THE SECURITIES  EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION  EXEMPT
FROM  REGISTRATION  UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES  ACT"), AND THE SECURITIES  EVIDENCED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE  EXEMPTION  THEREFROM.  EACH PURCHASER OF THE SECURITIES EVIDENCED
HEREBY IS HEREBY  NOTIFIED  THAT THE SELLER MAY BE RELYING ON AN EXEMPTION  FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES  ACT. THE HOLDER OF THE SECURITIES
EVIDENCED  HEREBY  AGREES  THAT (I) SUCH  SECURITIES  MAY BE RESOLD,  PLEDGED OR
OTHERWISE TRANSFERRED,  ONLY (1)(A) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE  SECURITIES  ACT, (B) OUTSIDE THE UNITED  STATES TO A FOREIGN
PERSON  IN A  TRANSACTION  MEETING  THE  REQUIREMENTS  OF  RULE  904  UNDER  THE
SECURITIES ACT OR (C) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS  OF  THE  SECURITIES  ACT,  (2)  TO THE  ISSUER  OF THE  SECURITIES
EVIDENCED HEREBY OR (3) PURSUANT TO AN EFFECTIVE  REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE  JURISDICTION AND (II) THE PURCHASER WILL,
AND EACH  SUBSEQUENT  PURCHASER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT  PURCHASER
FROM IT OF THE SECURITIES  EVIDENCED HEREBY OF THE RESALE  RESTRICTION SET FORTH
IN (I) ABOVE.

                                 FX ENERGY, INC.
                                  US$5,000,000
                          9.5% CONVERTIBLE SECURED NOTE

                                                                   March 9, 2001

         This 9.5%  Convertible  Secured Note in the face amount of US$5,000,000
(this  "Note") is  delivered  to  Rolls-Royce  Power  Ventures  Limited  and its
successors and permitted assigns (the "Holder") by FX Energy, Inc., incorporated
with limited  liability under the laws of the State of Nevada (the "Company") in
connection with a gas option  agreement  dated on the date hereof,  by and among
the  Holder  and FX Energy  Poland  Sp.  zo.o.,  and is subject to the terms and
conditions attached hereto (the "Conditions").

          The Company  (which term shall  include  any  corporation  which shall
succeed  to or assume  the  obligations  of the  Company),  for value  received,
promises, in accordance with the Conditions,  to pay to the Holder the principal
amount of this Note  outstanding on the date and in the amount  specified in the
Conditions and any additional amounts payable thereunder.

         The Company hereby irrevocably  authorizes the Holder to make (or cause
to be made)  appropriate  notations on the grid attached (or on any continuation
of such grid),  which  notations,  if made and  confirmed by the Company,  shall
evidence,  inter alia the  outstanding  principal of the Note.  On each occasion
that a new notation is included,  the Holder shall  promptly  send a copy of the
attached grid to the Company for  confirmation  and the Company  shall  promptly
confirm  such  notation or notify the Holder of its  reasons  for any  objection
thereto.

<PAGE>

         IN WITNESS WHEREOF,  FX Energy,  Inc. has caused this Note to be signed
manually  or by  facsimile  by one of its duly  authorized  officers on the date
first written above.

                                                     FX Energy, Inc.
                                                     By:

                                                     /s/ Andrew W. Pierce
                                                     --------------------------
                                                     Duly authorized signature
                                                     Name: Andrew W. Pierce
                                                     Title: Vice President


                                       2
<PAGE>

                              ADVANCES AND PAYMENTS
--------------------------------------------------------------------------------
        Advance    Amount of       Amount Converted      Unpaid         Notation
 Date   Amount   Principal Repaid     to Equity      Principal Balance   Made By
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                                       3
<PAGE>

                               ELECTION TO CONVERT

To FX Energy, Inc.
3006 Highland Drive
Salt Lake City, Utah  84106
USA

Attn:
                                                                          [Date]

         The undersigned  Holder of this Note hereby  irrevocably  exercises the
option to convert this Note, or the portion below designated,  into Common Stock
of FX Energy,  Inc. in accordance  with the  Conditions of the Note, and directs
that the shares  issuable and  deliverable  upon  conversion,  together with any
check in payment for fractional  shares,  be issued in the name of and delivered
to the undersigned.

         The Holder of the Note,  upon the exercise of its conversion  rights in
accordance  with the Conditions of the Note,  agrees to be bound by the terms of
the  Registration  Rights  Agreement  relating to the Common Stock issuable upon
conversion of the Note.

         in whole ___

                                   Portion of Note to be converted
                                   (US$100,000 or integral multiples thereof):
                                   US$__________________________

                                   ______________________________
                                   Duly authorized signature

                                   Name and Address

                                   ______________________________

                                   ______________________________


                                       4
<PAGE>

                                 ASSIGNMENT FORM

                  To assign this Note, fill in the form below:

                  (I) or (we) assign and transfer this Note to

                  ____________________________________________

                  ____________________________________________
                   (Print or type assignee's name and address)

and  irrevocably  instruct the registrar of the Company to transfer this Note on
the books of the Company.

Your Signature:                            Assignee's Signature:


-----------------------------------        --------------------------
Duly authorized signature of Holder        Duly authorized signature of Assignee
Name:                                      Name:
Title:                                     Title:

Date: __________________________


         In  connection  with  any  transfer  of  the  Note  evidenced  by  this
         certificate  occurring  prior to the date that is two  years  after the
         later of the date of original  issuance of such Note and the last date,
         if any, on which such Note was owned by the Company or any Affiliate of
         the  Company,   the  undersigned  confirms  that  such  Note  is  being
         transferred:

CHECK ONE BOX BELOW

(1)      [ ]      to the Company or any subsidiary thereof,

(2)      [ ]      outside the United States in compliance with Rule 904 under
                  the Securities Act,

(3)      [ ]      pursuant to the exemption  from  registration  provided by
                  Rule 144 under the Securities Act (if available) or

(4)      [ ]      pursuant to an effective registration statement under the
                  Securities Act.


