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Exhibit 10.8(c)

MARVIN I. HAAS

October 2, 2007

Mr. Michael Lacovara,
Chief Executive Officer
Rodman & Renshaw Capital Group, Inc.
1270 Avenue of the Americas, 16th Floor
New York, NY 10020

Dear Michael,

This letter confirms my acceptance to serve as a member of the Board of Directors of Rodman & Renshaw Capital Group, Inc. effective as of the date and time of effectiveness of the Company’s
  S-1 registration statement designated as SEC File No. 333-144684. I hereby consent to the use of my name in such registration statement as a director-nominee.

Very truly yours,

/s/ MARVIN I. HAAS
Marvin I. Haasc49473_ex10-8d.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.8(d) 

PETER F. DRAKE 

October 9, 2007 

Mr. Michael Lacovara, 

Chief Executive Officer 

Rodman & Renshaw Capital Group, Inc. 

1270 Avenue of the Americas, 16th Floor 

New York, NY 10020 

Dear Michael, 

       This letter confirms my acceptance to serve as a member of the Board of Directors of Rodman & Renshaw Capital Group, Inc. effective as of the date and time of effectiveness of the Company’s S-1 registration statement
designated as SEC File No. 333-144684. I hereby consent to the use of my name in such registration statement as a director-nominee. 

		
	 	
Very truly yours,
  
	 	 

  
	 	 

  
	 	
/s/ PETER F. DRAKE
  
	 	
Peter F. DrakeExhibit 10.23

 

EXHIBIT
10.23

Asset Transfer Agreement — Baode Area

ChevronTexaco China Energy Company

Pacific Asia Petroleum, Ltd.

and

Pacific Asia Petroleum, Inc.

Sale of participating interest in the Production Sharing

Contract in respect of the resources in the Baode Area

 

 

Asset Transfer Agreement 

Table of Contents

	 	 	 	 	 	 	 
	1.
	 	Definitions and Interpretation	 	 	4	 
	1.1
	 	Definitions	 	 	4	 
	1.2
	 	Interpretation	 	 	9	 
	2.
	 	Conduct before Completion	 	 	10	 
	2.1
	 	Conduct of business	 	 	10	 
	2.2
	 	Proceeds and Expenses	 	 	11	 
	3.
	 	Conditions	 	 	11	 
	3.1
	 	Conditions to Completion	 	 	11	 
	3.2
	 	Satisfaction of conditions	 	 	12	 
	3.3
	 	Other Contracts	 	 	13	 
	4.
	 	Right to Terminate	 	 	13	 
	4.1
	 	Relevant events	 	 	13	 
	4.2
	 	Limitations on right to terminate	 	 	13	 
	4.3
	 	Additional Rights	 	 	14	 
	5.
	 	Sale and Purchase	 	 	14	 
	5.1
	 	Sale and purchase	 	 	14	 
	5.2
	 	Excluded Assets	 	 	14	 
	5.3
	 	Purchase Price	 	 	14	 
	5.4
	 	Deposit	 	 	15	 
	5.5
	 	Allocation of Adjustments	 	 	15	 
	5.6
	 	Title and risk	 	 	15	 
	6.
	 	Completion	 	 	16	 
	6.1
	 	Place for Completion	 	 	16	 
	6.2
	 	Purchaser Completion Steps	 	 	16	 
	6.3
	 	Vendor Completion Steps	 	 	16	 
	6.4
	 	Contemporaneous effect	 	 	17	 
	6.5
	 	Liabilities	 	 	17	 
	6.6
	 	Insurance	 	 	17	 
	6.7
	 	Prepayments	 	 	17	 
	7.
	 	Cash Adjustment	 	 	18	 
	7.1
	 	Completion Accounts to be kept	 	 	18	 
	7.2
	 	Cashflow Account	 	 	18	 
	7.3
	 	Procedure to agree Adjustment Amount following Completion	 	 	19	 
	7.4
	 	Recognition of income and expenses	 	 	20	 
	8.
	 	Notice to Complete	 	 	21	 
	8.1
	 	Notice by the Purchaser	 	 	21	 

 
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Asset Transfer Agreement 

	 	 	 	 	 	 	 
	8.2
	 	Notice by the Vendor	 	 	21	 
	8.3
	 	Time of the essence	 	 	21	 
	9.
	 	Warranties and Purchaser Indemnity	 	 	21	 
	9.1
	 	Representations and Warranties of the Vendor	 	 	21	 
	9.2
	 	Disclosures	 	 	22	 
	9.3
	 	Limitation on liability	 	 	22	 
	9.4
	 	No reliance	 	 	23	 
	9.5
	 	Dealing with Warranty breach after Completion	 	 	24	 
	9.6
	 	Proceedings in respect of a claim	 	 	25	 
	9.7
	 	Insurance	 	 	25	 
	9.8
	 	Notification of Warranty breach before Completion	 	 	25	 
	9.9
	 	Each Party Warranties	 	 	26	 
	9.10
	 	Purchaser Warranties	 	 	27	 
	9.11
	 	Purchaser Indemnity	 	 	27	 
	10.
	 	Overdue Amount	 	 	27	 
	10.1
	 	Interest	 	 	27	 
	10.2
	 	Rate	 	 	28	 
	11.
	 	Access to Records after Completion	 	 	28	 
	12.
	 	No Disclosure	 	 	28	 
	12.1
	 	Confidentiality	 	 	28	 
	12.2
	 	Purchaser’s investigation	 	 	28	 
	12.3
	 	Exceptions	 	 	29	 
	12.4
	 	Public announcements	 	 	29	 
	12.5
	 	Confidentiality Agreement unaffected	 	 	29	 
	13.
	 	Amendment	 	 	29	 
	14.
	 	Further Assurances	 	 	29	 
	15.
	 	Entire Agreement	 	 	30	 
	16.
	 	Assignment	 	 	30	 
	17.
	 	Costs and Stamp Duty	 	 	30	 
	18.
	 	Governing Law	 	 	30	 
	19.
	 	Counterparts	 	 	30	 
	20.
	 	No Merger	 	 	30	 
	21.
	 	No Waiver	 	 	31	 
	22.
	 	FCPA	 	 	31	 
	23.
	 	Audit	 	 	31	 
	24.
	 	Consequential Loss	 	 	32	 
	25.
	 	Notices	 	 	32	 

 
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Asset Transfer Agreement 

	 	 	 	 	 
	Schedule 1
	 	 	35	 
	Notice of Proposed Transfer
	 	 	35	 
	Schedule 2
	 	 	37	 
	Notice of Assignment to CUCBM
	 	 	37	 
	Schedule 3
	 	 	39	 
	Disclosure Material
	 	 	39	 
	Schedule 4
	 	 	42	 
	Warranty Disclosures
	 	 	42	 

 
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Asset Transfer Agreement 

	 	 	 	 
	Date

	 	 	September
7th, 2007
	 

	 
 	 	 
	 
	 	 	 
	Parties
	 	 	 
	 

	 
 	 	 
	 
	 	 	 
	1.
	 	 	ChevronTexaco China Energy Company, a company organised and
existing under the laws of Mauritius (the Vendor);
	 
	 	 	 
	2.

	 	 	Pacific Asia Petroleum, Ltd. a company organised and existing
under the laws of Hong Kong (the Purchaser); and
	 
	 	 	 
	3.

	 	 	Pacific Asia Petroleum, Inc. a company organised and existing
under the laws of Delaware, United States of America (PAPI).
	 
	 	 	 
	 	 	 	 
	 
	 	 	 
	Recitals
	 	 	 
	 

	 
 	 	 
	 
	 	 	 
	A

	 	 	Subject to the execution of the Phase 2 Deed of Assignment and
approval of the Phase 2 Modification Agreement, the Vendor owns a
35.7142% interest in the Contractor’s interest in the Baode PSC.
	 
	 	 	 
	B

	 	 	The Vendor wishes to sell and the Purchaser wishes to buy the
Sale Interest on the terms of this Agreement.

IT IS AGREED as follows.

	1.	 	Definitions and Interpretation

 

	1.1	 	Definitions
	 
	 	 	The following definitions apply unless the context requires otherwise.
	 
	 	 	Adjustment Amount means any difference between the Purchaser Account and the Vendor Account
as determined under clause 7.
	 
	 	 	Affiliate has the meaning given in the Baode PSC.
	 
	 	 	Agreement means this agreement, the asset transfer agreement for the Baode Area.

 
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Asset Transfer Agreement 

	 	 	Approval includes any consent, authorisation, registration, filing, lodgement, agreement,
notarisation, certificate, permission, licence, approval, authority or exemption from, by
or with a Governmental Agency.
	 
	 	 	Baode Area means that area designated as the Baode area in Annex IB to the Baode PSC.
	 
	 	 	Baode Participation Agreements means the Joint Operating Agreement and the Farmout
Agreement.
	 
	 	 	Baode PSC means the Production Sharing Baode PSC for the Exploitation of Coalbed Methane
Resources in the Baode Area, the People’s Republic of China between CUCBM and Texaco China
B.V. dated 8 November 2000.
	 
	 	 	Base Purchase Price means US$ 13,000,000, payable by the Purchaser to the Vendor in
accordance with the terms set out herein.
	 
