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Exhibit 10.1

 
ENGLISH TRANSLATION (FOR REFERENCE ONLY)

Note:
This translation copy is furnished for your reference only. No representation is
made as to its accuracy or completeness and you may wish to seek independent
translation of the Chinese version. In any events this translation copy is not
legally binding and has no legal effect.

Dated the  12th   day of  June   , 2009    .

BLUEWATER PROPERTY MANAGEMENT CO., LTD.
（北京蓝泉物业管理有限公司）

and

Pacific Asia Petroleum

__________________________________________________

TENANCY AGREEMENT

in respect of

Room 08-10, Floor 5th (Actual Floor 4th )
of
Nexus Center
No.19A East 3rd Ring Rd North , Beijing,

__________________________________________________

 
 

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THIS TENANCY AGREEMENT is made this 12th day of June   Two Thousand and Nine

BETWEEN the party named and described as the Landlord in Part 1 of the Schedule
hereto (“Landlord” which expression shall where the context admits include its
successors and assignees) of the one part and the party named and described as
Tenant in Part 1 of the Schedule hereto (“Tenant”) of the other part.

WHEREBY IT IS AGREED as follows:

1.           The Landlord shall let and the Tenant shall take All Those premises
(“Premises”) which form part of the Nexus Center situated at No.19A East 3rd
Ring Rd North , Beijing, China., the People’s Republic of China Together with
all those fixtures fittings furniture or any other articles or things provided
by the Landlord as set out in the Appendix Four hereto for the term defined in
Part 4 of the Schedule hereto (“Term”) YIELDING AND PAYING therefor throughout
the Term the rent (“Rent”) and property management fees (“Property Management
Fees”) as are set out in Part 5 of the Schedule hereto and subject to the terms
and conditions hereinafter contained.

2.           The Schedule hereto together with the Standard Conditions of the
Tenancy Agreement (“Standard Conditions”) set out in Appendix One hereto as
varied and/or modified by the Special Conditions (“Special Conditions”)
specified in Appendix Two hereto and other Appendices expressly annexed hereto
shall form part of this Tenancy Agreement and shall be incorporated into this
Tenancy Agreement.

 
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SCHEDULE

This Schedule sets out the details and particulars of this Tenancy Agreement and
unless the context otherwise requires the terms specified in this Schedule shall
have the meanings therein ascribed to them.

Part 1 – the Parties

Landlord:
Bluewater Property Management Co., Ltd
(北京蓝泉物业管理有限公司)
   
Address:
Unit . 2709-2710, Nexus Center, No.19A East 3rd Ring Rd North , Beijing, China.
   
Tenant                      :
Pacific Asia Petroleum
   
Address:
No.B-118 Jiangguo Ave. The Exchange Building, Suite 1809. Beijing, China

Part 2 – the Premises

Premises:
Unit(s)08-10 on Floor 5th (actual floor 4th) of the Nexus Center (as shown for
identification purposes only colored Red on the plan(s) annexed hereto as
Appendix Three)
   
Building:
Nexus Center
   
Construction Area:
502.08square meters (including the usable space of the Premises and a pro-rata
share of the enclosing structural elements and the mechanical and electrical
installation areas and common facilities for the day-to-day operation of the
Building). During the Term of the lease, all amounts which are calculated on the
basis of the area are all based on the Construction Area stipulated herein.

Part 3 – Delivery Date

Delivery Date:
June 15, 2009

Part 4 - the Term

Term:
2 years (inclusive of the Commencement Date and Expiry Date)
   
Commencement Date:
0:00 on September 1, 2009
   
Expiry Date:
24:00 on August 31, 2011

 
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Any renewal of the lease shall be subject to Clause 11.7.
Part 5 – the Rent and the Property Management Fees

Rent:
RMB156 per calendar month per square meter, and the Monthly Rent of the Premises
is RMB78,324.48 payable  according to the terms hereof. The Daily Rent equals to
twelve times of the Monthly Rent divided by 365.
   
Property Management Fees:
RMB30 per calendar month per square meter, and the Monthly Property Management
Fees of the Premises is RMB15,062.40 payable  according to the terms hereof. The
Daily Property Management Fees equals to twelve times of the Monthly Property
Management Fees divided by 365.

Part 6 – the Deposit and Advance Payment

Deposit:
the sum equivalent to three-month Rent of the Premises and three-month Property
Management Fees of the Premises, totalled RMB280,160.64 by way of cash security
(payable by cash or bank cheques or bank transfer). The balance of the Deposit
payable to the Landlord shall be RMB 186,773.76 after deducting the amount of
RMB 93,386.88 already paid by the Tenant on June 3, 2009.
   
Advance Payment:
RMB93,386.88 payable for the Rent from September 1, 2009 to September 30, 2009
and Property Management Fees from June 15, 2009 to July 14, 2009

 
 

 
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The signing page:

Landlord:                                           Bluewater Property
Management Co., Ltd. (company chop)

Legal Representative
or authorized
representative:                                                                                                                                (signature)

Tenant:
Pacific Asia Petroleum (company chop)

Legal Representative
or authorized
representative:                                                                                                                                (signature)

Appendices
1.
Appendix One:
Standard Conditions

2.
Appendix Two:
Special Conditions

3.
Appendix Three:
Coloured Floor Plan(s)

4.
Appendix Four:
Standard Delivery Status

5.
Appendix Five:   Acknowledgement by Tenant

 
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APPENDIX ONE – STANDARD CONDITIONS

Clause 1 – Rent and Property Management Fees etc.

The Tenant to the intent that obligations hereunder shall continue throughout
the Term hereby undertakes and agrees with the Landlord as follows:

1.1           (Rent and Property Management Fees) To pay the Rent the Property
Management Fees and the handling charge of the cheques remittance or bank
transfer on the first day of each and every calendar month (hereinafter the “Due
Date”) (in the event that the first day in that calendar month is a statutory
rest day or festival and holiday, the Due Date shall be the last working day in
the preceding calendar month) or before and in the manner provided in the
Schedule hereto in advance clear of all deduction, set-off or withholding by way
of cheques of immediate value drawn in favour of “Bluewater Property Management
Co., Ltd.” or by remittance or bank transfer to the bank account designated by
the Landlord in writing from time to time. If the Commencement Date and The
Expiry Date do not respectively fall on the first or the last day of the
calendar month, the monthly payments to be made for the month in which the
Commencement Date or the Expiry Date falls shall be a multiple of the number of
days included in the first and last months of the Term and the daily Rent and/or
daily Property Management Fees.  The Property Management Fees shall include
without limitation all contributions towards the cost of the Landlord and/or its
property management company of the Building (“the Property Management Company”)
for and in providing central air-conditioning and heating, maintaining
environmental hygiene of the Building including garbage disposal (excluding
business or trade wastes of the Tenant), installing and maintaining common
facilities, providing water, electricity and communication services for use in
the common areas, public liability insurance, fire insurance and such other
insurance necessary against risks for managing the common areas of the Building,
remuneration and other benefits for security guards and other property
management personnel (including consultation fees payable to professionals where
necessary) and administration cost (including the remuneration of the Property
Management Company) and any other building services provided by the Landlord
and/or the Property Management Company. The Landlord shall be entitled to
prepare or revise the budget for the Property Management Fees periodically and
any readjustment of the Property Management Fees, if any, shall be notified in
writing to the Tenant and shall take effect from the date specified in such
notice.

1.2           (Advance Payment) To upon signing this Tenancy Agreement pay to
the Landlord the sum set out in the Schedule hereto (“Advance Payment”) which is
equivalent to the aggregate of (i) one (1) month’s Rent and Property Management
Fees as advance payment thereof; and (ii) if the commencement date of the rental
payment during the Term does not fall on the first date of a calendar month, the
Rent and the Property Management Fees shall be calculated on a pro-rata basis in
accordance with the number of days from the said commencement date to the last
date of that month under this Tenancy Agreement.

