Document:

exv10w14

 

Exhibit 10.14

Jing Hui Tong Real Estate Management Company

and

Inner Mongolia Sunrise Petroleum Limited

 

NO.118 Jian Guo Lu Yi, Beijing 100022 P.C,

The Exchange-Beijing

Room 09 Floor 18

Tenancy Agreement

 

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TENANCY AGREEMENT

	 	 	 	 	 
	Clause 1 DEFINITIONS
	 	 	3	 
	Clause 2 STATUS OF THE PREMISES
	 	 	4	 
	Clause 3 PURPOSE OF THE TENANCY
	 	 	5	 
	Clause 4 DELIVERY DATE AND LEASE TERM
	 	 	5	 
	Clause 5 RENT, PAYMENT METHOD AND TIME LIMIT
	 	 	6	 
	Clause 6 DEPOSIT AND OTHER FEES
	 	 	7	 
	Clause 7 USE OF THE PREMISES AND RESPONSIBILITY FOR REPAIR AND
MAINTENANCE
	 	 	9	 
	Clause 8 REMODELLING
	 	 	10	 
	Clause 9 CONDITIONS OF THE PREMISES AT SURRENDER
	 	 	11	 
	Clause 10 SUBLET, TRANSFER AND EXCHANGE
	 	 	12	 
	Clause 11 TERMINATION OF THIS AGREEMENT
	 	 	13	 
	Clause 12 DEFAULT LIABLITIES
	 	 	15	 
	Clause 13 RENEWAL
	 	 	16	 
	Clause 14 RIGHT OF ACCESS
	 	 	17	 
	Clause 15 OBLIGATIONS OF THE LANDLORD
	 	 	18	 
	Clause 16 OBLIGATIONS OF THE TENANT
	 	 	19	 
	Clause 17 FORCE MAJEURE
	 	 	23	 
	Clause 18 GOVERNING LAW
	 	 	24	 
	Clause19 PROPERTY MANAGER
	 	 	24	 
	Clause 20 CHANGE OF OWNERSHIP OF THE PREMISES
	 	 	24	 
	Clause 21 NOTICE
	 	 	25	 
	Clause 22 INSURANCE
	 	 	26	 
	Clause 23 WAIVER, PARTIAL EFFECTIVENESS
	 	 	26	 
	Clause 24 LEGAL COSTS, TAXES AND FEES AND OTHER EXPENSES
	 	 	26	 
	Clause25 MISCELLANEOUS
	 	 	27	 

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TENANCY AGREEMENT

(Serial No.    )    

THIS AGREEMENT IS ENTERED INTO BETWEEN:

LANDLORD: Jing Hui Tong Real Estate Management Company;

and

TENANT: Inner Mongolia Sunrise Petroleum Limited

In accordance with the P.R.C Contract Law and the Urban Premises Leasing Administration Regulation
(hereinafter called the “Regulations”), the Landlord and the Tenant (hereinafter collectively
known as the “Parties”), on the basis of equality, voluntariness, fairness and integrity and
through friendly consultations, have reached unanimity and entered into this agreement in respect
of the Tenant’s leasing of the premises which the Landlord is legally entitled to lease.

Clause 1 DEFINITIONS

	1.1	 	Unless the context requires otherwise, the following expressions shall have the following
meanings:

	 	1.1.1	 	“Agreement” means this Tenancy Agreement, including any further amendment
and/or supplement thereto, as agreed upon by the Parties hereto in writing.
	 
	 	1.1.2	 	“Building” means the building situated at 118 Jian Guo Lu Yi, Chaoyang
District, Beijing and known as “Exchange Beijing” or such other name as the Landlord
may use at its own discretion.
	 
	 	1.1.3	 	“Building Occupant Handbook” means the “Exchange Beijing Building Occupant
Handbook” as formulated by the Landlord or the property manager of the Building (the
“Property Manager”) and notified to the Tenant from time to time.
	 
	 	1.1.4	 	“Business Hours” means the hours from 8:00-20:00 on weekdays (Monday to
Friday) and 8:00-13:00 on Saturdays, and other holidays as confirmed by the Landlord
or the management company (including

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	 	 	 	the continuous holidays which are recommended by the government to enterprises
and institutions).

	 	1.1.5	 	“Commencement Date” means 8-16-2007.
	 
	 	1.1.6	 	“Fit-out Period” means the period stipulated in Clause 4.4 herein below.
	 
	 	1.1.7	 	“Fit-out Works Manual” means the “Exchange Beijing Fit-out Works Manual” as
formulated by the Landlord or the Property Manager and notified to the Tenant from
time to time.
	 
	 	1.1.8	 	“Premises” means the premises located at Unit 09, Floor 18 of the Building,
which shall not include the facilities, installations, wiring, ducting, piping and/or
other things or parts that are for public use.
	 
	 	1.1.9	 	“Property Management Fee” means the property management fee as stipulated in
Clause 5 of this Agreement.
	 
	 	1.1.10	 	“Rent” means the rent for the Premises as stipulated in Clause 5.1 of this
Agreement.
	 
	 	1.1.11	 	“Rent-Free Period” means the rent-free period stipulated in Clause 4.5 hereinbelow.
	 
	 	1.1.12	 	“Security Deposit” means the deposit as stipulated in Clause 6.1 of this Agreement.

Clause 2 STATUS OF THE PREMISES

	2.1	 	The Landlord hereby leases to the Tenant the Premises, which cover an area of 175.22 square
meters (hereinafter called the” Leased Area”). The Landlord and the Tenant hereby agree and
confirm that, even if there is any discrepancy between the Leased Area of the Premises
stipulated herein and such construction area, leased area or the area(s) calculated in any
other ways as measured or registered by any person, organization or authority, both parties
hereto shall make no adjustment to the Rent, Property Management Fee or other amounts which
are calculated on the basis of the Leased Area of the Premises. The floor plan of the Premises
is attached in Appendix 1 to this Agreement.

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	2.2	 	The standard conditions and facilities of the Premises are set out in Appendix 2. The
Parties agree that Appendix 2 shall form the basis for inspection of the Premises when the
Landlord delivers the Premises to the Tenant, and when, upon expiration or early termination
of this Agreement, the Tenant returns the Premises to the Landlord.

Clause 3 PURPOSE OF THE TENANCY

	3.1	 	The Tenant hereby undertakes to the Landlord that the Premises shall be used as office, and
the Tenant shall observe the national and municipal regulations in respect of property use and
property management. The Tenant may, subject to the Landlord’s permission, allow watchmen to
stay in the Premises overnight for security reasons but the names of the watchmen shall first
be registered with the Landlord prior to its giving such permission.

	3.2	 	The Tenant hereby warrants that the aforesaid purpose of the Premises shall not change within
the lease term without the prior written consent of the Landlord and the approval from
relevant authority (if such approval is required pursuant to relevant regulations).

Clause 4 DELIVERY DATE AND LEASE TERM

	4.1	 	The lease term of the Premises shall be from 8-16-2007 to 8-15-2009 (hereinafter called the
“Lease Term” ).

	4.2	 	On the day of the receipt of the first month’s Rent, Property Management Fee and Security
Deposit, or on the Commencement Date (whichever is later), the Tenant shall carry out, at the
place designated by the Landlord, all formalities necessary for the delivery of the Premises.
The Tenant shall furbish and decorate the Premises only after the completion of the
abovementioned formalities in accordance with the Building Occupant Handbook and Fit-out Works
Manual. If the Tenant fails to enter the Premises on the Commencement Date, the Landlord
reserves the right to collect from the Tenant, on the Commencement Date, the Rent, the
Property Management Fee and other fees and charges as set out in this Agreement. If the
Tenant, through fault of its own, fails to complete such formalities within fifteen (15) days
from the Commencement Date, the Landlord has the right to terminate this Agreement by giving a
written notice to the Tenant, and to forfeit the Security Deposit and any Rent and/or Property
Management Fee paid by the Tenant in advance (if any). For the avoidance of doubt, before the
commencement of the fit-out works on the Premises, the Tenant shall pay to the Landlord a
deposit for fit-out works in the amount specified in the Fit-out Works Manual. Such deposit
for fit-out works is separate to and is not included in the Security

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	 	 	Deposit, and the refund and deduction of such deposit for fit-out works shall be subject to
relevant provisions of the Fit-out Works Manual.
	 
	4.3	 	Save where the Tenant is in breach of this Agreement, should the Landlord be unable to
deliver the Premises to the Tenant within thirty (30) days from the Commencement Date, the
Tenant reserves the right to terminate this Agreement by giving a prior written notice to the
Landlord. In such case, the Landlord shall refund to the Tenant the Security Deposit and the
Rent already paid by the Tenant without any interest accrued thereon.

	4.4	 	Unless otherwise provided in this Agreement and subject to no breach of this Agreement by the
Tenant during the Lease Term, the Landlord agrees to give the Tenant a 1.5 -month
Fit-out Period commencing from the Commencement Date. During the Fit-out Period, the Tenant is
not obliged to pay the Rent stipulated in Clause 5.1 hereinbelow, but is obliged to pay the
Property Management Fees and other fees. The Fit-out Period is the period hereinbelow:
	 
	 	 	period commencing from 7-1-2007 and ending on 8-15-2007.

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

Clause 5 RENT, PAYMENT METHOD AND TIME LIMIT

	5.1	 	The Parties agree that the daily Rent per square meter of the Premises shall be RMB170.00;
and the total monthly Rent (calculated as 30.5 days equal 1 month) shall be
RMB(29,787.40). The Rent payable hereunder is exclusive of the charges for the Premises’
utilities (including but not limited to electricity, heating, air-conditioning and
telecommunications), the Property Management Fee and other expenses incurred by the Tenant
during the Lease Term.

	5.2	 	The Rent of the Premises shall not be adjusted within the Lease Term.

	5.3	 	The Tenant shall pay the first month’s Rent on the date of the execution of this Agreement,
and shall, on or before the 5th day of each calendar month, pay to the Landlord the
Rent for such month. The Rent for the first month and the last month of the Lease Term shall
be paid pro rata based on the number of days of actual occupation by the Tenant. The Rent
shall be paid without any deduction, counterclaim or set off by the Tenant.

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	5.4	 	All amounts (including without limitation to the Rent, the Property Management Fee and other
fees and expenses) payable by the Tenant to the Landlord hereunder shall be wired to the bank
account below or other designated by the Landlord, or by other method as may be designated by
the Landlord from time to time:
	 
	 	 	Receiver:
	 
	 	 	Jing Hui Tong Real Estate Management Company
	 
	 	 	Opening bank:
	 
	 	 	Charter Bank of England, Beijing Branch
	 
	 	 	Account: 3528490943
	 
	 	 	Any handling charge of bank incurred in such payment made by the Tenant and in any payment
made by the Landlord / Property Manager to the Tenant (such as to return the Deposit, the
rent and/or the Property Management Fee over paid by the Tenant) shall be borne by the
Tenant. The Landlord shall be entitled to deduct beforehand such charge of bank from the
amount to be returned to the Tenant.

Clause 6 DEPOSIT AND OTHER FEES

	6.1	 	The Landlord and the Tenant agree that, on the date of the execution of this Agreement, the
Tenant shall pay to the Landlord a security deposit (the “Security Deposit”). The Security
Deposit shall be the sum of three (3) months’ Rent and three (3)
months’ Property Management Fee of the Premises amounting to
RMB[104,285.69]. The Landlord shall have the right to hold the Security Deposit,
throughout the Lease Term as security for due performance by the Tenant of its obligations
under this Agreement. Upon the payment of the Security Deposit, the Landlord shall issue a
receipt to the Tenant.

	6.2	 	The Tenant may not apply the Security Deposit toward any payment due under this Agreement, or
performance of any other contractual or non-contractual obligation of the Tenant. The Tenant
may not assign the right of refund of the Security Deposit nor offer it as a pledge or
collateral to any third party for any purpose.

	6.3	 	The Landlord shall, at any time during the Lease Term, have the right to (in addition to
any other right or remedy) deduct from the Security Deposit any payment due from the Tenant
under this Agreement and/or any loss sustained by the Landlord as a direct or indirect result
of any breach of this Agreement by the Tenant. In such case, the Landlord shall notify the
Tenant in writing after making such deduction. If the Landlord makes any deduction from the
Security Deposit in accordance herewith, the Tenant shall, within seven (7) days of demand by
the Landlord, pay to the Landlord a further deposit equal to the amount so deducted. Failure
by the Tenant to pay such additional deposit

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	 	 	shall entitle the Landlord to forthwith re-enter the Premises and to terminate this
Agreement as herein provided.
	 
	6.4	 	Subject to the other provisions of this Clause 6, the Security Deposit and any further
deposits paid (or any balance thereof subject to the Landlord’s right of deduction hereunder)
shall be refunded by the Landlord to the Tenant without interest within thirty (30) days after
the fulfillment of all the following conditions: (i) the Tenant has completed the formalities
in respect of canceling or changing the registration of the Premises as its registered address
or business address with relevant industry and commerce administration authority; and (ii) the
Premises the Tenant returned to the Landlord and its fitments, equipments, and facilities have
been restored to the standard state and condition in accordance with Clause 9 herein and that
the Premises are suitable for lease; and (iii) the full settlement of the outstanding claim by
the Landlord against the Tenant in respect of any breach, non-observance or non-performance of
any of this Agreement’s stipulations or conditions herein contained and on the part of the
Tenant to be observed and performed; (iv) the full payment of the relevant charges for the
Premises’ utilities payable by the Tenant; and (v) the relevant telephone and
telecommunication authorities have cleared the Tenant’s telephone and telecommunication
accounts.

	6.5	 	Notwithstanding anything contained herein, the Tenant hereby expressly agrees that if the
Landlord assigns or transfers the ownership of the Premises to any person (the “New Landlord”)
prior to the termination of the Lease Term subject to and with the benefit of this Agreement,
the Landlord is entitled to transfer the Security Deposit paid by the Tenant hereunder (less
any deduction which the Landlord is entitled to make according to the terms of this Agreement)
to the New Landlord. In that event, the Tenant shall waive all claims against the Landlord
for the refund of the Security Deposit and may only make its claim for such refund against the
New Landlord. A written notice sent by the Landlord to the Tenant, by ordinary post to the
address stated herein, notifying the change of the ownership of the Premises shall be
conclusive evidence that the Security Deposit has been transferred to the New Landlord unless
such notice expresses a contrary intention.

	6.6	 	During the Lease Term, the charges for electricity, telecommunications, appliances, property
maintenance and management, and the supply of air-conditioning during non-Business
Hours and other related fees and expenses, shall be borne by the Tenant.

	6.7	 	The Tenant shall pay the utilities charges arising out of its occupancy or usage of the
Premises (including but not limited to the costs for electricity, heating, air-conditioning
during non-Business Hours and telecommunications), and shall reimburse the Landlord for any
such expenses, as may be paid by the Landlord on behalf of the Tenant, within seven (7) days
of demand by the Landlord.

