Document:

Exhibit 10.1

 

THE RYLAND GROUP,
INC.

2008 EQUITY INCENTIVE PLAN

 

1.       Purpose and
Types of Awards

 

The purpose of THE RYLAND
GROUP, INC. 2008 EQUITY INCENTIVE PLAN (the “Plan”) is to promote the long-term
growth and profitability of the Corporation by providing key people with
incentives to improve stockholder value and to contribute to the growth and
financial success of the Corporation.

 

The Plan permits the granting
of stock options (including incentive stock options qualifying under Code Section 422
and nonqualified stock options), restricted stock awards, stock units or any
combination of the foregoing.

 

2.       Definitions

 

Under this Plan, except where
the context otherwise indicates, the following definitions apply:

 

(a)      “Administrator” means the Board, the Compensation Committee of the Board,
or any committee or committees that are appointed by the Compensation Committee
or the Board that have authority to administer the Plan as provided in Section 3
hereof.

 

(b)      “Affiliate” shall mean any entity, whether now or hereafter existing,
which controls, is controlled by or is under common control with the
Corporation (including joint ventures, limited liability companies and
partnerships).  For this purpose, “control”
shall mean ownership of 50 percent or more of the total combined voting power
or value of all classes of stock or interests of the entity.

 

(c)      “Award” shall mean any stock option, restricted stock award or
stock unit award.

 

(d)      “Board” shall mean the Board of Directors of the Corporation.

 

(e)      “Change in
Control” shall mean:

 

(i)      The acquisition by any person, other than the Corporation
or any employee benefit plans of the Corporation, of beneficial ownership of 20
percent or more of the combined voting power of the Corporation’s then
outstanding voting securities;

 

(ii)     The first purchase under a tender offer or exchange offer,
other than an offer by the Corporation or any employee benefit plans of the
Corporation, pursuant to which shares of Common Stock have been purchased;

 

(iii)    During any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at least a majority thereof,
unless the election or the nomination for the election by stockholders of the
Corporation of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of
the period; or

 

 

(iv)    Approval by stockholders of the Corporation of a merger,
consolidation, liquidation or dissolution of the Corporation, or the sale of
all or substantially all of the assets of the Corporation.

 

For purposes of any
Award or subplan that constitutes a “nonqualified deferred compensation plan,”
within the meaning of Code Section 409A, the Administrator, in its
discretion, may specify a different definition of Change in Control in order to
comply with the provisions of Code Section 409A.

 

(f)       “Code” shall mean the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.

 

(g)      “Common
Stock” shall mean shares of common stock, $1.00 par value, of the
Corporation.

 

(h)      “Corporation” shall mean The Ryland Group, Inc. and its successors
and assigns.

 

(i)       “Designated
Beneficiary” shall mean the beneficiary designated by an Award holder, in a manner
and to the extent determined by the Administrator, to receive amounts due or
exercise rights of the Award holder in the event of the Award holder’s
death.  In the absence of an effective
designation by an Award holder, “Designated Beneficiary” shall mean the Award
holder’s estate.

 

(j)       “Effective Date” shall mean the date the Plan is approved by the
stockholders of the Corporation.

 

(k)      “Fair Market Value” shall mean, with respect to a share of the Corporation’s
Common Stock or other property for any purpose on a particular date, the value
determined by the Administrator in good faith. 
However, if the Common Stock is registered under Section 12(b) of
the Securities Exchange Act of 1934, as amended, “Fair Market Value” with
respect to a share of the Corporation’s Common Stock shall mean, as applicable,
(i) either the closing price or the average of the high and low sale price
on the relevant date, as determined in the Administrator’s discretion, quoted
on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq
National Market; (ii) the last sale price on the relevant date quoted on
the Nasdaq SmallCap Market; (iii) the average of the high bid and low
asked prices on the relevant date quoted on the Nasdaq OTC Bulletin Board
Service or by the National Quotation Bureau, Inc. or a comparable service
as determined in the Administrator’s discretion; or (iv) if the Common
Stock is not quoted by any of the above, the average of the closing bid and
asked prices on the relevant date furnished by a professional market maker for
the Common Stock, or by such other source, selected by the Administrator.  If no public trading of the Common Stock
occurs on the relevant date, then Fair Market Value shall be determined as of
the next preceding date on which trading of the Common Stock does occur.  For all purposes under this Plan, the term “relevant
date” as used in this Section 2(k) shall mean either the date as of
which Fair Market Value is to be determined or the next preceding date on which
public trading of the Common Stock occurs, as determined in the Administrator’s
discretion.

