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Exhibit 10.2
CONTRACT OF ENGAGEMENT
 

 
This Agreement is made as of 27 January 2009 between:
 
(1)
KKSH Holdings Ltd., registered in the British Virgin Islands (the “Service
Provider”); and

 
(2)
Pacific Asia Petroleum, Inc., a Delaware corporation (the “Company”).

 

 
Whereas:
 
(A)  
The Company wishes to engage the Service Provider to provide the services of the
Consultant including as Senior Vice President of the Company, for a period of
three years. The Service Provider has agreed to make the services of the
Consultant available to the Company.

 
(B)  
This Agreement identifies the terms on which the Service Provider will provide
consultancy services to the Company.

 

 
        1  
Interpretation

 
1.1  
In this Agreement (and any schedules to it):

 
“Confidential Information” means any and all confidential and/or proprietary
knowledge, data or information of the Group, any of their portfolio companies,
investors, clients and partners, including but not limited to, information
relating to financial matters, investments (and potential investments), budgets,
business plans, marketing plans, personal matters, business contacts, products,
processes, know-how, trade secrets and other works of authorship excluding in
any case any information that is or becomes (i) available to the public through
no fault of Service Provider, or (ii) independently developed from third
parties;
 
“Consultant” means Richard Grigg;
 
“Engagement” means the engagement of the Service Provider by the Company to
provide the services of the Consultant under this Agreement;
 
 “Group” means the Company, its ultimate holding company for the time being and
the subsidiary companies of the Company and its holding company for the time
being;
 
“Group Company” means a member of the Group and “Group Companies” will be
interpreted accordingly;
 
“RMB” shall mean the Renminbi, being the currency of the Peoples Republic of
China; and
 
“Services” means the services set out in Clause 2.1.
 
1.2  
References to any statutory provisions include any modifications or
re-enactments of those provisions.

 
1.3  
Headings are for convenience only and do not affect the interpretation of this
Agreement.

 

                                                           
 
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         2  
The Service Provider’s Services

 
2.1  
The Company agrees to engage the Service Provider and the Service Provider
agrees to make the Consultant available to the Company to perform the following
services:

 
(a)  
to perform the duties and undertake the responsibilities of Senior Vice
President (“SVP”) of the Company, including:

 
(i)  
to report to the Company’s Chief Executive Officer (“CEO”) and the Company’s
Board of Directors (“Board”) as required by the Company;

 
(ii)  
for carrying out the business of the Company in accordance with the Company’s
governing documents, and developing and managing business opportunities for the
Company, but specifically, and for the avoidance of doubt, the duties and
obligations required by this agreement will not be related to any of the
Company’s business activities in the Peoples Republic of China;

 
(b)  
to serve as an Executive Officer of the Company in the role of Senior Vice
President.

 
2.2  
The Company agrees that it shall grant full authorisation to the Consultant to
perform the Services in accordance with the scope of authority given to the
position of SVP pursuant to the Company’s governing documents.

 
2.3  
Notwithstanding anything to the contrary herein, Consultant shall serve as an
executive officer of the Company at the pleasure of the Company, and may be
removed at any time and for any or no reason from the position as an Executive
Officer with the Company or any Group Company.  In the event the Company removes
Consultant as an Executive Officer, the terms of this Agreement shall otherwise
remain in full force and effect in accordance with its terms.

 

 
         3  
Terms of Engagement

 
3.1  
Subject to clause 3.2, the Service Provider’s Engagement by the Company will
commence on  27 January 2009 or such other date that is notified to the Service
Provider by the Company (the “Start Date”).

 
3.2  
The term of the Engagement will be for 3 years (“Term”) commencing on the Start
Date and ending three years after the Start Date (“End Date”) unless terminated
earlier in accordance with Clause 10 of this Agreement.

 

 
         4  
The Service Provider’s Fee

 
4.1  
The Company will pay to the Service Provider the Fee for providing the Services
which shall be a total of the payments set out in this Clause 4.

 
4.2  
The basic fee for the Services will be RMB 919,000 per annum (“Fee”) to be
prorated and paid monthly. Such Fee will be reviewed thirty (30) days before
each anniversary of this agreement and may be increased by mutual consent with
such increase to be effective on the anniversary of this Agreement.

 

 
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4.3  
In addition to the Fee, the Company shall provide the following benefits to the
Consultant and his domestic partner (“Benefits”):

 
 
a)  
Medical Benefits and Life Assurance: the costs associated with provision of
coverage under a medical insurance policy for the Consultant and his partner,
providing for comprehensive private medical insurance and emergency evacuation
coverage, as well as coverage for the Consultant under a life assurance scheme,

 
b)  
International SOS Membership: the cost of membership which will include
emergency medical support and other associated medical services,

 
 
 
4.4  
In addition to the Fee and the Benefits, the Service Provider will be entitled
to an annual performance-based bonus (“Bonus”) award targeted at between 54% and
72% of the Fee, awardable in the discretion of the Company’s Board of Directors.