	 	 	BHPB means BHP Billiton World Exploration Inc., a company organised and existing under the
laws of Canada.
	 
	 	 	Business means the Coalbed Methane, Liquid Hydrocarbons and Petroleum exploration,
appraisal, development and production operations relating to the Sale Interest and the
operations and activities associated with or related to those operations.
	 
	 	 	Business Day means a weekday on which banks are open in the PRC.
	 
	 	 	Coalbed Methane has the meaning given in the Baode PSC.
	 
	 	 	Completion means completion of the sale and purchase of the Sale Interest under this
Agreement.
	 
	 	 	Completion Date means the Business Day in the month in which the last of all the conditions
in clause 3.1 is satisfied or such other date as the parties may agree in writing.
	 
	 	 	Completion Modification Agreement means the modification agreement dated on or about the
date of this Agreement between the parties to this Agreement, BHPB and CUCBM modifying the
terms of the Baode PSC in contemplation of Completion occurring under this Agreement.
	 
	 	 	Confidential Information includes know-how, trade secrets, technical processes, finances,
contractual arrangements with customers or suppliers and other information which by its
nature, or by the circumstances of its disclosure to the holder of the information, is or
could reasonably be expected to be regarded as confidential.

 
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Asset Transfer Agreement 

	 	 	Contractor has the meaning given in the Baode PSC.
	 
	 	 	CUCBM means China United Coalbed Methane Corporation, Ltd, a company organised and existing
under the laws of the PRC having its headquarters domiciled in Beijing, PRC.
	 
	 	 	Deed of Novation means the deed of novation dated on or about the date of this Agreement
between the Vendor, the Purchaser and BHPB pursuant to which the Vendor novates its rights
and obligations under the Baode Participation Agreements to the Purchaser.
	 
	 	 	Deposit means a cash amount equal to five percent (5%) of the Base Purchase Price, being
US$ 650,000.
	 
	 	 	Disclosure Material means the material disclosed to the Purchaser in respect of the Sale
Interest up until the Completion Date, including the material described in Schedule 3.
	 
	 	 	Effective Date means 30th June 2007.
	 
	 	 	Encumbrance means an interest or power:

	 	(a)	 	reserved in or over any interest in any asset including any retention of
title; or
	 
	 	(b)	 	created or otherwise arising in or over any interest in any asset under a
bill of sale, mortgage, charge, lien, pledge, trust or power,

	 	 	by way of security for the payment of debt or any other monetary obligation or the
performance of any other obligation and whether existing or agreed to be granted or
created.
	 
	 	 	Environmental Law means a law or a provision of a law that relates to an aspect of the
environment.
	 
	 	 	Farmout Agreement means the farmout agreement for the term of the Baode PSC dated 29 June
2004 between the Vendor and BHPB.
	 
	 	 	Governmental Agency means a government or a governmental, semi-governmental or judicial
entity or authority. It also includes a self-regulatory organisation established under
statute or a stock exchange.
	 
	 	 	Guarantee means an obligation or offer to provide funds (including by subscription or
purchase) or otherwise be responsible in respect of an obligation or indebtedness, or the
financial condition or insolvency, of another person. It includes a guarantee, indemnity,
letter of credit or legally

 
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Asset Transfer Agreement 

	 	 	binding letter of comfort, or an obligation or offer to purchase an obligation or
indebtedness of another person.
	 
	 	 	Interim Period means the period between the Effective Date and the Completion Date.
	 
	 	 	Joint Management Committee has the meaning given in the Baode PSC.
	 
	 	 	Joint Operating Agreement means the joint operating agreement relating to the Baode Area
dated 29 June 2004 between the Vendor and BHPB.
	 
	 	 	Liabilities means the Vendor’s liabilities in respect of the Sale Interest other than any
liabilities which accrued in or relate to any period before the Effective Date, except that
the term includes any liability of the Vendor relating to the Sale Interest to pay
compensation to a landholder or a land rights holder, whenever determined or agreed and
whenever or for whatever period that liability accrued or related to.
	 
	 	 	Liquid Hydrocarbons has the meaning given in the Baode PSC.
	 
	 	 	Modification Agreement means the Completion Modification Agreement and the Phase 2
Modification Agreement.
	 
	 	 	MOFCOM means the PRC Ministry of Commerce or its relevant local representative office as
appropriate.
	 
	 	 	MOLAR means the PRC Ministry of Land and Natural Resources or its relevant local
representative office as appropriate.
	 
	 	 	Operator has the meaning given in the Joint Operating Agreement.
	 
	 	 	Operating Committee has the meaning given in the Joint Operating Agreement.
	 
	 	 	Participating Interest means the Vendor’s 35.7142% interest in the rights and obligations
of the Contractor under the Baode PSC or derived from the Baode PSC.
	 
	 	 	Petroleum has the meaning given in the Baode PSC.
	 
	 	 	Phase 2 Assigned Interest has the meaning given in the Farmout Agreement.
	 
	 	 	Phase 2 Deed of Assignment means the deed of assignment between the Vendor, BHPB and CUCBM
pursuant to which the Vendor assigned a further 28.5716% of its participating interest in
the Baode PSC to BHPB.

 
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Asset Transfer Agreement 

	 	 	Phase 2 Modification Agreement means the modification agreement dated between the Vendor,
BHPB and CUCBM modifying the terms of the Baode PSC in accordance with the terms of the
Phase 2 Deed of Assignment.
	 
	 	 	PRC means the People’s Republic of China.
	 
	 	 	Purchaser Account means the account of the Purchaser as determined under clause 7.
	 
	 	 	Purchase Price has the meaning given in clause 5.3.
	 
	 	 	Relevant Rate means the rate per annum being the arithmetic mean during the applicable
period, of 6 month term London Interbank Offer Rates (LIBOR rates) for US$ as published on
the first Business Day of each month by the Financial Times of London.
	 
	 	 	SAIC means the PRC State Administration of Industry and Commerce or its relevant local
representative office as appropriate.
	 
	 	 	Sale Interest means:

	 	(a)	 	the Participating Interest and the Vendor’s rights, title and interest
attributable to that Participating Interest;
	 
	 	(b)	 	the Vendor’s rights and obligations under the Joint Operating Agreement;
	 
	 	(c)	 	the Vendor’s rights and obligations under the Farmout Agreement; and
	 
	 	(d)	 	all other commercial interests arising from and relating to the Baode PSC and
the Joint Operating Agreement held by the Vendor.

	 	 	Tax includes any tax, levy, impost, deduction, charge, rate, duty, compulsory loan or
withholding that is levied or imposed by a Governmental Agency, and any related interest,
penalty, charge, fee or other amount.
	 
	 	 	Vendor Account means the account of the Vendor as determined under clause 7.
	 
	 	 	Warranty means any of the warranties given in clause 9.
	 
	 	 	Work Program and Budget has the meaning given in the Joint Operating Agreement.

 
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Asset Transfer Agreement 

	1.2	 	Interpretation
	 
	 	 	Headings are for convenience only and do not affect interpretation. The following rules
apply unless the context requires otherwise.

	 	(a)	 	The singular includes the plural, and the converse also applies.
	 
	 	(b)	 	A gender includes all genders.
	 
	 	(c)	 	If a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
	 
	 	(d)	 	A reference to a clause, schedule or annexure is a reference to a clause of,
or schedule or annexure to, this Agreement.
	 
	 	(e)	 	A reference to an agreement or document (including a reference to this
Agreement) is to the agreement or document as amended, supplemented, novated or
replaced, except to the extent prohibited by this Agreement or that other agreement or
document, and includes the recitals, and schedules and annexures to that agreement or
document.
	 
	 	(f)	 	A reference to writing includes any method of representing or reproducing
words, figures, drawings or symbols in a visible and tangible form.
	 
	 	(g)	 	A reference to a party to this Agreement or another agreement or document
includes the party’s successors and permitted assigns (and, where applicable, the
party’s legal personal representatives).
	 
	 	(h)	 	A reference to legislation or to a provision of legislation includes a
modification or re-enactment of it, a legislative provision substituted for it and a
regulation or statutory instrument issued under it.
	 
	 	(i)	 	A reference to an agreement includes any undertaking, deed, agreement and
legally enforceable arrangement, whether or not in writing, and a reference to a
document includes an agreement (as so defined) in writing and any certificate, notice,
instrument and document of any kind.
	 
	 	(j)	 	A reference to dollars and $ is to United States currency.
	 
	 	(k)	 	A reference to a right or obligation of any two or more people comprising a
single party confers that right, or imposes that obligation, as the case may be, on
each of them severally and each two or more of them jointly. A reference to that
party is a reference

 
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Asset Transfer Agreement 

	 	 	 	to each of those people separately (so that, for example, a representation or
warranty by that party is given by each of them separately).
	 
	 	(l)	 	All references to time are to PRC time.
	 
	 	(m)	 	Mentioning anything after includes, including, for example, or similar
expressions, does not limit what else might be included.
	 
	 	(n)	 	Nothing in this Agreement is to be interpreted against a party solely on the
ground that the party put forward this Agreement or a relevant part of it.
	 