1.3           (Occupation Taxes) To pay and discharge all taxes charges
impositions and other outgoings of an annual or recurring nature now or
hereafter to be imposed and charged by all lawful authorities upon the Premises
or upon the tenant or occupier thereof under the relevant laws and regulations.

1.4           (Charges) To discharge all outgoings or charges for
air-conditioning services for non-business hours, telephone services, internet,
telecommunication services, electricity,

 
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water (if applicable), telephone lines and other services consumed in the
Premises and all necessary connection fees and deposits for such services. The
rates and fees of such services shall be subject to the invoices provided by the
Landlord and/or the Property Management Company.

Clause 2 – Tenant’s Obligations

The Tenant to the intent that obligations hereunder shall continue throughout
the Term hereby undertakes and agrees with the Landlord as follows:

2.1           (Compliance with regulations by-laws rules) To observe and comply
with and to indemnify the Landlord against the breach of any legislation law
regulation by-law rule and requirement of any government or other competent
authorities relating to the use and occupation of the Premises or to any other
act deed or thing done suffered or omitted therein or thereon by the Tenant or
any employee agent contractor or visitor of the Tenant and without prejudice to
the foregoing to obtain such licence approval or permit required by any
government or other competent authorities in connection with the Tenant's use or
occupation of the Premises prior to the commencement of the Tenant's business
and to maintain the same in force and to notify the Landlord forthwith in
writing of any notice received from any government or public authority
concerning or in respect of the Premises or any obligation under this Clause.

2.2           (Obligation to take possession of property etc.) To take
possession of the Premises upon the Delivery Date by following all steps and
procedures required by the Landlord, failing which possession shall be deemed to
have been taken and the Term shall be deemed to have commenced on the
Commencement Date without prejudice to other rights and remedies of the Landlord
provided herein.  For the avoidance of doubt, should the Tenant fail to make
full payment of the Deposit and Advance Payment to the Landlord before the
Delivery Date in accordance with this Tenancy Agreement, the Landlord shall have
no obligation to allow the Tenant to take possession of the Premises on the
Delivery Date.  The Commencement Date, Fit-out Period (if applicable) and
Rent-Free Period (if applicable) as provided hereunder shall not be delayed, and
in such case, the Tenant shall take possession of the Premises by following all
steps and procedures required by the Landlord within three workings day after
the Deposit and Advance Payment have been made in full.

Should the Tenant fail to take the required steps and procedures to take
possession of the Premises on the Delivery Date or within seven days of the time
as provided by this Section, the Landlord may, but is not obligated to, give the
Tenant a notice in writing to terminate this Tenancy Agreement.  In such case,
the Landlord shall have the right to forfeit all Deposit and have no obligation
to refund the same to the Tenant. The Deposit shall be the compensation to the
Landlord for its loss due to the default by the Tenant.

2.3           (Repair obligations) To keep all the interior non-structural parts
of the Premises including flooring and interior plaster or other finishes or
rendering to walls floors and ceilings the Landlord’s fixtures and fittings
therein and all additions thereto including but not limited to all doors windows
electrical installations wiring ducting and piping therein in good clean
tenantable and proper repair and condition and properly preserved and painted.

2.4           (Injury and damage to property, indemnity and insurance)

 
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2.4.1  To be responsible for, and to indemnify the aggrieved party who suffered
directly in, any damages of the Premises or part of it caused by fire,
explosion, water damage or smoke emission occurs at the Premises, or from any
behaviour, failure in performing duty or negligence by the Tenant or its
employee, agent, contractor, authorized person, invitee, or visitor, whereby the
Tenant shall also be legally liable to indemnify the Landlord for any claims
however caused or taken out by any person (including a third party) arising from
the above incidents.

2.4.2  The insurance policy taken out by the Landlord, in which the Landlord
shall be named beneficiary, will only cover the Premises’ structure, fixtures
and ancillary facilities.  In the event of the occurrence of any insurance
incident, the Landlord shall be the only party entitled to the proceeds paid by
the insurance company under such insurance policy. The Tenant shall in no event
be entitled to any claim for any such proceed due to any property damage and
personal injury arising out of such insurance incident.

2.4.3                      Throughout the Term of the lease (including the
Rent-Free period), to effect insurance cover with a reputable insurance company
on public liability which include, but not limited to, damages of the Premises
or part of it caused by fire, explosion, water damage or smoke emission occurs
at the Premises, or any personal injury or death and/on property loss or damage
caused by any behaviour, failure in performing duty or negligence of the Tenant
or its employee, agent, contractor, authorized person, invitee, or visitor, with
an insured amount not less than RMB3,000,000.00 yuan (in each claim) or an
insured amount which may be reasonably stipulated by the Landlord from time to
time and the insurance policy shall contain a clause to the effect that the
insurance cover thereby effected and the terms and conditions thereof shall not
be cancelled, modified or restricted, or the insured amount be reduced or the
exemption amount be increased unless the Landlord’s prior written consent is
obtained.  The insurance policy taken out by the Tenant shall include but not
limited to the following clauses:

1.
fire, explosion, smoke emission and water damage liability;

2.
cross liability;

3.
contractual obligation;

4.
Tenant obligation;

5.
personal injuries; and

6.
clauses relating to the Premises’ modification, expansion, repairs and
maintenance.

2.4.4  Prior to the Commencement Date, to provide to the Landlord a copy of the
cover note of such policy and the receipt for the paid premium or a letter of
confirmation from the insurer, so as to prove that it has already taken out
adequate insurance cover pursuant to the above requirements.  The Tenant shall
also within two months from the Commencement Date provide to the Landlord a copy
of the above insurance policy for records.  In the event that the above policy
expires during the term of the lease of the Premises, the Tenant shall complete
renewal of the insurance policy duly and shall within one month from the expiry
date of the previous insurance policy provide to the Landlord copy of the
renewed policy together with copy of the paid premium or a letter of
confirmation from the insurer for records.

2.4.5  .Throughout the Term of the lease (including the Rent-Free period), the
Tenant shall maintain insurance policy or policies with respect to its own
possessions and any other items within the Premises, and its employees as
required by the applicable laws.

 
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2.5           (Replacement of windows or curtain wall) To reimburse to the
Landlord the cost of replacing all broken and damaged windows and glass or
curtain wall if the same be broken or damaged by the act or neglect of the
Tenant its employees agents contractors invitees customers or visitors.

2.6           (Entry by Landlord) To permit the Landlord and all persons
authorized by it at all reasonable times upon notice to enter and view the state
of repair of the Premises to take inventories of the fixtures and fittings
therein and to carry out any works repairs or maintenance to the Premises and/or
the Building provided that in the event of an emergency the Landlord and/or the
Property Management Company and their employees or agents may enter without
notice and forcibly if need be and for this purpose, the Tenant shall inform the
Landlord as to the presence and nature of any security system of the Tenant
installed in the Premises.

2.7           (Notice of repair) On receipt of any notice from the Landlord or
its authorized representative specifying any repairs which are required to be
done and which are the responsibility of the Tenant hereunder forthwith to put
in hand and execute the same without delay. Failure by the Tenant so to do will
entitle the Landlord or its employees or agents to enter upon the Premises and
forcibly if need be to carry out any such works or repairs at the expense of the
Tenant.

2.8           (Inform Landlord of damage) To give notice in writing to the
Landlord of any injury to person occurred in and any damage that may be suffered
to the Premises and of any accident to or defects in the water pipes electrical
wiring or fittings fixtures or other facilities provided by the Landlord.

2.9           (Directory boards) To pay the Landlord immediately upon demand the
cost of affixing repairing altering or replacing as necessary the Tenant’s name
in lettering to the directory boards provided by the Landlord.

2.10           (Viewing Advertising and Reletting) To permit at all reasonable
times upon prior notice during the three calendar months immediately preceding
the expiration of the Term prospective tenants or occupiers to inspect the
Premises and every part thereof.

2.11           (Regulations) To observe and perform and not to contravene any of
the provisions contained in the Regulations as may from time to time be adopted
by the Landlord pursuant to Appendix One hereof.