                                       5
<PAGE>

                           STOCK OPTION EXERCISE FORM

FX Energy, Inc.
3006 Highland Drive
Salt Lake City, Utah  84106
USA

Attn:
                                                                          [Date]

         Re:      US$5,000,000 9.5% CONVERTIBLE SECURED NOTE OF FX ENERGY, INC.

         We refer to the US$5,000,000  9.5% Convertible Note of FX Energy,  Inc.
dated as of March [ ], 2001 (as amended,  changed or modified from time to time,
the "Note"),  between FX Energy,  Inc. (the  "Company")  and  Rolls-Royce  Power
Ventures  Limited and its  successors  and  permitted  assigns  (the  "Holder").
Capitalized  terms used but not defined  herein shall have the meanings given to
them in the terms and conditions of the Note.

         We hereby  notify you of our intention to purchase [ ] shares of Common
Stock at the  Conversion  Price  pursuant to our Stock Option under Section 8 of
the Note.

                                          By: __________________________
                                          Duly authorized signature of Holder

                                          Name:

                                          Title:


                                       6
<PAGE>

                        Terms and Conditions of the Note

In the event the obligations of the Company hereunder are evidenced by more than
one Note, these terms and conditions must be attached to each Note.

The  issue of any  Notes to the  Holder  are  constituted  by  these  terms  and
conditions (the "Conditions").

1.       Definitions.

For purposes of the Note, the following terms shall have the meanings indicated:

"Affiliate" means any Person which, directly or indirectly, is in control of, is
controlled  by, or is under common  control with,  such  specified  Person.  For
purposes  of this  definition,  control of a Person  means the power,  direct or
indirect,  to direct or cause the  direction of the  management  and policies of
such person whether by contract or otherwise;  and the terms  "controlling"  and
"controlled" have meanings correlative to the foregoing.

"Apache" shall have the meaning set forth in Section 3 hereof.

"Bankruptcy  Law" means Title 11, U.S.  Code or any  similar  federal,  state or
foreign law for the relief of debtors or the protection of creditors.

"Business  Day"  means any day other than a  Saturday,  Sunday or a day on which
state or  federally  chartered  banking  institutions  in New York,  New York or
London, England are not required to be open.

"Commission" means the United States Securities and Exchange Commission.

"Common Stock" means the Company's  common stock,  par value US$0.001 per share,
which   term   shall   include,   where   appropriate,   in  the   case  of  any
reclassification,  recapitalization  or other change in the Common  Stock,  such
capital  stock to which a holder  of Common  Stock  shall be  entitled  upon the
occurrence of such event.

"Conditions Date" shall have the meaning set forth in Section 3 hereof.

"Conversion Date" shall have the meaning set forth in Section 7 hereof.

"Conversion Price" shall have the meaning set forth in Section 7 hereof.

"Custodian"  means  any  receiver,  trustee,  assignee,  liquidator  or  similar
official under any Bankruptcy Law.

"Default"  means any event that is, or with the passage of time or the giving of
notice or both would be, an Event of Default.

                                       7
<PAGE>

"Early Repayment Amount" shall have the meaning set forth in Section 8 hereof.

"Event of Default" shall have the meaning set forth in Section 10 hereof.

"Exchange  Act" means the Securities  Exchange Act of 1934, as amended,  and the
rules and regulations of the Commission promulgated thereunder.

"Exchange Rate Contract"  means,  with respect to any Person,  any currency swap
agreements,  forward  exchange  rate  agreements,  foreign  currency  futures or
options,  exchange rate collar  agreements,  exchange  rate  insurance and other
agreements or arrangements,  or combination  thereof,  the principal  purpose of
which is to provide protection against  fluctuations in currency exchange rates.
An Exchange Rate Contract may also include an Interest Rate Agreement.

"Fences Area" means the  "Contract  Area" as defined in Article 1.9 of the Joint
Operating  Agreement  Covering Areas in the Foresudetic  Monocline dated May 12,
2000 between FXEP and POGC.

"FXEP" means FX Energy  Poland Sp. z o.o. a limited  liability  company with its
seat in  Warsaw,  Poland  at al.  Jana  Pawla II 29,  00-867,  entered  into the
Commercial Register maintained by the District Court in Warsaw under the RHB no.
50620.

"GAAP" means generally accepted accounting  principles set forth in the opinions
and pronouncements of the Accounting  Principles Board of the American Institute
of  Certified  Public  Accountants  and  statements  and  pronouncements  of the
Financial  Accounting  Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting  profession
of the United States, which are in effect as of the Issuance Date.

"Gas Agreement" shall have the meaning set forth in the Gas Option Agreement.

"Gas Option  Agreement"  means the gas option agreement dated on the date hereof
between the Holder and FXEP.

"Guarantee"   means  a  guarantee  (other  than  by  endorsement  of  negotiable
instruments  for  collection  in the  ordinary  course of  business),  direct or
indirect,  in any manner (including,  without limitation,  letters of credit and
reimbursement  agreements  in  respect  thereof),  of  all or  any  part  of any
Indebtedness.