	 	(o)	 	A month means a calendar month.
	 
	 	(p)	 	A day means a calendar day.

	2.	 	Conduct before Completion

 

	2.1	 	Conduct of business
	 
	 	 	From the date of this Agreement to the Completion Date (inclusive) the Vendor shall:

	 	(a)	 	not do any of the following things (other than things expressly contemplated
by this Agreement) without the prior written consent of the Purchaser, such consent
not to be unreasonably withheld or delayed:

	 	(i)	 	conduct the Business other than in its ordinary course;
	 
	 	(ii)	 	enter into any capital commitment relating to the Business
other than as set out in the Work Program and Budget or as otherwise permitted
by the Baode PSC or the Participation Agreements without requiring the
Vendor’s consent;
	 
	 	(iii)	 	except for disposals of Coalbed Methane, Liquid Hydrocarbons
and Petroleum in the ordinary and usual course of the Business, dispose of,
create any Encumbrance over, or declare itself trustee of the Sale Interest or
any part of it; or
	 
	 	(iv)	 	agree to vary any of the Baode Participation Agreements or
the Baode PSC; and

	 	(b)	 	observe and perform all of its obligations and duties under the Baode
Participation Agreements and the Baode PSC and shall not

 
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Asset Transfer Agreement 

	 	 	 	knowingly incur or assume any liability in connection with the Sale Interest other than in
the normal and usual course of business.

	2.2	 	Proceeds and Expenses
	 
	 	 	The Vendor is entitled to the proceeds received from, and shall pay all amounts payable in
respect of, the Sale Interest up to and including the Effective Date.
	 
	 	 	The Vendor is responsible for any tax, levy, encumbrance that any PRC Governmental Agency
imposes on the Vendor that relates directly to its transfer of the Sale Interest.

	3.	 	Conditions

 

	3.1	 	Conditions to Completion
	 
	 	 	The sale and purchase of the Sale Interest as contemplated in this Agreement is subject to:

	 	(a)	 	BHPB waiving its pre-emptive right to acquire the Participating Interest, and
consenting to the novation of the Baode Participation Agreements to the Purchaser
pursuant to the terms of this Agreement, the form of such waiver and consent being set
out in Schedule 1;
	 
	 	(b)	 	CUCBM waiving its preferred right to be assigned the Participating Interest,
and consenting to the transfer of the Participating Interest to the Purchaser pursuant
to the terms of this Agreement, the form of such waiver and consent being set out in
Schedule 2;
	 
	 	(c)	 	approval of the Modification Agreements (prior to execution) by MOLAR;
	 
	 	(d)	 	execution of the Phase 2 Deed of Assignment and Phase 2 Modification
Agreement;
	 
	 	(e)	 	execution of the Completion Modification Agreement;
	 
	 	(f)	 	filing of the executed Modification Agreements with MOLAR;
	 
	 	(g)	 	approval of the assignment of the Participating Interest and approval of the
Modification Agreements by MOFCOM;
	 
	 	(h)	 	either:

 
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Asset Transfer Agreement 

	 	(i)	 	the Purchaser registering with SAIC and including the
Participating Interest in the registration details maintained by SAIC; or
	 
	 	(ii)	 	if the Purchaser is already registered with SAIC, the
Purchaser’s registration details with SAIC are amended to include the
Participating Interest;

	 	(i)	 	the Vendor amending its registration details with SAIC to remove reference to
the Participating Interest (provided the Vendor has previously registered the details
of Participating Interest with SAIC);
	 
	 	(j)	 	any other Approval or Guarantee required to make effective the sale and
purchase of the Sale Interest contemplated by this Agreement; and
	 
	 	(k)	 	the execution of the Deed of Novation by all the parties to it.

	3.2	 	Satisfaction of conditions

	 	(a)	 	The Vendor will forthwith apply for and use all reasonable endeavours to
obtain the waivers and consents to the transfer of the Participating Interest referred
to in clauses 3.1(a) and 3.1(b).
	 
	 	(b)	 	The Vendor shall attend to the fulfilment of the conditions in clauses
3.1(c), 3.1(f) and 3.1(g). The Purchaser agrees to provide reasonable assistance to
the Vendor in order for the Vendor to fulfil the conditions in clauses 3.1(c), 3.1(f)
and 3.1(g).
	 
	 	(c)	 	After the waivers, consents and approvals referred to in clauses 3.1(a) to
3.1(g) have been obtained, the Purchaser will forthwith attend to the registration
requirements referred to in clause 3.1(h).
	 
	 	(d)	 	The Vendor shall inform the Purchaser if any consent or approval necessary
for the satisfaction of any condition in clause 3.1 (other than clause 3.1(h)) is
refused or if any consent or approval is conditional and provide a copy of all
relevant correspondence and documents to the Purchaser. On being informed of any
conditional consent or approval, the Purchaser will promptly inform the Vendor whether
the conditions are acceptable to the Purchaser.
	 
	 	(e)	 	A party will immediately inform each other party once a condition in clause
3.1 for which it is responsible is satisfied and each of the Vendor and the Purchaser
will provide regular reports to each other

 
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Asset Transfer Agreement 

	 	 	 	on progress towards satisfaction of the conditions in clause 3.1 for which it is
responsible.

	3.3	 	Other Contracts
	 
	 	 	The Vendor will, if requested by the Purchaser, or if the Vendor deems it appropriate,
apply for the novations and assignments of any agreement relating to the Sale Interest
other than the Baode Participation Agreements. The parties will use all reasonable
endeavours to obtain those novations and assignments. If the novation or assignment of any
such agreement is not obtained by Completion, then to the extent permitted by such
agreement, the Vendor will hold the benefit of that agreement for the Purchaser and act in
accordance with reasonable directions of the Purchaser and the Purchaser will indemnify the
Vendor in respect of any liabilities under that agreement.
	 
	4.	 	Right to Terminate

 

	4.1	 	Relevant events
	 
	 	 	Subject to clause 4.2, either party may terminate this Agreement by giving notice to the
other party before Completion if any condition referred to in clause 3.1 (other than those
conditions in clauses 3.1(h) or (i)) is not satisfied or waived on or before the day that
is nine months after the date of this Agreement.
	 
	4.2	 	Limitations on right to terminate
	 
	 	 	If any condition contained in clause 3.1 is not satisfied as a result of any breach of this
Agreement by the Vendor or the Purchaser, this Agreement shall not be liable to be
terminated in accordance with clause 4.1, but instead such breach shall constitute a breach
of this Agreement by that party which shall entitle the other party to:

	 	(a)	 	terminate this Agreement and recover damages from the defaulting party; or
	 
	 	(b)	 	sue for specific performance of this Agreement and damages in addition to or
in lieu thereof.

 
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Asset Transfer Agreement 

	4.3	 	Additional Rights
	 
	 	 	The rights under this clause 4 are in addition to, and not in substitution for, all other
rights which the other party may have at law or in equity in respect of such breach.

	5.	 	Sale and Purchase

 

	5.1	 	Sale and purchase
	 
	 	 	The Vendor will sell and the Purchaser will purchase the Sale Interest free from
Encumbrances with effect from the Effective Date.

	5.2	 	Excluded Assets

	 	(a)	 	The Purchaser hereby acknowledges and agrees for the avoidance of doubt that
any payments received by the Vendor on or prior to the Effective Date in respect of
Coalbed Methane, Liquid Hydrocarbons or Petroleum sold as a consequence of the
Vendor’s Participating Interest prior to the Effective Date, and any cash held by or
belonging to the Vendor as at the Effective Date in no way form part of the Sale
Interest.
	 
	 	(b)	 	The Purchaser also acknowledges and agrees that the Vendor will be entitled
to the benefit of any adjustments to payments made in respect of any period prior to
the Effective Date, and will cooperate to permit any audit or other investigation or
action in relation to any such potential adjustments, but at the expense of the Vendor
to the extent such audit, investigation or other action relate to any period prior to
the Effective Date.

	5.3	 	Purchase Price
	 
	 	 	Subject to the Adjustment Amount, the Purchase Price shall comprise:

	 	(a)	 	the Base Purchase Price; and
	 
	 	(b)	 	an amount equivalent to interest on the cash element of the Base Purchase
Price less the Deposit at the Relevant Rate, for the period between the Effective Date
and the Completion Date (both dates inclusive).

	 	 	If any amount payable to the Vendor under clause 5.3(b) of this Agreement is subject to Tax
in the PRC (including but not limited to, withholding tax or

 
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Asset Transfer Agreement 

	 	 	business tax), the Purchaser shall pay the Vendor any additional amounts actually paid by
the Vendor to ensure that the Vendor receives a net amount (after payment of any Taxes in
respect of those additional amounts) in the relevant currency equal to the full amount
which it would have received had a deduction for Tax not been made. The Purchaser shall
pay any such additional amount to the Vendor within 30 days of receiving confirmation in
writing from the Vendor evidencing that an additional Tax was paid by the Vendor as noted
above. The Purchaser shall indemnify the Vendor against the Tax and any amounts
recoverable from the Vendor in respect of the Tax.