 

(l)       “Grant
Agreement” shall mean a written document memorializing the terms and conditions
of an Award granted pursuant to the Plan and shall incorporate the terms of the
Plan.

 

(m)     “Plan Share
Reserve” means the maximum number of shares of Common Stock that may be issued
with respect to Awards granted under the Plan.

 

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(n)      “Prior Plans” shall mean The Ryland Group, Inc. 1992 Equity
Incentive Plan, The Ryland Group, Inc. 2002 Equity Incentive Plan, The
Ryland Group, Inc. 2005 Equity Incentive Plan and the 2007 Equity
Incentive Plan.

 

(o)      “2007
Equity Incentive Plan” shall mean The Ryland Group, Inc. 2007 Equity Incentive Plan, the
term of which expires on February 20, 2017.

 

3.       Administration

 

(a)      Administration
of the Plan.  The Plan shall be administered
by the Board, the Compensation Committee of the Board, or any committee or
committees that are appointed by the Compensation Committee or the Board from
time to time.

 

(b)      Powers of
the Administrator.  The Administrator shall have
all the powers vested in it by the terms of the Plan, such powers to include
authority, in its sole and absolute discretion, to grant Awards under the Plan,
prescribe Grant Agreements evidencing such Awards and establish programs for
granting Awards.

 

The Administrator
shall have full power and authority to take all other actions necessary to
carry out the purpose and intent of the Plan, including, but not limited to,
the authority to:  (i) determine the
eligible persons to whom, and the time or times at which Awards shall be
granted; (ii) determine the types of Awards to be granted; (iii) determine
the number of shares to be covered by or used for reference purposes for each
Award; (iv) impose such terms, limitations, restrictions and conditions
upon any such Award as the Administrator shall deem appropriate; (v) modify,
amend, extend or renew outstanding Awards, or accept the surrender of
outstanding Awards and substitute new Awards (provided however, that, except as
provided in Section 7(c) of the Plan, (A) any modification that
would adversely affect any outstanding Award shall not be made without the
consent of the holder, and (B) the exercise price for any outstanding
stock option granted under the Plan may not be decreased after the date of
grant nor may any outstanding stock option granted under the Plan be
surrendered to the Corporation as consideration for the grant of a new stock
option with a lower exercise price); (vi) accelerate or otherwise change
the time in which an Award may be exercised or becomes payable and to waive or
accelerate the lapse, in whole or in part, of any restriction or condition with
respect to such Award, including, but not limited to, any restriction or
condition with respect to the vesting or exercisability of an Award following
termination of any grantee’s employment or other service relationship with the
Corporation; and (vii) to establish, amend, modify, administer or
terminate subplans, and prescribe, amend and rescind rules and regulations
relating to such subplans.

 

The Administrator
shall have full power and authority, in its sole and absolute discretion, to
administer and interpret the Plan and to adopt and interpret such rules,
regulations, agreements, guidelines and instruments for the administration of
the Plan and for the conduct of its business as the Administrator deems
necessary or advisable.  To the extent
permitted by applicable law, the Administrator may delegate to one or more
executive officers of the Corporation the power to (i) grant Awards to
individuals who are not subject to Section 16 of the Securities Exchange
Act of 1934, as amended, or any successor provision and are not executive
officers of the Corporation, and (ii) make all determinations under the
Plan with respect thereto, provided that the Administrator shall fix the
maximum amount of such Awards for the group and a maximum for any Award recipient.

 

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(c)      Non-Uniform
Determinations.  The Administrator’s determinations under the Plan
(including without limitation, determinations of the persons to receive Awards,
the form, amount and timing of such Awards, the terms and provisions of such
Awards and the Grant Agreements evidencing such Awards) need not be uniform and
may be made by the Administrator selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.

 

(d)      Limited
Liability.  To the maximum extent permitted
by law, no member of the Administrator shall be liable for any action taken or
decision made in good faith relating to the Plan or any Award thereunder.

 

(e)      Indemnification.  To the maximum
extent permitted by law and by the Corporation’s Charter and Bylaws, the
members of the Administrator shall be indemnified by the Corporation in respect
of all their activities under the Plan.