2.12           (Deeming acts and defaults) To be responsible to the Landlord for
any breach non-observance non-performance of the terms conditions agreements or
stipulations by and the acts neglects omissions and defaults of all employees
agents contractors or visitors of the Tenant as if they were the breach
non-observance non-performance of the terms conditions agreements or
stipulations by and the acts neglects omissions and defaults of the Tenant
itself.

2.13  (Handover of Premises) Upon expiry or termination of this Tenancy
Agreement for whatsoever reasons, to reinstate the Premises to the condition as
per the standards (as set forth in Appendix Four hereunder) when the Landlord
delivered the Premises to the Tenant

 
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for usage, i.e. to dismantle any fixtures fittings or additions or alterations
made by the Tenant to the Premises after taking procession so as to reinstate
the Premises to the condition when the Premises is delivered to the Tenant, and
to deliver the Premises to the Landlord together with all the fixtures,
installation and additional facilities. All the shortfall shall be supplemented
or compensated by the Tenant for the damages, tear and wear of the materials.
The Landlord shall supply the detailed quotation for deficient items and the
Tenant agrees that the amount in such quotation shall be deducted directly by
the Landlord from the security deposit. The returned Premises together with all
fixtures, fittings and ceiling accessory materials therein and thereto shall be
in a complete, good, clean, tenantable and properly repaired condition. The
Tenant shall not be entitled to claim any compensation or damages from the
Landlord in respect of any fixtures fittings or additions made by the Tenant in
the Premises. Should the Landlord make such request, the Tenant shall handle
such removal of its personal belongings, fixtures, fittings and additions and be
responsible for such removal and transportation costs upon the expiry of this
Tenancy Agreement or its earlier termination. As such, should there be any
damages caused to the Premises and fixtures, fittings and additions which ought
to be returned to the Landlord during the course of such removal, the Tenant
shall make such remedy to the Landlord’s satisfaction in a proper and
sophisticated manner. Should the Tenant be unable to fulfill the aforesaid duty
in accordance with the Landlord’s requirement, the Tenant agrees to pay any and
all removal and transportation costs irrespective of whether the Landlord
handles such work itself or hires contractor to perform the same instead. The
Tenant shall surrender to the Landlord all keys giving access to all parts of
the Premises and permit the Landlord to remove at the Tenant’s expenses all
letters and characters relevant to the Tenant from the directory boards and from
all the doors, walls or windows of the Premises and to make good any damage
caused by such removal. If the Tenant fails to reinstate the Premise (except for
the case where both parties agree that the internal fittings, decoration or
accessories shall be retained) and to deliver up vacant possession of the
Premises on the expiry or earlier termination date of this tenancy according to
the stipulations in this Clause, the Tenant shall pay to the Landlord a late
delivery compensation (which is equivalent to 300% of the amount of the daily
Rent and Management Fee of the Premises) for each day of the period of delay in
delivering possession of the Premises to the Landlord (“Overstay”). AND
acceptance of such Overstay compensation by the Landlord shall not mean that the
Landlord recognizes the Tenant’s Overstay.  Further, notwithstanding the
Landlord’s acceptance of such Overstay compensation, if there are articles
fixtures or fittings remained or abandoned in or at the Premises upon the expiry
or earlier termination of this tenancy, the Landlord is entitled to terminate
electricity, air-condition, water supply, telephone, internet and / or other
services and supplies to the Premises without prior notice and to take
possession of the Premises. The Tenant hereby agrees to disclaim the ownership
of such articles and agrees that the Landlord can freely dispose of the same
including but not limited to disposal, realization or similar manners. Gains
accrued there from shall belong to the Landlord (if any) and costs shall be born
by the Tenant (if any) and the Landlord shall not be accountable to the Tenant
or any other persons for any loss or damage in respect of such disposal or any
other treatment thereof. Further, the Landlord is entitled to refuse entry into
the Premises by the Tenant or its employee, agent, contractor, authorized
person, invitee, customer or visitor upon the expiry or early termination of
this Tenancy Agreement (notwithstanding the Tenant’s payment of the Overstay
compensation), all risk and consequence arising out of such refusal shall be
solely borne by the Tenant accordingly.

2.14           (Electronic Installations, circuits, piping and ducting) To
repair and replace any electrical installation wiring ducting or piping
installed by the Tenant if the same becomes

 
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dangerous or unsafe or if so reasonably required by the Landlord or by the
relevant utilities company and the Tenant shall use the Landlord's one of the
recognised contractors for the electric power project of fire-service (including
thermometric sensor and smoke detection system) and the wiring (from the meter
room to the Tenant's main switch) works.  The Tenant shall permit the Landlord
or its agents to test the fire-service, air-conditioning and wiring ducting or
piping installed by the Tenant in the Premises at any reasonable time upon
request being made.

2.15           (Cleaning) To keep the Premises including where the Tenant
occupies the entire floor(s) including the common area and the lift lobbies on
the floor(s) of the Building occupied by the Tenant at all times in a clean and
sanitary state and condition.

2.16           (Cleaning of drains) To pay to the Landlord on demand all costs
incurred by the Landlord in clearing repairing or replacing any of the drains
pipes or sanitary or plumbing apparatus choked or stopped up owing to the
careless or improper use or neglect by the Tenant or any employee agent
contractor invitee guest or visitor of the Tenant and to indemnify the Landlord
against any cost claim or damage caused thereby or arising therefrom.

2.17           (Protection from bad weather) To take all reasonable precautions
to protect the Premises against damage by storm heavy rainfall heavy snowfall or
the like and in particular to ensure that all exterior doors and windows are
securely fastened upon the threat of such adverse weather conditions.

2.18           (Outside windows and doors) To keep all outside windows and doors
closed and in the event of a breach of this Clause the Landlord shall have the
right to send a representative to close any open door or doors or window or
windows should the Tenant fail to forthwith comply with the Landlord’s request
to close the same.

2.19           (Service entrances and lifts) To load and unload goods only at
such times and through such service entrances and by such service lifts as shall
be designated by the Landlord for this purpose from time to time.

2.20           (Refuse and garbage removal) To be responsible for the removal of
garbage and refuse from the Premises and to dispose of such garbage and refuse
only in those areas in the Building as shall be designated by the Landlord from
time to time.

2.21           (Conducting of business) To conduct the business of the Tenant so
as not to prejudice the goodwill and reputation of the Building as a first class
office building.

2.22           (Indemnity against breach) To keep the Landlord fully indemnified
from and against all actions claims losses damages expenses and legal costs
which the Landlord may suffer or incur as a result of or arising from any of the
Tenant’s breach non-observance or non-performance of any term condition
agreement or stipulation contained in this Tenancy Agreement or out of any works
carried out by the Tenant at any time during the Term to the Premises or out of
anything affixed and/or installed by the Tenant now or during the Term attached
to or projecting from the Premises or arising from any act neglect or default of
the Tenant.

 
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2.23           (Usage) Not to use or permit to use the Premises or suffer the
Premises to be used for purpose other than as office, and to observe any PRC and
Beijing regulations in respect of property use and property management. Tenant
hereby warrants that the aforesaid purpose of the Premises shall not change
within the Term without the prior written consent of Landlord and the approval
from relevant authority.

Clause 3 – Landlord’s Obligations

The Landlord agrees with the Tenant as follows:

3.1           (Quiet enjoyment) Subject to the Tenant paying the Rent, the
Property Management Fees and other amounts hereby agreed to be paid at the time
and in the manner herein provided for payment of the same and observing and
performing the terms conditions agreements and stipulations contained in this
Tenancy Agreement and to be observed and performed by the Tenant to permit the
Tenant to peacefully hold and enjoy the Premises during the Term without any
interruption by the Landlord or any person lawfully claiming through the
Landlord provided that the Tenant acknowledges that the Landlord or the Property
Management Company shall have the right to carry out renovation alteration
and/or repair works within, outside and/or above the Building and that
fitting-out works may be carried out by the Landlord and/or other tenants of the
Building.