	5.4	 	Deposit

	 	(a)	 	The Purchaser will, on the fifth Business Day immediately following the date
of this Agreement, pay the Deposit to the nominated bank account of the Vendor.
	 
	 	(b)	 	If this Agreement is terminated under clause 4.1 other than as a result of
failure by the Purchaser to fulfil its obligations under this Agreement, or under
clause 8.1, the Deposit will be repaid to the Purchaser within five Business Days of
the date of termination.
	 
	 	(c)	 	Otherwise, subject to Completion, the Deposit shall be released to the
Vendor, and shall be applied towards the Purchase Price.

	5.5	 	Allocation of Adjustments
	 
	 	 	If an amount is charged to the Vendor Account under clause 7, it shall be treated as a
negative adjustment to the Purchase Price and if an amount is charged to the Purchaser
Account under clause 7, it shall be treated as a positive adjustment to the Purchase Price.
Such amounts shall be paid by the relevant party in accordance with clause 7.3.

	5.6	 	Title and risk
	 
	 	 	Subject to Completion occurring, risk in the Sale Interest and title to the Sale Interest
passes to the Purchaser on the Completion Date.

 
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Asset Transfer Agreement 

	6.	 	Completion

 

	6.1	 	Place for Completion
	 
	 	 	Completion will take place at the offices of the Vendor in Beijing or other agreed place
before 1pm on the Completion Date.

	6.2	 	Purchaser Completion Steps
	 
	 	 	On Completion, after satisfaction of the Vendor’s obligations under clause 6.3, the
Purchaser shall pay to the Vendor (or as it may direct before Completion) by electronic
transfer in immediately available funds (to an account nominated in writing by the Vendor
to the Purchaser at least five Business Days before Completion) an amount equal to the
Purchase Price, less the Deposit, and the Purchaser will execute all documents received
from the Vendor under clause 6.3 (to the extent required to be executed by the Purchaser
and not already executed by it) and, where appropriate, provide one copy of those documents
to the Vendor.

	6.3	 	Vendor Completion Steps
	 
	 	 	On Completion, the Vendor shall place the Purchaser in effective possession and control of
the Sale Interest free from Encumbrances and shall deliver the following to the Purchaser:

	 	(a)	 	possession and control of all components of the Sale Interest, at the places
where they are located;
	 
	 	(b)	 	duly executed transfers or assignments of the Vendor’s undivided interest in
any other assets which comprise part of the Sale Interest which the Purchaser
reasonably requires and submits to the Vendor’s lawyers at least five Business Days
prior to Completion;
	 
	 	(c)	 	duly executed by the person to be bound by it, the waivers and consents set
out in clause 3.1(a) and 3.1(b);
	 
	 	(d)	 	duly executed originals where held by the Vendor, or otherwise complete
copies of the Baode PSC and the Baode Participation Agreements; and
	 
	 	(e)	 	evidence to the satisfaction of the Purchaser (acting reasonably) that any
representative on the Operating Committee or the Joint Management Committee who was
nominated or appointed by the

 
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Asset Transfer Agreement 

	 	 	 	Vendor (and any alternate for such representative) has resigned or been removed
from that office effective as of the Completion Date.

	6.4	 	Contemporaneous effect
	 
	 	 	All of the events and deliveries identified in clauses 6.2 and 6.3 shall be deemed to occur
simultaneously on the Completion Date, and no one event or delivery shall be deemed
completed or shall take effect until all are completed.

	6.5	 	Liabilities

	 	(a)	 	Subject to Completion occurring, and notwithstanding the Deed of Novation,
the Purchaser will be responsible for and will indemnify the Vendor:

	 	(i)	 	in respect of the Liabilities and, unless otherwise expressly
stated to the contrary in this Agreement, in respect of all other liabilities
associated with the Sale Interest arising after the Completion Date; and
	 
	 	(ii)	 	for all rehabilitation liabilities and obligations of the
Vendor pursuant to the Sale Interest or under any Environmental Law arising
after the Completion Date.

	 	(b)	 	The Vendor will be responsible for and will indemnify the Purchaser in
respect of all Liabilities associated with the Sale Interest which accrued, or relate
to any period, before the Completion Date.

	6.6	 	Insurance

	 	(a)	 	The Vendor and the Purchaser will use reasonable endeavours to cause any
insurance attributable to the Sale Interest to be changed to include the Purchaser’s
interest as the owner of the Sale Interest at Completion but with effect from the
Effective Date.
	 
	 	(b)	 	The Purchaser will reimburse the Vendor for a pro-rata share of annual
premium costs of insurance attributable to the Sale Interest and incurred in respect
of the Interim Period.

	6.7	 	Prepayments
	 
	 	 	From Completion the Purchaser shall have the benefit of the prepayments made by the Vendor
before the Effective Date on goods, services or other benefits in respect of the Sale
Interest which will be received by the

 
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Asset Transfer Agreement 

	 	 	Purchaser after the Effective Date (or by the Vendor during the Interim Period).

	7.	 	Cash Adjustment

 

	7.1	 	Completion Accounts to be kept
	 
	 	 	This clause 7 provides for adjustments to take into account the following:

	 	(a)	 	The balance between the Operator and the Vendor at the Effective Date (being
the difference of cumulative cash call paid since inception to the Effective Date to
the Operator less billings received from the Operator since inception to the Effective
Date).
	 
	 	(b)	 	All Vendor cash flow payments and receipts from the Effective Date to the
Completion Date.
	 
	 	(c)	 	The Vendor shall prepare a “cash adjustment statement” (the Cash Adjustment
Statement) comprising the balance between the Vendor and the Operator at the Effective
Date (referred to in paragraph (a)) and a cashflow account (Cashflow Account) in
respect of the Sale Interest for the Interim Period, taking into account the items
under clause 7.2.
	 
	 	(d)	 	Where the balance between the Operator and the Vendor at the Effective Date
is payable from the Vendor to the Operator, it will be charged to the Vendor Account.
Where the balance between the Vendor and the Operator is a receivable from the
Operator it will be charged to the Purchaser Account.
	 
	 	(e)	 	The Cashflow Account will record the adjustment to be made for all Vendor
cash flow receipts and payments from the Effective Date to the Completion Date. Net
income received by the Vendor from the Effective Date will be charged to the Vendor
Account and net expenses will be charged to the Purchaser Account.
	 
	 	(f)	 	The Vendor shall periodically (but not less that every 30 days from the date
of this Agreement) provide the Purchaser a copy of an updated Cash Adjustment
Statement.

	7.2	 	Cashflow Account

	 	(a)	 	The Cashflow Account shall take into account:

 
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Asset Transfer Agreement 

	 	(i)	 	the amount of any cash paid or payable by the Vendor in
respect of operating costs in relation to the Participating Interest or which
are invoiced or charged to, or otherwise incurred by, the Vendor in respect of
the Participating Interest during the Interim Period (such amounts to be
treated as expenses) and the Vendor shall pay any invoices in respect of such
costs received prior to the Completion Date; and

	 	(ii) 	(A) 	 	the amount of any cash received or entitled to be
received by the Vendor in respect of sales of Coalbed Methane, Liquid
Hydrocarbons or Petroleum invoiced in the Interim Period;
	 
	 	 	(B)	 	any other income received or entitled to be
received in respect of the Participating Interest in the Interim
Period,
	 
	 	 	(such amounts to be treated as revenue).

	 	(b)	 	If the sum of the total of revenue exceeds the sum of the total of expenses
incurred, then the amount of the difference (including interest under this clause)
shall be charged to the Vendor Account, otherwise the amount of the difference shall
be charged to the Purchaser Account.

	7.3	 	Procedure to agree Adjustment Amount following Completion

	 	(a)	 	If agreed between the parties, within 30 days after the end of the month in
which Completion occurs, the Vendor will prepare the final Cash Adjustment Statement
and submit it to the Purchaser, made up to the Completion Date. The Vendor will
provide supporting documentation reasonably adequate to justify all of the figures.
	 
	 	(b)	 	Within 15 Business Days of the date on which the Purchaser receives the Cash
Adjustment Statement (or such shorter time as the parties agree), the Purchaser agrees
to advise the Vendor in writing of any amounts to which it does not agree, including
its reasons.
	 
	 	(c)	 	The Vendor and the Purchaser will in good faith seek to reach agreement
without delay on any amounts not agreed to between them.
	 
	 	(d)	 	If no notice is given by the Purchaser under paragraph (b), then the Cash
Adjustment Statement will be considered final for the purposes of determining the
Adjustment Amount.

 
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Asset Transfer Agreement 

	 	(e)	 	If a notice is given under paragraph (b) and the Vendor and Purchaser do not
resolve the matter within 10 Business Days following receipt of the notice, then that
amount of the Adjustment Amount not disputed under paragraph (b) shall comprise the
Adjustment Amount.
	 
	 	(f)	 	If the parties are unable to resolve the dispute within 15 Business Days, the
parties shall refer such dispute to a certified public accountant to be selected by
the Vendor and the Purchaser, or failing which to be appointed by the American
Institute of Certified Public Accountants (AICPA). The decision of such chartered
accountant as to the Adjustment Amount shall be final and binding on the Vendor and
the Purchaser, and the Adjusted Amount thereon shall be paid or repaid by Purchaser or
the Vendor (as the case may be ) within 5 Business Days of such decision by the
chartered accountant.
	 
