Exhibit 10.1 Subscription Agreement


SUBSCRIPTION
AGREEMENT


	 	
THIS AGREEMENT PERTAINS TO SECURITIES THAT HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER ANY U.S.
STATE SECURITIES LAW. THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND ALL APPLICABLE U.S.
STATE SECURITIES LAWS OR ARE EXEMPT THEREFROM.






Fan Energy Inc.

1801 Broadway, Suite 720

Denver, Colorado 80202



Gentlemen:



        This
letter confirms the subscription of the undersigned (“Subscriber”),
together with each of the other persons identified on Exhibit A attached
hereto and incorporated herein by this reference (“Other
Subscribers”), to purchase, collectively, from Fan Energy Inc.
(“Company”), 3,250,000 shares of the Company’s $0.001 par value
common stock at a purchase price of $0.20 per share for a total purchase price
by Subscriber and the Other Subscribers of $650,000. The number of shares to be
purchased and total purchase price to be paid by Subscriber and each of the
Other Subscribers is set forth on Exhibit A. 


        The
Subscriber hereby subscribes to purchase the number of shares of common stock
(the “Shares”) of the Company set forth for Subscriber on Exhibit
A, and hereby agrees to pay the full subscription price of $0.20 per share
as set forth in this Subscription Agreement. The sale of Shares under this
Subscription Agreement is made subject to the terms, acknowledgments,
representations and conditions made by the Subscriber or the Company set forth
below. 


        1.
Purchase Price and Payment of Purchase Price.



        1.1. Purchase Price. As full
consideration for the sale of the Shares to Subscriber, Subscriber shall pay to
the Company to amount set forth for Subscriber on Exhibit A to purchase the
number of Shares referenced. Such amounts shall sometimes be referred
to herein as the "Purchase Price."


        1.2.
Payment of Purchase Price.  The Purchase Price shall be paid as follows:


	        	
        (a) Subscriber's check in the
amount of $50,000.00, receipt of which is acknowledged by the Company; and






	        	
        (b) Subscriber’s promissory
note (a “Subscriber’s Note”) in the amount of $600,000, due and
payable one-third on February 19, 2001, one-third on April 3, 2001 and the
balance on May 16, 2001. The Subscriber’s Note shall be in the form of
Exhibit B to this Subscription Agreement.





        2.
Investment Representations. Subscriber acknowledges, agrees and represents
to the Company, its Officers and Directors, as follows:


        2.1.
Other Information Furnished. Subscriber acknowledges that he or she has had
access to all available material and relevant information concerning the
Company, its management, its existing business and financial information. Such
information includes:


	        	
        (a) The Company's most recent
Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999;





	        	
        (b) The Prospectus of the
Company dated June 20, 2000; and





	        	
        (c) The Company's Form 10-QSB
for the quarter ended September 30, 2000.





In addition, Subscriber
acknowledges that he has full information and acknowledgment of a planned
transaction pursuant to which the Company shall acquire approximately $3.5
million of assets which are intended to be used by the Company following the
acquisition to manufacture, market and sell computer floppy disks. As a result
of the planned transaction, of which this Subscription Agreement is a part, it
is intended that control of the Company will be changed, the business of the
Company will be modified substantially and the future prospects of the business
will depend entirely upon any business success which the Company has in the new
business. As a result of the above information, the Subscriber has received all
disclosure of the intended business and other details of Subscriber’s
investment such that Subscriber is able to make an informed investment decision
regarding the subscription to purchase the Shares. All data or information
requested by Subscriber from the Company or any of its officers concerning the
Company and John Shebanow, and concerning the planned acquisition by the
Company, has been furnished to Subscriber. Subscriber has had an opportunity to
ask questions of, and to receive answers to and obtain additional information
from, the representatives of the Company and others who will be its officers
following this investment concerning the past and planned future business and
financial affairs of the Company, to the extent that such information is
possessed or could be acquired without unreasonable effort or expense. 


        
2.2. Purchase for Investment. Subscriber acknowledges that he or she
is the sole party in interest in making this purchase; that the Shares being
acquired herein are being acquired for his or her own account (or if a
fiduciary, for the account of a single principal), for investment purposes and
not with a view to, or for the purpose of, resale or distribution and no other
person has a direct or indirect beneficial interest in the Shares being
purchased. 


        
2.3. Ability to Bear Risk. Subscriber is a person or entity that is
able to bear the economic risk of an investment in the securities of the
Company. Subscriber has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the subscription
for Shares of the Company described in this Agreement and Subscriber does not
anticipate that Subscriber will need the funds being invested in the Company to
maintain Subscriber’s present standard of living for the foreseeable
future. In making this statement, the Subscriber has considered whether he or
she could afford to hold the securities subscribed for an indefinite period and
whether, at this time, he or she could afford a complete loss. The Shares being
purchased will not be transferable except in compliance with requirements set
out in this Subscription Agreement. 