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	6.8	 	The current daily Property Management Fee of the Premises is RMB28.39 per square
meter, i.e. the total monthly (calculated as 30.5 days equal 1 month) Property Management Fee
of the Premises is RMB4,974.50. The Tenant agrees that, during the Lease Term, the Landlord
shall be entitle to revise the Property Management Fee periodically due to the increase of
operation cost and any readjustment of the Property Management Fee, if any, shall be notified
in writing to the tenant and shall take effect from the month following the date specified in
such notice.

	6.9	 	The Tenant shall pay the Property Management Fee and other charges to the Property Manager at
the time and in the manner as provided in the Building Occupant Handbook and the Fit-out Works
Manual as well as other relevant management rules and regulations.

			
	Clause 7 USE OF THE PREMISES AND RESPONSIBILITY FOR REPAIR AND MAINTENANCE

	7.1	 	The Tenant shall at its sole expense keep all the interior parts of the Premises in good and
clean condition, and shall conduct proper repairs unless such repairs are made necessary due
to the Landlord’s gross negligence or willful default, in which case the expenses shall be
borne by the Landlord.

	7.2	 	During the Lease Term, the Tenant shall promptly inform the Landlord of any necessary repair
to the Premises and the facilities provided by the Landlord thereof (exclusive of the repairs
of the interior parts of the Premises which shall be conducted by the Tenant in accordance
with the terms and conditions of the Fit-out Works Manual) upon its discovery of any damage
and/or malfunction.

	7.3	 	During the Lease Term, the Tenant shall use properly and take care of the Premises and the
facilities provided by the Landlord thereof. If the Premises or the facilities thereof are
damaged or malfunction due to the improper or unreasonable use by the Tenant, the Tenant shall
bear the expenses incurred thereof.

	7.4	 	The Tenant shall immediately notify the Landlord of any repair work that may be needed and
shall not carry out the same by itself unless such repair work shall be conducted by the
Tenant as other stipulated in this Agreement. Any work conducted by the Tenant shall be
subject to the requirements under and in accordance with the terms and conditions of the
Fit-out Works Manual. The Tenant shall be liable for any damage, personal injury and property
loss resulting from or relating to the repair work carried out by the Tenant, its employees,
contractors or agents.

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	7.5	 	Where the inspection and maintenance of the Premises is to be conducted, the Landlord shall
give a reasonable prior notice to the Tenant. During such inspection and maintenance, the
Tenant shall co-operate with the Landlord, and the Landlord shall use its endeavors to reduce
any effect such inspection and maintenance may have on the Tenant in respect of the use of the
Premises.

	7.6	 	In addition to the stipulations set forth in Appendix 2 of this Agreement, if the Tenant
wishes to refurbish or add further facilities and equipments to the Premises, such
refurbishment or additions may only be carried out subject to the requirements under and in
accordance with the terms and conditions of the Fit-out Works Manual and with the prior
written consent of the Landlord, and if the approval from an authority is required pursuant to
relevant regulations, the Tenant shall make an application with the relevant authority in
order to obtain such approval. The ownership of the additional facilities and equipments and
the responsibility for their maintenance shall be agreed between the Parties in writing.

	7.7	 	Neither party hereto shall be liable to each other for any damage to the Premises or loss
incurred by either party due to an event of force majeure (the “Event of Force Majeure”).

Clause 8 REMODELLING

	8.1	 	Upon receiving the written approval from relevant competent government authorities and the
written consent from the Landlord, the Tenant may within the scope of the Landlord’s consent,
make alterations or additions to, or partition or renovate the Premises and /or any equipment
and facilities thereof. Any such alteration, addition, partition or renovation shall be first
discussed between the Parties hereto and shall be carried out by qualified construction
workers or contractors approved by the Landlord (except for works concerning fire, electricity
facilities, air conditioning, pipes, etc. which shall only be carried out by a contractor
appointed by the Landlord). All works mentioned in this clause (including but not limited to
the works concerning fire, electricity facilities, air conditioning, pipes, etc.) shall be
subject to the requirements under and in accordance with the terms and conditions of the
Fit-out Works Manual and at the Tenant’s expense.

	8.2	 	The Tenant hereby agrees it neither has any right to demand repayment of expenses for
improvements and/or expenses for repair and maintenance of the Premises or the facilities and
equipment thereon borne by the Tenant, nor has any right to demand purchase by the Landlord of
the items installed on the Premises.

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Clause 9 CONDITIONS OF THE PREMISES AT SURRENDER

	9.1	 	Upon the expiration or termination of this Agreement, the Tenant shall remove its
belongings and properties, reinstate the Premises to its standard state and condition as
stipulated in Appendix 2 (whether the conditions of the Premises at the time of handover is in
accordance with the standard state and condition as stipulated in Appendix 2 shall be
exclusively subject to the reasonable review and written approval of the Property Manager at
the time of handover of the Premises), return the keys and the Landlord’s properties, and hand
over the whole Premises which is in good, clean, tenantable condition (fair wear and tear
excepted) upon the expiration of the Lease Term, or in the event of early termination, no
later than the date designated by the Landlord, except where the Landlord has agreed to extend
the Tenant’s lease of the Premises.

	9.2	 	Provided being given prior written consent by the Landlord, at the request of the Tenant, the
Landlord may perform on the Tenant’s behalf any obligation of the Tenant under Clause 9.1
above, at the Tenant’s expense and subject to the Tenant indemnifying the Landlord against all
costs, claims and liabilities which may be suffered or incurred by the Landlord in carrying
out such obligations on behalf of the Tenant.

	9.3	 	In the event that the Tenant fails to reinstate the Premises to its standard state and
condition, the Landlord shall have the right to reinstate the Premises in place of the Tenant
provided that the Tenant shall pay to the Landlord double the normal monthly Rent and the
Property Management Fee calculated on a daily basis for the period from the expiration date
(or, in the event of early termination of this Agreement, from the termination date) to the
date that the Premises have been so reinstated. The Tenant shall also reimburse the Landlord
for all costs and expenses incurred for such reinstatement.

	9.4	 	If the Premises cannot be fully reinstated to its standard state and condition due to reasons
attributable to the Tenant, the Tenant shall compensate the Landlord for such irreparable
damage in addition to the payments provided under other provisions of this Agreement.

	9.5	 	In the event that the Tenant fails to surrender the Premises by the time provided in Clause
9.1, the Landlord may choose to charge the Tenant an occupation fee calculated on the basis of
double the daily Rent for each day of delay or to take possession of the Premises and move the
Tenant’s belongings to a suitable place for storage. The Landlord shall not be liable for any
loss or damage to the Tenant due to such forced surrender provided that the forced surrender
is conducted in accordance with the provisions of this Agreement. All the expenses incurred by
the Landlord (including but not limited to removal and storage expenses) as a result of the
forced surrender shall be borne by the Tenant.

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	9.6	 	The Landlord shall have the right to dispose of the belongings of the Tenant according to the
provisions of Clause 9 hereof.

	9.7	 	In the case of forced surrender, the Tenant shall be deemed to have failed to reinstate the
Premises to its standard state and condition, and Clauses 9.3, 9.4 and 9.5 shall apply.

	9.8	 	If this Agreement is terminated during the absence of the Tenant and the Tenant cannot be
located by the Landlord’s reasonable efforts, the Landlord shall have the right to repossess
and recover the Premises and remove the Tenant’s properties and belongings to a warehouse
where they will be stored. In this event, the storage expense shall be borne by the Tenant.

	9.9	 	Under the Clause 9.5 and Clause 9.8, in the event that the Tenant fails to make any written
request, satisfactory to the Landlord, concerning the disposition and treatment of its
belongings in the aforesaid situations within one (1) month from the expiration or early
termination of this Agreement, the Landlord may sell the properties and belongings of the
Tenant by auction sale at the time and in the manner as determined by the Landlord at its
absolute discretion. Any expense (including but not limited to transportation fees, storage
fees, and auction fees) arising out of the above-mentioned removal or auction shall be borne
by the Tenant. The Landlord shall not be liable for any loss or damage to the Tenant provided
that the auction sale is conducted in accordance with the provisions of this Agreement.

	9.10	 	The Landlord shall be entitled to apply the proceeds from such auction sale to any
outstanding amount due from the Tenant under this Agreement. The Landlord shall return any
excess thereafter to the Tenant.

Clause 10 SUBLET, TRANSFER AND EXCHANGE

	10.1	 	The Tenant shall not transfer, assign, sublet, mortgage, share or otherwise part with the
possession or occupation of the Premises or any part thereof by any means, whereby any person
not a party to this Agreement obtains the use or possession of the Premises or any part
thereof, irrespective of whether any rental or other consideration is given for such use or
possession. In the event of a breach of this Clause, the Landlord shall have the right to
terminate this Agreement with immediate effect by notice in writing to the Tenant, and upon
the receipt of such notice the Tenant shall forthwith return the Premises according to Clause
9.1.

	10.2	 	During the Lease Term, unless otherwise agreed by the Landlord in this Agreement, the Tenant
shall not sublet all or part of the Premises to a third

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	 	 	      party. However in no event may the Tenant sublet any portion or portions of the Premises as
one residential unit.

	10.3	 	If the Tenant sublets the Premises with the approval of the Landlord, the Tenant shall enter
into a written sublease contract with the sub-tenant and, in accordance with relevant
regulations, shall carry out the registration and filing procedures with the relevant
competent authority.

	10.4	 	During the Lease Term, if the Tenant wishes to assign the lease of the Premises to a third
party or to exchange the Premises for other premises leased by a third party, it shall obtain
the prior written consent from the Landlord. After such assignment or exchange, such third
party being assigned or exchanged the Premises shall execute a change of tenancy agreement
with the Landlord, and shall continue the performance of this Agreement.

Clause 11 TERMINATION OF THIS AGREEMENT

	11.1	 	Both Parties hereto agree that if during the Lease Term any of the following events occurs,
this Agreement shall be terminated, and neither Party hereto shall be held liable to each
other:

	 	(1)	 	The land use right of the land on which the Premises are situated is
prematurely withdrawn in accordance with relevant laws;
	 
	 	(2)	 	The Premises are expropriated on the grounds of public interest in accordance
with relevant laws;
	 
	 	(3)	 	The Premises are dismantled or removed for urban construction purposes in
accordance with relevant laws;
	 
	 	(4)	 	The Premises are destroyed, lost, or declared dangerous.

	11.2	 	In any of the following cases, the Tenant may immediately terminate this Agreement by giving
a written notice to the Landlord:

	 	(1)	 	The Landlord fails to deliver the Premises in accordance with the terms and
conditions of this Agreement and further fails to deliver the Premises within thirty
(30) days of the Tenant’s demand;
	 
	 	(2)	 	The purpose of the tenancy cannot take effect because the Premises delivered
by the Landlord do not comply with the terms and conditions

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	 	 	 	of this Agreement, and make material adverse effect to the Tenant; or the Premises
delivered by the Landlord are endanger the safety of the Tenant.

	11.3	 	In any of the following cases, the Landlord may immediately terminate this Agreement by
giving a written notice to the Landlord:

	 	(1)	 	The Tenant alters the purpose of the Premises without the Landlord’s prior
written consent;
	 
	 	(2)	 	The main structure of the Premises is damaged and such damage is attributable
to the Tenant;
	 
	 	(3)	 	The Tenant, without the prior written consent of the Landlord, willfully
sublets the Premises, assigns the lease of the Premises or exchanges the Premises with
other premises leased by a third party;
	 
	 	(4)	 	The Tenant defaults on its payment of the Rent and/or any other sums payable
hereunder for more than fifteen (15) days;
	 
	 	(5)	 	If the Tenant breaches any of the terms of this Agreement and does not
rectify such breach within the period notified by the Landlord;
	 
	 	(6)	 	If the right of refund of the Security Deposit is given by the Tenant as a
pledge or collateral to a third party, or becomes subject to an enforcement procedure
by a third party;
	 
	 	(7)	 	If the Tenant enters into bankruptcy or becomes insolvent; or the Tenant
makes an assignment or settlement for transfer of all or a substantial part of its
assets to satisfy its debts; or the Tenant applies for corporate dissolution or
reorganization; or the Landlord deems it impossible to continue this Agreement due to
a substantial change in the Tenant’s assets, creditworthiness or business; or
	 
	 	(8)	 	If the Tenant fails to commence occupancy of the Premises without a notice of
justifiable reason given to the Landlord within thirty (30) days from the Commencement
Date; or the Tenant fails to pay the Landlord the full amount of the Security Deposit
referred to in Clause 6.1 on the date of execution of this Agreement.

	11.4	 	Upon the occurrence of any of the events mentioned in Clause 11.3 above, the

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Landlord may at any time thereafter, without prejudice to the Landlord’s other rights and
remedies, re-enter the Premises and require the Tenant to surrender immediately the
Premises to the Landlord. In this case, the Landlord shall also have the right to
immediately forfeit the Security Deposit and claim for all the Rent exempted during the
Fit-out Period and the Rent-Free Period (if any) as stipulated in Clause 4.4 of this
Agreement and any loss incurred or suffered as a result of the Tenant’s breach including
but not limited to the Rent of the remaining lease term. The Landlord may take all
necessary measures provided by law to ensure it recovers such payment from the Tenant. All
expenses incurred by the Landlord as a result of the Tenant’s default hereof, including but
not limited to court costs and legal fees, shall be borne by the Tenant. Retention of the
Security Deposit by the Landlord shall not constitute sufficient ground for the Tenant to
refuse to surrender the Premises.

	11.5	 	If this Agreement is terminated according to Clause 11.2 and 11.3, the defaulting Party shall
pay the penalty of RMB104,285.69 to the other Party, and if such penalty are insufficient to
cover the actual loss incurred, the difference shall be paid by the defaulting Party.

	11.6	 	Unless mutually agreed upon in writing, neither Party may terminate this Agreement with
respect to all or only a portion of the Premises.

Clause 12 DEFAULT LIABLITIES

	12.1	 	If there is any defect in the Premises at the time of delivery, the Landlord shall rectify
such defect within a reasonable period of time from the date of delivery.

	12.2	 	If, before the creation of this tenancy, the Landlord fails to inform the Tenant that the
Premises are subject to mortgage or that transfer of the Premises is restricted, the Landlord
shall be liable for the direct loss incurred by the Tenant therefrom, however the Landlord’s
liability shall be limited to the value of the lease.

	12.3	 	The Tenant shall pay to the Landlord on demand a default charge (the “Default Charge”) in
respect of any payment under this Agreement (including without limitation to the Rent, the
Property Management Fee) which is overdue. The Default Charge shall be calculated at the
default rate of [0.5] % on the overdue amount for each day of delay from the payment due date
up to but excluding the date of actual full payment. If the Tenant delays in paying in full
any Rent and/or any other sums payable hereunder for more than fifteen (15) days after the due
date, the Landlord may terminate this Agreement immediately, and/or may suspend the supply of
maintenance service, electricity, heating, air-conditioning, telecommunications or any other
services or utilities provided by or through the Landlord. Payments made by the Tenant shall
be applied as follows: (i) payment of the Default Charge for any amount overdue;

15

 

(ii) settlement of any overdue amount; and (iii) payment of any other outstanding amount
due under this Agreement.