	 	(g)	 	Subject to paragraph (f), the Adjustment Amount shall be settled between the
parties within 20 Business Days of the date on which the Purchaser receives the Cash
Adjustment Statement.
	 
	 	(h)	 	Where the Vendor Account exceeds the Purchaser Account, the Adjustment Amount
shall be payable by the Vendor to the Purchaser.
	 
	 	(i)	 	Where the Purchaser Account exceeds the Vendor Account, the Adjustment Amount
shall be payable by the Purchaser to the Vendor.

	7.4	 	Recognition of income and expenses
	 
	 	 	The Vendor and Purchaser agree that:

	 	(a)	 	the Vendor will recognise the income and expenditures attributable to the
Sale Interest for income tax purposes for all periods up to and including the
Completion Date; and
	 
	 	(b)	 	the Purchaser will recognise the income and expenditures attributable to the
Sale Interest after the Completion Date for income tax purposes.

	 	 	The Vendor and the Purchaser agree to file all income tax returns on this basis.
	 
	 	 	The Vendor will indemnify the Purchaser for any liability for income tax arising on or
prior to the Completion Date and for any other Tax attributable to the Sale Interest
arising prior to or on the Effective Date and the

 
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Asset Transfer Agreement 

	 	 	Purchaser will indemnify the Vendor for
any liability for income tax attributable to the Sale Interest arising after the Completion
Date and for any other Tax attributable to the Sale Interest arising from the Effective
Date.

	8.	 	Notice to Complete

 

	8.1	 	Notice by the Purchaser
	 
	 	 	If the Vendor fails to satisfy its obligations under clause 6 on or before the Completion
Date, the Purchaser may give the Vendor a notice requiring it to satisfy those obligations
within 14 days after the date of receipt of the notice. If the Vendor fails to satisfy
those obligations on the date specified in the Purchaser’s notice, the Purchaser may,
without affecting or limiting any other rights it might have, terminate this Agreement.

	8.2	 	Notice by the Vendor
	 
	 	 	If the Purchaser fails to satisfy its obligations under clause 6 on or before the
Completion Date, the Vendor may give the Purchaser a notice requiring it to satisfy those
obligations within 14 days after the date of receipt of the notice. If the Purchaser fails
to satisfy those obligations on the date specified in the Vendor’s notice, the Vendor may,
without affecting or limiting any other rights it might have, terminate this Agreement.

	8.3	 	Time of the essence
	 
	 	 	When a notice is given under clause 8.1 or 8.2, time shall be of the essence under this
Agreement.

	9.	 	Warranties and Purchaser Indemnity

 

	9.1	 	Representations and Warranties of the Vendor
	 
	 	 	The Vendor represents and warrants to the Purchaser, as at the date of this Agreement that
each of the following is true and complete in all material respects.

	 	(a)	 	(Title to Sale Interest) The Vendor has title and rights to the Sale
Interest free and clear of all Encumbrances and there is not in effect any agreement
or other commitment to create any Encumbrance over the Sale Interest.

 
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Asset Transfer Agreement 

	 	(b)	 	(No breach) The Vendor is not in breach of the Baode PSC or the Baode
Participation Agreements.
	 
	 	(c)	 	(Full disclosure) The Vendor has disclosed all material information in its
possession or under its control relevant to the performance of its obligations under
the Baode PSC and the Baode Participation Agreements.
	 
	 	(d)	 	(Valid agreement) The Baode PSC and the Baode Participation Agreements are
valid and subsisting in accordance with their terms and set out all of the Vendor’s
rights in relation to those agreements.
	 
	 	(e)	 	(Third party rights) To the best of the Vendor’s knowledge, the Vendor’s
rights under the Baode PSC and the Baode Participation Agreements do not infringe the
rights of any third party.

	9.2	 	Disclosures
	 
	 	 	Each Warranty is subject to and qualified by any matter or transaction that:

	 	(a)	 	is provided for or described in this Agreement including the schedules;
	 
	 	(b)	 	is disclosed in the Disclosure Material or in Schedule 4; or
	 
	 	(c)	 	is known by the Purchaser.

	9.3	 	Limitation on liability
	 
	 	 	Notwithstanding any other provision of this Agreement, each of the following applies:

	 	(a)	 	the maximum aggregate liability of the Vendor under this Agreement (including
under any of the Warranties or any indemnity) is limited to an amount equal to the
Base Purchase Price plus any interest accrued;
	 
	 	(b)	 	the Vendor will not have any liability in respect of any claim under this
Agreement (including under the Warranties or any indemnity) unless reasonable
particulars of the claim are given to the Vendor
before the end of eighteen (18) calendar months from the end of the month in which
the Completion Date occurs;
	 
	 	(c)	 	the liability of the Vendor in respect of any claim under this Agreement
(including under the Warranties or any indemnity) will be

 
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Asset Transfer Agreement 

	 	 	 	reduced or extinguished (as
the case may be) to the extent that the claim has arisen as a result of any act or
omission after Completion;

	 	(d)	 	if after the Vendor has made a payment to the Purchaser under a claim made
under this Agreement (including under the Warranties or any indemnity), the Purchaser
receives any benefit or credit by reason of the matters to which the claim relates,
then the Purchaser shall immediately repay to the Vendor a sum corresponding to the
amount of the payment or (if less) the amount of the benefit or credit;
	 
	 	(e)	 	the Vendor will not be liable for a breach of Warranty in respect of any
matter or transaction referred to in clause 9.2;
	 
	 	(f)	 	the Vendor will not have any liability in respect of any proper claim under
this Agreement (including under the Warranties or any indemnity) unless:

	 	(i)	 	the amount of any one claim exceeds US$ 200,000; and
	 
	 	(ii)	 	the amount of the claim when aggregated with the amount of
any other claims properly made against the Vendor under this Agreement exceeds
the sum of US$ 400,000, but if such aggregate is exceeded then the whole
amount, and not just the excess above US$ 400,000, shall be recoverable; and

	 	(g)	 	the Vendor will not be liable to the Purchaser for any claim under this
Agreement (including under the Warranties or any indemnity):

	 	(i)	 	where the claim is as a result of any legislation not in
force at the date of this Agreement, including legislation which takes effect
retrospectively; or
	 
	 	(ii)	 	where the claim is as a result of or in respect of a change
in the judicial interpretation of the law in any jurisdiction after the date
of this Agreement.

	 	(h)	 	The limitation contained hereto shall not apply in the event of any
fraudulent act or omission of the Vendor, its agents or advisors.

	9.4	 	No reliance
	 
	 	 	The Purchaser acknowledges that:

	 	(a)	 	at no time has:

	 	(i)	 	the Vendor, or any person on behalf of the Vendor, made or
given; or

 
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Asset Transfer Agreement 

	 	(ii)	 	the Purchaser relied on,
	 
	 	any representation, warranty, promise or forecast except those in clauses 9.1 and
9.9 and otherwise as is set out in this Agreement;

	 	(b)	 	no other statements or representations (written or oral) or other conduct by
or on behalf of the Vendor:

	 	(i)	 	have induced or influenced the Purchaser to enter into this
Agreement or agree to any or all of its terms;
	 
	 	(ii)	 	have been relied on in any way as being accurate by the
Purchaser;
	 
	 	(iii)	 	have been warranted to the Purchaser as being true; or
	 
	 	(iv)	 	have been taken into account by the Purchaser as being
important to the Purchaser’s decision to enter into this Agreement or agree to
any or all of its terms; and

	 	(c)	 	it has had the opportunity to make requests for further information relevant
to the Sale Interest and such information has been supplied, and that this information
and access has been granted by or on behalf of the Vendor to enable the Purchaser to
make its own investigations and form its own views and to rely on those investigations
and views in entering into this Agreement, which investigations and views it has
relied upon.

	9.5	 	Dealing with Warranty breach after Completion
	 
	 	 	If the Purchaser becomes aware after Completion of any circumstances which constitute or
could (whether alone or with any other possible circumstances) constitute a breach of any
Warranty, including (without limitation) a claim against the Purchaser which if satisfied
would result in a claim for breach of any Warranty, the Purchaser must do each of the
following:

	 	(a)	 	promptly give the Vendor full details of the circumstances and any further
related circumstances of which the Purchaser becomes aware;
	 
	 	(b)	 	until it notifies the Vendor in accordance with paragraph (a), take
reasonable steps to mitigate any loss which may give rise to a claim against the
Vendor for breach of any Warranty;
	 
	 	(c)	 	not make any admission of liability, agreement or compromise with any person
in relation to the circumstances without first consulting

 
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Asset Transfer Agreement 

	 	 	 	with and obtaining the
approval of the Vendor (such approval not to be unreasonably withheld);

	 	(d)	 	give the Vendor and its professional advisers reasonable access to:

	 	(i)	 	the personnel and premises of the Purchaser; and
	 
	 	(ii)	 	relevant chattels, accounts, documents and records within the
power, possession or control of the Purchaser,

	 	 	 	to enable the Vendor and its professional advisers to examine the circumstances,
premises, chattels, accounts, documents and records and to take copies or
photographs of them at their own expense; and

	 	(e)	 	at the cost of the Vendor, take all action in good faith and with due
diligence that the Vendor reasonably directs to avoid, remedy or mitigate the breach,
including legal proceedings and disputing, defending, appealing or compromising the
claim and any adjudication of it.