 

(f)       Effect of
Administrator’s Decision.  All actions taken and decisions
and determinations made by the Administrator on all matters relating to the
Plan pursuant to the powers vested in it hereunder shall be in the
Administrator’s sole and absolute discretion and shall be conclusive and binding
on all parties concerned, including the Corporation, its stockholders, any
participants in the Plan and any other employee, consultant, or director of the
Corporation, and their respective successors in interest.

 

4.       Shares
Available for the Plan; Maximum Awards

 

(a)      Plan Share
Reserve.  Subject to the following
provisions of this Section 4 and adjustments as provided in Section 7(c) of
the Plan, the Plan Share Reserve shall be equal to the sum of: (i) 1,300,000
shares of Common Stock; (ii) 1,640,309 shares of Common Stock remaining
under the 2007 Equity Incentive Plan that are not subject to outstanding grants
of Awards under Prior Plans; and (iii) any shares of Common Stock that are
represented by Awards granted under the Prior Plans that are forfeited, expire
or are canceled without delivery of shares of Common Stock or which result in
the forfeiture of the shares of Common Stock back to the Corporation.

 

(b)      Adjustments
to Plan Share Reserve; Fixed ISO Limit.  If any Award, or
portion of an Award, under the Plan or the Prior Plans expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise terminated,
surrendered or canceled as to any shares, the shares subject to such Award
shall thereafter be available for Awards under the Plan; provided, however,
that the tender of shares for payment of the exercise price of an option or
award shall not make any such surrendered or tendered shares available for
issuance under the Plan; and provided further, that no more than the number of
shares available for issuance on the Effective Date shall be made available for
purchase pursuant to incentive stock options.

 

(c)      Cash
Settlement of Awards.  To the extent any shares of
Common Stock covered by an Award are not delivered to an Award holder or the
holder’s Designated Beneficiary because the Award is settled in cash, such
shares shall not be deemed to have been issued for purposes of determining the
maximum number of shares of Common Stock available for issuance under the Plan.

 

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(d)      Limitation
on Restricted Stock and Stock Units.  Notwithstanding the
provisions of Section 4(a) of the Plan and subject to adjustment as
provided in Section 7(c) of the Plan, the maximum number of shares of
Common Stock that may be issued in conjunction with Awards granted pursuant to
subsections (d) and (e) of Section 6 of the Plan (relating to
restricted stock awards and stock units) shall be 1,200,000 shares of Common
Stock; provided, however, that any shares of Common Stock that are forfeited
back to the Corporation with respect to any such Awards shall be available for
further Awards under subsections (d) and (e) of Section 6 of the
Plan.

 

(e)      Code Section 162(m) Limit.  Subject to adjustments as provided in Section 7(c) of
the Plan, the maximum number of shares of Common Stock subject to Awards of any
combination that may be granted during any one fiscal year of the Corporation
to any one individual under this Plan shall be limited to 500,000 shares.  Such per-individual limit shall not be
adjusted to effect a restoration of shares of Common Stock with respect to
which the related Award is terminated, surrendered or canceled.  The maximum cash amount that may be payable
in combination with any performance-based award distributable in restricted
stock or stock units is the cash amount equal to the sum of the fair market
value of the underlying shares plus the federal and state income and Medicare
taxes, assuming highest marginal tax rates, associated with the grant, vesting
or distribution of the related restricted stock or stock units.

 

5.       Participation

 

Participation in
the Plan shall be open to all employees, officers and other individuals
providing bona fide services to or for the Corporation or any Affiliate of the
Corporation, as may be selected by the Administrator from time to time.  The Administrator may also grant Awards to
individuals in connection with hiring, retention or otherwise, prior to the
date the individual first performs services for the Corporation or an Affiliate
provided that such Awards shall not become vested or exercisable, and no shares
shall be issued to such individual, prior to the date the individual first
commences performance of such services.

 

6.       Awards

 

(a)      Terms of
Awards; Vesting.  The Administrator, in its sole
discretion, establishes the terms of all Awards granted under the Plan.  Awards may be granted individually or in
tandem with other types of Awards.  All
Awards are subject to the terms and conditions provided in the Grant Agreement,
provided that all Awards shall have a minimum three-year pro-rated vesting
period, or a one-year vesting period plus performance criteria established by
the Administrator.