	12.4	 	In the case where the Tenant, without the prior written consent of the Landlord or over the
scope of the Landlord’s consent, carries out renovations on or additions to the Premises or
facilities thereof, the Landlord may demand that the Tenant reinstate the Premises to its
standard state and that the Tenant pay compensation to cover any loss incurred therefrom.

	12.5	 	If, before the expiration of the Lease Term, the Tenant, without the prior written consent of
the Landlord, willfully and prematurely terminates the lease and in an event other than those
stipulated in this Agreement, the Tenant shall pay to the Landlord the penalty the amount of
which shall be the daily Rent rate payable for every day from the actual date of early
termination to the expiration date of the Lease Term herein. The Tenant shall also be liable
to further compensate the Landlord should such penalty be insufficient to cover the losses
incurred by the Landlord as a result of such early termination.

	12.6	 	If the Tenant, or any of its employees and contractors, licensees or invitees, causes damage
to the Landlord’s property or personal injury to the Landlord, other tenants in the Building,
or any of their employees and contractors, the Tenant shall immediately notify the Landlord
thereof in writing. The Tenant shall be fully liable for and shall indemnify the Landlord
against all costs, claims or liabilities in connection therewith.

	12.7	 	If the Tenant breaches any provision of this Agreement, or otherwise causes damage to the
Premises and/or the Building, the Tenant shall compensate the Landlord for all losses and/or
damages which the Landlord suffered. In addition, the Tenant shall bear all civil or criminal
responsibilities therefor. For this purpose, any act of the employees and contractors of the
Tenant shall be regarded as the act of the Tenant.

	12.8	 	The Parties, by mutual agreement, shall first attempt to determine the amount of damages
according to the market value at the time of compensation.

	12.9	 	The Tenant may not claim against the Landlord for compensation for damages incurred by the
Tenant arising out of other tenants’ or other third parties’ acts unless such shall be
directly caused by the gross negligence or willful default of the Landlord.

Clause 13 RENEWAL

	13.1	 	This Agreement shall terminate in the event that one of the following

16

 

circumstances occurs:

	 	(1)	 	Upon the expiration of the Lease Term of this Agreement;
	 
	 	(2)	 	If the Parties so agree in writing; or
	 
	 	(3)	 	If this Agreement is terminated in accordance with the terms and conditions
hereof.

	13.2	 	If the Tenant wishes to renew the lease of the Premises upon the expiration of the Lease
Term, the Tenant shall issue a written application for renewal (hereinafter called the
“Renewal Application”) to the Landlord three (3) months prior to the expiration of the Lease
Term, and will be able to renew the Premises only upon the Landlord’s consent. If the Landlord
agrees to renew the Premises, the Landlord and the Tenant shall conclude a new written lease
agreement for renewal of the lease of the Premises three months prior to the expiration of the
Lease Term. If the Parties fail to reach and execute such new lease agreement two (2) months
prior to the expiration of the Lease Term, the lease hereunder shall end upon the expiration
or early termination of the Lease Term according to this Agreement.

	13.3	 	If the Landlord has not received the Renewal Application from the Tenant three (3) months
prior to the expiration of the Lease Term, or the Landlord disagrees with such Renewal
Application, or the Parties fail to conclude a written agreement regarding renewal two (2)
months prior to the expiration of the Lease Term, the lease hereunder shall end upon the
expiration of the Lease Term according to this Agreement.

	13.4	 	If the Landlord received the Renewal Application three (3) months before the expiration of
the lease and approved the Renewal, the new lease rate will be based on the market rate and
upon both parties’ negotiation.

Clause 14 RIGHT OF ACCESS

	14.1	 	For the purposes of repair, maintenance, sanitation, safe, fire control, rescue and such
other matters, the Landlord or the Property Manager and the staff employed by them
may, after informing the Tenant in advance, enter the Premises for carrying out inspection and
taking appropriate actions. However, in the event of an emergency when the Tenant cannot be
contacted in advance, the Landlord or the Property Manager and the staff employed may enter
the Premises and take such action as they deem fit without the prior consent from the Tenant,
but shall inform the Tenant thereafter as soon as possible. In such case, the Premises are
damaged or the Tenant suffers any loss, none of the Landlord, the Property Manager or their
employees shall take any responsibility.

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	14.2	 	The Tenant agrees that the Landlord shall be entitled, after giving a prior notice to the
Tenant, to bring potential purchaser(s) to view the Premises at reasonable times during the
Lease Term. In addition, the Landlord shall, upon giving a prior notice to the Tenant, be
entitled to bring potential tenant(s) to view the Premises at reasonable time within six (6)
months prior to the expiry or early termination of the Lease Term. When the Landlord enters
into the Premise pursuant to this Clause, the Landlord shall minimize the inconvenience
brought to the Tenant’s business.

	14.3	 	If pursuant to this Clause the Landlord or the Property Manager and the staff employed by
them need to access to the Premises, the Tenant shall give its cooperation.

Clause 15 OBLIGATIONS OF THE LANDLORD

	15.1	 	In addition to the obligations stipulated in the other terms and conditions of this
Agreement, the Landlord shall also have the following obligations:

	 	(1)	 	The Landlord shall deliver to the Tenant the Premises which are suitable for
normal use in accordance with the terms and conditions of this Agreement.
	 
	 	(2)	 	If the Landlord wants to make alternations or additions to, or renovate the
Premises, the Landlord shall give prior notice to the Tenant. the Tenant hereby
confirms that, the Landlord shall be entitled to further renovate, add to, reduce, or
dispose of any part of the Building and its facilities (except for the interior
facilities of the Premises belonging to the Tenant) at its discretion at any time.
	 
	 	(3)	 	Other than the taxes and charges which are payable by the Tenant under this
Agreement and payable under the Building Occupant Handbook, the Landlord shall bear
all the other taxes and charges in respect of the Premises payable by the Landlord as
the landlord.
	 
	 	(4)	 	Except that the Landlord may exercise its rights under this Agreement, it
shall not interfere with or obstruct the Tenant in its usual and reasonable usage of
the Premises.
	 
	 	(5)	 	Except for the mortgage, the Landlord shall not be obliged to notify the
Tenant of the other restrictions on the title transfer of the Premises made before or
after the lease, and the Tenant hereby waives the right to be informed. The Landlord
shall also have no obligation to compensate the Tenant for its losses caused by being
not informed as aforesaid and the

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	 	 	 	Tenant hereby waives the right to be compensated.

Clause 16 OBLIGATIONS OF THE TENANT

	16.1	 	The Tenant shall comply with all laws and regulations related to its business, and/or its
occupation or use of the Premises and/or the Building during the Lease Term. The Tenant, its
employees and contractors shall also comply with the rules and regulations related to the
Premises and/or the Building, as prescribed by the Landlord or the Property Manager (including
the Building Occupant Handbook, the Fit-out Works Manual and other rules and regulations
relating to the Premises and/or the Buildings as may be formatted by the Landlord or the
Property Manager from time to time). The Tenant shall be responsible for the acts of its
employees and contractors as if those acts are conducted by itself, and shall fully indemnify
the Landlord and the Property Manager against all costs, claims or liabilities to any third
party in connection therewith. In addition to the obligations stipulated in the other clauses
of this Agreement, the Tenant shall also have the following obligations:

	 	(1)	 	The Tenant shall use the Premises for the purpose as stipulated in this
Agreement and shall not change the purpose of the Premises without the prior written
consent from the Landlord and the approvals from relevant authorities issued in
accordance with relevant regulations.
	 
	 	(2)	 	Without the prior written approval of the Landlord, the Tenant may not make
any alteration to the Premises whatsoever, including but not limited to the following:
(i) the erection, installation or alteration of any partitioning; (ii) any alteration
or addition to the electrical wiring, air-conditioning plant, ducting or lighting
fixtures; (iii) the changes of internal fitting-out work, conduit and line layout; and
(iv) permanent alterations to the fixtures or fittings of the Premises or the
Building. Any work mentioned in this Clause carried out by the Tenant shall be subject
to the requirements under and in accordance with the terms and conditions of the
Fit-out Works Manual.
	 
	 	(3)	 	During the Tenant’s occupation of the Premises, the Tenant shall pay and
discharge all the taxes, charges and other outgoings now or hereafter to be imposed
and charged under the relevant PRC and Beijing municipality laws and regulations of
which the Tenant is responsible;
	 
	 	(4)	 	The Tenant shall keep the Premises (including but not limited to the
renovations, facilities and equipment as set out in Appendix 2 of this Agreement)
clean and in good and tenantable conditions.
	 
	 	(5)	 	The Tenant shall strictly comply with the Building Occupant Handbook and
Fitout Works Manual and other rules made and modified at any time and from time to
time by the Landlord and/or the Property Manager in

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	 	 	 	respect of management of the Building. The Tenant, its employees and contractors
shall not influence or interfere with the normal management of the Building by the
Landlord and/or the Property Manager.

	 	(6)	 	The Tenant shall not deface or cause damage to the common areas and the
equipment and facilities thereon.
	 
	 	(7)	 	The Tenant shall not place any goods, furniture or rubbish in the public
walkways or other common areas, and shall not obstruct the aforesaid common areas. The
Tenant shall 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. The Tenant shall not litter in common
areas.
	 
	 	(8)	 	The Tenant shall not bring to or store in the Premises any weapons,
ammunition, nitre, explosives, kerosene or other dangerous and contraband goods of
inflammable and explosive nature, or other objects, the keeping of which may
contravene any local ordinance or regulation or in respect of which an increased rate
of premium for any insurance is or may actually be required.
	 
	 	(9)	 	The Tenant shall not carry out, permit or consent to the carrying out of any
illegal or immoral activities, or various religious activities or other activities
deemed inappropriate by the Landlord, or other activities which may cause nuisance of
other users, tenants or parties, or the activity in any way which interferes with or
may interfere with the quiet and peaceful use of the common areas of the Building and
other units outside the Premises by other users, tenants and parties.
	 
	 	(10)	 	The Tenant shall not display, place, paste or hang any logos, words, marks,
posters, flags, advertisement boards or notice boards etc. on the exterior of the
Premises including the public walkways, windows, external walls and copings without
the prior written consent from the Landlord. Otherwise, the Landlord shall be entitled
to remove the same at the cost and expense of the Tenant.
	 
	 	(11)	 	The Tenant shall be responsible for the actions of its employees and
contractors and shall ensure that they will not take any action that will cause loss
or damage to the Premises and that is not permitted to be done by the Tenant under
this Agreement. The Tenant shall bear the liabilities to compensate the Landlord for
its losses resulted from purposely or faulty activities by the Tenant’s employees and
contractors to any part of the Premises or the Building.

20

 

	 	(12)	 	Without the Landlord’s prior written consent, the Tenant shall not move any
large machinery, equipment, goods or renovation materials into or out of the Premises.
The Tenant shall not place such objects in excess of the load-bearing as stipulated in
the XXX on the floor or other places of the Premises without the prior written
approval of the Landlord or the Property Manager. Before moving objects into the
Premises, notice shall be given to the Landlord or the Property Manager and the
maximum load-bearing capacity of the Premises shall be checked. The Landlord or the
Property Manager shall have the right to stipulate where the safe and other heavy
objects shall be placed to enable the load-bearing to be evenly spread. Specialised
tools and equipment which are moved into the Premises must be placed on appropriate
holders to be set up by the Tenant on its own expenses. Such placement shall be in
accordance with the requirements of the Landlord or the Property Manager and shall be
sufficient for preventing vibration or loud noises from disturbing other users. If the
Tenant defaults and such default has not been rectified, the Tenant shall not move its
equipments, appliances, goods or other properties away from the Premises without the
Landlord’s written consent in advance.
	 
	 	(13)	 	The Tenant shall obey and require its guests, visitors or permitted occupiers
to obey the rules and restrictions made by the Landlord or the Property Manager in
respect of parking, and shall not park its vehicles or permit or allow its guests,
visitors and permitted occupiers to park their vehicles at will and obstruct the
entrance, public walkways and other common areas of the Building.
	 
	 	(14)	 	The Tenant shall not move or allow others to move any fixture, equipment and
facilities in the Premises belonging to the Landlord unless getting the written
permission from the Landlord.
	 
	 	(15)	 	Unless the prior written consent of the Landlord has been obtained, the
Tenant shall not otherwise engage in or carry out the following business or
undertakings in the Premises or use the Premises as any type of breeding, industrial
activities or construction of production work areas, warehouses, funeral parlours or
sale of objects for funeral use, Buddhist temples, Taoist temples, other religious
temples, sale of altars, inns, guest houses, or rental of beds etc.
	 
	 	(16)	 	The Tenant shall not let noise out of the Premises to any part of the
Building.
	 
	 	(17)	 	The Tenant shall take all reasonable precautions to protect the interior of
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 closed upon
the threat of such adverse weather conditions.

21

 

	 	(18)	 	The Tenant shall keep all exterior 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 windows should the Tenant fails to forthwith comply with the
Landlord’s request to close the same.
	 
	 	(19)	 	The Tenant shall not 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.
	 
	 	(20)	 	The Tenant shall not hold or permit or suffer to be held in the Premises any
exhibition, auction or similar sale of things or properties of any kind.
	 
	 	(21)	 	The Tenant shall not use or permit or suffer the Premises or any part thereof
to be used as sleeping quarters.
	 
	 	(22)	 	Without the prior written consent of the Landlord, the Tenant shall not use
or permit to be used the name/logo or any part of the name/logo of the Landlord or of
the Building, or use or permit to be used in 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.
	 
	 	(23)	 	The Tenant shall not keep or permit or suffer to be kept any animals or pets
inside the Premises.
	 
	 	(24)	 	The Tenant shall not cook or prepare or permit or suffer to be cooked or
prepared any food in the Premises or cause or permit any offensive or unusual odours
to be produced upon or emanated from the Premises.
	 
	 	(25)	 	The Tenant shall not erect any antenna on the roof or walls of the Building
or on the ceiling or walls of the Premises, and shall not interfere with, remove,
dismantle or alter those common aerials (if any) provided by the Landlord.
	 
	 	(26)	 	The Tenant shall abide by the relevant PRC national and Beijing municipal
laws and regulations. The Tenant shall undertake all the economic and administrative
obligations when there is any loss suffered by the Landlord because of the Tenant’s
breach of the related laws, regulations and/or stipulations.

22

 

	 	(27)	 	The Tenant shall obtain all approvals, business license and permits, etc.
necessary for it to legally carry on its business in the Premises and shall timely
renew the said approvals, business license and permits.
	 