        
2.4. Other Acknowledgments. Subscriber acknowledges, agrees and represents
to the Company, its officers and directors, as follows:


	 	

        (a)   Status of
Subscriber. Subscriber is either an Accredited Investor as defined in
Regulation D adopted by the United States Securities and Exchange Commission, as
set forth below [check each  applicable item] or a nonaccredited
investor, as set forth below [again, check each applicable item and 
complete missing information]:





	 	
An
Accredited Investor as defined in Regulation D adopted by the United States
Securities and Exchange Commission because one or more of the following applies
to Subscriber:





	        �

Initial if checked	        
(i) Together with his or her spouse has a net worth, inclusive of home,
furnishings and automobiles, of at least $1,000,000; or





	        �

Initial if checked	        
(ii) Subscriber has an annual income during the last two years, and anticipates
the same for the current year, of at least $200,000 (or $300,000 together with
spouse); or





	        �

Initial if checked	        
(iii) Subscriber is a trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares, whose purchase is
directed by a person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
prospective investment; or





	        �

Initial if checked	        
(iv) Subscriber is a trustee for a trust that is revocable by the grantor at any
time (including and IRA) and the grantor qualifies under either (i) or (ii)
above; or





	  J.J.S.   �

Initial if checked	        
(v) Subscriber is an entity, all of the beneficial owners of which qualify as
Accredited Investors as defined herein [describe entity and name all beneficial
owners: ___________________________________________________________]





	  J.J.S.   �

Initial if checked	        
(vi) Subscriber is an entity with total assets in excess of $5,000,000 which was
not formed for the specific purposes of investing in the Shares and which is one
of the following types of entities: corporation, partnership, business trust or
tax exempt organization described in Section 501(c)(3) of the Code. [describe
entity]    Limited Liability Company    
        .





        
Nonaccredited Investor:


	 	        
If investor is not an Accredited Investor as described above you are not
qualified to purchase shares in the offering described in this Subscription
Agreement.





        
3. Restricted Securities. The Subscription to purchase Shares is made
without registration under the Securities Act of 1933, as amended (the
“Act”), pursuant to an exemption from the registration requirements of
the Act. Sale of the Shares is also intended to be exempt from registration or
qualification requirements under applicable state laws. The Subscriber
acknowledges the following restrictions applicable to the Shares being purchased
pursuant to this Subscription Agreement: 


        3.1.
Subscriber understands (i) that an investment in the Shares is illiquid and
there is not now and will probably never be a trading market in the Shares; (ii)
he or she cannot sell or otherwise transfer the Shares unless and until the
securities have been registered under the Act and any applicable state
securities laws or unless exemptions from such registration requirements are
available to the reasonable satisfaction of the Company; (iii) the following
restrictive legend will be placed on certificates evidencing the Shares: 


	 	
“The
securities represented by this certificate may not be offered for sale, sold, or
otherwise transferred except pursuant to an effective registration statement
under the Securities Act of 1933 (“the Act”), or pursuant to an
exemption from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.”





(iv) that the Shares are
restricted securities as that term is defined under the Act and Subscriber will
not sell such securities without compliance with the terms of the Act and any
applicable state securities laws; and (v) that the Subscriber has no right to
require the Company to register the securities under federal or state securities
laws at any time or to join any future registration thereof. 


        3.2.
Subscriber acknowledges that no general solicitation or general advertising
(including communications published in a newspaper, newsletter, magazine or
other broadcast) has been received by Subscriber and that no public solicitation
or advertisement with respect to the offering or sale of the Shares has been
made to Subscriber. 


        3.3.
The Company will pay no commissions or similar remuneration directly or
indirectly to any person for soliciting or assisting in effecting this
subscription.


        
4. Confidential Information. Subscriber acknowledges that the
information and data received from the Company is confidential and intended to
be proprietary. The Company could sustain irreparable injury and its potential
competitors could gain an unwarranted advantage should such information become
available to others. Accordingly, Subscriber agrees that all information
furnished to Subscriber by the Company, and any other information provided to
the Subscriber marked Confidential, shall not be copied for any purpose, shall
be returned to the Company upon the Company’s written request therefor,
shall not be furnished to others without the prior written consent of the
Company, and shall be maintained in a confidential manner by the Subscriber.
Subscriber further agrees that any threatened or actual violation of his or her
agreements relating to such confidential information, or other materials, may be
enjoined in an appropriate legal proceeding instituted by the Company or may be
subject to a suit for damages by the Company. 


        
5.   Option to Purchase Additional Securities. Each of
Subscriber and the Other Subscribers shall have an option, exercisable
individually by the option holder at any time for 150 days from the date of this
subscription, to purchase an amount of common stock of the Company determined by
multiplying one-half of the amount of subscription from Exhibit A times
the option exercise price, which shall be the higher of (i) $0.20 per share, or
(ii) the average of the reported closing bid price for the Company’s common
stock for the 20 trading days ending the day before the option is exercised.
Upon exercise the total exercise price shall be paid in full. The option may not
be exercised at any time when any portion of Subscriber’s Subscription Note
remains unpaid. 