	9.6	 	Proceedings in respect of a claim
	 
	 	 	Any claim by the Purchaser under this Agreement (including under any Warranty or any
indemnity) will (if not previously satisfied, settled or withdrawn) be taken to be waived
or withdrawn and will be barred and unenforceable following the end of eighteen (18)
calendar months from the end of the month in which the Completion Date occurs unless
proceedings in respect of the claim have been commenced against the Vendor. Proceedings
will not be taken to be commenced unless they have been both issued and served on the
Vendor.

	9.7	 	Insurance
	 
	 	 	The Vendor will not be liable to the Purchaser for any claim for breach of, or inaccuracy
in, any Warranty to the extent that the Purchaser is entitled to
claim, and does recover, under an indemnity against any loss or damage suffered by the
Purchaser arising out of the breach or claim under the terms of any insurance policy.

	9.8	 	Notification of Warranty breach before Completion
	 
	 	 	If on or before Completion the Purchaser becomes aware of any breach or potential breach of
any Warranty, the Purchaser must:

	 	(a)	 	notify the Vendor of this; and

 
 
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Asset Transfer Agreement 

	 	(b)	 	allow the Vendor a reasonable opportunity to remedy the breach or potential
breach.

If the Vendor is unable to remedy it to the Purchaser’s reasonable satisfaction or if the
Purchaser does not, in its reasonable opinion, accept the result as a remedy and the breach
could expose the Vendor to a liability exceeding 25% of the Base Purchase Price as
determined in good faith by the Purchaser, the Vendor may terminate this Agreement by
giving notice to the Purchaser and the Vendor shall immediately return the Deposit and any
other payments made against the Base Purchase Price, including interest accrued thereon, to
the Purchaser.

	9.9	 	Each Party Warranties

Each party, both at the date of this Agreement and at the Completion Date, warrants for the
benefit of each other party as follows:

	 	(a)	 	it is a company duly incorporated and validly existing under the laws of the
State or country of its incorporation;
	 
	 	(b)	 	subject to the satisfaction of the conditions in clause 3.1, it has full
power and authority to enter into, and has taken, or prior to the Completion Date will
have taken, all necessary corporate action required by it for the execution of, this
Agreement and the transactions contemplated by this Agreement;
	 
	 	(c)	 	this Agreement sets out and provides for its valid and binding obligations
enforceable in accordance with its terms and neither the execution and performance by
it of this Agreement nor any transaction contemplated by it will violate in any
respect:

	 	(i)	 	any law or treaty or any judgement, ruling, order,
authorisation, requirement or decree of any Governmental Agency binding on it;
	 
	 	(ii)	 	its constitution or other constituent documents; or
	 
	 	(iii)	 	any other document or agreement which is binding upon it or
its assets; and

	 	(d)	 	to the best of its knowledge, information and belief after due enquiry, no
petition has been issued against it for winding up, no receiver, administrator,
receiver and manager, official manager, liquidator or provisional liquidator has been
appointed to it, no action has been

 
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Asset Transfer Agreement 

taken to seize or take possession of any of its assets and there are no unsatisfied
judgements against it nor has any sequestration order been made or writ of
execution issued against it or any of its assets.

	9.10	 	Purchaser Warranties

The Purchaser warrants for the benefit of the Vendor that at the Completion Date it shall
have all necessary approvals in place and will be in a position to fund the purchase of the
Sale Interest and complete the transaction contemplated herein without undue delay.

	9.11	 	Purchaser Indemnity

PAPI hereby indemnifies, defends and holds harmless the Vendor in respect of all rights,
obligations, acts and omissions of the Purchaser in relation to this Agreement.

	10.	 	Overdue Amount

 

	10.1	 	Interest

	 	(a)	 	Any amount due and payable but unpaid by a party in accordance with this
Agreement will bear interest at the rate referred to in clause 10.2 accruing daily
from the due date up to and including the date of actual payment before and (as a
separate and independent legal obligation) after any judgement obtained in respect of
that amount (but excluding that day if payment is made in immediately available funds
by 12.00 noon on that day).
	 
	 	(b)	 	If any amount payable pursuant to this clause 10 is subject to Tax in the PRC
(including but not limited to, withholding tax or business tax), the party responsible
for such payment under paragraph (a) (the Responsible Party) shall pay the other party
(the Owed Party) any additional amounts actually paid by the Owed Party to ensure that
the Owed Party receives a net amount (after payment of any Taxes in respect of those
additional amounts) in the relevant currency equal to the full amount which it would
have received had a deduction for Tax not been made. The Responsible Party shall
indemnify the Owed Party against the Tax and any amounts recoverable from the Owed
Party in respect of the Tax.

 
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Asset Transfer Agreement 

	10.2	 	Rate

The rate of interest applicable for the purposes of clause 10.1 is the rate equal to the
aggregate of 3% per annum and the Relevant Rate calculated on a daily basis.

	11.	 	Access to Records after Completion

 

After the Completion Date, to the extent reasonably necessary to enable each party to
comply with its obligations and administer its affairs, in relation to any Tax:

	 	(a)	 	the Purchaser shall keep the books, records and other documents relating to
the Sale Interest delivered to the Purchaser on Completion; and
	 
	 	(b)	 	the Vendor shall keep the books, records and other documents relating to the
Business required to be kept or maintained by the Vendor,

for 10 years (or such greater period required under PRC law) from the date of the creation
of the relevant document. Each party, to the extent reasonably necessary to enable the
other party to comply with its obligations and administer its affairs, in relation to any
Tax, shall permit the other party to have access to those books, records and documents
during business hours as the other party reasonably requires.

	12.	 	No Disclosure

 

	12.1	 	Confidentiality

Subject to clauses 12.3 and 12.4, each party shall keep the terms of this Agreement
confidential.

	12.2	 	Purchaser’s investigation

Subject to clause 12.3, any Confidential Information obtained by the Purchaser in relation
to the Sale Interest must be kept confidential:

	 	(a)	 	until the Completion Date; and
	 
	 	(b)	 	after the Completion Date, if Completion does not occur.

 
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Asset Transfer Agreement 

	12.3	 	Exceptions

A party may make any disclosures in relation to this Agreement or any Confidential
Information as it thinks necessary:

	 	(a)	 	to its professional advisers, bankers, financial advisers and financiers, if
those persons undertake to keep information disclosed confidential;
	 
	 	(b)	 	to apply for and obtain any approvals or consents contemplated in clause 3.1;
	 
	 	(c)	 	to comply with any applicable law or requirement of any Governmental Agency;
or
	 
	 	(d)	 	to any of its employees to whom it is necessary to disclose the information
and who have an obligation to keep such information confidential.

	12.4	 	Public announcements

Except as required by applicable law or the requirements of any Governmental Agency,
all press releases and other public announcements relating to the transactions dealt with
by this Agreement to be made by the Vendor or the Purchaser must be in terms agreed by the
other of them (acting reasonably).

	12.5	 	Confidentiality Agreement unaffected

If the Purchaser has entered into any separate agreement to keep confidential the
Confidential Information of the Vendor or the Business, nothing in this clause 12 shall
limit or otherwise affect the terms of that agreement.

	13.	 	Amendment

 

This Agreement may be amended only by another agreement executed by the parties.

	14.	 	Further Assurances

 

Each party shall take all steps, execute all documents and do everything reasonably
required by the other party to give effect to any of the transactions contemplated by this
Agreement.

 
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Asset Transfer Agreement 

	15.	 	Entire Agreement

 

This Agreement contains the entire agreement between the parties with respect to its
subject matter. It sets out the only conduct relied on by the parties and supersedes all
earlier conduct and prior agreements and understandings between the parties in connection
with its subject matter.

	16.	 	Assignment

 

The rights of the parties under this Agreement cannot be assigned, charged or otherwise
dealt with.

	17.	 	Costs and Stamp Duty

 

Each party must bear its own costs arising out of the negotiation and preparation of this
Agreement. All stamp duty chargeable on this Agreement, on any instrument executed under
it, and in respect of any transaction evidenced by this Agreement shall be borne equally by
the parties.

	18.	 	Governing Law

 

This Agreement is governed by the laws of England and Wales. The parties submit to the
exclusive jurisdiction of the courts exercising jurisdiction there.

	19.	 	Counterparts

 

This Agreement may be executed in any number of counterparts. All counterparts together
will be taken to constitute one instrument.

	20.	 	No Merger

 

The rights and obligations of the parties will not merge on the completion of any
transaction contemplated by this Agreement. They will survive the execution and delivery
of any assignment or other document entered into for the purpose of implementing a
transaction.

 
Page (30)

 

 

Asset Transfer Agreement 

	21.	 	No Waiver

 

A failure to exercise or a delay in exercising any right, power or remedy under this
Agreement does not operate as a waiver. A single or partial exercise or waiver of the
exercise of any right, power or remedy does not preclude any other or further exercise of
that or any other right, power or remedy. A waiver is not valid or binding on the party
granting that waiver unless made in writing.

