pfab_ex1023.htm


     

     

    Exhibit
10.23

     

     

    Amendment
to the Contract of the Chinese-Foreign Equity Joint Venture Inner Mongolia
Sunrise Petroleum Co. Ltd.,

    Promissory
Note, by and between Beijing Jin Run Hang Da Technology Company Ltd. and Inner
Mongolia Production Company (HK) Ltd., dated December 31, 2009, and

    Promissory
Note, by and between Inner
Mongolia Sunrise Petroleum Co. Ltd. and Inner Mongolia Production Company
(HK) Ltd., dated December 31, 2009

     

     

    
      
        
        

      

      
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    AMENDMENT
TO THE CONTRACT OF

    THE
CHINESE-FOREIGN EQUITY JOINT VENTURE

    INNER
MONGOLIA SUNRISE PETROLEUM CO. LTD.

    AND

    PROMISSORY
NOTE

     

    THIS
AMENDMENT TO THE CONTRACT OF THE CHINESE-FOREIGN EQUITY JOINT VENTURE INNER
MONGOLIA SUNRISE PETROLEUM CO. LTD. AND PROMISSORY NOTE, dated as of December
31, 2009 (this “Amendment”),
by and between BEIJING JIN RUN HANG DA TECHNOLOGY COMPANY LTD (“BJHTC”)
and INNER MONGOLIA PRODUCTION COMPANY (HK) LTD (“IMPCO
HK”), amends (i) that certain Contract of the Chinese-Foreign Equity
Joint Venture Inner Mongolia Sunrise Petroleum Co. Ltd., dated October 25, 2006
(the “JV
Agreement”), and (ii) that certain Promissory Note, dated November 14,
2006, as amended September 12, 2008, issued by BJHTC to IMPCO HK (as amended,
the “Promissory
Note”).  Capitalized terms used herein that are not otherwise
defined herein shall have the meanings ascribed to them in the JV
Agreement.

     

     

    WITNESSETH

     

    A. BJHTC and
IMPCO HK (the “Parties”)
entered into the JV Agreement which sets forth the terms and conditions of the
Parties’ Chinese-foreign joint venture Inner Mongolia Sunrise Petroleum Co. Ltd.
(“Sunrise”),
a joint venture company 97% owned by IMPCO HK and 3% owned by BJHTC, including
provisions regarding Sunrise’s business purpose and scope, governance and
management, the obligations of the Parties with respect to Sunrise and their
respective  investment amounts, and other customary
provisions.

     

     

    
      
        
        

      

      
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    B. In
connection with the capitalization of Sunrise, IMPCO HK loaned the principal sum
of RMB 3,143,308.44 to BJHTC (“BJHTC
Loan”), and BJHTC promised to repay to IMPCO HK the same, to be used by
BJHTC to meet its obligations to transfer paid in capital to Sunrise, which
funds were to be used by Sunrise to fund various operations to be carried out by
Sunrise.

     

    C. The BJHTC
Loan was documented through the Promissory Note, which Promissory Note matures
on November 14, 2014 and is repayable only through BJHTC’s share of profits
derived through its ownership in Sunrise.

     

    D. At the
time of formation of Sunrise, IMPCO HK and its parent company, Pacific Asia
Petroleum, Inc. (“PAP”),
intended to enter into contracts for crude oil trading and to aggressively grow
other business opportunities through Sunrise as PAP’s sole business entity that
could conduct the contemplated operations in China at such time, which planned
operations required that PAP, through IMPCO HK, contribute significant capital
to Sunrise to bring the equity ownership ratio of Sunrise to 3% BJHTC and 97%
IMPCO HK.

     

    E. During
2006 and 2007, a number of capital contributions from both IMPCO HK and BJHTC
were made into Sunrise, without regard for Sunrise’s registered capital limits,
and which resulted in BJHTC’s equity ownership share of Sunrise to equal more
than 3% of the registered capital of Sunrise, in part based on the expectation
that IMPCO HK would later provide additional capital to Sunrise to maintain its
intended 97% equity ownership share of Sunrise as agreed upon between the
Parties.

     

    F. Because
no operations have commenced to date under Sunrise and Sunrise currently has
accumulated losses, and because PAP has commenced other ventures in China
through other entities, the Parties no longer believe there is a need to
capitalize Sunrise at its current level and desire to amend the JV Agreement,
the Promissory Note, and their respective obligations with respect to Sunrise in
order to realign the capital to be consistent with the Parties’ intended 97%
IMPCO HK and 3% BJHTC Sunrise equity ownership allocation, reduce the capital
allocated to BJHTC, and reduce BJHTC’s obligations to IMPCO HK under the
Promissory Note.