"Indebtedness"  means,  with  respect to any Person,  any  indebtedness  of such
Person, whether or not contingent,  in respect of borrowed money or evidenced by
bonds,  notes,  debentures  or  similar  instruments  or  letters  of credit (or
reimbursement  agreements  in  respect  thereof)  or  representing  the  balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback  transactions) or representing any hedging
obligations  under an Exchange Rate Contract or an Interest Rate  Agreement,  if
and to the extent any of the  foregoing  indebtedness  (other  than  obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such

                                       8
<PAGE>

Person  prepared in accordance  with GAAP, and also includes,  to the extent not
otherwise  included,  the Guarantee of items which would be included within this
definition. "Indebtedness" does not include accrued operating costs, expenses or
liabilities, open account advances or trade accounts payable.

"Interest  Rate  Agreement"  means,  for any  Person,  any  interest  rate  swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
similar  agreement  designed  to protect  the party  indicated  therein  against
fluctuations in interest rates.

"Issuance Date" means the date on which the Note is first issued.

"Material  Subsidiary"  means  (i) FXEP and (ii)  any  other  subsidiary  of the
Company  which is a  "significant  subsidiary"  as  defined  in Rule  1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act (as such Regulation
is in effect on the date hereof).

"Note" means, collectively, (i) this Note or (ii) any note or notes which may be
issued in exchange or substitution of this Note, in whole or in part.

"Obligations" means any principal,  interest, penalties, fees, indemnifications,
reimbursements,  damages and other  liabilities  payable under the documentation
governing any Indebtedness.

"Permitted  Security  Interest"  means  (i) any  Security  Interest  arising  by
operation  of law in the ordinary  course of business  and securing  amounts not
more than 90 days  overdue;  (ii)  Security  Interests  expressly  permitted  in
writing by the Holder;  (iii)  easements,  rights of way,  servitudes,  permits,
surface leases and other rights affecting the surface that do not interfere with
the use, operation,  value or unrestricted alienability of the affected property
and do not interfere  with the ability of the Holder to enforce any rights under
this Note or any Security  Agreements  nor in any way  materially  and adversely
affect the ongoing  interests of the Company;  and (iv) purchase  money security
interests  securing amounts no greater than US$100,000  incurred in the ordinary
course of business.

"Person"  means  any  individual,   corporation,   partnership,  joint  venture,
association,   joint  stock  company,  trust,   unincorporated  organization  or
government or any agency or political subdivision thereof.

"POGC" shall have the meaning set forth in Section 3 hereof.

"Project  Finance Debt" shall have the meaning  ascribed to it in the Gas Option
Agreement.

"Registration Rights Agreement" means the registration rights agreement dated on
the date hereof between the Company and the Holder.

"Restricted  Share  Certificate"  shall have the  meaning set forth in Section 7
hereof.

                                       9
<PAGE>

"Restricted Share Legend" shall have the meaning set forth in Section 7 hereof.

"Restricted Shares" shall have the meaning set forth in Section 7 hereof.

"Security  Interest"  means any  mortgage,  pledge,  lien,  charge,  assignment,
hypothecation or security interest or any other agreement or arrangement  having
the effect of conferring security.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

"Security  Agreements"  means (i) the pledge  agreements  between the Holder and
FXEP  described  in Section 15 hereof,  together  with all other  agreements  or
instruments  executed or delivered  in  connection  therewith,  and (ii) and any
other  document  agreed by the Holder,  the Company and FXEP to be designated as
such from time to time.

"Shares" shall have the meaning set forth in Section 7 hereof.

"Stock Option" shall have the meaning set forth in Section 8 hereof.

"US dollars" and "US$" mean the lawful currency of the United States of America.

2.       Ranking.

This Note,  limited to US$5,000,000 in aggregate  principal amount, is a direct,
unconditional,  unsubordinated  general  obligation  of the Company,  secured by
certain  assets of FXEP as provided in Section 13. The Company  currently has no
Indebtedness and shall not issue any securities or incur any  Indebtedness  that
rank  senior  to or pari  passu in right of  payment  with the Note or rights or
options  exercisable  for or convertible  into any such  securities  without the
prior written consent of the Holder of the Note.

3.       Advances.

The Holder shall lend the principal amount of this Note to the Company by way of
two  advances,  each in the amount of  US$2,500,000.  The first advance shall be
made by wire  transfer  within three (3) days after the date hereof.  The second
advance shall be made upon satisfaction of the following conditions:

         (a)      receipt by the Holder of either:

                  (1)      consents  in the  form  set  forth  in Annex A, or as
                           otherwise  agreed to in writing  between  the Company
                           and the  Holder,  from the Polish Oil and Gas Company
                           ("POGC") and Apache  Poland Sp. zo.o.  ("Apache")  to
                           the pledges  created by the Security  Agreements  and
                           the Holder's rights thereunder; or

                                       10
<PAGE>

                  (2)      (A)  acknowledgements  from  POGC and  Apache  to the
                           pledges  created by the Security  Agreements  and the
                           Holder's  rights  thereunder,  together with (B)(i) a
                           valid pledge of a  newly-established  bank account in
                           Poland in the name of FXEP into which all proceeds to
                           be received by FXEP from the sale of natural gas from
                           the  Kleka 11 well and any other  well in the  Fences
                           Area  are  to  be  deposited,  (ii)  irrevocable  and
                           unconditional  instructions  from FXEP to POGC to pay
                           all  amounts  due to FXEP to such  account and POGC's
                           acknowledgement  of  such  instructions,   and  (iii)
                           irrevocable and unconditional  instructions from FXEP
                           to the relevant bank  concerning  the  management and
                           disposition   of  such   account   and  such   bank's
                           acknowledgement of such instructions;  provided, that
                           all  agreements  and  documents  referred  to in this
                           subsection   (a)  shall  be  in  form  and  substance
                           reasonably  acceptable  to the Holder and deemed each
                           to be a Security Agreement; and

                  (b)      receipt  by  the  Holder  of  confirmation  from  the
                           Company  that no Event of Default has occurred and is
                           continuing.

If the above  conditions are not satisfied  within 21 days after the date hereof
or such later date as the  Company  and the Holder may agree to in writing  (the
"Conditions  Date"),  the Holder may in its discretion (i) waive such conditions
and make the second advance  within 9 days after the  Conditions  Date, in which
case the Company  shall  continue  to use its best  efforts to satisfy the above
conditions  following the Conditions Date, or (ii) accept  alternative  security
satisfactory  to the Holder and the Company and make the second advance within 9
days after the Conditions Date or (iii) cancel its commitment to make the second
advance as of the  Conditions  Date, in which case the  principal  amount of the
first advance shall be  immediately  due and payable,  the Gas Option  Agreement
shall be terminated and the Stock Option revoked.

4.       Interest.

No interest  shall  accrue or be payable on this Note during the period from the
Issuance Date to, and  including,  the first  anniversary  of the Issuance Date.
From the first  anniversary of the Issuance Date until  repayment in full,  this
Note will accrue  interest  at a rate of nine and  one-half  percent  (9.5%) per
year.  Interest  will be  computed  on the basis of a 360-day  year.  If the Gas
Agreement  has  been  executed  in  accordance  with the Gas  Option  Agreement,
interest  shall be  compounded  quarterly  from  the  first  anniversary  of the
Issuance Date until repayment in full. The Company will pay interest, if any, on
overdue  principal and interest at the interest rate borne by this Note plus 3%,
compounded quarterly.

5.       Payment.

The Company  promises to pay  principal and interest on this Note in arrears (i)
on the second  anniversary  of the Issuance  Date in a single  instalment of the
total amount outstanding if the Gas Agreement has not been executed by the first
anniversary of the Issuance Date, or (ii) if the Gas Agreement has been executed
on or before the

                                       11
<PAGE>

first  anniversary of the Issuance Date, in accordance with the terms of the Gas
Option  Agreement,  in thirty two (32) consecutive  equal quarterly  payments of
principal  and  interest,  commencing  on the  first  day of  the  second  month
following the first quarter in which the Buyer under the Gas Agreement has taken
or paid for the Quarterly  Take or Pay Quantity of Gas specified in Section 11.1
of the gas supply heads of terms contained in the Gas Option  Agreement.  Unless
this Note has been  previously  converted  pursuant  to  Section  7 hereof,  all
payments  under this Note shall be made without  deductions or  withholdings  by
wire  transfer  of  immediately  available  funds in US  dollars  to an  account
nominated by the Holder.

6.       Early Repayment.

The Company may, at any time and from time to time,  without premium or penalty,
redeem the Note, in whole or in part and in a minimum  amount of US$100,000  and
integral  multiples of US$100,000,  at a redemption price equal to the principal
amount  thereof  plus  accrued  and unpaid  interest  thereon to the  applicable
redemption  date.  Notice of any  redemption  must be  received by the Holder at
least 10 Business  Days before the  redemption  date at the address set forth in
Section 15 hereof.  On and after the redemption date,  interest ceases to accrue
on the Notes or the portion of the Notes that is redeemed.

7.       Conversion.

7.1.     If the  Holder  has made an  irrevocable  election  in  writing  to the
         Company not to enter into the Gas Agreement,  the Holder has the right,
         exercisable  at any time after the date  hereof,  to convert all or any
         part of the  outstanding  principal  payable by the Company on the Note
         into shares of Common  Stock (the  "Shares") at the  Conversion  Price,
         except  that if the Note,  or any part  thereof,  is  called  for early
         repayment pursuant to Section 6, the conversion right will terminate on
         the first  anniversary of the Issuance Date or on receipt by the Holder
         of notice of redemption, whichever is later. The conversion right shall
         terminate in all events at the close of business (New York time) on the
         second  anniversary  of the Issuance Date. No interest shall be payable
         on any  principal  amount  converted  into Shares,  and if any interest
         shall  have  been  paid on such  principal  it shall be  repaid  to the
         Company at the time of Conversion.

7.2.     The  "Conversion  Price" shall be US$5.00 per Share;  provided that, if
         all of the consents described in Section 3(a)(1) are not obtained prior
         to the Conditions  Date, the  Conversion  Price shall be  automatically
         adjusted to US$4.00 plus or minus  one-half the variation  from US$4.00
         of the closing price of the Common Stock trading on Nasdaq on the first
         trading day that is 90 days after the date hereof;  provided  that such
         adjusted Conversion Price shall in no event be greater than US$5.00 per
         Share or less than  US$3.00 per Share.  The  Conversion  Price shall be
         subject to pro rata adjustment upon any alteration to the nominal value
         of the  Common  Stock  as a result  of  consolidation,  subdivision  or
         reclassification.

                                       12
<PAGE>

7.3.     The  Holder may  convert a portion  of this Note equal to any  integral
         multiple of US$100,000.  The provisions herein that apply to conversion
         of all of this Note also apply to conversion of a portion of it.

7.4.     To convert the Note, the Holder must (1) complete and sign a conversion
         notice  substantially  in the form set forth  above in the Note and (2)
         surrender  such  Note  to the  Company.  The  date on  which  a  Holder
         satisfies these  requirements  is the conversion date (the  "Conversion
         Date"). For the avoidance of doubt, if the Conversion Date occurs prior
         to 90 days after the date  hereof,  the  Conversion  Price shall remain
         US$5.00 per Share.

7.5.     As soon as  practicable  after the  Conversion  Date, the Company shall
         deliver to the  Holder a  certificate  for the  number of whole  Shares
         issued. The Company will not issue fractional Shares upon conversion of
         a Note. In lieu of fractional Shares, the Company will pay an amount in
         cash based upon the  closing  price of the Common  Stock on the trading
         day prior to the Conversion Date. As of the Conversion Date, the Person
         in whose name the  certificate  is made shall cease to have rights as a
         Holder.