	 	(28)	 	The proper safekeeping of the Tenant’s property shall be the sole
responsibility of the Tenant. The Landlord and the Property Manager shall not be
liable in any way to the Tenant or to any other person for any damage which may be
suffered or incurred by the Tenant or any other person, or in respect of any property
on the Premises and/or in the Building for any reason and however caused, including
but not limited to fire, flood, theft or robbery. The Tenant shall make reasonable
efforts to protect the Premises as well as the Landlord’s fixtures, fittings and
chattels thereon.
	 
	 	(29)	 	Upon being requested by the Landlord, the Tenant shall endeavor to assist the
Landlord in carrying out the lease registration and filing formalities of this
Agreement with relevant real estate administrative authorities, including but not
limited to providing legal and valid business licence, etc, and executing necessary
documents.
	 
	 	(30)	 	The Tenant shall strictly comply with the ordinance and property management
rules made and modified at any time and from time to time by the Administration
Committee and/or the Management Organization of China Merchants Group Center in
respect of management, use, insurance and security, etc. of the Building, and shall
not act in incompliance with the above ordinance and rules. Otherwise, the Tenant
shall reimburse the parties for all costs and expenses incurred for such incompliance.

	16.2	 	The Landlord and the Tenant confirm that, unless otherwise specified herein by both Parties,
all the stipulations herein on the rights, obligations and corresponding default liabilities
of the Landlord and the Tenant during the Lease Term shall be applied during the Fit-out
Period. However the payment of the Rent and Property Management Fee during the Fit-out Period
shall be subject to Clause 4.4 of this Agreement hereof.

Clause 17 FORCE MAJEURE

	17.1	 	Should either of the Parties to this Agreement be prevented from performing its obligations
under this Agreement by reason of an Event of Force Majeure, such as epidemic, earthquake,
storm, flood, tidal wave or other acts of nature, fire, explosion, prohibition or acts by
government or public agency, riot, war, hostility, public disturbance, strikes, other labor
disputes and work stoppages,

23

 

failure or interruption of transportation or other utilities, or other unforeseen events
beyond the prevented Party’s reasonable control (“Force Majeure”), the prevented Party
shall notify the other Party in writing within fourteen (14) days after the occurrence of
such Event of Force Majeure, and shall within the same time limit provide detailed
information concerning such events and documents evidencing such events. The Parties shall
use their reasonable endeavors to mitigate any damage, to the extent possible, which may be
caused by such events.

	17.2	 	If an Event of Force Majeure occurs, neither Party shall be responsible for any damage,
increased cost or loss which the other Party may sustain by reason of such failure or delay of
performance, and such failure or delay shall not be deemed a breach of this Agreement. The
Party claiming Force Majeure shall take appropriate means to minimize or remove the effects of
Force Majeure and, within the shortest time possible, attempt to resume performance of the
obligations delayed or prevented by the Event of Force Majeure.

	17.3	 	Should an Event of Force Majeure or the effects of an Event of Force Majeure prevent one or
both of the Parties hereto from performing part or all of its or their obligations hereunder
for a period of 120 days or more, then the Parties shall, through consultations, decide
whether to terminate this Agreement or to exempt the implementation of part of the obligations
of this Agreement according to the effects of the Event of Force Majeure on the performance of
this Agreement.

Clause 18 GOVERNING LAW

This Agreement shall be governed by the laws of the People’s Republic of China.

Clause19 PROPERTY MANAGER

The Landlord may designate its affiliate or a third party as the property manager for the
management of the Premises and the Building. The manager shall be regarded as the Landlord’s agent
with full authority to act on behalf of the Landlord with respect to the management of the Premises
and the Building.

Clause 20 CHANGE OF OWNERSHIP OF THE PREMISES

During the Lease Term, the Landlord has the right to transfer all or part of the ownership of the
Premises to a third party (the “New Landlord”). The Landlord shall notify the Tenant in writing
forthwith after such transfer. The validity of this Agreement is not affected by such change of
ownership of the Premises and the rights and obligations of the Landlord under this Agreement shall
be deemed to have been

24

 

automatically assigned by the Landlord to the New Landlord. The Tenant hereby irrevocably and
expressly consents to any transfer of the Premises, the Building, or any part of the Premises or
the Building and waives any preemptive rights or any other rights it has or may have in the case of
such transfer.

Clause 21 NOTICE

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

The Landlord       :

Attention       :

Address       :

Facsimile No.:

The Tenant       :

Attention       :

Address       :

Post Code       :

Facsimile No.:

	      	 	or at such other address or facsimile number as the Party to whom such notice is to be
given shall have last notified the Party giving notice.
	 
	21.2	 	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; or in the case of prepaid registered post, 5 days after posting.

	21.3	 	In addition to the notices and communications given pursuant to Clause 21.1 and 21.2
hereinabove, the Parties hereto agree that upon the take-over of the

25

 

	 	 	Premises by the Tenant under this Agreement, any notice to be given to the Tenant shall be
sufficiently given if it is addressed to the Tenant and left at the Premises. In such case,
the notice so delivered shall be deemed to be received by the Tenant on the business day
following the date of delivery.
	 
	21.4	 	During the term of this Agreement, each Party has the right to change its address or
facsimile number for notices, provided it gives written notice to the other Party.

Clause 22 INSURANCE

The insurance taken out by the Landlord shall only refer to the Premises themselves and be in favor
of the Landlord as the owner of the Premises. Where any insured event occurs, all compensation paid
by the relevant insurance company under such insurance policy shall belong to the Landlord. The
Tenant shall not, as to its property losses or personal injury resulting from such insured event,
be entitled to claim against or demand that the Landlord share such amount of compensation paid by
the relevant insurance company and owned by the Landlord. The Tenant shall, at its own cost, take
out insurance for its employees and its own properties inside the Premises.

Clause 23 WAIVER, PARTIAL EFFECTIVENESS

	23.1	 	The Landlord’s acceptance of the Rent after it has become aware of the Tenant’s acts of
breach shall not be deemed as the Landlord’s waiver of its rights to claim against the Tenant
for breach of liabilities. When the Rent or other payments by the Tenant are not sufficient to
cover the amount stipulated hereby or the Landlord accepts such insufficient Rent or other
payments, such acts shall not be deemed as the Landlord’s consent of decreasing the Rent or
other payments, nor shall it affect the Landlord’s claims for overdue amounts hereunder or any
other right under this Agreement or relevant laws. Furthermore, the failure or delay of
performing the Landlord’s rights hereunder shall not be deemed as the waiver of such rights.
Any waiver of the Landlord’s rights shall only be made in the form of a written instrument
signed by the Landlord.

	23.2	 	If any provision of this Agreement shall be deemed invalid or illegal, such provision shall
not affect the validity and legality of other provisions of this Agreement.

Clause 24 LEGAL COSTS, TAXES AND FEES AND OTHER EXPENSES

Each of the Parties shall bear its own legal fees in connection with this Agreement. The Tenant
shall bear the tenancy registration and filing fees charged by the relevant

26

 

real estate government authority for the registration and filing of this Agreement, and the stamp
duties in respect of this Agreement shall be equally shared by both Parties.

Clause25 MISCELLANEOUS

	25.1	 	The headings in this Agreement are for reference only and have no effect in the
interpretation of this Agreement.
	 
	25.2	 	Any Party specified in this Agreement shall include the successors and assignees of such
Party.
	 
	25.3	 	This Agreement shall not be amended without the written consent of both Parties hereto. The
Parties may, upon mutual consultation and agreement, execute Supplemental Clauses in respect
of the matters which are not sufficiently stipulated herein. The Supplemental Clauses and the
Appendixes shall form an integral part of this Agreement and shall be equally valid.
	 
	25.4	 	This Agreement is written in Chinese and English. In case of any discrepancy between the
Chinese and English versions, the Chinese version shall prevail.
	 
	25.5	 	Any dispute between the Parties hereto arising in connection with the performance of this
Agreement shall be settled through friendly negotiations, In the event that the dispute is
still unresolved, either party may submit the disputes for arbitration to the China
International Economic and Trade Arbitration Commission for arbitration in Beijing in
accordance with its procedural rules then in force. The decision of arbitration shall be final
and binding on both parties. All arbitration fees (including the legal fees of both parties)
shall be borne by the losing party, unless otherwise determined by the arbitration awarded.
	 
	25.6	 	This Agreement shall take effect upon the signature by the authorized representatives of both
Parties and upon the company seals of both Parties.
	 
	25.7	 	This agreement and the annexes are written in Chinese version in 4 originals The Landlord
shall hold 2 original and the Tenant shall hold 1 original and the Beijing Construction
committee (in charge of lease registration) hold one original of Chinese version.

27

 

Execution Page

In witness whereof, the authorized representatives of both Parties have duly signed this Agreement
on the date indicated below:

The Landlord:

/s/ Jason Brown           (Signature and Company Seal)

Name of Representative: Jason Brown

Title: Chairman

Date: 6/29/2007

The Tenant:

/s/ Jamie Tseng           (Signature and Company Seal)

Name of Representative: Jamie Tseng

Title:

Date: 6/29/2007

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Appendix 1 Level Plan of the Premises

29

 

Appendix 2 Standard Conditions and Facilities of the Premises

a) Floor: Cement surface.

b) Wall (Corridors and Partition): Plasterboard painted with emulsion paint.

c) Load Bearing Wall: Reinforced concrete painted with emulsion paint and wooden skirting.

d) Ceiling: False ceiling with Armstrong ceiling system.

e) Door: Single or Double leaf glass.

f ) No pipes, lines or wires to remain in the ceiling, ground and inner-wall other than base
building provision.

g) Windows are in good repair without scratches, cracks and in operable condition where appropriate

h) Sills and mullions are in good condition without damage

30exv10w15

 

Exhibit 10.15

AMENDED AND RESTATED

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

by and among:

PACIFIC EAST ADVISORS, INC.

a Delaware corporation;

DRILLCO ACQUISITION, LLC.,

a Delaware limited liability company;

and

ADVANCED DRILLING SERVICES, LLC,

a Delaware limited liability company

Dated as of December 11, 2006

Amended and Restated as of February 12, 2007

 

 

AMENDED AND RESTATED AGREEMENT AND PLAN

OF MERGER AND REORGANIZATION

     THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
“Agreement”) is made and entered into as of December 11, 2006 (the “Execution
Date”), as amended and restated on February 12, 2007, by and among: Pacific East Advisors,
Inc., a Delaware corporation (“Parent”); DRILLCO ACQUISITION, LLC., a Delaware limited
liability company and a wholly owned subsidiary of Parent (“Merger Sub”); and ADVANCED
DRILLING SERVICES, LLC, a Delaware limited liability company (the “Company”).

RECITALS

     A. The Boards of Directors of Parent, and the Manager of Merger Sub and the Company, deem it
advisable and in the best interest of each entity and its respective stockholders or interest
holders, that Parent and the Company combine in order to advance the long-term business interests
of Parent and the Company.

     B. The strategic combination of Parent and the Company (the “Merger”) shall be
effected in accordance with the Delaware General Corporation Law (the “DGCL”) and the terms
of this Agreement through a transaction in which (i) the Company will merge with and into Merger
Sub (the “LLC Merger”), (ii) Merger Sub will be the surviving entity in the LLC Merger and
will remain a wholly owned limited liability company subsidiary of Parent and will continue to
carry on the business of the Company, and (iii) the interest holders of the Company will become
stockholders of Parent (the Merger and the LLC Merger being herein referred to as the
“Combination”).

     C. The Manager of the Company (i) has determined that the Combination is advisable, fair to,
and in the best interests of the Company and its interest holders, (ii) has determined that this
Agreement is advisable and has approved this Agreement, the Combination and the other transactions
contemplated by this Agreement, and (iii) has determined to recommend that the interest holders of
the Company adopt this Agreement.

     D. The Board of Directors of Parent (i) has unanimously determined that the Combination is
advisable and consistent with and in furtherance of the long-term business strategy of Parent and
is fair to, and in the best interests of, Parent and its stockholders, (ii) has unanimously
approved this Agreement, the Combination and the other transactions contemplated by this Agreement,
and (iii) to the extent required by applicable law, has unanimously determined to recommend that
the stockholders of Parent adopt this Agreement and approve the Combination and the other
transactions contemplated by this Agreement.

     E. Immediately prior to the closing of the Merger, the Company will issue Class B Membership
Units to the accredited investors who subscribe for Class B Membership Interests of the Company
(the “Class B Interests”) being offered to accredited investors in a private placement by
the Company. All of the foregoing Class B Interests will be issued and will be outstanding prior

 

 

to the Merger, and will be exchanged for Parent Series A Preferred Stock in the Merger as set
forth herein.

     F. Concurrent with the closing of the Merger, Parent shall consummate closing of the merger of
Inner Mongolia Production Company LLC (“IMPCO”), a New York limited liability company, with
and into IMPCO Acquisition, LLC, a New York limited liability company and wholly owned subsidiary
of Parent (the “IMPCO Merger”), pursuant to that certain Amended and Restated Agreement and
Plan of Merger and Reorganization, made and entered into on or about the Execution Date, as amended
and restated on even date herewith, by and among Parent, IMPCO Acquisition, LLC, a New York limited
liability company and wholly owned subsidiary of Parent, and Inner Mongolia Production Company LLC,
a New York limited liability company (the “IMPCO Merger Agreement”).

     G. Parent, Merger Sub and Company have entered into an Agreement and Plan of Merger and
Reorganization on the Effective Date (the “Existing Agreement”), and desire to amend and
restate the Existing Agreement in full as set forth herein.

     NOW THEREFORE, for the mutual consideration set out herein, and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

AGREEMENT

     A. Amendment of Existing Agreement. Effective and contingent upon execution of this
Agreement by Parent, Merger Sub and Company, the Existing Agreement is hereby amended and restated
in its entirety to read as set forth in this Agreement, and Parent, Merger Sub and Company hereby
agree to be bound by the provisions hereof as the sole Agreement of Parent, Merger Sub and Company
with respect to matters as set forth herein.

     1. Integrated Transaction. For U.S. Federal income tax purposes, it is intended that
the transactions contemplated by this Agreement and the IMPCO Merger Agreement constitute part of a
single integrated transaction and are pursuant to a single integrated plan intended to qualify as a
tax-free transaction under Section 351 of the Internal Revenue Code of 1986, as amended (the
“Code”).

     2. Terms of Merger. Immediately following the Effective Time (as defined below),
without condition, Parent shall cause Merger Sub to file with the Secretary of State of the State
of Delaware a properly executed certificate of merger for the LLC Merger (the “LLC Certificate
of Merger”) conforming to the requirements of the DGCL, in a form mutually agreeable to the
parties. The LLC Merger shall become effective at the time the LLC Certificate of Merger is filed
with the Secretary of State of the State of Delaware.