 

(b)      Performance
Factors.  For purposes of ensuring that compensation arising from
Awards granted under the Plan to officers and key employees of the Company is
deductible as qualified performance-based compensation within the meaning of
Code Section 162(m), the Administrator may provide that the granting,
vesting, right to exercise or lapse of restrictions associated with an Award
(each, a “performance-based award”) is contingent upon the attainment of one or
more pre-established, objective performance goals based on any, or any
combination of, the following business criteria as it may apply to an
individual, a business unit, or the Company: return on stockholders’ equity,
net cash provided by operating activities, return on investment, total revenue,
earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation
and amortization (“EBITDA”), profits, stock price, earnings per share, or cost
containment.  Performance goals may
include minimum, maximum and target levels of performance, with the size of the
performance-based award or the lapse of restrictions with respect thereto based
on the level attained.  The

 

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Administrator may,
at its sole discretion, modify the measurement criteria as applied to
performance-based awards to offset any unintended results arising from events
not anticipated when the performance goals were established; provided, that
such modifications may be made with respect to an Award granted to any
executive officer of the Company only to the extent permitted by Code Section 162(m).

 

(c)      Stock
Options.  The Administrator may from time to time grant to eligible
participants Awards of incentive stock options, as that term is defined in Code
Section 422, or nonqualified stock options; provided, however, that Awards
of incentive stock options shall be limited to employees of the Corporation or
of any current or hereafter existing “parent corporation” or “subsidiary
corporation,” as defined in Code Sections 424(e) and (f), respectively, of
the Corporation.  No stock option shall
be an incentive stock option unless so designated by the Administrator at the
time of grant or in the Grant Agreement evidencing such stock option.  All stock options granted under the Plan must
have an exercise price at least equal to Fair Market Value as of the date of
grant and may not have a term longer than five years.  Except for adjustments pursuant to Section 7(c),
the exercise price for any outstanding stock option granted under the Plan may
not be decreased after the date of grant nor may any outstanding stock option
granted under the Plan be surrendered to the Corporation as consideration for
the grant of a new stock option with a lower exercise price.

 

(d)      Restricted
Stock Awards.  The Administrator may from time to time grant restricted
stock Awards to eligible participants in such amounts, on such terms and
conditions, and for such consideration, including no consideration or such
minimum consideration as may be required by law, as it shall determine.  A restricted stock Award may be paid in
Common Stock, in cash, or in a combination of Common Stock and cash, as
determined in the sole discretion of the Administrator.

 

(e)      Stock Unit
Awards.  The Administrator may from time to time grant Awards to
eligible participants denominated in stock-equivalent units in such amounts and
on such terms and conditions as it shall determine.  Stock units granted to a participant shall be
credited to a bookkeeping reserve account solely for accounting purposes and
shall not require a segregation of any of the Corporation’s assets.  An Award of stock units may be settled in
Common Stock, in cash, or in a combination of Common Stock and cash, as
determined in the sole discretion of the Administrator.  Shares of Common Stock awarded in connection
with an Award of stock units may be issued for such consideration as may be
determined by the Administrator, including for no consideration or such minimum
consideration as may be required by law. 
Except as otherwise provided in the applicable Grant Agreement, the
grantee shall not have the rights of a stockholder with respect to any shares
of Common Stock represented by a stock unit solely as a result of the grant of
a stock unit to the grantee.

 

7.       Miscellaneous

 

(a)      Withholding
of Taxes.  Grantees and holders of Awards shall pay to the Corporation
or its Affiliate, or make provision satisfactory to the Administrator for
payment of, any taxes required to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability.  The Corporation or its Affiliate may, to the
extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the grantee or holder of an Award.  Notwithstanding the above, in no event may
holders of Awards satisfy such tax liability through the tender or withholding
of shares of Common Stock.

 

(b)      Transferability.  Except as otherwise
determined by the Administrator, and in any event in the case of an incentive
stock option, no Award granted under the Plan shall be transferable by a
grantee

 

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otherwise than by
will or the laws of descent and distribution. 
Unless otherwise determined by the Administrator in accord with the
provisions of the immediately preceding sentence, an Award may be exercised
during the lifetime of the grantee, only by the grantee or, during the period
the grantee is under a legal disability, by the grantee’s guardian or legal
representative.

 

(c)      Adjustments;
Business Combinations.