	22.	 	FCPA

 

Each Party warrants that neither it nor its affiliates has made or will make, with respect
to the matters provided for hereunder, any offer, payment, promise to pay or authorisation
of the payment of any money, or any offer, gift, promise to give or authorisation of the
giving of anything of value, directly or indirectly, to or for the use or benefit of any
official or employee of any government authority or to or for the use or benefit of any
political party, official, or candidate (Offer) unless such Offer is authorised by the
applicable laws of any government authority. Each Party further warrants that neither it
nor its affiliates has made or will make any such Offer to or for the use or benefit of any
other person if the Party has a belief, or is aware that there is a high probability that
the other person would use such Offer for any of the purposes described in the preceding
sentence. The Purchaser understands that the Vendor does not authorize any payments which
would be prohibited by the United States Foreign Corrupt Practices Act (FCPA) (or any other
similar law or regulation of any other government having jurisdiction over this Agreement
and/or the Parties) and acknowledges that no employee of the Vendor shall have authority to
give any direction relating to the making of any commitment by the Purchaser to any third
party in violation of the FCPA (or other similar law or regulation).

	23.	 	Audit

 

Each Party shall be entitled to audit all accounts and financial records the other relating
to the payments made and received under this Agreement for any calendar year upon thirty
(30) days advance notice to the other Party. This right to audit must be exercised within a
period of twenty-four (24) months from the end of the calendar year to which the charges
relate. Payments of any advances or invoices shall not prejudice the right of any

 
Page (31)

 

 

Asset Transfer Agreement 

Party to challenge the correctness thereof. After the twenty-four (24) month period, all
costs charged shall conclusively be presumed to be true and correct, except for costs
detailed in written exceptions resulting from the audits provided such exceptions are
received before the expiration of that period. All costs of the audit shall be borne by the
Party conducting the audit.

	24.	 	Consequential Loss

 

Neither Party is liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this Agreement,
including loss of profit or business interruptions, however these losses may be caused.

	25.	 	Notices

 

Any notice, demand, consent or other communication (a Notice) given or made under this
Agreement:

	 	(a)	 	must be in writing and signed by the sender or a person duly authorised by
the sender;
	 
	 	(b)	 	must be addressed and delivered to the intended recipient at the address or
fax number below or the address or fax number last notified by the intended recipient
to the sender after the date of this Agreement:

	 	 	 
	(i)     to the Vendor:

	 	1218 China World Tower 2,

1 Jian Guo Men Wai Avenue

Beijing 100004, PRC

Attention: Tim Galvin

Fax No: +86 10 6505 8209;
	 
	 	 
	(ii)    to the
Purchaser:

	 	250 East Hartsdale Ave

Hartsdale, NY 10530

United States of America

Attention: Frank Ingriselli

Fax No: +1 914 472 6793; and
	 
	 	 
	(iii)   to PAPI:

	 	250 East Hartsdale Ave

Hartsdale, NY 10530

 
Page (32)

 

 

Asset Transfer Agreement 

	 	 	 
	 

	 	United States of America

Attention: Frank Ingriselli

Fax No: +1 914 472 6793.

	 	(c)	 	will be taken to be duly given or made when delivered, received or left at
the above fax number or address. If delivery or receipt occurs on a day that is not a
business day in the place to which the Notice is sent or is later than 4pm (local
time) at that place, it will be taken to have been duly given or made at the
commencement of business on the next business day in that place.

 
Page (33)

 

 

Asset Transfer Agreement 

	 	 	 	 	 	 	 
	EXECUTED as an agreement

SIGNED for and on behalf of ChevronTexaco 

China Energy Company by its duly authorised 

signatory

 	 	 
	Signed
	 	 	 	 
	 	 	Title
 	 	 	 	 
	 	 	Witness
	 	 	 	 

	 	 	 	 	 	 	 
	SIGNED for and on behalf of Pacific Asia 

Petroleum, Ltd. by its duly authorised signatory

 	 	 
	Signed
	 	 	 	 
	 	 	Title
 	 	 	 	 
	 	 	Witness
	 	 	 	 

	 	 	 	 	 	 	 
	SIGNED for and on behalf of Pacific Asia 

Petroleum, Inc. by its duly authorised signatory

 	 	 
	Signed
	 	 	 	 
	 	 	Title
 	 	 	 	 
	 	 	Witness
	 	 	 	 

 
Page (34)

 

 

Asset Transfer Agreement 

Schedule 1

Notice of Proposed Transfer

 

To: BHP Billiton World Exploration Inc.

Joint Operating Agreement and Farmout Agreement in respect of the Baode Area, PRC

ChevronTexaco China Energy Company (CHEVRON) hereby gives you notice that it proposes to transfer
its rights and obligations under the Joint Operating Agreement and Farmout Agreement between BHP
Billiton World Exploration Inc and CHEVRON each dated 29 June 2004, to Pacific Asia Petroleum,
Ltd.. As a consequence, CHEVRON will also transfer to Pacific Asia Petroleum, Ltd. its
Participating Interest in the Production Sharing Contract for the Exploitation of Coalbed Methane
Resources in the Baode Area, the People’s Republic of China between China United Coalbed Methane
Corporation Ltd (CUCBM) and Texaco China B.V. dated 8 November 2000 (the PSC). The proposed
transfer of CHEVRON’s interest in the Joint Operating Agreement, Farmout Agreement and the PSC to
Pacific Asia Petroleum, Ltd. is referred to hereafter as the Proposed Transfer.

CHEVRON intends to enter into a binding agreement with Pacific Asia Petroleum, Ltd. in order for
the Proposed Transfer to take place with effect on and from 30 June 2007 subject to obtaining all
necessary approvals. We attach the form of agreement setting out the final terms and conditions of
the Proposed Transfer (the Transfer Agreement).

Pursuant to the terms of the Joint Operating Agreement (Baode Area), you have a right, exercisable
within 30 days of receipt of this notice, to acquire CHEVRON’s Participating Interest in the PSC on
the same terms as the attached Transfer Agreement. This right, if exercised, is subject to a final
right of CUCBM to acquire CHEVRON’s interest on the same terms.

CHEVRON is also required to obtain your consent to proceed with the Proposed Transfer.

We would be grateful if you could sign and return the enclosed copy of this letter indicating your
consent to the Proposed Transfer and waiving your pre-emptive right.

 
Page (35)

 

 

Asset Transfer Agreement 

	 	 	 
	
For and on behalf of

ChevronTexaco China Energy Company

By counter-signing and returning this letter, we BHP Billiton World Exploration Inc:

	 	(a)	 	waive the right to exercise our pre-emptive right to acquire CHEVRON’s
Participating Interest on the terms specified in the Transfer Agreement; and
	 
	 	(b)	 	consent to the Proposed Transfer to Pacific Asia Petroleum, Ltd. on the terms
specified in the Transfer Agreement.

	 	 	 
	
For and on behalf of

BHP Billiton World Exploration Inc

	 
	[Transfer Agreement to be attached.]

 
Page (36)

 

 

Asset Transfer Agreement 

Schedule 2

Notice of Assignment to CUCBM

 

	 	 	 
	To:

	 	China United Coalbed Methane Corporation, Ltd
	 

	 	A88 Anwai Avenue,

	 

	 	Beijing 100011, PRC
	 

	 	Attention: Mr. Du Ming
	 

	 	Facsimile: +86 10 64291881

Production Sharing Contract for the Exploitation of Coalbed
Methane Resources in respect of the Baode area, PRC

ChevronTexaco China Energy Company (CHEVRON)
gives you notice that it proposes to transfer its rights and obligations under the Production Sharing Contract for the
Exploitation of Coalbed Methane Resources in the Baode Area, the People’s Republic of China between
China United Coalbed Methane Corporation Ltd (CUCBM) and Texaco China B.V. dated 8 November 2000 (the PSC),
to Pacific Asia Petroleum Ltd. The proposed transfer of CHEVRON’s participating interest in the PSC to Pacific Asia Petroleum Ltd. is referred to hereafter as the Proposed Transfer.

CHEVRON intends to enter into a binding agreement with Pacific
Asia Petroleum, Ltd. in order for the Proposed Transfer to take place with effect on and from 30 June 2007
subject to obtaining all necessary approvals. We attach the form of agreement setting out the final terms and
conditions of the proposed transfer to Pacific Asia Petroleum
Ltd. (the Transfer Agreement).

Pursuant to the terms of the PSC, you have a right, exercisable within 60 days of receipt of this notice,
to acquire CHEVRON’s Participating Interest in the PSC on the same terms as the attached Transfer Agreement.

CHEVRON is also required to obtain your consent to proceed with the Proposed Transfer.

We would be grateful if you could sign and return the enclosed copy of this letter, indicating your consent to the Proposed Transfer and waiving your preferential right.