7.6.     Upon surrender of any Note that is converted in part, the Company shall
         issue and  authenticate  a new Note  equal in  principal  amount to the
         unconverted portion of the Note surrendered.

7.7.     The issuance of  certificates  for Shares upon the  conversion  of this
         Note shall be made  without  charge to the  converting  Holder for such
         certificates  or  for  any  tax in  respect  of the  issuance  of  such
         certificates.

7.8.     The Company  shall at all times reserve and keep  available,  free from
         preemptive  rights,  out of its authorized  but unissued  Common Stock,
         solely for the  purpose of  issuance  upon  conversion  of this Note as
         herein provided, a sufficient number of Shares to permit the conversion
         of the  outstanding  portion of this Note for Shares.  All Shares which
         may be issued upon  conversion  of this Note shall be duly  authorized,
         validly issued, fully paid and non-assessable when so issued.

7.9.     For so long as the Note or any portion  thereof may be  converted  into
         Shares,  and for two years after the Conversion Date of any Shares, and
         in any event for two years from the Issuance  Date,  the Company  shall
         timely file all reports  required to be filed by it pursuant to Section
         13 of the  Exchange  Act in order to make  Rule  144  available  to the
         Holder for any transfer of this Note or the Common Stock  issuable upon
         any conversion of this Note.

7.10.    In accordance with Rule 144, with respect to all Shares:  (i) no Shares
         may be resold before one year from the Issuance  Date;  (ii) during the
         next year resales of Shares shall not exceed the amounts  allowed under
         Rule 144(e); and (iii) thereafter,  subject to Section 7.11, the Shares
         may be resold without

                                       13
<PAGE>

                  restriction.  Upon  conversion  of this Note to Common  Stock,
                  each  certificate  representing  the Shares will bear a legend
                  (the  "Restricted  Share Legend") so  restricting  the sale of
                  such Shares in substantially the following form:

         The securities evidenced hereby were originally issued in a transaction
         exempt  from  registration   under  Section  5  of  the  United  States
         Securities  Act of 1933,  as amended (the  "Securities  Act"),  and the
         securities  evidenced  hereby  may not be  offered,  sold or  otherwise
         transferred  in the  absence  of  such  registration  or an  applicable
         exemption therefrom.  Each purchaser of the securities evidenced hereby
         is hereby  notified that the seller may be relying on an exemption from
         the  provisions of Section 5 of the  Securities  Act. The holder of the
         securities  evidenced  hereby  agrees that (I) such  securities  may be
         resold, pledged or otherwise transferred,  only (1)(a) in a transaction
         meeting the  requirements  of Rule 144 under the  Securities  Act,  (b)
         outside the United States to a foreign person in a transaction  meeting
         the  requirements  of  Rule  904  under  the  Securities  Act or (c) in
         accordance with another exemption from the registration requirements of
         the  Securities  Act,  (2) to the  issuer of the  securities  evidenced
         hereby or (3) pursuant to an effective  registration  statement and, in
         each case, in accordance  with any  applicable  securities  laws of any
         state of the United  States or any other  applicable  jurisdiction  and
         (II) the purchaser will, and each subsequent  purchaser is required to,
         notify any subsequent  purchaser  from it of the  securities  evidenced
         hereby of the resale restriction set forth in (I) above.(1)

         (1)      This  paragraph  shall  be  removed  upon the  earlier  of (i)
         registration  of the Common Stock pursuant to the  Registration  Rights
         Agreement or (ii)  satisfaction of the requirements  under Section 7.10
         of the Note.

7.11.    With respect to all Shares, and notwithstanding  Rule 144d(3)(ii) under
         the Securities Act:

         (a)      No Shares may be resold  before one year after the  Conversion
                  Date; and

         (b)      The  aggregate  sales of all Shares  during  the  period  that
                  begins one year after their  issuance and ends two years after
                  their issuance shall not exceed the greater of (a) one percent
                  of the number of shares of Common Stock issued and outstanding
                  as shown by the most recent  report or statement  published by
                  the  Company,  or (ii) the  average  volume of trading in such
                  Common Stock  reported  through the Nasdaq Stock Market during
                  the four calendar weeks  preceding the receipt of the order to
                  execute the sale by the broker or the date of execution of the
                  sale directly with a market maker.

                                       14
<PAGE>

         (c)      The  certificates   representing  such  Shares  will  bear  an
                  additional  Restricted  Shares Legend (for two years following
                  the Conversion Date, after which such legend shall be removed)
                  substantially in the following form:

         Resale of the securities  evidenced  hereby are subject to restrictions
         set forth in that  certain  9.5%  Convertible  Secured Note in the face
         amount of US$5,000,000  payable to Rolls-Royce  Power Ventures  Limited
         Company dated March 9, 2001 (the "Note"),  a copy of which restrictions
         may be obtained from the issuer of the securities  evidenced  hereby at
         its principal  executive  offices.  Notwithstanding  Rule 144(d)(3)(ii)
         under the  Securities  Act, such  restrictions  prohibit  sales of such
         securities  for the period  ending one year after  their  issuance  and
         limit,  for the period  beginning  one year after  their  issuance  and
         ending two years  after  their  issuance,  the  aggregate  sales by the
         holder or holders of all shares of Common Stock issued or issuable upon
         conversion  of the whole  Note to not more than the  greater of (a) one
         percent of the shares of Common Stock issued and  outstanding  as shown
         by the most recent  report or statement  published  by the Company,  or
         (ii) the  average  volume of  trading  in such  Common  Stock  reported
         through  the  Nasdaq  Stock  Market  during  the  four  calendar  weeks
         preceding the receipt of the order to execute the sale by the broker or
         the date of execution of the transaction  directly with a market maker.
         (1)

         (1)      This  paragraph  shall  be  removed  upon the  earlier  of (i)
         registration  of the Common Stock pursuant to the  Registration  Rights
         Agreement, (ii) satisfaction of the requirements of Section 7.11 of the
         Note or (iii) upon demand of the Holder in exercising  its rights under
         Section 10.3(b) of the Note.

7.12.    It is the intention of the Company and the Holder that all Shares shall
         be tradable  without  restriction  under the  Securities  Act on Nasdaq
         after the holding  periods  described in Sections  7.10 and 7.11,  upon
         which  the  Company  agrees  and  undertakes  to take any and all steps
         required to enable the Holder to trade any Shares  without  restriction
         under the Securities Act, including  registering the Shares pursuant to
         the Registration Rights Agreement.

8.       Early Repayment Stock Option.

8.1.     Notwithstanding  anything to the  contrary  in Section  7.1, if (i) the
         Company  makes  an  early  repayment  of all or a  part  of the  amount
         outstanding under the Note (the "Early Repayment  Amount") prior to the
         first  anniversary of the Issuance Date and (ii) on or before the first
         anniversary  of the Issuance  Date,  the Holder has made an irrevocable
         election in writing to the Company not to enter into the Gas Agreement,
         the Holder shall have the option (the "Stock Option") at its discretion
         to purchase  Common Stock at the  Conversion  Price (as may be adjusted
         pursuant to Section  7.2),  up to a

                                       15
<PAGE>

         number of Shares  equal to the Early  Repayment  Amount  divided by the
         Conversion  Price.  The  Stock  Option  shall  expire  on the  close of
         business (New York time) on the first anniversary of the Issuance Date.

8.2.     The Stock  Option may be exercised  only by written  notice in the form
         attached to the Note  delivered in accordance  with Section 16. Payment
         for the Common  Stock  issued  pursuant to exercise of the Stock Option
         shall be made by wire  transfer of  immediately  available  funds,  and
         shares  evidencing  such Common  Stock shall be delivered to the Holder
         within three Business Days thereafter.

8.3.     Sections  7.2,  7.3,  7.5,  7.7, 7.8, 7.9, 7.10 and 7.11 shall apply to
         this Section 8 mutatis mutandis as if references  therein to conversion
         of the Note were references to exercise of the Stock Option.

9.       Representation and Warranties.

9.1.     The Company represents and warrants:

(a)      Status and  Authority.  (i) The  Company is an entity  duly  organized,
         validly   existing  and  in  good  standing   under  the  laws  of  the
         jurisdiction  in which it is organized  and is qualified to do business
         in all jurisdictions where it is required to be qualified;  (ii) it has
         the  necessary  power  and  authority  to enter  into and  perform  its
         obligations under this Note; (iii) it has duly authorized the person(s)
         signing  this  Note to  execute  this  Note on its  behalf;  (iv)  upon
         execution,  this Note will be a legal,  valid and binding obligation of
         the Company,  enforceable  against the Company in  accordance  with its
         terms;  and (v) the execution and delivery of this Note and performance
         hereunder will not violate,  result in a breach of or conflict with any
         law, rule,  regulation,  order or decree applicable to the Company, its
         organizational documents or the terms of any other agreement binding on
         the  Company.

(b)      Capitalization.  FXE is authorized to issue (a)  100,000,000  shares of
         common stock,  $0.001 par value per share, of which  17,680,235  shares
         are issued and  outstanding  and  4,575,167  shares  are  reserved  for
         issuance on the exercise of outstanding  options and warrants,  and (b)
         5,000,000  shares of preferred  stock,  $0.001 par value per share,  of
         which 500,000 shares are designated as Series A Preferred Stock and are
         reserved  for  issuance  under a rights  agreement  dated as of 4 April
         1997, between FXE and Fidelity Transfer Corporation, a copy of which is
         available to RRPV. The common stock and the Series A Preferred Stock of
         FXE have the  voting  powers,  designations,  preferences,  rights  and
         qualifications,  limitations, or restrictions set forth in the articles
         of  incorporation  and  amendments  thereto.  All  of  the  issued  and
         outstanding  shares of capital  stock of FXE have been duly  authorized
         and validly issued and are fully paid and  nonassessable and not issued
         in violation of the preemptive  right of any person.  The  undesignated
         preferred  stock may be issued in such series  with the voting

                                       16
<PAGE>

         powers,   designations,   preferences,   rights   and   qualifications,
         limitations,  or  restrictions  as may be duly approved by the board of
         directors.

(c)      Issuance and Sale of Shares. The Shares  contemplated by this Note have
         been duly  reserved for issuance by all necessary  corporate  action on
         the part of the Company;  and the Shares,  when issued and delivered in
         accordance  with the  terms  of this  Note,  will be duly  and  validly
         issued,  fully paid, and  nonassessable  and not issued in violation of
         the   preemptive   right   of  any   person.   Based  in  part  on  the
         representations  made by or on behalf of the Holder in Section 9.2, the
         offer, issuance, and sale to the Holder of the Note and the issuance of
         the  Shares  issuable  upon  conversion  of the  Note are  exempt  from
         registration  under the Securities Act and applicable  state securities
         laws.