3.2           (Roof and main structure) To keep the main structural parts of the
Building in a proper state of repair.

3.3           (Decoration) To carry out all necessary decoration to the common
areas of the Building as and when the Landlord shall decide the same is
necessary.

3.4           (Cleaning) To keep the common areas and toilets and other parts of
the Building for common use clean and in proper condition.

3.5           (Common Facilities) To maintain any lifts escalators fire and
security services equipment air-conditioning plant and other common service
facilities of the Building in proper working order.

3.6           (Air-conditioning) During normal working hours, to provide
air-conditioning services to the Premises daily from Monday to Friday (including
those Saturdays and Sundays that become working days according to public holiday
schedule) from 8:00 a.m. until 7:00 p.m. and from 8:00 a.m. until 12:00 a.m. of
Saturdays (excluding public holidays). Days other than those provided hereby as
within normal working hours and public holidays shall be considered outside of
normal working hours and no air-conditioning services will be provided. If the
Tenant shall require air-conditioning services for extra hours the Landlord may
provide the same to the Tenant on receiving reasonable prior notice of the
Tenant’s requirement. The charges for such additional air-conditioning shall be
determined by the Landlord and notified to the Tenant from time to time and the
Tenant shall forthwith pay the charges thereof on receipt of the demand note
therefore.

3.7  3.7   (Registration of the Tenancy) Upon request of the Landlord, the
Tenant shall assist the Landlord in applying for registration of the lease,
including but not limited to providing valid and lawful business license, and
signing relevant documents. The registration

 
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fees therefore incurred shall be equally shared by both parties.

Clause 4 – Restrictions and Prohibitions

The Tenant hereby agrees with the Landlord as follows:

4.1           (Renovation, Installation and alteration) Not without the prior
written consent of the Landlord (such consent not to be unreasonably withheld)
to erect install or alter any fixtures partitioning or other erection or
installation in the Premises or any part thereof or to make or permit or suffer
to be made any installations in or additions to the electrical wiring piping
ducting and any other installations or to install or permit or suffer to be
installed any equipment apparatus or machinery which imposes a weight on any
part of the flooring in excess of that for which it is designed or which
requires any additional electrical wiring piping or ducting or which consumes
electricity not metered through the Tenant’s separate meter. The Landlord shall
be entitled to prescribe the maximum weight and permitted location of safes and
other heavy equipment and to require that the same stand on supports of such
dimensions and material to distribute the weight as the Landlord may deem
necessary and that in carrying out any approved work hereunder the Tenant and
its employees agents contractors and workmen shall cooperate fully with the
Landlord and all the employees agents contractors and workmen of the Landlord
and with other tenants or contractors carrying out any work in the Building. The
Tenant its employees agents contractors and workmen shall obey and comply with
all instructions and directions which may be given by the Landlord or its
representative in connection with the carrying out of such work.

4.2           (Criteria for commencing business) Not to use occupy the Premises
to commence business or operation (whether temporarily or otherwise), the
Landlord may at its discretion refuse to provide the necessary facilities and
services to the Premises including the electricity and air-conditioning unless
and until the Tenant (i) has obtained all necessary unconditional
completion/approval certificate(s) duly issued by the competent authorities in
respect of all works and installation to the Premises which shall be legally
required for commencing business or operation at or in the Premises; and (ii)
has deposited with the Landlord at all times during the Term the relevant valid
completion/approval certificate(s) therefor; failing which the Landlord may at
its discretion refuse to provide the necessary facilities and services to the
Premises including the electricity supply and air-conditioning facility.

4.3           (Signs) Not to affix or display or permit or suffer to be affixed
or displayed within or outside the Premises any signboard sign decoration
advertising matter or other device whether illuminated or not which may be
visible from outside the Premises and the Landlord shall have the right to
remove the same at the cost and expense of the Tenant Provided that:
(i)
the Tenant shall be entitled to have its name displayed in English and Chinese
in uniform lettering and/or characters designated by the Landlord on the
directory boards, such lettering and characters and any additions or alterations
thereto will be placed thereon by the Landlord at the Tenant’s expense; and

(ii)
the Tenant shall be entitled at its own expense to have its name affixed in
lettering and/or characters of dimensions approved by the Landlord on the
Tenant’s main entrance door.

Save as provided in (i) and (ii) above, the Tenant shall not do or permit or
suffer any act which may alter or otherwise adversely affect the appearance of
the Premises or the Building.

 
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4.4           (Illegal or immoral use) Not to use or permit or suffer the
Premises to be used for any illegal immoral or improper purpose.

4.5           (No touting) Not to permit any touting or soliciting for business
or the distributing of any pamphlets notice or advertising matter outside the
Premises or anywhere within or near the vicinity of the Building by any of the
Tenant’s employees or agents.

4.6           (Auction and Exhibition) Not to hold or permit or suffer to be
held in the Premises any exhibition auction or similar sale of things or
properties of any kind.

4.7           (Sleeping or domestic use) Not to use or permit or suffer the
Premises or any part thereof to be used as sleeping quarters.

4.8           (Manufacture or storage of goods) Not to use or permit or suffer
the Premises to be used for the production manufacture or working of goods or
merchandise nor for the storage of goods and merchandise other than samples and
exhibits in small quantities reasonably required in connection with the Tenant’s
business carried on therein.

4.9           (Combustible or dangerous goods) Not to keep or store or permit or
suffer to be kept or stored in the Premises any arms ammunition gun-powder
salt-petre kerosene or other explosive or combustible substance or hazardous or
unlawful goods and not at any time during the Term to allow the Premises or any
part thereof to be used in any way entailing a fine forfeiture or penalty
against the Landlord under any laws for the time being in force in the People’s
Republic of China.

4.10           (Obstruction to Passages) Not to encumber or obstruct or permit
or suffer to be encumbered or obstructed with any boxes packaging rubbish or
other articles or obstruction of any kind or nature any of the entrances exits
staircases landing passages escalators lift lobbies or other parts of the
Building in common use and the Landlord shall if it thinks fit be entitled
without notice and at the Tenant’s expense to remove and dispose of any such
boxes packaging rubbish or other articles or obstruction as it sees fit without
incurring any liability therefor.

4.11           (Articles in common area) Not to lay install affix or attach any
wiring cables or other articles or things at in or upon any of the entrances
exits staircases landings passages lobbies or other parts of the Building in
common use without having obtained the Landlord’s prior written consent.

4.12           (Breach of insurance policy) Not to do or permit or suffer to be
done any act deed matter or thing whatsoever whereby the insurance policies on
the Building and/or the Premises against loss or damage by fire and/or other
insurable perils and/or claims by third parties for the time being in force may
become void or voidable or whereby the rate of premium or premiums thereon may
be increased Provided that if as the result of any act deed matter or thing done
permitted or suffered to be done by the Tenant the rate of premium on any such
policy of insurance shall be increased the Landlord shall be entitled without
prejudice to any other remedy hereunder to recover from the Tenant the amount of
any such increase. Furthermore, the Tenant shall provide relevant documentary
evidence or assistance to the insurance company upon its request.

 
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4.13           (Air-conditioning) Not without the prior written consent of
Landlord to install air-conditioning facilities in addition to such facilities
as are provided by the Landlord.

4.14           (Parking) Not to park in obstruct or otherwise use nor permit any
employee agent or visitor of the Tenant to park in obstruct or otherwise use
those areas of the Building allocated to the parking or movement of or access
for vehicles or designated as loading/unloading areas otherwise than in
accordance with the Regulations made by the Landlord pursuant to Clause 9 of
Appendix One.

4.15           (Use of Building name) Not without the prior written consent of
the Landlord to use or permit to be used the name/logo or any part of the
name/logo of the Landlord or of the Building or any picture representation or
likeness of the whole or any part of such name/logo or of the Building or of the
Premises in connection with the business or operations of the Tenant or for any
purpose whatsoever other than to indicate the address and place of business of
the Tenant only.