          (a) Effects of the LLC Merger 

               (1) At the time at which the LLC Merger is filed with the Secretary of State of Delaware, as
described above (the “Effective Time”), (i) the separate existence of the Merger Sub shall
cease and the Merger Sub shall be merged with and into the Company, with the Company as the
surviving entity in the LLC Merger (Merger Sub and the Company are

2

 

sometimes referred to below as the “LLC Constituent Entities” and the Company
following the LLC Merger is sometimes referred to below as the “Continuing LLC”), and (ii)
the Certificate of Formation and the Amended and Restated Operating Agreement of the Company as in
effect immediately prior to the Effective Time shall be unchanged by the LLC Merger.

               (2) At and after the Effective Time, the Continuing LLC shall possess all the rights,
privileges, powers, and franchises of a public as well as of a private nature, and be subject to
all the restrictions, disabilities, and duties of each of the LLC Constituent Entities; and all
singular rights, privileges, powers, and franchises of each of the LLC Constituent Entities, and
all property, real, personal, and mixed, and all debts due to either of the LLC Constituent
Entities on whatever account, and all other things in action or belonging to each of the LLC
Constituent Entities, shall be vested in the Continuing LLC, and all property, rights, privileges,
powers, and franchises, and all and every other interest shall be thereafter as effectually the
property of the Continuing LLC as they were of the LLC Constituent Entities, and the title to any
real estate vested by deed or otherwise, in either of the LLC Constituent Entities, shall not
revert or be in any way impaired; but all rights of creditors and all liens upon any property of
either of the LLC Constituent Entities shall be preserved unimpaired, and all debts, liabilities,
and duties of the LLC Constituent Entities shall thereafter attach to the Continuing LLC, and may
be enforced against it to the same extent as if such debts and liabilities had been incurred by it.

               (3) At the Effective Time, the Certificate of Incorporation of Parent (the “Parent
Certificate”) shall be amended and restated in its entirety as set forth on Exhibit A
attached hereto.

               (4) At the Effective Time, (i) the Amended and Restated Operating Agreement of the Company, as
existing immediately prior to the Effective Time, shall be and remain the Amended and Restated
Operating Agreement of the Continuing LLC; (ii) the members of the Board of Managers of the Company
holding office immediately prior to the Effective Time shall remain as the members of the Board of
Managers of the Continuing LLC (if on or after the Effective Time a vacancy exists on the Board of
Managers of the Company, such vacancy may thereafter be filled in a manner provided by applicable
law and the Amended and Restated Operating Agreement); and (iii) until the Board of Managers of the
Company shall otherwise determine, all persons who hold offices of the Company at the Effective
Time shall continue to hold the same offices of the Continuing LLC.

3

 

               (5) Upon the terms and subject to the conditions of this Agreement, the Closing (as defined
below) of the Merger will take place (a) at the offices of The Krueger Group, LLP, 5771 La Jolla
Boulevard, La Jolla, California 92037, at 7:00 a.m., California time, on the date that is the
second Business Day after the satisfaction or waiver of the conditions set forth in Sections 7 and
8 hereof, other than conditions which by their terms are to be satisfied at the Closing, or (b)
such other location, date or time as the parties may mutually agree (the “Closing Date”).
For purposes of this Agreement, a “Business Day” shall mean any day that is not a Saturday,
a Sunday or other day on which the office of the California Secretary of State is closed.

          (b) Events Occurring Immediately Prior to the Closing.

               (1) It is currently contemplated that prior to the Merger becoming effective under Delaware
law, the Company shall close a private offering under Regulation D, Rule 506, as promulgated by the
Securities and Exchange Commission (“SEC”) under the Securities Act, pursuant to which it
will issue up to 11,200,000 Class B Interests (excluding warrants issuable to the Company’s
placement agents) (the “Maximum Offering”) at $1.25 per Class B Interest (the “Private
Placement”). All of the Class B Interests issued as part of the Private Placement shall be
included in the membership interests of the Company that are outstanding at the time of the Merger
and will be converted/exchanged in the Merger in accordance with Section 2(c)(1) below.

               (2) Immediately prior to the Merger becoming effective, on the day of such effectiveness, the
Company shall consummate the Merger under Section 251 of the Delaware General Corporation Law by
filing a Delaware Certificate of Merger with the Delaware Secretary of State.

          (c) Conversion of Securities in LLC Merger.

               (1) By virtue of the LLC Merger and without any further action on the part of the Company or
the Merger Sub or the holders of interests of the Company: (i) each Class A Interest of the Company
then outstanding shall be converted into one (1) fully paid share of Common Stock of the Parent for
a total aggregate of 9,850,000 fully paid and nonassessable shares of Common Stock, par value
$0.001; AND (ii) each Class B Interest of the Company then issued and outstanding in connection
with the Private Placement shall be converted into one (1) fully paid share of Series A Preferred
Stock of the Parent for a maximum total aggregate of 11,200,000 fully paid and nonassessable shares
of Series A Preferred Stock, par value $0.001 (excluding warrants issuable to the Company’s
placement agents) (assuming the Maximum Offering is achieved).

               (2) On or prior to the Closing Date, Parent shall make available to its transfer agent (the
“Exchange Agent”) for the benefit of the holders of Class A Interests and Class B Interests
of the Company, a sufficient number of certificates representing Common Stock of Parent and Series
A Preferred Stock of the Parent required to effect the delivery of the aggregate consideration in
Common Stock of Parent and Series A Preferred Stock of the Parent and cash for the payment of
fractional shares set forth below (collectively, the “Share Consideration” and the certificates
representing such aggregate Share Consideration being referred to hereinafter as the “Stock
Merger Exchange Fund”). The Exchange Agent shall,

4

 

pursuant to irrevocable instructions, deliver the Share Consideration out of the Stock Merger
Exchange Fund. The Stock Merger Exchange Fund shall not be used for any other purpose than as set
forth herein.

               (3) No fractional Parent securities shall be issued in the Merger. Each holder of Class A
Interests and Class B Interests of the Company shall be entitled to receive in lieu of any
fractional Parent securities to which such holder otherwise would have been entitled pursuant to
Section 2(c)(1) a cash payment in an amount equal to the product of (i) the fractional interest of
a Parent securities to which such holder otherwise would have been entitled and (ii) the fair
market value of one (1) Parent securities as determined by Parent’s Board of Directors in good
faith.

          (d) Other Matters.

               (1) Upon the effectiveness of the LLC Merger, each outstanding option or warrant to purchase
the Company Class B Interests, whether or not then exercisable, shall be converted into an option
or warrant to purchase (in substitution for each share of the Company Class B Interest subject to
the Company option or warrant) one (1) share of Parent Series A Preferred Stock at a price equal to
the exercise price in effect immediately prior to the LLC Merger. All other terms and conditions
of each the Company option or warrant shall remain the same.

               (2) At the Closing, the number of directors of Parent will be set at three (3). The then
existing sole director of Parent shall then nominate and elect to the Board of Directors of Parent
Frank Ingriselli, Laird Q. Cagan and Elizabeth P. Smith, or such other persons designated by the
Company, and all of the persons serving as directors and officers of Parent immediately prior to
the Closing shall thereafter resign from all of their positions with Parent, effective immediately
after the Closing.

               (3) Upon the effectiveness of the Merger, Parent shall assume and will be bound by the
registration rights agreements previously entered into, or hereafter entered into, between the
Company and the accredited investors who purchase shares of the Company Class B Interests in the
Private Placement that is currently scheduled to close prior to the Closing. The terms of the
registration rights are set forth as an exhibit to the subscription agreements entered into by each
of the foregoing purchasers of shares of the Company Class B Interests. Parent agrees to execute
any agreement or other instrument the Company deems necessary to confirm its agreement to comply
with the registration rights granted by the Company to the purchasers of its Class B Interests.

               (4) All stock of the Parent issued in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of Parent Stock, and there
shall be no further registration of transfers on the records of the Parent of shares of Company
membership interests that were outstanding immediately prior to the Effective Time.

5

 

     3. Representations of the Company. The Company hereby represents and warrants as
follows, which warranties and representations shall also be true as of the Execution Date:

          (a) Organization, Standing and Authority of the Company. The Company is a duly
organized, validly existing and in good standing under the laws of the State of Delaware with full
corporate power and authority to carry on its business as now conducted and is duly qualified to do
business in any jurisdiction where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to have such corporate power and
authority or to so qualify would not have a Material Adverse Effect on the Company.

          (b) Authorized and Effective Agreement.

               (1) The Company has all requisite corporate power and authority to enter into and perform all
of its obligations under this Agreement. The execution, delivery and performance of this Agreement
by the Company and the consummation of the Merger and the other transactions contemplated hereby
have been duly authorized by the Manager of the Company, which authorization constitutes all
necessary corporate action in respect thereof and which have not been rescinded, revoked or
otherwise adversely modified.

               (2) This Agreement constitutes the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its terms subject, as to enforceability, to bankruptcy,
insolvency and other legal requirements of general applicability relating to or affecting
creditors’ rights and to general equity principles.

               (3) Neither the execution and delivery of this Agreement, nor consummation of the Merger and
the other transactions contemplated hereby, nor compliance by the Company with any of the
provisions hereof shall (i) conflict with or result in a breach of any provision of the Certificate
of Formation or Amended and Restated Operating Agreement (the “Operating Agreement”) of the
Company or (ii) violate any legal requirements applicable to the Company.

               (4) Other than the filing of the LLC Certificate of Merger with the Delaware Secretary of
State and consent of the holders of Class A and Class B Interests of the Company, no consent,
approval or authorization of, or declaration, notice, filing or registration with, any Government
Entity, or any other Person, is required to be made or obtained by the Company on or prior to the
Effective Time in connection with the execution, delivery and performance of this Agreement and the
LLC Merger or the consummation of the transactions contemplated hereby or thereby.

          (c) Capital Structure of the Company. The issued and outstanding limited liability
company interests of the Company consist of 9,850,000 Class A Interests and no Class B Interests as
of the Execution Date. In connection with the Private Placement, the Company may issue up to
11,200,000 additional Class B Interests prior to the Closing (excluding warrants issuable to the
Company’s placement agents). As of the Execution Date, all the outstanding limited liability
company interests of the Company are held by the members free and clear of all

6

 

encumbrances. As of the Execution Date and as of the Closing, other than the warrants
issuable to the Company’s placement agents in connection with the Private Placement (the
“Placement Agent Warrants”) and as otherwise set forth herein, there are and will be no
options, warrants, convertible securities or other rights, agreements, arrangements or commitments
relating to the limited liability company interests of the Company.

          (d) Material Adverse Change. Except as set forth in the Company Disclosure Documents,
there has not been any change in the financial condition, results of operations, prospects or
business which would individually or in the aggregate with any other such changes, of the Company
except changes arising in the ordinary course of business, which changes would have a Material
Adverse Effect with respect to the Company.

          (e) Litigation. There are no actions, suits or proceedings instituted, pending or, to
its Knowledge, any governmental investigation or proceeding, and, to its Knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened against the Company.

          (f) Absence of Undisclosed Liabilities. Except as disclosed by the Company to Parent
in its financial statements provided to Parent prior to the Execution Date, the Company does not
have any liability (contingent or otherwise) or Indebtedness that is material to the Company, or
that, when combined with all similar undisclosed liabilities, would be material to the Company,
except for liabilities incurred in the ordinary course of business subsequent to the Execution
Date.

          (g) Tax Matters. The Company has, or by the Closing will have, filed all material
federal tax, governmental and/or related forms and reports (or extensions thereof) due or required
to be filed in the ordinary course of business and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become due as of the Closing.

          (h) Material Contracts. As part of the Company Disclosure Documents, the Company has
previously given Parent copies of or access to all material contracts, commitments and/or
agreements to which the Company is a party, including all contracts covering relationships or
dealings with related parties or affiliates. The Company is not in material breach of, or material
default under any material contract.

          (i) Subsidiary Corporations. The Company has no Subsidiaries, other than Sunrise
Energy Asia LLC (“Sunrise”), a Delaware limited liability company and wholly owned
subsidiary of the Company.

          (j) Minute Books, Financial Records. The Company has made its corporate financial
records, minute books, and other corporate documents and records available for review to present
management of Parent prior to the Closing, during reasonable business hours and on reasonable
notice.

          (k) Disclosure. The Company Disclosure Documents which have been delivered by the
Company to Parent for use in connection with the Merger are true and accurate in all material
respects.

7

 

     4. Representations of Parent and Merger Sub. Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company as follows, each of which representations and
warranties shall continue to be true as of the Effective Time:

          (a) Organization, Standing and Authority of Parent. Parent is duly organized, validly
existing and in good standing under the laws of the State of Delaware, with the full corporate
power to own, lease and operate its property and to carry on its business as now being conducted
and is duly qualified to do business and in good standing to do business in any jurisdiction where
the ownership or leasing of the property or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material Adverse Effect. As
of the Execution Date, Parent is not required to be qualified to do business in any state other
than Delaware. Merger Sub is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all necessary limited liability
company power and authority to enter into this Agreement and to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and thereby.

          (b) Capital Structure of Parent.

               (1) As of the Execution Date, Parent’s authorized capital stock consists of (i) 100,000,000
shares of Parent Common Stock, $0.001 par value, of which approximately 468,068 shares are issued
and outstanding, and (ii) and 5,000,000 authorized shares of Preferred Stock, par value $0.001, of
which no shares of Preferred Stock are issued or outstanding. The Merger Sub is a single member
LLC wholly-owned by Parent.

               (2) All outstanding shares of Parent stock are, and shall be at Closing, validly issued, fully
paid and nonassessable. At the Execution Date and at the Closing, there are and there will be no
existing options, convertible or exchangeable securities, calls, claims, warrants, preemptive
rights, registration rights or commitments of any character relating to the issued or unissued
capital stock or other securities of Parent, other than pursuant to the IMPCO Merger Agreement.
There are no voting trusts, proxies or other agreements, commitments or understandings of any
character to which Parent is a party or by which Parent is bound with respect to the voting of any
capital stock of Parent. There are no outstanding stock appreciation, phantom stock or similar
rights with respect to any capital stock of Parent. There are no outstanding obligations to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent.

               (3) As of the Closing, the shares of Parent Common and Preferred Stock to be issued and
delivered to the holders of Class A and Class B Interests of the Company hereunder and in
connection herewith will, when so issued and delivered, constitute duly authorized, validly and
legally issued, fully-paid, nonassessable shares of Parent capital stock, will not be issued in
violation of any preemptive or similar rights and will be issued free and clear of all liens and
encumbrances.

          (c) Authorized and Effective Agreement. Parent and Merger Sub have full corporate
power and corporate authority to execute and deliver this Agreement and, subject to receipt of the
Parent Required Vote (as hereinafter defined) (to the extent such Parent Required

8

 

Vote is required by applicable law), to consummate the transactions contemplated hereby. The
Board of Directors of Parent by written consent has (i) determined that this Agreement and the
Merger are in the best interests of Parent and its stockholders and declared this Agreement and the
Merger to be advisable, (ii) approved the Merger, the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and (iii) recommended that stockholders of
Parent adopt this Agreement and, if required by applicable law, directed that such matter be
submitted for consideration and approval by Parent’s stockholders. Except for the adoption of this
Agreement by the affirmative vote of a majority of the outstanding shares of Parent Common Stock
entitled to vote in accordance with applicable law, if required (the “Parent Required
Vote”), no other corporate proceedings on the part of Parent are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and (assuming due authorization, execution
and delivery by the Company) constitutes a valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally
(the “Bankruptcy and Equity Exceptions”).