     

     

    
      
        
        

      

      
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    NOW, THEREFORE, in
consideration of the premises, and the mutual covenants and agreements set forth
herein, the Parties agree as follows:

     

    Section
1.1                      Adjustment of Sunrise
Recorded Capital to Registered Capital.  The Parties hereby
agree to adjust the recorded capital of Sunrise to the registered capital under
Chinese law, and the corresponding shares of Sunrise issued to each of the
Parties, as follows:

     

    
      	
                Party

            	 	
              Sunrise
      Paid-In Capital Pre-Adjustment (RMB)

            	 	 	
              Paid-In
      Capital Adjustment Amount (RMB)

            	 	 	
              Sunrise
      Paid-In Capital Post-Adjustment (RMB)

            	 	 	
              Sunrise
      Equity Ownership Interest Post-Adjustment

            	 
	
              IMPCO
      HK

            	 	 	11,816,858.00	 	 	 	(176,858.00	)	 	 	11,640,000.00	 	 	 	97	%
	
              BJHTC

            	 	 	3,143,308.44	 	 	 	(2,783,308.44	)	 	 	360,000.00	 	 	 	3	%
	
              TOTAL:

            	 	 	14,960,166.44	 	 	 	(2,960,166.44	)	 	 	12,000,000.00	 	 	 	100	%


    

    


     

    Section
1.2                      Amendment and Replacement of
Promissory
Note.                                                                                                The
Parties hereby amend the Promissory Note to reduce the principal amount owned by
BJHTC to IMPCO HK thereunder to RMB 360,000.00 and to eliminate interest payable
on the prior and revised principal, to be documented through the entry into a
successor promissory note attached hereto as Exhibit A (the “BJHTC Promissory
Note”), which reduction reflects the adjustment of the BJHTC share
capital in Sunrise as set forth in Section 1.1 above.

     

    Section
1.3                      Entry into Sunrise
Promissory
Note.                                                                The
Parties hereby agree that the total excess capital for both IMPCO HK and BJHTC
in the amount of RMB 2,960,166.44, which is equal to the sum of reduced
principal amount of RMB 2,783,308.44 under the BJHTC Promissory Note as set
forth in Section 1.2 above and RMB 176,858.00, be reclassified as a note payable
on demand due from Sunrise to IMPCO HK, to be documented through the entry into
the promissory note attached hereto as Exhibit B (the “Sunrise
Promissory Note”).

     

     

    
      
        
        

      

      
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    Section
1.4                      Entire Agreement; Continued
Validity.                                                                           
Except as expressly set forth in this Amendment, all other provisions of the JV
Agreement, as amended to date, shall remain in full force and
effect.

     

    IN WITNESS WHEREOF, the
Parties hereto have caused this Amendment to be duly executed by their
respective authorized signatories as of the date first indicated
above.

     

    BEIJING
JIN RUN HANG DA TECHNOLOGY COMPANY LTD

    


    By: /s/ Li Jin Hou

    Name: Li
Jin
Hou                                                            

    Title: Legal
Representative                                                                        

     

    INNER
MONGOLIA PRODUCTION

    COMPANY
(HK) LTD

    


    By: /s/ Richard C.
Grigg

    Name:
Richard C. Grigg

    Title:
Director


    
      
         


      

      
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    EXHIBIT
A

     

    BJHTC
PROMISSORY NOTE

     

     

    
      
        
        

      

      
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    PROMISSORY
NOTE

    
       

      
        	 RMB 360,000.00                                                                                                           	 	 December 31,
    2009


      

       

    

     

     

    FOR VALUE RECEIVED, BEJING JIN RUN
HANG DA TECHNOLOGY COMPANY LTD (“Obligor”) hereby promises to pay to the
order of INNER MONGOLIA
PRODUCTION COMPANY (HK) LTD and its successors, assigns, and subsequent
holders of this Note (“Holder”), in lawful money of the United States of
America, or lawful money of the People’s Republic of China (at Holder’s choice),
at such place as Holder may from time to time designate, the principal sum of
RMB 360,000.00 (RMB Three Hundred Sixty Thousand), less all banking charges
incurred, or such lesser amount as shall equal the outstanding principal amount
hereof, together with and any and all costs of collection, all in accordance
with the following provisions.  All unpaid principal, together with
any other amounts payable hereunder, shall be due and payable on November 14,
2014 (the “Maturity Date”).

     

     

    1. Unpaid
principal on this Note shall be payable at maturity.

     

     

    2. This Note
may be prepaid in whole or in part at any time without penalty or
premium.  All payments hereunder shall be applied first to any costs
and expenses of enforcement and collection, then to principal.

     

     

    3. Obligor
hereby agrees to pay all costs and expenses, including reasonable attorneys’
fees, incurred by Holder and arising out of the collection of any amounts due
hereunder or the enforcement of any rights provided for herein.

     

     

    4. Reserved.

     

     

    5. This Note
shall be governed by and construed in accordance with the laws of the State of
New York.  The parties agree that any State District Court or United
States District Court located in New York shall have exclusive jurisdiction over
any case or controversy arising hereunder, and shall be the proper forum in
which to adjudicate such case or controversy.

     

    


     

    [SIGNATURE PAGES FOLLOW]

     


    
      
         


      

      
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    IN WITNESS WHEREOF, Obligor and Holder
have executed this Note as of the day and year first written above.

     

    OBLIGOR:

    


    BEJING
JIN RUN HANG DA TECHNOLOGY COMPANY LTD

    By: /s/ Li Jin Hou

    Name: Li
Jin
Hou                                                           

    Title: Legal
Representative                                                                    

     

    HOLDER:

     

    INNER
MONGOLIA PRODUCTION

    COMPANY
(HK) LTD

    By: /s/ Richard C.
Grigg

    Name:
Richard C. Grigg

    Title:
Director


    
      
         


      

      
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    EXHIBIT
B

     

    SUNRISE
PROMISSORY NOTE

     

    


     


    
      
         


      

      
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    PROMISSORY
NOTE

     

    
      	RMB 2,960,166.44                                                                                                       	 	 December 31,
    2009


    

     

                                                                                                                           

     

     

    FOR VALUE RECEIVED, INNER MONGOLIA
SUNRISE PETROLEUM CO. LTD (“Obligor”) hereby promises to pay to the order
of INNER MONGOLIA PRODUCTION
COMPANY (HK) LTD and its successors, assigns, and subsequent holders of
this Note (“Holder”), in lawful money of the United States of America, or lawful
money of the People’s Republic of China (at Holder’s choice), at such place as
Holder may from time to time designate, the principal sum of RMB 2,960,166.44
(RMB Two Million Nine Hundred Sixty Thousand One Hundred Sixty Six and Forty
Four Cents), less all banking charges incurred, or such lesser amount as shall
equal the outstanding principal amount hereof, together with and any and all
costs of collection, all in accordance with the following
provisions.  All unpaid principal, together with any other amounts
payable hereunder, shall be due and payable on upon demand by the Holder (the
“Maturity Date”).

     

    1. 
Unpaid
principal on this Note shall be payable at maturity.

     

    2. This Note
may be prepaid in whole or in part at any time without penalty or
premium.  All payments hereunder shall be applied first to any costs
and expenses of enforcement and collection, then to principal.

     

    3. Obligor
hereby agrees to pay all costs and expenses, including reasonable attorneys’
fees, incurred by Holder and arising out of the collection of any amounts due
hereunder or the enforcement of any rights provided for herein.

     

    4. Reserved.

     

    5. This Note
shall be governed by and construed in accordance with the laws of the State of
New York.  The parties agree that any State District Court or United
States District Court located in New York shall have exclusive jurisdiction over
any case or controversy arising hereunder, and shall be the proper forum in
which to adjudicate such case or controversy.

     

    [SIGNATURE
PAGES FOLLOW]

     


    
      
         


      

      
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    IN WITNESS WHEREOF, Obligor and Holder
have executed this Note as of the day and year first written above.

     

    OBLIGOR:

    


    INNER
MONGOLIA SUNRISE PETROLEUM CO. LTD

    By:  /s/ Frank C.
Ingriselli

    Name:  Frank
C.
Ingriselli                                                           

    Title: 
Director                                                                    

     

    HOLDER:

     

    INNER
MONGOLIA PRODUCTION

    COMPANY
(HK) LTD

    By: /s/ Richard C.
Grigg

    Name:
Richard C. Grigg

    Title:
Director

    


     

    AGREED AND ACKNOWLEDGED BY
OBLIGOR EQUITY HOLDERS:

     

    BEIJING
JIN RUN HANG DA TECHNOLOGY COMPANY LTD

    By: /s/ Li Jin Hou

    Name: Li
Jin
Hou                                                            

    Title: Legal
Representative                                                                     

     

    INNER
MONGOLIA PRODUCTION

    COMPANY
(HK) LTD

    By: /s/ Richard C.
Grigg

    Name:
Richard C. Grigg

    Title:
Director

    


    


     


    
      
         


      

      
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