        
6. Subscription Irrevocable by Subscriber. The Company reserves the right to
reject, reduce or allot this subscription. However, this subscription is
irrevocable by the Subscriber.









SIGNATURE
PAGE


FAN ENERGY
INC.


SUBSCRIPTION
AGREEMENT


        This
subscription is subject to acceptance by FAN ENERGY INC. and is irrevocable by
Subscriber.



Dated this 5th day of January 2001.



APG Associates, LLC ("Subscriber")        
                Number of Shares: 3,250,000

3550 Barron Way, Suite 11B        
            
            
      Total Purchase Price$ 0.20 per share:

Reno, Nevada 89511



Telephone No.: (775) 826-8280



Signature:  /s/ John James Shebanow           

        John James Shebanow, Managing Member



Agreed to and accepted:


FAN ENERGY INC.


By  /s/
W. Grafham           

       Authorized Officer



Date Accepted: January 5, 2001.










EXHIBIT A


Name and Address of           Amount of                Dollar Amount of      Number of
   Subscriber               Subscription   Cash Paid   Subscription Notes      Shares
--------------------------------------------------------------------------------------

APG Associates, LLC            $  650,000    $ 50,000      $  600,000        3,250,000
3550 Barron Way, Suite 11B
Reno, Nevada 89511
                                ------------------------------------------------------
                                Total                                       $  650,000











EXHIBIT B


Promissory
Note


SECURED
INSTALLMENT PROMISSORY NOTE


        FOR
VALUE RECEIVED, the undersigned, hereafter the “Maker,” hereby
promises to pay to the order of Fan Energy Inc., a Nevada corporation
(“Payee”), the sum of the principal amount stated below
(“Principal Amount”), together with simple interest at a rate of 5.5%
per annum on the unpaid principal balance, payable in arrears, commencing with
the first of three monthly payments described below. The principal balance of
this Note shall be payable in three equal monthly installments described below.
All principal and all accrued interest hereon shall be due and payable on the
date of the final installment. 


        This
Note is given by Maker as partial consideration for the purchase by Maker of the
number of shares of $0.001 par value common stock of Payee described below (the
“Shares”). Maker agrees that Payee shall hold certificates
representing the Shares until such time as this Note and all accrued interest
has been paid in full and that if this Note is not paid when due or is otherwise
in default, Payee shall have the right, at its sole election, to cancel the
issuance of all or any portion of the Shares which have not been paid in full at
a purchase of $0.20 per share at the time of default or nonpayment. 


        This
Note is delivered pursuant to a Subscription Agreement pursuant to which Maker
agreed to purchase the Shares from the Payee, and this Note is subject to the
terms and conditions thereof. This Note and any accrued unpaid interest may be
prepaid in full by Maker without penalty at any time. 


        Maker,
any endorsers and other persons liable for the payment for this Note, expressly
grant to Payee the right to release or to agree not to sue any other person, or
to suspend the right to enforce this Note against any such person or to
otherwise discharge such person; and each Maker, endorser or other person liable
hereunder agrees that the exercise of such rights by the Payee will have no
effect upon the liability of any other person liable hereunder. Maker, any
endorser and any other person liable hereunder, waives delinquency in
collection, demand for payment, presentment for payment, protest, notice of
protest, notice of dishonor and all duty or obligation of Payee to effect,
protect, perfect, retain or enforce any security or payment of this Note or to
proceed against any collateral before otherwise enforcing this Note. Maker, any
endorser and any other person liable hereunder expressly agree that this Note
and any payment hereunder may be extended from time to time by Payee without in
any way affecting the liability of the Maker, any endorser or any other person
liable hereunder. Maker represents and warrants to Payee that this Note is
binding upon the undersigned Maker in accordance with its terms. This Note shall
be deemed to have been executed and delivered in Reno, Nevada, and its terms and
provisions shall be governed by the laws of the state of Nevada. The following
information is intended by the undersigned Maker to be a part of the terms of
this Note: 







Promissory Note
Page 2


     
   Principal Amount:        
              
              
   
            
        $ 600,000



        Date of Note:        
              
              
                
        
        January 5, 2001



        Number of Shares Purchased:        
             
      
    
        3,250,000



        Number of Shares Liened
Hereunder:           
         
  
     3,000,000



        Name and Address of Maker:        
              
          
        APG Associates, LLC
        
              
              
              
             
           
              
        3550 Barron Way, Suite 11B
        
              
              
              
                    
    
              
        Reno, Nevada 89511



        Amount of Each Monthly
Installment:       
            
       $ 200,000



        Due Date of First Installment:        
              
 
        
        February 19, 2001



        Due Date of Second Installment:     
         
        
             April 3, 2001



        Due Date of Final Installment:        
        
            
   
        May 16, 2001



        Signature of Maker:        
              
              
                
        /s/ John James Shebanow    

              
              
                 
              
              
                
        APG Associates, LLC
        
              
        
              
              
              
                
        John James Shebanow
        
              
                
              
              
              
        
        Managing Member


Approved and
Accepted:


FAN ENERGY INC.


By    
/s/ W. Grafham            

       Authorized Officer