          (d) Taxes. Parent has filed all federal, state, county and local income, excise,
property and other tax, governmental and/or other returns, forms, filings, or reports, which are
due or required to be filed by it prior to the date hereof and have paid or made adequate provision
in the Parent financial statements for the payment of all taxes, fees, or assessments which have or
may become due pursuant to such returns, filings or reports or pursuant to any assessments
received. Parent is not delinquent or obligated for any tax, penalty, interest, delinquency or
charge and there are no tax liens or encumbrances applicable to either corporation.

          (e) Consents and Approvals, No Violation. Neither the execution and delivery of this
Agreement nor the consummation by Parent or Merger Sub of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of its Articles of Incorporation (or
other similar documents) or By-Laws (or other similar documents); (ii) require any consent,
approval, authorization or permit of, or registration or filing with or notification to, any
governmental or regulatory authority, except (A) pursuant to the applicable requirements of the
Securities Act of 1933, and the rules and regulations promulgated thereunder, (B) the filing of
appropriate documents with the relevant authorities of other states in which Parent or Merger Sub
is authorized to do business, (C) as may be required by any applicable state securities or takeover
laws, (D) such filings and consents as may be required under any environmental, health or safety
law or regulation pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement, or (E) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or notification, would not in
the aggregate have a Material Adverse Effect or adversely affect the ability of Parent or Merger
Sub to consummate the transactions contemplated hereby; (iii) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or lien or other charge or encumbrance) under
any of the terms, conditions or provisions of any indenture, note, license, lease, agreement or
other instrument or obligation to

9

 

which Parent or Merger Sub or any of its assets may be bound, except for such violations,
breaches and defaults (or rights of termination, cancellation or acceleration or lien or other
charge or encumbrance) as to which requisite waivers or consents have been obtained or which, in
the aggregate, would not have a Material Adverse Effect or adversely affect the ability of Parent
or Merger Sub to consummate the transactions contemplated hereby; (iv) cause the suspension or
revocation of any authorizations, consents, approvals or licenses currently in effect which would
have a Material Adverse Effect; or (v) assuming the consents, approvals, authorizations or permits
and filings or notifications referred to in this Section 4(e) are duly and timely obtained or made
and the approval of the Merger and the approval of this Agreement by Parent’s stockholders has been
obtained, violate any order, writ, injunction, decree, statute, rule or regulation applicable to
Parent or Merger Sub or to any of its assets, except for violations which would not in the
aggregate have a Material Adverse Effect or adversely affect the ability of Parent or Merger Sub to
consummate the transactions contemplated hereby.

          (f) No Subsidiaries. Other than the Merger Sub, Parent has no Subsidiaries or
affiliates or has no direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or other business.

          (g) Material Adverse Change. Other than as disclosed in the Parent Disclosure
Documents, there have not been any changes in the financial condition, results of operations, or
financial condition of Parent or Merger Sub which would individually or in the aggregate with any
other such changes, except changes arising in the ordinary course of business, which changes would
have a Material Adverse Effect with respect to Parent. Parent has (and at the Closing it will
have) disclosed in the Parent Disclosure Documents all events, conditions, and facts materially
affecting, the business, financial condition (including liabilities, contingent or otherwise) or
results of operations of Parent.

          (h) Absence of Undisclosed Liabilities.

               (1) Other than listed on Schedule 4(h) attached hereto, at the Closing, Parent and
Merger Sub shall have no material assets and will not have any liabilities or Indebtedness of any
kind other than the costs incurred in connection with the Merger or costs incurred in connection
with Parent’s regulatory compliance.

               (2) There is no basis for any assertion against Parent or Merger Sub of any material
liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise and
whether due or to become due, known or unknown, including, without limitation, any liability for
taxes (including e-commerce sales or other taxes), interest, penalties and other charges payable
with respect thereto. Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (a) result in any payment (whether severance pay,
unemployment compensation or otherwise) becoming due from Parent or Merger Sub to any Person or
entity, including without limitation any employee, director, officer or affiliate or former
employee, director, officer or affiliate of Parent or Merger Sub, (b) increase any benefits
otherwise payable to any Person or entity, including without limitation any employee, director,
officer or affiliate or former employee, director, officer or affiliate of Parent or Merger Sub, or
(c) result in the acceleration of the time of payment or vesting of any such benefits.

10

 

          (i) Litigation. Neither Parent nor Merger Sub is a party to, or the subject of, any
pending litigation, claims, or governmental investigation or proceeding not reflected in the Parent
financial statements, and to the Knowledge of Parent, there are no lawsuits, claims, assessments,
investigations, or similar matters, threatened or contemplated against or affecting Parent or the
management or properties of Parent.

          (j) Minute Books and Records. Except as otherwise indicated in the Parent Disclosure
Documents, the Parent minute books and other corporate records made available to the Company prior
to the date of this Agreement, are complete and accurate in all material respects.

          (k) Material Contracts.

               (1) Parent has not breached, nor is there any pending, existing or threatened claim that
Parent has breached, any of the material terms or conditions of any agreements, contracts,
commitments or other documents to which it is a party or by which it is, or its properties are
bound. The execution and performance of this Agreement will not violate any provisions of
applicable law or any agreement to which Parent is subject. Merger Sub has no contracts other than
this Agreement.

               (2) Parent hereby represents and warrants that, except for the IMPCO Merger Agreement and as
otherwise provided in the Parent Disclosure, it is not a party to any material contract or
commitment other than appointment documents with Parent’s transfer agent, and that it has disclosed
to the Company all previous or existing relationships or dealings with related or controlling
parties or affiliates of Parent

               (3) Except for the IMPCO Merger Agreement and as otherwise provided in the Parent Disclosure
Documents, Parent has no material contracts, commitments, arrangements, or understandings relating
to its business, operations, financial condition, prospects or otherwise. For purposes of this
Section 4, “material” means payment or performance of a contract, commitment, arrangement or
understanding which is expected to involve payments in excess of $20,000.

               (4) Except for the IMPCO Merger Agreement, this Agreement and the transactions contemplated
thereby, there are no outstanding contracts, commitments or bids, or services, development, sales
or other proposals of Parent.

               (5) There are no outstanding lease commitments that cannot be terminated without penalty upon
30-days notice, or any purchase commitments of Parent.

          (l) Compliance with Securities Laws.

               (1) There are no outstanding, pending or threatened stop orders or other actions or
investigations relating thereto involving federal and state Securities Laws. To Parent’s
Knowledge, all issued and outstanding shares of Parent’s capital stock were offered and sold in
compliance with federal and state Securities Laws and were not offered, sold or issued in violation
of any preemptive right, right of first refusal or right of first offer and are not subject to any
right of rescission.

11

 

               (2) All information regarding Parent and any entity for whose conduct Parent is legally held
responsible which has been provided to the Company in the Parent Disclosure Documents relating to
any document or other communication, disseminated to any former, existing or potential stockholders
of Parent or to the public or filed with The National Association of Securities Dealers, Inc.
(“NASD”) or the SEC or any state securities regulators or authorities is true, complete,
accurate in all material respects, not misleading, and was and is in full compliance with all
Securities Laws and regulations.

               (3) Parent has timely filed all required documents, reports and schedules with the NASD and
the SEC, and any applicable state or regional securities regulators or authorities. As of their
respective dates, the Parent Disclosure Documents complied in all material respects with the
requirements of the Securities Act, the Exchange Act, the NASD rules and regulations and state and
regional Securities Laws and regulations, as the case may be, and, at the respective times they
were filed. None of the Parent Disclosure Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.

          (m) Governmental Authorizations: Compliance with Laws.

               (1) Up to the Closing, Parent is currently in compliance with, and has complied with, and
Parent has conducted any business previously owned or operated by it in compliance with, all
applicable laws, orders, rules and regulations of all Governmental Entities, including applicable
Securities Laws and regulations and environmental laws and regulations, except where such
noncompliance has and will have, in the aggregate, no Material Adverse Effect on Parent.

               (2) Up to the Closing, Parent has not received notice of any noncompliance with the foregoing,
nor to its Knowledge are there any claims or threatened claims in connection therewith.

               (3) Assuming all corporate consents and approvals have been obtained and assuming all
applicable appropriate filings and mailings are made by Parent under the Securities Act, the
Exchange Act, with the NASD, and with the Secretary of State of Delaware, the execution and
delivery by Parent of this Agreement and the closing documents and the consummation by Parent of
the transactions contemplated hereby do not and will not (i) require the consent, approval or
action of, or any filing or notice to, any corporation, firm, Person or other entity or any public,
Governmental Entity or judicial authority (except for such consents, approvals, actions, filing or
notices the failure of which to make or obtain will not in the aggregate have a Material Adverse
Effect on Parent); or (ii) violate any order, writ, injunction, decree, judgment, ruling, law, rule
or regulation of any federal, state, county, municipal, or foreign court or Governmental Entity or
authority applicable to Parent, or its business or assets. Parent is not subject to, or a party
to, any mortgage, lien, lease, agreement, contract, instrument, order, judgment or decree or any
other material restriction of any kind or character which would prevent, hinder, restrict or impair
the continued operation of the business of Parent (or to the Knowledge of Parent, the continued
operation of the business of the Company) after the Closing.

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          (n) Ongoing Business. No aspect of Parent’s past or present business, operations or
assets is of such a character as would restrict or otherwise hinder or impair Parent from carrying
on the business of Parent as it is presently being conducted by Parent.

          (o) Required Government Consents, Filings, etc. Except as have been or, prior to the
Closing, will be obtained, no approval, authorization, certification, consent, variance,
permission, license, or permit to or from, or notice, filing, or recording to or with, any U.S.
Federal, state, or local governmental authorities is necessary for the execution and delivery of
this Agreement and the other agreements and instruments to be executed and delivered by Parent in
connection with the transactions contemplated hereby, or the consummation by Parent of the
transactions contemplated hereby.

          (p) Other Required Consents, Filings, etc. Except as have been or, prior to the
Closing, will be obtained, no approval, authorization, consent, permission, or waiver to or from,
or notice, filing, or recording to or with, any person is necessary for the execution and delivery
of this Agreement and the other agreements and instruments to be executed and delivered in
connection with the transactions contemplated hereby by Parent, or the consummation by Parent of
the transactions contemplated hereby.

          (q) Title to Assets. Parent has good and marketable title to all of its assets, free
and clear of any claims or Encumbrances. “Encumbrance” means any mortgage, charge (whether fixed or
floating), security interest, pledge, right of first refusal, lien (including any unpaid vendor’s
lien), option, hypothecation, title retention or conditional sale agreement, lease, option,
restriction as to transfer or possession, or subordination to any right of any other person.

          (r) Intellectual Property. Parent has no Intellectual Property. The term
“Intellectual Property” includes all patents and patent applications, trademarks, service marks,
and trademark or service mark registrations and applications, trade names, logos, designs, domain
names, web sites, slogans and general intangibles of like nature, together with all goodwill
relating to the foregoing, copyrights, copyright registrations, renewals and applications,
software, databases, technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models and methodologies, drawings, specifications,
plans, proposals, financing and marketing plans, advertiser, customer and supplier lists and all
other information relating to advertisers, customers and suppliers (whether or not reduced to
writing), licenses, agreements and all other proprietary rights, which relate to Parent or Merger
Sub’s business.

          (s) Compliance with Rules.

               (1) Parent at all times has been and is currently in compliance with all Rules applicable to
Parent and/or its business, except where such failure to comply would not have a material adverse
effect on Parent or its operations. “Rule” means any law, statute, rule, regulation, order,
court decision, judgment or decree of any U.S. Federal, state, territorial, provincial or municipal
authority.

               (2) Parent is in material compliance with, and have obtained all Permits and other
authorizations relating to Parent or Merger Sub which are required by any

13

 

Rule, which has been enacted to the date of this Agreement, except as would not have a
material adverse effect on Parent or Merger Sub or its operations. No governmental proceeding is
pending or threatened to cancel, amend, modify or fail to renew any such Permit. “Permit”
includes any approval, authorization, concession, grant, certificate of convenience and necessity,
qualification, consent, franchise, license, security clearance, easement, order or other permit
issued or granted by any governmental entity.

          (t) Disclosures. No representation or warranty by Parent contained in this Agreement
or the Parent Disclosure Documents and no statement contained in any certificate, schedule or other
communication furnished pursuant to or in connection with the provisions hereof contains or shall
contain any untrue statement of a material fact or omits to state a material fact necessary in
order to make the statements therein not misleading. There is no current or prior event or
condition of any kind or character pertaining to Parent that may reasonably be expected to have a
Material Adverse Effect on Parent. Except as specifically indicated elsewhere in this Agreement,
all documents delivered by Parent in connection herewith have been and will be complete originals,
or exact copies thereof.

          (u) Employees. Parent currently has no employees, consultants or independent
contractors. No amounts are due or owed to any previous or current Parent employee, consultant or
independent contractor. There are no oral employment agreements, consulting agreements or other
compensation agreements currently in effect between Parent and any person.

          (v) Broker’s or Finder’s Fees. Parent has not authorized any person to act as broker
or finder or in any other similar capacity in connection with the transactions contemplated by this
Agreement.

          (w) Environmental Matters. Parent, including any corporation to which Parent is a
successor, is in material compliance with all Environmental Laws. Neither Parent nor, to the
Knowledge of Parent, any other Person for whose conduct Parent is or may be held responsible, has
any Environmental Liabilities, or, to the Knowledge of Parent, with respect to any properties and
assets (whether real, personal or mixed) in which Parent (or any predecessor) has or had an
interest, or at any property geologically or hydrologically adjoining any such property or assets.

     5. Closing. The Closing of the transactions contemplated herein shall take place on
such date (the “Closing”) as soon as reasonably practicable following the execution of this
Agreement, subject to the conditions precedent set forth in Sections 7 and 8 hereto, unless
accelerated or extended by the affirmative agreement by all parties.

     6. Actions Prior to Closing.

          (a) Prior to the Closing, the Company on the one hand, and Parent and Merger Sub on the other
hand, shall be entitled to make such investigations of the assets, properties, business and
operations of the other party, and to examine the books, records, tax returns, financial statements
and other materials of the other party as such investigating party deems necessary in connection
with this Agreement and the transactions contemplated hereby. Any such investigation and
examination shall be conducted at reasonable times and under reasonable circumstances, and the
parties hereto shall cooperate fully therein. Until the Closing, and if the

14

 

Closing shall not occur, hereafter, each party shall keep confidential and shall not use in
any manner inconsistent with the transactions contemplated by this Agreement, and shall not
disclose, nor use for their own benefit, any information or documents obtained from the other party
concerning the assets, properties, business and operations of such party, unless such information
(i) is readily ascertainable from public or published information, (ii) is received from a third
party not under any obligation to keep such information confidential, or (iii) is required to be
disclosed by any law or order (in which case the disclosing party shall promptly provide notice
thereof to the other party in order to enable the other party to seek a protective order or to
otherwise prevent such disclosure). If this transaction is not consummated for any reason, each
party shall return to the other all such confidential information, including notes and compilations
thereof, promptly after the date of such termination. The representations and warranties contained
in this Agreement shall not be affected or deemed waived by reason of the fact that either party
hereto discovered or should have discovered any representation or warranty is or might be
inaccurate in any respect.

