CONTRACT OF ENGAGEMENT
This
Agreement is made as of 27 January 2009 between:
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(1)
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KKSH Holdings Ltd.,
registered in the British Virgin Islands (the “Service
Provider”); and
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(2)
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Pacific Asia Petroleum,
Inc., a Delaware corporation (the “Company”).
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Whereas:
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(A)
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The
Company wishes to engage the Service Provider to provide the services of
the Consultant including as Senior Vice President of the Company, for a
period of three years. The Service Provider has agreed to make the
services of the Consultant available to the
Company.
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(B)
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This
Agreement identifies the terms on which the Service Provider will provide
consultancy services to the
Company.
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1
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Interpretation
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1.1
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In
this Agreement (and any schedules to
it):
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“Confidential Information”
means any and all confidential and/or proprietary knowledge, data or information
of the Group, any of their portfolio companies, investors, clients and partners,
including but not limited to, information relating to financial matters,
investments (and potential investments), budgets, business plans, marketing
plans, personal matters, business contacts, products, processes, know-how, trade
secrets and other works of authorship excluding in any case any information that
is or becomes (i) available to the public through no fault of Service Provider,
or (ii) independently developed from third parties;
“Consultant” means Xxxxxxx
Xxxxx;
“Engagement” means the
engagement of the Service Provider by the Company to provide the services of the
Consultant under this Agreement;
“Group” means the Company, its
ultimate holding company for the time being and the subsidiary companies of the
Company and its holding company for the time being;
“Group Company” means a member
of the Group and “Group
Companies” will be interpreted accordingly;
“RMB” shall mean the Renminbi,
being the currency of the Peoples Republic of China; and
“Services” means the services
set out in Clause 2.1.
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1.2
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References
to any statutory provisions include any modifications or re-enactments of
those provisions.
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1.3
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Headings
are for convenience only and do not affect the interpretation of this
Agreement.
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Page 1
of 7
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2
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The Service
Provider’s
Services
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2.1
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The
Company agrees to engage the Service Provider and the Service Provider
agrees to make the Consultant available to the Company to perform the
following services:
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(a)
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to
perform the duties and undertake the responsibilities of Senior Vice
President (“SVP”)
of the Company, including:
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(i)
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to
report to the Company’s Chief Executive Officer (“CEO”) and the Company’s
Board of Directors (“Board”) as required by
the Company;
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(ii)
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for
carrying out the business of the Company in accordance with the Company’s
governing documents, and developing and managing business opportunities
for the Company, but specifically, and for the avoidance of doubt, the
duties and obligations required by this agreement will not be related to
any of the Company’s business activities in the Peoples Republic of
China;
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(b)
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to
serve as an Executive Officer of the Company in the role of Senior Vice
President.
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2.2
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The
Company agrees that it shall grant full authorisation to the Consultant to
perform the Services in accordance with the scope of authority given to
the position of SVP pursuant to the Company’s governing
documents.
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2.3
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Notwithstanding
anything to the contrary herein, Consultant shall serve as an executive
officer of the Company at the pleasure of the Company, and may be removed
at any time and for any or no reason from the position as an Executive
Officer with the Company or any Group Company. In the event the
Company removes Consultant as an Executive Officer, the terms of this
Agreement shall otherwise remain in full force and effect in accordance
with its terms.
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3
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Terms of
Engagement
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3.1
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Subject
to clause 3.2, the Service Provider’s Engagement by the Company will
commence on 27 January 2009 or such other date
that is notified to the Service Provider by the Company (the “Start
Date”).
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3.2
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The
term of the Engagement will be for 3 years (“Term”)
commencing on the Start Date and ending three years after the Start Date
(“End
Date”) unless terminated earlier in accordance with Clause 10 of
this Agreement.
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4
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The Service
Provider’s
Fee
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4.1
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The
Company will pay to the Service Provider the Fee for providing the
Services which shall be a total of the payments set out in this Clause
4.
