Agreement on Cooperation
Exhibit
10.1
September
30, 2008
This
Agreement on Cooperation (“AOC”) is dated September 30, 2008 and is executed by
and between Well Lead Group Limited, a company organized and existing under the
laws of the British Virgin Islands (hereinafter referred to as “Party A”), and
Pacific Asia Petroleum, Inc., a company formed and existing under the laws of
the State of Delaware, the United States of America (hereinafter referred to as
“Party B”). Party A and Party B are jointly referred to as the
“Parties” or individually referred to as “Party”.
WITNESSETH:
WHEREAS,
Party A has a 49% interest in Northeast Oil (China) Development Company Ltd., a
company that is incorporated in Hong Kong and owns a 95% interest in the
oilfield blocks Fu710 and Meilisi723 which are located in the Fulaerjiqu
Oilfield in Qiqihar City, the Heilongjiang Province in the People’s Republic of
China (the “Oil Blocks”);
WHEREAS,
Party A and Party B have met several times discussing their intent to reach a
mutually acceptable agreement whereby Party B will acquire a minimum 25%
interest in Northeast Oil (China) Development Company Ltd. (the
“Interest”);
WHEREAS,
the Oil Blocks have existing production with additional xxxxx to be drilled over
the next couple of years and according to public information, an independent
valuer has estimated the value of the Oil Blocks at approximately 1.8 billion
Hong Kong Dollar (HK$);
WHEREAS,
Party A and Party B, based on their own analyses, wish to define the basic terms
for Party B to acquire from Party A the Interest and set out such basic terms in
a draft term sheet; and
WHEREAS,
Party A and Party B will continue to conduct technical analysis, financial
analysis, due diligence and negotiations in regards to Party B acquiring such
Interest.
NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto agree as follows:
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1.
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Party
A and Party B have developed the attached Term Sheet which is incorporated
herein and which sets out the basic terms of
cooperation.
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2.
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Party
A and Party B agree to use commercially reasonable efforts to negotiate
and enter into a mutually acceptable Sale and Purchase Agreement pursuant
to the
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schedule
as set out in the attached Term Sheet, subject to Party B’s satisfactory due
diligence review and analysis of the Oil Blocks, Interest and proposed
transaction.
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3.
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Party
A will hold the Oil Blocks for the exclusive acquisition of the Interest
by Party B until a Sales and Purchase Agreement is signed, but no later
than November 30, 2008.
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4.
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In
consideration for the exclusivity provided by Party A for such acquisition
through to November 30, 2008, and Party A’s full good faith cooperation in
Party B’s due diligence review and analyses of the Oil Blocks, Interest
and proposed transaction, which Party A hereby agrees to provide, Party B
agrees to unconditionally issue to Party A 25,000 shares of common stock
of Pacific Asia Petroleum, Inc. which is currently traded on the Over the
Counter market in the United States. Alternatively, Party A shall have the
sole option (to be advised to Party B within 10 days of the date of this
Agreement) to require Party B to pay to the bank account as stipulated by
Party A the non-refundable sum of US$ 50,000 within 5 working days upon
the receipt of a written notice from Party A, instead of issuing the
25,000 shares of common stock.
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5.
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If
at any time prior to the execution of the Sales and Purchase Agreement,
Party A (other than due to Party B’s fault) terminates the Transaction
contemplated in this AOC , Party A will compensate Party B with a cash
payment of US$100,000 as full and final settlement for the termination
within 5 working days. Upon termination or expiration of this Agreement,
Party B shall forthwith return or destroy all confidential information
with all copies thereof obtained from or provided by Party A during the
due diligence.
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6.
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The
Parties agree that, unless otherwise agreed in writing, each Party will
bear its own respective costs and expenses (including, but not limited to,
travel expenses and attorney’s fees) incurred by them in pursuing the
transactions contemplated herein, whether or not such transactions are
consummated.
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7.
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Each
party shall not disclose the content of this Agreement, any information
regarding this transaction save to the extent that any announcement is
required by law, the regulatory body or any stock exchange. Party B will
provide to Party A an advance copy for its review of any announcement it
proposes to make regarding this transaction, and shall incorporate any
reasonable revisions thereto proposed by Party
A.
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8.
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This
AOC is governed by and shall be construed in accordance with the laws of
the Hong Kong Special Administrative Region of the People’s Republic of
China.
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9.
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No
amendments, changes or modifications to this AOC shall be valid except if
the same are in writing and signed by a duly legal person or an authorized
representative of each Party
herein.
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10.
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This
Agreement may be executed in one or more counterparts, each of which will
be considered an original instrument, but all of which will be considered
one and
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the same
agreement, and will become binding when one or more counterparts have been
signed by each of the parties and delivered to each of the parties.
IN
WITNESS WHEREOF, the duly authorized representatives of the Parties have caused
this Agreement on Cooperation to be executed on the date first written
above.
Party
A: Well Lead Group Limited
/s/
Au Xxx
Xxxxx
Name : Au
Xxx Xxxxx
Position
: Director
Party
B: Pacific Asia Petroleum, Inc.
/s/
Xxxxx X.
Xxxxxxxxxx
Name :
Xxxxx X. Xxxxxxxxxx
Position
: President & CEO
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