4.16           (Damages to walls and ceiling etc.) Not without the prior written
consent of the Landlord to cut maim injure drill nail or screw into mark or
deface or permit or suffer to be cut maimed injured drilled into marked or
defaced any doors windows walls beams structural members or any part of the
fabric of the Premises or any of the plumbing or sanitary or air-conditioning
apparatus or installations therein, nor without such consent of the Landlord to
do any other thing which may damage or penetrate the existing floor screed or
slab.

4.17           (Damage to common areas) Not to damage injure or deface any part
of the common areas of the Building including without limitation the fabric
decorative features the stairs lifts escalators any trees plants or shrubs
therein or thereabout.

4.18           (Nuisance or annoyance) Not to do or permit or suffer to be done
any act or thing which may be or become a nuisance or annoyance to the Landlord
or to the tenants or occupiers of other premises in the Building.

4.19           (Noise) Not to cause produce or permit or suffer to be produced
at any time in the Premises any disturbing or irritating noise or any music
sound or noise (including sound produced by broadcasting or any apparatus or
equipment capable of producing reproducing receiving or recording sound) which
may be audible outside the Premises.

4.20           (Toilet facilities) Not to use or permit or suffer to be used the
toilet facilities provided by the Landlord in the Premises or in the common
areas of the Building for any purpose other than that for which they are
intended and not to throw or permit or suffer to be thrown therein any substance
or object incompatible with their intended use and the Tenant shall pay to the
Landlord on demand the whole expense of any breakage blockage or damage
resulting from a violation of this Clause.

4.21           (Animals pets and infestation) Not to keep or permit or suffer to
be kept any animals or pets inside the Premises and at the Tenant’s expense to
take all such steps and precautions as shall be required by the Landlord to
prevent the Premises or any part thereof from becoming infested by pests or
vermin.

4.22           (Preparation of food and prevention of odours) Not to cook or
prepare or permit or

 
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suffer to be cooked or prepared any food in the Premises or to cause or permit
any offensive or unusual odours to be produced upon or emanated from the
Premises.

4.23           (Aerials) Not to erect any aerial on the roof or walls of the
Building or on the ceiling or walls of the Premises and not to interfere with
remove dismantle or alter those common aerials (if any) provided by the
Landlord.

Clause 5 – Exclusions

Unless caused through the gross negligence of the Landlord its employees or
agents, the Landlord shall not be liable to the Tenant occupier or any other
person whomsoever:

5.1           (Lift escalators air-conditioning etc.) In respect of any injury
loss damage or death to person or property sustained by the Tenant occupier or
any such other person caused by or through or in any way owing to any defect in
or breakdown of any of the lifts escalators fire and security services equipment
air-conditioning plant telecommunication services or any other facilities of and
in the Premises or the Building; or

5.2           (Electricity/water supply) In respect of any injury loss damage or
death to person or property sustained by the Tenant occupier or any such other
person caused by or through or in any way owing to any failure malfunction
explosion or suspension of the electricity or water supply to the Building or
the Premises; or

5.3           (Fire and overflow of water and vermin) In respect of any injury
loss damage or death to person or property sustained by the Tenant occupier or
any such other person caused by or through or in any way owing to fire or the
escape of fumes smoke odours or any substance or thing or the overflow or
leakage of water from anywhere within the Building or the influx of rain water
or storm water into the Building or the Premises or the activity of rats or
other vermin in the Building; or

5.4           (Security) For the security or safekeeping of the Premises or any
persons or contents therein and in particular but without prejudice to the
generality of the foregoing the provision by the Landlord or the Property
Management Company of watchmen and caretakers or any mechanical or electrical
systems of alarm of whatever nature shall not create any obligation on the part
of the Landlord or the Property Management Company as to the security of the
Premises or any contents therein and the responsibility for the safety of the
Premises and the contents thereof shall at all times rest with the Tenant; or

5.5           (Non-enforcement of the Regulations) In respect of any injury loss
damage or death however caused by or arising from any non-enforcement of the
Regulations under Clause 9 of Appendix One or non-observance thereof by any
party; or

Nor shall the Rent or the Property Management Fees payable by the Tenant
hereunder or any part thereof be abated or cease to be payable on account of any
of the foregoing circumstances.

 
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Clause 6 – Abatement of Rent

If the Premises or any part thereof shall be destroyed or so damaged by fire bad
weather Act of God force majeure or other cause not attributable directly or
indirectly to any act or default of the Tenant as to render the Premises unfit
for use and occupation the Rent hereby agreed to be paid or a part thereof
proportionate to the nature and extent of the damage sustained shall cease to be
payable until the Premises shall have been restored or reinstated Provided
Always that the Landlord shall be under no obligation to repair or reinstate the
Premises if in its opinion it is not reasonably economical or practicable so to
do and Provided Further that if the whole or substantially the whole of the
Premises which have been destroyed or rendered unfit for use and occupation
shall not have been repaired and reinstated within six months of the occurrence
of the destruction or damage either party hereto shall be entitled at any time
before the same are so repaired and reinstated to terminate this Tenancy
Agreement by notice in writing to the other but without prejudice to the rights
and remedies of either party against the other in respect of any antecedent
claim or breach of the agreements terms and conditions herein contained or of
the Landlord in respect of the Rent the Property Management Fees and other
charges payable hereunder prior to the coming into effect of the cessation.

Clause 7 – Default

It is hereby further expressly agreed and declared as follows:

7.1           (Material Default) Entirely without prejudice to the provisions of
Clause 8.1 of Appendix One, each of the following events would constitute a
Material Default under this Tenancy Agreement:

(i) the Rent, the Property Management Fees and/or other amounts payable by the
Tenant under this Tenancy Agreement or any part thereof (including but not
limited to Advance Payment and Deposit and Overdue Delinquent Payment and so on)
remain unpaid in full within fourteen (14) days after the same shall have become
payable (whether the Tenant has been demanded to pay or not); or

(ii) any breach non-observance or non-performance by the Tenant of any of the
terms agreements stipulations or conditions hereof and failed to be cured within
the time period as required by Landlord; or

(iii) any of the assets of the Tenant has been seized, forfeited or distrained
by the People’s Court or any competent authority; or

(iv) the Tenant shall become bankrupt or being a corporation shall go into
liquidation; or

(v) any petition shall be filed for the bankruptcy or winding up of the Tenant;
or

(vi) the Tenant shall otherwise become insolvent (including but not limited to
amounts payable by the Tenant under other tenancies with premises of Nexus
Center shall not be fully paid for fourteen (14) days after relevant due dates.)
or make any composition or arrangement with its creditors or shall suffer any
execution to be levied on the Premises

 
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(vii) the Tenant, without prior written notice of the Landlord, consents to
change the usage of the Premises, the business scope, trade name or name of the
Tenant; or

(viii) any serious damage caused by the Tenant to the Premises; or

 
(ix) the Tenant, without prior consent, sublet the Premises, assign the tenancy
or carry out a exchange of the leased Premises with other parties; or

(x) the Tenant, without prior written consent of the Landlord, alter the
structure of the Premises.

7.2   (Remedial Rights) Under any condition as stipulated under Section 7.1, the
Landlord may give written notice to the Tenant requesting remedies to such
Material Default(s) within the required period.  Should such Material Default(s)
has/have not been remedied within the time limit provided in a written notice
has been served by the Landlord to the Tenant, the Landlord may further exercise
all of the following rights (the “Remedial Rights”):

(i)
to enter or re-enter on the Premises or any part thereof in the name of the
whole;

(ii)
to terminate this Tenancy Agreement absolutely but without prejudice to any
right of action of the Landlord in respect of any outstanding breach or
non-observance or non-performance by the Tenant of any of the agreements
stipulations and conditions herein contained;

(iii)
to forfeit the Deposit and other deposits paid by the Tenant as part of the
liquidated damages due to the Tenant’s breach without prejudice to the
Landlord’s right of deduction in accordance with Clauses 7.8 of Appendix One and
claim for further compensation; and

(iv)
to do all lawful things and/or to take all lawful actions which the Landlord
considers necessary or desirable to remedy the Material Default(s).

