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CLIFFORD
CHANCE
CLIFFORD CHANCE LLP
 
FINAL VERSION

Dated 5 August 2010
FX ENERGY POLAND SP. Z O.O.
AS BORROWER
 
WITH
 
FX ENERGY, INC.
FX ENERGY NETHERLANDS PARTNERSHIP C.V. AND
FX ENERGY NETHERLANDS B.V.
AS GUARANTORS
 
ARRANGED BY
 
THE ROYAL BANK OF SCOTLAND PLC
ING BANK N.V.
KBC BANK NV
AS MANDATED LEAD ARRANGERS
 
WITH
 
THE ROYAL BANK OF SCOTLAND PLC
ACTING AS AGENT
 
WITH
 
THE ROYAL BANK OF SCOTLAND PLC
ACTING AS TECHNICAL BANK
 
WITH
 
THE ROYAL BANK OF SCOTLAND PLC
ACTING AS SECURITY TRUSTEE
 
AND
 
THE FINANCIAL INSTITUTIONS LISTED HEREIN
 
 
       
 
USD 55,000,000
SENIOR RESERVE BASE LENDING FACILITY AGREEMENT
 

 

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CONTENTS

Clause
Page
1.
 
Definitions and Interpretation
1
2.
 
The Facility
29
3.
 
Purpose
29
4.
 
Conditions of Utilisation
30
5.
 
Utilisation – Loans
32
6.
 
Projections
34
7.
 
Project Accounts
43
8.
 
Repayment
46
9.
 
Prepayment and Cancellation
47
10.
 
Interest
52
11.
 
Interest Periods
53
12.
 
Changes to the Calculation of Interest
54
13.
 
Fees
55
14.
 
Tax Gross Up and Indemnities
56
15.
 
Increased Costs
60
16.
 
Other Indemnities
62
17.
 
Mitigation by the Lenders
63
18.
 
Costs and Expenses
64
19.
 
Guarantee and Indemnity
66
20.
 
Representations
70
21.
 
Information Undertakings
78
22.
 
General Undertakings
87
23.
 
Events of Default
101
24.
 
Changes to the Lenders
108
25.
 
Changes to the Obligors
112
26.
 
Role of the Agent and the Mandated Lead Arrangers
114
27.
 
Conduct of Business by the Finance Parties
121
28.
 
Sharing among the Finance Parties
122
29.
 
Payment Mechanics
124
30.
 
Set-off
127
31.
 
Notices
127
32.
 
Calculations and Certificates
129

 

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33.
 
Partial Invalidity
129
34.
 
Remedies and Waivers
130
35.
 
Amendments and Waivers
130
36.
 
Confidentiality
131
37.
 
Counterparts
134
38.
 
Governing Law
135
39.
 
Enforcement
135
Schedule 1
 
The Original Parties
137
PART I
 
The Original Borrower
137
PART II
 
The Original Guarantors
138
PART III
 
The Original Lenders
139
Schedule 2
 
Conditions Precedent
140
PART I
 
Conditions Precedent to Initial Utilisation
140
PART II
 
Conditions Precedent Required To Be Delivered By An Additional Guarantor
144
Schedule 3
 
Reduced Commitments
147
Schedule 4
 
Initial Borrowing Base Assets
148
Schedule 5
 
Utilisation Request
149
Schedule 6
 
Mandatory Cost Formulae
150
Schedule 7
 
Form of Transfer Certificate
152
Schedule 8
 
Form of Assignment Agreement
154
Schedule 9
 
Form of Compliance Certificate
157
Schedule 10
 
Form of Guarantor Accession Letter
158
Schedule 11
 
Existing Financial Indebtedness
159
Schedule 12
 
Schedule of Field Documents
160
Schedule 13
 
LMA Form of Confidentiality Undertaking
162
Schedule 14
 
Group Structure Chart
167
Schedule 15
 
Hedging Policy
168
Schedule 16
 
Timetables
171

 
 

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THIS AGREEMENT is dated 5 August 2010 and made
 
BETWEEN:
 
(1)  
FX ENERGY POLAND SP. Z O.O. a limited liability company, established and
organised under the laws of Poland with its registered office in Lipiny Stare at
ul. Chałubińskiego 8, 00-613 Warsaw, Poland, registered in the register of
entrepreneurs of the National Court Register kept by the District Court for the
Capital City of Warsaw in Warsaw, XII Commercial Department of the National
Court Register, under number KRS 0000025459, having NIP number 5212751481,
having REGON number 012659847 (the “Borrower”);

 
(2)  
THE ROYAL BANK OF SCOTLAND PLC, KBC BANK NV, AND ING BANK N.V. as mandated lead
arrangers (the “Mandated Lead Arrangers”);

 
(3)  
THE FINANCIAL INSTITUTIONS listed in Part III of Schedule 1 (The Original
Parties) as lenders (the “Original Lenders”);

 
(4)  
THE SUBSIDIARIES of the Parent listed in Part II of Schedule 1 (The Original
Parties) as original guarantors (together with the Parent the “ Original
Guarantors”);

 
(5)  
THE ROYAL BANK OF SCOTLAND PLC as technical bank (the “Technical Bank”);

 
(6)  
THE ROYAL BANK OF SCOTLAND PLC as agent of the other Finance Parties (the
“Agent”); and

 
(7)  
THE ROYAL BANK OF SCOTLAND PLC as security trustee for the Secured Parties (the
“Security Trustee”).

 
IT IS AGREED as follows:
 
SECTION 1
 
INTERPRETATION
 
1.  
DEFINITIONS AND INTERPRETATION

 
1.1  
Definitions

 
In this Agreement:
 
 “Abandonment Date” means, in relation to each Borrowing Base Asset and each
Projection, the date shown in such Projection on which it is reasonably
anticipated that such Borrowing Base Asset and/or the relevant facilities
relating thereto will be abandoned.
 
 “Abandonment Liabilities” means the obligations and liabilities of the Group or
any member(s) of the Group relating to the abandonment of any Borrowing Base
Asset (including any such obligations and liabilities arising under any Joint
Operating Agreement relating to such Borrowing Base Asset).
 

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“Accession Letter” means a document substantially in the form set out in
Schedule 10 (Form of Guarantor Accession Letter).
 
“Accession Undertaking” means an accession undertaking in the form specified in
Schedule 2 (Form of Accession Undertaking) of the Assignment of Intercompany
Loans.
 
“Account Bank” means ING Bank Slaski S.A., or any of its successors or assignees
from time to time under the Account Bank Agreement.
 
“Account Bank Agreement” means the agreement dated on or about the date of this
Agreement, pursuant to which the operation of the Project Accounts are
regulated.
 
“Additional Guarantor” means a company which becomes an Additional Guarantor in
accordance with Clause 25 (Changes to the Obligors).
 
 “Additional Cost Rate” has the meaning given to it in Schedule 6 (Mandatory
Cost formulae).
 
 “Affiliate” means, in relation to any person, a Subsidiary of that person or a
Holding Company of that person or any other Subsidiary of that Holding Company.
 
 “Agent’s Spot Rate of Exchange” means the Agent’s spot rate of exchange for the
purchase of the relevant currency with the Base Currency in the London foreign
exchange market at or about 11:00 a.m. on a particular day.
 
“Agreed Form” in relation to any document means the form of such document
initialled by the Borrower and the Agent for the purposes of identification
hereof.
 
 “Applicable Law” means all laws (including common or customary law), statutes,
constitutions, by-laws, ordinances, regulations or any other legislative
measure, judgments, decrees, decisions, writs, awards, orders, rules,
directives, guidelines and policies of any Governmental Authority, treaties or
any other agreements to which a Governmental Authority is a party, governing or
applicable to the business and financial operations of any obligor or that
otherwise relate to a Borrowing Base Asset or the exercise by a Lender of its
rights under any Finance Document.
 
 “Applicable Polish Licensing Authority” means the minister of the Republic of
Poland competent in environmental matters from time to time including the
Minister of Environmental Protection, National Resources and Forestry, the
Minister of the Environment and/or his legal successor, and any other authority
responsible for licensing of mining operations in Poland at the given time.
 
 “Assignment Agreement” means an agreement substantially in the form set out in
Schedule 8 (Form of Assignment Agreement) or any other form agreed between the
relevant assignor and assignee.
 
 “Assignment of Insurances” means the agreement dated on or about the date of
this Agreement between the Borrower and the Security Trustee assigning the
proceeds of insurances in respect of the Borrowing Base Assets to the Security
Trustee on behalf of the Lenders.
 

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 “Assignment of Intercompany Loans” means agreement dated on or about the date
of this Agreement between the Borrower and the Security Trustee assigning the
rights in respect of intercompany loans granted between members of the Group.
 
“Assignment of Gas Sale Agreements” means agreement dated on or about the date
of this Agreement between the Borrower and the Security Trustee assigning the
Borrower’s rights under the gas sale agreements relating to the Roszków and
Zaniemysl Fields.
 
 “Assumptions” means the Economic Assumptions and the Technical Assumptions.
 
 “Authorisation” means an authorisation, consent, approval, resolution, licence,
exemption, filing, notarisation or registration.
 
 “Availability Period” means the period from and including the date of this
Agreement to and including to and including the date falling one month prior to
the Final Maturity Date.
 
 “Available Facility” means the aggregate for the time being of each Lender’s
Available Commitment.
 
 “Base Currency” means dollars.
 
 “Borrowing Base Amount” means, in relation to any Calculation Period, the
amount (in dollars) reflected in each Projection which is the lesser of A and B
where:
 
(a)  
“A” is the field life cover amount calculated by dividing the Field Life NPV
relating to that Calculation Period by 1.5; and

 
(b)  
“B” is the loan life cover amount calculated by dividing the Loan Life NPV
relating to that Calculation Period by 1.3.

 
 “Borrowing Base Asset” means (a) the Petroleum Assets listed in Schedule 4
(Initial Borrowing Base Assets) and (b) any New Borrowing Base Asset but, in the
case of (a) or (b), excluding any Petroleum Asset which has ceased to be
designated a Borrowing Base Asset in accordance with Clause 6 (Projections).
 
 “Borrower Update” means a report or other information prepared by or on behalf
of the Borrower which updates the information and/or evaluation(s) contained in
the most recent Reserves Report and including any additional information and/or
evaluation(s) as the Technical Bank may reasonably require.
 
 “Break Costs” means the amount (if any) by which:
 
(a)  
the interest which a Lender should have received for the period from the date of
receipt of all or any part of its participation in a Loan or Unpaid Sum to the
last day of the current Interest Period in respect of that Loan or Unpaid Sum,
had the principal amount or Unpaid Sum received been paid on the last day of
that Interest Period;

 

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exceeds:
 
(b)  
the amount which that Lender would be able to obtain by placing an amount equal
to the principal amount or Unpaid Sum received by it on deposit with a leading
bank in the Relevant Interbank Market for a period starting on the Business Day
following receipt or recovery and ending on the last day of the current Interest
Period.

 
 “Budget” means, in relation to each Borrowing Base Asset, a budget for that
Borrowing Base Asset setting out all the costs that are to be incurred in
connection with that Borrowing Base Asset for the period covered by the budget.
 
 “Business Day” means a day (other than a Saturday or Sunday) on which banks are
open for general business in London, New York and Warsaw.
 
 “Calculation End Date” means, in relation to each Projection, the last day of
the last Calculation Period in which any item of Gross Expenditure and/or Gross
Income is projected to arise.
 
 “Calculation Period” means each period of six months commencing on 1 January or
1 July of each year.
 
 “Charged Property” means all of the assets of the Obligors which from time to
time are, or are expressed to be, the subject of the Transaction Security.
 
 “Commitment” means:
 
(a)  
in relation to an Original Lender, the amount set opposite its name under the
heading “Commitment” in Part III of ‎Schedule 1 (The Original Parties) and the
amount of any other Commitment transferred to it under this Agreement; and

 
(b)  
in relation to any other Lender, the amount of any Commitment transferred to it
under this Agreement,

 
 to the extent not cancelled, reduced or transferred by it under this Agreement.
 
 “Compliance Certificate” means a certificate substantially in the form set out
in Schedule 9 (Form of Compliance Certificate).
 
 “Computer Model” means the computer model used to prepare the Initial
Projection, as amended from time to time in accordance with Clause 6.11
(Computer Model) or as otherwise agreed between the Borrower and the Agent.
 
 “Confidential Information” means all information relating to the Borrower, the
Parent, the Guarantors, the Group,  the Finance Documents or the Facility of
which a Finance Party becomes aware in its capacity as, or for the purpose of
becoming, a Finance Party or which is received by a Finance Party in relation
to, or for the purpose of becoming a Finance Party under, the Finance Documents
or the Facility from either:
 
(a)  
any member of the Group or any of its advisers; or

 

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(b)  
another Finance Party, if the information was obtained by that Finance Party
directly or indirectly from any member of the Group or any of its advisers,

 
in whatever form, and includes information given orally and any document,
electronic file or any other way of representing or recording information which
contains or is derived or copied from such information but excludes information
that:
 
(i)  
is or becomes public information other than as a direct or indirect result of
any breach by that Finance Party of Clause 36 (Confidentiality); or

 
(ii)  
is identified in writing at the time of delivery as non-confidential by any
member of the Group or any of its advisers; or

 
(iii)  
is known by that Finance Party before the date the information is disclosed to
it in accordance with paragraphs (a) or (b) above or is lawfully obtained by
that Finance Party after that date, from a source which is, as far as that
Finance Party is aware, unconnected with the Group and which, in either case, as
far as that Finance Party is aware, has not been obtained in breach of, and is
not otherwise subject to, any obligation of confidentiality.

 
 “Confidentiality Undertaking” means a confidentiality undertaking substantially
in a recommended form of the LMA as set out in Schedule 13 (LMA Form of
Confidentiality Undertaking) or in any other form agreed between the Borrower
and the Agent.
 
 “CTA” means the Corporation Tax Act 2009.
 
 “Default” means an Event of Default or any event or circumstance specified in
Clause 23 (Events of Default) which would (with the expiry of a grace period,
the giving of notice, the making of any determination under the Finance
Documents or any combination of any of the foregoing) be an Event of Default.
 
 “Delegate” means any delegate, agent, attorney or co-trustee appointed by the
Security Trustee.
 
“Disclosed Litigation” means (i) the case In re FX Energy, Inc., Securities
Litigation, United States District Court, District of Utah, case no.
2:07-cv-00874 where all claims were dismissed, and the time for appeal lapsed
and (ii) the case Leilani York, derivatively on behalf of nominal defendant FX
Energy, Inc., plaintiff, v. David N. Pierce, Dennis B. Goldstein, Arnold S.
Grundvig, Jr., Richard Hardman, Tom Lovejoy, Jerzy Maciolek, Clay Newton, Andrew
W. Pierce, and David Worrell, defendants, and FX Energy, Inc., nominal
defendant, United States District Court, District of Utah, case no.
2:08-cv-00143 which was stayed pending a decision in the case referred to in (i)
above, in each case as disclosed in the Parent’s SEC Form 10-K (2009), Item 3.
Legal Proceedings.
 

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 “Disruption Event” means either or both of:
 
(a)  
a material disruption to those payment or communications systems or to those
financial markets which are, in each case, required to operate in order for
payments to be made in connection with the Facility (or otherwise in order for
the transactions contemplated by the Finance Documents to be carried out) which
disruption is not caused by, and is beyond the control of, any of the Parties;
or

 
(b)  
the occurrence of any other event which results in a disruption (of a technical
or systems-related nature) to the treasury or payments operations of a Party
preventing that, or any other Party:

 
(i)  
from performing its payment obligations under the Finance Documents; or

 
(ii)  
from communicating with other Parties in accordance with the terms of the
Finance Documents,

 
(and which (in either such case)) is not caused by, and is beyond the control
of, the Party whose operations are disrupted.
 
“Dutch Letter of Release “ means the Dutch law governed letter of release dated
on or about the date of this Agreement, releasing the security constituted by
the Dutch law governed Deed of Pledge of Shares in FX Energy Netherlands B.V.
dated 18 December 2006 .
 
“Dutch Obligor” means each Original Obligor which is incorporated, registered or
organised in the Netherlands.
 
“Dutch Share Pledge” means the agreement dated on or about the date of this
Agreement between Frontier Exploration Company and FX Drilling Company Inc. in
their capacity of general partners of FX Energy Netherlands Partnership C.V. as
pledgor, the Security Trustee and FX Energy Netherlands B.V. creating Security
over the shares of FX Energy Netherlands B.V.
 
“Economic Assumption” means each of the following economic assumptions, and the
values ascribed to such assumptions, upon which each Projection or draft
Projection and, in each case, the calculations and information therein are, or
are to be, based:
 
(a)  
Petroleum prices;

 
(b)  
cost of funding;

 
(c)  
Tax;

 
(d)  
currency exchange rates;

 
(e)  
inflation rates;

 
(f)  
discount rates;

 

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(g)  
interest rates; and

 
(h)  
any other assumption that the Technical Bank and the Borrower agree shall be
treated as “Economic Assumptions”.

 
 “Emergency” means a condition or situation which in the opinion of the
Borrower:
 
(a)  
materially and adversely affects, or is likely to materially and adversely
affect, the ability of the Borrower to operate a Borrowing Base Asset safely as
a Reasonable and Prudent Operator; or

 
(b)  
presents or is likely to present a physical threat to persons or property or the
security, integrity or reliability of a Borrowing Base Asset.

 
“English Letter of Release” means the English law governed letter of release
dated on or about the date of this Agreement, releasing the security constituted
by the English law governed (i) Deed of Assignment of Insurance dated 17
November 2006 and (ii) Deed of Assignment of Subordinated Debt dated  21
December 2006.
 
“Environmental Decision” means, in relation to each Borrowing Base Asset,
decyzja o środowiskowych uwarunkowaniach, being the report prepared by the head
of the relevant municipality or the regional director of environmental
protection in the area of the Borrowing Base Asset which sets out the findings
of the applicable environmental impact assessment and the steps required by the
operator of the Borrowing Base Asset to ensure that the Borrowing Base Asset
complies with Polish Applicable Law and Polish Environmental Requirements.
 
 “Environmental and Mining Claim” means any claim by any person in connection
with (a) a breach, or alleged breach, of Environmental and Mining Laws; (b) any
accident, fire, explosion or other event of any type involving an emission or
substance which is capable of causing harm to any living organism or the
environment; or (c) any other environmental contamination or other infringement
of third party rights resulting from the search for, exploration and/or
exploitation of minerals.
 
 “Environmental and Mining Laws” means any law or regulation concerning (a) the
protection of health and safety; (b) environment; (c) any emission or substance
which is capable of causing harm to any living organism or the environment, or
(d) geological works as well as search for, exploration and exploitation of
minerals.
 
 “Environmental and Mining Licences” means all Authorisations necessary under
Environmental and Mining Laws for the ownership of an interest in any Petroleum
Asset, the exploitation of such Petroleum Asset (or any aspect thereof), and/or
the carrying out of the operations and activities relating to such Petroleum
Asset (including in particular Mining Concessions).
 
 “Equivalent Financings” means any secured borrowing based financings arranged
in the London market relating to any oil and gas project in North West Europe
(a) that are comparable to the credit facilities contemplated by this Agreement;
and (b) to which a Lender is a party as lender.
 

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“Existing Facility Agreement” means the existing USD 25,000,000 senior debt
facility agreement dated 17th November 2006 entered into between the Borrower as
borrower, FX Energy, Inc., FX Energy Netherlands Partnership C.V., FX Energy
Netherlands B.V. as guarantors and The Royal Bank of Scotland plc as lender.
 
“Existing Security” means the Security constituted by:
 
(a)  
the Deed of Pledge of Shares in FX Energy Netherlands B.V. dated 18 December
2006;

 
(b)  
the Deed of Assignment of Insurance dated 17 November 2006;

 
(c)  
the Deed of Assignment of Subordinated Debt dated  21 December 2006;

 
(d)  
the Agreement for Pledges Over Shares in FX Energy Poland sp. z o.o dated 18
December 2006;

 
(e)  
the Agreement for Registered Pledge Over Enterprise dated 18 December 2006;

 
(f)  
the Agreement for Pledges Over Bank Accounts dated 18 December 2006;

 
(g)  
the Agreement for Pledges Over Mining Usufruct Rights dated 18 December 2006;

 
(h)  
the Agreement for Collateral Assignment of Rights Under Project Documents dated
18 December 2006; and

 
(i)  
the Agreement for Pledge Over Receivables under Joint Operating Agreements dated
18 December 2006.

 
 “Event of Default” means any event or circumstance specified as such in
Clause 23 (Events of Default).
 
 “Facility” means the borrowing base reserve revolving loan facility made
available under this Agreement as described in Clause 2 (The Facility).
 
 “Facility Office” means the office or offices notified by a Lender to the Agent
in writing on or before the date it becomes a Lender (or, following that date,
by not less than five (5) Business Days’ written notice) as the office or
offices through which it will perform its obligations under this Agreement.
 
 “Fee Letter” means any letter or letters dated on or about the date of this
Agreement between the Mandated Lead Arrangers and the Borrower (or the Agent and
the Borrower or the Security Trustee and the Borrower) setting out any of the
fees referred to in Clause ‎13 (Fees).
 

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 “Field Documents” means:
 
(a)  
in relation to each Borrowing Base Asset:

 
(i)  
each Joint Operating Agreement and/ or unitisation and unit operating agreement
relating to that Borrowing Base Asset;

 
(ii)  
each agreement relating to the transportation, processing and/or storage of
production from that Borrowing Base Asset;

 
(iii)  
each agreement for the sale or marketing of production from that Borrowing Base
Asset;

 
(iv)  
each material agreement relating to that Borrowing Base Asset and/or Petroleum
produced therefrom (including any tariff and offtake contract, pipeline
transmission contract, drilling contract, equipment supply contract,
installation, construction, contract, maintenance and management contract),
other than the agreements set forth in items (i) to (iii) above;

 
(v)  
any Authorisation required for the lawful construction, exploitation,
development or operation of that Borrowing Base Asset or the production,
transportation or sale of Petroleum therefrom (and including any Petroleum
production or exploration licence and any particular Environmental and Mining
Licenses);

 
(vi)  
any development plan filed with and/or approved by any relevant operating
committee and/or any appropriate governmental or other regulatory authority
relating to that Borrowing Base Asset;

 
(vii)  
such rights (if any) to geological documentation with respect to the Borrowing
Base Assets which the Borrower may have;

 
(viii)  
any applicable Mining Usufruct Agreement;

 
(ix)  
agreements providing real property rights for the locations of the Borrowing
Base Assets;

 
(b)  
any documents relating to the acquisition by any member of the Group of any
interests in any Borrowing Base Asset or of any entity holding the interest in
such Borrowing Base Asset; and

 
(c)  
any other document designated as such by the Borrower and the Agent.

 
 “Field Life NPV” means, in relation to any Calculation Period, the amount (in
dollars) of the net present value (as at the first day of that Calculation
Period) of the aggregate of the Projected Net Revenues (the “relevant
amount”)  for that Calculation Period and for each Calculation Period occurring
thereafter which ends on or before the Calculation End Date (being the
discounted value of the relevant amount calculated, using the Computer Model, by
applying the relevant discount rate agreed or determined in accordance with
Clause 6 (Projections) to the relevant amount).
 

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 “Final Maturity Date” means the earlier of:
 
(a)  
30th June 2015; and

 
(b)  
the Reserve Tail Date.

 
 “Finance Document” means:
 
(a)  
 this Agreement;

 
(b)  
the Mandate Letter;

 
(c)  
the Security Documents;

 
(d)  
the Intercreditor Deed;

 
(e)  
the Account Bank Agreement;

 
(f)  
the Hedging Agreements;

 
(g)  
any Fee Letter; and

 
any other document designated as a “Finance Document” by the Agent and the
Borrower.
 
 “Finance Party” means the Agent, the Mandated Lead Arrangers, the Security
Trustee or a Lender.
 
 “Financial Indebtedness” means any indebtedness for or in respect of:
 
(a)  
moneys borrowed;

 
(b)  
any amount raised by acceptance under any acceptance credit facility or
dematerialised equivalent;

 
(c)  
any amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument;

 
(d)  
the amount of any liability in respect of any lease or hire purchase contract
which would, in accordance with GAAP/IFRS, be treated as a finance or capital
lease;

 
(e)  
receivables sold or discounted (other than any receivables to the extent they
are sold on a non-recourse basis);

 
(f)  
any amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing;

 
(g)  
any derivative transaction entered into in connection with protection against or
benefit from fluctuation in any rate or price (and, when calculating the value
of any derivative transaction, only the marked to market value shall be taken
into account);

 

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(h)  
any counter-indemnity obligation in respect of a guarantee, indemnity, bond,
standby or documentary letter of credit or any other instrument issued by a bank
or financial institution;

 
(i)  
any amount raised by the issue of redeemable shares;

 
(j)  
any amount of any liability under an advance or deferred purchase agreement if
one of the primary reasons behind the entry into this agreement is to raise
finance; and

 
(k)  
(without double counting) the amount of any liability in respect of any
guarantee or indemnity for any of the items referred to in paragraphs (a) to (j)
above.

 
 “Frontier Exploration Company” means a corporation established and organised
under the laws of Utah with its registered office 3006 Highland Drive, Suite
206, Salt Lake City, UT 84106 and having company number 1023353-0142.
 
 “FX Drilling Company, Inc.” means a corporation established and organised under
the laws of the state of Nevada, United States of America, having its registered
office at 311 South Division Street, Carson City, Nevada 89703, United States of
America and registered with Secretary of State in Nevada, United States of
America under number C4629-1994.
 
“FX Energy, Inc.” means a corporation established and organised under the laws
of Nevada with its registered office 3006 Highland Drive, Suite 206, Salt Lake
City, UT 84106 and having company number C576-1989.
 
“FX Energy Netherlands B.V.” means a private company with limited liability
(besloten vennootschap met beperkte aansprakelijkheid) incorporated under the
laws of The Netherlands having its corporate seat in Utrecht, The Netherlands,
having its registered office at Locatellikade 1, 1076 AZ Amsterdam, The
Netherlands with the trade register of the commercial register of the chamber of
commerce in Amsterdam  under number 30132757.
 
“FX Energy Netherlands Partnership C.V.” means a limited partnership
(commanditaire vennootschap), organised under the laws of the Netherlands,
having its registered office at Locatellikade 1, 1076 AZ Amsterdam, The
Netherlands and registered with the Dutch Commercial Register under number
33298513 and represented by its general partners (beherende vennoten) being  FX
Drilling Company, Inc., and Frontier Exploration Company, a company with limited
liability incorporated under the laws of the State of Utah, United States of
America, having its registered office at 3006 High-Land Drive, Suite 206, Salt
Lake City, Utah 04106, United States of America and registered with the
Secretary of State, Utah, United States of America under number 1023353-0142.
 
 “FX Producing Company, Inc.” means a corporation established and organised
under the laws of Nevada with its registered office 311 South Division Street,
Carson City, Nevada 89703 and having company number C4628-1994.
 

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 “GAAP/IFRS” means in relation only to the Borrower, the Guarantors or any
member of the Group that is not incorporated in the UK, generally accepted
accounting principles in that person’s jurisdiction of incorporation, or, in
each case, if IFRS has been implemented by the Group or the relevant member
thereof, IFRS.
 
 “Governmental Authority” means the government of any country, or of any
political subdivision thereof, whether state, regional or local, and any agency,
authority, branch, department, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government or any
subdivision thereof (including any supra-national bodies), and all officials,
agents and representatives of each of the foregoing.
 
“Guarantors” means the Original Guarantors and each Additional Guarantor.
 
 “Gross Expenditure” means, in relation to any period and any Obligor, without
double counting:
 
(a)  
to the extent that the same is payable in that period by that Obligor in respect
of any Borrowing Base Asset:

 
(i)  
all cash calls by the operator of that Borrowing Base Asset; and

 
(ii)  
to the extent not covered by paragraph (i) above:

 
(A)  
all costs of producing, lifting, transporting, storing, processing and selling
any Petroleum derived from that Borrowing Base Asset;

 
(B)  
all costs of reinstating any damaged facilities relating to that Borrowing Base
Asset;

 
(C)  
all costs of satisfying any liability in respect of seepage, pollution and well
control;

 
(D)  
all insurance premiums and all the fees, costs and expenses of insurance
brokers;

 
(E)  
all exploration and appraisal expenditure on that Borrowing Base Asset;

 
(F)  
all costs of abandonment and any payments to make provision for abandonment
costs in accordance with all relevant Field Documents relating to the whole or
any part of that Borrowing Base Asset or any physical assets associated with it;
and

 
(G)  
any royalties under any Petroleum production licence or other payments required
by Applicable Law to be made to any Governmental Authority in Poland;

 
(b)  
(if that Obligor holds any interests in any Borrowing Base Assets) any Taxes
payable by that Obligor in that period;

 

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(c)  
any general and administrative expenditure not falling within paragraph (a)
above which is payable by that Obligor in that period but only to the extent
attributable to any Borrowing Base Asset;

 
(d)  
any other expenses and payments not falling within the preceding paragraphs of
this definition which are payable by that Obligor in that period in respect of
any Borrowing Base Asset (including costs related to any hedging arrangements in
respect of any Borrowing Base Asset); and

 
(e)  
any other expense or payment not falling in the preceding paragraphs of this
definition which the Borrower elects (with the approval of the Majority Lenders)
to treat as “Gross Expenditure”.

 
 “Gross Income” means, in relation to any period and any Obligor, without double
counting:
 
(a)  
to the extent that the same is payable in that period to that Obligor in respect
of any Borrowing Base Asset:

 
(i)  
the gross proceeds (without deductions whatsoever) of any disposal of any
Petroleum derived from that Borrowing Base Asset paid or payable to that Obligor
in that period;

 
(ii)  
any gross proceeds (without any deductions whatsoever) payable to that Obligor
in respect of the use or reservation of capacity of any pipeline forming part
of, or relating to, that Borrowing Base Asset;

 
(iii)  
any other amounts paid or payable to that Obligor in that period in respect of
that Borrowing Base Asset (including subject to Clause 6.3 (Key Principles) any
proceeds of insurance or income from hedging arrangements relating to any
Borrowing Base Asset); and

 
(b)  
(if that Obligor holds any interests in any Borrowing Base Assets) any refunds
of Taxes payable to that Obligor in that period;

 
but excluding:
 
(i)  
any amount paid or payable by way of loan or contribution to the equity capital
of that Obligor in that period;

 
(ii)  
any amount paid or payable to that Obligor by another member of the Group; and

 
(iii)  
any amount paid or payable to that Obligor in that period which does not relate
to a Borrowing Base Asset (other than any amount referred to in paragraph (b)
above).

 

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 “Group” means, other than for the purpose specified in each of Clause 20.1(c)
(Representations) and Clause 22(b) (General Undertakings), the Parent and its
Subsidiaries for the time being, in each case as a separate legal entity and not
as consolidated with any other member of the Group.
 
 “Group Structure Chart” means the group structure chart annexed to this
Agreement at Schedule 14 (Group Structure Chart).
 
“Hedging Agreements” means any agreement or instrument relating to the hedging
of commodity price exposure, interest rate exposure or currency exposure
(including a forward, swap or option) or any other derivative or risk hedging
instrument approved under Clause 5 (Hedging Banks: rights and obligations) of
the Intercreditor Deed.
 
“Hedging Bank” has the meaning given to it in the Intercreditor Deed.
 
 “Hedging Policy” means a hedging strategy document, in a form annexed to this
Agreement as Schedule 15 (Hedging Policy) approved by the Majority Lenders which
sets out, among other things, the hedging transactions to be undertaken by the
Obligors in the relevant period covered by such document.
 
 “Holding Company” means, in relation to a person, any other person in respect
of which it is a Subsidiary.
 
 “IFRS” means international accounting standards within the meaning of the IAS
Regulation 1606/2002 to the extent applicable to the relevant financial
statements.
 
“ISDA Agreement” means the 1992 ISDA Master Agreement (Multicurrency - Cross
Border), as supplemented and amended by a schedule.
 
 “Independent Engineer” means RPS Group Plc or such other reputable independent
petroleum engineer or other expert approved by the Technical Bank (in
consultation with the Borrower).
 
 “Information Memorandum” means the document in the form approved by the
Borrower concerning the Group which, at the Borrower’s request and on its
behalf, was prepared in relation to this transaction and distributed by The
Royal Bank of Scotland plc to selected financial institutions before the date of
this Agreement.
 
 “Initial Approved Reserves” has the meaning given in Clause 6.12 (Initial
Approved Reserves).
 
 “Initial Borrowing Base Assets” means those assets specified in Schedule 4
(Initial Borrowing Base Assets).
 
 “Initial Projection” means in relation to the Initial Borrowing Base Assets,
the relevant Projection described in paragraph 7(n) of Part I of Schedule 2
(Conditions Precedent to Initial Utilisation), which is delivered to the Agent
pursuant to Clause 4.1 (Initial conditions precedent).
 

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 “Insolvency Officer” means any liquidator, trustee in bankruptcy, judicial
custodian or manager, compulsory manager, receiver, administrative receiver,
administrator or other similar officer in each case, appointed in any
jurisdiction, including a compulsory manager appointed pursuant to Article 27 of
the Polish law dated December 6, 1996 (as amended) on registered pledge and
pledge register or pursuant to Article 931 of the Polish Code of Civil
Procedure.
 
 “Insurance Proceeds” means any proceeds received by the Borrower under or
pursuant to any Project Insurances policy.
 
 “Intercreditor Deed” means the intercreditor deed to be entered into pursuant
to paragraph 2(a)(xi) of Part I of Schedule 2 (Conditions Precedent to Initial
Utilisation).
 
 “Intercreditor Accession Deed” has the meaning given to it in the Intercreditor
Deed.
 
 “Interest Period” means, in relation to a Loan, each period determined in
accordance with Clause 11 (Interest Periods) and, in relation to an Unpaid Sum,
each period determined in accordance with Clause 10.3 (Default Interest).
 
 “Interim Projection” means each Projection that is adopted or due to be adopted
on each Interim Recalculation Date.
 
 “Interim Recalculation Date” means any date nominated as such in any
Designation Notice delivered pursuant to Clause 6.1(b) (Adoption).
 
 “ITA” means the Income Tax Act 2007.
 
 “Joint Operating Agreement” means any contract, agreement, joint venture or
other arrangement entered into by the Borrower and a third party regulating
joint operations, physical facilities and profits in relation to a Borrowing
Base Asset.
 
“KSK Fields” means each of the Sroda Kromolice Field, Kromolice South Field and
Środa Wielkopolska Field (as described in Schedule 4 (Initial Borrowing Base
Assets)).
 
“KSK First Production” means:
 
(a)  
the KSK Fields and all related facilities have (without unremedied major or
material malfunctions) demonstrated the ability to either produce, process and
transport and make available for sale gas at an average aggregate gross
production rate of 14 million standard cubic feet per day over a continuous 30
day period;

 
(b)  
the development and construction of all the facilities relating to the KSK
fields have been completed in accordance with the development plan referred to
in the latest Reserve Report in all material respects;

 
(c)  
the gas sales agreements for the KSK fields have been fully executed and the
rights thereunder secured in favour of the Security Trustee on behalf of the
Lenders in a manner in form and substance satisfactory to the Agent; and

 

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(d)  
the State Treasury of the Republic of Poland has consented to the transfer of a
49% interest in the mining usufruct rights for exploitation  to the Borrower for
each of the KSK Fields and evidence of this consent and transfer has been
provided to the Agent in form and substance satisfactory to the Agent.

 
“Legal Reservation” means any qualifications as to matters of law set out in any
legal opinion delivered under paragraph 6 of Part I of Schedule 2 (Conditions
Precedent to Initial Utilisation).
 
 “Lender” means:
 
(a)  
any Original Lender; and

 
(b)  
any bank, financial institution, trust, fund or other entity which has become a
Party in accordance with Clause 24 (Changes to the Lenders),

 
which in each case has not ceased to be a Party in accordance with the terms of
this Agreement.
 
 “Lender’s Available Commitment” means a Lender’s Commitment minus (subject as
set out below):
 
(a)  
the amount of its participation in any outstanding Loans; and

 
(b)  
in relation to any proposed Utilisation, the amount of its participation in any
Loans that are due to be made on or before the proposed Utilisation Date.

 
For the purposes of calculating a Lender’s Available Commitment in relation to
any proposed Utilisation, that Lender’s participation in any Loans that are due
to be repaid or prepaid on or before the proposed Utilisation Date shall not be
deducted from a Lender’s Commitment.
 
“Letters of Release” means the Dutch Letter of Release, the English Letter of
Release and the Polish Letter of Release.
 
 “LIBOR” means, in relation to any Loan:
 
(a)  
the applicable Screen Rate; or

 
(b)  
(if no Screen Rate is available for dollars for the Interest Period of that
Loan) the arithmetic mean of the rates (rounded upwards to four decimal places)
as supplied to the Agent at its request quoted by the Reference Banks to leading
banks in the London interbank market,

 
as of the Specified Time on the Quotation Day for the offering of deposits in
dollars and for a period comparable to the Interest Period for that Loan.
 
 “LMA” means the Loan Market Association.
 
“Liquidation Account” has the meaning given in the Account Bank Agreement.
 

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 “Loan” means a loan made or to be made under the Facility or the principal
amount outstanding for the time being of that loan.
 
 “Loan Life NPV” means, in relation to any Calculation Period, the amount, in
dollars, of the net present value (as at the first day of that Calculation
Period) of the aggregate of the Projected Net Revenues (the “relevant
amount”)  for that Calculation Period and for each Calculation Period occurring
thereafter which ends on or before the Final Maturity Date (being the discounted
value of the relevant amount calculated, using the Computer Model, by applying
the relevant discount rate agreed or determined in accordance with Clause 6
(Projections) to the relevant amount).
 
 “Majority Lenders” means:
 
(a)  
if there are no Loans then outstanding, a Lender or Lenders whose Commitments
aggregate more than 66⅔ per cent. of the Total Commitments (or, if the Total
Commitments have been reduced to zero, aggregated more than 66⅔ per cent. of the
Total Commitments immediately prior to the reduction); or

 
(b)  
at any other time, a Lender or Lenders whose participations in the Loans then
outstanding aggregate more than 66⅔ per cent. of all the Loans then outstanding.

 
 “Mandate Letter” means the letter dated 22 March 2010 between The Royal Bank of
Scotland plc and the Borrower.
 
 “Mandatory Cost” means the percentage rate per annum calculated by the Agent in
accordance with Schedule 6 (Mandatory Cost formulae).
 
 “Margin” means:
 
(a)  
before 30 June 2013, 4.00 per cent. per annum; and

 
(b)  
thereafter, 5.00 per cent. per annum.

 
 “Material Adverse Effect” means, in the reasonable opinion of the Majority
Lenders (save for the purposes of Clause 6.1(a)(ii)(A) (Projections), in the
reasonable opinion of the Technical Bank,  if applicable), a material adverse
effect on:
 
(a)  
the financial condition of any Obligor;

 
(b)  
the ability of any Obligor to perform (i) its obligations under any Finance
Document to which it is a party or (ii) its material obligations under any
Transaction Document (other than a Finance Document) to which it is a party;

 
(c)  
the validity or enforceability of (i) any Finance Document (or any material
provision thereof) or (ii) any Security purported to be created under any
Security Document; or

 
(d)  
the rights and remedies of the Lenders under any Finance Document.

 

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 “Mining Concession” means a concession to search for, explore and/or exploit
oil and gas issued by the Applicable Polish Licensing Authority.
 
“Mining Law” means the act of 4 February 1994 on Geological and Mining Law
(Journal of Laws of the Republic of Poland of 2005, No. 228, item 1947, as
amended), as may be amended from time to time, or any subsequent and/or
superseding Polish legislative act applicable to carrying out of mining
operations in the Republic of Poland.
 
 “Mining Usufruct Agreement” means an agreement pursuant to which the Borrower
and/or other persons hold the right of a mining usufruct.
 
 “Month” means a period starting on one day in a calendar month and ending on
the numerically corresponding day in the next calendar month, except that:
 
(a)  
(subject to paragraph (c) below)  if the numerically corresponding day is not a
Business Day, that period shall end on the next Business Day in that calendar
month in which that period is to end if there is one, or if there is not, on the
immediately preceding Business Day;

 
(b)  
if there is no numerically corresponding day in the calendar month in which that
period is to end, that period shall end on the last Business Day in that
calendar month; and

 
(c)  
if an Interest Period begins on the last Business Day of a calendar month, that
Interest Period shall end on the last Business Day in the calendar month in
which that Interest Period is to end.

 
The above rules will only apply to the last Month of any period.
 
 “Monthly Cash Flow Projection” means a report, in the Agreed Form, issued by
the Parent at the end of a quarter, which sets out, in respect of each month
falling during the 12 month period following the end of such quarter, the cash
flow, debt and equity position of the Group (on a consolidated basis) including
a breakdown of all planned, committed and uncommitted expenditure of the Group,
forecast debt service and estimated revenues.
 
 “New Borrowing Base Asset” means any Petroleum Asset not listed in Schedule 4
(Initial Borrowing Base Assets) and that has been designated as such in
accordance with Clause 6 (Projections).
 
“Non-Dutch Obligor” means each Original Obligor which is not a Dutch Obligor.
 
 “Obligors” has the meaning given to it in the Intercreditor Deed.
 
“Onshore Proceeds Account” has the meaning given in the Account Bank Agreement.
 
 “Original Financial Statements” means:
 
(a)  
in relation to the Borrower, its audited financial statements for its financial
year ended 31 December 2009;

 

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(b)  
in relation to the Parent:

 
(i)  
the audited consolidated financial statements of the Group for the financial
year ending on 31 December 2009;

 
(ii)  
the unaudited consolidated financial statements of the Group for the quarter
ending on 31 March 2010.

 
(c)  
in relation to FX Energy Netherlands Partnership C.V., the annual financial
statements for its financial year ended 31 December 2008; and

 
(d)  
in relation to FX Energy Netherlands B.V., its annual financial statements for
its financial year ended 31 December 2008.

 
“Original Obligor” means the Borrower or an Original Guarantor.
 
“Parent” means FX Energy, Inc.
 
“Parent Operating Expenses” means the reasonable general and administrative
costs of the Parent reflected in the then current Monthly Cash  Flow Projection
and attributable to activities on the Polish Fields.
 
 “Participating Member State” means any member state of the European Union that
adopts or has adopted the euro as its lawful currency in accordance with
legislation of the European Union relating to Economic and Monetary Union.
 
 “Party” means a party to this Agreement.
 
 “Permitted Expenditure” means:
 
(a)  
any payment pursuant to Clause 3(a) and Clause 3(b) (Purpose);

 
(b)  
each item of Gross Expenditure reflected in the then current Projection;

 
(c)  
(without double counting) any item of expenditure in respect of Parent Operating
Expenses reflected in the then current Monthly Cash Flow Projection;

 
(d)  
any item of expenditure (not being Gross Expenditure) reflected in the then
current Monthly Cash Flow Projection and incurred by the Borrower in relation to
any Polish Field which is not a  Borrowing Base Asset;

 
(e)  
any payment which the Borrower is required to make by law or as otherwise
approved by the Agent into the Liquidation Account; and

 
(f)  
any other item of expenditure that the Majority Lenders and the Borrower agree
to designate as “Permitted Expenditure”.

 
 “Permitted Security” means:
 
(a)  
any lien arising by operation of law and in the ordinary course of trading;

 

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(b)  
any Security constituted by any Finance Document;

 
(c)  
any Security comprising a netting or set-off arrangement entered into by an
Obligor or any other member of the Group in the ordinary course of its banking
and trading arrangements for the purpose of netting debit and credit balances;
and

 
(d)  
any Security granted to secure bids, tenders, contracts, leases, statutory
obligations, surety and appeal bonds, and other obligations of a similar nature
arising in the ordinary course of trading up to an aggregate limit of USD
1,000,000 and which Security may not continue for more than 24 months following
its date of creation.

 
 “Petroleum” means any mineral, oil or relative hydrocarbon (including
condensate and natural gas liquids) and natural gas existing in its natural
condition in strata (but not including coal or bituminous shale or other
stratified deposits from which oil can be extracted by destructive
distillation).
 
 “Petroleum Asset” means (a) any Petroleum field, pipeline transmission system
or other Petroleum project, (b) the facilities relating to such field, system or
project and/or (c) the interests in such field, system, project or facilities.
 
“PGNiG” means Polskie Górnictwo Naftowe i Gazownictwo SA.
 
 “Polish Environmental Requirements” means Polish regulatory requirements for
oil and gas companies including in particular requirements under Environmental
and Mining Laws relating to licences and / or other aspects of the Borrowing
Base Asset approval and implementation processes.
 
 “Polish Fields”  means any area covered by a licence issued by the Applicable
Polish Licensing Authority pursuant to the Mining Law in which the Borrower has
an interest in respect of the mining usufruct or the petroleum accumulation in
such area, including but not limited to any contractual interest.
 
“Polish Letter of Release” means the Polish law governed letter of release dated
on or about the date of this Agreement, releasing  the security constituted by
the Polish law governed:
 
(a)  
Agreement for Pledges Over Shares in FX Energy Poland sp. z o.o dated 18
December 2006;

 
(b)  
Agreement for Registered Pledge Over Enterprise dated 18 December 2006;

 
(c)  
Agreement for Pledges Over Bank Accounts dated 18 December 2006;

 
(d)  
Agreement for Pledges Over Mining Usufruct Rights dated 18 December 2006;

 
(e)  
Agreement for Collateral Assignment of Rights Under Project Documents dated 18
December 2006; and

 

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(f)  
Agreement for Pledge Over Receivables under Joint Operating Agreements dated 18
December 2006.

 
 “Polish Financial Pledge over Bank Accounts” means the agreement dated on or
about the date of this Agreement between the Borrower and the Security Trustee
pledging all right, title and interest in respect of specified bank accounts of
the Borrower under the Certain Financial Collateral Law (as defined therein).
 
 “Polish Financial Pledge over Shares” means the agreement dated on or about the
date of this Agreement between FX Energy Netherlands B.V. and the Security
Trustee and under the Certain Financial Collateral Law (as defined therein)
creating Security over the shares of the Borrower.
 
 “Polish Registered Pledge over Bank Accounts” means the agreement dated on or
about the date of this Agreement between the Borrower and the Security Trustee
pledging all right, title and interest in respect of specified bank accounts of
the Borrower and registered under the Registered Pledge Law (as defined
therein).
 
 “Polish Registered Pledge over Moveable Assets” means the agreement dated on or
about the date of this Agreement between the Borrower and the Security Trustee
pledging all right, title and interest in the moveable assets of the Borrower
and registered under the Registered Pledge Law (as defined therein).
 
“Polish Registered Pledge over Shares” means the agreement dated on or about the
date of this Agreement between FX Energy Netherlands B.V. and the Security
Trustee and registered under the Registered Pledge Law (as defined therein)
creating Security over the shares of the Borrower.
 
 “Polish Submission to Execution” means a voluntary submission to enforcement in
relation to the Facility pursuant to Article 777 of the Polish Code of Civil
Procedure to be executed by the Borrower in favour of the Lenders.
 
 “Project Accounts” means the Onshore Proceeds Accounts and the Liquidation
Account.
 
 “Project Insurances” means all insurances that the Borrower is required to
maintain pursuant to Clause 22.12(a) (Insurance).
 
 “Project Loans” means the proceeds of Utilisations, drawings under any loan
facilities or other Financial Indebtedness incurred in connection with operating
and developing the Polish Fields.
 
 “Projected Net Revenues” means, in relation to any period, an amount (which may
be a negative or positive figure) calculated by deducting “B” from “A” where:
 
“A” is the aggregate of the Gross Income of the Borrower projected to be
received in that period; and
 
“B” is the aggregate of the Gross Expenditure of the Borrower projected to be
made in that period.
 

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 “Projection” means a consolidated cashflow and debt service projection prepared
or to be prepared pursuant to this Agreement.
 
 “Probable Reserves” means, in relation to any Petroleum Asset, those quantities
of Petroleum which are as likely as not to be recovered from that Petroleum
Asset having regard to the rules and regulations prescribed by the US Securities
and Exchange Commission.
 
“Proved Reserves” means, in relation to any Petroleum Asset, those quantities of
Petroleum which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions having regard to the rules and regulations
prescribed by the US Securities and Exchange Commission.
 
“Proved and Probable Reserves” means the Proved Reserves and the Probable
Reserves.
 
 “Qualifying Lender” has the meaning given to it in Clause 14 (Tax gross up and
indemnities).
 
 “Quotation Day” means, in relation to any period for which an interest rate is
to be determined, two Business Days before the first day of that period unless
market practice differs in the Relevant Interbank Market, in which case the
Quotation Day will be determined by the Agent in accordance with market practice
in the Relevant Interbank Market (and if quotations would normally be given by
leading banks in the Relevant Interbank Market on more than one day, the
Quotation Day will be the last of those days).
 
 “Reasonable and Prudent Operator” means a person acting in good faith, with the
intention of performing its contractual obligations and who, in so doing, and in
the general conduct of its undertaking, exercises that degree of skill,
diligence, prudence and foresight which would reasonably and ordinarily be
exercised by a skilled and experienced person complying with applicable laws and
observing all applicable standard industry practices and guidelines engaged in
the same type of undertaking in similar conditions and circumstances.
 
 “Recalculation Date” means any Scheduled Recalculation Date or Interim
Recalculation Date.
 
 “Receiver” means a receiver or receiver and manager or administrative receiver
of the whole or any part of the Charged Property.
 
 “Reduction Date” means each date specified in the first column (headed
“Reduction Date”) of the table in Schedule 3 (Reduced Commitments).
 
 “Reference Banks” means the principal London offices of The Royal Bank of
Scotland plc, ING Bank N.V. and KBC Bank NV or such other banks as may be
appointed by the Agent in consultation with the Borrower.
 

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“Refinancing Date” means the date of payment or repayment in full of all amounts
due under the Finance Documents (as defined in the Existing Facility Agreement)
such that no amounts are outstanding thereunder.
 
 “Related Fund” in relation to a fund (the “first fund”), means a fund which is
managed or advised by the same investment manager or investment adviser as the
first fund or, if it is managed by a different investment manager or investment
adviser, a fund whose investment manager or investment adviser is an Affiliate
of the investment manager or investment adviser of the first fund.
 
 “Relevant Interbank Market” means the London interbank market.
 
 “Relevant Jurisdiction” means:
 
(a)  
the jurisdiction of incorporation or organisation of each member of the Group;

 
(b)  
the jurisdiction where any asset subject to or intended to be subject to the
Transaction Security is situated; and

 
(c)  
the jurisdiction where any member of the Group is conducting its business.

 
“Relevant Obligor” means any Obligor (a) that has granted Security under a
Security Document over such of its assets as specified by the Agent and (b)
whose Holding Company(ies) have granted Security over all of the shares in that
Obligor to the Security Trustee.
 
 “Remaining Borrowing Base Reserves” means, in relation to each Borrowing Base
Asset and any date, the quantities of Petroleum forecast in the then current
Projection to be produced by that Borrowing Base Asset in the period from that
date up to (and including) the Abandonment Date for such Borrowing Base Asset
(which figure may vary from Projection to Projection).
 
 “Repeating Representations” means each of the representations set out in Clause
20 (Representations) other than in Clause 20.7 (No proceedings pending or
threatened), paragraph (b) of Clause 20.11 (Security Matters), Clause 20.13
(Deduction of Tax), Clause 20.16 (No filing or stamp taxes), paragraph (a) of
Clause 20.18 (Ownership) and Clause 20.30 (Offtake).
 
 “Representative” means any delegate, agent, manager, administrator, nominee,
attorney, trustee or custodian.
 
 “Required Authorisation” means each Authorisation required by an Obligor or any
other member of the Group:
 
(a)  
to enable it lawfully to enter into, exercise its rights and comply with its
obligations in the Transaction Documents to which it is a party;

 
(b)  
to make the Transaction Documents to which it is a party admissible in evidence
in its jurisdiction of incorporation; and/or

 

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(c)  
in connection with the ownership, development, construction, operation and/or
exploitation of any Borrowing Base Asset.

 
 “Reserves Report” means a report prepared by the Independent Engineer
containing such information and/or evaluation(s) (relating to each Borrowing
Base Asset or, as the case may be, any other Petroleum Asset which the Borrower
is seeking to have designated as a Borrowing Base Asset) as the Technical Bank
may reasonably require including evaluation(s) of the recoverable reserves,
production profiles, operational expenditure, abandonments costs and/or capital
expenditure of such Borrowing Base Assets or, as the case may be, Petroleum
Assets.
 
 “Reserve Tail Date” means the Recalculation Date immediately following the date
(reflected in the then current Projection) on which the aggregate Remaining
Borrowing Base Reserves for all Borrowing Base Assets is forecast to fall below
25 per cent. of the Initial Approved Reserves.
 
 “Rollover Loan” means one or more Loans:
 
(a)  
made or to be made on the same day that a maturing Loan is due to be repaid;

 
(b)  
the aggregate amount of which is equal to or less than the amount of the
maturing Loan; and

 
(c)  
made or to be made for the purpose of refinancing a maturing Loan.

 
 “Scheduled Projection” means each Projection that is adopted or due to be
adopted on a Scheduled Recalculation Date.
 
 “Scheduled Recalculation Date” means each 30 June and 31 December occurring on
or before the Final Maturity Date.
 
 “Screen Rate” means the British Bankers’ Association Interest Settlement Rate
for dollars for the relevant period, displayed on the appropriate page of the
Reuters screen.  If the agreed page is replaced or service ceases to be
available, the Agent may specify another page or service displaying the
appropriate rate after consultation with the Borrower and the Lenders.
 
 “Secured Parties” has the meaning given to it in the Intercreditor Deed.
 
 “Security” means a mortgage, charge, pledge, lien or other security interest
securing any obligation of any person or any other agreement or arrangement
having a similar effect.
 
 “Security Documents” means each of the documents specified in paragraph 2(a)
(Transaction Documents) of Part I ‎of Schedule 2 (Conditions Precedent to
Initial Utilisation), together with any other document entered into by any
Obligor creating or expressed to create any Security over all or any part of its
assets in respect of the obligations of any of the Obligors under any of the
Finance Documents.
 
 “Specified Time” means a time determined in accordance with Schedule 16
(Timetables).
 

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 “Subordinated Lender” means any member of the Group that makes or proposes to
make loans to the Borrower or any other member of the Group under Subordinated
Loan Agreements or equity contributions and which loans or contributions are
subject to the Intercreditor Deed.
 
 “Subordinated Loan Agreements” means any loan agreement (including, without
limitation, those loan agreements referred to in Schedule 11 (Existing Financial
Indebtedness) between a Subordinated Lender and (a) the Borrower or (b) another
Subordinated Lender and which are subject to the Intercreditor Deed.
 
 “Subsidiary” means a subsidiary undertaking within the meaning of section 1162
of the Companies Act 2006 which for this purpose shall be treated as including
any person the shares or ownership interests in which are subject to Security
and where the legal title to the shares or ownership interests so secured are
registered in the name of the secured party or its nominee pursuant to such
Security.
 
 “Tax” means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any penalty or interest payable in connection with any
failure to pay or any delay in paying any of the same).
 
 “Technical Bank” means The Royal Bank of Scotland plc.
 
 “Technical Assumption” means any assumptions (other than an Economic
Assumption), and the values ascribed to such assumptions, upon which each
Projection or draft Projection and, in each case, the calculations and
information therein are, or are to be, based.
 
 “Total Commitments” means the aggregate of each Lender’s Commitment from time
to time, being USD 55,000,000 at the date of this Agreement as may be reduced
from time to time pursuant to Clause 8.2 (Reduction).
 
 “Transaction Close” means the date of satisfaction of all conditions precedent
listed in Part I of Schedule 2 (Conditions Precedent to Initial Utilisation).
 
 “Transaction Document” means the Finance Documents and the Field Documents.
 
 “Transaction Security” means the Security created or expressed to be created in
favour of the Security Trustee pursuant to the Security Documents.
 
 “Transfer Certificate” means a certificate substantially in the form set out in
Schedule 7 (Form of Transfer Certificate) or any other form agreed between the
Agent and the Borrower.
 
 “Transfer Date” means, in relation to an assignment or a transfer, the later
of:
 
(a)  
the proposed Transfer Date specified in the relevant Assignment Agreement or
Transfer Certificate; and

 
(b)  
the date on which the Agent executes the relevant Assignment Agreement or
Transfer Certificate.

 

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 “Unitisation” means any unitisation of, or affecting, any Borrowing Base Asset,
or any adjustment of the relevant member of the Group’s interests in any
Borrowing Base Asset and/or any Petroleum derived therefrom as a result of the
pooling of production of that Borrowing Base Asset with that of another field or
otherwise.
 
 “Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the
Finance Documents.
 
 “Utilisation” means a utilisation of the Facility.
 
 “Utilisation Date” means the date of a Utilisation, being the date on which the
relevant Loan is to be made.
 
 “Utilisation Request” means a notice substantially in the form set out in
Schedule 5 (Utilisation Request).
 
 “VAT” means value added tax as provided for in the Value Added Tax Act 1994 and
any other tax of a similar nature.
 
1.2  
Construction

 
(a)  
Unless a contrary indication appears any reference in this Agreement to:

 
(i)  
the “Agent”, the “Mandated Lead Arranger”, the “Security Trustee”, the
“Technical Bank” any “Finance Party”, any “Secured Party”, any “Lender”, any
“Obligor” or any “Party” shall be construed so as to include its successors in
title, permitted assigns and permitted transferees and, in the case of the
Security Trustee, any person for the time being appointed as Security Trustee or
Security Trustees in accordance with this Agreement;

 
(ii)  
“assets” includes present and future properties, revenues and rights of every
description;

 
(iii)  
a “Finance Document” or any other agreement or instrument is a reference to that
Finance Document or other agreement or instrument as amended, novated,
supplemented, extended, replaced or restated;

 
(iv)  
“indebtedness” includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual
or contingent;

 
(v)  
a “person” includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium
or partnership (whether or not having separate legal personality);

 

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(vi)  
a “regulation” includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law) of any governmental,
intergovernmental or supranational body, agency, department or of any
regulatory, self-regulatory or other authority or organisation;

 
(vii)  
a “quarter” means each period of three months commencing on 1 January of each
year;

 
(viii)  
a reference to “includes” means ‘includes without limitation’ and ‘includes’ and
‘including’ shall be construed accordingly;

 
(ix)  
a provision of law is a reference to that provision as amended or re-enacted;
and

 
(x)  
a time of day is a reference to London time.

 
(b)  
Section, Clause and Schedule headings are for ease of reference only.

 
(c)  
Unless a contrary indication appears, a term used in any other Finance Document
or in any notice given under or in connection with any Finance Document has the
same meaning in that Finance Document or notice as in this Agreement.

 
(d)  
A Default (other than an Event of Default) is “continuing” if it has not been
remedied or waived and an Event of Default is “continuing” if it has not been
waived.

 
1.3  
Dutch Terms

 
In this Agreement, where it relates to a Dutch entity, a reference to:
 
(a)  
a necessary action to authorise, where applicable, includes without limitation:

 
(i)  
any action required to comply with the Dutch Works Council Act (Wet op de
ondernemingsraden); and

 
(ii)  
obtaining unconditional positive advice (advies) from each competent works
council;

 
(b)  
a winding-up, administration or dissolution includes a Dutch entity being:

 
(i)  
declared bankrupt (failliet verklaard);

 
(ii)  
dissolved (ontbonden);

 
(c)  
a moratorium includes surséance van betaling and granted a moratorium includes
surséance verleend;

 
(d)  
a trustee in bankruptcy includes a curator;

 

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(e)  
an administrator includes a bewindvoerder;

 
(f)  
a receiver or an administrative receiver does not include a curator or
bewindvoerder; and

 
(g)  
an attachment includes a beslag.

 
1.4  
Currency Symbols and Definitions

 
(a)  
“USD”, “$” and “dollars” denote the lawful currency of the United States of
America.

 
(b)  
“zloty” denotes the lawful currency of the Republic of Poland.

 
1.5  
Third party rights

 
(a)  
Unless expressly provided to the contrary in a Finance Document, a person who is
not a Party has no right under the Contracts (Rights of Third Parties) Act 1999
(the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this
Agreement.

 
(b)  
A Hedging Bank may enforce the terms of Clause 19 (Guarantee and indemnity) in
accordance with Clause 38 (Governing law) and Clause 39 (Enforcement) and the
provisions of the Third Parties Act.

 
(c)  
Notwithstanding any term of any Finance Document, the consent of any person who
is not a Party is not required to rescind or vary this Agreement at any time.

 

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SECTION 2
THE FACILITY
 
2.  
THE FACILITY

 
2.1  
The Facility

 
Subject to the terms of this Agreement, the Lenders make available to the
Borrower a dollar revolving loan facility in an aggregate amount equal to the
Total Commitments.
 
2.2  
Finance Parties’ rights and obligations

 
(a)  
The obligations of each Finance Party under the Finance Documents are
several.  Failure by a Finance Party to perform its obligations under the
Finance Documents does not affect the obligations of any other Party under the
Finance Documents.  No Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents.

 
(b)  
The rights of each Finance Party under or in connection with the Finance
Documents are separate and independent rights and any debt arising under the
Finance Documents to a Finance Party from an Obligor shall be a separate and
independent debt.

 
(c)  
A Finance Party may, except as otherwise stated in the Finance Documents,
separately enforce its rights under the Finance Documents.

 
3.  
PURPOSE

 
(a)  
The Borrower shall make the first drawdown under the Facility within 5 Business
Days of Transaction Close, and shall apply such drawdown towards (i)  repayment
in full of all amounts outstanding under and pursuant to the Existing Facility
Agreement and (ii) payment of all fees and transaction costs referred to in
paragraph 7(i) of Part I of Schedule 2 (Conditions Precedent to Initial
Utilisation), (and the Borrower shall request the Agent to apply the funds from
such drawdown directly towards such purposes at the time of drawdown).

 
(b)  
Subject to Clause 3(a), the Borrower shall apply all amounts borrowed by it
under the Facility:

 
(i)  
 in payment of any fees or transaction costs related to the Facility; and

 
(ii)  
for its general corporate purposes in accordance with Clause 7.4 (Withdrawals
from the Onshore Proceeds Account).

 
3.2  
Monitoring

 
No Finance Party is bound to monitor or verify the application of any amount
borrowed pursuant to this Agreement.
 

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4.  
CONDITIONS OF UTILISATION

 
4.1  
Initial conditions precedent

 
The Borrower may not deliver a Utilisation Request unless the Agent has received
all of the documents and other evidence listed in Part I of Schedule 2
(Conditions Precedent to Initial Utilisation) in form and substance satisfactory
to all the Lenders.  The Agent shall notify the Borrower promptly upon the
Lenders being so satisfied.
 
4.2  
Further conditions precedent

 
The Lenders will only be obliged to comply with Clause 5.4 (Lenders’
participation) if on the date of the Utilisation Request and on the proposed
Utilisation Date:
 
(a)  
in the case of a Rollover Loan, no Event of Default is continuing or would
result from the proposed Loan and, in the case of any other Loan, no Default is
continuing or would result from the proposed Loan;

 
(b)  
the Repeating Representations to be made by each Obligor are true in all
material respects;

 
(c)  
other than in the case of a Rollover Loan, any Projection which is due to be
adopted by a Recalculation Date has been adopted in accordance with Clause 6
(Projections) by such Recalculation Date unless such Projection has not been
adopted because:

 
(i)  
of any failure on the part of any Finance Party to perform its obligations under
this Agreement; or

 
(ii)  
the Majority Lenders (acting reasonably) are of the opinion that if such a
Projection were to be adopted, the applicable Borrowing Base Amount that would
be generated by such a Projection would exceed the aggregate amount of (1) all
the outstanding Utilisations and (2) all the Utilisations proposed to be made on
the proposed Utilisation Date; and

 
(d)  
the aggregate of:

 
(i)  
the amount of the Utilisation proposed to be made on the proposed Utilisation
Date; and

 
(ii)  
the aggregate amount of all outstanding Utilisations on the proposed Utilisation
Date less the aggregate amount of all outstanding Utilisations due to be repaid
or prepaid on the proposed Utilisation Date,

 

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does not exceed the least of (1) the Available Facility applicable on the
proposed Utilisation Date, (2) the Borrowing Base Amount applicable on the
proposed Utilisation Date and (3) if the proposed Utilisation Date occurs prior
to KSK First Production having been achieved (to the Majority Lenders’
satisfaction), $40,000,000.
 
4.3  
Maximum number of Loans

 
The Borrower may not deliver a Utilisation Request if as a result of the
proposed Utilisation six (6) or more Loans would be outstanding.
 

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SECTION 3
 
UTILISATION
 
5.  
UTILISATION - LOANS

 
5.1  
Delivery of a Utilisation Request

 
The Borrower may utilise the Facility by delivery to the Agent of a duly
completed Utilisation Request not later than the Specified Time.
 
5.2  
Completion of a Utilisation Request

 
(a)  
Each Utilisation Request is irrevocable and will not be regarded as having been
duly completed unless:

 
(i)  
in respect of the first Utilisation Request, the proposed Loan is sufficient to
repay in full all amounts outstanding under and pursuant to the Existing
Facility Agreement and all fees and transaction costs referred to in paragraph
7(i) of Part I of Schedule 2 (Conditions Precedent to Initial Utilisation);

 
(ii)  
the proposed Utilisation Date is a Business Day within the Availability Period;

 
(iii)  
the currency and amount of the Utilisation comply with Clause 5.3 (Currency and
amount);

 
(iv)  
the proposed Interest Period complies with Clause 11 (Interest Periods); and

 
(v)  
it has been duly signed by an authorised signatory of the Borrower.

 
(b)  
Only one Loan may be requested in each Utilisation Request.

 
5.3  
Currency and amount

 
(a)  
The currency specified in a Utilisation Request must be dollars.

 
(b)  
The proposed Loan must not exceed the maximum amount of the Facility that may be
utilised for such Loan under Clause 4.2 (Further conditions precedent) and,
except for an initial Loan equal to the total amount of fees and expenses
associated with the Facility, the amount of the proposed Loan must be an amount
which is a minimum of USD 1,000,000 and an integral multiple of USD 1,000,000
or, if less, that maximum amount.

 

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5.4  
Lenders’ participation

 
(a)  
If the conditions set out in this Agreement have been met, each Lender shall
make its participation in each Loan available by the Utilisation Date through
its Facility Office.

 
(b)  
The amount of each Lender’s participation in each Loan will be equal to the
proportion borne by that Lender’s Available Commitment to the Available Facility
immediately prior to making the Loan.

 
(c)  
The Agent shall notify each Lender of the amount of each Loan and the amount of
its participation in that Loan, in each case by the Specified Time.

 
5.5  
Cancellation of Commitment

 
The Commitments which, at that time, are unutilised shall be immediately
cancelled at the end of the Availability Period.
 

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SECTION 4
 
PROJECTIONS
 
6.  
PROJECTIONS

 
6.1  
Adoption

 
(a)  
Until the adoption of the first new Projection in accordance with this Clause 6
(Projections), the Initial Projection shall be the current Projection for the
purposes of this Agreement.  A new Projection shall be prepared in accordance
with this Clause 6 (Projections) and adopted as of:

 
(i)  
each Scheduled Recalculation Date; and

 
(ii)  
each Interim Recalculation Date if the Technical Bank or the Agent (acting on
the instructions of the Majority Lenders) so requires at any time:

 
(A)  
following the occurrence of any event or circumstance which, in the reasonable
opinion of the Technical Bank or the Majority Lenders, as applicable, has or is
likely to have, a Material Adverse Effect;

 
(B)  
where in reasonable opinion of the Technical Bank or the Majority Lenders, as
applicable, if a new Projection were to be adopted, it would or is likely to:

 
(1)  
generate a Borrowing Base Amount (relating to the Calculation Period in which
such new Projection is expected to be adopted) which is less than the aggregate
amount of the outstanding Utilisations; or

 
(2)  
demonstrate that the Obligors will not be able to meet their liabilities as they
fall due or that the Facility will not be repaid by the Final Maturity Date;

 
(C)  
following any Unitisation; or

 
(D)  
following any change in the operator of any Borrowing Base Asset.

 
(iii)  
following any request pursuant to Clause 6.5 (Asset base) by the Borrower:

 
(A)  
for any Petroleum Asset to be designated a Borrowing Base Asset; or

 
(B)  
for any Borrowing Base Asset to cease to be designated a Borrowing Base Asset.

 

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(b)  
Promptly following any request for a new Projection:

 
(i)  
pursuant to Clause 6.1(a)(ii) the Technical Bank shall specify and notify the
Borrower of the date as of which such Projection is to be prepared and adopted;
or

 
(ii)  
pursuant to Clause 6.1(a)(iii) the Borrower shall specify and notify the
Technical Bank of the date as of which any Projection is to be prepared and
adopted,

 
both such notices being a “Designation Notice”.
 
6.2  
Content

 
(a)  
Each Projection and draft Projection prepared pursuant to this Clause 6
(Projections) must:

 
(i)  
be prepared using the Computer Model;

 
(ii)  
be in a form similar to the Initial Projection (or such other form as the Agent
acting on the instructions of the Majority Lenders may approve) and include the
same type of information (and in the same level of detail) as that included in
the Initial Projection;

 
(iii)  
be prepared on the basis of the Assumptions that are proposed, approved, agreed
and/or determined in accordance with this Clause 6 (Projections);

 
(iv)  
without prejudice to paragraph (a)(ii) of Clause 6.2, include:

 
(A)  
details of all the Assumptions on which it is based;

 
(B)  
calculations of:

 
(1)  
the Projected Net Revenues for each Calculation Period ending on or before the
Calculation End Date;

 
(2)  
the Field Life NPV and the Loan Life NPV relating to each Calculation Period
ending on or before the Calculation End Date; and

 
(3)  
the Borrowing Base Amount for each Calculation Period commencing on or before
the Final Maturity Date.

 

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(b)  
The first Calculation Period shown in each Projection and draft Projection
prepared pursuant to this Clause 6 (Projections) shall be:

 
(i)  
in the case of any Scheduled Projection, the Calculation Period that commences
on the day after the Scheduled Recalculation Date; and

 
(ii)  
in the case of any Interim Projection, the Calculation Period that commences on
the day after the Interim Recalculation Date specified in the Designation Notice
or such other Calculation Period as may be specified by the Agent.

 
6.3  
Key principles

 
In (a) proposing, agreeing and/or determining Assumptions, (b) preparing and/or
approving any Projection or draft Projection or (c) otherwise carrying out their
obligations, and exercising their rights, under this Clause 6 (Projections), the
Parties shall have regard to and comply with the following principles:
 
(i)  
Each Projection shall, subject to Clause 6.3(ix), be based on:

 
(A)  
where the Technical Bank is satisfied that a Borrowing Base Asset has
demonstrated a history of production at a satisfactory level for a period of at
least six (6) continuous months, the Proved and Probable Reserves of such
Borrowing Base Asset; and

 
(B)  
the Proved Reserves of any other Borrowing Base Asset; or

 
(C)  
such other reserves basis as may be agreed between the Technical Bank and the
Borrower.

 
(ii)  
Each Projection must disregard any income or expenditure of any Obligor that is
not Gross Income or Gross Expenditure.

 
(iii)  
Each Projection must disregard any VAT or similar Tax which is payable in
respect of any Gross Income or Gross Expenditure except to the extent that such
VAT or similar Tax will be payable by any Obligor and is not effectively
recoverable by it.

 
(iv)  
All figures for Taxes included in any Projection must be based on tax
legislation in force on the relevant Recalculation Date on which that Projection
is due to be adopted and on any official announcements or publications in force
as at such date stating that such legislation is to be altered, supplemented or
replaced in whole or in part.

 
(v)  
For the purposes of determining the opening cash balance(s) and the closing cash
balance(s) for each Calculation Period shown in any Projection, all amounts
standing to the credit of accounts that are not Onshore Proceeds Accounts shall
be disregarded.

 

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(vi)  
The Technical Assumptions to be used for any Projection relating to any
Borrowing Base Asset shall be based upon:

 
(A)  
the Reserves Report and Borrower Update that has most recently been delivered to
the Agent under this Agreement, in the form and to the extent such Technical
Assumptions are  recommended by the Technical Bank; or

 
(B)  
if the Technical Bank and the Borrower agree, information generated by the
Borrower and supported by evidence in all respects satisfactory to the Technical
Bank.

 
(vii)  
Each Projection must reflect the then current Budgets and all relevant
circumstances (including Abandonment Liabilities).

 
(viii)  
Any proceeds of insurance paid or payable to any Obligor in respect of any
Borrowing Base Asset shall only be included as an item of Gross Income to the
extent that:

 
(A)  
the Borrower can demonstrate to the reasonable satisfaction of the Agent that
such proceeds will be received by that Obligor when projected; and

 
(B)  
such proceeds are not paid or payable to that Obligor in respect of any third
party liability.

 
(ix)  
If following any disposal referred to in Clause 22.16 (Disposals) the Borrowing
Base Assets comprise only one Polish Field, projections shall henceforth,
thereafter, be based on Proved Reserves of such Borrowing Base Asset.

 
6.4  
Preparatory Steps

 
(a)  
No later than 40 Business Days before each Recalculation Date or, in relation to
any Interim Projection, such later date as the Agent may specify:

 
(i)  
the Agent shall submit to the Borrower its proposals for the Economic
Assumptions; and

 
(ii)  
the Borrower shall submit to the Technical Bank its proposals for the Technical
Assumptions,

 
to be used, in each case, for the Projection due to be adopted on such
Recalculation Date.
 
(b)  
The Borrower and the Technical Bank shall seek to agree on the Assumptions to be
used for each Projection based on the proposals submitted in accordance with
Clause 6.4(a) by (i) the date falling 30 Business Days before the Recalculation
Date on which that Projection is due to be adopted or (ii) in relation to any
Interim Projection, such later date as the Agent may specify.

 

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6.5  
Asset base

 
(a)  
On or before the date falling 10 Business Days before the date on which the
Technical Bank and the Borrower are due to submit their proposals in respect of
the Assumptions to be used for any Projection pursuant to Clause 6.4
(Preparatory Steps), the Borrower may submit a request to the Agent for its
consent for any Petroleum Asset to be designated a Borrowing Base Asset and/or
for any existing Borrowing Base Asset to cease to be designated a Borrowing Base
Asset.

 
(b)  
If the Borrower has made a request under Clause 6.5(a) for any Petroleum Asset
to be designated a Borrowing Base Asset or a Projection is being prepared
pursuant to Clause 6.1(a)(iii) (Adoption), the Borrower must deliver to the
Agent (at the same time it makes the relevant request for such Petroleum Asset
to be designated a Borrowing Base Asset) all such information, documentation and
evidence as the Agent may consider necessary with respect to such Petroleum
Asset including, without limitation, the matters specified in Clause 6.6(c) (i)
to (iv) (Draft Projections).

 
6.6  
Draft Projections

 
(a)  
The Technical Bank shall prepare a draft Projection using:

 
(i)  
all the Assumptions that have been agreed between the Borrower and the Technical
Bank pursuant to Clause 6.4 (Preparatory Steps); and

 
(ii)  
to the extent that the Borrower and the Technical Bank have not been able to
reach agreement on any such Assumptions by the date referred to in Clause 6.4
(Preparatory Steps) such Assumptions as determined by the Technical Bank
(provided that, in the case of any Economic Assumptions, such Assumptions are
(from the Borrower’s perspective) no less favourable than the corresponding
economic assumptions which are then being used for the production of forecasts
and projections on Equivalent Financings).

 
(b)  
The Technical Bank will endeavour to ensure that each draft Projection is
delivered to the Borrower and the Lenders no later than (i) 25 Business Days
prior to the Recalculation Date on which such Projection is due to be adopted or
(ii) in the case of any draft Interim Projection, such later date as the Agent
may specify.

 

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(c)  
Each draft Projection must be accompanied by details of the conditions (if any)
that the Agent (acting reasonably) considers necessary to be satisfied in order
for (if the Borrower has made a request under Clause 6.5 (Asset base)), the
relevant Petroleum Asset(s) to be designated as Borrowing Base Asset(s) and/or,
as the case may be, the relevant Borrowing Base Asset(s) to cease to be so
designated.  The conditions for the designation of a Petroleum Asset as a
Borrowing Base Asset shall include as a minimum (i) the completion of
satisfactory economic, legal and technical due diligence relating to that
Petroleum Asset (ii) creation of Security relating thereto in favour of the
Security Trustee (iii) the production of satisfactory evidence that all
Authorisations required for the development and/or exploitation of that
Petroleum Asset have been obtained and (iv) a satisfactory Reserves Report.

 
6.7  
Consideration by Lenders

 
(a)  
Each Lender may, within 10 Business Days of receiving the draft Projection and
other information under Clause 6.6 (Draft Projections), inform (through the
Agent) the Technical Bank whether or not it approves each of:

 
(i)  
the adoption of each of the Assumptions used in the preparation of that draft
Projection;

 
(ii)  
any relevant Petroleum Asset being designated as a Borrowing Base Asset and the
conditions relating thereto (if any); and/or

 
(iii)  
a Borrowing Base Asset ceasing to be so designated and to the conditions
relating thereto (if any).