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4.2
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The
basic fee for the Services will be RMB 919,000 per annum (“Fee”) to be
prorated and paid monthly. Such Fee will be reviewed thirty (30) days
before each anniversary of this agreement and may be increased by mutual
consent with such increase to be effective on the anniversary of this
Agreement.
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Page 2
of 7
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4.3
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In
addition to the Fee, the Company shall provide the following benefits to
the Consultant and his domestic partner (“Benefits”):
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a)
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Medical
Benefits and Life Assurance: the costs associated with provision of
coverage under a medical insurance policy for the Consultant and his
partner, providing for comprehensive private medical insurance and
emergency evacuation coverage, as well as coverage for the Consultant
under a life assurance scheme,
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b)
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International
SOS Membership: the cost of membership which will include emergency
medical support and other associated medical
services,
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4.4
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In
addition to the Fee and the Benefits, the Service Provider will be
entitled to an annual performance-based bonus (“Bonus”) award
targeted at between 54% and 72% of the Fee, awardable in the discretion of
the Company’s Board of Directors.
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4.5
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The
Company shall pay the Fee to the Service Provider throughout the Term of
this Agreement pursuant to this clause 4, notwithstanding that the
Consultant has been absent from performing the Services for any day or
days throughout the Term which fall within the following agreed periods of
absences:
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(a)
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In
each year, up to 30 working days vacation which entitlement may be carried
forward to a subsequent year by mutual written agreement between the
Company and the Service Provider;
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(b)
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In
each year, up to 10 days per year (or such greater number of days as maybe
mutually agreed between the Company and the Service Provider from time to
time) for absence due to incapacity, which shall include sickness,
accident or other similar circumstances which prevent the Consultant from
attending work which can be carried forward into subsequent years, without
limitation.
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4.6
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The
Service Provider’s reasonable out-of-pocket expenses incurred by the
Consultant in the provision of the Services may be reimbursed, subject to
obtaining prior written approval from the CEO of the Company. The Service
Provider shall not be obligated to incur any unreimbursed out-of-pocket
expenses to perform any Services.
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4.7
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The
Service Provider will submit monthly invoices to the Company for the Fee
for each month, one week before the last day of the calendar month to
which such invoice relates.
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4.8
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The
Service Provider will submit an invoice to the Company for any Bonus that
may be awarded subject to clause 4.4
above.
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4.9
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Invoices
may be submitted in any currency. The conversion exchange rate from
Chinese Renminbi to the currency of the invoice will be the average
exchange rate for the 30 days prior to the date of the invoice as defined
at xxx.xxxxx.xxx. The Company will pay the Service Provider within 14 days
of receiving an invoice in the currency of the
invoice.
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Page 3
of 7
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5
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Grant of Shares and
Options
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5.1
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In
addition to the Fee, the Company may also issue to the Service Provider an
amount of shares and/or options in the Company from time to time as it may
deem appropriate and at the sole discretion of Company’s Board of
Directors.
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6
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The Service
Provider’s and
Consultant’s
Responsibilities
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6.1
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The
Service Provider shall cause the Consultant to, and the Consultant shall,
devote whatever time, attention and skill is needed to perform the
Services to the reasonable satisfaction of the Company unless prevented
from doing so by ill health or
injury.
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6.2
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The
Service Provider will procure that the Consultant will execute an
agreement agreeing that while this Agreement is in effect and for 12
months after its termination, neither the Service Provider nor the
Consultant will accept any employment or engage in any activity, without
the written consent of the Board, if the loyal and complete fulfillment of
the Service Provider’s or Consultant’s duties in such employment or
engagement would inevitably require him to reveal or utilize Confidential
Information, as reasonably determined by the Board. By agreement between
the parties at any time the terms of this clause 6.2 may be varied,
reviewed or modified so long as any such variation, review or modification
is in writing and signed by both
parties.
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7
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Office
Facilities
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The
Company shall provide an office, secretarial and other office facilities and
services as are needed by the Service Provider as reasonably necessary for the
Consultant to provide the Services.
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8
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Independent Service
Provider Status
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8.1
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Nothing
in this Agreement will make the Service Provider or the Consultant an
employee, agent or partner of the Company or any Group Company with
respect to the Services provided hereunder. For the avoidance
of doubt, the Service Provider agrees that it shall be the employer of the
Consultant for all purposes
hereunder.
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8.2
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The
Service Provider confirms that the Service Provider shall be responsible
for all income tax and other tax liabilities and all social security or
similar contributions in respect of the Fees and other compensation paid
hereunder.
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9
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Confidentiality
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9.1
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Without
prejudice to the common law duties which the Service Provider owes to the
Company, or any Group Company, the Service Provider agrees, and agrees to
procure that the Consultant agrees, that the Service Provider and the
Consultant will not, except in the proper performance of the Services,
either directly or indirectly, use or disclose to any person, firm,
company or entity any Confidential Information. This restriction will
continue to apply after the termination of the
Engagement without limit in time but will not apply to
Confidential Information which
becomes
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Page 4 of
7
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public
other than through unauthorised disclosure by the Service Provider or the
Consultant or where required to be disclosed by law. The
Service Provider shall procure that the Consultant will use the
Consultant’s best endeavours to prevent the unauthorised use or disclosure
of such information.
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9.2
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In
the course of the Engagement, the Service Provider is likely to obtain
Confidential Information belonging or relating to Group Companies and
other persons. The Service Provider will treat such information
as if it falls within the terms of Clause 9.1 and Clause 9.1 will
apply with any necessary amendments to such
information.
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10
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Termination of
Engagement
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10.1
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The
Engagement will terminate on the End Date unless terminated in accordance
with this Clause 10, except that the parties can agree to extend the
contract by mutual agreement before the expiry of the
Term.
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10.2
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Service
Provider or the Company may terminate this Agreement for any reason or for
no reason at all at any time, with or without Cause (as defined below),
during or after the Term, by providing the other party with notice of
termination as provided in clause 10.4. The Company shall pay
the Service Provider all outstanding fees and all other amounts, in each
such case, actually earned, accrued or owing as of the date of termination
but not yet paid to the Service Provider through the date of termination;
provided that if the this agreement is terminated by the Company without
Cause (as defined below) then, in addition to the payments described in
this Section 10.2, the Company shall pay the Service Provider a lump
sum payment in an amount equal to two hundred and fifteen percent
(215%) of the Fee. All payments defined in this clause 10.2 shall be
made within 30 days of the date of
Termination.
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10.3
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For
the purposes of this agreement “Cause” shall
mean (i) the Service Provider’s or Consultant’s gross and willful
misappropriation or theft of the Company’s or its subsidiary’s or
affiliate’s funds or property, (ii) the Service Provider’s or
Consultant’s commission of any fraud, misappropriation, embezzlement or
similar act, whether or not a punishable criminal offense, or the Service
Provider’s or Consultant’s conviction of or entering of a plea of nolo
contendere to a charge of any felony or crime involving dishonesty or
moral turpitude, (iii) the Service Provider’s or Consultant’s
engagement in any willful conduct that is injurious to the Company or its
subsidiaries or affiliates, (iv) the Service Provider’s or
Consultant’s material breach of this Agreement or failure to perform any
of his material duties owed to the Company or its subsidiaries or
affiliates, or (v) the Service Provider’s or Consultant’s commission
of any act involving willful malfeasance or gross negligence or the
Service Provider’s or Consultant’s failure to act involving material
nonfeasance.
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10.4
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Any
termination of this Agreement by the Company or by the Service Provider
shall be communicated in writing to the other party before the date on
which such termination is proposed to take effect and, unless otherwise
agreed to by the Company and the Service Provider, shall be effective
sixty (60) days after such notice, except that there shall be no 60 day
notice period in the event of the Agreement being terminated for “Cause”
by the Company
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Page 5
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10.5
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From
and after the termination of this Agreement by the Company or by the
Service Provider, the Service Provider will procure that the Consultant
does or causes to be done all other things and acts, to execute, deliver,
file and perform or cause to be executed, delivered, filed and performed
all other instruments, documents and certificates as may be reasonably
requested by the Company or are necessary, proper or advisable in order to
effect the removal, transition, substitution or modification of the
Consultant as an officer, agent, affiliate, director, manager or
authorized representative of the Company or any other positions that the
Consultant holds with the Company or its subsidiaries or affiliates
providing the cost of doing such things is paid for by the
Company.
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10.6
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Notwithstanding
anything to the contrary herein, in the event Xxxxxxx Xxxxx no longer
performs the Services required hereunder to the Company on behalf of the
Service Provider as a result of his own action or the actions of the
Service Provider, then the Company may terminate this Agreement for
“Cause”.
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11
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Dispute
Resolution
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Any
dispute or claim arising out of or in connection with any provision of this
Agreement will be finally settled by binding arbitration in London, England, in
accordance with the rules of the International Chamber of Commerce ("ICC") by
one arbitrator appointed in accordance with said rules. The
arbitrator shall apply English law, without reference to rules of conflicts of
law or rules of statutory arbitration, to the resolution of any
dispute. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Notwithstanding the
foregoing, the parties may apply to any court of competent jurisdiction for
preliminary or interim equitable relief, or to compel arbitration in accordance
with this paragraph, without breach of this arbitration provision.
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12
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Miscellaneous
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12.1
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This
Agreement may only be modified by the written agreement of the
parties.
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12.2
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No
party can assign this Agreement to anyone
else.
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12.3
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References
in this Agreement to rules, regulations, policies, handbooks or other
similar documents which supplement it, are referred to in it or describe
any retirement or other benefits arrangement are references to the
versions or forms of the relevant documents as amended or updated from
time to time.
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12.4
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This
Agreement represents the entire agreement between the parties with respect
to the engagement of the Service Provider by the Company and supersedes
any previous written or oral agreement between the parties in relation to
the matters dealt with in them.
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12.5
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If
any provision (or part of any provision) of this Agreement is invalid or
unenforceable, the validity or enforceability of the remaining provisions
(or parts of a provision) shall not be affected and the other provisions
(or parts of a provision) shall remain in full force and effect as if the
invalid or unenforceable parts had been
deleted.
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12.6
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No
party’s rights or powers under this Agreement will be affected
if:
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Page 6
of 7
(a) one
party delays in enforcing any provision of this Agreement; or
(b) one
party grants time to the other party.
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12.7
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If
any party agrees to waive its rights under a provision of this Agreement,
that waiver will only be effective if it is in writing and it is signed by
the Service Provider. A party’s agreement to waive any breach of any term
or condition of this Agreement will not be regarded as a waiver of any
subsequent breach of the same term or condition or a different term or
condition.
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13
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Governing
Law
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This
Agreement will be governed by and construed in accordance with the laws of
England and Wales. The Service Provider and the Company submit to the
non-exclusive jurisdiction of the English courts in relation to any dispute
arising in connection with this Agreement.
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Signed
for and on behalf of
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KKSH Holdings
Ltd
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/s/
Xxxxxxx Xxxxx
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Name
and Title: Xxxxxxx Xxxxx, Director
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Date: January
27, 2009
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Signed
for and on behalf of
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Pacific Asia
Petroleum, Inc.
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/s/
Xxxxx X. Xxxxxxxxxx
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Name
and Title: Xxxxx
X. Xxxxxxxxxx, Chief
Executive Officer
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Date: January
28, 2009
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Page 7
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