TERMINATION AGREEMENT OF THE SHARES SUBSCRIPTION AGREEMENT DATED 11 SEPTEMBER 2013

Asia Sixth Energy Resources Limited, a company incorporated under the laws of the British Virgin Islands and having its registered office at Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands (the “Company”);

The Sixth Energy Limited, a company incorporated under the laws of the British Virgin Islands and having its registered office at Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands (“Sixth Energy”); and

Pacific Energy Development Corp., a company incorporated under the laws of the State of Nevada and having its registered office at 4125, Blackhawk Plaza Circle, Suite 201, Danville, CA 94506, the United States of America (“PEDCO”).

A.

The Parties entered into a shares subscription agreement dated 11 September 2013 ("Original Agreement") pursuant to which PEDCO agreed to acquire from the Company and the Company agreed to issue to PEDCO, on the terms and subject to the conditions contained in the Original Agreement, 17,382 Shares, representing 51% of the total issued and outstanding share capital of the Company at Completion (such term as defined in the Original Agreement).

B.

In accordance with the Original Agreement, PEDCO has paid to the Company the Initial Subscription Price, being an amount equal to United States Dollars Ten Million (US$10,000,000), the receipt of which is acknowledged by the Company.

C.

The Company and PEDCO, amongst others, entered into an agreement for the purchase of shares of Aral Petroleum Capital LLP and shares and debt of Groenzee B.V. on the date of this agreement (“Caspian SPA”), pursuant to which, among other things, PEDCO and RJ Credit, LLC (“RJ Credit”) will subscribe for shares in Caspian Energy Inc. (“CEI”).  It is a covenant under the Caspian SPA that PEDCO and the Company will take all necessary steps to terminate the Original Agreement as soon as reasonably possible after the date of the Caspian SPA.

D.

The Parties have agreed to terminate the Original Agreement on the terms set out in this Agreement.

1.1

Unless otherwise specified, words and expressions defined in the Original Agreement shall have the same meanings when used in this Agreement.

1.2

Unless the context otherwise requires, references in this Agreement to Recital(s), Clause(s) and the Annexure are to recital(s) and clause(s) in and the annexure(s) to this Agreement.  The Recitals and Annexures to this Agreement shall form part of this Agreement.

1.3

This Agreement may be translated into one or more languages other than English. In the event of any inconsistency or contradiction between the texts, this English text shall prevail.

2.1

In consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties agree to terminate, with effect from the date of this Agreement, the Original Agreement, including all rights, powers, authorities, obligations and liabilities arising under the Original Agreement, save as expressly provided in this Agreement.

3.1

Save as expressly provided in this Agreement, each Party hereby irrevocably and unconditionally releases and discharges the other from any and all obligations, liabilities, losses, damages, demands, claims, suits or actions of whatsoever nature arising from or in any way relating to the Original Agreement; PROVIDED that nothing in this Agreement shall release, discharge or otherwise affect any obligation, liability, loss, damage, demand, claim, suit or action to the extent that it arises from or in any way relates to:

 

(a)

the respective rights, powers, authorities, obligations and liabilities of the Parties accrued prior to the termination of the Original Agreement under Clause 2; or

 

(b)

clause 9 (Announcements and Confidentiality) of the Original Agreement.

4.1

The Company acknowledges that PEDCO has paid the Initial Subscription Price in the amount of United States Dollars Ten Million (US$10,000,000) to the Company pursuant to clause 3.2 of the Original Agreement.

4.2

The Company agrees to refund the Initial Subscription Price in the amount of United States Dollars Ten Million (US$10,000,000) to PEDCO by issuing (i) to PEDCO a promissory note in the form as annexed in Annexure 1 in the amount of United States Dollars Five Million (US$5,000,000) (“PEDCO Promissory Note”) and (ii) at the direction of PEDCO, to RJ Credit, a promissory note in the form as annexed in Annexure 2 in the amount of United States Dollars Five Million (US$5,000,000) (“RJ Credit Promissory Note”). Each of PEDCO and RJ Credit shall satisfy the payment of its respective portion of the Subscription Price (such term as defined in the Caspian SPA) by delivering and assigning, respectively, the PEDCO Promissory Note and the RJ Credit Promissory Note to CEI at the Closing (such term as defined in the Caspian SPA).