 
(b)  
Any Lender that does not inform, through Agent, the Technical Bank to the
contrary within 10 Business Days of receiving the draft Projection and other
information under Clause 6.6 (Draft Projections), shall be deemed to have
approved (as the case may be):

 
(i)  
the adoption of all of the Assumptions used in the preparation of that draft
Projection;

 
(ii)  
any proposed Petroleum Asset being designated a Borrowing Base Asset and the
conditions relating thereto (if any); and/or

 
(iii)  
the relevant Borrowing Base Asset ceasing to be so designated and the conditions
relating thereto (if any).

 
(c)  
In any event, the Agent shall on the date falling 10 Business Days after the
date on which each draft Projection is delivered under Clause 6.6 (Draft
Projections) to the Lenders, inform the Borrower and the Lenders of whether
Clause 6.8 (Lenders approve) or Clause 6.9 (Lenders do not approve) applies with
respect to such draft Projection.

 

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6.8  
Lenders approve

 
If (as the case may be):
 
(a)  
the Majority Lenders approve, or are deemed to have approved, the use of each of
the Assumptions for the preparation of the relevant Projection; and/or

 
(b)  
the Majority Lenders approve, or are deemed to have approved, any Petroleum
Asset being designated a Borrowing Base Asset and the conditions relating
thereto; and/or

 
(c)  
the Majority Lenders approve, or are deemed to have approved, any existing
Borrowing Base Asset ceasing to be so designated and the conditions relating
thereto,

 
then (as the case may be):
 
(a)  
the draft Projection shall be adopted in accordance with Clause 6.10 (Adoption
of Projection) as the current Projection for the purposes of this Agreement;

 
(b)  
the proposed new Petroleum Asset shall become a Borrowing Base Asset (upon
satisfaction of the relevant conditions); and/or

 
(c)  
the relevant existing Borrowing Base Asset shall cease to be a Borrowing Base
Asset (upon satisfaction of such the relevant conditions).

 
6.9  
Lenders do not approve

 
(a)  
If Majority Lenders do not approve any of the Assumptions used in any draft
Projection delivered to the Lenders for approval pursuant to Clause 6.6 (Draft
Projections) and Clause 6.7 (Consideration by Lenders), then (i) the Technical
Bank shall consult with the Lenders and the Borrower as to the Assumptions that
should be adopted instead of the Assumptions that the Lenders have not approved
(the “rejected Assumptions”) and (ii) the Assumptions that are to be adopted
instead of the rejected Assumptions shall be determined by the Majority Lenders.

 
(b)  
The Technical Bank shall, through the Agent, promptly upon the Majority Lenders
determining the Assumptions to be used instead of the rejected Assumptions,
notify the Borrower and the Lenders of the Assumptions so determined by the
Majority Lenders.  The Technical Bank (in consultation with the Borrower) shall,
promptly, following  dispatch of such notice:

 
(i)  
revise the relevant draft Projection to reflect the Assumptions so determined by
the Majority Lenders; and

 
(ii)  
deliver (through Agent) a copy of such revised draft Projection to the Borrower
and the Lenders (and such revised draft Projection shall be adopted in
accordance with Clause 6.10 (Adoption of Projection) as the current Projection
for the purposes of this Agreement).

 

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(c)  
If the Majority Lenders (i) do not approve the designation of any Petroleum
Asset as a Borrowing Base Asset or (ii) require conditions relating to the
designation of any Petroleum Asset as a Borrowing Base Asset which are not
acceptable to the Borrower, then the Technical Bank will:

 
(i)  
promptly (in consultation with the Borrower) prepare a revised draft Projection
based on the Assumptions that have been agreed, approved or determined in
accordance with the preceding provisions of this Clause 6 (Projections) that
does not take account of the proposed Petroleum Asset as a Borrowing Base Asset;
and

 
(ii)  
deliver (through Agent) a copy of such revised draft Projection to the Borrower,
and the Lenders (and such revised draft Projection shall be adopted in
accordance with Clause 6.10 (Adoption of Projection) as the current Projection
for the purposes of this Agreement).

 
(d)  
If the Majority Lenders (i) do not approve of an existing Borrowing Base Asset
ceasing to be so designated or (ii) require conditions relating to an existing
Borrowing Base Asset ceasing to be so designated which are not acceptable to the
Borrower, then the Technical Bank will:

 
(i)  
promptly (in consultation with the Borrower) prepare a revised draft Projection
based on the Assumptions that have been agreed, approved or determined in
accordance with the preceding provisions of this Clause 6 (Projections) that
takes account of the relevant Borrowing Base Asset as a Borrowing Base Asset;
and

 
(ii)  
deliver (through the Agent) a copy of such revised draft Projection to the
Borrower and the Lenders (and such revised draft Projection shall be adopted in
accordance with Clause 6.10 (Adoption of Projection) as the current Projection
for the purposes of this Agreement).

 
6.10  
Adoption of Projection

 
(a)  
Each draft Projection prepared pursuant to the preceding provisions of this
Clause 6 (Projections) will not be adopted as the current Projection for the
purposes of this Agreement until the latest of:

 
(i)  
the relevant Recalculation Date on which the relevant Projection is due to be
adopted;

 
(ii)  
(in the case of any Projection to be adopted in accordance with the designation
of any Petroleum Asset as a Borrowing Base Asset or the ceasing of an existing
Borrowing Base Asset to be so designated) the date on which any relevant
conditions (together with any additional conditions that the Majority Lenders
may require in accordance with the preceding provisions of this Clause 6
(Projections)) are satisfied; and

 

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(iii)  
(in the case of any revised draft Projection that has been prepared pursuant to
Clause 6.9 (Lenders do not approve)) the date on which the Technical Bank
delivers (through the Agent) the relevant revised draft Projection to the
Borrower and the Lenders.

 
(b)  
Upon such adoption of the Projection, the Agent shall inform the Borrower
accordingly and shall send a copy of that Projection to the Borrower.

 
6.11  
Computer Model

 
The Technical Bank may, with the prior consent of the Borrower (such consent not
to be unreasonably withheld or delayed), make amendments to the Computer Model
from time to time  to correct any deficiencies in such Computer Model (including
any conflict between the Computer Model and any Field Document) or otherwise to
reflect any changes in circumstance since the date of this Agreement.
 
6.12  
Initial Approved Reserves

 
(a)  
Subject to the remaining provisions of this Clause 6.12 (Initial Approved
Reserves), the “Initial Approved Reserves” shall be the aggregate quantities of
Petroleum forecast in the Initial Projection to be produced from the Borrowing
Base Assets.

 
(b)  
If any Projection has been adopted in accordance with this Clause 6
(Projections) either in connection with (i) the designation of any Petroleum
Asset as a New Borrowing Base Asset or (ii) any Borrowing Base Asset ceasing to
be so designated, the Technical Bank (having regard to that Projection and after
consulting the Borrower pursuant to Clause 6.5 (Asset base)) shall adjust the
Initial Approved Reserves to reflect (as the case may be):

 
(A)  
any increase in the aggregate quantities of Petroleum forecast to be produced by
the Borrowing Base Assets by reason of a Petroleum Asset being designated as a
New Borrowing Base Asset;

 
(B)  
any decrease in the aggregate quantities of Petroleum forecast to be produced by
the Borrowing Base Assets by reason of a Borrowing Base Asset ceasing to be so
designated; or

 
(C)  
any other change approved by the Majority Lenders.

 
(c)  
The Agent shall promptly after making any adjustment pursuant to Clause 6.12,
notify the Borrower and the Lenders of the same and until the next adjustment is
made pursuant Clause 6.12(b), the adjusted figure so notified by the Agent shall
be the “Initial Approved Reserves” for the purposes of this Agreement.

 

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SECTION 5
PROJECT ACCOUNTS
 
7.  
PROJECT ACCOUNTS

 
7.1  
Project Accounts

 
The Borrower shall establish and maintain the Project Accounts with the Account
Bank, in accordance with the provisions of the Account Bank Agreement.
 
7.2  
Other Project Accounts

 
The Borrower may not establish any other bank accounts without the prior written
approval of the Agent and then only if such other accounts are opened with the
Account Bank and secured in favour of the Security Trustee on substantially the
same terms as the Project Accounts are secured and appropriate amendments are
made to the provisions of this Section 5 in accordance with the provisions of
Clause 35 (Amendments and Waivers).
 
7.3  
Onshore Proceeds Accounts

 
The Borrower shall procure that:
 
(a)  
all Gross Income;

 
(b)  
all Project Loans;

 
(c)  
any receipts under any Hedging Agreements;

 
(d)  
all Insurance Proceeds;

 
(e)  
all amounts received  in connection with the Polish Fields; and

 
(f)  
all other revenues not otherwise allocated,

 
shall be deposited into the relevant Onshore Proceeds Account.
 
7.4  
Withdrawals from the Onshore Proceeds Accounts

 
Provided that there is no Default or Event of Default which is continuing, the
Borrower shall only be entitled to withdraw amounts from the Onshore Proceeds
Accounts for the following purposes and in the following order of priority:
 
(a)  
to meet Permitted Expenditure;

 
(b)  
on a pari passu basis:

 
(i)  
to pay any fees, interest and expenses due under the Finance Documents; and

 

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(ii)  
to make any hedging payments under a Hedging Agreement which are of recurring
nature and are not a direct or indirect result of a voluntary termination of
that Hedging Agreement.

 
(c)  
to make mandatory prepayments pursuant to Clause 9.1 (Illegality), Clause 9.2
(Change of control), Clause 9.3 (Refinancing), and Clause 9.6 (Right of
replacement or repayment and cancellation in relation to a single Lender);

 
(d)  
to make repayments of principal under the Facility in accordance with Clause 8.2
(Reduction); and

 
(e)  
if, following the Borrower’s request, the Agent is satisfied that immediately
following such payment, the amount standing to the credit of the Onshore
Proceeds Accounts would be at least equal to the Gross Expenditure (as
forecasted in the then current Projection) to be incurred on the Borrowing Base
Assets for the six (6) month period following the most recent Recalculation Date
to:

 
(i)  
 make voluntary repayments or prepayments under the Facility; and

 
(ii)  
 make any non-recurring payments under the Hedging Agreements.

 
7.5  
Deposits into the Liquidation Account

 
The Borrower shall procure that sufficient funds are credited to the Liquidation
Account to comply with its obligations under Article 26c of the Polish
Geological and Mining Law.
 
7.6  
Withdrawals from the Liquidation Account

 
The Borrower shall not make any withdrawals from the Liquidation Account until
it has provided the Agent with a copy of the relevant approval from the
appropriate Polish mining supervisory authority.
 
7.7  
Permitted withdrawals – General

 
(a)  
No payments to any Project Account, or withdrawals from any Project Account
shall be made except as expressly permitted by this Agreement and the Account
Bank Agreement or with the approval of the Majority Lenders.

 
(b)  
All amounts withdrawn from any Project Account by the Borrower for application
in or towards making a specific payment or meeting a specific liability shall be
applied in or towards making that payment or meeting that liability and for no
other purpose.

 
 

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7.8  
Withdrawals during a Default

 
(a)  
The Borrower may not:

 
(i)  
withdraw any moneys from any Project Account at any time when a Default or Event
of Default has occurred and is continuing and has been notified by the Agent to
the Borrower unless such withdrawal is:

 
(A)  
to fund costs arising from the actions of the Borrower, acting as a Reasonable
and Prudent Operator and directly resulting from an Emergency subject to the
prior written consent of the Majority Lenders;

 
(B)  
in payment of Taxes; or

 
(ii)  
withdraw any moneys from any Project Account following receipt by the Borrower
of a notice from the Agent pursuant to Clause 23.23 (Acceleration).

 
(b)  
The Borrower acknowledges that, upon any enforcement of any Transaction Security
over the Project Accounts, the Security Trustee shall be entitled to require the
Account Bank to pay any money standing to the credit of the Project Accounts to
the Security Trustee.

 

 

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SECTION 6
 
REPAYMENT, PREPAYMENT AND CANCELLATION
 
8.  
REPAYMENT

 
8.1  
Repayment of Loans

 
(a)  
The Borrower shall repay each Loan on the last day of its Interest Period.

 
(b)  
Subject to compliance with the other terms of this Agreement the Borrower may
borrow a Rollover Loan on the last day of the Interest Period pertaining to a
Loan after serving a Utilisation Request in accordance with Clause 5
(Utilisation – Loans) and if the Borrower so serves a Utilisation Request, as
specified in this paragraph (b) of Clause 8.1, then the relevant Loan shall be
deemed to have been repaid to the Lenders on the last day of the relevant
Interest Period and to have been immediately reborrowed as a Rollover Loan by
the Borrower from the Lenders for the Interest Period selected in the relevant
Utilisation Request.

 
(c)  
Notwithstanding any other provision of this Agreement, all Utilisations and
other amounts outstanding under the Facility shall be repaid on the Final
Maturity Date and all Commitments cancelled.

 
8.2  
Reduction

 
(a)  
Subject to Clause 9.4 (Voluntary cancellation), the Total Commitments shall be
reduced on each Reduction Date to the amount set out opposite each Reduction
Date in Schedule 3 (Reduced Commitments) with each Lender’s Commitment reduced
pro rata, provided that if such Reduction Date is not a Business Day that
Reduction Date shall instead fall on the preceding Business Day.

 
(b)  
The Borrower shall ensure that sufficient Loans are repaid on a Reduction Date
to the extent necessary so that the aggregate of the outstanding Loans (after
that repayment) is equal to or less than the reduced amount of the Total
Commitments at that time.

 
(c)  
The Borrower shall ensure that sufficient Loans are repaid on a Recalculation
Date to the extent necessary so that the aggregate of the outstanding Loans
(after that repayment) is equal to or less than the Borrowing Base Amount
(which, for the avoidance of doubt, shall take into account any permitted
disposal of part or whole of a Borrowing Base Asset by way of share sale or
asset sale pursuant to Clause 22.16 (Disposals)) applicable on the day after
such Recalculation Date.

 
(d)  
Any reduction of the Total Commitments shall reduce rateably the Commitment of
each Lender.

 
(e)  
If the Borrower cancels the whole or any part of the Commitments in accordance
with Clause 9.4 (Voluntary cancellation), then the amount of each Lender’s
Commitment for each Reduction Date falling after that cancellation will reduce
pro rata in chronological order by the amount cancelled.

 

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(f)  
Any repayments of Loans under Clause 8.2(b) or Clause 8.2(c) shall be applied
towards such Loans as the Agent (acting in consultation with the Borrower) shall
determine.

 
(g)  
The Total Commitments shall reduce to zero on the Final Maturity Date.

 
9.  
PREPAYMENT AND CANCELLATION

 
9.1  
Illegality

 
If, at any time, it is or will become unlawful in any applicable jurisdiction
for a Lender to perform any of its obligations as contemplated by this Agreement
or to fund or maintain its participation in any Loan:
 
(a)  
that Lender shall promptly notify the Agent upon becoming aware of that event;

 
(b)  
upon the Agent notifying the Borrower, the Commitment of that Lender will be
immediately cancelled; and

 
(c)  
the Borrower shall repay that Lender’s participation in the Loans made to the
Borrower on the last day of the Interest Period for each Loan occurring after
the Agent has notified the Borrower or, if earlier, the date specified by the
Lender in the notice delivered to the Agent (being no earlier than the last day
of any applicable grace period permitted by law).

 
9.2  
Change of control

 
(a)  
For the purpose of this Clause:

 
“a Change of Control Event” occurs if:
 
(i)  
the Parent does not or ceases to hold, directly or indirectly and both legally
and beneficially, and have the right to vote as it sees fit, more than 50 per
cent. of the share capital of any Obligor;

 
(ii)  
the Parent does not or ceases to have the right to direct the management of any
Obligor to comply with the types of obligations imposed by the Finance Documents
or to determine the composition of a majority of the board of directors of any
Obligor;

 
(iii)  
any person or two or more persons acting in concert shall have acquired
beneficial ownership, directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of or control
over, voting stock of the Parent (or other securities convertible into such
voting stock) representing 50 per cent. or more of the combined voting power of
all voting stock of the Parent; or

 

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(iv)  
during any period of up to 12 consecutive months, individuals who at the
beginning of such 12-month period were directors of the Parent (together with
any new director whose election by the Parent’s board of directors or whose
nomination for election by Parent’s stockholders was approved by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of Parent then in office.

 
“acting in concert” means, a group of persons who, pursuant to an agreement or
understanding (whether formal or informal), actively co-operate, through the
acquisition by any of them, either directly or indirectly, of shares in an
Obligor, to obtain or consolidate control of the Obligor.
 
“control” means:
 
 
(i)
the power (whether by way of ownership of shares, proxy, contract, agency or
otherwise) to:

 
(A)  
cast, or control the casting of, more than one-half of the maximum number of
votes that might be cast at a general meeting of an Obligor; or

 
(B)  
appoint or remove all, or the majority, of the directors or other equivalent
officers of the Obligor; or

 
(C)  
give directions with respect to the operating and financial policies of the
Obligor which the directors or other equivalent officers of the Obligor are
obliged to comply with; or

 
 
(ii)
the holding of more than one-half of the issued share capital of an Obligor
(excluding any part of that issued share capital that carries no right to
participate beyond a specified amount in a distribution of either profits or
capital).

 
(b)  
If a Change of Control Event occurs:

 
(i)  
the Borrower and/or the Parent shall promptly notify the Agent upon becoming
aware of that event; and

 
(ii)  
the Agent shall, by not less than ten (10) days notice to the Borrower, cancel
the Total Commitments and declare all outstanding Loans, together with accrued
interest and all other amounts accrued under the Finance Documents, immediately
due and payable, whereupon the Total Commitments will be cancelled and all such
outstanding amounts will become immediately due and payable.

 

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9.3  
Refinancing

 
If this Facility is refinanced at any time in whole or in part, then on the date
on which the first drawing is made under the credit facility or any other
funding arrangement entered into for the purposes of such refinancing:
 
(a)  
the Total Commitments shall be cancelled; and

 
(b)  
the Borrower must repay all Utilisations and other amounts outstanding under the
Finance Documents.

 
9.4  
Voluntary cancellation

 
The Borrower may, if it gives the Agent not less than ten (10) Business Days’
(or such shorter period as the Majority Lenders may agree) prior notice, cancel
the whole or any part (being a minimum amount of USD 1,000,000 or if less, the
undrawn amount) of the Available Facility.  Any cancellation under this Clause
9.4 shall reduce the Commitments of the Lenders rateably.
 
9.5  
Voluntary Prepayment of Loans

 
The Borrower may, if it gives the Agent not less than ten (10) Business Days’
(or such shorter period as the Majority Lenders may agree) prior notice, prepay
the whole or any part of a Loan (but if in part, being an amount that reduces
the amount of the Loan by a minimum amount of USD 1,000,000).
 
9.6  
Right of replacement or repayment and cancellation in relation to a single
Lender

 
(a)  
If:

 
(i)  
any sum payable to any Lender by an Obligor is required to be increased under
paragraph (c) of Clause 14.2 (Tax gross-up);

 
(ii)  
any Lender claims indemnification from the Borrower under Clause 14.3 (Tax
indemnity) or Clause 15.1 (Increased costs); or

 
(iii)  
any Lender notifies the Agent of its Additional Cost Rate under paragraph 3 of
Schedule 6 (Mandatory Cost formulae),

 
the Borrower may, whilst (in the case of paragraphs (i) and (ii) above) the
circumstance giving rise to the requirement for that increase or indemnification
continues or (in the case of paragraph (iii) above) that Additional Cost Rate is
greater than zero, give the Agent notice of cancellation of the Commitment of
that Lender and its intention to procure the repayment of that Lender’s
participation in the Loans or give the Agent notice of its intention to replace
that Lender in accordance with paragraph (d) below.
 
(b)  
On receipt of a notice of cancellation referred to in paragraph (a) above, the
Commitment of that Lender shall immediately be reduced to zero.

 

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(c)  
On the last day of each Interest Period which ends after the Borrower has given
notice of cancellation under paragraph (a) above (or, if earlier, the date
specified by the Borrower in that notice), the Borrower shall repay that
Lender’s participation in that Loan.

 
(d)  
The Borrower may, in the circumstances set out in paragraph (a) above, on five
(5) Business Days’ prior notice to the Agent and that Lender, replace that
Lender by requiring that Lender to (and to the extent permitted by law, that
Lender shall) transfer pursuant to Clause 24 (Changes to the Lenders) all (and
not part only) of its rights and obligations under this Agreement to a Lender or
other bank, financial institution, trust, fund or other entity selected by the
Borrower which confirms its willingness to assume and does assume all the
obligations of the transferring Lender in accordance with Clause 24 (Changes to
the Lenders) for a purchase price in cash or other cash payment payable at the
time of the transfer equal to the outstanding principal amount of such Lender’s
participation in the outstanding Loans and all accrued interest, Break Costs and
other amounts payable in relation thereto under the Finance Documents.

 
(e)  
The replacement of a Lender pursuant to paragraph (d) above shall be subject to
the following conditions:

 
(i)  
the Borrower shall have no right to replace the Agent;

 
(ii)  
neither the Agent nor any Lender shall have any obligation to find a replacement
Lender; and

 
(iii)  
in no event shall the Lender replaced under paragraph (d) above be required to
pay or surrender any of the fees received by such Lender pursuant to the Finance
Documents.

 
9.7  
Restrictions

 
(a)  
Any notice of cancellation or prepayment given by any Party under this Clause 9
shall be irrevocable and, unless a contrary indication appears in this
Agreement, shall specify the date or dates upon which the relevant cancellation
or prepayment is to be made and the amount of that cancellation or prepayment.

 
(b)  
Any prepayment under this Agreement shall be made together with accrued interest
on the amount prepaid and, subject to any Break Costs, without premium or
penalty.

 
(c)  
Unless a contrary indication appears in this Agreement, any part of the Facility
which is prepaid or repaid may be reborrowed in accordance with the terms of
this Agreement.

 
(d)  
The Borrower shall not repay or prepay all or any part of the Loans or cancel
all or any part of the Commitments except at the times and in the manner
expressly provided for in this Agreement.

 

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(e)  
No amount of the Total Commitments cancelled under this Agreement may be
subsequently reinstated.

 
(f)  
If the Agent receives a notice under this Clause 9 it shall promptly forward a
copy of that notice to either the Borrower or the affected Lender, as
appropriate.

 

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SECTION 7
 
COSTS OF UTILISATION
 
10.  
INTEREST

 
10.1  
Calculation of interest

 
The rate of interest on each Loan for each Interest Period is the percentage
rate per annum which is the aggregate of the applicable:
 
(a)  
Margin;

 
(b)  
LIBOR; and

 
(c)  
Mandatory Cost, if any.

 
10.2  
Payment of interest

 
On the last day of each Interest Period the Borrower shall pay accrued interest
on the Loan to which that Interest Period relates (and, if the Interest Period
is longer than six Months, on the dates falling at six Monthly intervals after
the first day of the Interest Period).
 
10.3  
Default interest

 
(a)  
If an Obligor fails to pay any amount payable by it under a Finance Document on
its due date, interest shall accrue on the overdue amount from the due date up
to the date of actual payment (both before and after judgment) at a rate which,
subject to paragraph (b) below, is two (2) per cent higher than the rate which
would have been payable if the overdue amount had, during the period of
non-payment, constituted a Loan in the currency of the overdue amount for
successive Interest Periods, each of a duration selected by the Agent (acting
reasonably).  Any interest accruing under this Clause 10.3 shall be immediately
payable by the Obligor on demand by the Agent.

 
(b)  
If any overdue amount consists of all or part of a Loan which became due on a
day which was not the last day of an Interest Period relating to that Loan:

 
(i)  
the first Interest Period for that overdue amount shall have a duration equal to
the unexpired portion of the current Interest Period relating to that Loan; and

 
(ii)  
the rate of interest applying to the overdue amount during that first Interest
Period shall be two (2) per cent. higher than the rate which would have applied
if the overdue amount had not become due.

 
(c)  
Default interest (if unpaid) arising on an overdue amount will be compounded
with the overdue amount at the end of each Interest Period applicable to that
overdue amount but will remain immediately due and payable.

 

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10.4  
Notification of rates of interest

 
The Agent shall promptly notify the Lenders and the Borrower of the
determination of a rate of interest under this Agreement.
 
11.  
INTEREST PERIODS

 
11.1  
Selection of Interest Periods

 
(a)  
The Borrower may select an Interest Period for a Loan in the Utilisation Request
for that Loan.

 
(b)  
Subject to this Clause 11, the Borrower may select an Interest Period of one,
two, three or six Months or any other period agreed between the Borrower and the
Agent (acting on the instructions of all the Lenders in relation to the relevant
Loan).

 
(c)  
The Borrower may select an Interest Period of less than six Months which does
not coincide with the periods specified in paragraph (b) of Clause 11.1 for the
purpose of ensuring that (i) the last day of such Interest Period coincides with
a Reduction Date and (ii) there are sufficient Loans (with an aggregate amount
equal to or greater than the amount required to be repaid under Clause 8.2
(Reduction) on such Reduction Date) which have an Interest Period ending on such
Reduction Date.

 
(d)  
An Interest Period for a Loan shall not extend beyond the Final Maturity Date.

 
(e)  
Each Interest Period for a Loan shall start on the Utilisation Date.

 
(f)  
A Loan has one Interest Period only.

 
11.2  
Changes to Interest Periods

 
(a)  
Prior to determining the interest rate for a Loan, the Agent may shorten the
Interest Period for any Loan to ensure that (i) the last day of such Interest
Period coincides with a Reduction Date and (ii) there are sufficient Loans (with
an aggregate amount equal to or greater than the amount required to be repaid
under Clause 8.2 (Reduction) on such Reduction Date) which have an Interest
Period ending on such Reduction Date.

 
(b)  
If the Agent makes any change to an Interest Period referred to in this Clause
11.2, it shall promptly notify the Borrower and the Lenders.

 
11.3  
Non-Business Days

 
If an Interest Period would otherwise end on a day which is not a Business Day,
that Interest Period will instead end on the next Business Day in that calendar
month (if there is one) or the preceding Business Day (if there is not).
 

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12.  
CHANGES TO THE CALCULATION OF INTEREST

 
12.1  
Absence of quotations

 
Subject to Clause 12.2 (Market disruption), if LIBOR is to be determined by
reference to the Reference Banks but a Reference Bank does not supply a
quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall
be determined on the basis of the quotations of the remaining Reference Banks.
 
12.2  
Market disruption

 
(a)  
If a Market Disruption Event occurs in relation to a Loan for any Interest
Period, then the rate of interest on each Lender’s share of that Loan for the
Interest Period shall be the percentage rate per annum which is the sum of:

 
(i)  
the Margin;

 
(ii)  
the rate notified to the Agent by that Lender as soon as practicable and in any
event before interest is due to be paid in respect of that Interest Period, to
be that which expresses as a percentage rate per annum the cost to that Lender
of funding its participation in that Loan from whatever source it may reasonably
select; and

 
(iii)  
the Mandatory Cost, if any, applicable to that Lender’s participation in the
Loan.

 
(b)  
In this Agreement “Market Disruption Event” means:

 
(i)  
at or about noon on the Quotation Day for the relevant Interest Period the
Screen Rate is not available and none or only one of the Reference Banks
supplies a rate to the Agent to determine LIBOR for dollars and the relevant
Interest Period; or

 
(ii)  
before close of business in London on the Quotation Day for the relevant
Interest Period, the Agent receives notifications from a Lender or Lenders
(whose participations in a Loan exceed 35 per cent. of that Loan) that the cost
to it of obtaining matching deposits in the Relevant Interbank Market would be
in excess of LIBOR.

 
12.3  
Alternative basis of interest or funding

 
(a)  
If a Market Disruption Event occurs and the Agent or the Borrower so requires,
the Agent and the Borrower shall enter into negotiations (for a period of not
more than thirty days) with a view to agreeing a substitute basis for
determining the rate of interest.

 
(b)  
Any alternative basis agreed pursuant to paragraph (a) above shall, with the
prior consent of all the Lenders and the Borrower, be binding on all Parties.

 

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12.4  
Break Costs

 
(a)  
The Borrower shall, within three Business Days of demand by a Finance Party, pay
to that Finance Party its Break Costs attributable to all or any part of a Loan
or Unpaid Sum being paid by the Borrower on a day other than the last day of an
Interest Period for that Loan or Unpaid Sum.

 
(b)  
Each Lender shall, as soon as reasonably practicable after a demand by the
Agent, provide a certificate confirming the amount of its Break Costs for any
Interest Period in which they accrue.

 
13.  
FEES

 
13.1  
Commitment fee

 
(a)  
The Borrower shall pay to the Agent (for the account of each Lender) a fee in
dollars computed at the rate of 50 per cent. of the Margin payable on each
Lender’s Available Commitment for the period from Transaction Close to the Final
Maturity Date.

 
(b)  
The accrued commitment fee is payable on the last day of each successive period
of three Months which ends during the Availability Period, on the last day of
the Availability Period and, if cancelled in full, on the cancelled amount of
the relevant Lender’s Commitment at the time the cancellation is effective.

 
13.2  
Arrangement fee

 
The Borrower shall pay to each Mandated Lead Arranger an arrangement fee in the
amount and at the times agreed in a Fee Letter.
 
13.3  
Agency fee

 
The Borrower shall pay to the Agent (for its own account) an agency fee in the
amount and at the times agreed in a Fee Letter.
 
13.4  
Security Trustee fee

 
The Borrower shall pay to the Security Trustee (for its own account) the
security trustee fee in the amount and at the times agreed in a Fee Letter.
 

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SECTION 8
 
ADDITIONAL PAYMENT OBLIGATIONS
 
14.  
TAX GROSS UP AND INDEMNITIES

 
14.1  
Definitions

 
(a)  
In this Agreement:

 
“Certificate of Residence” means a document issued by the appropriate tax
authorities of a country of residence of the Treaty Lender confirming its tax
residency in that country.
 
“Protected Party” means a Finance Party which is or will be subject to any
liability, or required to make any payment, for or on account of Tax in relation
to a sum received or receivable (or any sum deemed for the purposes of Tax to be
received or receivable) under a Finance Document.
 
“Qualifying Lender” means a Lender which is beneficially entitled to interest
payable to that Lender in respect of an advance under a Finance Document and is:
 
(i)  
a resident in Poland;

 
(ii)  
acting through a Facility office established in Poland and constituting a
permanent establishment within the meaning of the relevant double taxation
agreement; or

 
(iii)  
a Treaty Lender which has provided the Borrower with the Certificate of
Residence.

 
“Tax Credit” means a credit against, relief or remission for, or repayment of
any Tax.
 
“Tax Deduction” means a deduction or withholding for or on account of Tax from a
payment under a Finance Document.
 
“Tax Payment” means either the increase in a payment made by an Obligor to a
Finance Party under Clause 14.2 (Tax gross-up) or a payment under Clause 14.3
(Tax indemnity).
 
“Treaty Lender” means a Lender which:
 
 
(i)
is treated as a resident of a Treaty State for the purposes of the Treaty; and

 
 
(ii)
does not carry on a business in Poland through a permanent establishment with
which that Lender’s participation in the Loan is effectively connected.

 

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“Treaty State” means a jurisdiction having a double taxation agreement (a
“Treaty”) with Poland which makes provision for full exemption from tax imposed
by Poland on interest.
 
(b)  
Unless a contrary indication appears, in this Clause 14 a reference to
“determines” or “determined” means a determination made in the absolute
discretion of the person making the determination.

 
14.2  
Tax gross-up

 
(a)  
Each Obligor shall make all payments to be made by it without any Tax Deduction,
unless a Tax Deduction is required by law.

 
(b)  
The Borrower shall promptly upon becoming aware that an Obligor must make a Tax
Deduction (or that there is any change in the rate or the basis of a Tax
Deduction)  notify the Agent accordingly.  Similarly, a Lender shall notify the
Agent on becoming so aware in respect of a payment payable to that Lender.  If
the Agent receives such notification from a Lender it shall notify each Obligor.

 
(c)  
If a Tax Deduction is required by law to be made by an Obligor, the amount of
the payment due from that Obligor shall be increased to an amount which (after
making any Tax Deduction) leaves an amount equal to the payment which would have
been due if no Tax Deduction had been required.

 
(d)  
A payment shall not be increased under paragraph (c) above by reason of a Tax
Deduction on account of Tax imposed by Poland, if on the date on which the
payment falls due:

 
(i)  
the payment could have been made to the relevant Lender without a Tax Deduction
if the Lender had been a Qualifying Lender, but on that date that Lender is not
or has ceased to be a Qualifying Lender other than as a result of any change
after the date it became a Lender under this Agreement in (or in the
interpretation, administration, or application of) any law or Treaty, or any
published practice or published concession of any relevant taxing authority; or

 
(ii)  
the relevant Lender is a Treaty Lender and the Obligor making the payment is
able to demonstrate that the payment could have been made to the Lender without
the Tax Deduction had that Lender complied with its obligations under paragraph
(g) below.

 
(e)  
If an Obligor is required to make a Tax Deduction, that Obligor shall make that
Tax Deduction and any payment required in connection with that Tax Deduction
within the time allowed and in the minimum amount required by law.

 

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(f)  
Within thirty days of making either a Tax Deduction or any payment required in
connection with that Tax Deduction, the Obligor making that Tax Deduction shall
deliver to the Agent for the Finance Party entitled to the payment evidence
reasonably satisfactory to that Finance Party that the Tax Deduction has been
made or (as applicable) any appropriate payment paid to the relevant taxing
authority.

 
(g)  
A Treaty Lender and each Obligor which makes a payment to which that Treaty
Lender is entitled shall co-operate in completing any procedural formalities
necessary for that Obligor to obtain authorisation to make that payment without
a Tax Deduction.

 
14.3  
Tax indemnity

 
(a)  
The Borrower shall (within three Business Days of demand by the Agent) pay to a
Protected Party an amount equal to the loss, liability or cost which that
Protected Party determines will be or has been (directly or indirectly) suffered
for or on account of Tax by that Protected Party in respect of a Finance
Document.

 
(b)  
Paragraph (a) above shall not apply:

 
(i)  
with respect to any Tax assessed on a Finance Party:

 
(A)  
under the law of the jurisdiction in which that Finance Party is incorporated
or, if different, the jurisdiction (or jurisdictions) in which that Finance
Party is treated as resident for tax purposes; or

 
(B)  
under the law of the jurisdiction in which that Finance Party’s Facility Office
is located in respect of amounts received or receivable in that jurisdiction,

 
if that Tax is imposed on or calculated by reference to the net income received
or receivable (but not any sum deemed to be received or receivable) by that
Finance Party; or
 
(ii)  
to the extent a loss, liability or cost:

 
(A)  
is compensated for by an increased payment under Clause 14.2 (Tax gross-up); or

 
(B)  
would have been compensated for by an increased payment under Clause 14.2 (Tax
gross-up) but was not so compensated solely because one of the exclusions in
paragraph (d) of Clause 14.2 (Tax gross-up) applied.

 
(c)  
A Protected Party making, or intending to make a claim under paragraph (a) above
shall promptly notify the Agent of the event which will give, or has given, rise
to the claim, following which the Agent shall notify the Borrower.

 

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(d)  
A Protected Party shall, on receiving a payment from an Obligor under this
Clause 14.3, notify the Agent.

 
14.4  
Tax Credit

 
If an Obligor makes a Tax Payment and the relevant Finance Party determines
that:
 
(a)  
a Tax Credit is attributable either to an increased payment of which that Tax
Payment forms part, or to that Tax Payment; and

 
(b)  
that Finance Party has obtained, utilised and retained that Tax Credit,

 
the Finance Party shall pay an amount to the Obligor which that Finance Party
determines will leave it (after that payment) in the same after-Tax position as
it would have been in had the Tax Payment not been required to be made by the
Obligor (but without any obligation to arrange its tax affairs other than it
sees fit or disclose any information about its tax affairs).
 
14.5  
Lender Status Confirmation

 
Each Lender which becomes a Party to this Agreement after the date of this
Agreement shall indicate, in the Transfer Certificate or Assignment Agreement
which it executes on becoming a Party, and for the benefit of the Agent and
without liability to any Obligor, which of the following categories it falls in:
 
(a)  
not a Qualifying Lender;

 
(b)  
a Qualifying Lender (other than a Treaty Lender); or

 
(c)  
a Treaty Lender.

 
If a New Lender fails to indicate its status in accordance with this Clause 14.5
then such New Lender shall be treated for the purposes of this Agreement
(including by each Obligor) as if it is not a Qualifying Lender until such time
as it notifies the Agent which category applies (and the Agent, upon receipt of
such notification, shall inform the Borrower).  For the avoidance of doubt, a
Transfer Certificate or Assignment Agreement shall not be invalidated by any
failure of a Lender to comply with this Clause 14.5.
 
14.6  
Stamp taxes

 
The Borrower shall pay and, within three Business Days of demand, indemnify each
Secured Party and the Mandated Lead Arrangers against any cost, loss or
liability that Secured Party or Mandated Lead Arranger incurs in relation to all
stamp duty, registration and other similar Taxes payable in respect of any
Finance Document.
 

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14.7  
VAT

 
(a)  
All amounts set out, or expressed in a Finance Document to be payable by any
Party to a Finance Party which (in whole or in part) constitute the
consideration for a supply or supplies for VAT purposes shall be deemed to be
exclusive of any VAT which is chargeable on such supply or supplies, and
accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on
any supply made by any Finance Party to any Party under a Finance Document, that
Party shall pay to the Finance Party (in addition to and at the same time as
paying any other consideration for such supply) an amount equal to the amount of
such VAT (and such Finance Party shall promptly provide an appropriate VAT
invoice to such Party).

 
(b)  
If VAT is or becomes chargeable on any supply made by any Finance Party (the
“Supplier”) to any other Finance Party (the “Recipient”) under a Finance
Document, and any Party other than the Recipient (the “Subject Party”) is
required by the terms of any Finance Document to pay an amount equal to the
consideration for such supply to the Supplier (rather than being required to
reimburse the Recipient in respect of that consideration), such Party shall also
pay to the Supplier (in addition to and at the same time as paying such amount)
an amount equal to the amount of such VAT.  The Recipient will promptly pay to
the Subject Party an amount equal to any credit or repayment obtained by the
Recipient from the relevant tax authority which the Recipient reasonably
determines is in respect of such VAT.

 
(c)  
Where a Finance Document requires any Party to reimburse or indemnify a Finance
Party for any cost or expense, that Party shall reimburse or indemnify (as the
case may be) such Finance Party for the full amount of such cost or expense,
including such part thereof as represents VAT, save to the extent that such
Finance Party reasonably determines that it is entitled to credit or repayment
in respect of such VAT from the relevant tax authority.

 
(d)  
Any reference in this Clause 14.7 to any Party shall, at any time when such
Party is treated as a member of a group for VAT purposes, include (where
appropriate and unless the context otherwise requires) a reference to the
representative member of such group at such time (the term “representative
member” to have the same meaning as in the Value Added Tax Act 1994).

 
15.  
INCREASED COSTS

 
15.1  
Increased costs

 
(a)  
Subject to Clause 15.3 (Exceptions), the Borrower shall, within three Business
Days of a demand by the Agent, pay for the account of a Finance Party the amount
of any Increased Costs incurred by that Finance Party or any of its Affiliates
as a result of (i) the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation or (ii)
compliance with any law or regulation made after the date of this Agreement.

 

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(b)  
In this Agreement “Increased Costs” means:

 
(i)  
a reduction in the rate of return from the Facility or on a Finance Party’s (or
its Affiliate’s) overall capital;

 
(ii)  
an additional or increased cost; or

 
(iii)  
a reduction of any amount due and payable under any Finance Document,

 
which is incurred or suffered by a Finance Party or any of its Affiliates to the
extent that it is attributable to that Finance Party having entered into its
Commitment or funding or performing its obligations under any Finance Document.
 
15.2  
Increased cost claims

 
(a)  
A Finance Party intending to make a claim pursuant to Clause 15.1 (Increased
costs) shall notify the Agent of the event giving rise to the claim, following
which the Agent shall promptly notify the Borrower.

 
(b)  
Each Finance Party shall, as soon as practicable after a demand by the Agent,
provide a certificate confirming the amount of its Increased Costs.

 
15.3  
Exceptions

 
(a)  
Clause 15.1 (Increased costs) does not apply to the extent any Increased Cost
is:

 
(i)  
attributable to a Tax Deduction required by law to be made by an Obligor;

 
(ii)  
compensated for by Clause 14.3 (Tax indemnity) (or would have been compensated
for under Clause 14.3 (Tax indemnity) but was not so compensated solely because
any of the exclusions in paragraph (b) of Clause 14.3 (Tax indemnity) applied);

 
(iii)  
compensated for by the payment of the Mandatory Cost; or

 
(iv)  
attributable to the wilful breach by the relevant Finance Party or its
Affiliates of any law or regulation.

 
(b)  
In this Clause 15.3, a reference to a “Tax Deduction” has the same meaning given
to the term in Clause 14.1 (Definitions).

 

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16.  
OTHER INDEMNITIES

 
16.1  
Currency indemnity

 
(a)  
If any sum due from an Obligor under the Finance Documents (a “Sum”), or any
order, judgment or award given or made in relation to a Sum, has to be converted
from the currency (the “First Currency”) in which that Sum is payable into
another currency (the “Second Currency”) for the purpose of:

 
(i)  
making or filing a claim or proof against that Obligor; or

 
(ii)  
obtaining or enforcing an order, judgment or award in relation to any litigation
or arbitration proceedings,

 
that Obligor shall as an independent obligation, within three Business Days of
demand, indemnify each Secured Party and the Mandated Lead Arranger to whom that
Sum is due against any cost, loss or liability arising out of or as a result of
the conversion including any discrepancy between (A) the rate of exchange used
to convert that Sum from the First Currency into the Second Currency and (B) the
rate or rates of exchange available to that person at the time of its receipt of
that Sum.
 
(b)  
Each Obligor waives any right it may have in any jurisdiction to pay any amount
under the Finance Documents in a currency or currency unit other than that in
which it is expressed to be payable.

 
16.2  
Other indemnities

 
Each Obligor shall, within three Business Days of demand, indemnify each Secured
Party and the Mandated Lead Arrangers against any cost, loss or liability
incurred by that Secured Party or Mandated Lead Arranger as a result of:
 
(a)  
the occurrence of any Event of Default;

 
(b)  
a failure by an Obligor to pay any amount due under a Finance Document on its
due date, including without limitation, any cost, loss or liability arising as a
result of Clause 28 (Sharing among the Finance Parties);

 
(c)  
funding, or making arrangements to fund, its participation in a Loan requested
by the Borrower in a Utilisation Request but not made by reason of the operation
of any one or more of the provisions of this Agreement (other than by reason of
default or negligence by that Finance Party alone); or

 
(d)  
a Loan (or part of a Loan) not being prepaid in accordance with a notice of
prepayment given by the Borrower.

 

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16.3  
Indemnity to the Agent

 
The Borrower shall promptly indemnify the Agent against any cost, loss or
liability incurred by the Agent (acting reasonably) as a result of:
 
(a)  
investigating any event which it reasonably believes is a Default; or

 
(b)  
acting or relying on any notice, request or instruction which it reasonably
believes to be genuine, correct and appropriately authorised.

 
16.4  
Indemnity to the Security Trustee

 
(a)  
Each Obligor shall promptly indemnify the Security Trustee and every Receiver
and Delegate against any cost, loss or liability incurred by any of them as a
result of:

 
(i)  
the taking, holding, protection or enforcement of the Transaction Security;

 
(ii)  
the exercise of any of the rights, powers, discretions and remedies vested in
the Security Trustee and each Receiver and Delegate by the Finance Documents or
by law; and

 
(iii)  
any default by any Obligor in the performance of any of the obligations
expressed to be assumed by it in the Finance Documents.

 
(b)  
The Security Trustee may, in priority to any payment to the Secured Parties,
indemnify itself out of the Charged Property in respect of, and pay and retain,
all sums necessary to give effect to the indemnity in this Clause 16.4 and shall
have a lien on the Transaction Security and the proceeds of the enforcement of
the Transaction Security for all monies payable to it.

 
17.  
MITIGATION BY THE LENDERS

 
17.1  
Mitigation

 
(a)  
Each Finance Party shall, in consultation with the Borrower, take all reasonable
steps to mitigate any circumstances which arise and which would result in any
amount becoming payable under or pursuant to, or cancelled pursuant to, any of
Clause 9.1 (Illegality), Clause 12 (Changes to the Calculation of Interest),
Clause 14 (Tax gross up and indemnities), Clause 15 (Increased costs) or
paragraph 3 of Schedule 6 (Mandatory Cost formulae) including (but not limited
to) transferring its rights and obligations under the Finance Documents to
another Affiliate or Facility Office.

 
(b)  
Paragraph (a) above does not in any way limit the obligations of any Obligor
under the Finance Documents.

 

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17.2  
Limitation of liability

 
(a)  
The Borrower shall promptly indemnify each Finance Party for all costs and
expenses reasonably incurred by that Finance Party as a result of steps taken by
it under Clause 17.1 (Mitigation).

 
(b)  
A Finance Party is not obliged to take any steps under Clause 17.1 (Mitigation)
if, in the opinion of that Finance Party (acting reasonably), to do so might be
prejudicial to it.

 
18.  
COSTS AND EXPENSES

 
18.1  
Transaction expenses

 
The Borrower shall promptly on demand pay the Agent, the Mandated Lead Arrangers
and the Security Trustee the amount of all costs and expenses (including, but
not limited to, legal and consultancy fees) reasonably incurred by any of them
(and, in the case of the Security Trustee, by any Receiver or Delegate) in
connection with:
 
(a)  
the negotiation, preparation, printing, execution, syndication and perfection
of:

 
(i)  
this Agreement and any other documents referred to in this Agreement and the
Transaction Security; and

 
(ii)  
any other Finance Documents executed after the date of this Agreement.

 
(b)  
the designation or de-designation of any Petroleum Assets as Borrowing Base
Assets; and

 
(c)  
the amount payable by the Borrower under paragraph (a) of Clause 18.1 in
connection with the negotiation, preparation, printing and execution of (i) this
Agreement and (ii) any other document relating thereto which is, or to be,
executed on or before the date of the first Utilisation Date shall be paid on or
before the first Utilisation Date.

 
18.2  
Amendment costs

 
If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment
is required pursuant to Clause 29.9 (Change of currency), the Borrower shall,
within three Business Days of demand, reimburse each of the Agent and the
Security Trustee for the amount of all costs and expenses (including, but not
limited to, legal fees) reasonably incurred by the Agent and the Security
Trustee (and in the case of the Security Trustee, by any Receiver or Delegate)
in responding to, evaluating, negotiating or complying with that request or
requirement.
 

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18.3  
Security Trustee’s ongoing costs

 
(a)  
In the event of (i) the occurrence of a Default or (ii) the Security Trustee
considering it necessary or expedient or (iii) the Security Trustee being
requested by an Obligor or the Majority Lenders to undertake duties which the
Security Trustee and the Borrower agree to be of an exceptional nature and/or
outside the scope of the normal duties of the Security Trustee under the Finance
Documents, the Borrower shall pay to the Security Trustee any additional
remuneration that may be agreed between them.

 
(b)  
If the Security Trustee and the Borrower fail to agree upon the nature of the
duties or upon any additional remuneration, that dispute shall be determined by
an investment bank (acting as an expert and not as an arbitrator) selected by
the Security Trustee and approved by the Borrower or, failing approval,
nominated (on the application of the Security Trustee) by the President for the
time being of the Law Society of England and Wales (the costs of the nomination
and of the investment bank being payable by the Borrower) and the determination
of any investment bank shall be final and binding upon the parties to this
Agreement.

 
18.4  
Enforcement and preservation costs

 
The Borrower shall, within three Business Days of demand, pay to each Secured
Party and the Mandated Lead Arrangers the amount of all costs and expenses
(including, but not limited to, legal fees) incurred by that Secured Party and
the Mandated Lead Arrangers in connection with the enforcement of, or the
preservation of any rights under, any Finance Document and the Transaction
Security and any proceedings instituted by or against the Security Trustee as a
consequence of taking or holding the Transaction Security or enforcing these
rights.
 

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SECTION 9
 
GUARANTEE
 
19.  
GUARANTEE AND INDEMNITY

 
19.1  
Guarantee and indemnity

 
Each Guarantor irrevocably and unconditionally jointly and severally:
 
(a)  
guarantees to each Finance Party punctual performance by the Borrower of all the
Borrower’s obligations under the Finance Documents;

 
(b)  
undertakes with each Finance Party that whenever the Borrower does not pay any
amount when due under or in connection with any Finance Document, the Guarantors
shall immediately on demand pay that amount as if it was the principal obligor;
and

 
(c)  
agrees with each Finance Party that if any obligation guaranteed by it is or
becomes unenforceable, invalid or illegal it will, as an independent and primary
obligation, indemnify that Finance Party immediately on demand against any cost,
loss or liability it incurs as a result of the Borrower not paying any amount
which would, but for such unenforceability, invalidity or illegality, have been
payable by it under any Finance Document on the date when it would have been
due.  The amount payable by a Guarantor under this indemnity will not exceed the
amount it would have had to pay under this Clause 19 if the amount claimed had
been recoverable on the basis of a guarantee.

 
19.2  
Continuing guarantee

 
This guarantee is a continuing guarantee and will extend to the ultimate balance
of sums payable by any Obligor under the Finance Documents, regardless of any
intermediate payment or discharge in whole or in part.
 
19.3  
Reinstatement

 
If any discharge, release or arrangement (whether in respect of the obligations
of any Obligor or any security for those obligations or otherwise) is made by a
Finance Party in whole or in part on the basis of any payment, security or other
disposition which is avoided or must be restored in insolvency, liquidation,
administration or otherwise, without limitation, then the liability each
Guarantor under this Clause 19 will continue or be reinstated as if the
discharge, release or arrangement had not occurred.
 
19.4  
Waiver of defences

 
The obligations of each Guarantor under this Clause 19 will not be affected by
any act, omission, matter or thing which, but for this Clause, would reduce,
release or prejudice any of its obligations under this Clause 19 (without
limitation and whether or not known to it or any Finance Party) including:
 

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(a)  
any time, waiver or consent granted to, or composition with, any Obligor or
other person;

 
(b)  
the release of any other Obligor or any other person under the terms of any
composition or arrangement with any creditor of any member of the Group;

 
(c)  
the taking, variation, compromise, exchange, renewal or release of, or refusal
or neglect to perfect, take up or enforce, any rights against, or security over
assets of, any Obligor or other person or any non-presentation or non-observance
of any formality or other requirement in respect of any instrument or any
failure to realise the full value of any security;

 
(d)  
any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of an Obligor or any other
person;

 
(e)  
any amendment, novation, supplement, extension (whether of maturity or
otherwise) or restatement (in each case however fundamental and of whatsoever
nature, and whether or not more onerous) or replacement of a Finance Document or
any other document or security;

 
(f)  
any unenforceability, illegality or invalidity of any obligation of any person
under any Finance Document or any other document or security; or

 
(g)  
any insolvency or similar proceedings.

 
19.5  
Guarantor Intent

 
Without prejudice to the generality of Clause 19.4 (Waiver of defences), each
Guarantor expressly confirms that it intends that this guarantee shall extend
from time to time to any (however fundamental and of whatsoever nature and
whether or not more onerous) variation, increase, extension or addition of or to
any of the Finance Documents and/or any facility or amount made available under
any of the Finance Documents for the purposes of or in connection with any of
the following:  acquisitions of any nature; increasing working capital; enabling
investor distributions to be made; carrying out restructurings; refinancing
existing facilities; refinancing any other indebtedness; making facilities
available to new borrowers; any other variation or extension of the purposes for
which any such facility or amount might be made available from time to time; and
any fees, costs and/or expenses associated with any of the foregoing.
 
19.6  
Immediate recourse

 
Each Guarantor waives any right it may have of first requiring any Finance Party
(or any trustee or agent on its behalf) to proceed against or enforce any other
rights or security or claim payment from any person before claiming from that
Guarantor under this Clause 19.  This waiver applies irrespective of any law or
any provision of a Finance Document to the contrary.
 

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19.7  
Appropriations

 
Until all amounts which may be or become payable by the Obligors under or in
connection with the Finance Documents have been irrevocably paid in full, each
Finance Party (or any trustee or agent on its behalf) may:
 
(a)  
refrain from applying or enforcing any other moneys, security or rights held or
received by that Finance Party (or any trustee or agent on its behalf) in
respect of those amounts, or apply and enforce the same in such manner and order
as it sees fit (whether against those amounts or otherwise) and no Guarantor
shall be entitled to the benefit of the same; and

 
(b)  
hold in an interest-bearing suspense account any moneys received from any
Guarantor or on account of any Guarantor’s liability under this Clause 19.

 
19.8  
Deferral of Guarantor’s rights

 
Until all amounts which may be or become payable by the Obligors under or in
connection with the Finance Documents have been irrevocably paid in full and
unless the Agent otherwise directs, no Guarantor will exercise any rights which
it may have by reason of performance by it of its obligations under the Finance
Documents or by reason of any amount being payable, or liability arising, under
this Clause 19:
 
(a)  
to be indemnified by an Obligor;

 
(b)  
to claim any contribution from any other guarantor of any Obligor’s obligations
under the Finance Documents;

 
(c)  
to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Finance Parties under the Finance Documents or
of any other guarantee or security taken pursuant to, or in connection with, the
Finance Documents by any Finance Party;

 
(d)  
to bring legal or other proceedings for an order requiring any Obligor to make
any payment, or perform any obligation, in respect of which any Guarantor has
given a guarantee, undertaking or indemnity under Clause 19.1 (Guarantee and
indemnity);

 
(e)  
to exercise any right of set-off against any Obligor; and/or

 
(f)  
to claim or prove as a creditor of any Obligor in competition with any Finance
Party.

 
If the Guarantor receives any benefit, payment or distribution in relation to
such rights it shall hold that benefit, payment or distribution to the extent
necessary to enable all amounts which may be or become payable to the Finance
Parties by the Borrower under or in connection with the Finance Documents to be
repaid in full on trust for the Finance Parties and shall promptly pay or
transfer the same to the Agent or as the Agent may direct for application in
accordance with Clause 29 (Payment mechanics).
 

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19.9  
Additional security

 
This guarantee is in addition to and is not in any way prejudiced by any other
guarantee or security now or subsequently held by any Finance Party.
 
19.10  
Limitation

 
Notwithstanding any other provision of this Clause 19 (Guarantee and Indemnity)
the guarantee, indemnity and other obligations of any Dutch Obligor expressed to
be assumed in this Clause 19 (Guarantee and Indemnity) shall be deemed not to be
assumed by such Dutch Obligor to the extent that the same would constitute
unlawful financial assistance within the meaning of Article 2:207c or 2:98c
Dutch Civil Code or any other applicable financial assistance rules under any
relevant jurisdiction (the “Prohibition”) and the provisions of this Agreement
and the other Finance Documents shall be construed accordingly.  For the
avoidance of doubt it is expressly acknowledged that the relevant Dutch Obligors
will continue to guarantee all such obligations which, if included, do not
constitute a violation of the Prohibition.
 

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SECTION 10
 
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
 
20.  
REPRESENTATIONS

 
20.1  
Application

 
(a)  
Each Obligor makes the representations and warranties set out in this Clause 20
to each Finance Party on the date of this Agreement.

 
(b)  
Each Obligor makes the representations and warranties set out in Clause 20.11
(Security matters) on the date on which each Security Document is entered into.

 
(c)  
Save in respect of Clause 20.9(c) (Compliance with Environmental and Mining
Laws), Clause 20.10 (Compliance with laws) and Clause 20.23 (Group Liquidity
Test), any reference to ‘Group’ in each of the representations and warranties
set out in this Clause excludes reference to FX Drilling Company, Inc. and FX
Producing Company, Inc.

 
20.2  
Non-conflict with other obligations

 
The entry into and performance by it of, or any member of the Group of, and the
transactions contemplated by, the Transaction Documents to which it, or such
member of the Group, is a party do not and will not conflict with:
 
(a)  
any law or regulation applicable to it or any member of the Group;

 
(b)  
its or any of its Subsidiaries’ constitutional documents or the constitutional
documents of any member of the Group; or

 
(c)  
any Transaction Document or any other agreement or instrument binding upon (i)
it or any of its assets or (ii) any member of the Group or any assets of any
member of the Group.

 
20.3  
Status

 
(a)  
It is a corporation, duly incorporated and validly existing under the law of its
jurisdiction of incorporation or, in the case of FX Energy Netherlands
Partnership C.V., duly organised or registered and validly existing under the
laws of the Netherlands.

 
(b)  
It and each of its Subsidiaries has the power to own its assets and carry on its
business as it is being conducted.

 

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20.4  
Power and authority

 
It and each member of the Group has the power to enter into, perform and
deliver, and has taken all necessary action to authorise its entry into,
performance and delivery of, the Transaction Documents to which it is a party
and the transactions contemplated by those Transaction Documents.
 
20.5  
Binding obligations

 
The obligations expressed to be assumed by it, and each member of the Group, in
each Transaction Document are, subject to any Legal Reservations, legal, valid,
binding and enforceable obligations and are in full force and effect.
 
20.6  
Pari passu ranking

 
Its indebtedness and payment obligations and the indebtedness and payment
obligations of each member of the Group under the Finance Documents rank at
least pari passu with the claims of all its, or as the case may be, that Group
member’s other unsecured and unsubordinated creditors, except for obligations
mandatorily preferred by law applying to companies generally.
 
20.7  
No proceedings pending or threatened

 
Save in respect of the Disclosed Litigation, no litigation, arbitration or
administrative proceedings of or before any court, arbitral body or agency
which, if adversely determined, might reasonably be expected to have a Material
Adverse Effect has (to the best of its knowledge and belief) been started or
threatened against any member of the Group (or against the directors of any
member of the Group).
 
20.8  
Financial statements

 
(a)  
Its latest audited/unaudited financial statements were prepared in accordance
with GAAP/IFRS consistently applied.

 
(b)  
Its latest audited/unaudited financial statements fairly represent its financial
condition and operations (consolidated in the case of the Parent) during the
relevant financial year.

 
(c)  
There has been no material adverse change in its business or financial condition
(or the business or consolidated financial condition of the Group, in the case
of the Parent) since the date on which its latest audited/unaudited financial
statements were first provided pursuant to Clause 21.2 (Financial statements).

 

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20.9  
Compliance with Environmental and Mining Laws

 
(a)  
All Environmental and Mining Licences required in connection with the Borrowing
Base Assets and/or their exploitation have been obtained and it and each member
of the Group and the operator of each Borrowing Base Asset have at all times
complied with those Environmental and Mining Licences and all applicable
Environmental Decisions and all other applicable Environmental and Mining Laws.

 
(b)  
There is no material environmental contamination on any site connected with any
Borrowing Base Asset.

 
(c)  
There are no Environmental and Mining Claims current, or to its knowledge,
pending or threatened, against or connected with it, any member of the Group or
any Borrowing Base Asset which have or may have a Material Adverse Effect.

 
(d)  
So far as each Obligor is aware, PGNiG has not received any notice of withdrawal
or intention to withdraw any applicable Environmental and Mining Licence granted
to it.

 
20.10  
Compliance with Laws

 
Members of the Group are in material compliance with all laws and regulations
applicable to them.
 
20.11  
Security matters

 
(a)  
No Security (or agreement to create the same) exists over any of its assets or
the assets of any other member of the Group, in each case, save for any
Permitted Security.

 
(b)  
Subject to (i) any Legal Reservation or (ii) any required registration of any
Security Documents, each Security Document to which it, or any member of the
Group, is a party:

 
(i)  
confers the Security of the type it purports to create over the assets over
which the Security is purported to be given by that Security Document and each
such Security is (subject to any Permitted Security which may be prior ranking)
first ranking; and

 
(ii)  
is valid and enforceable against (A) it or, as the case may be, that member of
the Group, and (B) its Insolvency Officers and its creditors or, as the case may
be, the Insolvency Officers and creditors of that member of the Group; and

 
(iii)  
is not capable of being avoided or set aside, whether in the winding up,
administration or dissolution or otherwise of it or any of its assets or, as the
case may be, that member of the Group or any of that Group member’s assets.

 

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(c)  
Each member of the Group that has entered into any Security Document for the
purposes of granting Security over all or any of its assets is the legal and
beneficial owner of all of the assets (the “charged assets”) secured, or
purported to be secured, under such Security Document free from any Security
(other than the relevant Security created pursuant to that Security Document or
any Permitted Security).  Where the charged assets comprise shares held by that
member of the Group in another member of the Group, such charged assets are free
from any restrictions as to transfer or registration and are not subject to any
calls or other liability to pay money.

 
(d)  
With respect to the Borrowing Base Assets the Borrower holds the following
interests:

 
Initial Borrowing Base Asset
Borrower’s Interest
Other Interests
Zaniemysl Field
24.5%
51%
   
24.5%
Roszków Field
49%
51%
Kromolice Field
49%
51%
Kromolice S Field
49%
51%
Środa Wielkopolska Field
49%
51%
     

20.12  
Validity and admissibility in evidence

 
All Required Authorisations required or desirable:
 
(a)  
to enable it lawfully to enter into, exercise its rights and comply with its
obligations in the Transaction Documents to which it is a party; and

 
(b)  
to make the Transaction Documents to which it is a party admissible in evidence
in each Relevant Jurisdiction,

 
have been obtained or effected and are in full force and effect and no steps
have been taken for the revocation, variation or refusal of any Required
Authorisation which has been granted.
 
20.13  
Deduction of Tax

 
It is not required to make any deduction for or on account of Tax from any
payment it may make under any Finance Document to a Lender which is a Qualifying
Lender.
 
20.14  
No default

 
(a)  
No Default or Event of Default is continuing or might reasonably be expected to
result from the making of any Utilisation.

 

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(b)  
No other event or circumstance is outstanding which constitutes a default under
any other agreement or instrument which is binding on it or any of its
Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject
which might have a Material Adverse Effect.

 
20.15  
Governing law and enforcement

 
(a)  
The choice of governing law of each of the Finance Documents to which it, or any
member of the Group, is a party will, subject to any Legal Reservations, be
recognised and enforced in its or, as the case may be, that group member’s
Relevant Jurisdiction.

 
(b)  
Any judgment obtained in England in relation to a Finance Document will, subject
to any Legal Reservations, be recognised and enforced in each Relevant
Jurisdiction.

 
20.16  
No filing or stamp taxes

 
Subject to (i) due registration of the Polish registered pledges (ii) notarial
fees in respect of any Security Documents and (iii) stamp duty on any power of
attorney presented to Polish authorities as well as common or administrative
courts in Poland, under the law of its jurisdiction of incorporation or the
jurisdiction of incorporation or organisation of any member of the Group it is
not necessary that the Finance Documents be filed, recorded or enrolled with any
court or other authority in that jurisdiction or that any stamp, registration or
similar tax be paid on or in relation to the Finance Documents or the
transactions contemplated by the Finance Documents.
 
20.17  
Borrowing Base Assets and Field Documents

 
(a)  
The Field Documents are in full force and effect in all material respects and
contain no restrictions, covenants and conditions that would, in any material
respect, adversely affect the use, ownership, possession or exploitation of any
Borrowing Base Asset in the manner contemplated by the Transaction Documents,
the then current Projection, and each then current Budget.  A complete list of
Fields Documents existing on the date of the execution of this Agreement is set
out in Schedule 12 (Schedule of Field Documents) hereto.

 
(b)  
No member of the Group that is a party to a Field Document is in material
default under any Field Document and, to the best of its knowledge and belief,
no other party to a Field Document is in material default under any Field
Document.

 
(c)  
It, or a member of the Group, owns, or has sufficient access to and the right to
use, all assets necessary for the exploitation of each Borrowing Base Asset as
contemplated by the Transaction Documents, the then current Projection, and each
then current Budget.

 

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(d)  
The Borrower and other members of the Group have rights to all assets, which are
required in order to allow the Borrower to own, operate (to the extent it is the
operator in relation to such Borrowing Base Asset) and exploit the Borrowing
Base Assets as contemplated in the Projections and Technical Assumptions.

 
(e)  
Additionally, the Borrower is the absolute legal and beneficial owner (or,
subject to paragraph (d) of Clause 20.11, co-owner and/or co-venturer together
with other parties holding interests with respect to the Borrowing Base Assets)
of each Borrowing Base Asset free from any Security or other interest of any
kind other than (i) the Security under the Security Documents, (ii) the Security
permitted under Clause 22.13 (Negative pledge) (including, for the avoidance of
doubt, Permitted Security) and (iii) the interests (if any) of any co-venturers
under the Field Documents relating to that Borrowing Base Asset.

 
(f)  
No member of the Group is under any obligation to create any Security over any
Borrowing Base Asset except by virtue of any Security Document or as permitted
under Clause 22.13 (Negative pledge).

 
(g)  
Each copy of a Field Document delivered to the Agent by it is, at the time it is
delivered, a correct and complete copy of the relevant document as in force at
that time.

 
20.18  
Ownership

 
(a)  
As at the date of this Agreement, the only member of the Group that holds any
interests in any Borrowing Base Assets is the Borrower.

 
(b)  
As at the date of this Agreement, the ownership structure of the Group is as set
out in the Group Structure Chart.

 
(c)  
Each member of the Group that holds any interest in any Borrowing Base Assets is
a Relevant Obligor.

 
20.19  
Insurances

 
All insurances which are at any time required to be maintained or effected by
it, or any member of the Group, pursuant to the Finance Documents are in full
force and effect at that time, and to the best of its knowledge and belief, no
event or circumstance has occurred, nor has there been any omission to disclose
a fact, which would in either case entitle any insurer under those insurances to
avoid its liability or otherwise reduce its liability.
 
20.20  
Projections

 
(a)  
All information provided by, or on behalf of, it or any member of the Group for
the purposes of preparing the current Projection:

 
(i)  
in the case of any factual information, was true in all material respects as at
the date it was provided; and

 

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(ii)  
have been prepared and provided in good faith and with due care on the basis of
recent historical information and assumptions it considers to be reasonable.

 
(b)  
The current Projection:

 
(i)  
is based on reasonable assumptions;

 
(ii)  
is consistent with the provisions of the Transaction Documents in all material
respects;

 
(iii)  
(to the extent prepared by any Obligor or other member of the Group) has been
prepared in good faith and with due care; and

 
(iv)  
fairly represents the expectations of the members of the Group,

 
except, in the case of paragraph (i) and (iv) above, to the extent the
assumptions and expectations of the members of the Group differ from those of
the Majority Lenders.
 
20.21  
No misleading information

 
(a)  
Any factual information provided by any member of the Group for the purposes of
the Information Memorandum was true and accurate in all material respects as at
the date it was provided or as at the date (if any) at which it is stated.

 
(b)  
The financial projections contained in the Information Memorandum have been
prepared on the basis of recent historical information and on the basis of
reasonable assumptions.

 
(c)  
Nothing has occurred or been omitted from the Information Memorandum and no
information has been given or withheld that results in the information contained
in the Information Memorandum being untrue or misleading in any material
respect.

 
(d)  
All written information (other than the Information Memorandum) supplied by any
member of the Group is true, complete and accurate in all material respects as
at the date it was given and is not misleading in any respect.

 
20.22  
No Winding Up

 
No member of the Group has taken any corporate action nor have any other steps
been taken or legal proceedings been started or (to the best of its knowledge
and belief after making due enquiry) threatened against it for its bankruptcy,
winding–up, dissolution, administration or re–organisation or for the
appointment of a receiver, administrator, administrative receiver, trustee,
bankruptcy trustee or similar officer of it or of any or all of its assets or
revenues.
 

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20.23  
Group Liquidity Test

 
The Monthly Cash Flow Projection most recently delivered to the Agent:
 
(a)  
is based on reasonable assumptions;

 
(b)  
has been prepared in good faith and with due care;

 
(c)  
fairly represents the expectations of the Parent; and

 
(d)  
includes a forecast of all of the outgoings, expenditures and liabilities that
the members of the Group are expected to incur in the relevant forecast period
for such Monthly Cash Flow Projection.

 
20.24  
Taxation

 
(a)  
Each member of the Group has duly and punctually paid and discharged all Taxes
imposed upon it or its assets within the time period allowed without incurring
penalties (except to the extent that (i) payment is being contested in good
faith, (ii) it has maintained adequate reserves for those Taxes and (iii)
payment can be lawfully withheld).

 
(b)  
No member of the Group is materially overdue in the filing of any Tax returns.

 
(c)  
No claims are being or are reasonably likely to be asserted against it with
respect to Taxes.

 
20.25  
Dutch Tax Status

 
No notice under Article 36 Tax Collection Act (Invorderingswet 1990) has been
given by any member of the Group.
 
20.26  
No Immunity

 
In any proceedings taken in a Relevant Jurisdiction in relation to the Finance
Documents, it will not be entitled to claim for itself or any of its assets
immunity from suit, execution, attachment or other legal process.
 
20.27  
Private and commercial acts

 
Its execution of the Finance Documents constitutes, and its exercise of its
rights and performance of its obligations under this Agreement will constitute,
private and commercial acts done and performed for private and commercial
purposes.
 
20.28  
Ranking

 
As from the Effective Date specified in each of the Letters of Release, the
Transaction Security will have first ranking priority and will not be subject to
any prior ranking or pari passu ranking Security.
 

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20.29  
Good title to assets

 
It has good, valid and marketable title to, or valid leases or licences of, and
all appropriate Authorisations to use, the assets necessary to carry on its
business as presently conducted.
 
20.30  
Offtake

 
The Borrower has not entered into any agreement for the disposal of any
Petroleum produced from any Borrowing Base Asset except to PGNiG.
 
20.31  
Repetition

 
The Repeating Representations are deemed to be made by each Obligor (by
reference to the facts and circumstances then existing) on:
 
(a)  
the date of each Utilisation Request and the first day of each Interest Period;

 
(b)  
in the case of an Additional Guarantor, the day on which it becomes (or it is
proposed that it becomes) an Additional Guarantor; and

 
(c)  
each Recalculation Date.

 
21.  
INFORMATION UNDERTAKINGS

 
21.1  
Application

 
(a)  
The undertakings in this Clause 21 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents
or any Commitment is in force.

 
(b)  
Any projection, report or other document provided to the Agent pursuant to
Clauses 21.2 (Financial statements) 21.4 (Operations Report), 21.5 (Group
Liquidity Test) 21.6 (Compliance Certificate), 21.7 (Information:
Miscellaneous), 21.8 (Information: Borrowing Base Assets), 21.9 (Information:
Projections and Reserve Reports), 21.10 (Budgets) and 21.11(Notification of
Default) , shall following receipt thereof in final form be provided by the
Agent to the Lenders.

 
21.2  
Financial statements

 
The Parent shall supply, or shall procure the Borrower to supply to the Agent:
 
(a)  
as soon as the same become available, but in any event within 90 days after the
end of each of their financial years:

 
(i)  
the audited financial statements of the Borrower for that financial year;

 
(ii)  
the audited consolidated financial statements of the Parent for that financial
year; and

 

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(iii)  
the annual unaudited statements of FX Drilling Company, Inc. and FX Producing
Company, Inc.

 
(b)  
as soon as the same become available, but in any event within 270 days after the
end of each of their financial years the annual financial statements of FX
Energy Netherlands Partnership C.V. and FX Energy Netherlands B.V. for that
financial year; and

 
(c)  
as soon as the same become available, but in any event within 90 days after the
end of each quarter the Parent’s unaudited consolidated quarterly management
accounts for that period.

 
21.3  
Requirements as to financial statements

 
(a)  
The Parent shall provide with its financial statements delivered pursuant to
Clause 21.2 (Financial statements):

 
(i)  
a certificate by a director of the Parent certifying such financial statements
as fairly representing its financial condition as at the date at which those
financial statements were drawn up; or

 
(ii)  
a copy of the certifications by each of the chief executive officer and the
chief financial officer of the Parent pursuant to 18 U.S.C. section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and/or Rule
13a-14 of the Securities Exchange Act of 1934.

 
(b)  
The Borrower shall procure that each set of financial statements delivered
pursuant to Clause 21.2 (Financial statements) is prepared using GAAP/IFRS.

 
Any reference in this Agreement to “those financial statements” shall be
construed as a reference to those financial statements as adjusted to reflect
the basis upon which the Original Financial Statements were prepared.
 
21.4  
Operations Report

 
The Borrower must provide to the Agent within 15 calendar days of the last
Business Day of every month (and in respect of such month), updates, in a form
and substance satisfactory to the Agent in respect of each Borrowing Base Asset
to include all material technical and other information in relation to each of
the Borrowing Base Assets, including (for the avoidance of doubt and without
limitation):
 
(a)  
information in respect of any delay in achieving first gas/oil in respect of
each Borrowing Base Asset for the month in question;

 
(b)  
the production performance and Petroleum sales figures in respect of each
Borrowing Base Asset for the month in question;

 
(c)  
information in respect of all maintenance work and operational activities
carried out in connection with each Borrowing Base Asset during the month in
question; and

 

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(d)  
all forward activities anticipated in respect of the Borrowing Base Assets
during the forthcoming calendar months.

 
21.5  
Group Liquidity Test

 
The Parent shall ensure that:
 
(a)  
a Monthly Cash Flow Projection is prepared confirming that sufficient funds
(cash flow, debt and equity) are available to meet all of the Group’s
obligations as and when they fall due;

 
(b)  
each such Monthly Cash Flow Projection is delivered to the Agent by the date
falling five Business Days after the relevant date as of which such Monthly Cash
Flow Projection is required to be prepared;

 
(c)  
it (i) promptly considers and addresses any amendments that the Lenders suggest
to the assumptions used for each such Monthly Cash Flow Projection  (ii) shall
revise the relevant Monthly Cash Flow Projection in accordance with such
amendments and (iii) shall deliver to the Agent such revised Monthly Cash Flow
Projection; and

 
(d)  
if it becomes aware of any event, circumstance or information which results in
any assumption, data or item of information included in the Monthly Cash Flow
Projection most recently delivered to the Agent becoming inaccurate or otherwise
out-of-date, in each case, in any material respect, it will promptly notify the
Agent of the same.

 
21.6  
Compliance Certificate

 
(a)  
Within 10 Business Days after the end of each quarter, the Parent shall supply
to the Agent a Compliance Certificate setting out (in reasonable detail)
computations as to compliance with Clause 21.5 (Group Liquidity Test) as of the
end of that quarter.

 
(b)  
Each Compliance Certificate shall be signed by one director of the Parent.

 
(c)  
Any material change to the information contained in the most recent Compliance
Certificate shall be notified promptly to the Agent.

 
21.7  
Information:  miscellaneous

 
The Borrower shall supply to the Agent:
 
(a)  
all documents despatched by the Borrower to its shareholders (or any class of
them) or its creditors generally at the same time as they are dispatched;

 
(b)  
copies of all documents filed publicly by, or on behalf of, the Guarantors with
the relevant stock exchange at the same time as they are filed (where for these
purposes, “relevant stock exchange” means the Nasdaq Global Market);

 

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(c)  
promptly upon becoming aware of them, the details of any litigation, arbitration
or administrative proceedings which are current, threatened or pending against
any member of the Group (or against the directors of any member of the Group),
and which might, if adversely determined, have a Material Adverse Effect;

 
(d)  
promptly upon becoming aware of the same, details of any event or circumstance
or any new information which results in any material information previously
provided to the Agent by it or its advisors being misleading or inaccurate in
any material respect;

 
(e)  
information regarding any decisions concerning registration of (or refusal to
register) any Security required to be registered in the applicable registers,
promptly after such information;

 
(f)  
promptly upon becoming aware of the same, any notice or information relating to
the withdrawal of, or intention to withdraw, any applicable Environmental and
Mining Licence granted to PGNiG;

 
(g)  
promptly upon becoming aware of the same, details of any payment or other
material default by PGNiG in the performance of its obligations towards the
Borrower under any Field Document; and

 

 
(h)  
promptly, such further information regarding the financial condition, business
and operations of any member of the Group as any Finance Party (through the
Agent) may reasonably request.