 
Page (37)

 

 

Asset Transfer Agreement 

	 	 	 
	
For and on behalf of

ChevronTexaco China Energy Company

By counter-signing and returning this letter, we China United Coalbed Methane Corporation Ltd:

	 	(a) 	 	waive the right to exercise our preferential right to acquire CHEVRON’s Participating Interest on the terms specified in the Transfer Agreement; and
	 
	 	(b) 	 	consent to the Proposed Transfer to Pacific Asia Petroleum Ltd. on the terms specified in the Transfer Agreement.

	 	 	 
	
For and on behalf of

China United Coalbed Methane Corporation Ltd

	 
	[Transfer Agreement to be attached.]

 
Page (38)

 

 

Asset Transfer Agreement 

Schedule 3

Disclosure Material

 

	 	1.	 	PSC — Shenfu Area (dd. November 8, 2000)
	 
	 	2.	 	Modification Agreement for PSC (dd. June 29, 2004)
	 
	 	3.	 	4th Modification Agreement for PSC (dd. April 6, 2006)
	 
	 	4.	 	JOA (Sino Gas) — Shenfu (dd. January 24, 2006)
	 
	 	5.	 	JOA — Shenfu Area (dd. June 29, 2004)
	 
	 	6.	 	Farmout Agreement — Shenfu Area (dd. June 29, 2004)
	 
	 	7.	 	Farmout Agreement (Sino Gas) (dd. January 24, 2006)
	 
	 	8.	 	Deed of Assignment — Shenfu Area (dd. June 29, 2004)
	 
	 	9.	 	Modification Agreement for PSC (dd. June 29, 2004)
	 
	 	10.	 	Modification Agreement for PSC (dd. April 6, 2006)
	 
	 	11.	 	JOA — Baode Area (dd. June 29, 2004)
	 
	 	12.	 	Farmout Agreement — Baode Area (dd. June 29, 2004)
	 
	 	13.	 	Deed of Assignment — Baode Area (dd. June 29, 2004)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	Date	 	 	Items	 	 	Description	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	12-Jul-07	 	 	1CD	 	 	End of Well Report:	 	LXSG-1	 
	 	 

	 	 	 	 	 	 	 	 	 	SJSG-1	 
	 	 

	 	 	 	 	 	 	 	 	 	TB-1	 
	 	 

	 	 	 	 	 	 	 	 	 	TB-2	 
	 	 

	 	 	 	 	 	TB-4 data
	 	 	 	All Avialable Data	 
	 	 

	 	 	 	 	 	TB-3 data
	 	 	 	All Available Data	 
	 	 

	 	 	 	 	 	Others:
	 	 	 	TB-1, TB-2, TB-3, TB-4 FE analysis	 
	 	 

	 	 	 	 	 	 	 	 	 	Ordos Play Map	 
	 	 

	 	 	 	 	 	 	 	 	 	TB-1, TB-2, TB-3 wireline logs	 
	 	 

	 	 	 	 	 	 	 	 	 	TB-4 Formation Evaluation	 
	 	 	 	 	 	 	 	 	 
	 	30-Jul-07	 	 	Hard copy	 	 	BD Pilot producion reports (3 Jun-21 Jul)	 
	 	 	 	 	 	 	 	TB-01 Daily Operations Reports (25 Jun-29 Jul)	 
	 	 	 	 	 	 	 	TB-02 Daily Operations Reports (18 Jun -29 Jul)	 
	 	 	 	 	 	 	 	 	 
	 	6-Aug-07	 	 	1CD	 	 	BD-7 & BD-8:	 	5-day Outlook	 
	 	 

	 	 	 	 	 	 	 	 	 	Daily Drilling Reports	 
	 	 

	 	 	 	 	 	 	 	 	 	Daily Geological Reports	 
	 	 

	 	 	 	 	 	 	 	 	 	Mud Logs	 
	 	 

	 	 	 	 	 	 	 	 	 	Wireline Logs	 
	 	 

	 	 	 	 	 	BD-9:
	 	 	 	Daily Drilling Reports	 
	 	 

	 	 	 	 	 	 	 	 	 	Daily Geological Report	 
	 	 

	 	 	 	 	 	BD-10:
	 	 	 	Daily Drilling Reports	 
	 	 

	 	 	 	 	 	 	 	 	 	Daily Geological Reports	 
	 	 

	 	 	 	 	 	 	 	 	 	Mud Logs	 

 
Page
(39)

 

 

Asset Transfer Agreement 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	Date	 	 	Items	 	 	Description	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	ChangQing Study-2003:	 	CQ RI Final Report
	 
	 	 

	 	 	 	 	 	 	 	 	 	Hedong Report
	 
	 	 

	 	 	 	 	 	 	 	 	 	Attachments_tif
	 
	 	 	 	 	 	 	 	 	 
	 	8-Aug-07	 	 	Electronic file	 	 	SF-2 mud log	 	SF-2 wirelin log
	 
	 	 	 	 	 	 	 	BD-11 wireline logs	 	BD-11_BD6_4v_500
	 
	 	 	 	 	 	 	 	 	 
	 	10-Aug-07	 	 	Electronic file	 	 	Linxing Block map	 	 	 
	 	 	 	 	 	 	 	 	 
	 	28-Aug-07	 	 	1CD	 	 	JMC August 2007 FINAL 23Aug07.ppt	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	BD-11 :	 	BD-11 Drilling Parameters.xls	 
	 	 	 	 	 	 	 	 	 	BD-11 DST1 S8_9_10_11_040707.ppt	 
	 	 	 	 	 	 	 	 	 	BD-11 DST2 S4_5_040707.ppt	 
	 	 	 	 	 	 	 	 	 	BD-11 DST3 S8_9_10_11Final_040707.ppt	 
	 	 	 	 	 	 	 	 	 	BD-11 Testing Summary040707.ppt	 
	 	 	 	 	 	 	 	 	 	BD-11_Final_Mudlog_040607.gif	 
	 	 	 	 	 	 	 	 	 	BD11 Daily Drilling Reports.zip	 
	 	 	 	 	 	 	 	 	 	BD11 Final Core Run Sheet.doc	 
	 	 	 	 	 	 	 	 	 	BD11_Final_Lithology_Detail_300507.doc	 
	 	 	 	 	 	 	 	 	 	BD11_Final_Mudlogging_Report_310507.pdf	 
	 	 	 	 	 	 	 	 	 	BD11_Predict_Actual_v1.ppt	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	BD-6 :	 	BD6 Daily Drilling Reports.zip	 
	 	 	 	 	 	 	 	 	 	BD6 Testing Summary190707.ppt	 
	 	 	 	 	 	 	 	 	 	BD6_Detailed_Lithology_Description_
150707.doc	 
	 	 	 	 	 	 	 	 	 	BD6_Gas_Content_test_result_260707.doc	 
	 	 	 	 	 	 	 	 	 	BD6_Predict_Actual_v1.ppt	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Permeability

Testing:	 	Testing Campaign Summary150807.xls	 
	 	 	 	 	 	 	 	 	 	Testing Summary for 2006_7 Wells140807.ppt	 
	 	 	 	 	 	 	 	Seam 89

Maps :	 	Baode_Seam89_Floor_Structure_mAMS_
Aug2007.jpg	 
	 	 	 	 	 	 	 	 	 	Baode_Seam89_Isochore_Aug2007.jpg	 
	 	 	 	 	 	 	 	 	 	Baode_Seam89_Overburden_Aug2007.jpg	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	SF-2 :	 	Prelim_SF2_Proximate_Analysis.doc	 
	 	 	 	 	 	 	 	 	 	SF2 Daily Drilling Reports.zip	 
	 	 	 	 	 	 	 	 	 	SF2 Final Core Run Sheet080507.doc	 
	 	 	 	 	 	 	 	 	 	SF2 Lithology Detail_Final_070507.doc	 
	 	 	 	 	 	 	 	 	 	SF2 S4 DST2 Prelim Interp090507.pdf	 
	 	 	 	 	 	 	 	 	 	SF2 S4 DST2 Prelim Interp110507.ppt	 

 
Page
(40)

 

 

Asset Transfer Agreement 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	Date	 	 	Items	 	 	Description	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	SF2 S8_9 DST3 Prelim Interp110507.pdf	 
	 	 	 	 	 	 	 	 	 	SF2 S8_9 DST3 Prelim Interp110507.ppt	 
	 	 	 	 	 	 	 	 	 	sf2samp_10-270.jpg	 
	 	 	 	 	 	 	 	 	 	sf2samp_1060-1130a.jpg	 
	 	 	 	 	 	 	 	 	 	sf2samp_275-470.jpg	 
	 	 	 	 	 	 	 	 	 	sf2samp_475-670.jpg	 
	 	 	 	 	 	 	 	 	 	sf2samp_675-870.jpg	 
	 	 	 	 	 	 	 	 	 	sf2samp_875-1055.jpg	 
	 	 	 	 	 	 	 	 	 	SF2_Final_Mudlogging_Report_030607.pdf	 
	 	 	 	 	 	 	 	 	 	SF2_Final_Mudlog_110507.jpg	 
	 	 	 	 	 	 	 	 	 	SF2_Predict_Actual_v3.ppt	 
	 	 	 	 	 	 	 	 	 

 
Page
(41)

 

 

Asset Transfer Agreement 

Schedule 4

Warranty Disclosures

 

 
Page
(42)

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