 

(a)

the disclosure or use is required by law, any regulatory body or the rules and/or regulations of any relevant stock exchange, including any disclosure or use in an announcement, press release or circular required to be made or issued pursuant to Clause 6.1;

 

(b)

the disclosure or use is required for the purpose of any judicial or regulatory proceedings arising out of this Agreement or any other agreement entered into under or pursuant to this Agreement or the disclosure is reasonably required to be made to a taxation authority in connection with the taxation affairs of the disclosing Party;

 

(c)

the disclosure is made to employees, directors, officers, agents, Affiliates, fund investors and professional advisors, including financial advisors, lenders, consultants, accountants and legal counsel, of a Party on terms that such employees, directors, officers, agents, Affiliates, fund investors, lenders and professional advisors undertake to comply with the provisions of this Clause 6 in respect of such information as if they were a party to this Agreement; or

 

(d)

the other Parties have given prior written approval to the disclosure or use.

 

(a)

can be shown by the disclosing Party to the reasonable satisfaction of the other Parties is already known to the disclosing Party independently and prior to its transfer by the disclosing party;

 

(b)

on, before or after the date of this Agreement is in or enters the public domain prior to its disclosure by the receiving party or thereafter enters the public domain not due to any violation of the obligation of confidentiality by the receiving party; or

 

(c)

on, before or after the date of this Agreement is lawfully received from a third party source, which source was not, and could not reasonably have been (given the inquiry that should have been made), known by the disclosing Party, to be in breach of an obligation to any other Party not to disclose such Confidential Information.

SIGNED for and on behalf of

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by

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its director/authorized representative

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in the presence of : /s/ Ling Ling Ng

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SIGNED for and on behalf of

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)

by

)

its director/authorized representative

)

in the presence of : /s/ Ling Ling Ng

)

SIGNED for and on behalf of

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by

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its director/authorized representative

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in the presence of : /s/ Valentina Babichev

)

(a)

Asia Sixth hereby agrees and undertakes to the Beneficiary that with effect from the date hereof, the Beneficiary shall hold a first priority lien and security interest in, to and under all of the assets of Asia Sixth (the “Collateral”), including, but not limited to, Asia Sixth’s ownership interest in all of its Subsidiaries, including Groenzee, and any dividends, proceeds from any disposal or sale of any shares of or assets in Asia Sixth or any Subsidiary thereof (including Groenzee and Aral), in each case payable to Asia Sixth or Groenzee, and any monies raised through debt financings, it being acknowledged by the Beneficiary that the creation of any Collateral over Asia Sixth’s indirect or indirect ownership interest in Aral is subject to obtaining the prior written consent and/or waiver of Caspian and relevant consent from the MOG.

(b)

At the written request of the Beneficiary, upon the termination of the Caspian SPA, Asia Sixth will join with the Beneficiary in executing one or more financing statements pursuant to applicable law in a form reasonably satisfactory to the Beneficiary and Asia Sixth (collectively the “Financing Statements” and each a “Financing Statement”), it being acknowledged by the Beneficiary that the execution of a Financing Statement by Asia Sixth shall be subject to the obtaining of necessary approval, consent, waiver of any Person (including any Governmental Authority) in accordance with applicable laws and/or contractual commitments binding on Asia Sixth.  Subject to the foregoing, Asia Sixth hereby authorizes the Beneficiary to file a Financing Statement signed only by the Beneficiary in all places where necessary to perfect the Beneficiary’s security interest in the Collateral in all jurisdictions where such authorization is permitted by applicable law. Without limiting the foregoing Asia Sixth agrees that whenever applicable law requires Asia Sixth to sign a Financing Statement for filing purposes, Asia Sixth hereby appoints the Beneficiary or any of the Beneficiary’s representatives as Asia Sixth’s attorney and agent, with full power of substitution, to sign or endorse Asia Sixth’s name on any Financing Statement or other document necessary to give effect to the above and authorizes the Beneficiary to file a Financing Statement in all places where necessary to perfect the Beneficiary’s security interest in the Collateral; and Asia Sixth ratifies all acts of the Beneficiary and said representatives. A carbon, photographic or other reproduction of this promissory note or of a Financing Statement is sufficient as a Financing Statement. Upon full payment of all obligations under this promissory note, the lien or charge created hereby or resulting herefrom, shall automatically cease to exist and the Beneficiary shall file all termination statements and take all actions necessary to accomplish this purpose as may be reasonably requested by Asia Sixth.