 

 
4.5  
The Company shall pay the Fee to the Service Provider throughout the Term of
this Agreement pursuant to this clause 4, notwithstanding that the Consultant
has been absent from performing the Services for any day or days throughout the
Term which fall within the following agreed periods of absences:

 
(a)  
In each year, up to 30 working days vacation which entitlement may be carried
forward to a subsequent year by mutual written agreement between the Company and
the Service Provider;

 
(b)  
In each year, up to 10 days per year (or such greater number of days as maybe
mutually agreed between the Company and the Service Provider from time to time)
for absence due to incapacity, which shall include sickness, accident or other
similar circumstances which prevent the Consultant from attending work which can
be carried forward into subsequent years, without limitation.

 
4.6  
The Service Provider’s reasonable out-of-pocket expenses incurred by the
Consultant in the provision of the Services may be reimbursed, subject to
obtaining prior written approval from the CEO of the Company. The Service
Provider shall not be obligated to incur any unreimbursed out-of-pocket expenses
to perform any Services.

 
4.7  
The Service Provider will submit monthly invoices to the Company for the Fee for
each month, one week before the last day of the calendar month to which such
invoice relates.

 
4.8  
The Service Provider will submit an invoice to the Company for any Bonus that
may be awarded subject to clause 4.4 above.

 
4.9  
Invoices may be submitted in any currency. The conversion exchange rate from
Chinese Renminbi to the currency of the invoice will be the average exchange
rate for the 30 days prior to the date of the invoice as defined at
www.oanda.com. The Company will pay the Service Provider within 14 days of
receiving an invoice in the currency of the invoice.

 

 
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         5  
Grant of Shares and Options

 
5.1  
In addition to the Fee, the Company may also issue to the Service Provider an
amount of shares and/or options in the Company from time to time as it may deem
appropriate and at the sole discretion of Company’s Board of Directors.

 

 
         6  
The Service Provider’s and Consultant’s Responsibilities

 
6.1  
The Service Provider shall cause the Consultant to, and the Consultant shall,
devote whatever time, attention and skill is needed to perform the Services to
the reasonable satisfaction of the Company unless prevented from doing so by ill
health or injury.

 
6.2  
The Service Provider will procure that the Consultant will execute an agreement
agreeing that while this Agreement is in effect and for 12 months after its
termination, neither the Service Provider nor the Consultant will accept any
employment or engage in any activity, without the written consent of the Board,
if the loyal and complete fulfillment of the Service Provider’s or Consultant’s
duties in such employment or engagement would inevitably require him to reveal
or utilize Confidential Information, as reasonably determined by the Board. By
agreement between the parties at any time the terms of this clause 6.2 may be
varied, reviewed or modified so long as any such variation, review or
modification is in writing and signed by both parties.

 

 
          7  
Office Facilities

 
The Company shall provide an office, secretarial and other office facilities and
services as are needed by the Service Provider as reasonably necessary for the
Consultant to provide the Services.
 
          8  
Independent Service Provider Status

 
8.1  
Nothing in this Agreement will make the Service Provider or the Consultant an
employee, agent or partner of the Company or any Group Company with respect to
the Services provided hereunder.  For the avoidance of doubt, the Service
Provider agrees that it shall be the employer of the Consultant for all purposes
hereunder.

 
8.2  
The Service Provider confirms that the Service Provider shall be responsible for
all income tax and other tax liabilities and all social security or similar
contributions in respect of the Fees and other compensation paid hereunder.

 

 
          9  
Confidentiality

 
9.1  
Without prejudice to the common law duties which the Service Provider owes to
the Company, or any Group Company, the Service Provider agrees, and agrees to
procure that the Consultant agrees, that the Service Provider and the Consultant
will not, except in the proper performance of the Services, either directly or
indirectly, use or disclose to any person, firm, company or entity any
Confidential Information. This restriction will continue to apply after the
termination of the Engagement  without limit in time but will not apply to
Confidential Information which becomes

 

 
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public other than through unauthorised disclosure by the Service Provider or the
Consultant or where required to be disclosed by law.  The Service Provider shall
procure that the Consultant will use the Consultant’s best endeavours to prevent
the unauthorised use or disclosure of such information.

 
9.2  
In the course of the Engagement, the Service Provider is likely to obtain
Confidential Information belonging or relating to Group Companies and other
persons.  The Service Provider will treat such information as if it falls within
the terms of Clause 9.1 and Clause 9.1 will apply with any necessary amendments
to such information.

 

 
       10  
Termination of Engagement

 
10.1  
The Engagement will terminate on the End Date unless terminated in accordance
with this Clause 10, except that the parties can agree to extend the contract by
mutual agreement before the expiry of the Term.

 
10.2  
Service Provider or the Company may terminate this Agreement for any reason or
for no reason at all at any time, with or without Cause (as defined below),
during or after the Term, by providing the other party with notice of
termination as provided in clause 10.4.  The Company shall pay the Service
Provider all outstanding fees and all other amounts, in each such case, actually
earned, accrued or owing as of the date of termination but not yet paid to the
Service Provider through the date of termination; provided that if the this
agreement is terminated by the Company without Cause (as defined below) then, in
addition to the payments described in this Section 10.2, the Company shall pay
the Service Provider a lump sum payment in an amount equal to two hundred and
fifteen percent (215%) of the Fee. All payments defined in this clause 10.2
shall be made within 30 days of the date of Termination.