          (b) Prior to the Closing, the Company, Parent and Merger Sub agree not to issue any statement
or communications to the public or the press regarding the transactions contemplated by this
Agreement without the prior written consent of the other parties. In the event that Parent is
required under federal Securities Law to either (i) file any document with the SEC that discloses
this Agreement or the transactions contemplated hereby, or (ii) to make a public announcement
regarding this Agreement or the transactions contemplated hereby, Parent shall provide the Company
with a copy of the proposed disclosure no less than 48 hours before such disclosure is made and
shall incorporate into such disclosure any reasonable comments or changes that the Company may
request. The parties hereto agree to the issuance of a press release in a form to be agreed upon
by the parties following the Execution Date.

          (c) There shall be no stock dividend, stock split, recapitalization, or exchange of shares
with respect to or rights, options or warrants issued in respect of Parent’s Common or Preferred
Stock after the date hereof and there shall be no dividends or other distributions paid on Parent’s
Common Stock, or shares of Parent capital stock issued, after the date hereof, in each case through
and including the Effective Time. The Company, Parent and Merger Sub shall conduct no business,
prior to the Closing, other than in the ordinary course of business or as may be necessary in order
to consummate the transactions contemplated hereby.

          (d) Prior to the Closing, if requested by the Managers of IMPCO and the Company, Parent shall
adopt a new stock option plan or amend its existing stock option plan in the manner requested by
the Managers of IMPCO and the Company.

          (e) Prior to the Closing, the Board of Directors of the Parent and the Manager of Merger Sub
shall approve the Merger, this Agreement, and the transactions contemplated hereby, and shall
approve the resignations of the officers and directors of Parent and Merger Sub, effective as of
the Closing, and take such action as is necessary to appoint the Company nominees to the Parent
Board of Directors and offices effective as of the Closing.

     7. Conditions Precedent to the Obligations of the Company. All obligations of the
Company under this Agreement are subject to the fulfillment, prior to or as of the Closing and/or
the Effective Time, as indicated below, of each of the following conditions:

15

 

          (a) The representations and warranties by or on behalf of Parent and Merger Sub contained in
this Agreement or in any certificate or document delivered pursuant to the provisions hereof or in
connection herewith shall be true and correct in all material respects at and as of the Closing and
Effective Time as though such representations and warranties were made at and as of such time.

          (b) Parent and Merger Sub shall have performed and complied with all covenants, agreements,
and conditions set forth or otherwise contemplated in, and shall have executed and delivered all
documents required by, this Agreement to be performed or complied with or executed and delivered by
them prior to or at the Closing.

          (c) On or before the Closing, the directors of Parent and the Manager of Merger Sub, and
Parent as interest holder of Merger Sub, and the stockholders of Parent (to the extent the Parent
Required Vote is required by applicable law), shall have approved in accordance with applicable
state corporation law the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.

          (d) On or before the Closing Date, Parent and Merger Sub shall have delivered certified copies
of resolutions of the sole interest holder and Manager of Merger Sub and of the directors of Parent
approving and authorizing the execution, delivery and performance of this Agreement and authorizing
all of the necessary and proper action to enable Parent and Merger Sub to comply with the terms of
this Agreement, including the election of the Company’s nominees to the Board of Directors of
Parent and all matters outlined or contemplated herein.

          (e) The Merger shall be permitted by applicable state law and otherwise and Parent shall have
sufficient shares of its capital stock authorized to complete the Merger and the transactions
contemplated hereby.

          (f) At the Closing, the number of directors of Parent will be set at three (3), and (A) Frank
Ingriselli, Laird Q. Cagan and Elizabeth P. Smith, or such other persons designated by the Company,
shall be elected to the Board of Directors of Parent, (B) Frank Ingriselli shall be elected the
President and Chief Executive Officer of Parent, (C) Jamie Tseng shall be elected as the Executive
Vice President of Parent, (D) Stephen F. Groth shall be elected Vice President, Chief Financial
Officer and Secretary of Parent, and (E) all of the former directors and officers of Parent shall
resign in writing from their positions as directors and officers of Parent.

          (g) At the Closing, all instruments and documents delivered by Parent or Merger Sub, including
to the Company holders of Series A and Series B Interests pursuant to the provisions hereof shall
be reasonably satisfactory to legal counsel for the Company.

          (h) The Company shall have received the reasonable assurance of its certified public
accountants, to the extent it deems necessary, that its financial audit shall be concluded at the
proper time in order to be in full compliance will applicable SEC reporting requirements in
connection with the Merger and the Closing of this transaction.

16

 

          (i) The Company shall have raised a minimum of $8,000,000 of capital in connection with its
Private Placement under terms and conditions acceptable to the Company.

          (j) The shares of restricted Parent capital stock to be issued to the holders of Company
Series A and Series B Interests at Closing will be validly issued, nonassessable and fully paid
under Delaware corporation law and will be issued in a nonpublic offering in compliance with all
federal, state and applicable Securities Laws.

          (k) The Company shall have received the advice of its tax advisor, to the extent it deems
necessary, that this transaction is a tax free reorganization as to the Company and all of the
holders of Company Series A and Series B Interests.

          (l) The Company shall have received all necessary and required approvals and consents from
required parties and from its holders of Company Series A and Series B Interests in connection with
the Closing of this Agreement, including stockholder approval to change the name of Parent to
“Pacific Asia Petroleum, Inc.,” in the State of Delaware and thereafter change the trading symbol
of Parent.

          (m) At the Closing, Parent and Merger Sub shall have delivered to the Company an opinion of
Parent’s legal counsel dated as of the Closing to the effect that:

               (1) Parent is a corporation duly organized, validly existing and in good standing under the
laws of the Delaware, and Merger Sub is a limited liability company validly existing and in good
standing under the laws of Delaware;

               (2) This Agreement has been duly authorized, executed and delivered by Parent and Merger Sub
and is a valid and binding obligation of Parent and Merger Sub enforceable in accordance with its
terms;

               (3) Parent and Merger Sub each through its Board of Directors and stockholders, and interest
holders and Manager, respectively, have taken all corporate action necessary for performance under
this Agreement;

               (4) The documents executed and delivered to the Company and the holders of Company Series A
and Series B Interests hereunder are valid and binding in accordance with their terms and vest in
the holders of Company Series A and Series B Interests all right, title and interest in and to the
shares of Parent’s Common Stock and Preferred Stock to be issued pursuant to Section 2 hereof, and
the shares of Parent capital stock when issued will be duly and validly issued, fully paid and
nonassessable; and

               (5) Parent and Merger Sub each has the corporate power to execute, deliver and perform under
this Agreement.

          (n) The “Closing” as defined in the IMPCO Merger Agreement of that certain merger transaction
contemplated by the IMPCO Merger Agreement shall close simultaneously with the Closing of the
Merger under this Agreement.

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     8. Conditions Precedent to the Obligations of Parent and Merger Sub. All obligations
of Parent and Merger Sub under this Agreement are subject to the fulfillment, prior to or at the
Closing and/or the Effective Time, of each of the following conditions:

          (a) The representations and warranties by the Company contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof shall be true and correct in
all material respects at and as of the Closing and the Effective Time as though such
representations and warranties were made at and as of such times.

          (b) The Company shall have performed and complied with, in all material respects, all
covenants, agreements, and conditions required by this Agreement to be performed or complied with
by it prior to or at the Closing.

          (c) The Company shall have raised a minimum of $8,000,000 of capital in connection with its
Private Placement.

          (d) The Company shall deliver an opinion of its legal counsel to the effect that:

               (1) The Company is a limited liability company duly organized, validly existing and in good
standing under the laws of the state of its organization;

               (2) This Agreement has been duly authorized, executed and delivered by the Company;

               (3) The Manager and holders of Company Series A and Series B Interests have taken all
corporate action necessary for performance under this Agreement; and

               (4) The Company has the corporate power to execute, deliver and perform under this Agreement.

     9. Survival and Indemnification. Notwithstanding any investigation conducted by any
Party hereto or any information any party may receive, all representations, warranties, covenants
and agreements contained in this Agreement (or in any schedule, certificate, document or statement
delivered pursuant hereto) shall survive only until the Closing.

     10. Nature of Representations. All of the parties hereto are executing and carrying
out the provisions of this Agreement in reliance solely on the representations, warranties and
covenants and agreements contained in this Agreement and the other documents delivered at the
Closing and not upon any representation, warranty, agreement, promise or information, written or
oral, made by the other party or any other Person other than as specifically set forth herein.

     11. Documents at Closing. At the Closing, the following documents shall be delivered:

          (a) The Company will deliver, or will cause to be delivered, to Parent the following:

18

 

               (1) a certificate executed by the President of the Company to the effect that all
representations and warranties made by the Company under this Agreement are true and correct as of
the Closing and as of the Effective Time, the same as though originally given to Parent or Merger
Sub on said date;

               (2) a certificate from the state of the Company’s organization dated within five business days
of the Closing to the effect that the Company is in good standing under the laws of said state;

               (3) such other instruments, documents and certificates, if any, as are required to be
delivered pursuant to the provisions of this Agreement;

               (4) an executed copy of the LLC Certificate of Merger for filing in Delaware;

               (5) certified copies of resolutions adopted by the members and Manager of the Company
authorizing the Merger;

               (6) all other items, the delivery of which is a condition precedent to the obligations of
Parent and Merger Sub, as set forth herein; and

               (7) the legal opinion required by Section 8(d) hereof.

          (b) Parent and Merger Sub will deliver or cause to be delivered to the Company:

               (1) stock certificates representing those securities of Parent to be issued as a part of the
Merger as described in Section 2 hereof;

               (2) a certificate of the President of Parent and Merger Sub, respectively, to the effect that
all representations and warranties of Parent and Merger Sub made under this Agreement are true and
correct as of the Closing, the same as though originally given to the Company on said date;

               (3) certified copies of resolutions adopted by Parent’s Board of Directors and, if applicable,
stockholders, and the Manager of Merger Sub and its members, if applicable, authorizing the Merger
and all related matters;

               (4) certificates from the jurisdiction of incorporation of Parent and organization of Merger
Sub dated within five business days of the Closing Date that each of said corporations is in good
standing under the laws of said state;

               (5) opinion of Parent’s counsel as described in Section 7(m) above;

               (6) such other instruments and documents as are required to be delivered pursuant to the
provisions of this Agreement;

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               (7) written resignation of all of the officers and directors of Parent and Merger Sub and
written appointment of the Company nominees as directors and officers; and

               (8) all other items, the delivery of which is a condition precedent to the obligations of the
Company, as set forth in Section 7 hereof.

     12. Consultants’ Fees. Parent and Merger Sub, jointly and severally, represent and
warrant to the Company, and the Company represents and warrants to each of the Parent and Merger
Sub, that none of them, or any party acting on their behalf, has incurred any liabilities, either
express or implied, to any “consultant” “broker” or “finder” or similar Person in connection with
this Agreement or any of the transactions contemplated hereby.

     13. Post-Closing Covenants.

          (a) Standard and Poor’s. If required for the trading of Parent Common Stock, Parent
shall use its commercially reasonable efforts to apply for listing with Standard and Poor’s
Information Service and Blue Sky filings.

          (b) Stock Listing. As soon as Parent meets the company listing requirements, Parent
shall use all commercially reasonable efforts to cause Parent Common Stock to be listed for trading
on the Over-The-Counter Bulletin Board.

          (c) Confidentiality. Parent hereby agrees that, after the Execution Date and prior to
Effective Time, it shall not publicly disclose any confidential information of Parent or the
Company, and that they shall not make any public statement or announcement regarding the Merger or
the business, financial condition, prospects or operations of Parent or the Company, without the
prior written consent of the Company.

     14. Miscellaneous.

          (a) Further Assurances. At any time, and from time to time, after the Effective Time,
each party will execute such additional instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.

          (b) Waiver. Any failure on the part of any party hereto to comply with any of its
obligations, agreements or conditions hereunder may be waived in writing by the party (in its sole
discretion) to whom such compliance is owed.

          (c) Termination.

               (1) By Any Party. This Agreement may be terminated at the discretion of any party if
the Closing has not occurred by April 30, 2007 (unless the Closing date is extended with the
consent of both the Company and Parent) for any reason other than the default hereunder by the
terminating party.

               (2) Termination by Mutual Consent. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, before or

20

 

after gaining requisite stockholder approval, by the mutual written consent of Parent and the
Company.

               (3) Termination by Parent and Merger Sub. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the Board of Directors
of Parent and Merger Sub if:

               a. any representation or warranty of the Company contained in this Agreement shall not be true
in all material respects when made or, if a representation or warranty relates to a particular
date, shall not be true in all material respects as of such date (provided such breach is capable
of being cured and has not been cured within five (5) business days following receipt by the
breaching Party of notice of the breach) or on and as of the Effective Time as if made on and as of
the Effective Time; or

               b. the Merger is not approved by the Company’s members contemplated by this Agreement.

               (4) Termination by the Company. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time by action of the Manager of the Company if:

               a. any representation or warranty of Parent or Merger Sub contained in this Agreement shall
not be true in all material respects when made or, if a representation or warranty relates to a
particular date, shall not be true in all material respects as of such date (provided such breach
is capable of being cured and has not been cured within five (5) business days following receipt by
the breaching Party of notice of the breach) or on and as of the Effective Time as if made on and
as of the Effective Time; or

               b. the Merger is not submitted to Parent’s stockholders as contemplated by this Agreement
(provided that the Company is not in material breach of the terms of this Agreement and this
Agreement has not otherwise been terminated pursuant to this Section 14(c)).

               (5) Effect of Termination. Except as otherwise expressly provided herein, in the event
of termination of this Agreement by a Party as provided in this Section 14(c), this Agreement shall
forthwith become void and there shall be no liability or obligation on the part of the Parties or
their respective affiliates, officers, managers, members, directors or stockholders, except
(x) with respect to the payment of expenses pursuant to Section 14(l) and (y) to the extent that
such termination results from the breach of a Party of any of its representations or warranties, or
any of its covenants or agreements, in each case, as set forth in this Agreement. In addition, in
the event of termination of this Agreement any materials or documents that have been furnished by
one party to the other in connection with this Agreement or the transactions contemplated hereby
shall be promptly returned by the receiving party, accompanied by all copies of such
documentation, within ten (10) days after (a) the termination of this Agreement or (b) the written
request of the disclosing party.

          (d) Amendment. This Agreement may be amended only in writing as agreed to by all
parties hereto.

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          (e) Notices. All notices, requests, demands, claims, and other communications
required or permitted hereunder shall be in writing and shall be deemed given upon receipt if
delivered personally or by recognized commercial delivery service, or mailed by registered or
certified mail (return receipt requested), or sent via facsimile (with acknowledgment of complete
transmission and confirmed in writing by mail simultaneously dispatched) to the parties at the
following addresses (or at such other address for a party as shall be specified by like notice):

	 	(1)	 	if to Parent or Merger Sub, to:

     Pacific East Advisors, Inc.

     10600 N. De Anza Blvd., Suite 250

     Cupertino, California 95014

     Attention: Laird Q. Cagan

          Telephone No.: (408) 873-0400

          Facsimile No.: (408) 873-0550
	 
	 	 	 	with a copy (which shall not constitute notice) to:

     Krueger Group, LLP

     5771 La Jolla Boulevard

     La Jolla, California 92037

     Attention: Blair Krueger

          Telephone No.: (858) 729-9997

          Facsimile No.: (858) 729-9995

	 	(2)	 	if to Company, to:

     Advanced Drilling Services, LLC

     10600 N. De Anza Blvd., Suite 250

     Cupertino, California 95014

     Attention: Laird Q. Cagan

          Telephone No.: (408) 873-0400

          Facsimile No.: (408) 873-0550

          (f) Headings. The section and subsection headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

          (g) Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

          (h) Binding Effect. This Agreement shall be binding upon the parties hereto and inure
to the benefit of the parties, their respective heirs, administrators, executors, successors and
assigns.

          (i) Entire Agreement. This Agreement and the attached Exhibits, is the entire
agreement of the parties covering everything agreed upon or understood in the transaction.

22

 

There are no oral promises, conditions, representations, understandings, interpretations or
terms of any kind as conditions or inducements to the execution hereof.

          (j) Time. Time is of the essence.

          (k) Severability. If any part of this Agreement is deemed to be unenforceable, the
balance of the Agreement shall remain in full force and effect.

          (l) Responsibility and Costs. If the Merger is not consummated, all fees, expenses
and out-of-pocket costs, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred by the parties hereto (collectively the
“Transaction Expenses”) shall be borne solely and entirely by the party that has incurred
such costs and expenses, unless the failure to consummate the Merger constitutes a breach of the
terms hereof, in which event the breaching party shall be responsible for all costs of all parties
hereto. If the Merger is consummated, the Company shall be responsible for payment of all
Transaction Expenses incurred by the Company, the Parent and the Merger Sub.

          (m) Applicable Law. This Agreement shall be construed and governed by the internal
laws of the State of Delaware, without reference to principles of conflicts of law.

          (n) Jurisdiction and Venue. Each party hereto irrevocably consents to the
jurisdiction and venue of the state or federal courts located in Santa Clara County, State of
California, in connection with any action, suit, proceeding or claim to enforce the provisions of
this Agreement, to recover damages for breach of or default under this Agreement, or otherwise
arising under or by reason of this Agreement.

          (o) Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:

               (1) “Company Disclosure Documents” means that certain Confidential Private Placement
Memorandum of the Company, to be provided by the Company prior to the Closing, and other documents
provided to Parent by the Company prior to the Effective Time. Any information with respect to a
matter that is disclosed by the Company to the Parent for any purpose in the Company Disclosure
Documents shall be deemed to be disclosed for all purposes hereunder provided that such information
sufficiently identifies the matter in question in all material respects.

               (2) “Parent Disclosure Documents” means all available documents filed by Parent with
the NASD, the SEC or documents otherwise provided by Parent to the Company prior to the Effective
Time.

               (3) “Encumbrance” means, with respect to any Person, any mortgage, deed of trust,
pledge, lien, security interest, charge, claim or other security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the
effect of, security and any filed financing statement or other notice of any of the foregoing
(whether or not an Encumbrance is created or exists at the time of the filing).

23

 

               (4) “Environmental Law” means any and all applicable Legal Requirements, and without
limiting the foregoing, any regulations, orders, decrees, judgments or injunctions promulgated or
entered into by any Governmental Entity, relating to the preservation or reclamation of natural
resources, or to the management, Release (as hereinafter defined) or threatened Release of
Hazardous Material (as hereinafter defined), including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.
(“CERCLA”), the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., the Clean
Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2701 et seq., the
Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et. seq., the Safe Drinking Water Act, 42 U.S.C. §
300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq., and any
similar or implementing state or local law, and all amendments or regulations promulgated
thereunder.

               (5) “Environmental Liabilities” means all claims, demands, causes of action,
liabilities, investigations, judgments, damages, costs and expenses (including, without limitation,
costs of suit, reasonable attorneys’ fees, costs of negotiation, consulting fees and expert fees,
Remedial Action costs, penalties, fines and punitive damages, whether in respect of death, personal
injury, property damage, cleanup and removal expense, cost recovery contribution or compensation),
under Environmental Laws in effect prior to or as of the Closing, which arise from (i) the Release
of Hazardous Materials prior to the Closing at, on, in or under any facilities of the Company, (ii)
any violation by the Company of any Environmental Law in effect at the time of the Closing Date,
due to conditions existing or events occurring prior to the Closing, or (iii) the off-site
treatment, storage or disposal of Hazardous Materials from any of the facilities of the Company at
any time prior to the Closing.

               (6) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

               (7) “GAAP” means generally accepted accounting principles in the United States.

               (8) “Governmental Authorization” means any permit, license, franchise, approval,
consent, permission, confirmation, endorsement, waiver, certification, registration, qualification,
clearance or other authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Entity or pursuant to any Legal Requirement.

               (9) “Governmental Entity” means any nation, state, municipality and any federal,
state, local, foreign, provincial or supranational court or governmental agency, authority,
instrumentality or regulatory body.

               (10) “Hazardous Material” means all explosive or regulated radioactive materials or
substances; petroleum and petroleum products (including crude oil or any fraction thereof);
asbestos or asbestos-containing materials; and any hazardous or toxic materials, wastes or
chemicals designated, defined, listed or regulated as such pursuant to any Environmental Law.

24

 

               (11) “Indebtedness” means indebtedness for borrowed money or the equivalent or
represented by notes, bonds or other similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid of the purchase
price of any property (other than trade payables constituting current liabilities and Personal
property leases), and including without limitation capital lease obligations, including all accrued
and unpaid interest thereon, and applicable prepayment, breakage or other premiums, fees or
penalties and the costs of discharging such indebtedness, all as determined in accordance with
GAAP.

               (12) “Legal Requirement” shall mean any federal, state, local, provincial, foreign,
international, multinational or other statute, law, treaty, rule, regulation, guideline,
administrative order, directives, ordinance, constitution or principle of common law (or any
interpretation thereof by a Governmental Entity).

               (13) “Material Adverse Effect” means:

          (a) with respect to the Company, an effect that would be materially adverse: (i) to the
business, results of operation or financial condition of the Company; (ii) to the Company’s ability
to perform any of its material obligations under this Agreement or to consummate the Merger; or
(iii) to the ability of the Continuing LLC or Parent to conduct the business of the Company
following the Effective Time or the ability of the Company to exercise full rights of ownership of
the Company or its assets or business; or

          (b) with respect to Parent, an effect that would be materially adverse: (i) to the business,
results of operation, or financial conditions of Parent and its Subsidiaries, considered as a
whole; or (ii) to Parent’s ability to perform any of its material obligations under this Agreement
or to consummate the Merger; or (iii) to the ability of the Continuing LLC or Parent to conduct the
business of the Company following the Effective Time or the ability of Parent to exercise full
rights of ownership of the Company or its assets or business;

provided, however, that in determining whether a Material Adverse Effect has
occurred there shall be excluded any action or omission of the Company or Parent taken with the
prior written consent of Parent or the Company, as applicable, in contemplation of the Merger.

               (14) “Party” or “Parties” means either, or collectively, Parent, Merger Sub or
the Company.

               (15) “Person” means any individual and any corporation, partnership, limited liability
company, firm, trust, or other business entity and any Governmental Entity.

               (16) “Remedial Action” shall mean (a) “remedial action” as such term is defined in
CERCLA and (b) all other action required by any Governmental Entity to respond to a release or
threatened release of Hazardous Material.

               (17) “Securities Act” means the Securities Act of 1933, as amended.

               (18) “Securities Laws” means the Securities Act; the Exchange Act; the Investment
Company Act of 1940, as amended; the Investment Advisers Act of 1940, as

25

 

amended; the Trust Indenture Act of 1939, as amended; the rules and regulations of the
Securities and Exchange Commission promulgated thereunder; and the blue sky and other Legal
Requirements of any state that are applicable to the purchase and sale of securities generally.

               (19) “Subsidiary” or “Subsidiaries” means with respect to any party, any
corporation, company, partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.

               (20) In addition, the following terms shall be interpreted as set forth below:

               a. The words “hereof,” “herein,” “hereby” and “hereunder” and/or words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular
provisions of this Agreement.

               b. Terms defined in the singular shall have a comparable meaning when used in the plural, and
vice-versa.

               c. References to the “Knowledge” of an entity shall refer to the actual personal knowledge of
the directors and officers of the entity, and the knowledge of any fact or matter which any Person
would have following inquiries of those employees and directors or former employees and directors
of the entity of whom such persons would reasonably believe would have actual knowledge of such
matters presented.

               d. References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement. The reference to an
“Article” or “Section” is, unless otherwise specified, to one of the Articles or Sections of this
Agreement.

26

 

     IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above
written.

	 	 	 	 	 	 	 	 	 	 	 
	PACIFIC EAST ADVISORS, INC.,	 	 	 	DRILLCO ACQUISITION, LLC,	 	 
	a Delaware corporation	 	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Dale Walter
 

Dale Walter,
	 	 	 	By:
	 	/s/ Dale Walter
 

Dale Walter,
	 	 
	 

	 	Chairman, President and Chief Executive
	 	 	 	 	 	President and Chief Executive Officer	 	 
	 

	 	Officer	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ADVANCED DRILLING SERVICES, LLC.,	 	 
	 

	 	 	 	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Laird Q. Cagan	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Laird Q. Cagan,	 	 
	 

	 	 	 	 	 	 	 	Manager, President and Chief Executive
Officer	 	 

27

 

EXHIBIT A

PARENT CERTIFICATE

Intentionally Omitted

28

 

Amendment No 1. to the Amended and Restated Plan of Merger and Reorganization

ADVANCED DRILLING SERVICES, LLC

     This Amendment No. 1 to Amended and Restated Plan of Merger and Reorganization (“Amendment”)
is executed as of the 20th day of April, 2007, by and among: Pacific East Advisors, Inc., a
Delaware corporation (“Parent”), DRILLCO ACQUISITION, LLC., a Delaware limited liability company
and a wholly-owned subsidiary of Parent (“Merger Sub”) and ADVANCED DRILLING SERVICES, LLC, a
Delaware limited liability company (the “Company”).

WITNESSETH:

     WHEREAS, Parent, Merger Sub and the Company entered into that certain Agreement and Plan of
Merger and Reorganization (the “Merger Agreement”) dated December 5, 2006, and as amended and
restated on February 12, 2007, concerning the merger of the Company with and into Merger Sub. (such
agreement, as so amended and restated, is hereinafter referred to as the “Agreement”); and

     WHEREAS, Parent, Merger Sub and the Company desire to amend and modify the Merger Agreement;

     NOW, THEREFORE, Parent, Merger Sub and Company hereby agree as follows:

	 	1.	 	Section 2(b)(1) of the Merger Agreement is amended and restated in its
entirety, effective as of the date hereof, to provide as follows:

     “(1) It is currently contemplated that prior to the Merger becoming effective
under Delaware law, the Company shall close a private offering under Regulation D,
Rule 506, as promulgated by the Securities and Exchange Commission (“SEC”)
under the Securities Act, pursuant to which it will issue up to 13,600,000 Class B
Interests (excluding warrants issuable to the Company’s placement agents) (the
“Maximum Offering”) at $1.25 per Class B Interest (the “Private
Placement”). All of the Class B Interests issued as part of the Private
Placement shall be included in the membership interests of the Company that are
outstanding at the time of the Merger and will be converted/exchanged in the Merger
in accordance with Section 2(c)(1) below.”

	 	2.	 	Section 2(c)(1) of the Merger Agreement is amended and restated in its
entirety, effective as of the date hereof, to provide as follows:

     “(1) By virtue of the LLC Merger and without any further action on the part of
the Company or the Merger Sub or the holders of interests of the Company: (i) each
Class A Interest of the Company then outstanding shall be converted into one (1)
fully paid share of Common Stock of the Parent for a total aggregate of 9,850,000
fully paid and nonassessable shares of Common Stock, par value $0.001; AND (ii) each
Class B Interest of the Company then issued and

-1-

 

outstanding in connection with the
Private Placement shall be converted into one (1) fully paid share of Series A
Preferred Stock of the Parent for a maximum total aggregate of 13,600,000 fully paid
and nonassessable shares of Series A Preferred Stock, par value $0.001 (excluding
warrants issuable to the Company’s placement agents) (assuming the Maximum Offering
is achieved).”

	 	3.	 	Section 3(c) of the Merger Agreement is amended and restated in its entirety,
effective as of the date hereof, to provide as follows:

     “(c) Capital Structure of the Company. The issued and outstanding
limited liability company interests of the Company consist of 9,850,000 Class A
Interests and no Class B Interests as of the Execution Date. In connection with the
Private Placement, the Company may issue up to 13,600,000 additional Class B
Interests prior to the Closing (excluding warrants issuable to the Company’s
placement agents). As of the Execution Date, all the outstanding limited liability
company interests of the Company are held by the members free and clear of all
encumbrances. As of the Execution Date and as of the Closing, other than the
warrants issuable to the Company’s placement agents in connection with the Private
Placement (the “Placement Agent Warrants”) and as otherwise set forth
herein, there are and will be no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the limited liability
company interests of the Company.”

	 	4.	 	Except to the extent modified hereby, the Merger Agreement shall remain in full
force and effect.

[The remainder of this page is intentionally left blank.]

-2-

 

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of the date and
year first referenced above.

	 	 	 	 	 	 	 	 	 	 	 
	PACIFIC EAST ADVISORS, INC.	 	 	 	DRILLCO ACQUISITION, LLC	 	 
	a Delaware corporation
	 	 	 	a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Dale Walter
 

Dale Walter,
	 	 	 	By:
	 	/s/ Dale Walter
 

Dale Walter,
	 	 
	 

	 	Chairman, President and Chief Executive
Officer
	 	 	 	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ADVANCED DRILLING SERVICES LLC,	 	 
	 

	 	 	 	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Laird Q. Cagan	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Laird Q. Cagan,	 	 
	 

	 	 	 	 	 	 	 	Manager, President and Chief Executive
Officer	 	 

 -3-

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