(c)

Sixth Energy agrees that all obligations to repay or otherwise satisfy debt, other monies, chattel or equity interests due and owing by Asia Sixth to Sixth Energy, as the date of, or maturing after, the termination of this promissory note, including, but not limited to, pursuant to the Existing Shareholder Loan Agreement, as amended or superseded to date, shall be expressly subordinated to Asia Sixth’s obligation to refund the full amount of the Initial Subscription Price to the Beneficiary hereunder, and that until Asia Sixth has fully satisfied its obligation to refund the full amount of the Initial Subscription Price to the Beneficiary as required hereunder, nothing of value shall be paid, issued, delivered or otherwise transferred to Sixth Energy.  Notwithstanding the foregoing, the Beneficiary acknowledges and agrees that subject to, and simultaneously with the closing of the Caspian SPA, Asia Sixth will cause certain number of the Common Shares and Asia Sixth Consideration Options to be issued to Sixth Energy and setting-off against a corresponding amount of indebtedness owing by Asia Sixth to Sixth Energy.

For and on behalf of

By:

Name:

Title:

For and on behalf of

By:

Name:

Title:

By:

Name:

Title:

(a)

Asia Sixth hereby agrees and undertakes to the Beneficiary that with effect from the date hereof, the Beneficiary shall hold a first priority lien and security interest in, to and under all of the assets of Asia Sixth (the “Collateral”), including, but not limited to, Asia Sixth’s ownership interest in all of its Subsidiaries, including Groenzee, and any dividends, proceeds

(b)

At the written request of the Beneficiary, upon the termination of the Caspian SPA, Asia Sixth will join with the Beneficiary in executing one or more financing statements pursuant to applicable law in a form reasonably satisfactory to the Beneficiary and Asia Sixth (collectively the “Financing Statements” and each a “Financing Statement”), it being acknowledged by the Beneficiary that the execution of a Financing Statement by Asia Sixth shall be subject to the obtaining of necessary approval, consent, waiver of any Person (including any Governmental Authority) in accordance with applicable laws and/or contractual commitments binding on Asia Sixth.  Subject to the foregoing, Asia Sixth hereby authorizes the Beneficiary to file a Financing Statement signed only by the Beneficiary in all places where necessary to perfect the Beneficiary’s security interest in the Collateral in all jurisdictions where such authorization is permitted by applicable law. Without limiting the foregoing Asia Sixth agrees that whenever applicable law requires Asia Sixth to sign a Financing Statement for filing purposes, Asia Sixth hereby appoints the Beneficiary or any of the Beneficiary’s representatives as Asia Sixth’s attorney and agent, with full power of substitution, to sign or endorse Asia Sixth’s name on any Financing Statement or other document necessary to give effect to the above and authorizes the Beneficiary to file a Financing Statement in all places where necessary to perfect the Beneficiary’s security interest in the Collateral; and Asia Sixth ratifies all acts of the Beneficiary and said representatives. A carbon, photographic or other reproduction of this promissory note or of a Financing Statement is sufficient as a Financing Statement. Upon full payment of all obligations under this promissory note, the lien or charge created hereby or resulting herefrom, shall automatically cease to exist and the Beneficiary shall file all termination statements and take all actions necessary to accomplish this purpose as may be reasonably requested by Asia Sixth.

(c)

Sixth Energy agrees that all obligations to repay or otherwise satisfy debt, other monies, chattel or equity interests due and owing by Asia Sixth to Sixth Energy, as the date of, or maturing after, the termination of this promissory note, including, but not limited to, pursuant

 

to the Existing Shareholder Loan Agreement, as amended or superseded to date, shall be expressly subordinated to Asia Sixth’s obligation to refund the full amount of the Initial Subscription Price to the Beneficiary hereunder, and that until Asia Sixth has fully satisfied its obligation to refund the full amount of the Initial Subscription Price to the Beneficiary as required hereunder, nothing of value shall be paid, issued, delivered or otherwise transferred to Sixth Energy.  Notwithstanding the foregoing, the Beneficiary acknowledges and agrees that subject to, and simultaneously with the closing of the Caspian SPA, Asia Sixth will cause certain number of the Common Shares and Asia Sixth Consideration Options to be issued to Sixth Energy and setting-off against a corresponding amount of indebtedness owing by Asia Sixth to Sixth Energy.

For and on behalf of

By:

Name:

Title:

For and on behalf of

 

By:

Name:

Title:

By:

Name:

Title: