ex10-2.htm


    
      
        

      

    

    
      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

            


    

     


    
      
         


      

      
        Page 4 of
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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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