 

           (i)       Upon a stock dividend of, or stock split or reverse stock
split affecting, the Common Stock of the Corporation, (A) the maximum
number of shares reserved for issuance or with respect to which Awards may be
granted under the Plan and the maximum number of shares with respect to which
Awards may be granted during any one fiscal year of the Corporation to any
individual, as provided in Section 4 of the Plan, and (B) the number
of shares covered by and the exercise price and other terms of outstanding
Awards, shall, without further action of the Board, be adjusted to reflect such
event unless the Board determines, at the time it approves such stock dividend,
stock split or reverse stock split, that no such adjustment shall be made.  The Administrator may make adjustments, in
its discretion, to address the treatment of fractional shares and fractional
cents that arise with respect to outstanding Awards as a result of the stock
dividend, stock split or reverse stock split.

 

           (ii)      In the event of any other changes affecting the
Corporation, the capitalization of the Corporation or the Common Stock of the
Corporation by reason of any spin-off, split-up, dividend, recapitalization,
merger, consolidation, business combination or exchange of shares and the like,
the Administrator, except as otherwise provided in Section 7(d), in its
discretion and without the consent of holders of Awards, may make: (A) appropriate
adjustments to the maximum number and kind of shares reserved for issuance or
with respect to which Awards may be granted under the Plan, in the aggregate
and with respect to any individual, as provided in Section 4 of the Plan,
and to the number, kind and price of shares covered by outstanding Awards; and (B) any
other adjustments in outstanding Awards, including but not limited to reducing
the number of shares subject to Awards or providing or mandating alternative
settlement methods such as settlement of the Awards in cash or in shares of
Common Stock or other securities of the Corporation or of any other entity, or
in any other matters which relate to Awards as the Administrator shall, in its
sole discretion, determine to be necessary or appropriate.

 

           (iii)     The Administrator is authorized to make, in its discretion
and without the consent of holders of Awards, adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual
or nonrecurring events affecting the Corporation, or the financial statements
of the Corporation or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan and outstanding Awards.

 

(d)      Change in
Control.  Notwithstanding the provisions of Section 7(c)(ii), in
the event of a Change in Control, all Awards under the Plan are automatically
and fully vested and immediately exercisable or payable in whole or in
part.  The obligations of the Corporation
pursuant to the Plan and performance with respect to rights of Award holders
thereunder shall be assumed by any participant, successor-in-interest or
beneficiary of or interested party in the Change in Control (collectively, the
Change-in-Control Participant), and the Change-in-Control Participant shall
cause the Awards to be assumed, or new rights substituted therefor, by another
entity.

 

7

 

(e)      Substitution
of Awards in Mergers and Acquisitions in which the Corporation or an Affiliate
is the Acquiring Entity.  Solely in the event that the Corporation or an Affiliate is
an acquiring entity in a merger, acquisition and other business combination,
Awards may be granted under the Plan from time to time in substitution for Awards
held by employees, officers, consultants or directors of a target entity who
become or are about to become employees, officers, consultants or directors of
the Corporation or an Affiliate as the result of a merger or consolidation of
the employing entity with the Corporation or an Affiliate, or the acquisition
by the Corporation or an Affiliate of the assets or stock of the employing
entity.  The terms and conditions of any
substitute Awards so granted may vary from the terms and conditions set forth
herein to the extent that the Administrator deems appropriate at the time of
grant to conform the substitute Awards to the provisions of the awards for
which they are substituted.

 

(f)       Compensation
Committee Report.  For each performance year
and/or performance period, the Compensation Committee of the Board shall
determine and set forth in writing not later than 90 days after the
commencement of the performance year and/or performance period and in no event
later than the point in time when 25 percent of the performance period has
elapsed or the outcome of the performance objectives is no longer substantially
uncertain:  (i) the participants
under the Plan who are granted performance-based awards for the performance
period; (ii) the nature and amount (or the objective formula for
determining the amount) of the performance-based award that will be earned if
specified performance objectives are met; (iii) the applicable performance
factors; and (iv) any other objective terms and conditions that must be
satisfied by the participant in order to earn the performance-based award.

 

(g)      Termination,
Amendment and Modification of the Plan.  The Administrator
may terminate, amend or modify the Plan or any portion thereof at any time;
provided, however, that the provisions of Section 6(c) relating to
stock option repricing shall not be amended without approval by the Corporation’s
stockholders, and any amendments to the Plan will not (i) materially
increase the benefits accruing to participants under the Plan; (ii) materially
increase the aggregate number of securities that may be issued under the Plan;
or (iii) materially modify the requirements as to eligibility for
participation in the Plan, without approval by the Corporation’s stockholders.