(d)      SEC Reports.  The Company has furnished to  Rolls-Royce  Power Ventures
         Limited complete and accurate copies,  as amended or supplemented as of
         the date hereof,  of its (i) Annual  Report on Form 10-K for the fiscal
         year ended 31 December  1999,  as filed with the  Commission,  (ii) all
         proxy statements and other solicitation materials that have been issued
         by the Company relating to the Company's  meetings of stockholders held
         or  currently  scheduled  since 31 December  1999,  and (iii) all other
         reports filed by the Company with the Commission under the Exchange Act
         since 31  December  1999 (such  reports  are  collectively  referred to
         herein as the "FXE  Reports").  The FXE Reports  constitute  all of the
         documents required to be filed by the Company with the Commission under
         Sections 13, 14 or 15(d) of the Exchange Act since 31 December 1999.

(e)      Financial Statements.  The audited consolidated financial statements of
         the Company  included in the  Company's  Annual Report on Form 10-K for
         the fiscal years ended 31 December  1998 and 1999 (i) comply as to form
         in all material  respects with applicable  accounting  requirements and
         the published  rules and  regulations  of the  Commission  with respect
         thereto,  (ii) have been prepared in accordance with generally accepted
         accounting  principles  applied on a consistent  basis  throughout  the
         periods covered  thereby (except as may be indicated  therein or in the
         notes  thereto),   (iii)  fairly  present  the  consolidated  financial
         condition,  results of  operations  and cash flows of the Company as of
         the respective  dates thereof and for the periods  referred to therein,
         and (iv) are consistent with the books and records of the Company.

         The unaudited consolidated financial statements of the Company included
         in the Company's quarterly reports on Form 10-Q for the fiscal quarters
         ended 31 March,  30 June,  and 30  September  2000,  and the  unaudited
         consolidated  financial  statement  of the  Company for the fiscal year
         ended  31  December  2000,  furnished  to  Rolls-Royce  Power  Ventures
         Limited,  fairly  present the  consolidated  financial  position of the
         Company and its  subsidiaries as of the respective  dates thereof,  and
         the  consolidated  results of operations and cash flows for the periods
         indicated  (including  reasonable  estimates  of normal  and  recurring
         year-end adjustments),  except (i) to the extent required by changes

                                       17
<PAGE>

         in generally accepted accounting  principles;  (ii) as may be indicated
         in the notes  thereto;  and (iii) as may be  permitted by Article 10 of
         Commission Regulation S-X.

(f)      No Actions  and  Proceedings.  There are no  actions,  suits or claims,
         legal   or   arbitral   proceedings,    governmental    inquiries,   or
         investigations  pending  or,  to the  Company's  knowledge,  threatened
         against  the  Company  or against  any of its  Affiliates  or  Material
         Subsidiaries,  that question the right of the Company to issue the Note
         or that might result,  either individually or in the aggregate,  in any
         material  adverse  change  in  the  business,   prospects,  assets,  or
         condition, financial or otherwise, of the Company.

(g)      No Material  Change.  Since  December 31, 2000,  there has not been any
         material adverse change in the assets,  business,  financial condition,
         or results of operations of the Company.

(h)      Senior Ranking.  The Company's  obligations under this Note rank senior
         to all of its Indebtedness except for Permitted Security Interests. The
         Company is not aware of any  Indebtedness  that ranks senior to or pari
         passu with the Note other than  Permitted  Security  Interests or other
         obligations  that would be  mandatorily  preferred  by law  applying to
         companies generally.

(i)      Assets.  All of the  Company's  assets and  property  are free from any
         Security  Interests other than Permitted  Security  Interests,  and are
         free from any other material restrictions, covenants and conditions.

(j)      Accuracy of Information.  The information contained in the FXE Reports,
         as of their respective  dates, and the unaudited  balance sheets of the
         Company as of December 31, 2000,  did not contain any untrue  statement
         of a material  fact or omit to state a  material  fact  required  to be
         stated therein or necessary to make the statements therein, in light of
         the circumstances under which they were made, not misleading.

9.2.     The Holder represents and warrants:

(a)      Acquisition of the Shares.  In connection  with the  acquisition by the
         Holder of any  Shares  in  accordance  with the terms of the Note,  the
         Holder represents that the Shares are being acquired without a view to,
         or for,  resale in connection  with any  distribution of such Shares or
         any interest  therein without  registration or an applicable  exemption
         under the Securities Act and that the Holder is not an "underwriter" as
         defined in Section 2(a)(11) of the Securities Act.

(b)      Authority. The Holder has full power and authority to execute, deliver,
         and  perform its  obligations  under this Note in  accordance  with the
         Conditions.  The  Holder  has  not  been  organized,   reorganized,  or
         recapitalized specifically for the purpose of investing in the Company.
         This  Note has been duly  executed  and  delivered  by the  Holder  and
         constitutes a valid and binding

                                       18
<PAGE>

         obligation of the Holder,  enforceable against the Holder in accordance
         with the Conditions.

(c)      Accredited  Investor.  The Holder is an  "accredited  investor" as that
         term is  defined  in Rule 501 of  Regulation  D  promulgated  under the
         Securities Act. The Holder,  either alone or with its duly  constituted
         representative, has sufficient knowledge and experience in investing in
         companies  similar to the  Company,  so as to be able to  evaluate  the
         risks  and  merits  of its  investment  in  the  Company  and  is  able
         financially to bear the risk thereof,  including a complete loss of its
         entire investment.

(d)      Brokerage.  No broker,  finder, agent or similar intermediary has acted
         on  behalf  of  the  Holder  in  connection   with  this  Note  or  the
         transactions   contemplated   hereby,   and  there  are  no   brokerage
         commissions,  finder's fees, or similar fees or commissions, payable in
         connection   therewith   based  on  any  agreement,   arrangement,   or
         understanding with the Holder.