 
10.3  
For the purposes of this agreement “Cause” shall mean (i) the Service Provider’s
or Consultant’s gross and willful misappropriation or theft of the Company’s or
its subsidiary’s or affiliate’s funds or property, (ii) the Service Provider’s
or Consultant’s commission of any fraud, misappropriation, embezzlement or
similar act, whether or not a punishable criminal offense, or the Service
Provider’s or Consultant’s conviction of or entering of a plea of nolo
contendere to a charge of any felony or crime involving dishonesty or moral
turpitude, (iii) the Service Provider’s or Consultant’s engagement in any
willful conduct that is injurious to the Company or its subsidiaries or
affiliates, (iv) the Service Provider’s or Consultant’s material breach of this
Agreement or failure to perform any of his material duties owed to the Company
or its subsidiaries or affiliates, or (v) the Service Provider’s or Consultant’s
commission of any act involving willful malfeasance or gross negligence or the
Service Provider’s or Consultant’s failure to act involving material
nonfeasance.

 
10.4  
Any termination of this Agreement by the Company or by the Service Provider
shall be communicated in writing to the other party before the date on which
such termination is proposed to take effect and, unless otherwise agreed to by
the Company and the Service Provider, shall be effective sixty (60) days after
such notice, except that there shall be no 60 day notice period in the event of
the Agreement being terminated for “Cause” by the Company

 

 
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        10.5 
From and after the termination of this Agreement by the Company or by the
Service Provider, the Service Provider will procure that the Consultant does or
causes to be done all other things and acts, to execute, deliver, file and
perform or cause to be executed, delivered, filed and performed all other
instruments, documents and certificates as may be reasonably requested by the
Company or are necessary, proper or advisable in order to effect the removal,
transition, substitution or modification of the Consultant as an officer, agent,
affiliate, director, manager or authorized representative of the Company or any
other positions that the Consultant holds with the Company or its subsidiaries
or affiliates providing the cost of doing such things is paid for by the
Company.

10.6  
Notwithstanding anything to the contrary herein, in the event Richard Grigg no
longer performs the Services required hereunder to the Company on behalf of the
Service Provider as a result of his own action or the actions of the Service
Provider, then the Company may terminate this Agreement for “Cause”.

 

 
        11  
Dispute Resolution

 
Any dispute or claim arising out of or in connection with any provision of this
Agreement will be finally settled by binding arbitration in London, England, in
accordance with the rules of the International Chamber of Commerce ("ICC") by
one arbitrator appointed in accordance with said rules.  The arbitrator shall
apply English law, without reference to rules of conflicts of law or rules of
statutory arbitration, to the resolution of any dispute.  Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.  Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for preliminary or interim equitable relief, or to compel
arbitration in accordance with this paragraph, without breach of this
arbitration provision.
 

 
       12  
Miscellaneous

 
12.1  
This Agreement may only be modified by the written agreement of the parties.

 
12.2  
No party can assign this Agreement to anyone else.

 
12.3  
References in this Agreement to rules, regulations, policies, handbooks or other
similar documents which supplement it, are referred to in it or describe any
retirement or other benefits arrangement are references to the versions or forms
of the relevant documents as amended or updated from time to time.

 
12.4  
This Agreement represents the entire agreement between the parties with respect
to the engagement of the Service Provider by the Company and supersedes any
previous written or oral agreement between the parties in relation to the
matters dealt with in them.

 
12.5  
If any provision (or part of any provision) of this Agreement is invalid or
unenforceable, the validity or enforceability of the remaining provisions (or
parts of a provision) shall not be affected and the other provisions (or parts
of a provision) shall remain in full force and effect as if the invalid or
unenforceable parts had been deleted.

 
12.6  
No party’s rights or powers under this Agreement will be affected if:

 

 
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(a)              one party delays in enforcing any provision of this Agreement;
or
 
(b)              one party grants time to the other party.
 
12.7  
If any party agrees to waive its rights under a provision of this Agreement,
that waiver will only be effective if it is in writing and it is signed by the
Service Provider. A party’s agreement to waive any breach of any term or
condition of this Agreement will not be regarded as a waiver of any subsequent
breach of the same term or condition or a different term or condition.

 

 
13    
Governing Law

 
This Agreement will be governed by and construed in accordance with the laws of
England and Wales.  The Service Provider and the Company submit to the
non-exclusive jurisdiction of the English courts in relation to any dispute
arising in connection with this Agreement.
 

Signed for and on behalf of
 
KKSH Holdings Ltd
         
/s/ Richard Grigg
 
Name and Title:  Richard Grigg, Director
 
Date:  January 27, 2009
     
Signed for and on behalf of
 
Pacific Asia Petroleum, Inc.
         
/s/ Frank C. Ingriselli
 
Name and Title:  Frank C. Ingriselli, Chief Executive Officer
 
Date:  January 28, 2009
 

 
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