 

(h)      Non-Guarantee
of Employment or Service.  Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Corporation or shall interfere in any way with the right
of the Corporation to terminate such service at any time with or without cause
or notice.  The Corporation expressly
reserves the right at any time to dismiss an Award recipient free from any
liability or claim under the Plan, except as expressly provided in the applicable
Grant Agreement.

 

(i)       No Trust or
Fund Created.  Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the Corporation and a grantee or any other
person.  To the extent that any grantee
or other person acquires a right to receive payments from the Corporation
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.

 

(j)       Designated
Beneficiaries.  Unless otherwise provided in the applicable Grant
Agreement, amounts or certificates due an Award recipient after his or her
death under an Award shall be paid or delivered to the Award recipient’s
Designated Beneficiary in accordance with the terms and conditions of the
Award.

 

8

 

(k)      Governing
Law.  The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules, regulations,
determinations or decisions made by the Administrator relating to the Plan or
such Grant Agreements, and the rights of any and all persons having or claiming
to have any interest therein or thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Maryland,
without regard to its conflict of laws principles.

 

(l)      Effective
Date; Termination Date.  The Plan is effective as of the date on which the Plan is
approved by the stockholders of the Corporation.  The Plan shall be unlimited in duration and,
in the event of Plan termination, shall remain in effect as long as any Awards
under it are outstanding; provided, however, that no Awards shall be granted
under the Plan after the close of business on February 20, 2018.

 

9United States Securities and Exhange Commission Edgar Filing

EXHIBIT 10.1

AMENDMENT AGREEMENT TO ASSET TRANSFER AGREEMENT – BAODE AREA BETWEEN CHEVRONTEXACO CHINA ENERGY COMPANY, PACIFIC ASIA PETROLEUM, LTD. AND PACIFIC ASIA PETROLEUM, INC. DATED SEPTEMBER 7, 2007, REGARDING THE SALE OF PARTICIPATING INTEREST IN THE PRODUCTION SHARING CONTRACT IN RESPECT OF THE RESOURCES IN THE BAODE AREA

THIS AMENDMENT AGREEMENT is made and entered into the 24th day of April, 2008 between CHEVRONTEXACO CHINA ENERGY COMPANY, incorporated under the laws of Mauritius (“CTCEC”), PACIFIC ASIA PETROLEUM, INC (“PAP Inc”) incorporated under the laws of Delaware, the United States of America and PACIFIC ASIA PETROLEUM, LTD, incorporated under the laws of Hong Kong (“PAPL”), (together the “Parties”).

WHEREAS further to the Asset Transfer Agreement for the sale of CTCEC’s participating interest in the production sharing contract in respect of the resource in the Baode Area made between CTCEC, PAPL and PAP Inc dated 7th September 2007 (the “Agreement”), the Parties agree as follows:

1.

In respect of the Agreement, the following amendments are hereby agreed:

a.

The definition of "Base Purchase Price" is amended by replacing "US$ 13,000,000" with "US$ 2,000,000".

b.

The definition of "Deposit" is amended to read "means US$ 650,000".

c.

Clause 4.1 is amended by replacing the words "nine months" with "fourteen months".

d.

Clause 5.3 is amended to read in its entirety:

"Subject to the Adjustment Amount, the Purchase Price shall be the Base Purchase Price".

2.

This Amendment Agreement shall form an integral part of the Agreement and shall be effective from the date hereof.

3.

Except for the provisions as expressly stipulated and revised in this Amendment Agreement, all other provisions of the Agreement shall remain unchanged, effective and fully applicable. 

4.

All capitalized terms have the meaning given in the Agreement unless otherwise stated.

IN WITNESS WHEREOF, this Amendment Agreement is signed on this 24th day of April, 2008 by the authorized representatives of each Party hereto.

			
	SIGNED for and on behalf of ChevronTexaco China Energy Company by its duly authorised signatory

	 
	SIGNED for and on behalf of Pacific Asia Petroleum, Inc. by its duly authorised signatory

	Signed    /s/ Randy Smith

	 
	Signed   /s/ Jamie Tseng

	Title 

Manager Finance

	 
	Title      

Executive Vice President

		
	SIGNED for and on behalf of Pacific Asia Petroleum, Ltd. by its duly authorised signatory

	 

	Signed /s/ Jamie Tseng 

	 

	Title 

Executive Vice President

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