 
21.8  
Information:  Borrowing Base Assets

 
The Obligors must supply to the Agent:
 
(a)  
promptly upon receipt by it of the same, a copy of any notice of default
(howsoever called) served upon it under any Field Document;

 
(b)  
promptly upon becoming aware of the same, the details of any claims and/or
proceedings which are current, threatened or pending in relation to any
Borrowing Base Asset which, if adversely determined, would have a Material
Adverse Effect;

 
(c)  
promptly upon becoming aware of the same, the details of any event or
circumstance which has resulted in the production, recovery or transportation of
Petroleum with respect to any Borrowing Base Asset being suspended or
interrupted for a period of 20 days or more (excluding scheduled shutdowns);

 
(d)  
promptly upon becoming aware of the same, details of any potential or actual
warranty claim or any other material dispute under the then current Field
Documents;

 

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(e)  
promptly upon becoming aware of the same, details of (i) any incident involving
any material physical damage to a Borrowing Base Asset and (ii) any proposal for
reinstatement;

 
(f)  
promptly upon request by the Agent, a copy of any reports or budgets in respect
of each Borrowing Base Asset prepared by the operator or operating committee
thereof;

 
(g)  
promptly upon becoming aware of the same, any other information relating to a
Borrowing Base Asset or Obligor that could reasonably be expected to change any
Assumption in the current Projection (in a material respect) or impose any
additional material liability on any Obligor;

 
(h)  
promptly upon request by any Lender:

 
(i)  
a copy of any Field Document and

 
(ii)  
such information as that Lender may reasonably require in respect of a Borrowing
Base Asset or a member of the Group;

 
(i)  
promptly upon such document being entered into or otherwise executed or issued,
a copy of any Field Document, copies of which have not previously been provided
to the Agent;

 
(j)  
no later than seven days prior to the date on which any member of the Group
proposes to enter into, execute or file for any new Field Document or make a
material amendment or request a material amendment to the terms of any existing
Field Document, a copy of the then current draft of the relevant new Field
Document that any member of the Group proposes to enter into after the date of
this Agreement or, as the case may be, details of the proposed material
amendment;

 
(k)  
at the same time as the same is submitted, copies of any information provided by
any member of the Group to, or any application made by any member of the Group
to, the Applicable Polish Licensing Authority or any other governmental agency
or body in relation to any Borrowing Base Asset; and

 
(l)  
promptly upon becoming aware of the same, the details of any Unitisation or
potential Unitisation or any steps that have been, or are being, taken with
respect to any Unitisation or potential Unitisation.

 
21.9  
Information:  Projections and Reserves Reports

 
(a)  
The Borrower shall commission, at the expense of the Obligors, the Independent
Engineer to prepare a Reserves Report:

 
(i)  
on an annual basis as of 31 December for the purposes of the Scheduled
Projections to be adopted in accordance with Clause 6 (Projections) to the
satisfaction of the Technical Bank;

 

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(ii)  
if at any time the Borrower makes a request for a Petroleum Asset to be
designated a Borrowing Base Asset or for a Borrowing Base Asset to cease to be
so designated;

 
(iii)  
if any request for an Interim Projection is made pursuant to paragraph (a)(ii)
of Clause 6.1 (Adoption) by the Technical Bank or by the Agent (on behalf of the
Majority Lenders);

 
(iv)  
if the Technical Bank so requests following any acquisition of any asset by the
Borrower or any member of the Group that, in the reasonable opinion of the
Technical Bank, has a material effect on the risk profile of the Group;

 
(v)  
if at any time the Borrower notifies the Technical Bank that an event has
happened or a circumstance has arisen that will have a material impact on the
Loan Life NPV or the Field Life NPV attributable to any Borrowing Base Asset and
that it wishes for such event or circumstance to be taken into account for the
purposes of the next Scheduled Projection.

 
(b)  
The Borrower shall ensure that each Reserves Report which is commissioned and
prepared:

 
(i)  
pursuant to paragraph (a)(i) of this Clause 21.9 is delivered to the Agent
within 120 days of 31 December of each year; and

 
(ii)  
pursuant to paragraph (a)(ii) to paragraph (a)(v) of this Clause 21.9 is
delivered to the Agent within 30 days of the relevant request being made by the
Borrower.

 
(c)  
The Borrower shall:

 
(i)  
ensure that each Reserves Report that is prepared pursuant to this Clause 21.9
(Information:  Projections and Reserves Reports) is addressed to the Agent in a
manner which ensures that the Independent Engineer owes a duty of care to the
Lenders; and

 
(ii)  
instruct the Independent Engineer to include in each Reserves Report prepared by
it the operating costs, capital expenditure and production profiles that it
takes into consideration for each Borrowing Base Asset.

 
(d)  
At the Technical Bank’s request the Borrower must supply to the Agent a
reconciliation report which reconciles (i) the projected costs and revenues set
out in the then current Projection and the then current Budgets for that
Calculation Period with (ii) the actual costs incurred and revenues received in
that period.

 

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(e)  
The Borrower shall, at the expense of the Obligor, prepare or procure the
preparation of Borrower Updates and deliver each such Borrower Update to the
Agent no later than 45 Business Days before 31 December of each year (unless a
Reserves Report is scheduled pursuant to paragraph (b) of Clause 21.9 to be
delivered to the Agent within one month of such date).

 
(f)  
The Obligors must supply, and the Borrower must procure that each member of the
Group supplies, promptly upon request made by the Agent, in connection with the
procedures provided for in Clause 6 (Projections) and the preparation and/or
adoption of the Projections, all such information and documents as the Agent may
reasonably request.

 
21.10  
Information:  Budgets

 
(a)  
The Borrower must supply to the Agent:

 
(i)  
a Budget for each Borrowing Base Asset referred to in Schedule 4 (Initial
Borrowing Base Assets) pursuant to Clause 4.1 (Initial conditions precedent);
and

 
(ii)  
a Budget for each other Borrowing Base Asset on or before the date on which that
Borrowing Base Asset becomes designated as such pursuant to Clause 6
(Projections).

 
(b)  
Thereafter, the Borrower must supply the Agent with a Budget for each Borrowing
Base Asset which updates the information contained in the then current Budget:

 
(i)  
no later than 31 March of each year; and

 
(ii)  
if any circumstance or event has arisen which results, or might reasonably be
expected to result, in any information contained in the then current Budget
being inaccurate in any material respect.

 
(c)  
The Borrower shall ensure that the Budget supplied by it pursuant to this
Agreement is in a form satisfactory to the Technical Bank and contains such
information as the Technical Bank may reasonably require.

 
21.11  
Notification of default

 
(a)  
Each Obligor shall notify the Agent of any Default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of its occurrence (unless that
Obligor is aware that a notification has already been provided by another
Obligor).

 
(b)  
Promptly upon a request by the Agent, the Borrower shall supply to the Agent a
certificate signed by two of its directors or senior officers on its behalf
certifying that no Default is continuing (or if a Default is continuing,
specifying the Default and the steps, if any, being taken to remedy it).

 

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21.12  
Inspection of data

 
Each Obligor shall allow any representative of the Agent, upon reasonable notice
following the occurrence of a Default, to have access to and to inspect any and
all books, records and other relevant data or information in the possession of
or available to each Obligor during regular business hours.
 
21.13  
Additional due diligence

 
If the Agent so requires following the Agent becoming aware of any event,
circumstance or any matter which in the reasonable opinion of Agent has, or
would have, a material and adverse impact on (a) any Assumption in the current
Projection, (b) any Budget, (c) on the progress of any Borrowing Base Asset; or
(d) otherwise on the operation and/or exploitation of any Borrowing Base Asset,
then the Agent may carry out, or appoint expert(s) or adviser(s) to carry out,
such due diligence with regard to any Borrowing Base Asset as it considers
necessary and the Borrower shall (i) take all such steps as may reasonably be
necessary to facilitate the same and (ii) be responsible for all reasonable
costs (including legal and other advisory fees) that may be incurred by the
Agent in connection with such due diligence.
 
21.14  
Use of websites

 
(a)  
The Borrower may satisfy its obligation under this Agreement to deliver any
information in relation to those Lenders (the “Website Lenders”) who accept this
method of communication by posting this information onto an electronic website
designated by the Borrower and the Agent (the “Designated Website”) if:

 
(i)  
the Agent expressly agrees (after consultation with each of the Lenders) that it
will accept communication of the information by this method;

 
(ii)  
both the Borrower and the Agent are aware of the address of and any relevant
password specifications for the Designated Website; and

 
(iii)  
the information is in a format previously agreed between the Borrower and the
Agent.

 
If any Lender (a “Paper Form Lender”) does not agree to the delivery of
information electronically then the Agent shall notify the Borrower accordingly
and the Borrower shall supply the information to the Agent (in sufficient copies
for each Paper Form Lender) in paper form.  In any event the Borrower shall
supply the Agent with at least one copy in paper form of any information
required to be provided by it.
 
(b)  
The Agent shall supply each Website Lender with the address of and any relevant
password specifications for the Designated Website following designation of that
website by the Borrower and the Agent.

 
(c)  
The Borrower shall promptly upon becoming aware of its occurrence notify the
Agent if:

 
(i)  
the Designated Website cannot be accessed due to technical failure;

 

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(ii)  
the password specifications for the Designated Website change;

 
(iii)  
any new information which is required to be provided under this Agreement is
posted onto the Designated Website;

 
(iv)  
any existing information which has been provided under this Agreement and posted
onto the Designated Website is amended; or

 
(v)  
the Borrower becomes aware that the Designated Website or any information posted
onto the Designated Website is or has been infected by any electronic virus or
similar software.

 
If the Borrower notifies the Agent under paragraph (c)(i) or paragraph (c)(v)
above, all information to be provided by the Borrower under this Agreement after
the date of that notice shall be supplied in paper form unless and until the
Agent and each Website Lender is satisfied that the circumstances giving rise to
the notification are no longer continuing.
 
(d)  
Any Website Lender may request, through the Agent, one paper copy of any
information required to be provided under this Agreement which is posted onto
the Designated Website.  The Borrower shall comply with any such request within
ten Business Days.

 
21.15  
“Know your customer” checks

 
(a)  
If:

 
(i)  
the introduction of or any change in (or in the interpretation, administration
or application of) any law or regulation made after the date of this Agreement;

 
(ii)  
any change in the status of the Borrower or the composition of the shareholders
of the Borrower after the date of this Agreement; or

 
(iii)  
a proposed assignment or transfer by a Lender of any of its rights and
obligations under this Agreement to a party that is not a Lender prior to such
assignment or transfer,

 
obliges the Agent or any Lender (or, in the case of paragraph (iii) above, any
prospective new Lender) to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information is
not already available to it, each Obligor shall promptly upon the request of the
Agent or any Lender supply, or procure the supply of, such documentation and
other evidence as is reasonably requested by the Agent (for itself or on behalf
of any Lender) or any Lender (for itself or, in the case of the event described
in paragraph (iii) above, on behalf of any prospective new Lender) in order for
the Agent, such Lender or, in the case of the event described in paragraph (iii)
above, any prospective new Lender to carry out and be satisfied it has complied
with all necessary “know your customer” or other similar checks under all
applicable laws and regulations pursuant to the transactions contemplated in the
Finance Documents.
 

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(b)  
Each Lender shall promptly upon the request of the Agent supply, or procure the
supply of, such documentation and other evidence as is reasonably requested by
the Agent (for itself) in order for the Agent to carry out and be satisfied it
has complied with all necessary “know your customer” or other similar checks
under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.

 
(c)  
The Borrower shall, by not less than ten Business Days’ prior written notice to
the Agent, notify the Agent of its intention to request that one of its
Affiliates becomes an Additional Guarantor pursuant to Clause 25 (Changes to the
Obligors).

 
(d)  
Following the giving of any notice pursuant to Clause 21.15(c) above, if the
accession of such Additional Guarantor obliges the Lenders to comply with “know
your customer” or similar identification procedures in circumstances where the
necessary information is not already available to it, the Borrower shall
promptly upon the request of the relevant Lender supply, or procure the supply
of, such documentation and other evidence as is reasonably requested by that
Lender (for itself or on behalf of any prospective new Lender) in order for that
Lender or any prospective new Lender to carry out and be satisfied it has
complied with all necessary “know your customer” or other similar checks under
all applicable laws and regulations pursuant to the accession of such Affiliate
to this Agreement as an Additional Guarantor.

 
22.  
GENERAL UNDERTAKINGS

 
(a)  
The undertakings in this Clause 22 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents
or any Commitment is in force.

 
(b)  
Save in respect of Clause 22.2 (Corporate existence), Clause 22.4 (Compliance
with laws), Clause 22.13 (Negative pledge), Clause 22.14 (Indebtedness) and
Clause 22.26 (a) and (b) (Environmental matters), in this Clause 22 any
reference to the ‘Group’ shall exclude reference to FX Drilling Company, Inc.,
and FX Producing Company, Inc.

 
22.2  
Corporate existence

 
Each Obligor shall, and shall ensure that each member of the Group shall,
maintain its corporate or other existence (as the case may be) under the laws of
its jurisdiction of incorporation or establishment and no member of the Group
may change its corporate or other domicile, or attempt to resolve to do so.
 
22.3  
Compliance with documents

 
Each Obligor shall comply with its obligations under the Transaction Documents
save to the extent any failure to do so would, or would be reasonably likely to,
have a Material Adverse Effect.
 

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22.4  
Compliance with laws

 
Each Obligor shall, and shall ensure that each member of the Group shall, comply
in all material respects with all laws to which it may be subject.
 
22.5  
Authorisations

 
Each Obligor shall, and shall ensure that each member of the Group shall,
promptly:
 
(a)  
obtain, comply with and do all that is necessary to maintain in full force and
effect; and

 
(b)  
supply certified copies to the Agent of,

 
any Authorisation required under any law or regulation of the Relevant
Jurisdictions to enable it to perform its obligations under the Transaction
Documents and to ensure the legality, validity, enforceability or admissibility
in evidence in each Relevant Jurisdiction of any Transaction Document.
 
22.6  
Taxation

 
(a)  
Each Obligor shall (and the Parent shall ensure that each member of the Group
will) duly and punctually pay and discharge all Taxes imposed upon it or its
assets within the time period allowed without incurring penalties (except to the
extent that (i) such payment is being contested in good faith, adequate reserves
are being maintained for those Taxes and (ii) such payment can be lawfully
withheld).

 
(b)  
Each Obligor shall, and shall ensure that each member of the Group shall, file
all tax returns required to be filed by it in any jurisdiction within the period
required by law.

 
22.7  
Security Documents

 
Each Obligor shall, and shall ensure that each member of the Group will,
promptly take all steps (including the making or delivery of filings and the
payment of fees) which are within its power and reasonably necessary for the
purposes of ensuring that each Security Document to which it, or member of the
Group, is a party:
 
(a)  
confers the Security of the type it purports to create over the assets over
which the Security is purported to be given by that Security Document and each
such Security is (subject to any Permitted Security that may be prior ranking)
first ranking;

 
(b)  
is valid and enforceable against (i) it or, as the case may be, that member of
the Group, and (ii) its Insolvency Officers and its creditors or, as the case
may be, the Insolvency Officers and creditors of that member of the Group; and

 
(c)  
is not capable of being avoided or set aside, whether in the winding up,
administration or dissolution or otherwise of it or any of its assets or, as the
case may be, that member of the Group or any of that Group member’s assets.

 

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22.8  
Pari passu ranking

 
Each Obligor shall, and shall ensure that each member of the Group will, procure
that at all times its indebtedness and obligations under the Finance Documents
rank at least pari passu with the claims of all its, or as the case may be, that
Group member’s, other unsecured and unsubordinated creditors, except for
obligations mandatorily preferred by law applying to companies generally.
 
22.9  
Borrowing Base Assets

 
Each Obligor shall, and shall ensure that each member of the Group will:
 
(a)  
exercise such votes and other rights as it may have under the Field Documents
for the purposes of ensuring that each Borrowing Base Asset is at all times
developed, operated, maintained and/or exploited in a reasonable and prudent
manner and in accordance with good oil industry practice, all applicable laws
and regulations, the Environmental Decisions, and the provisions of the
Transaction Documents;

 
(b)  
not abandon all or any material part of any Borrowing Base Asset in which it has
an interest before its scheduled Abandonment Date;

 
(c)  
not concur in any proposal or decision to abandon all or any material part of
any Borrowing Base Asset in which it has an interest and vote against any such
proposal or decision before its scheduled Abandonment Date;

 
(d)  
not exercise its rights on any operating or similar committee in a manner that
would be materially prejudicial to the interests of the Lenders under the
Finance Documents;

 
(e)  
maintain full and proper technical and financial records in relation to each
Borrowing Base Asset in which it has an interest, and ensure (so far as it is
able) that the Agent (and/or any person nominated by the Agent) is afforded
reasonable access to each of such Borrowing Base Asset and all such records
during normal business hours on reasonable notice; and

 
(f)  
not concur in any proposal or decision, nor exercise such votes and other rights
as it may have under the Field Documents, to change the operator in relation to
any Borrowing Base Asset without the prior written consent of the Majority
Lenders.

 
22.10  
Field Documents

 
Each Obligor shall, and shall ensure that each member of the Group will:
 
(a)  
ensure that none of its rights under or in respect of any of the Field Documents
are at any time terminated, suspended or limited in any material way;

 
(b)  
not agree to any waiver, material amendment, termination or cancellation of any
of the Field Documents without the prior consent of the Agent;

 

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(c)  
duly and properly perform, in all material respects, its obligations under the
Field Documents (except to the extent, if any, they are inconsistent with its
obligations under the Finance Documents);

 
(d)  
exercise its rights, and (so far as within its power) ensure that others
exercise their respective rights, under and in respect of the Field Documents
consistently with its obligations under the Finance Documents;

 
(e)  
not enter into any Field Document the entry into, performance, termination or
breach of which would, or would be reasonably likely to, result in a Material
Adverse Effect; and

 
(f)  
ensure that, to the extent possible, all rights of the Borrower under any Field
Document are assigned to the Security Trustee on behalf of the Lenders or are
otherwise subject to Security under a Security Document for the benefit of the
Lenders in a manner which is in form and substance satisfactory to the Agent.

 
22.11  
Gas Sale Agreements

 
The Borrower shall grant Security over each Borrowing Base Asset gas sale
agreement in favour of the Security Trustee on behalf of the Lenders in a manner
in form and substance satisfactory to the Agent.
 
22.12  
Insurance

 
(a)  
Each Obligor shall, and shall ensure that each member of the Group will:

 
(i)  
take out and maintain, or cause to be taken out and maintained, with respect to
the Borrowing Base Assets and all activities relating thereto all insurances:

 
(A)  
in such amounts and on such terms and against such risks as would be taken out
by prudent owners and/or operators (acting in accordance with good oil industry
practice) of comparable assets and/or carrying out comparable activities in the
region in which the relevant Borrowing Base Assets are located or the relevant
activities are taking place;

 
(B)  
against any other risks which the Agent acting on behalf of the Majority Lenders
may reasonably require as a result of any material change(s) in circumstances,
risks or the Majority Lenders’ reasonable perception of  risk;

 
(ii)  
ensure that all insurances required under this Agreement are maintained with
insurers or underwriters acceptable to the Agent (acting reasonably);

 

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(iii)  
procure that all moneys received or receivable by it under any insurance policy
required by this Agreement relating to third party liability are applied
directly to the person to whom the liability to which the sum relates was
incurred, or to the relevant insured party in reimbursement of moneys expended
in satisfaction of such liability;

 
(iv)  
procure that the Security Trustee (as security trustee for the Finance Parties)
is named as a co-insured or an additional insured party upon the policy,
certificate or cover note relating to each material insurance policy required
pursuant to this Agreement and that the Security Trustee is named as loss-payee;

 
(v)  
not do, or knowingly permit anything to be done, which may make any insurance
policy required pursuant to this Agreement void, voidable, unavailable or
unenforceable or render any sums which may be paid out under such insurance
policies repayable in whole or in part;

 
(vi)  
promptly pay all premiums, calls and contributions and do all other things
necessary to keep each insurance policy required pursuant to this Agreement
maintained in full force and effect;

 
(vii)  
on demand by the Agent, produce to the Agent (A) the policy, certificate or
cover note relating to any insurance policy required by this Agreement (B) the
receipt for the payment of any premium for any such insurance policy and (C)
such other details of any such insurance policy as the Agent may reasonably
request;

 
(viii)  
if the Agent so requires (acting reasonably), ensure that every policy relating
to insurances required by this Agreement contains a non-vitiation clause and any
other lender endorsements that the Agent may reasonably request, in each case,
in such form as the Agent (acting reasonably) may approve (where, for these
purposes, “lender endorsements” means any endorsements or clauses relating to
the protection of the Security Trustee and/or the Finance Parties with respect
to its or their interests in such insurance policies);

 
(ix)  
if the Security Trustee so requires:

 
(A)  
enter into a Security Document (in form and substance satisfactory to the
Security Trustee) for the purposes of granting Security over any insurance
policy required pursuant to this Agreement and the proceeds thereof in favour of
the Security Trustee unless such Security has been granted under an existing
Security Document;

 
(B)  
without prejudice to Clause 22.5 (Authorisations), promptly obtain all such
Authorisations as may be necessary in order for such Security to be granted; and

 

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(C)  
deliver to the Security Trustee, or procure the delivery to the Security Trustee
of, any documents that may be required in connection with the provision of any
legal opinion that the Security Trustee may reasonably require in connection
with the entry into such Security Document.

 
(b)  
No Finance Party shall have any liability for the payment of premiums or any
other amount owing in respect of any insurances and the Obligors shall use their
reasonable endeavours to ensure that this is the case notwithstanding the
inclusion of the Security Trustee as co-insured, additional insured and/or loss
payee upon the policy, certificate or cover note relating to any insurance
policy required pursuant to this Agreement.

 
(c)  
If any Obligor fails to pay any costs relating to any insurance policy required
pursuant to this Agreement the Agent may, at its sole discretion, pay any costs
due and the Obligors shall immediately pay such costs to the Agent.

 
(d)  
The Borrower shall provide the Agent with a yearly insurance letter confirming
that the insurances specified in Clause 22.12 (Insurance) relating to the
Borrowing Base Assets are in full force and effect.

 
22.13  
Negative pledge

 
In this Clause 22.13, “Quasi-Security” means an arrangement or transaction
described in paragraph ‎(b) below.
 
(a)  
Save with the prior written consent of the Agent acting on behalf of the
Majority Lenders, no Obligor shall (and the Parent shall ensure that no other
member of the Group will) create or permit to subsist any Security over any of
its assets.

 
(b)  
No Obligor shall (and the Parent shall ensure that no other member of the Group
will):

 
(i)  
sell, transfer or otherwise dispose of any of its assets on terms whereby they
are or may be leased to or re-acquired by an Obligor or any other member of the
Group;

 
(ii)  
sell, transfer or otherwise dispose of any of its receivables on recourse terms;

 
(iii)  
enter into any arrangement under which money or the benefit of a bank or other
account may be applied, set-off or made subject to a combination of accounts; or

 
(iv)  
enter into any other preferential arrangement having a similar effect,

 
in circumstances where the arrangement or transaction is entered into primarily
as a method of raising Financial Indebtedness or of financing the acquisition of
an asset.
 

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(c)  
Paragraphs (a) and (b) above do not apply to any Security (or as the case may
be) Quasi-Security, listed below:

 
(i)  
any Existing Security prior to the Refinancing Date;

 
(ii)  
any netting or set-off arrangement entered into by any member of the Group in
the ordinary course of its banking arrangements for the purpose of netting debit
and credit balances;

 
(iii)  
any payment or close out netting or set-off arrangement pursuant to any hedging
transaction entered into by a member of the Group for the purpose of:

 
(A)  
hedging any risk to which any member of the Group is exposed in its ordinary
course of trading; or

 
(B)  
its interest rate or currency management operations which are carried out in the
ordinary course of business and for non-speculative purposes only.

 
excluding, in each case, any Security or Quasi-Security under a credit support
arrangement in relation to a hedging transaction;
 
(iv)  
any lien arising by operation of law and in the ordinary course of trading;

 
(v)  
any Security or Quasi-Security over or affecting any asset acquired by a member
of the Group after the date of this Agreement if:

 
(A)  
the Security or Quasi-Security was not created in contemplation of the
acquisition of that asset by a member of the Group;

 
(B)  
the principal amount secured has not been increased in contemplation of, or
since the acquisition of that asset by a member of the Group; and

 
(C)  
the Security or Quasi-Security is removed or discharged within three months of
the date of acquisition of such asset;

 
(vi)  
any Security or Quasi-Security over or affecting any asset of any company which
becomes a member of the Group after the date of this Agreement, where the
Security or Quasi-Security is created prior to the date on which that company
becomes a member of the Group, if:

 
(A)  
the Security or Quasi-Security was not created in contemplation of the
acquisition of that company;

 
(B)  
the principal amount secured has not increased in contemplation of or since the
acquisition of that company; and

 

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(C)  
the Security or Quasi-Security is removed or discharged within three months of
that company becoming a member of the Group;

 
(vii)  
the Transaction Security; and

 
(viii)  
any Security or Quasi-Security arising under any retention of title, hire
purchase or conditional sale arrangement or arrangements having similar effect
in respect of goods supplied to a member of the Group in the ordinary course of
trading and on the supplier’s standard or usual terms and not arising as a
result of any default or omission by any member of the Group.

 
22.14  
Indebtedness

 
(a)  
Save with the prior written consent of the Agent acting on behalf of the
Majority Lenders, the Parent shall ensure that no member of the Group shall
incur, create or permit to subsist or have outstanding any Financial
Indebtedness or enter into any agreement or arrangement whereby it is entitled
to incur, create or permit to subsist any Financial Indebtedness.

 
(b)  
Paragraph (a) above does not apply to any Financial Indebtedness granted by a
member of the Group:

 
(i)  
arising under or permitted by the Finance Documents (including any guarantee of
such Financial Indebtedness); or

 
(ii)  
where:

 
(A)  
the relevant member of the Group has acceded as a Subordinated Lender under the
Intercreditor Deed in respect of such Financial Indebtedness by delivering a
duly completed and executed Intercreditor Accession Deed to the Agent;

 
(B)  
the rights in respect of such Financial Indebtedness are assigned to the
Security Trustee in favour of the Lenders by the relevant creditor delivering a
duly completed and executed Accession Undertaking, or otherwise providing
Security in respect of such Financial Indebtedness in form and substance
satisfactory to the Agent; or

 
(iii)  
where the aggregate amount of such Financial Indebtedness does not exceed USD
1,000,000 (or its equivalent).

 
22.15  
Loans and Guarantees

 
(a)  
Save with the prior written consent of the Agent acting on behalf of the
Majority Lenders, no Obligor may, and each Obligor shall ensure that no member
of the Group will:

 

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(i)  
be a creditor in respect of any Financial Indebtedness or provide (or allow to
subsist) any other form of credit or financial accommodation to any person,
other than intercompany loans and/or advances made for financing purposes by the
Parent to its Subsidiaries from its own financial resources and not from
proceeds from the Loans or Financial Indebtedness and, in the case of any
Financial Indebtedness provided by an Obligor to the Borrower, on terms that
such Financial Indebtedness is subordinated and subject to the Intercreditor
Deed; or

 
(ii)  
save in respect of any guarantee or surety provided pursuant to the terms of any
Field Document, give (or allow to subsist) any guarantee or indemnity in respect
of any contractual obligation of any other person.

 
(b)  
The Borrower undertakes that it will not maintain any bank accounts apart from
the Project Accounts.

 
(c)  
Clause 22.15(a) does not apply to:

 
(i)  
credit extended on normal trade terms by any member of the Group to its trading
counterparties in the ordinary course of its oil and gas trading including
advances of operating costs under any Mining Usufruct Agreement and Joint
Operating Agreement and compliance with gas balancing provisions under gas sales
agreements; or

 
(ii)  
any guarantee or indemnity given by any member of the Group in the ordinary
course of its business in respect of any contractual obligation of any other
member of the Group which is incurred in accordance with the Finance Documents.

 
22.16  
Disposals

 
(a)  
No Obligor may, and each Obligor shall ensure that no member of the Group will,
enter into a single transaction or a series of transactions (whether related or
not) and whether voluntary or involuntary to sell, lease, transfer or otherwise
dispose of any of its material assets including any Borrowing Base Asset or any
interests therein or any of its shareholding in any person holding any interest
in any Borrowing Base Asset, without the prior written consent of the Agent
acting on behalf of the Majority Lenders, which shall not be unreasonably
withheld if:

 
(i)  
at the time of and immediately after such transaction or series of transactions
no Event of Default shall subsist or occur (as the case may be);

 
(ii)  
such disposal is for fair value on terms resulting from arm’s length
negotiations independently verified by valuers acceptable to the Agent;

 
(iii)  
following such disposal the Majority Lenders do not consider that an
unreasonable concentration of risk will arise in connection with the remaining
Borrowing Base Assets; and

 

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(iv)  
the proceeds of any such disposal are applied towards repaying the Loans.

 
(b)  
Paragraph (a) of Clause 22.16 does not apply to:

 
(i)  
any sale of Petroleum on terms no less favourable to the Borrower than would
result from arm’s length negotiations of cash-only consideration in the ordinary
course of trading;

 
(ii)  
any disposal for cash not otherwise prohibited under the terms of any Finance
Document;

 
(iii)  
any disposal of surplus materials or of materials that are forthwith replaced
with materials of equivalent utility;

 
(iv)  
any disposal arising solely by virtue of a Unitisation;

 
(v)  
any disposal of materials used in the course of a Group member’s operations
where such disposal is made in the ordinary course of business and on terms no
less favourable to the Borrower than would result from arm’s length
negotiations; and

 
(vi)  
any disposals of a Petroleum Asset which has ceased to be designated as a
Borrowing Base Asset in accordance with Clause 6 (Projections) where the amount
of all Utilisations are reduced in accordance with Clause 8.2 (Reduction), in
each case, following the adoption of the new Projection which takes account of
such Petroleum Asset ceasing to be designated a Borrowing Base Asset.

 
22.17  
Change of business

 
No Obligor may, and each Obligor shall ensure that no member of the Group will,
carry on any business other than the ownership, development and exploitation of
the Borrowing Base Assets and the exploration for, and development and
production of, Petroleum.
 
22.18  
Distributions

 
(a)  
For the purposes of this Agreement, “Distribution” means, in relation to any
person:

 
(i)  
any payment, dividend or other distribution (whether in cash or in kind) in
relation to any of its share capital;

 
(ii)  
any redemption, reduction, repayment, or retirement of any of its share capital
or any other payments resulting in a reduction of the payer’s own funds
(including, in particular, reserve and supplementary capital);

 

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(iii)  
save for any payments in respect of Parent Operating Expenses, any payments in
respect of, or any repayment, prepayment, redemption, retirement, discharge or
purchase of, or sub-participation in, any loans or other financial accommodation
made available to it by any Affiliate (including any such payments under the
Subordinated Loan Agreement or Financial Indebtedness subject to the
Intercreditor Deed);

 
(iv)  
any other payments (including any management, advisory or other fees) or
distributions to any of its shareholders or its Affiliates,

 
in each case, whether in cash or in kind and whether by way of actual payment,
set-off, counter-claim or otherwise.
 
(b)  
No Obligor (other than the Parent) may make or pay, or permit to be made or
paid, any Distribution.

 
22.19  
Subordinated Loan Agreement

 
The Borrower and the Subordinated Lenders may not amend or waive any material
term of a Subordinated Loan Agreement without the prior written consent of the
Majority Lenders.
 
22.20  
Transactions with Affiliates

 
Save for any intercompany loans or equity contributions made by the Parent or
any of its Affiliates to the Borrower in accordance with the terms of the
Finance Documents and which are subject to the Intercreditor Deed, the Parent or
any of its Affiliates will not enter into any transaction with any Affiliate
(other than transactions on terms no less favourable than would result from
arm’s length negotiations for cash-only consideration in the ordinary course of
trading) without the consent of the Agent (such consent not to be unreasonably
withheld or delayed).
 
22.21  
Acquisitions

 
(a)  
The Borrower may not make any acquisitions or investments without the consent of
the Majority Lenders.

 
(b)  
Paragraph (a) of Clause 22.21 does not apply to:

 
(i)  
any Permitted Expenditure incurred by the Borrower;

 
(ii)  
any acquisitions or investments made by the Parent or any member of the Group
that is not a party to any Finance Document from its own financial resources and
not from proceeds from the Loans or other Financial Indebtedness.

 
(iii)  
any acquisitions or investments in the ordinary course of trading and/or which
have a value which is less than a sum equal to an increase of 15 per cent. of
the then current Budget for any Borrowing Base Asset; and

 

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(iv)  
any acquisitions or investments by the Borrower from its own financial resources
and not from proceeds from Loans or other Financial Indebtedness over oil and
gas assets for cash or shares where the applicable reserves and purchase
consideration are audited by engineers and/or valuers acceptable to the Agent.

 
22.22  
Merger

 
No Obligor shall (and the Parent shall ensure that no other member of the Group
will) enter into any amalgamation, demerger, merger, corporate reconstruction or
winding-up without the prior written consent of the Majority Lenders, such
consent not to be unreasonably withheld.
 
22.23  
Hedging

 
(a)  
Each Obligor will, and the Parent shall procure that each Obligor will,
implement the agreed Hedging Policy within the agreed timeframe stated therein
and comply at all times with the most recently adopted version of the Hedging
Policy.

 
(b)  
No Obligor may enter into any Hedging Agreement unless:

 
(i)  
such Hedging Agreement is an ISDA Agreement;

 
(ii)  
such Hedging Agreement has been entered into by the Obligor in compliance with,
and on terms consistent with, the terms of this Agreement and the Hedging
Policy;

 
(iii)  
the counterparty to such Hedging Agreement is a Hedging Bank; and

 
(iv)  
such Hedging Agreement has been entered into for prudent treasury management
purposes so as to cover the genuine commercial exposure of the Obligors and not
for speculative purposes or for the purposes of raising finance.

 
(c)  
Save for:

 
(i)  
any Security constituted by any Security Document; and

 
(ii)  
any guarantee given pursuant to Clause 19 (Guarantee and indemnity),

 
no Obligor may enter into any margin call arrangement, post any collateral or
credit support, grant any Security or otherwise give any guarantee, indemnity or
other financial accommodation in respect of any Hedging Agreement entered into
by any Obligor.
 
(d)  
Each Obligor shall, promptly, on becoming a party to any Hedging Agreement:

 

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(i)  
enter into a Security Document (in form and substance satisfactory to the
Security Trustee) for the purposes of granting Security over that Hedging
Agreement in favour of the Security Trustee unless Security over such Hedging
Agreement has been granted to the Security Trustee under any existing Security
Document;

 
(ii)  
promptly obtain all such Authorisations as may be necessary in order for such
Security to be granted; and

 
(iii)  
deliver to the Security Trustee, or procure the delivery to the Security
Trustee, such documents as may be requested in connection with the provision of
any legal opinion that the Security Trustee may reasonably require in connection
with the entry into such Security Document.

 
(e)  
A Hedging Policy (or any updated version thereof) shall only be “adopted” upon
(i) the Majority Lenders confirming their approval of the same and (ii) the
Agent providing a copy of such approved version of the Hedging Policy to all
Lenders (and “adoption” shall be construed accordingly).

 
(f)  
No Obligor shall, and the Parent shall procure that no Obligor shall, enter into
any hedging arrangement outside the Hedging Policy.

 
22.24  
Preservation of Assets

 
The Obligor shall, and the Parent shall ensure that each member of the Group
will, maintain and preserve all of its assets that are necessary or desirable,
in the opinion of the Agent, for the conduct of its business, as conducted at
the date of this Agreement, in good working order and condition, ordinary wear
and tear excepted.
 
22.25  
Access

 
The Obligor shall, and the Parent shall ensure that each member of the Group
whose shares are the subject of the Transaction Security will:
 
(a)  
on request of the Agent, provide the Agent and Security Trustee with any
information the Agent or Security Trustee may reasonably require about that
company’s business and affairs, the Charged Property and its compliance with the
terms of the Security Documents; and

 
(b)  
permit the Security Trustee, its representatives, delegates, professional
advisers and contractors, free access at all reasonable times and on reasonable
notice at the cost of the Obligors, (i) to inspect and take copies and extracts
from the books, accounts and records of that company and (ii) to view the
Charged Property (without becoming liable as mortgagee in possession).

 
22.26  
Environmental matters

 
(a)  
Each Obligor shall, and shall ensure that each member of the Group will, comply
in all material respects with all Environmental and Mining Laws and
Environmental and Mining Licences applicable to it and/or any of its assets.

 

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(b)  
Each Obligor shall, and shall ensure that each member of the Group will,
promptly upon becoming aware of the same notify the Agent of:

 
(i)  
any Environmental and Mining Claim current, or to its knowledge, pending or
threatened;

 
(ii)  
any circumstances reasonably likely to result in an Environmental and Mining
Claim; or

 
(iii)  
any material environmental contamination on any site connected with any
Borrowing Base Asset.

 
(c)  
Each Obligor shall, and shall ensure that each member of the Group will, comply
in all material respects with any Environmental Decision that is applicable to
it and/or any of its assets.

 
22.27  
Mining Usufruct Rights

 
(a)  
The Borrower and the Parent shall use best endeavours to obtain (by way of
transfer from PGNiG to the Borrower) a 49% interest in the mining usufruct
rights for exploitation for each of the KSK Fields and the consent of the State
Treasury of the Republic of Poland to such transfer. Failure by the Borrower
and/or the Parent to obtain such transfer and/or consent shall in no way
prejudice the conditions that need to be satisfied for KSK First Production to
have been achieved.

 
(b)  
To the extent the Borrower is legally able to do so, the Borrower will grant and
perfect a pledge (or pledges) in favour of the Security Trustee, in form and
substance satisfactory to the Agent, over mining usufruct rights in respect of
any applicable Borrowing Base Asset which the Agent requires to be pledged to
the Security Trustee within 60 days of the Borrower so being able to grant such
pledge.

 
22.28  
Offtake

 
Save as otherwise agreed with the Agent acting on behalf of the Majority
Lenders, the Borrower shall not dispose of any Petroleum produced from any
Borrowing Base Asset except to PGNiG.
 
22.29  
UCC Filings

 
Following the Refinancing Date, the Borrower shall, and the Parent shall ensure
that the Borrower shall (i) promptly release any Uniform Commercial Code
security filings in Utah and Nevada relating to the Existing Facility Agreement
and (ii) file necessary Uniform Commercial Code security filings in relation to
the Finance Documents to ensure first priority ranking for the Transaction
Security in Utah and Nevada.
 

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22.30  
Certificate from the Polish Tax Office

 
The Borrower shall, and the Parent shall procure that the Borrower shall, within
ten (10) Business Days of the date of this Agreement obtain a Certificate from
the Polish Tax Office (Urząd Skarbowy) and Polish Social Security Office (ZUS)
confirming whether the Borrower has any outstanding taxes or social security
payments, such certificate to be issued no earlier than 30 days before the date
of the first Utilisation Request.
 
22.31  
Termination of Accounts

 
The Borrower shall, and the Parent shall procure that the Borrower shall, within
30 days of the date of this Agreement:
 
(a)  
close the account with ING Bank Slaski S.A. with IBAN 61 1050 0086 1000 0023
1214 1837; and

 
(b)  
cease to hold the joint account with ING Bank Slaski S.A. with IBAN 54 1050 0086
1000 0022 7509 7760.

 
23.  
EVENTS OF DEFAULT

 
Each of the events or circumstances set out in this Clause 23 is an Event of
Default (save as for Clause 23.23 (Acceleration)).
 
23.1  
Non-payment

 
An Obligor does not pay on the due date any amount payable pursuant to a Finance
Document at the place at and in the currency in which it is expressed to be
payable unless:
 
(a)  
its failure to pay is caused by:

 
(i)  
administrative or technical error; or

 
(ii)  
a Disruption Event; and

 
(b)  
payment is made within three (3) Business Days of its due date.

 
23.2  
Breach of Key Covenants

 
An Obligor does not comply with any provision set out in any of Clauses 22.2
(Corporate existence), 22.13 (Negative pledge), 22.14 (Indebtedness), 22.15
(Loans and guarantees), 22.16 (Disposals), 22.18 (Distributions), or 22.21
(Acquisitions).
 
23.3  
Other obligations

 
(a)  
An Obligor does not comply with any provision of the Finance Documents (other
than those referred to in Clause 23.1 (Non-payment)).

 

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(b)  
No Event of Default under paragraph (a) above will occur if the failure to
comply is capable of remedy and is remedied within 21 days of the earlier of (A)
the Agent giving notice to the Borrower and (B) the Borrower becoming aware of
the failure to comply.

 
23.4  
Misrepresentation

 
Any representation or statement made or deemed to be made by an Obligor in the
Finance Documents or any other document delivered by or on behalf of any Obligor
under or in connection with any Finance Document is or proves to have been
incorrect or misleading in any material respect when made or deemed to be made
unless the circumstances giving rise to the misrepresentation:
 
(a)  
are capable of remedy; and

 
(b)  
are remedied to the reasonable satisfaction of the Agent within 21 days of the
date on which the relevant representation or statement was made or deemed to be
made.

 
23.5  
Cross default

 
(a)  
Any Financial Indebtedness of any member of the Group is not paid when due nor
within any originally applicable grace period.

 
(b)  
Any Financial Indebtedness of any member of the Group is declared to be or
otherwise becomes due and payable prior to its specified maturity as a result of
an event of default (however described).

 
(c)  
Any commitment for any Financial Indebtedness of any member of the Group is
cancelled or suspended by a creditor of any member of the Group as a result of
an event of default (however described).

 
(d)  
Any creditor of any member of the Group becomes entitled to declare any
Financial Indebtedness of any member of the Group due and payable prior to its
specified maturity as a result of an event of default (however described).

 
(e)  
No Event of Default will occur under this Clause 23.5 if the aggregate amount of
Financial Indebtedness or commitment for Financial Indebtedness falling within
paragraphs (a) to (d) above is less than USD 250,000 (or its equivalent in any
other currency or currencies).

 
23.6  
Insolvency

 
(a)  
A member of the Group is unable or admits inability to pay its debts as they
fall due, suspends making payments on any of its debts or, by reason of actual
or anticipated financial difficulties, commences negotiations with one or more
of its creditors with a view to rescheduling any of its indebtedness.

 
(b)  
The value of the assets of any member of the Group is less than its liabilities
(taking into account contingent and prospective liabilities).

 

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(c)  
A moratorium is declared in respect of any indebtedness of any member of the
Group.

 
23.7  
Insolvency proceedings

 
Any corporate action, legal proceedings or other procedure or step is taken in
relation to:
 
(a)  
the suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution, administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of any member of the Group other than a
solvent liquidation or reorganisation of any member of the Group which is not an
Obligor;

 
(b)  
a composition, compromise, assignment or arrangement with any creditor of any
member of the Group;

 
(c)  
the appointment of a liquidator (other than in respect of a solvent liquidation
of a member of the Group which is not an Obligor), receiver, administrative
receiver, administrator, compulsory manager or other similar officer in respect
of any member of the Group or any of its assets; or

 
(d)  
enforcement of any Security over any assets of any member of the Group,

 
or any analogous procedure or step is taken in any jurisdiction.
 
This Clause 23.7 shall not apply to any winding-up petition which is frivolous
or vexatious and is discharged, stayed or dismissed within fourteen days of
commencement.
 
23.8  
Creditors’ process

 
Any expropriation, attachment, sequestration, distress or execution affects any
asset or assets of a member of the Group having an aggregate value of USD
250,000 and is not discharged within 14 days.
 
23.9  
Unlawfulness

 
It is or becomes unlawful for an Obligor to perform any of its obligations under
the Transaction Documents or any Transaction Security created or expressed to be
created or evidenced by the Security Documents ceases to be effective.
 
23.10  
Repudiation

 
A Transaction Document is repudiated or becomes void or unenforceable against an
Obligor or any Obligor evidences an intention to repudiate any Transaction
Document.
 
23.11  
Transaction Security

 
(a)  
Any Obligor fails to perform or comply with any of the obligations assumed by it
in the Security Documents.

 

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(b)  
At any time the guarantee provided by the Guarantors pursuant to Clause 19
(Guarantee and indemnity) or any of the Transaction Security is or becomes
unlawful or is not, or ceases to be legal, valid, binding or enforceable or
otherwise ceases to be effective or is alleged by any Obligor or the grantor of
such Security to be ineffective or any Security Document otherwise ceases to
confer the Security it purports to create.

 
(c)  
If at any time following the Refinancing Date, any of the Transaction Security
fails to have first ranking priority or is subject to any prior ranking or pari
passu ranking Security.

 
23.12  
Cessation of business

 
Any Obligor or any member of the Group that is a party to any Finance Document
ceases, or threatens to cease, to carry on all or a substantial part of its
business.
 
23.13  
Borrowing Base Assets

 
(a)  
All or any part of any Borrowing Base Asset, or any Petroleum or revenues
derived from any Borrowing Base Asset is nationalised, expropriated,
compulsorily acquired or seized by any government or other governmental or
public sector agency or body or any government or other governmental or public
sector agency, takes, or officially announces that it will take, any step with a
view to such nationalisation, expropriation, compulsory acquisition or seizure.

 
(b)  
Any of the following occurs:

 
(i)  
any decision is taken to abandon any Borrowing Base Asset prior to its
Abandonment Date; or

 
(ii)  
there has been an interruption or suspension of the production or recovery of
any Petroleum derived from or relating to any Borrowing Base Asset for (A) a
period of 60 days (or more) and (B) such interruption or suspension is likely to
have a Material Adverse Effect.

 
23.14  
Field Documents

 
(a)  
Any Authorisation relating to any Borrowing Base Asset (including any
Environmental and Mining License) is materially modified, refused, suspended,
revoked, rescinded, withheld or terminated or not obtained within a timeframe
required to duly operate the respective Borrowing Base Assets and comply with
the respective Projections.

 
(b)  
It is or becomes unlawful for any party to perform any of its obligations under
any Field Document or any Field Document otherwise ceases to be valid, binding
or enforceable in whole or in part and the same, in each case, in the reasonable
opinion of the Agent has, or is likely to have, a Material Adverse Effect.

 

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(c)  
Any party to a Field Document repudiates, or evidences an intention in writing
to repudiate, a Field Document and the repudiation of such Field Document in the
reasonable opinion of the Agent has, or is likely to have, a Material Adverse
Effect.

 
(d)  
There has been a default by a party to any Field Document and the same, in the
reasonable opinion of the Agent has, or is likely to have, a Material Adverse
Effect.

 
(e)  
PGNiG fails to comply with any payment or other material obligation under the
Field Documents.

 
(f)  
Any Field Document is terminated or otherwise ceases to be in full force and
effect, amended, modified or subject to the grant of any waiver having the
effect of an amendment or modification of such Field Document and the same, in
each case, in the reasonable opinion of the Agent has, or is likely to have, a
Material Adverse Effect.

 
23.15  
Material adverse change

 
Any event or series of events occurs which, in the reasonable opinion of the
Agent acting on behalf of the Majority Lenders, has or would be likely to have a
Material Adverse Effect unless the effects of such event or series of events are
capable of remedy and:
 
(a)  
the Borrower (i) commences consultations with the Agent (as to the possible
steps that need to be taken to remedy and/or mitigate those effects) within 5
Business Days of the date of issue of a notice from the Agent on behalf of the
Lenders or, if earlier, of the date of the occurrence of the relevant event or
series of events and (ii) continues with such consultations for such period as
the Lenders may reasonably request; and

 
(b)  
the relevant effects are remedied or mitigated to the satisfaction of the Agent
within the remedy period (where, for these purposes, “remedy period” means (i)
the period of ten (10) Business Days commencing on the date of the relevant
notice from the Agent on behalf of the Lenders, or if earlier, the date of
occurrence of the relevant event or series of events or (ii) such longer period
as may be approved by the Agent pursuant to the consultations referred to in
paragraph (a)).

 
23.16  
Unitisation

 
Any Unitisation occurs and the Projection which is adopted in accordance with
Clause 6 (Projections) following such Unitisation demonstrates that the Obligors
will not be able to meet their liabilities as they fall due.
 
23.17  
Ownership

 
The Parent ceases to hold indirectly or directly the entire issued share capital
of the Borrower.
 

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23.18  
Insurances

 
The Obligor fails to take out or maintain, or cause to be taken out and
maintained, any insurance required by Clause 20.19 (Insurances) or any such
required insurance is vitiated, becomes invalid or void or otherwise ceases to
be in full force and effect and, in any case, the same is not remedied to the
reasonable satisfaction of the Agent within ten (10) Business Days of the Agent
(acting on behalf of the Lenders) giving notice to the Borrower or, if earlier,
the Borrower becoming aware of the same.
 
23.19  
Adverse proceedings

 
Any litigation, arbitration or administrative proceedings (the “relevant
proceedings”) of or before any court, arbitral body or agency have been started
against any Obligor or any other member of the Group that is a party to any
Finance Document; and such relevant proceedings, if adversely determined, would
(in the reasonable opinion of the Agent) have or be reasonably likely to have a
Material Adverse Effect; and it is reasonably likely that such relevant
proceedings will be adversely determined.
 
23.20  
Qualification of accounts

 
The auditors of the Group adversely qualify their report(s) on any audited
financial statements, or (as the case may be) any audited consolidated financial
statements, of any Obligor or any other member of the Group that is a party to
any Finance Document in any way save where such qualification is technical in
nature or related to Section 404 of the Sarbanes-Oxley Act and immaterial in the
context of the Facility and any weakness or deficiency does not impair the
ability of the Borrower to make full and timely payments to the Lenders as and
when required under the Facility.
 
23.21  
Group Liquidity Test

 
The Parent is unable to make the certification required in Clause 21.6
(Compliance Certificate) or any such certification is subsequently shown to be
untrue or misleading in any material respect.
 
23.22  
Dutch Tax Status

 
A notice under Article 36 Tax Collection Act (Invorderingswet 1990) has been
given by any member of the Group.
 
23.23  
Acceleration

 
On and at any time after the occurrence of an Event of Default which is
continuing the Agent may, and shall if so directed by the Majority Lenders, by
notice to the Borrower:
 
(a)  
cancel the Total Commitments, at which time they shall immediately be cancelled;

 
(b)  
declare that all or part of the Loans, together with accrued interest, and all
other amounts accrued or outstanding under the Finance Documents be immediately
due and payable, at which time they shall become immediately due and payable;

 
 

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(c)  
declare that all or part of the Loans be payable on demand, at which time they
shall immediately become payable on demand by the Agent on the instructions of
the Majority Lenders; and/or

 
(d)  
exercise, or direct the Security Trustee (subject to the Intercreditor Deed) to
exercise, any or all of its rights, remedies and powers under any of the Finance
Documents.

 

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SECTION 11
 
CHANGES TO PARTIES
 
24.  
CHANGES TO THE LENDERS

 
24.1  
Assignments and transfers by the Lenders

 
Subject to this Clause 24, a Lender (the “Existing Lender”) may:
 
(a)  
assign any of its rights; or

 
(b)  
transfer by novation any of its rights and obligations,

 
to another bank or financial institution or to a trust, fund or other entity
which is regularly engaged in or established for the purpose of making,
purchasing or investing in loans, securities or other financial assets (the “New
Lender”).
 
24.2  
Conditions of assignment or transfer

 
(a)  
An assignment will only be effective on:

 
(i)  
receipt by the Agent (whether in the Assignment Agreement or otherwise) of
written confirmation from the New Lender (in form and substance satisfactory to
the Agent) that the New Lender will assume the same obligations to the other
Finance Parties and the other Secured Parties as it would have been under if it
was an Original Lender; and

 
(ii)  
performance by the Agent of all necessary “know your customer” or other similar
checks under all applicable laws and regulations in relation to such assignment
to a New Lender, the completion of which the Agent shall promptly notify to the
Existing Lender and the New Lender.

 
(b)  
A transfer will only be effective if the procedure set out in Clause 24.5
(Procedure for transfer) is complied with.

 
(c)  
If:

 
(i)  
a Lender assigns or transfers any of its rights or obligations under the Finance
Documents or changes its Facility Office; and

 
(ii)  
as a result of circumstances existing at the date the assignment, transfer or
change occurs, an Obligor would be obliged to make a payment to the New Lender
or Lender acting through its new Facility Office under Clause 15 (Increased
costs),

 

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then the New Lender or Lender acting through its new Facility Office is only
entitled to receive payment under those Clauses to the same extent as the
Existing Lender or Lender acting through its previous Facility Office would have
been if the assignment, transfer or change had not occurred.  This paragraph (c)
shall not apply in respect of an assignment or transfer made in the ordinary
course of the primary syndication of the Facility.
 
(d)  
Each New Lender, by executing the relevant Transfer Certificate or Assignment
Agreement, confirms, for the avoidance of doubt, that the Agent has authority to
execute on its behalf any amendment or waiver that has been approved by or on
behalf of the requisite Lender or Lenders in accordance with this Agreement on
or prior to the date on which the transfer or assignment becomes effective in
accordance with this Agreement and that it is bound by that decision to the same
extent as the Existing Lender would have been had it remained a Lender.

 
24.3  
Assignment or transfer fee

 
Save in the case of a transfer to a New Lender which is an Affiliate of an
Existing Lender, the New Lender shall, on the date upon which an assignment or
transfer takes effect, pay to the Agent (for its own account) a fee of  $5,000.
 
24.4  
Limitation of responsibility of Existing Lenders

 
(a)  
Unless expressly agreed to the contrary, an Existing Lender makes no
representation or warranty and assumes no responsibility to a New Lender for:

 
(i)  
the legality, validity, effectiveness, adequacy or enforceability of the Finance
Documents, the Transaction Security or any other documents;

 
(ii)  
the financial condition of any Obligor;

 
(iii)  
the performance and observance by any Obligor of its obligations under the
Finance Documents or any other documents; or

 
(iv)  
the accuracy of any statements (whether written or oral) made in or in
connection with any Finance Document or any other document,

 
and any representations or warranties implied by law are excluded.
 
(b)  
Each New Lender confirms to the Existing Lender and the other Finance Parties
that it:

 
(i)  
has made (and shall continue to make) its own independent investigation and
assessment of the financial condition and affairs of each Obligor and its
related entities in connection with its participation in this Agreement and has
not relied exclusively on any information provided to it by the Existing Lender
in connection with any Finance Document; and

 

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(ii)  
will continue to make its own independent appraisal of the creditworthiness of
each Obligor and its related entities whilst any amount is or may be outstanding
under the Finance Documents or any Commitment is in force.

 
(c)  
Nothing in any Finance Document obliges an Existing Lender to:

 
(i)  
accept a re-transfer or re-assignment from a New Lender of any of the rights and
obligations assigned or transferred under this Clause 24; or

 
(ii)  
support any losses directly or indirectly incurred by the New Lender by reason
of the non-performance by any Obligor of its obligations under the Finance
Documents or otherwise.

 
24.5  
Procedure for transfer

 
(a)  
Subject to the conditions set out in Clause 24.2 (Conditions of assignment or
transfer) a transfer is effected in accordance with paragraph (c) below when the
Agent executes an otherwise duly completed Transfer Certificate delivered to it
by the Existing Lender and the New Lender.  The Agent shall, subject to
paragraph (b) below, as soon as reasonably practicable after receipt by it of a
duly completed Transfer Certificate appearing on its face to comply with the
terms of this Agreement and delivered in accordance with the terms of this
Agreement, execute that Transfer Certificate.

 
(b)  
The Agent shall only be obliged to execute a Transfer Certificate delivered to
it by the Existing Lender and the New Lender once it is satisfied it has
complied with all necessary “know your customer” or other similar checks under
all applicable laws and regulations in relation to the transfer to such New
Lender.

 
(c)  
On the Transfer Date:

 
(i)  
to the extent that in the Transfer Certificate the Existing Lender seeks to
transfer by novation its rights and obligations under the Finance Documents and
in respect of the Transaction Security each of the Obligors and the Existing
Lender shall be released from further obligations towards one another under the
Finance Documents and in respect of the Transaction Security and their
respective rights against one another shall be cancelled (being the “Discharged
Rights and Obligations”);

 
(ii)  
each of the Obligors and the New Lender shall assume obligations towards one
another and/or acquire rights against one another which differ from the
Discharged Rights and Obligations only insofar as that Obligor and the New
Lender have assumed and/or acquired the same in place of that Obligor and the
Existing Lender;

 

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(iii)  
the Agent, the Mandated Lead Arrangers, the Security Trustee, the New Lender and
the other Lenders shall acquire the same rights and assume the same obligations
between themselves and in respect of the Transaction Security as they would have
acquired and assumed had the New Lender been an Original Lender with the rights
and/or obligations acquired or assumed by it as a result of the transfer and to
that extent the Agent, the Mandated Lead Arrangers, the Security Trustee and the
Existing Lender shall each be released from further obligations to each other
under the Finance Documents; and

 
(iv)  
the New Lender shall become a Party as a “Lender”.

 
24.6  
Procedure for assignment

 
(a)  
Subject to the conditions set out in Clause 24.2 (Conditions of assignment or
transfer) an assignment may be effected in accordance with paragraph (c) below
when the Agent executes an otherwise duly completed Assignment Agreement
delivered to it by the Existing Lender and the New Lender.  The Agent shall,
subject to paragraph (b) below, as soon as reasonably practicable after receipt
by it of a duly completed Assignment Agreement appearing on its face to comply
with the terms of this Agreement and delivered in accordance with the terms of
this Agreement, execute that Assignment Agreement.

 
(b)  
The Agent shall only be obliged to execute an Assignment Agreement delivered to
it by the Existing Lender and the New Lender once it is satisfied it has
complied with all necessary “know your customer” or other similar checks under
all applicable laws and regulations in relation to the assignment to such New
Lender.

 
(c)  
On the Transfer Date:

 
(i)  
the Existing Lender will assign absolutely to the New Lender the rights under
the Finance Documents expressed to be the subject of the assignment in the
Assignment Agreement;

 
(ii)  
the Existing Lender will be released by each Obligor and the other Finance
Parties from the obligations owed by it (the “Relevant Obligations”) and
expressed to be the subject of the release in the Assignment Agreement; and

 
(iii)  
the New Lender shall become a Party as a “Lender” and will be bound by
obligations equivalent to the Relevant Obligations.

 

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(d)  
Lenders may utilise procedures other than those set out in this Clause 24.6 to
assign their rights under the Finance Documents (but not, without the consent of
the relevant Obligor or unless in accordance with Clause 24.5 (Procedure for
transfer), to obtain a release by that Obligor from the obligations owed to that
Obligor by the Lenders nor the assumption of equivalent obligations by a New
Lender) provided that they comply with the conditions set out in Clause 24.2
(Conditions of assignment or transfer).

 
24.7  
Copy of Transfer Certificate or Assignment Agreement to Borrower

 
The Agent shall, as soon as reasonably practicable after it has executed a
Transfer Certificate or an Assignment Agreement, send to the Borrower a copy of
that Transfer Certificate or Assignment Agreement.
 
24.8  
Security over Lenders’ rights

 
In addition to the other rights provided to Lenders under this Clause 24.8, each
Lender may without consulting with or obtaining consent from any Obligor at any
time charge, assign or otherwise create Security in or over (whether by way of
collateral or otherwise) all or any of its rights under any Finance Document to
secure obligations of that Lender including, without limitation:
 
(a)  
any charge, assignment or other Security to secure obligations to a federal
reserve or central bank; and

 
(b)  
in the case of any Lender which is a fund, any charge, assignment or other
Security granted to any holders (or trustee or representatives of holders) of
obligations owed, or securities issued, by that Lender as Security for those
obligations or securities,

 
except that no such charge, assignment or Security shall:
 
(i)  
release a Lender from any of its obligations under the Finance Documents or
substitute the beneficiary of the relevant charge, assignment or Security for
the Lender as a party to any of the Finance Documents; or

 
(ii)  
require any payments to be made by an Obligor or grant to any person any more
extensive rights than those required to be made or granted to the relevant
Lender under the Finance Documents.

 
25.  
CHANGES TO THE OBLIGORS

 
25.1  
Assignments and transfers by Obligors

 
No Obligor may assign any of its rights or transfer any of its rights or
obligations under the Finance Documents.
 

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25.2  
Additional Guarantors

 
(a)  
Subject to compliance with the provisions of Clauses 21.15(c) and 21.15(d) of
Clause 21.15 (“Know your customer” checks), the Borrower may request that any of
the Parent’s Subsidiaries become an Additional Guarantor.  That Subsidiary shall
become an Additional Guarantor if:

 
(i)  
the Borrower delivers to the Agent a duly completed and executed Accession
Letter;

 
(ii)  
the Subsidiary accedes to the Intercreditor Deed as a Guarantor by delivering to
the Agent a duly completed and executed  Intercreditor Accession Deed; and

 
(iii)  
the Agents has received all of the documents and other evidence listed in Part
II of Schedule 2 (Conditions Precedent Required To Be Delivered By An Additional
Guarantor) in relation to that Additional Guarantor, each in form and substance
satisfactory to the Agent.

 
(b)  
The Agent shall notify the Borrower promptly upon being satisfied that it has
received (in form and substance satisfactory to it) all the documents and other
evidence listed in Part II of Schedule 2 (Conditions Precedent Required To Be
Delivered By An Additional Guarantor).

 
25.3  
Repetition of Representations

 
Delivery of an Accession Letter constitutes confirmation by the relevant
Subsidiary that the Repeating Representations are true and correct in relation
to it as at the date of delivery as if made by reference to the facts and
circumstances then existing.
 

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SECTION 12
 
THE FINANCE PARTIES
 
26.  
ROLE OF THE AGENT AND THE MANDATED LEAD ARRANGERS

 
26.1  
Appointment of the Agent

 
(a)  
Each other Finance Party (other than the Security Trustee) appoints the Agent to
act as its agent under and in connection with the Finance Documents.

 
(b)  
Each other Finance Party authorises the Agent to exercise the rights, powers,
authorities and discretions specifically given to the Agent under or in
connection with the Finance Documents together with any other incidental rights,
powers, authorities and discretions.

 
26.2  
Duties of the Agent

 
(a)  
Subject to paragraph (b) below, the Agent shall promptly forward to a Party the
original or a copy of any document which is delivered to the Agent for that
Party by any other Party.

 
(b)  
Without prejudice to Clause 24.7 (Copy of Transfer Certificate or Assignment
Agreement to Borrower), paragraph (a) above shall not apply to any Transfer
Certificate or to any Assignment Agreement.

 
(c)  
Except where a Finance Document specifically provides otherwise, the Agent is
not obliged to review or check the adequacy, accuracy or completeness of any
document it forwards to another Party.

 
(d)  
If the Agent receives notice from a Party referring to this Agreement,
describing a Default and stating that the circumstance described is a Default,
it shall promptly notify the other Finance Parties.

 
(e)  
If the Agent is aware of the non-payment of any principal, interest, commitment
fee or other fee payable to a Finance Party (other than the Agent, the Mandated
Lead Arrangers or the Security Trustee) under this Agreement it shall promptly
notify the other Finance Parties.

 
(f)  
The Agent’s duties under the Finance Documents are solely mechanical and
administrative in nature.

 
(g)  
The Agent shall promptly forward to the Security Trustee a copy of all notices
issued pursuant to Clause 23.23 (Acceleration).

 
26.3  
Role of the Mandated Lead Arrangers

 
Except as specifically provided in the Finance Documents, the Mandated Lead
Arrangers have no obligations of any kind to any other Party under or in
connection with any Finance Document.
 

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26.4  
No fiduciary duties

 
(a)  
Nothing in this Agreement constitutes the Agent or the Mandated Lead Arrangers
as a trustee or fiduciary of any other person.

 
(b)  
Neither the Agent nor the Mandated Lead Arrangers shall be bound to account to
any Lender for any sum or the profit element of any sum received by it for its
own account.

 
26.5  
Business with the Group

 
The Agent and the Mandated Lead Arrangers may accept deposits from, lend money
to and generally engage in any kind of banking or other business with any member
of the Group.
 
26.6  
Rights and discretions of the Agent

 
(a)  
The Agent may rely on:

 
(i)  
any representation, notice or document believed by it to be genuine, correct and
appropriately authorised; and

 
(ii)  
any statement made by a director, authorised signatory or employee of any person
regarding any matters which may reasonably be assumed to be within his knowledge
or within his power to verify.

 
(b)  
The Agent may assume (unless it has received notice to the contrary in its
capacity as agent for the Lenders) that:

 
(i)  
no Default has occurred (unless it has actual knowledge of a Default arising
under Clause 23.1 (Non-payment));

 
(ii)  
any right, power, authority or discretion vested in any Party or the Majority
Lenders has not been exercised; and

 
(iii)  
any notice or request made by the Borrower (other than a Utilisation Request) is
made on behalf of and with the consent and knowledge of the Guarantors.

 
(c)  
The Agent may engage, pay for and rely on the advice or services of any lawyers,
accountants, surveyors or other experts.

 
(d)  
The Agent may act in relation to the Finance Documents through its personnel and
agents.

 
(e)  
The Agent may disclose to any other Party any information it reasonably believes
it has received as Agent under this Agreement.

 

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(f)  
Notwithstanding any other provision of any Finance Document to the contrary,
neither the Agent nor the Mandated Lead Arrangers are obliged to do or omit to
do anything if it would or might in its reasonable opinion constitute a breach
of any law or regulation or a breach of a fiduciary duty or duty of
confidentiality.

 
26.7  
Majority Lenders’ instructions

 
(a)  
Unless a contrary indication appears in a Finance Document, the Agent shall (i)
exercise any right, power, authority or discretion vested in it as Agent in
accordance with any instructions given to it by the Majority Lenders (or, if so
instructed by the Majority Lenders, refrain from exercising any right, power,
authority or discretion vested in it as Agent) and (ii) not be liable for any
act (or omission) if it acts (or refrains from taking any action) in accordance
with an instruction of the Majority Lenders.

 
(b)  
Unless a contrary indication appears in a Finance Document, any instructions
given by the Majority Lenders will be binding on all the Finance Parties other
than the Security Trustee.

 
(c)  
The Agent may refrain from acting in accordance with the instructions of the
Majority Lenders (or, if appropriate, the Lenders) until it has received such
security as it may require for any cost, loss or liability (together with any
associated VAT) which it may incur in complying with the instructions.

 
(d)  
In the absence of instructions from the Majority Lenders, (or, if appropriate,
the Lenders) the Agent may act (or refrain from taking action) as it considers
to be in the best interest of the Lenders.

 
(e)  
The Agent is not authorised to act on behalf of a Lender (without first
obtaining that Lender’s consent) in any legal or arbitration proceedings
relating to any Finance Document.

 
26.8  
Responsibility for documentation

 
Neither the Agent nor the Mandated Lead Arrangers are responsible for:
 
(a)  
the adequacy, accuracy and/or completeness of any information (whether oral or
written) provided by the Agent, the Mandated Lead Arrangers, an Obligor or any
other person given in or in connection with any Finance Document, the
Information Memorandum or the transactions contemplated by the Finance
Documents; or

 
(b)  
the legality, validity, effectiveness, adequacy or enforceability of any Finance
Document or the Transaction Security or any other agreement, arrangement or
document entered into, made or executed in anticipation of or in connection with
any Finance Document or the Transaction Security; or

 

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(c)  
any determination as to whether any information provided or to be provided to
any Finance Party is non-public information the use of which may be regulated or
prohibited by applicable law or regulation relating to insider dealing or
otherwise.

 
26.9  
Exclusion of liability

 
(a)  
Without limiting paragraph (b) below (and without prejudice to the provisions of
paragraph (e) of Clause 29.10 (Disruption to Payment Systems etc.), the Agent
will not be liable (including, without limitation, for negligence or any other
category of liability whatsoever) for any action taken by it under or in
connection with any Finance Document or the Transaction Security, unless
directly caused by its gross negligence or wilful misconduct.

 
(b)  
No Party (other than the Agent) may take any proceedings against any officer,
employee or agent of the Agent in respect of any claim it might have against the
Agent or in respect of any act or omission of any kind by that officer, employee
or agent in relation to any Finance Document and any officer, employee or agent
of the Agent may rely on this Clause subject to Clause 1.5 (Third Party Rights)
and the provisions of the Third Parties Act.

 
(c)  
The Agent will not be liable for any delay (or any related consequences) in
crediting an account with an amount required under the Finance Documents to be
paid by the Agent if the Agent has taken all necessary steps as soon as
reasonably practicable to comply with the regulations or operating procedures of
any recognised clearing or settlement system used by the Agent for that purpose.

 
(d)  
Nothing in this Agreement shall oblige the Agent or the Mandated Lead Arrangers
to carry out any “know your customer” or other checks in relation to any person
on behalf of any Lender and each Lender confirms to the Agent and the Mandated
Lead Arrangers that it is solely responsible for any such checks it is required
to carry out and that it may not rely on any statement in relation to such
checks made by the Agent or the Mandated Lead Arrangers.

 
26.10  
Lenders’ indemnity to the Agent

 
Each Lender shall (in proportion to its share of the Total Commitments or, if
the Total Commitments are then zero, to its share of the Total Commitments
immediately prior to their reduction to zero) indemnify the Agent, within three
Business Days of demand, against any cost, loss or liability (including, without
limitation, for negligence or any other category of liability whatsoever)
incurred by the Agent (otherwise than by reason of the Agent’s gross negligence
or wilful misconduct) (or, in the case of any cost, loss or liability pursuant
to Clause 29.10 (Disruption to Payment Systems etc.) notwithstanding the Agent’s
negligence, gross negligence or any other category of liability whatsoever but
not including any claim based on the fraud of the Agent) in acting as Agent
under the Finance Documents (unless the Agent has been reimbursed by an Obligor
pursuant to a Finance Document).
 

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26.11  
Resignation of the Agent

 
(a)  
The Agent may resign and appoint one of its Affiliates acting through an office
in the United Kingdom as successor by giving notice to the other Finance Parties
and the Borrower.

 
(b)  
Alternatively the Agent may resign by giving 30 days’ notice to the other
Finance Parties and the Borrower, in which case the Majority Lenders (after
consultation with the Borrower) may appoint a successor Agent.

 
(c)  
If the Majority Lenders have not appointed a successor Agent in accordance with
paragraph (b) above within 20 days after notice of resignation was given, the
retiring Agent (after consultation with the Borrower) may appoint a successor
Agent.

 
(d)  
The retiring Agent shall, at its own cost, make available to the successor Agent
such documents and records and provide such assistance as the successor Agent
may reasonably request for the purposes of performing its functions as Agent
under the Finance Documents.

 
(e)  
The Agent’s resignation notice shall only take effect upon the appointment of a
successor.

 
(f)  
Upon the appointment of a successor, the retiring Agent shall be discharged from
any further obligation in respect of the Finance Documents but shall remain
entitled to the benefit of this Clause 26.  Any successor and each of the other
Parties shall have the same rights and obligations amongst themselves as they
would have had if such successor had been an original Party.

 
(g)  
After consultation with the Borrower, the Majority Lenders may, by notice to the
Agent, require it to resign in accordance with paragraph (b) above.  In this
event, the Agent shall resign in accordance with paragraph (b) above.

 
26.12  
Resignation of the Technical Bank

 
(a)  
The Technical Bank may resign and appoint one of its Affiliates acting through
an office in the United Kingdom as successor by giving notice to the Agent and
the Borrower.

 
(b)  
Alternatively the Technical Bank may resign by giving 30 days’ notice to the
Agent and the Borrower, in which case the Majority Lenders (after consultation
with the Borrower) may appoint a successor Technical Bank.

 
(c)  
If the Majority Lenders have not appointed a successor Technical Bank in
accordance with paragraph (b) above within 20 days after notice of resignation
was given, the retiring Technical Bank (after consultation with the Borrower)
may appoint a successor Technical Bank.

 

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(d)  
The retiring Technical Bank shall, at its own cost, make available to the
successor Technical Bank such documents and records and provide such assistance
as the successor Agent may reasonably request for the purposes of performing its
functions as Agent under the Finance Documents.

 
(e)  
The Technical Bank’s resignation notice shall only take effect upon the
appointment of a successor.

 
(f)  
Upon the appointment of a successor, the retiring Technical Bank shall be
discharged from any further obligation in respect of the Finance Documents but
shall remain entitled to the benefit of this Clause 26.  Any successor and each
of the other Parties shall have the same rights and obligations amongst
themselves as they would have had if such successor had been an original Party.

 
(g)  
After consultation with the Borrower, the Majority Lenders may, by notice to the
Technical Bank, require it to resign in accordance with paragraph (b) above.  In
this event, the Technical Bank shall resign in accordance with paragraph (b)
above.

 
26.13  
Confidentiality

 
(a)  
In acting as agent for the Finance Parties, the Agent shall be regarded as
acting through its agency division which shall be treated as a separate entity
from any other of its divisions or departments.

 
(b)  
If information is received by another division or department of the Agent, it
may be treated as confidential to that division or department and the Agent
shall not be deemed to have notice of it.

 
26.14  
Relationship with the Lenders

 
(a)  
The Agent may treat the person shown in its records as Lender at the opening of
business (in the place of the Agent’s principal office as notified to the
Finance Parties from time to time) as the Lender acting through its Facility
Office:

 
(i)  
entitled to or liable for any payment due under any Finance Document on that
day; and

 
(ii)  
entitled to receive and act upon any notice, request, document or communication
or make any decision or determination under any Finance Document made or
delivered on that day,

 
unless it has received not less than five (5) Business Days’ prior notice from
that Lender to the contrary in accordance with the terms of this Agreement.
 
(b)  
Each Lender shall supply the Agent with any information required by the Agent in
order to calculate the Mandatory Cost in accordance with Schedule 6 (Mandatory
Cost formulae).

 

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(c)  
Any Lender may by notice to the Agent appoint a person to receive on its behalf
all notices, communications, information and documents to be made or despatched
to that Lender under the Finance Documents.  Such notice shall contain the
address, fax number and (where communication by electronic mail or other
electronic means is permitted under Clause 31.5 (Electronic communication))
electronic mail address and/or any other information required to enable the
sending and receipt of information by that means (and, in each case, the
department or officer, if any, for whose attention communication is to be made)
and be treated as a notification of a substitute address, fax number, electronic
mail address, department and officer by that Lender for the purposes of Clause
31.2 (Addresses) and paragraph (a)(iii) of Clause 31.5 (Electronic
communication) and the Agent shall be entitled to treat such person as the
person entitled to receive all such notices, communications, information and
documents as though that person were that Lender.

 
(d)  
Each Secured Party shall supply the Agent with any information that the Security
Trustee may reasonably specify (through the Agent) as being necessary or
desirable to enable the Security Trustee to perform its functions as security
trustee.  Each Lender shall deal with the Security Trustee exclusively through
the Agent and shall not deal directly with the Security Trustee.

 
26.15  
Credit appraisal by the Lenders

 
Without affecting the responsibility of any Obligor for information supplied by
it or on its behalf in connection with any Finance Document, each Lender
confirms to the Agent and the Mandated Lead Arrangers that it has been, and will
continue to be, solely responsible for making its own independent appraisal and
investigation of all risks arising under or in connection with any Finance
Document including but not limited to:
 
(a)  
the financial condition, creditworthiness, condition, affairs, status and nature
of each member of the Group;

 
(b)  
the legality, validity, effectiveness, adequacy or enforceability of any Finance
Document and the Transaction Security and any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in
connection with any Finance Document or the Transaction Security;

 
(c)  
whether that Lender has recourse, and the nature and extent of that recourse,
against any Party or any of its respective assets under or in connection with
any Finance Document, the Transaction Security, the transactions contemplated by
the Finance Documents or any other agreement, arrangement or document entered
into, made or executed in anticipation of, under or in connection with any
Finance Document;

 

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(d)  
the adequacy, accuracy and/or completeness of the Information Memorandum and any
other information provided by the Agent, the Security Trustee, any Party or by
any other person under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other agreement,
arrangement or document entered into, made or executed in anticipation of, under
or in connection with any Finance Document; and

 
(e)  
the right or title of any person in or to, or the value or sufficiency of any
part of the Charged Property, the priority of any of the Transaction Security or
the existence of any Security affecting the Charged Property,

 
and each Lender warrants to the Agent and the Mandated Lead Arrangers that it
has not relied on and will not at any time rely on the Agent or the Mandated
Lead Arrangers in respect of any of these matters.
 
26.16  
Reference Banks

 
If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of
which it is an Affiliate) ceases to be a Lender, the Agent shall (in
consultation with the Borrower) appoint another Lender or an Affiliate of a
Lender to replace that Reference Bank.
 
26.17  
Agent’s Management Time

 
Any amount payable to the Agent under Clause 16.3 (Indemnity to the Agent),
Clause 18 (Costs and expenses) and Clause 26.10 (Lenders’ indemnity to the
Agent) shall include the cost of utilising the Agent’s management time or other
resources and will be calculated on the basis of such reasonable daily or hourly
rates as the Agent may notify to the Borrower and the Lenders, and is in
addition to any fee paid or payable to the Agent under Clause 13 (Fees).
 
26.18  
Deduction from amounts payable by the Agent

 
If any Party owes an amount to the Agent under the Finance Documents the Agent
may, after giving notice to that Party, deduct an amount not exceeding that
amount from any payment to that Party which the Agent would otherwise be obliged
to make under the Finance Documents and apply the amount deducted in or towards
satisfaction of the amount owed.  For the purposes of the Finance Documents that
Party shall be regarded as having received any amount so deducted.
 
27.  
CONDUCT OF BUSINESS BY THE FINANCE PARTIES

 
No provision of this Agreement will:
 
(a)  
interfere with the right of any Finance Party to arrange its affairs (tax or
otherwise) in whatever manner it thinks fit;

 
(b)  
oblige any Finance Party to investigate or claim any credit, relief, remission
or repayment available to it or the extent, order and manner of any claim; or

 

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(c)  
oblige any Finance Party to disclose any information relating to its affairs
(tax or otherwise) or any computations in respect of Tax.

 
28.  
SHARING AMONG THE FINANCE PARTIES

 
28.1  
Payments to Finance Parties

 
If a Finance Party (a “Recovering Finance Party”) receives or recovers any
amount from an Obligor other than in accordance with Clause 29 (Payment
mechanics) (a “Recovered Amount”) and applies that amount to a payment due under
the Finance Documents then:
 
(a)  
the Recovering Finance Party shall, within three Business Days, notify details
of the receipt or recovery, to the Agent;

 
(b)  
the Agent shall determine whether the receipt or recovery is in excess of the
amount the Recovering Finance Party would have been paid had the receipt or
recovery been received or made by the Agent and distributed in accordance with
Clause 29 (Payment mechanics), without taking account of any Tax which would be
imposed on the Agent in relation to the receipt, recovery or distribution; and

 
(c)  
the Recovering Finance Party shall, within three Business Days of demand by the
Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt
or recovery less any amount which the Agent determines may be retained by the
Recovering Finance Party as its share of any payment to be made, in accordance
with Clause 29.5 (Partial payments).

 
28.2  
Redistribution of payments

 
The Agent shall treat the Sharing Payment as if it had been paid by the relevant
Obligor and distribute it between the Finance Parties (other than the Recovering
Finance Party) (the “Sharing Finance Parties”) in accordance with Clause 29.5
(Partial payments) towards the obligations of that Obligor to the Sharing
Finance Parties.
 
28.3  
Recovering Finance Party’s rights

 
On a distribution by the Agent under Clause 28.2 (Redistribution of payments) of
a payment received by a Recovering Finance Party from an Obligor as between the
relevant Obligor and the Recovering Finance Party, an amount of the Recovered
Amount equal to the Sharing Payment will be treated as not having been paid by
that Obligor.
 
28.4  
Reversal of redistribution

 
If any part of the Sharing Payment received or recovered by a Recovering Finance
Party becomes repayable and is repaid by that Recovering Finance Party, then:
 

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(a)  
each Sharing Finance Party shall, upon request of the Agent, pay to the Agent
for the account of that Recovering Finance Party an amount equal to the
appropriate part of its share of the Sharing Payment (together with an amount as
is necessary to reimburse that Recovering Finance Party for its proportion of
any interest on the Sharing Payment which that Recovering Finance Party is
required to pay) (the “Redistributed Amount”); and

 
(b)  
as between the relevant Obligor and each relevant Sharing Finance Party, an
amount equal to the relevant Redistributed Amount will be treated as not having
been paid by that Obligor.

 
28.5  
Exceptions

 
(a)  
This Clause 28 shall not apply to the extent that the Recovering Finance Party
would not, after making any payment pursuant to this Clause, have a valid and
enforceable claim against the relevant Obligor.

 
(b)  
A Recovering Finance Party is not obliged to share with any other Finance Party
any amount which the Recovering Finance Party has received or recovered as a
result of taking legal or arbitration proceedings, if:

 
(i)  
it notified that other Finance Party of the legal or arbitration proceedings;
and

 
(ii)  
that other Finance Party had an opportunity to participate in those legal or
arbitration proceedings but did not do so as soon as reasonably practicable
having received notice and did not take separate legal or arbitration
proceedings.

 

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SECTION 13
 
ADMINISTRATION
 
29.  
PAYMENT MECHANICS

 
29.1  
Payments to the Agent

 
(a)  
On each date on which an Obligor or a Lender is required to make a payment under
a Finance Document, that Obligor or Lender shall make the same available to the
Agent (unless a contrary indication appears in a Finance Document) for value on
the due date at the time and in such funds specified by the Agent as being
customary at the time for settlement of transactions in the relevant currency in
the place of payment.

 
(b)  
Payment shall be made to such account in the principal financial centre of the
country of that currency with such bank as the Agent specifies.

 
29.2  
Distributions by the Agent

 
Each payment received by the Agent under the Finance Documents for another Party
shall, subject to Clause 29.3 (Distributions to an Obligor), Clause 29.4
(Clawback) and Clause 26.18 (Deduction from amounts payable by the Agent) be
made available by the Agent as soon as practicable after receipt to the Party
entitled to receive payment in accordance with this Agreement (in the case of a
Lender, for the account of its Facility Office), to such account as that Party
may notify to the Agent by not less than five (5) Business Days’ notice with a
bank in the principal financial centre of the country of that currency.
 
29.3  
Distributions to an Obligor

 
The Agent may (with the consent of the Obligor or in accordance with Clause 30
(Set-off)) apply any amount received by it for that Obligor in or towards
payment (on the date and in the currency and funds of receipt) of any amount due
from that Obligor under the Finance Documents or in or towards purchase of any
amount of any currency to be so applied.
 
29.4  
Clawback

 
(a)  
Where a sum is to be paid to the Agent under the Finance Documents for another
Party, the Agent is not obliged to pay that sum to that other Party (or to enter
into or perform any related exchange contract) until it has been able to
establish to its satisfaction that it has actually received that sum.

 
(b)  
If the Agent pays an amount to another Party and it proves to be the case that
the Agent had not actually received that amount, then the Party to whom that
amount (or the proceeds of any related exchange contract) was paid by the Agent
shall on demand refund the same to the Agent together with interest on that
amount from the date of payment to the date of receipt by the Agent, calculated
by the Agent to reflect its cost of funds.

 

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29.5  
Partial payments

 
(a)  
If the Agent receives a payment that is insufficient to discharge all the
amounts then due and payable by an Obligor under the Finance Documents, the
Agent shall apply that payment towards the obligations of that Obligor under the
Finance Documents in the following order:

 
(i)  
first, in or towards payment pro rata of any unpaid fees, costs and expenses of
the Agent, the Security Trustee (including of any Receiver or Delegate) and the
Mandated Lead Arrangers under the Finance Documents;

 
(ii)  
secondly, in or towards payment pro rata of any accrued interest, fee or
commission due but unpaid under this Agreement;

 
(iii)  
thirdly, in or towards payment pro rata of any principal due but unpaid under
this Agreement; and

 
(iv)  
fourthly, in or towards payment pro rata of any other sum due but unpaid under
the Finance Documents.

 
(b)  
The Agent shall, if so directed by the Majority Lenders, vary the order set out
in paragraphs (a)(ii) to (iv) above.

 
(c)  
Paragraphs (a) and (b) above will override any appropriation made by an Obligor.

 
29.6  
No set-off by Obligors

 
All payments to be made by an Obligor under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for) set-off
or counterclaim.
 
29.7  
Business Days

 
(a)  
Any payment which is due to be made on a day that is not a Business Day shall be
made on the next Business Day in the same calendar month (if there is one) or
the preceding Business Day (if there is not).

 
(b)  
During any extension of the due date for payment of any principal or Unpaid Sum
under this Agreement interest is payable on the principal or Unpaid Sum at the
rate payable on the original due date.

 
29.8  
Currency of account

 
(a)  
Subject to paragraphs (b) and (c) below, dollars is the currency of account and
payment for any sum from an Obligor under any Finance Document.

 
(b)  
Each payment in respect of costs, expenses or Taxes shall be made in the
currency in which the costs, expenses or Taxes are incurred.

 

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(c)  
Any amount expressed to be payable in a currency other than dollars shall be
paid in that other currency.

 
29.9  
Change of currency

 
(a)  
Unless otherwise prohibited by law, if more than one currency or currency unit
are at the same time recognised by the central bank of any country as the lawful
currency of that country, then:

 
(i)  
any reference in the Finance Documents to, and any obligations arising under the
Finance Documents in, the currency of that country shall be translated into, or
paid in, the currency or currency unit of that country designated by the Agent
(after consultation with the Borrower); and

 
(ii)  
any translation from one currency or currency unit to another shall be at the
official rate of exchange recognised by the central bank for the conversion of
that currency or currency unit into the other, rounded up or down by the Agent
(acting reasonably).

 
(b)  
If a change in any currency of a country occurs, this Agreement will, to the
extent the Agent (acting reasonably and after consultation with the Borrower)
specifies to be necessary, be amended to comply with any generally accepted
conventions and market practice in the Relevant Interbank Market and otherwise
to reflect the change in currency.

 
29.10  
Disruption to Payment Systems etc.

 
If either the Agent determines (in its discretion) that a Disruption Event has
occurred or the Agent is notified by the Borrower that a Disruption Event has
occurred:
 
(a)  
the Agent may, and shall if requested to do so by the Borrower, consult with the
Borrower with a view to agreeing with the Borrower such changes to the operation
or administration of the Facility as the Agent may deem necessary in the
circumstances;

 
(b)  
the Agent shall not be obliged to consult with the Borrower in relation to any
changes mentioned in paragraph (a) if, in its opinion, it is not practicable to
do so in the circumstances and, in any event, shall have no obligation to agree
to such changes;

 
(c)  
the Agent may consult with the Finance Parties in relation to any changes
mentioned in paragraph (a) but shall not be obliged to do so if, in its opinion,
it is not practicable to do so in the circumstances;

 
(d)  
any such changes agreed upon by the Agent and the Borrower shall (whether or not
it is finally determined that a Disruption Event has occurred) be binding upon
the Parties as an amendment to (or, as the case may be, waiver of) the terms of
the Finance Documents notwithstanding the provisions of Clause 35 (Amendments
and Waivers);

 

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(e)  
the Agent shall not be liable for any damages, costs or losses
whatsoever  (including, without limitation for negligence, gross negligence or
any other category of liability whatsoever but not including any claim based on
the fraud of the Agent) arising as a result of its taking, or failing to take,
any actions pursuant to or in connection with this Clause 29.10; and

 
(f)  
the Agent shall notify the Finance Parties of all changes agreed pursuant to
paragraph (d) above.

 
30.  
SET-OFF

 
A Finance Party may set off any matured obligation due from an Obligor under the
Finance Documents (to the extent beneficially owned by that Finance Party)
against any matured obligation owed by that Finance Party to that Obligor,
regardless of the place of payment, booking branch or currency of either
obligation.  If the obligations are in different currencies, the Finance Party
may convert either obligation at a market rate of exchange in its usual course
of business for the purpose of the set-off.
 
31.  
NOTICES

 
31.1  
Communications in writing

 
Any communication to be made under or in connection with the Finance Documents
shall be made in writing and, unless otherwise stated, may be made by fax or
letter.
 
31.2  
Addresses

 
The address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with the Finance
Documents is:
 
(a)  
in the case of the Borrower, that identified with its name below;

 
(b)  
in the case of each Lender or any other Obligor, that notified in writing to the
Agent on or prior to the date on which it becomes a Party; and

 
(c)  
in the case of the Agent and Security Trustee, that identified with its name
below,

 
or any substitute address or fax number or department or officer as the Party
may notify to the Agent (or the Agent may notify to the other Parties, if a
change is made by the Agent) by not less than five (5) Business Days’ notice.
 
31.3  
Delivery

 
(a)  
Any communication or document made or delivered by one person to another under
or in connection with the Finance Documents will only be effective:

 
(i)  
if by way of fax, when received in legible form; or

 

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(ii)  
if by way of letter, when it has been left at the relevant address or five (5)
Business Days after being deposited in the post postage prepaid in an envelope
addressed to it at that address,

 
and, if a particular department or officer is specified as part of its address
details provided under Clause 31.2 (Addresses), if addressed to that department
or officer.
 
(b)  
Any communication or document to be made or delivered to the Agent or to the
Security Trustee will be effective only when actually received by the Agent or
the Security Trustee and then only if it is expressly marked for the attention
of the department or officer identified with the Agent’s or the Security
Trustee’s signature below (or any substitute department or officer as the Agent
shall specify for this purpose).

 
(c)  
All notices from or to an Obligor shall be sent through the Agent.

 
(d)  
Any communication or document made or delivered to the Borrower in accordance
with this Clause will be deemed to have been made or delivered to the each of
the Guarantors.

 
(e)  
All notices to a Lender from the Security Trustee shall be sent through the
Agent.

 
31.4  
Notification of address and fax number

 
Promptly upon receipt of notification of an address and fax number or change of
address or fax number pursuant to Clause 31.2 (Addresses) or changing its own
address or fax number, the Agent shall notify the other Parties.
 
31.5  
Electronic communication

 
(a)  
Any communication to be made between the Agent or the Security Trustee and a
Lender or the Obligors under or in connection with the Finance Documents may be
made by electronic mail or other electronic means, if the Agent, the Security
Trustee and the relevant Lender or Obligor:

 
(i)  
agree that, unless and until notified to the contrary, this is to be an accepted
form of communication;

 
(ii)  
notify each other in writing of their electronic mail address and/or any other
information required to enable the sending and receipt of information by that
means; and

 
(iii)  
notify each other of any change to their address or any other such information
supplied by them.

 

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(b)  
Any electronic communication made between the Agent and a Lender, Obligor or the
Security Trustee will be effective only when actually received in readable form
and in the case of any electronic communication made by a Lender or Obligor to
the Agent or the Security Trustee only if it is addressed in such a manner as
the Agent or Security Trustee shall specify for this purpose.

 
31.6  
English language

 
(a)  
Any notice given under or in connection with any Finance Document must be in
English.

 
(b)  
All other documents provided under or in connection with any Finance Document
must be:

 
(i)  
in English; or

 
(ii)  
if not in English, and if so required by the Agent, accompanied by a certified
English translation and, in this case, the English translation will prevail
unless the document is a constitutional, statutory or other official document.

 
32.  
CALCULATIONS AND CERTIFICATES

 
32.1  
Accounts

 
In any litigation or arbitration proceedings arising out of or in connection
with a Finance Document, the entries made in the accounts maintained by a
Finance Party are prima facie evidence of the matters to which they relate.
 
32.2  
Certificates and determinations

 
Any certification or determination by a Finance Party of a rate or amount under
any Finance Document is, in the absence of manifest error, conclusive evidence
of the matters to which it relates.
 
32.3  
Day count convention

 
Any interest, commission or fee accruing under a Finance Document will accrue
from day to day and is calculated on the basis of the actual number of days
elapsed and a year of 360 days or, in any case where the practice in the
Relevant Interbank Market differs, in accordance with that market practice.
 
33.  
PARTIAL INVALIDITY

 
If, at any time, any provision of the Finance Documents is or becomes illegal,
invalid or unenforceable in any respect under any law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions nor
the legality, validity or enforceability of such provision under the law of any
other jurisdiction will in any way be affected or impaired.
 

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34.  
REMEDIES AND WAIVERS

 
No failure to exercise, nor any delay in exercising, on the part of any Secured
Party or the Mandated Lead Arrangers, any right or remedy under the Finance
Documents shall operate as a waiver of any such right or remedy or constitute an
election to affirm any of the Finance Documents.  No election to affirm any of
the Finance Documents on the part of any Secured Party or the Mandated Lead
Arrangers shall be effective unless it is in writing.  No single or partial
exercise of any right or remedy shall prevent any further or other exercise or
the exercise of any other right or remedy.  The rights and remedies provided in
this Agreement are cumulative and not exclusive of any rights or remedies
provided by law.
 
35.  
AMENDMENTS AND WAIVERS

 
35.1  
Required consents

 
(a)  
Subject to Clause 35.2 (Exceptions) any term of the Finance Documents may be
amended or waived only with the consent of the Majority Lenders and the Obligors
and any such amendment or waiver will be binding on all Parties.

 
(b)  
The Agent, or in respect of the Security Documents the Security Trustee, may
effect, on behalf of any Finance Party, any amendment or waiver permitted by
this Clause.

 
35.2  
Exceptions

 
(a)  
An amendment or waiver that has the effect of changing or which relates to:

 
(i)  
the definition of “Majority Lenders” in Clause 1.1 (Definitions);

 
(ii)  
an extension to the date of payment of any amount under the Finance Documents;

 
(iii)  
a reduction in the Margin or a reduction in the amount of any payment of
principal, interest, fees or commission payable;

 
(iv)  
an increase in or an extension of any Commitment;

 
(v)  
a change to the Borrower or Guarantors;

 
(vi)  
any provision which expressly requires the consent of all the Lenders;;

 
(vii)  
Clause 2.2 (Finance Parties’ rights and obligations), Clause 24 (Changes to the
Lenders) or this Clause 35;

 
(viii)  
the nature or scope of the guarantee and indemnity granted under Clause 19
(Guarantee and indemnity); or

 

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(ix)  
the nature or scope of the Charged Property, the Transaction Security or the
manner in which the proceeds of enforcement of the Transaction Security are
distributed,

 
shall not be made without the prior consent of all the Lenders.
 
(b)  
An amendment or waiver which relates to the rights or obligations of the Agent,
the Security Trustee or the Mandated Lead Arrangers (each in their capacity as
such) may not be effected without the consent of the Agent, the Security Trustee
or the Mandated Lead Arrangers as the case may be.

 
36.  
CONFIDENTIALITY

 
36.1  
Confidential Information

 
Each Finance Party agrees to keep all Confidential Information confidential and
not to disclose it to anyone, save to the extent permitted by Clause 36.2
(Disclosure of Confidential Information), and to ensure that all Confidential
Information is protected with security measures and a degree of care that would
apply to its own confidential information.
 
36.2  
Disclosure of Confidential Information

 
Any Finance Party may disclose:
 
(a)  
to any of its Affiliates and Related Funds and any of its or their officers,
directors, employees, professional advisers, auditors, partners and
Representatives such Confidential Information as that Finance Party shall
consider appropriate if any person to whom the Confidential Information is to be
given pursuant to this paragraph (a) is informed in writing of its confidential
nature and that some or all of such Confidential Information may be
price-sensitive information except that there shall be no such requirement to so
inform if the recipient is subject to professional obligations to maintain the
confidentiality of the information or is otherwise bound by requirements of
confidentiality in relation to the Confidential Information;

 
(b)  
to any person:

 
(i)  
to (or through) whom it assigns or transfers (or may potentially assign or
transfer) all or any of its rights and/or obligations under one or more Finance
Documents and to any of that person’s Affiliates, Related Funds, Representatives
and professional advisers;

 
(ii)  
with (or through) whom it enters into (or may potentially enter into), whether
directly or indirectly, any sub-participation in relation to, or any other
transaction under which payments are to be made or may be made by reference to,
one or more Finance Documents and/or one or more Obligors and to any of that
person’s Affiliates, Related Funds, Representatives and professional advisers;

 

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(iii)  
appointed by any Finance Party or by a person to whom sub paragraph (b)(i) or
(ii) above applies to receive communications, notices, information or documents
delivered pursuant to the Finance Documents on its behalf (including, without
limitation, any person appointed under paragraph (c) of Clause 26.14
(Relationship with the Lenders));

 
(iv)  
who invests in or otherwise finances (or may potentially invest in or otherwise
finance), directly or indirectly, any transaction referred to in paragraph b(i)
or (b)(ii) above;

 
(v)  
to whom information is required or requested to be disclosed by any court of
competent jurisdiction or any governmental, banking, taxation or other
regulatory authority or similar body, the rules of any relevant stock exchange
or pursuant to any applicable law or regulation;

 
(vi)  
to whom or for whose benefit that Finance Party charges, assigns or otherwise
creates Security (or may do so) pursuant to Clause 24.8 (Security over Lenders’
rights);

 
(vii)  
to whom information is required to be disclosed in connection with, and for the
purposes of, any litigation, arbitration, administrative or other
investigations, proceedings or disputes;

 
(viii)  
who is a Party; or

 
(ix)  
with the consent of the Borrower;

 
in each case, such Confidential Information as that Finance Party shall consider
appropriate if:
 
(A)  
in relation to paragraphs (b)(i), (b)(ii) and b(iii) above, the person to whom
the Confidential Information is to be given has entered into a Confidentiality
Undertaking except that there shall be no requirement for a Confidentiality
Undertaking if the recipient is a professional adviser and is subject to
professional obligations to maintain the confidentiality of the Confidential
Information;

 
(B)  
in relation to paragraph (b)(iv) above, the person to whom the Confidential
Information is to be given has entered into a Confidentiality Undertaking or is
otherwise bound by requirements of confidentiality in relation to the
Confidential Information they receive and is informed that some or all of such
Confidential Information may be price-sensitive information;

 

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(C)  
in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom
the Confidential Information is to be given is informed of its confidential
nature and that some or all of such Confidential Information may be
price-sensitive information except that there shall be no requirement to so
inform if, in the opinion of that Finance Party, it is not practicable so to do
in the circumstances;

 
(c)  
to any person appointed by that Finance Party or by a person to whom paragraph
(b)(i) or (b)(ii) above applies to provide administration or settlement services
in respect of one or more of the Finance Documents including without limitation,
in relation to the trading of participations in respect of the Finance
Documents, such Confidential Information as may be required to be disclosed to
enable such service provider to provide any of the services referred to in this
paragraph (c) if the service provider to whom the Confidential Information is to
be given has entered into a confidentiality agreement substantially in the form
of the LMA Master Confidentiality Undertaking for Use With
Administration/Settlement Service Providers or such other form of
confidentiality undertaking agreed between the Borrower and the relevant Finance
Party;

 
(d)  
to any rating agency (including its professional advisers) such Confidential
Information as may be required to be disclosed to enable such rating agency to
carry out its normal rating activities in relation to the Finance Documents
and/or the Obligors.

 
36.3  
Entire agreement

 
This Clause 36 (Confidentiality) constitutes the entire agreement between the
Parties in relation to the obligations of the Finance Parties under the Finance
Documents regarding Confidential Information and supersedes any previous
agreement, whether express or implied, regarding Confidential Information.
 
36.4  
Inside information

 
Each of the Finance Parties acknowledges that some or all of the Confidential
Information is or may be price-sensitive information and that the use of such
information may be regulated or prohibited by applicable legislation including
securities law relating to insider dealing and market abuse and each of the
Finance Parties undertakes not to use any Confidential Information for any
unlawful purpose.
 
36.5  
Notification of disclosure

 
Each of the Finance Parties agrees (to the extent permitted by law and
regulation) to inform the Borrower:
 

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(a)  
of the circumstances of any disclosure of Confidential Information made pursuant
to paragraph (b)(v) of Clause 36.2 (Disclosure of Confidential Information)
except where such disclosure is made to any of the persons referred to in that
paragraph during the ordinary course of its supervisory or regulatory function;
and

 
(b)  
upon becoming aware that Confidential Information has been disclosed in breach
of this Clause 36 (Confidentiality).

 
36.6  
Continuing obligations

 
The obligations in this Clause 36 (Confidentiality) are continuing and, in
particular, shall survive and remain binding on each Finance Party for a period
of twelve months from the earlier of:
 
(a)  
the date on which all amounts payable by the Obligors under or in connection
with this Agreement have been paid in full and all Commitments have been
cancelled or otherwise cease to be available; and

 
(b)  
the date on which such Finance Party otherwise ceases to be a Finance Party.

 
37.  
COUNTERPARTS

 
Each Finance Document may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a single
copy of the Finance Document.
 

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SECTION 14
 
GOVERNING LAW AND ENFORCEMENT
 
38.  
GOVERNING LAW

 
This Agreement and any non-contractual obligations arising out of or in
connection with it is governed by English law.
 
39.  
ENFORCEMENT

 
39.1  
Jurisdiction

 
(a)  
The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this Agreement (including a dispute relating to the
existence, validity or termination of this Agreement or the consequences of its
nullity or any non-contractual obligations arising out of or in connection with
this Agreement) (a “Dispute”).

 
(b)  
The Parties agree that the courts of England are the most appropriate and
convenient courts to settle Disputes and accordingly no Party will argue to the
contrary.

 
(c)  
This Clause 39.1 (Jurisdiction) is for the benefit of the Finance Parties
only.  As a result, and notwithstanding paragraph (a) of Clause 39.1, any
Finance Party may take proceedings relating to a Dispute in any other courts
with jurisdiction.  To the extent allowed by law, the Finance Parties may take
concurrent proceedings in any number of jurisdictions.

 
39.2  
Service of process

 
Without prejudice to any other mode of service allowed under any relevant law,
each Obligor (other than an Obligor incorporated in England and Wales):
 
(a)  
irrevocably appoints Law Debenture Corporate Services Limited as its agent for
service of process in relation to any proceedings before the English courts in
connection with any Finance Document; and

 
(b)  
agrees that failure by an agent for service of process to notify the relevant
Obligor of the process will not invalidate the proceedings concerned.

 
39.3  
Waiver of Immunity

 
The Borrower waives generally all immunity it or its assets or revenues may
otherwise have in any jurisdiction, including immunity in respect of:
 
(a)  
the giving of any relief by way of injunction or order for specific performance
or for the recovery of assets or revenues; and

 

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(b)  
the issue of any process against its assets or revenues for the enforcement of a
judgment or, in an action in rem, for the arrest, detention or sale of any of
its assets and revenues.

 
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
 

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SCHEDULE 1
THE ORIGINAL PARTIES
 
PART I
The Original Borrower
 
Name of Borrower
 
FX Energy Poland sp. z o.o.
     

 

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PART II
The Original Guarantors
 

 
Name of Guarantor
FX Energy, Inc.
Frontier Exploration Company and FX Drilling Company, Inc. in their capacity of
general partners of FX Energy Netherlands Partnership C.V.
FX Energy Netherlands B.V.

 

 

 

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PART III
The Original Lenders
 
Name of Original Lender
 
Commitment
 
The Royal Bank of Scotland plc
US$ 20,000,000
ING Bank N.V.
US$ 20,000,000
KBC Bank NV
US$ 15,000,000
           

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SCHEDULE 2
CONDITIONS PRECEDENT
 
PART I
Conditions Precedent to Initial Utilisation
 
1.  
Corporate Documents

 
(a)  
A copy of the constitutional documents of each Non-Dutch Obligor.

 
(b)  
A copy of a resolution of the board of directors of each Non-Dutch Obligor:

 
(i)  
approving the terms of, and the transactions contemplated by, the Finance
Documents to which it is a party and resolving that it execute the Finance
Documents to which it is a party;

 
(ii)  
authorising a specified person or persons to execute the Finance Documents to
which it is a party on its behalf; and

 
(iii)  
authorising a specified person or persons, on its behalf, to sign and/or
despatch all documents, powers of attorney, deeds and notices (including, if
relevant, any Utilisation Request) to be signed and/or despatched by it under or
in connection with the Finance Documents to which it is a party.

 
(c)  
A specimen of the signature of each person authorised by the resolution referred
to in paragraph (b) above.

 
(d)  
A certificate of each Original Obligor (signed by a director or partner (as
applicable) of each Original Obligor) confirming that borrowing or guaranteeing,
as appropriate, the Total Commitments would not cause any borrowing,
guaranteeing or similar limit binding on any Original Obligor to be exceeded.

 
(e)  
A certificate of each Original Obligor (signed by a director) confirming its
solvency and confirming that it has not registered any establishment with the
Registrar of Companies in England and Wales.

 
(f)  
A certificate of an authorised signatory of the relevant Original Obligor
certifying that each copy document relating to it specified in this Part I is
correct, complete and in full force and effect as at a date no earlier than the
date of this Agreement.

 
(g)  
The Group Structure Chart certified by the Parent as being true at the date of
this Agreement.

 
(h)  
A copy of the articles of association (statuten) as well as an extract
(uittreksel) from the Dutch Commercial Register (Handelsregister) of FX Energy
Netherlands B.V. and a copy of the limited partnership agreement (c.v.
overeenkomst) dated 23 December 1997  as supplemented by the Addendum (as
defined below) (the “Association Agreement”) as well as an extract (uittreksel)
from the Dutch Commercial Register (Handelsregister) of FX Energy Netherlands
Partnership C.V.

 

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(i)  
A copy of a resolution of the board of managing directors or general partners of
the Dutch Obligors:

 
(i)  
approving the terms of, and the transactions contemplated by, the Finance
Documents to which it is a party and resolving that it execute the Finance
Documents to which it is a party;

 
(ii)  
if applicable, authorising a specified person or persons to execute the Finance
Documents to which it is a party on its behalf; and

 
(iii)  
if applicable, authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents and notices (including, if relevant, any
Utilisation Request) to be signed and/or despatched by it under or in connection
with the Finance Documents to which it is a party.

 
(j) 
A copy of the resolution of the shareholder of FX Energy Netherlands B.V. and of
the resolution of the limited member of FX Energy Netherlands Partnership C.V.
approving the resolutions of the board of managing directors or general partners
referred to under paragraph (i) above and in the case of FX Energy Netherlands
B.V. only, appointing an authorised person to represent the relevant Dutch
Obligor in case of a conflict of interest.

 
(k)  
A specimen of the signature of each member of the board of managing directors of
each Dutch Obligor and, if applicable, each person authorised by the resolutions
referred to in paragraph (i) sub-paragraph (ii) and/or (iii) above in relation
to the Finance Documents.

 
(l)  
A copy of the executed Addendum to the Association Agreement in form and
substance satisfactory to the Lenders (the “Addendum”).

 
2.  
Transaction Documents

 
(a)  
The following Security Documents duly executed by the relevant Original Obligors
and the Security Trustee:

 
(i)  
Polish Financial Pledge over Shares;

 
(ii)  
Polish Registered Pledge over Shares;

 
(iii)  
Polish Financial Pledge over Bank Accounts;

 
(iv)  
Polish Registered Pledge over Bank Accounts;

 
(v)  
Polish Registered Pledge over Moveable Assets;

 
(vi)  
Dutch Share Pledge;

 
(vii)  
Assignment of Insurances;

 

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(viii)  
Assignment of Hedging Agreements;

 
(ix)  
Assignment of Intercompany Loans;

 
(x)  
Assignment of Gas Sale Agreements; and

 
(xi)  
Intercreditor Deed.

 
(b)  
An executed copy of this Agreement.

 
(c)  
A copy of all Field Documents listed in Schedule 12 (Schedule of Field
Documents).

 
(d)  
A copy of any notices of assignment and/or a motion to be filed for registration
at the relevant register required pursuant to any Security Document.

 
(e)  
Executed copies of the Letters of Release.

 
(f)  
An executed copy of the Account Bank Agreement.

 
3.  
Bank Accounts

 
(a)  
A letter from the Borrower to the Agent specifying each of the accounts subject
to or intended to be subject to the Transaction Security including details of
the account name, account number and the name and address of the bank or
financial institution where the account is held.

 
(b)  
A copy of notice(s) executed by the Borrower addressed to and acknowledged by
the banks or financial institutions holding the secured Project Accounts.

 
4.  
Shares

 
(a)  
All share certificates and stock transfer forms duly executed by FX Energy
Poland sp z o.o and FX Energy Netherlands B.V. in blank in relation to the
certificated shares subject to or expressed to be subject to the Transaction
Security.

 
(b)  
A copy of the register of members or shareholders register of FX Energy Poland
sp z o.o and FX Energy Netherlands B.V.

 
(c)  
A copy of any shareholders’ agreement or resolution amending or varying the
rights attaching to the shares of FX Energy Poland sp z o.o and FX Energy
Netherlands B.V.

 
 
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5.  
Insurance

 
(a)  
A letter, in form and substance satisfactory to the Agent, from Newman Martin &
Buchan LLP insurance broker dated the date of this Agreement addressed to the
Agent, the Mandated Lead Arrangers, the Security Trustee and the Lenders
confirming (i) the insurance policies of the Group at the date of this Agreement
and that such policies are in full force and effect and (ii) the Insurance
Policies relating to the Borrower name the Security Trustee as loss payee and
co-insured and/or additional insured, the Borrower as principal insured.

 
(b)  
A copy of all insurance policies required pursuant to Clause 22.12 (Insurance).

 
6.  
Legal opinions

 
(a)  
A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead
Arrangers and the Agent in England, substantially in the form distributed to the
Original Lenders prior to signing this Agreement.

 
(b)  
A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead
Arrangers and the Agent in Poland, substantially in the form distributed to the
Original Lenders prior to signing this Agreement.

 
(c)  
A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead
Arrangers and the Agent in Amsterdam, substantially in the form distributed to
the Original Lenders prior to signing this Agreement.

 
(d)  
A legal opinion of Kruse Landa Maycock & Ricks, LLC, legal advisers to the
Parent in Utah, substantially in the form distributed to the Original Lenders
prior to signing this Agreement.

 
(e)  
A legal opinion of Woodburn and Wedge legal advisers to the Parent in Nevada,
substantially in the form distributed to the Original Lenders prior to signing
this Agreement.

 
7.  
Other documents and evidence

 
(a)  
Evidence that any agent for service of process referred to in Clause 39.2
(Service of process) has accepted  its appointment.

 
(b)  
Delivery of the Hedging Policy.

 
(c)  
The Agreed Form of the Monthly Cash Flow Projection.

 
(d)  
A copy of any other Authorisation or other document, opinion or assurance which
the Agent considers to be necessary or desirable (if it has notified the
Borrower accordingly) in connection with the entry into and performance of the
transactions contemplated by any Finance Document or for the validity and
enforceability of any Finance Document.

 
(e)  
The Original Financial Statements of each Original Obligor.

 

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(f)  
A copy of the most recent Reserves Report from the Independent Engineer.

 
(g)  
A copy of the operations report required by Clause 21.4 (Operations Report).

 
(h)  
A copy of the signed Compliance Certificate (including supporting documents)
required by Clause 21.6 (Compliance Certificate) certifying compliance as of the
date of this Agreement.

 
(i)  
Evidence that the fees, costs and expenses then due from the Borrower pursuant
to Clause 13 (Fees), Clause 18 (Costs and expenses) and Clause 14.6 (Stamp
Taxes) have been paid or will be paid by the first Utilisation Date.

 
(j)  
The executed Fee Letters.

 
(k)  
A copy of the Clifford Chance LLP legal due diligence report prepared in
relation to the Borrowing Base Assets and the relevant Field Documents.

 
(l)  
A certificate issued by the Central Register of Treasury Pledges confirming that
the Borrower is not enrolled as pledgor.

 
(m)  
Excerpts from the Polish Register of Pledges confirming that there are no
registered pledges established over the assets of the Borrower save in respect
of the Existing Facility Agreement.

 
(n)  
A copy of (i) the Initial Projection as agreed between all Lenders and the
Borrower and (ii) confirmation from the Borrower’s auditors as to the tax
position to be used in the Initial Projection.

 
(o)  
A certified copy of all Subordinated Loan Agreements including all amendments
thereto.

 
(p)  
Any other document required by a Lender for ‘know your customer’ purposes.

 

 
PART II
Conditions Precedent Required To Be Delivered By An Additional Guarantor
 
(a)  
An Accession Letter, duly executed by the Additional Guarantor and the Borrower.

 
(b)  
A copy of the constitutional documents of the Additional Guarantor.

 
(c)  
A copy of a resolution of the board of directors of the Additional Guarantor:

 
(i)  
approving the terms of, and the transactions contemplated by, the Finance
Documents to which it is a party and resolving that it execute the Finance
Documents to which it is a party;

 

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(ii)  
authorising a specified person or persons to execute the Finance Documents to
which it is a party on its behalf; and

 
(iii)  
authorising a specified person or persons, on its behalf, to sign and/or
despatch all documents, powers of attorney, deeds and notices (including, if
relevant, any Utilisation Request) to be signed and/or despatched by it under or
in connection with the Finance Documents to which it is a party.

 
(d)  
A specimen of the signature of each person authorised by the resolution referred
to in paragraph (b) above.

 
(e)  
A certificate of the Additional Guarantor (signed by a director of the
Additional Guarantor) confirming that borrowing or guaranteeing, as appropriate,
the Total Commitments would not cause any borrowing, guaranteeing or similar
limit binding on any Original Obligor to be exceeded.

 
(f)  
A certificate of the Additional Guarantor (signed by a director or equivalent
officer) confirming its solvency and confirming that it has not registered any
establishment with the Registrar of Companies in England and Wales.

 
(g)  
A certificate of an authorised signatory of the relevant Original Obligor
certifying that each copy document relating to it specified in this Part II is
correct, complete and in full force and effect as at a date no earlier than the
date of this Agreement.

 
(h)  
The Group Structure Chart certified by the Parent as being true at the date of
this Agreement.

 
(i)  
A copy of any other Authorisation or other document, opinion or assurance which
the Agent considers to be necessary or desirable in connection with the entry
into and performance of the transactions contemplated by the Accession Letter or
for the validity and enforceability of any Finance Document.

 
(j)  
If available, the latest audited financial statements of the Additional
Guarantor.

 
(k)  
A certificate issued by the Central Register of Treasury Pledges confirming that
the Additional Guarantor incorporated in Poland is not enrolled as pledgor.

 
(l)  
Excerpts from the Polish Register of Pledges confirming that there are no
registered pledges established over the assets of the Additional Guarantor
incorporated in Poland.

 
(m)  
A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead
Arrangers in England.

 
(n)  
If the Additional Guarantor is incorporated in a jurisdiction other than England
and Wales, a legal opinion of the legal advisers to the Lenders in the
jurisdiction in which the Additional Guarantor is incorporated.

 

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(o)  
If the proposed Additional Guarantor is incorporated in a jurisdiction other
than England and Wales, evidence that the agent for service of process specified
in Clause 39.2 (Service of process), if not an Obligor, has accepted its
appointment in relation to the proposed Additional Guarantor.

 
(p)  
A copy of the signed Compliance Certificate (including supporting documents)
required by Clause 21.6 (Compliance Certificate) dated the date of the Accession
Letter.

 

 

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SCHEDULE 3
REDUCED COMMITMENTS
 
Reduction Date
Total Commitments
30 June 2013
USD  44,000,000
31 December 2013
USD  33,000,000
30 June 2014
USD  22,000,000
31 December 2014
USD  11,000,000
30 June 2015
0

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SCHEDULE 4
INITIAL BORROWING BASE ASSETS
 
(a)  
The Borrower’s 24.5 per cent. interest in the mining usufruct for exploitation
over the deposit of natural gas located in the area of Zaniemyśl municipality,
Wielkopolskie Voivideship, known as the “Zaniemyśl Field” in accordance with the
agreement on transfer of the mining usufruct dated 30 June 2009 between the
Borrower, CalEnergy Resources Poland sp. z o.o. and PGNiG, relating to the
agreement on establishment of the mining usufruct dated 16 September 2008
between the Applicable Polish Licensing Authority and PGNiG and relating to the
Licence no. 12/2008 dated 16 September 2008 issued in favour of PGNiG (together
with the Borrower’s interests in all related facilities and infrastructure).

 
(b)  
The Borrower’s 49 per cent. interest in the mining usufruct for exploitation
over the deposit of natural gas located in the area of Jarocin city and
municipality and Jaraczewo municipality, Wielkopolskie voivodeship known as the
“Roszków Field” in accordance with the agreement dated 28 May 2009 between the
Borrower and PGNiG, relating to the agreement on establishment of the mining
usufruct dated 26 February 2009 between the Applicable Polish Licensing
Authority and PGNiG and relating to the Licence no. 3/2009 dated 26 February
2009 issued in favour of PGNiG  (together with the Borrower’s interest in all
related facilities and interests in all related facilities and infrastructure).

 
(c)  
The Borrower’s 49 per cent. interest in the mining usufruct for exploration and
appraisal of crude oil and natural gas in the area of Września, Dominowo,
Kleszczewo, Kostrzyn, Krzykosy, Kórnik, Zaniemyśl, Miłosław, Mosina, Środa
Wielkopolska, Nekla, Nowe Miasto nad Wartą, Żerków municipalities and Poznań and
Puszczykowo cities, Wielkopolskie voivodeship, known as the “Kórnik-Środa Area”,
in accordance with the agreement regarding cooperation within the Poznan Area
dated 8 January 2003 between the Borrower and PGNiG, relating to the agreement
on establishment of the mining usufruct dated 16 July 1996, as amended from time
to time, between the Applicable Polish Licensing Authority and PGNiG and
relating to the Licence no. 32/96/p dated 19 July 1996, as amended from time to
time, issued in favour of PGNiG and the Borrower’s rights in connection to joint
operations of the Borrower and PGNiG in the Kórnik-Środa Area relating to
exploitation of natural gas from the fields known as the “Kromolice Field”,
“Kromolice S Field” and “Środa Wielkopolska Field”, located in the Kórnik-Środa
Area, relating to the relevant agreements on establishment of the mining
usufruct rights for exploitation of natural gas from these fields concluded
between PGNiG and the State Treasury and relating to the licences no. 8/2010,
9/2010 and 10/2010 dated 9 July 2010 for exploitation of natural gas from these
fields issued in favour of PGNiG.

 

 

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SCHEDULE 5
UTILISATION REQUEST
 
From:      FX Energy Poland sp. z o.o
 
To:          [Agent]
 
Dated:
 
Dear Sirs
 
FX Energy Poland sp. z o.o – USD 55,000,000 Facility Agreement
dated [•] August 2010 (the “Agreement”)
 
1.  
We refer to the Agreement.  This is a Utilisation Request.  Terms defined in the
Agreement have the same meaning in this Utilisation Request unless given a
different meaning in this Utilisation Request.

 
2.  
We wish to borrow a Loan on the following terms:

 

 
Proposed Utilisation Date:
[•] (or, if that is not a Business Day, the next Business Day)
 
Currency of Loan:
USD
 
Amount:
[•] or, if less, the Available Facility
 
Interest Period:
[•]

 
3.  
We confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Utilisation Request.

 
4.  
[The proceeds of this Loan should be credited to the following Onshore Proceeds
Account [ ] .] / [This Utilisation pertains to a Rollover Loan]

 
5.  
This Utilisation Request is irrevocable.

 
Yours faithfully
 

_______________________
authorised signatory for
FX Energy Poland sp.  z o.o
 

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SCHEDULE 6
MANDATORY COST FORMULAE
 
1.  
The Mandatory Cost is an addition to the interest rate to compensate Lenders for
the cost of compliance with (a) the requirements of the Bank of England and/or
the Financial Services Authority (or, in either case, any other authority which
replaces all or any of its functions) or (b) the requirements of the European
Central Bank.

 
2.  
On the first day of each Interest Period (or as soon as possible thereafter) the
Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”)
for each Lender, in accordance with the paragraphs set out below.  The Mandatory
Cost will be calculated by the Agent as a weighted average of the Lenders’
Additional Cost Rates (weighted in proportion to the percentage participation of
each Lender in the relevant Loan) and will be expressed as a percentage rate per
annum.

 
3.  
The Additional Cost Rate for any Lender lending from a Facility Office in a
Participating Member State will be the percentage notified by that Lender to the
Agent.  This percentage will be certified by that Lender in its notice to the
Agent to be its reasonable determination of the cost (expressed as a percentage
of that Lender’s participation in all Loans made from that Facility Office) of
complying with the minimum reserve requirements of the European Central Bank in
respect of loans made from that Facility Office.

 
4.  
The Additional Cost Rate for any Lender lending from a Facility Office in the
United Kingdom will be calculated by the Agent as follows:

 
E x 0.01 per cent. per annum.
    300
 
Where:
 
 
E
is designed to compensate Lenders for amounts payable under the Fees Rules and
is calculated by the Agent as being the average of the most recent rates of
charge supplied by the Reference Banks to the Agent pursuant to paragraph 7
below and expressed in pounds per £1,000,000.

 
5.  
For the purposes of this Schedule:

 
(a)  
“Fees Rules” means the rules on periodic fees contained in the FSA Fees Manual
or such other law or regulation as may be in force from time to time in respect
of the payment of fees for the acceptance of deposits;

 
(b)  
“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the
activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee
required pursuant to the Fees Rules but taking into account any applicable
discount rate); and

 
(c)  
“Tariff Base” has the meaning given to it in, and will be calculated in
accordance with, the Fees Rules.

 

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6.  
If requested by the Agent, each Reference Bank shall, as soon as practicable
after publication by the Financial Services Authority, supply to the Agent, the
rate of charge payable by that Reference Bank to the Financial Services
Authority pursuant to the Fees Rules in respect of the relevant financial year
of the Financial Services Authority (calculated for this purpose by that
Reference Bank as being the average of the Fee Tariffs applicable to that
Reference Bank for that financial year) and expressed in pounds per £1,000,000
of the Tariff Base of that Reference Bank.

 
7.  
Each Lender shall supply any information required by the Agent for the purpose
of calculating its Additional Cost Rate.  In particular, but without limitation,
each Lender shall supply the following information on or prior to the date on
which it becomes a Lender:

 
(a)  
the jurisdiction of its Facility Office; and

 
(b)  
any other information that the Agent may reasonably require for such purpose.

 
Each Lender shall promptly notify the Agent of any change to the information
provided by it pursuant to this paragraph.
 
8.  
the rates of charge of each Reference Bank for the purpose of E above shall be
determined by the Agent based upon the information supplied to it pursuant to
paragraphs 7 above.

 
9.  
The Agent shall have no liability to any person if such determination results in
an Additional Cost Rate which over or under compensates any Lender and shall be
entitled to assume that the information provided by any Lender or Reference Bank
pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.

 
10.  
The Agent shall distribute the additional amounts received as a result of the
Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each
Lender based on the information provided by each Lender and each Reference Bank
pursuant to paragraphs 3, 7 and 8 above.

 
11.  
Any determination by the Agent pursuant to this Schedule in relation to a
formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a
Lender shall, in the absence of manifest error, be conclusive and binding on all
Parties.

 
12.  
The Agent may from time to time, after consultation with the Borrower and the
Lenders, determine and notify to all Parties any amendments which are required
to be made to this Schedule in order to comply with any change in law,
regulation or any requirements from time to time imposed by the Bank of England,
the Financial Services Authority or the European Central Bank (or, in any case,
any other authority which replaces all or any of its functions) and any such
determination shall, in the absence of manifest error, be conclusive and binding
on all Parties.

 

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SCHEDULE 7
FORM OF TRANSFER CERTIFICATE
 
To:          [•] as Agent
 
From:
[The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New
Lender”)

 
Dated:
 
FX Energy Poland sp. z o.o – USD 55,000,000 Facility Agreement
dated [•] August 2010 (the “Agreement”)
 
1.  
We refer to the Agreement.  This is a Transfer Certificate.  Terms defined in
the Agreement have the same meaning in this Transfer Certificate unless given a
different meaning in this Transfer Certificate.

 
2.  
We refer to Clause 24.5 (Procedure for transfer):

 
(a)  
The Existing Lender and the New Lender agree to the Existing Lender transferring
to the New Lender by novation all or part of the Existing Lender’s Commitment,
rights and obligations referred to in the Schedule in accordance with Clause
24.5 (Procedure for transfer).

 
(b)  
The proposed Transfer Date is [•].

 
(c)  
The Facility Office and address, fax number and attention details for notices of
the New Lender for the purposes of Clause 31.2 (Addresses) are set out in the
Schedule.

 
3.  
The New Lender confirms, for the benefit of the Agent and without liability to
any Obligor, that it is:

 
(a)  
[a Qualifying Lender (which is not a Treaty Lender;]

 
(b)  
[a Treaty Lender;]

 
(c)  
[not a Qualifying Lender].1

 
4.  
The New Lender expressly acknowledges the limitations on the Existing Lender’s
obligations set out in paragraph (c) of Clause 24.4 (Limitation of
responsibility of Existing Lenders).

 
5.  
[The New Lender confirms that the person beneficially entitled to interest
payable to that Lender in respect of an advance under a Finance Document is
either:

 
(a)  
a company resident in the United Kingdom for United Kingdom tax purposes; or

 
__________________ 
1
Delete as applicable - each New Lender is required to confirm which of these
three categories it falls within.

 

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(b)  
a partnership each member of which is:

 
(i)  
a company so resident in the United Kingdom; or

 
(ii)  
a company not so resident in the United Kingdom which carries on a trade in the
United Kingdom through a permanent establishment and which brings into account
in computing its chargeable profits (within the meaning of section 19 of the
CTA) the whole of any share of interest payable in respect of that advance that
falls to it by reason of Part 17 of the CTA; or

 
(c)  
a company not so resident in the United Kingdom which carries on a trade in the
United Kingdom through a permanent establishment and which brings into account
interest payable in respect of that advance in computing the chargeable profits
(within the meaning of section 19 of the CTA) of that company.]

 
[4/5].
This Transfer Certificate may be executed in any number of counterparts and this
has the same effect as if the signatures on the counterparts were on a single
copy of this Transfer Certificate.

 
[5/6].
This Transfer Certificate [and any non-contractual obligations arising out of or
in connection with it] [is/are] governed by English law.

 
[6/7].
This Transfer Certificate has been entered into on the date stated at the
beginning of this Transfer Certificate.

 
THE SCHEDULE
 
Commitment/rights and obligations to be transferred
 
[insert relevant details]
 
[Facility Office address, fax number and attention details for notices and
account details for payments,]
 
[Existing Lender]
[New Lender]
   
By:                                                               
By:                                                               
This Transfer Certificate is accepted by the Agent and the Transfer Date is
confirmed as [•].
[Agent]
     
By:                                                               
 

 

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SCHEDULE 8
FORM OF ASSIGNMENT AGREEMENT
 
To:          [•] as Agent and [•] as Borrower
 
From:
[the Existing Lender] (the “Existing Lender”) and [the New Lender] (the “New
Lender”)

 
Dated:
 
FX Energy Poland sp. z o.o – USD 55,000,000 Facility Agreement
dated [•] August 2010 (the “Agreement”)
 
1.  
We refer to the Agreement.  This is an Assignment Agreement.  Terms defined in
the Agreement have the same meaning in this Assignment Agreement unless given a
different meaning in this Assignment Agreement.

 
2.  
We refer to Clause 24.6 (Procedure for assignment):

 
(a)  
The Existing Lender assigns absolutely to the New Lender all the rights of the
Existing Lender under the Agreement and the other Finance Documents which relate
to that portion of the Existing Lender’s Commitments and participations in Loans
under the Agreement as specified in the Schedule.

 
(b)  
The Existing Lender is released from all the obligations of the Existing Lender
which correspond to that portion of the Existing Lender’s Commitments and
participations in Loans under the Agreement specified in the Schedule.

 
(c)  
The New Lender becomes a Party as a Lender and is bound by obligations
equivalent to those from which the Existing Lender is released under paragraph
(b) above.

 
3.  
The proposed Transfer Date is [•].

 
4.  
On the Transfer Date the New Lender becomes Party to the Finance Documents as a
Lender.

 
5.  
The Facility Office and address, fax number and attention details for notices of
the New Lender for the purposes of Clause 31.2 (Addresses) are set out in the
Schedule.

 
6.  
The New Lender expressly acknowledges the limitations on the Existing Lender’s
obligations set out in paragraph (c) of Clause 24.4 (Limitation of
responsibility of Existing Lenders).

 
7.  
The New Lender confirms, for the benefit of the Agent and without liability to
any Obligor, that it is:

 
(a)  
[a Qualifying Lender falling within paragraph (i)(A) [or paragraph (ii) of the
definition of Qualifying Lender;]

 

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(b)  
[a Treaty Lender;]

 
(c)  
[not a Qualifying Lender].2

 
8.  
[The New Lender confirms that the person beneficially entitled to interest
payable to that Lender in respect of an advance under a Finance Document is
either:

 
(a)  
a resident in Poland;

 
(b)  
acting through a Facility office established in Poland and constituting a
permanent establishment within the meaning of the relevant double taxation
agreement; or

 
a Treaty Lender which has provided the Borrower with the Certificate of
Residence.]
 
[8/9].
This Assignment Agreement acts as notice to the Agent (on behalf of each Finance
Party) and, upon delivery in accordance with Clause 24.7 (Copy of Transfer
Certificate or Assignment Agreement to Borrower), to the Borrower (on behalf of
each Obligor) of the assignment referred to in this Assignment Agreement.

 
[9/10].
This Assignment Agreement may be executed in any number of counterparts and this
has the same effect as if the signatures on the counterparts were on a single
copy of this Assignment Agreement.

 
[10/11].
This Assignment Agreement and any non-contractual obligations arising out of or
in connection with it is governed by English law.

 
[11/12].
This Assignment Agreement has been entered into on the date stated at the
beginning of this Assignment Agreement.

 
__________________ 
2
Delete as applicable - each New Lender is required to confirm which of these
three categories it falls within.

 

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THE SCHEDULE
 
Rights to be assigned and obligations to be released and undertaken
 
[insert relevant details]
 
[Facility office address, fax number and attention details for notices and
account details for payments]
 
[Existing Lender]
[New Lender]
   
By:                                                               
By:                                                               
 
This Assignment Agreement is accepted by the Agent and the Transfer Date is
confirmed as [•].
 
Signature of this Assignment Agreement by the Agent constitutes confirmation by
the Agent of receipt of notice of the assignment referred to herein, which
notice the Agent receives on behalf of each Finance Party.
   
[Agent]
     
By:                                                               
 

 

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SCHEDULE 9
FORM OF COMPLIANCE CERTIFICATE
 
To:          [•] as Agent
 
From:      FX Energy, Inc.
 
Dated:
 
Dear Sirs
 
FX Energy Poland sp. z o.o – USD 55,000,000 Facility Agreement
dated [•] August 2010 (the “ Agreement”)
 
1.  
We refer to the Agreement.  This is a Compliance Certificate.  Terms defined in
the Agreement have the same meaning when used in this Compliance Certificate
unless given a different meaning in this Compliance Certificate.

 
2.  
We confirm that as of the date of the last Monthly Cash Flow Projection, we have
sufficient funds available to meet all of the Group’s obligations as and when
they fall due for each month falling during the 12 month period following the
date of such Monthly Cash Flow Projection.

 
3.  
We confirm that no Default or Event of Default is continuing.

 

 
Signed:                                                               
 
Director
of
FX ENERGY, INC.
 

 

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SCHEDULE 10
FORM OF GUARANTOR ACCESSION LETTER
 
To:          [Agent]
 
From:      [Subsidiary] and [Borrower]
 
Dated:
 
Dear Sirs
 
FX Energy Poland sp. z o.o – USD 55,000,000 Facility Agreement
dated [•] August 2010 (the “Agreement”)

1.  
We refer to the Agreement.  This is an Accession Letter.  Terms defined in the
Agreement have the same meaning in this Accession Letter unless given a
different meaning in this Accession Letter.

 
2.  
[Subsidiary] agrees to become an Additional Guarantor and to be bound by the
terms of the Agreement as an Additional Guarantor pursuant to Clause 25.2
(Additional Guarantors) of the Agreement.  [Subsidiary] is a company duly
incorporated under the laws of [name of relevant jurisdiction].

 
3.  
 [Subsidiary’s] administrative details are as follows:

 
Address:
 
Fax No:
 
Attention:
 
4.  
This Accession Letter is governed by English law.

 
[This Guarantor Accession Letter is entered into by deed.]
 

 

 
[Company]                                                                                                [Subsidiary]
 
             By:                                                                                                           By:
 

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SCHEDULE 11
EXISTING FINANCIAL INDEBTEDNESS
 
1.  
A loan agreement with an effective date of 1 January 2006 between FX Energy
Netherlands B.V. and FX Energy Poland sp. z o.o. and all amendments thereto.

 
2.  
A loan agreement with an effective date of 1 January 2006, between FX Energy
Netherlands Partnership C.V. and FX Energy Netherlands B.V. and all amendments
thereto.

 

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SCHEDULE 12
SCHEDULE OF FIELD DOCUMENTS
 
1.  
ZANIEMYŚL FIELD

 
(a)  
Licences

 
(i)  
License No. 12/2008 dated 16 September 2008 issued by the Minister of
Environment to the benefit of PGNiG.

 
(b)  
Mining usufruct

 
(i)  
Mining usufruct agreement dated 16 September 2008 between the State Treasury and
PGNiG; and

 
(ii)  
Agreement dated 30 June 2009 between PGNiG, the Borrower  and CalEnergy
Resources Poland sp. z o.o. transferring 24.5 per cent. interest in the mining
usufruct to the Borrower.

 
(c)  
Other documents

 
(i)  
The Joint Operating Agreement covering the Greater Zaniemysl Area between PGNiG,
the Borrower and CalEnergy Resources Poland sp. z o.o., dated 27 October 2005;

 
(ii)  
The gas sale agreement dated 8 December 2005 relating to the Greater Zaniemysl
Area between the Borrower and PGNiG, as amended from time to time.

 
2.  
ROSZKÓW FIELD

 
(a)  
Licences

 
(i)  
License No. 3/2009 dated 26 February 2009 issued by the Minister of Environment
to the benefit of PGNiG.

 
(b)  
Mining usufruct

 
(i)  
Mining usufruct agreement dated 26 February 2009 between the State Treasury and
PGNiG; and

 
(ii)  
Agreement dated 28 May 2009 between PGNiG and the Borrower transferring 49  per
cent. interest in the mining usufruct to the Borrower.

 
(c)  
Other documents

 
(i)  
The joint operating agreement covering areas in the Foresudetic Moncline between
PGNiG and the Borrower, dated 12 May 2000; and

 

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(ii)  
The gas sale agreement relating the Roszków Field dated 19 June 2009 between the
Borrower and PGNiG.

 
3.  
KROMOLICE FIELD, KROMOLICE S FIELD AND ŚRODA WIELKOPOLSKA FIELD

 
(a)  
Licences

 
(i)  
License No. 32/96/p dated 19 July 1996 issued by the Minister of Environment to
the benefit of PGNiG, relating to exploration and processing in the Kórnik-Środa
Area;

 
(ii)  
License No. 8/2010 dated 9 July 2010 issued by the Minister of Environment in
favour of PGNiG, relating to exploitation from the Środa Wielkopolska Field;

 
(iii)  
License No. 9/2010 dated 9 July 2010 issued by the Minister of Environment in
favour of PGNiG, relating to exploitation from the Kromolice Field; and

 
(iv)  
License No. 10/2010 dated 9 July 2010 issued by the Minister of Environment in
favour of PGNiG, relating to exploitation from the Kromolice S Field.

 
(b)  
Mining usufruct

 
(i)  
Mining usufruct agreement dated 16 July 1996, as amended from time to time,
between the State Treasury and PGNiG, relating to exploration and processing in
the Kórnik-Środa Area;

 
(ii)  
Agreement regarding cooperation within the Poznan Area 8 January 2003 between
PGNiG and the Borrower  transferring 49 per cent. interest in the mining
usufruct for exploration and processing in the Kórnik-Środa Area to the
Borrower;

 
(iii)  
Mining usufruct agreement dated 9 July 2010 between the State Treasury and
PGNiG, relating to exploitation from the Środa Wielkopolska Field; and

 
(iv)  
Mining usufruct agreement dated 9 July 2010 between the State Treasury and
PGNiG, relating to exploitation from the Kromolice Field; and

 
(v)  
Mining usufruct agreement dated 9 July 2010 between the State Treasury and
PGNiG, relating to exploitation from the Kromolice S Field.

 
(c)  
Other documents

 
(i)  
The Joint Operating Agreement covering Poznan Area between PGNiG and the
Borrower, dated 1 June 2004.

 

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SCHEDULE 13
LMA FORM OF CONFIDENTIALITY UNDERTAKING
 
[Letterhead of Seller]
 
To:
 

 
[insert name of Potential Purchaser]

 
Re:           The Agreement
 
Company:                                                   (the “Company”)
Date:
Amount:
Agent:

 
Dear Sirs
 
We understand that you are considering acquiring an interest in the Agreement
which, subject to the Agreement, may be by way of novation, assignment, the
entering into, whether directly or indirectly, of a sub-participation or any
other transaction under which payments are to be made or may be made by
reference to one or more Finance Documents and/or one or more Obligors or by way
of investing in or otherwise financing, directly or indirectly, any such
novation, assignment, sub-participation or other transaction (the
“Acquisition”).  In consideration of us agreeing to make available to you
certain information, by your signature of a copy of this letter you agree as
follows:
 
1.  
CONFIDENTIALITY UNDERTAKING

 
You undertake (a) to keep all Confidential Information confidential and not to
disclose it to anyone, save to the extent permitted by paragraph 2 below and to
ensure that all Confidential Information is protected with security measures and
a degree of care that would apply to your own confidential information, and (b)
until the Acquisition is completed to use the Confidential Information only for
the Permitted Purpose.
 
2.  
PERMITTED DISCLOSURE

 
We agree that you may disclose:
 

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2.1  
to any of your Affiliates and any of your or their officers, directors,
employees, professional advisers and auditors such Confidential Information as
you shall consider appropriate if any person to whom the Confidential
Information is to be given pursuant to this paragraph 2.1 is informed in writing
of its confidential nature and that some or all of such Confidential Information
may be price-sensitive information, except that there shall be no such
requirement to so inform if the recipient is subject to professional obligations
to maintain the confidentiality of the information or is otherwise bound by
requirements of confidentiality in relation to the Confidential Information;

 
2.2  
subject to the requirements of the Agreement, to any person:

 
(a)  
to (or through) whom you assign or transfer (or may potentially assign or
transfer) all or any of your rights and/or obligations which you may acquire
under the Agreement such Confidential Information as you shall consider
appropriate if the person to whom the Confidential Information is to be given
pursuant to this sub-paragraph (a) of paragraph 2.2 has delivered a letter to
you in equivalent form to this letter;

 
(b)  
with (or through) whom you enter into (or may potentially enter into) any
sub-participation in relation to, or any other transaction under which payments
are to be made or may be made by reference to the Agreement or any Obligor such
Confidential Information as you shall consider appropriate if the person to whom
the Confidential Information is to be given pursuant to this sub-paragraph (b)
of paragraph 2.2 has delivered a letter to you in equivalent form to this
letter;

 
(c)  
to whom information is required or requested to be disclosed by any
governmental, banking, taxation or other regulatory authority or similar body,
the rules of any relevant stock exchange or pursuant to any applicable law or
regulation such Confidential Information as you shall consider appropriate; and

 
2.3  
notwithstanding paragraphs 2.1 and 2.2 above, Confidential Information to such
persons to whom, and on the same terms as, a Finance Party is permitted to
disclose Confidential Information under the Agreement, as if such permissions
were set out in full in this letter and as if references in those permissions to
Finance Party were references to you.

 
3.  
NOTIFICATION OF DISCLOSURE

 
You agree (to the extent permitted by law and regulation) to inform us:
 
3.1  
of the circumstances of any disclosure of Confidential Information made pursuant
to sub-paragraph (c) of paragraph 2.2 above except where such disclosure is made
to any of the persons referred to in that paragraph during the ordinary course
of its supervisory or regulatory function; and

 
3.2  
upon becoming aware that Confidential Information has been disclosed in breach
of this letter.

 

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4.  
RETURN OF COPIES

 
If you do not enter into the Acquisition and we so request in writing, you shall
return all Confidential Information supplied to you by us and destroy or
permanently erase (to the extent technically practicable) all copies of
Confidential Information made by you and use all reasonable endeavours to ensure
that anyone to whom you have supplied any Confidential Information destroys or
permanently erases (to the extent technically practicable) such Confidential
Information and any copies made by them, in each case save to the extent that
you or the recipients are required to retain any such Confidential Information
by any applicable law, rule or regulation or by any competent judicial,
governmental, supervisory or regulatory body or in accordance with internal
policy, or where the Confidential Information has been disclosed under
sub-paragraph (c) of paragraph 2.2 above.
 
5.  
CONTINUING OBLIGATIONS

 
The obligations in this letter are continuing and, in particular, shall survive
and remain binding on you until (a) if you acquire an interest in the Agreement
by way of novation, the date on which you acquire such an interest; (b) if you
enter into the Acquisition other than by way of novation, the date falling
twelve (12) months after termination of that Acquisition; or (c) in any other
case twelve (12) months after the date of this letter.
 
6.  
NO REPRESENTATION; CONSEQUENCES OF BREACH, ETC

 
You acknowledge and agree that:
 
6.1  
neither we, nor any member of the Group nor any of our or their respective
officers, employees or advisers (each a “Relevant Person”) (i) make any
representation or warranty, express or implied, as to, or assume any
responsibility for, the accuracy, reliability or completeness of any of the
Confidential Information or any other information supplied by us or the
assumptions on which it is based or (ii) shall be under any obligation to update
or correct any inaccuracy in the Confidential Information or any other
information supplied by us or be otherwise liable to you or any other person in
respect of the Confidential Information or any such information; and

 
6.2  
we or members of the Group may be irreparably harmed by the breach of the terms
of this letter and damages may not be an adequate remedy; each Relevant Person
may be granted an injunction or specific performance for any threatened or
actual breach of the provisions of this letter by you.

 
7.  
ENTIRE AGREEMENT:  NO WAIVER; AMENDMENTS, ETC

 
7.1  
This letter constitutes the entire agreement between us in relation to your
obligations regarding Confidential Information and supersedes any previous
agreement, whether express or implied, regarding Confidential Information.

 
7.2  
No failure or delay in exercising any right or remedy under this letter will
operate as a waiver thereof nor will any single or partial exercise of any right
or remedy preclude any further exercise thereof or the exercise of any other
right or remedy under this letter.

 

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7.3  
The terms of this letter and your obligations under this letter may only be
amended or modified by written agreement between us.

 
8.  
INSIDE INFORMATION

 
You acknowledge that some or all of the Confidential Information is or may be
price-sensitive information and that the use of such information may be
regulated or prohibited by applicable legislation including securities law
relating to insider dealing and market abuse and you undertake not to use any
Confidential Information for any unlawful purpose.
 
9.  
NATURE OF UNDERTAKINGS

 
The undertakings given by you under this letter are given to us and are also
given for the benefit of the Company and each other member of the Group.
 
10.  
THIRD PARTY RIGHTS

 
10.1  
Subject to this paragraph 10 and to paragraphs 6 and 9, a person who is not a
party to this letter has no right under the Contracts (Rights of Third Parties)
Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any
term of this letter.

 
10.2  
The Relevant Persons may enjoy the benefit of the terms of paragraphs 6 and 9
subject to and in accordance with this paragraph 10 and the provisions of the
Third Parties Act.

 
10.3  
Notwithstanding any provisions of this letter, the parties to this letter do not
require the consent of any Relevant Person to rescind or vary this letter at any
time.

 
11.  
GOVERNING LAW AND JURISDICTION

 
11.1  
This letter (including the agreement constituted by your acknowledgement of its
terms)  (the “Letter”) and any non-contractual obligations arising out of or in
connection with it (including any non-contractual obligations arising out of the
negotiation of the transaction contemplated by this Letter)  are governed by
English law.

 
11.2  
The courts of England have non-exclusive jurisdiction to settle any dispute
arising out of or in connection with this Letter (including a dispute relating
to any non-contractual obligation arising out of or in connection with either
this Letter or the negotiation of the transaction contemplated by this Letter).

 
12.  
DEFINITIONS

 
In this letter (including the acknowledgement set out below) terms defined in
the Agreement shall, unless the context otherwise requires, have the same
meaning and:
 

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 “Confidential Information” means all information relating to the Company, any
Obligor, the Group, the Finance Documents, the Facility and/or the Acquisition
which is provided to you in relation to the Finance Documents or the Facility by
us or any of our affiliates or advisers, in whatever form, and includes
information given orally and any document, electronic file or any other way of
representing or recording information which contains or is derived or copied
from such information but excludes information that:
 
(a)  
is or becomes public information other than as a direct or indirect result of
any breach by you of this letter; or

 
(b)  
is identified in writing at the time of delivery as non-confidential by us or
our advisers; or

 
(c)  
is known by you before the date the information is disclosed to you by us or any
of our affiliates or advisers or is lawfully obtained by you after that date,
from a source which is, as far as you are aware, unconnected with the Group and
which, in either case, as far as you are aware, has not been obtained in breach
of, and is not otherwise subject to, any obligation of confidentiality.

 
 “Group” means the Company and its subsidiaries for the time being (as such term
is defined in the Companies Act 2006).
 
 “Permitted Purpose” means considering and evaluating whether to enter into the
Acquisition.
 
Please acknowledge your agreement to the above by signing and returning the
enclosed copy.
 
Yours faithfully
 

 

For and on behalf of
[Seller]
 
To:           [Seller]
 
The Company and each other member of the Group
 

 
We acknowledge and agree to the above:
 

 

For and on behalf of
[Potential Purchaser]
 

 

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SCHEDULE 14
GROUP STRUCTURE CHART
 
 
Visio No. 2463598
 
 
[ex10958k080510page167.jpg]
 
 
 
 

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SCHEDULE 15
HEDGING POLICY
 
1.  
FOREIGN EXCHANGE HEDGING

 
1.1  
General

 
(a)  
The Borrower may from time to time enter into such Hedging Agreements as it
considers necessary, for the purposes of protecting its exposure to fluctuations
in foreign exchange rates.

 
(b)  
Any Hedging Agreement entered into pursuant to paragraph 1.1.(a) above shall be
entered into by the Borrower by means of foreign exchange swaps, and/or the
purchase by the Borrower of foreign exchange put/call options, and/or foreign
exchange collar agreements.

 
1.2  
Minimum hedging requirement in relation to PLN/USD exchange rate exposure:

 
(a)  
If on any Recalculation Date, the Projection shows that repayment of principal
will be due over the next 12 months (whether it is due to the Borrowing Base
Amount reducing or a scheduled Reduction Date occurring), then the Borrower will
be required to enter into Hedging Agreements to cover its exposure to adverse
fluctuations of PLN against USD over a 12 month period.

 
(b)  
The notional amount to be hedged will be 70% of the principal repayments due
over the next 12 months as shown in the then current Projection.

 
2.  
PETROLEUM PRICE HEDGING

 
2.1  
Objectives for hedging

 
The Borrower may from time to time enter into such Hedging Agreements as it
considers necessary, for the purposes of protecting its exposure to fluctuations
in Petroleum prices, to ensure that it will be able to meet (i) its (and all
other Obligors’) payment obligations under the Facility Agreement when they fall
due and (ii) the Obligors’ ongoing expenditure and investment program in
relation to the Borrowing Base Assets.
 
2.2  
Limitation on hedge volume

 
In order to avoid excessive exposure to hedging liabilities, each Obligor shall:
 
(a)  
consult with the Technical Bank prior to entering into any Hedging Agreement for
the purposes of hedging its or any other Obligor’s exposure to fluctuations in
Petroleum prices; and

 
(b)  
not enter into any Hedging Agreement unless (a) a maximum volume profile has
been agreed between the Technical Bank and the relevant Obligor (each acting
reasonably) and (b) such Hedging Agreement is in compliance with such maximum
volume profile.

 

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2.3  
Limitation on hedge tenor

 
No Obligor may (without the prior written consent of the Majority Lenders) enter
into any Hedging Agreement for the purposes of hedging its or any other
Obligor’s exposure to fluctuations in Petroleum prices if such Hedging Agreement
results or could result in any Obligor and/or the Obligors’ collectively hedging
their exposure to fluctuations in Petroleum prices in respect of any period in
excess of three years following the end of the month in which such Hedging
Agreement is entered into.
 
2.4  
Permitted Hedge Instruments

 
Subject to the above, any Hedging Agreement entered into by any Obligor shall be
entered into by means of any of the following:
 
(a)  
a swap agreement by which the relevant Obligor agrees to sell a notional
quantity of oil or gas to a counterparty at a fixed, specified price and to
purchase the same notional quantity of oil or gas from such counterparty at a
floating price over a fixed, specified period;

 
(b)  
a forward sale agreement by which the relevant Obligor agrees to sell a
specified quantity of oil or gas to a counterparty at a fixed, specified price
on a fixed, specified future date;

 
(c)  
a put option agreement by which the relevant Obligor acquires the right to sell
a notional quantity of oil or gas to a counterparty at a fixed, specified price
over a fixed, specified period;

 
(d)  
a collar agreement (including a “zero cost collar”) by which the relevant
Obligor acquires the right to sell a notional quantity of oil or gas to a
counterparty at a fixed, specified price (i.e. buys a put option) and sells to
such counterparty the right to purchase the same notional quantity of oil or gas
from the relevant Obligor at a fixed, specified price (i.e. sells a call option)
over a fixed, specified period (provided that the call strike price is greater
than the put strike price); or

 
(e)  
any other hedging transaction as may be approved in writing by the Majority
Lenders (acting reasonably).

 
3.  
INTEREST RATE HEDGING

 
3.1  
The Borrower may from time to time enter into such Hedging Agreements as it
considers necessary, for the purposes of protecting its exposure to fluctuations
in interest rates.

 
3.2  
Any Hedging Agreement entered into pursuant to paragraph 3.1 above shall be
entered into by the Borrower by means of interest rate swaps, and/or the
purchase by the Borrower of interest rates put/call options, and/or interest
rates collar agreements.

 

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3.3  
No Obligor may (without the prior written consent of the Majority Lenders) enter
into any Hedging Agreement for the purposes of hedging its or any other
Obligor’s exposure to fluctuations in interest rates if such Hedging Agreement
results or could result in any Obligor and/or the Obligors’ collectively hedging
their exposure to fluctuations in interest rates in respect of any amounts in
excess of 105% of the amount of debt outstanding from time to time under the
Facility Agreement.

 

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SCHEDULE 16
TIMETABLES
 

 
Loans in Dollars
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a
Utilisation Request)
U-3
11.00am
   
Agent notifies the Lenders of the Loan in accordance with Clause 5.4 (Lenders’
participation)
U-3
3.00pm
   
LIBOR is fixed
Quotation Day as of
11:00 a.m.

 
“U” = date of utilisation
 
“U - X” = Business Days prior to date of utilisation
 

 

 

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SIGNATURES
 
THE BORROWER
 
FX ENERGY POLAND SP. Z O.O.
 
By: /s/ Antoni Minkiewicz
 
Address:
 
Fax:
 
Attention:
 

 
THE BORROWER
 
FX ENERGY POLAND SP. Z O.O.
 
By: /s/ David N. Pierce
 
Address: Ul. Chalubinskiego 8, 00-613 Warsaw, Poland
 
Fax: 1-801-486-5575
 
Attention: David N. Pierce
 

 
THE ORIGINAL GUARANTORS
 
FX ENERGY, INC.
 
By: /s/ David N. Pierce
 
Address: 3006 Highland Drive, Salt Lake City, UT USA
 
Fax: 1-801-486-5575
 
Attention: David N. Pierce
 

 

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FX NETHERLANDS PARTNERSHIP C.V. by:
 
FX DRILLING COMPANY, INC.
FRONTIER EXPLORATION COMPANY
By: /s/ David N. Pierce
By: /s/ Andrew W. Pierce
as authorised agent
 
Address:
Address:
Fax: 1-801-486-5575
Fax: 1-801-486-5575
Attention: David Pierce
Attention: Andrew Pierce

acting in their capacity as general partners of FX Netherlands Partnership C.V.
 

 
FX ENERGY NETHERLANDS B.V.
 
By: /s/ Clay Newton
 
Address: Locatellikade 1, 1076 AZ Amsterdam, The Netherlands
 
Fax: 1-801-486-5575
 
Attention: Clay Newton
 

 
THE MANDATED LEAD ARRANGERS
 
THE ROYAL BANK OF SCOTLAND PLC
 
By: /s/ Kevin Maddick
 
Address: 135 Bishopsgate, London EC2M 3UR
 
Fax: +44 (0)20 7085 4003
 
Attention: Shenth Ravindra  / Emma-Marie Mayes
 

 

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ING BANK N.V.
 
By: /s/ M.F.E. de Haan
By: /s/ Michael Klemme
Managing Director
Managing Director

Address:
 
Fax:
 
Attention:
 

 
KBC BANK NV
 
By: /s/ Katrijn Quaghebeur
By: /s/ David Barry

Address: Havenlaan 2, 1080 Brussels, Belgium
 
Fax: 32 2 429 8694
Fax: 353 603 5437
Attention: Katrijn Quaghebeur
Attention: David Barry

 
THE TECHNICAL BANK
 
THE ROYAL BANK OF SCOTLAND PLC
 
By: /s/ Kevin Maddick
 
Address: 280 Bishopsgate, London EC2M 4RB
 
Fax:  +44 (0) 20 7085 8766
 
Attention: James Cowlrick
 

 

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THE AGENT
 
THE ROYAL BANK OF SCOTLAND PLC
 
By: /s/ Kevin Maddick
 
Address: 135 Bishopsgate, London, EC2M 3UR
 
Fax: +44 (0) 20 7085 4564
 
Attention: Philip A. Pentney
 

 
THE SECURITY TRUSTEE
 
THE ROYAL BANK OF SCOTLAND PLC
 
By: /s/ Kevin Maddick
 
Address:
 
Fax:
 
Attention:
 

 
THE ORIGINAL LENDERS
 
THE ROYAL BANK OF SCOTLAND PLC
 
By: /s/ Kevin Maddick
 
Address: 135 Bishopsgate, London EC2M 3UR
 
Fax: +44 (0)20 7085 4003
 
Attention: Shenth Ravindra  / Emma-Marie Mayes
 

 

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ING BANK N.V.
 
By: /s/ M.F.E. de Haan
By: /s/ Michael Klemme
Managing Director
Managing Director

Address:
 
Fax:
 
Attention:
 

 
KBC BANK NV
 
By: /s/ Katrijn Quaghebeur
By: /s/ David Barry

Address: Havenlaan 2, 1080 Brussels, Belgium
 
Fax: 32 2 429 8694
Fax: 353 603 5437
Attention: Katrijn Quaghebeur
Attention: David Barry

 

 

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