7.3   (Disconnection of Utilities) Under any condition as stipulated under
Section 7.1, the Landlord may disconnect all electricity, air-conditioning,
water, telephone, internet, other utility services and/or supplies to the
Premises provided that a three (3) days’ th prior notice has been given to the
Tenant of the Landlord‘s intention to do so.  All relevant costs and expenses
incurred by the Landlord in connection with the disconnection and the subsequent
re-connection of the electricity air-conditioning, water, telephone, internet,
other utility services and/or supplies to the Premises shall be paid by the
Tenant and shall be recoverable from the Tenant as a debt or be deductible by
the Landlord from the Deposit paid by the Tenant in accordance with Clause 8 of
Appendix One hereof.

7.4           (Exercise of right)  A written notice served by the Landlord on
the Tenant in manner hereinafter mentioned to the effect that the Landlord
thereby exercises the power of re-entry and determination of the Tenancy
Agreement herein contained shall be a full and sufficient exercise of such power
without physical entry on the part of the Landlord. Upon dispatch of the written
notice of re-entry, the Premises shall be deemed to have been

 
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repossessed by the Landlord and the Tenant shall be deemed evicted. Thereafter,
the Landlord shall be entitled to dispose of the Premises and any items or
chattels left on the Premises in such manner as it wishes and it shall not incur
any liability to the Tenant therefor.

7.5           (Acceptance of Rent and Property Management Fees) Acceptance of
the Rent and/or the Property Management Fees and/or other amounts by the
Landlord shall not be deemed to operate as a waiver by the Landlord of any right
to proceed against the Tenant in respect of any breach non-observance or
non-performance by the Tenant of any of the agreements stipulations and
conditions herein contained and on the Tenant’s part to be observed and
performed.

7.6           (Payment Order) The Rent payable in respect of the Premises shall
be and be deemed to be in arrears if not paid in advance at the times and in the
manner hereinbefore provided for payment thereof. In such a case, the Landlord
may apply for Payment Order issued by the People’s Court in accordance with the
supervisory procedures of the PRC Civil Procedure Law and all costs and expenses
thus incurred shall be borne by the Tenant.

7.7           (Overdue Delinquent Payment) Without prejudice to the Landlord’s
other rights and remedies on such default, if the Rent, the Property Management
Fees or any other charges payable by the Tenant under this Tenancy Agreement or
any part thereof shall not be paid in the manner and at the time specified
herein, then Overdue Delinquent Payment shall be payable by the Tenant at the
rate of 0.1% of the due and unpaid amount per day calculated on daily basis from
the due date up to the date of actual payment (both inclusive).

7.8    (Undertaking) Save and except in the event of force majeure during the
agreed rental period, the Tenant shall under no circumstances terminate this
Tenancy Agreement prematurely.  If the Tenant chooses to terminate this Tenancy
Agreement before the expiration of the Term, or this Tenancy Agreement is
terminated prematurely or cannot be performed due to breach of this Tenancy
Agreement by the Tenant, the Landlord shall not be required to return to the
Tenant the Deposit and other deposits (if any) already paid.  Further, the
Tenant shall also be required to pay all the rentals that should be payable
during the un-performed term of the Tenancy Agreement（i.e. the aggregate sum of
the Deposit paid by the Tenant and the rentals should be payable during the
un-performed term shall be regarded as liquidated damages payable by the Tenant
to the Landlord due to the Tenant’s early termination  or being unable to
perform）. In case the loss to the Landlord caused by such termination exceeds
the rentals that should be payable during the un-performed term of the Tenancy
Agreement, the Tenant shall be liable to indemnify the Landlord for such
exceeding loss.  The Landlord shall have the right to offer the Premises to
other tenants so as to minimize the loss that may arise from the Tenant’s breach
of contract.

Clause 8 - Deposit

8.1           (The Deposit) The Tenant shall on the signing hereof deposit with
the Landlord the deposit in Renminbi specified in the Schedule to this Tenancy
Agreement (“Deposit”) to secure the due observance and performance by the Tenant
of the terms conditions agreements and stipulations contained in this Tenancy
Agreement and to be observed and performed by the Tenant. The Deposit shall be
retained by the Landlord throughout the Term free of any interest and in the
event of any breach or non-observance or non-performance by the Tenant of any of
the agreements stipulations or conditions under this Tenancy Agreement the

 
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Landlord shall be entitled, by exercising its Remedial Rights provided in this
Tenancy Agreement, to terminate this Tenancy Agreement, forfeit the Deposit and
claim further compensation for the costs expenses loss or damage thus incurred.
Notwithstanding the foregoing, the Landlord may in any such event at its option
deduct immediately after the occurrence of the breach non-observance or
non-performance of any agreement stipulation or condition of this Tenancy
Agreement from the Deposit the amount of any monetary loss incurred by the
Landlord in consequence of such breach non-observance or non-performance with or
without prior notice to the Tenant (the Landlord can exercise such right at its
own absolute discretion) in which event the Tenant shall as a condition
precedent to the continuation of the tenancy deposit with the Landlord the
amount so deducted within 7 days after receiving the written notice of the
Landlord demanding the same and if the Tenant shall fail so to do the Landlord
shall forthwith be entitled to exercise all of its Remedial Rights.

8.2           (Repayment of the Deposit) Subject to any aforesaid deduction or
forfeiture, the Deposit shall be refunded to the Tenant by the Landlord without
interest within thirty (30) days after:  (a) the expiration of this Tenancy
Agreement and the handover of the Premises to the Landlord in accordance with
Clause 2.13 of Appendix One; (b) the settlement of the last outstanding claim by
the Landlord against the Tenant in respect of any breach non-observance or
non-performance of any of the agreements stipulations or conditions herein
contained and on the part of the Tenant to be observed and performed; and (c)
the relevant telephone telecommunication and electricity authorities have
cleared the Tenant’s telephone telecommunication and electricity accounts;
whichever is the latest. The Deposit shall be refunded to the Tenant without
interest in the same amount as it was paid to the Landlord, subject, however, to
the Landlord’s right to make deduction, withholding or set off according to the
terms of this Tenancy Agreement.

Clause 9 - Regulations

9.1           (Introduction of Regulations) The Landlord reserves the right from
time to time and by notice in writing to the Tenant to make and introduce and
subsequently amend adopt or abolish if necessary such rules and
regulations  including but not limited to the Users’ Handbook and Fit-out
Instruments (altogether, the “Regulations”) as it may consider necessary for the
control of use of parking spaces, fitting-out and the access operation
management and maintenance of Nexus Center as a first class office building and
for the compliance of the relevant laws regulations or requirements imposed by
the competent authorities.

9.2           (Conflict) Such Regulations shall be supplementary to the terms
and conditions contained in this Tenancy Agreement and shall not in any way
derogate from such terms and conditions. In the event of conflict between such
Regulations and the terms and conditions of this Tenancy Agreement, the terms
and conditions of this Tenancy Agreement shall prevail. For the purpose of this
Tenancy Agreement, a conflict exists when no matter being interpreted in what
way, the meaning of the provisions become contrary to each other.

Clause 10 – Early Termination

Landlord and Tenant hereby agree that this Tenancy Agreement shall be terminated
and the Parties hereto shall not be responsible to each other in case of any of
the following events:

 
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(1)
The land use right of the Premises is taken back before its expiration in
accordance with relevant laws; or

 
(2)
The Premises is expropriated for public interests or needs of urban construction
in accordance with relevant laws; or

 
(3)
The Premises is included in the area within which properties are to be
demolished and residents are to be relocated according to laws due to
requirements of the urban constructions; or

 
(4)
Not as a result of the behaviour non-performance of duty negligence of Tenant or
its employee agent contractor invitee customer or visitor, the Premises is
damaged, destroyed or verified as a dangerous building unit (if such damage or
danger to the Premises can be recovered or repaired within ninety (90) days
after the damage incurs or the danger is verified, this Tenancy Agreement shall
not be terminated provided that Landlord shall not be obliged to reinstate the
Premises); or

 
(5)
Tenant has been well informed by the Landlord that the Premises has been
mortgaged, and the Premises is legally disposed of by the mortgagee during the
Term; or

 
(6)
This Tenancy Agreement cannot be performed continuously due to damage of the
Premises or the Building, or the facilities thereof caused by a force majeure
event (provided that if such damages to the Premises or the Building or the
facilities thereof can be repaired within [one hundred and eighty (180)] days
after the damage is incurred, this Tenancy Agreement shall not be terminated);
or

 
(7)
Not as a result of the act, fault or negligence of Tenant, any other event in
which the tenancy is prohibited by laws and regulations occurs; or

 
(8)
If Landlord wishes to sell, demolish, redevelop or refurbish the Building or any
part affecting the Premises by giving at least six months' prior notice to
Tenant.

Clause 11 – Interpretation and Miscellaneous

11.1           (Headings and indices) The headings and indices (if any) are
intended for guidance only and do not form part of this Tenancy Agreement nor
shall any of the provisions of this Tenancy Agreement be construed or
interpreted by reference thereto or in any way affected or limited thereby.

11.2           (Condonation not a waiver) No condoning excusing or overlooking
by the Landlord of any default breach or non-observance or non-performance by
the Tenant at any time or from time to time of any of the Tenant’s obligations
herein contained shall operate as a waiver of the Landlord’s rights hereunder in
respect of any continuing or subsequent default breach or non-observance or
non-performance or so as to defeat or affect in any way the rights and remedies
of the Landlord hereunder in respect of any such continuing or

 
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subsequent default or breach and no waiver by the Landlord shall be inferred
from or implied by anything done or omitted by the Landlord unless expressed in
writing and signed by the Landlord. Any consent given by the Landlord shall
operate as a consent only for the particular matter to which it relates and in
no way shall it be considered as a waiver or release of any of the provisions
hereof nor shall it be construed as dispensing with the necessity of obtaining
the specific written consent of the Landlord in the future, unless expressly so
provided.

11.3           (Parking spaces) In case Tenant needs parking spaces, it shall
apply to Landlord and subject to confirmation by Landlord, the parties shall
enter into separate licence agreement regarding relevant matters in relation to
the usage of such parking spaces.

11.4  (Right of first refusal) Before the Tenant enters into Tenancy Agreement,
the Landlord has informed the Tenant that the Premises has been mortgaged.
The Tenant hereby expressly undertakes that unless otherwise consented by the
Landlord and the mortgagee in advance in writing, Tenant irrevocably and
unconditionally agree to waive the rights it may have to be given notice or the
right of first refusal to purchase the Premises when the Landlord is to sell, or
the mortgagee is to dispose of the Premises in other manner.

11.5  (Sublet) With the prior written consent from Landlord, Tenant may sublet
all or part of the Premises to a Tenant’s subsidiary company, Tenant’s
actual-controlling company or a subsidiary company of Tenant’s
actual-controlling company (referred to as the “Sub-Tenant” hereinafter). In
case of sublet of the Premises, such sublet should be in compliance with the
design of unit division of the Building. The Tenant and the Sub-Tenant shall
adopt the template agreement for sublet provided by the Landlord and the sublet
agreement shall be submitted to Landlord for review and approval; otherwise, the
Tenant shall not enter into any sublet agreement. A copy of the agreement in
respect of such sublet shall be submitted to Landlord for its retention. The
Landlord has right to charge for RMB2,000 as administrative fee for each sublet.
The costs incurred by such sublet (including but not limited to Landlord’s
administrative disbursements and the legal fees for the legal services to be
rendered in connection with the preparation of the relevant documents regarding
the sublet) shall all be borne by Tenant. Should the income received by the
Tenant in accordance with the sublet agreement exceed the rental income received
by the Landlord in accordance with this Tenancy Agreement, the Landlord may be
entitled to 50% of the difference between such sublet income and the rental
income it receives under this Tenancy Agreement.

11.6  (Assignment) Without prior written consent by the Landlord, Tenant shall
not assign underlet or otherwise part with the possession of or transfer the
Premises or any part thereof or any interests therein nor permit or suffer any
arrangement or transaction whereby any person who is not a party to the Tenancy
Agreement obtains the use possession occupation or enjoyment of the Premises or
any part thereof irrespective of whether any rental or other consideration is
given therefore.

11.7  (Renewal) If Tenant desire to renew the tenancy of the Premises, Tenant
should give Landlord a written notice six (6) months prior to the expiration of
the Term (hereinafter referred to as the “Renewal Notice”). Landlord will
negotiate on the aforesaid renewal of the Premises with Tenant. The terms and
conditions in respect of the renewal of the Premises shall be that as may be
mutually agreed upon by both Landlord and Tenant. Unless otherwise agreed by the
parties, the Rent for each square meter of the Premises during the further
renewal lease term shall be the current Rent hereby provided or the open market
rental of

 
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office buildings of similar quality at the time when the renewal notice was
received by the Landlord, whichever is higher. Within thirty (30) days after the
Renewal Notice is issued, Tenant shall execute with Landlord a renewal lease
agreement in respect of the Premises (hereinafter referred to as “Renewal
Tenancy Agreement”).

If Tenant has not issued and delivered  the Renewal Notice to Landlord six (6)
months prior to the expiration of the Term, or the premises to be leased as
mentioned in the Renewal Notice are not all of the Premises, or the lease term
stipulated in the Renewal Notice is less than 24 months, or Tenant fails to
execute the Renewal Tenancy Agreement with Landlord pursuant to this Clause, or
the Tenant express in writing that it will not renew the lease, then Tenant
shall lose the right of renewal as stipulated in this Clause and Tenant shall be
deemed to have waived the first refusal to lease the Premises under the same
conditions.  Under such circumstance, Landlord shall be entitled to negotiate
with any other party to lease the Premises after the expiration of the tenancy
under this Tenancy Agreement and sign relevant tenancy agreement with such other
party.

11.8  (Landlord's rights regarding common areas and common facilities) The
Landlord reserves the right to remove cancel relocate or otherwise change or
carry out any alteration or addition or other works to the common areas and
common facilities of the Building and such other part or parts of the Building
(other than the Premises) and to restrict the access or rights of way thereof
from time to time and in such manner as the Landlord may in its absolute
discretion deem fit without the same constituting an actual or constructive
eviction of the Tenant and without incurring any liability whatsoever to the
Tenant therefor.

11.9
(Service of notices)

 
11.9.1 Any notice or communication to be given under or in connection with this
Tenancy Agreement by the Parties hereto shall be given in writing to the
following addresses, facsimile numbers and email addresses:

Landlord:
Bluewater Property Management Co., Ltd.

Attention:
Asset Manager

 
Address:
27/F, Nexus Center, No.19A East 3rd Ring Rd North , Beijing, China.

Post Code:
100020

Telephone:
(86-10) 5870-7788

Fax No.
:
(86-10) 5870-7799

Email:
lily.lui@kailongrei.com

Tenant:
      Pacific Asia Petroleum

Attention:
Austina

Address
:
No.B-118 Jiangguo Ave. The Exchange Building, Suite 1809. Beijing,

 
Post Code:   100022

 
Telephone:   010-65675587

Fax No.
:     010-65675508

 
Email:      Austina-yan@papetroleum.cn

 
or at such other address, facsimile number or email address as the party to whom
such notice is to be given shall have last notified the party giving notice. Any
notice delivered to the original address, facsimile number or email address by
one party should be deemed properly delivered before the party giving notice
receives such

 
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notice on the change of address.

 
11.9.2 Any notice or communication shall be deemed to be received, in the case
of a letter delivered by hand, at the time of delivery; or in the case of
facsimile, on the completion of transmission; in the case of express delivery by
post, 3 days after posting; or in the case of prepaid registered post, 5 days
after posting; in case of electronic mail, delivery of such mail to the email
system of the designated email address.

 
11.9.3 In addition to the notices and communications given pursuant to Clause
11.9.1 and 11.9.2 of Appendix One, the Parties hereto agree that upon the
take-over of the Premises by Tenant under this Tenancy Agreement, any notice to
be given to Tenant shall be deemed as has been delivered to Tenant if it is
addressed to Tenant and left at the Premises. The notice so delivered shall be
deemed to be received by Tenant on the business day following the date of
delivery.

11.10                      (Exclusion of warranties) This Tenancy Agreement sets
out the full agreement reached between the parties and supercedes all prior
representations, agreements, covenants or warranties. No other representations
or warranties have been made or given relating to the Landlord or the Tenant or
the Building or the Premises and if any such representation or warranty has been
made given or implied the same is hereby waived.

11.11                      (Name of Building) The Landlord reserves the right to
name the Building with any such name or style as it in its sole discretion may
determine and at any time and from time to time to change alter substitute or
abandon any such name without compensation to the Tenant Provided that the
Landlord shall give the Tenant and the postal and other relevant government
authorities not less than one months notice of its intention so to do.

11.12                      (Business License) Prior to signing this Tenancy
Agreement, the Tenant shall produce to the Landlord for inspection the business
license or registration certificate issued by the Government of the People’s
Republic of China and the relevant Power of Attorney and in case where the
Tenant is a corporation, the by-laws or the memorandum and articles of
association of the Tenant and a certified copy of the board minutes of the
Tenant authorizing the Tenant’s representative to execute this Tenancy
Agreement.  Without prejudice to the foregoing, the Tenant represents and
warrants to the Landlord that it has all requisite power and authority to
execute and deliver this Tenancy Agreement and to perform its obligations
hereunder, and that the person signing this Tenancy Agreement on behalf of the
Tenant has been duly authorized to do so by all necessary corporate or other
action of the Tenant.

11.13                      (Condition of Premises) Subject to the execution of
this Tenancy Agreement and compliance with and performance of the terms and
conditions under this Tenancy Agreement by the Tenant, the Premises shall be
delivered to the Tenant on “as is” basis as of the date on which possession
thereof shall be delivered to the Tenant by the Landlord. The Tenant shall
accept the Premises so delivered as tenantable and in accordance with this
Tenancy Agreement.

11.14                      (Costs and Expenses) Unless the laws and regulations
of the People’s Republic of China provide to the contrary in which event such
contrary provisions shall apply, all expenses including stamp duty for and
incidental to the creation of this Tenancy Agreement

 
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shall be borne equally by the Landlord and the Tenant. Each party shall bear its
own legal costs, if any.

11.15                      (Confidentiality) Information about the parties
business, operation, finance, material schemes and all of the provisions and
stipulations contained in the Tenancy Agreement and other documents in relation
to the lease (if any) are all confidential. Without prior consent of the other
party, neither party shall disclose such information or documents to any other
party, excluding disclosure to its employees or agents for the discussion,
draft, execution, performance of the lease, or disclosure as required by laws
and regulations, or disclosure of relevant information by the Landlord to its
professional consultants in the areas of financial, financing, accounting,
audit, taxation, legal and engineering in connection with the provision of such
consultancy services; or disclosure according to this Tenancy Agreement. Any
party breaching the duty of confidentiality shall be fully liable for the losses
therefore incurred to the other party. Without prejudice to abovementioned, the
parties promise as follows: the Tenant promises to strictly keep confidential
the management information of the Landlord, the Rent, Property Management Fee,
Rent-free Period, etc. and keep strictly confidential any other preferential
treatment granted by Landlord to Tenant, and would not disclose to any third
party without prior permit by Landlord. The Landlord promises to keep the
information of Tenant confidential, and not to disclose to any other party
without prior consent by Tenant.

11.16 (Governing Law and Jurisdiction) This Tenancy Agreement shall be governed
by and construed in accordance with the laws of the People’s Republic of China.
Any disputes arising in connection with this Tenancy Agreement between the
Parties hereto shall be resolved through negotiation. For disputes that cannot
be resolved through negotiations within a reasonable time or one party has
reason to believe that the disputes would not be resolved by friendly
negotiation, either party shall be entitled to bring such dispute to the
jurisdictional court of the district where the Premises is located.

11.17                      (Execution and Language) This Tenancy Agreement shall
be executed in Chinese version in quadruplicate, with Landlord holding Three (3)
original copies and Tenant holding One (1) original copy. The English
translation of this Tenancy Agreement, if so provided by the Landlord, is for
the Tenant’s reference only.  The Landlord does not warrant or represent that
the contents of the English translation and the meaning conveyed by its wordings
are the same as the Chinese version.  In case of conflict and inconsistency, the
Chinese version shall prevail.

 
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APPENDIX TWO – SPECIAL CONDITIONS

Unless otherwise expressly agreed, if there is any inconsistency between the
terms of any part of this Tenancy Agreement with those of the Special
Conditions, the terms of the Special Conditions shall prevail.

1.
(Rent-free Period)

1.1.
Provided that the Tenant shall lease the Premises for the entire Term and
observe each term and condition herein, the Landlord agrees to grant a Three (3)
months Rent-free Period. During the Rent-free Period, Tenant is not obliged to
pay the Rent, but shall pay the Property Management Fees and other fees as
specified in this Tenancy Agreement. The Rent-free Period is the period herein
below:

Commencing from August 1, 2010 and ending on August 31, 2010 (both days
inclusive);
Commencing from July 1, 2011 and ending on August 31, 2011 (both days
inclusive). The Rent-free Period shall not be suspended or extended unless for
force majeure events.

1.2.
If the actual period during which Tenant leases the Premises is shorter than the
Term for whatever reasons, and/or if Tenant breaches any of the stipulations of
this Tenancy Agreement, Landlord shall be entitled to claim against Tenant for
all of the Rent exempted during the Rent-Free Period.

 
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APPENDIX THREE: Floor Plan(s)

[beijingleasefloorplan.jpg]

 
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APPENDIX FOUR:                                                      Standard
Delivery Status

The Premises will be handed over to Party B in as-is condition with the
following
provisions:

10.1  600x600mm acoustic ceiling tiles and grills material to be provided by
Party A
and to be installed by Party B at Party B’s own cost;
10.2  600x1200 mm light fittings material to be provided by Party A and to be
installed by Party B at Party B’s own cost.;
10.3  VAV boxes, thermostatic controllers, air diffusers and return air grilles;
10.4  Complete sprinkler system;
10.5  Smoke detection system;
10.6  Off-white paint walls and columns;
10.7  Steel raised floor;
10.8  Double-glass door with electrical locker;
10.9  Fire door.

Party A will hand over the Premises and above material with brand new and
undamaged
conditions. At handover Party A or their nominated representative, Party B and
Party B’s
nominated fitout contractor will inspect the area to be leased and sign a
handover
document detailing agreement on the condition of the premises at the Handover
Date
along with any items that need to be remedied by Party A subsequent to the
Handover
Date.
APPENDIX FIVE –ACKNOWLEDGEMENT BY TENANT

Tenant hereby acknowledges the fact that the Premises have been mortgaged to the
Creditor (“Mortgagee”). Tenant fully understands and accepts that its rights
under the tenancy of the Premises cannot act/protest against the Mortgagee’s
rights as granted by PRC laws. In case that the Premises is disposed/sold
because of the Mortgagee’s execution of his rights as an mortgagee, Tenant
agrees to waive all of its legal rights of being notified and the right of first
refusal to purchase the Premises.

Notwithstanding the above, Tenant agrees to lease the Premises in accordance
with the terms and conditions of this Tenancy Agreement.

Acknowledged and agreed by Tenant:

__________________________________________________________ (Seal)
Authorized Representative:
Title:
Date:

 
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