10.      Defaults and Remedies.

10.1.    Events of Default.  An "Event of Default" occurs if:

(a)      the Company  defaults in the payment of  principal  and interest on the
         Note when the same becomes due and payable;

(b)      the Company fails to timely observe or perform or breaches any material
         covenant,  representation  or warranty or  agreement  contained  in the
         Conditions;

(c)      there is a default  under any mortgage,  indenture or instrument  under
         which there may be issued or by which there may be secured or evidenced
         any  Indebtedness  (including  for the avoidance of doubt,  any Project
         Finance  Debt) for money  borrowed  by the  Company  (or the payment of
         which is  guaranteed  by the  Company),  whether such  Indebtedness  or
         guarantee  now  exists or is created  after the  Issuance  Date,  which
         default:

         (1)      is caused by a failure to pay when due any amounts  payable on
                  such Indebtedness within the grace period provided for in such
                  Indebtedness  (which failure  continues  beyond any applicable
                  grace period) (a "Payment Default");

         (2)      results in the acceleration of such Indebtedness  prior to its
                  express maturity; and

         (3)      in each case, the principal  amount of any such  Indebtedness,
                  together  with  the   principal   amount  of  any  other  such
                  Indebtedness  under  which  there is a Payment  Default or the
                  maturity  of  which  has  been  so   accelerated,   aggregates
                  US$250,000 or more;

                                       19
<PAGE>

(d)      the Company pursuant to or within the meaning of any Bankruptcy Law:

         (1)      commences a voluntary case;

         (2)      consents to the entry of an order for relief  against it in an
                  involuntary case in which it is the debtor;

         (3)      consents to the appointment of a Custodian of it or for all or
                  substantially all of its property;

         (4)      makes a general  assignment  for the benefit of its creditors;
                  or

         (5)      generally  is unable to pay its debts as the same  become due;
                  (e) a court  of  competent  jurisdiction  enters  an  order or
                  decree under any Bankruptcy Law that:

                  (1)      is for relief  against the Company in an  involuntary
                           case;

                  (2)      appoints  a  Custodian  of  the  Company  for  all or
                           substantially all of its property; or

                  (3)      orders the liquidation of the Company,  and the order
                           or decree remains unstayed and in effect for 60 days;
                           (f) the  Company or FXEP  fails to timely  observe or
                           perform   or   breaches   any   material    covenant,
                           representation or warranty or agreement  contained in
                           the Gas Option  Agreement,  the Gas  Agreement or any
                           Security Agreement; or

(g)      the proceeds  from the issuance of this Note are not used in accordance
         with the development plan attached hereto as Annex B.

10.2.    Acceleration.  If an Event of Default  (other  than an Event of Default
         specified in clauses (d) and (e) of Section 10.1 hereof)  occurs and is
         continuing,  the Holder by notice to the Company, may declare this Note
         to be due and  payable.  Upon such  declaration,  the  principal of and
         interest  on,  this Note shall be due and  payable  immediately.  If an
         Event of Default  specified in clause (d) or (e) of Section 10.1 hereof
         occurs,  such an amount shall ipso facto become and be immediately  due
         and  payable  without any  declaration  or other act on the part of the
         Holder. The Holder by notice to the Company may rescind an acceleration
         and its  consequences  if the  rescission  would not conflict  with any
         judgment or decree.

10.3.    Other Remedies.

(a)      If an Event of Default occurs and is continuing, the Holder may declare
         that all or any of its  rights  under the  Security  Agreements  may be
         exercised

                                       20
<PAGE>

         and/or pursue any available remedy,  including specific performance and
         injunctive  relief,  to collect the payment of principal or interest on
         this Note or to enforce the performance of any provision of this Note.

(b)      If an Event of Default occurs and is continuing, the Holder may declare
         and the Company  hereby agrees that any additional  restrictions  which
         may have been  imposed  by  Section  7.11 on the  Holder's  ability  to
         transfer any Common Stock  acquired by any  conversion  of this Note is
         immediately rescinded.

(c)      A delay or  omission  by the Holder in  exercising  any right or remedy
         accruing  upon an Event of Default shall not impair the right or remedy
         or  constitute a waiver of, or  acquiescence  in, the Event of Default.
         All remedies are cumulative to the extent permitted by law.

10.4.    Waiver of Past Defaults. The Holder, in its sole discretion, by written
         notice to the Company may waive an existing Default or Event of Default
         and its consequences.

10.5.    Rights  of  Holder  to  Receive  Payment.   Notwithstanding  any  other
         provision of this Note,  the right of the Holder to receive  payment of
         principal  and  interest on the Note,  on or after the  respective  due
         dates  expressed in this Note, or to bring suit for the  enforcement of
         any such  payment  on or after  such  respective  dates,  shall  not be
         impaired or affected without the consent of the Holder made pursuant to
         this Section 10.5.

11.      Transfer of the Note.

The Holder may sell or  otherwise  transfer or assign this Note,  in whole or in
part,  or the Holder's  rights or  obligations  hereunder,  in whole or in part,
without the consent of the Company to any of its  Affiliates  or a joint venture
entity  formed with any such  Affiliate  if such  transferee  or assignee is the
"Buyer" under the Gas Agreement.  The Holder may transfer this Note to any third
party at any time there is a Default hereunder.  Any other transfer of this Note
shall require the prior written consent of the Company,  which consent shall not
be unreasonably withheld.

12.      Successor Corporation Substituted.

Upon any  consolidation  or merger of the  Company,  the  successor  corporation
formed thereby shall succeed to, and be  substituted  for and may exercise every
right and power of, the Company  under this Note with the same effect as if such
successor  Person  had been  named as the  Company  herein.  The  Company  shall
condition any sale, assignment, transfer, lease, conveyance or other disposition
of all or substantially all of the assets of the Company on the agreement of the
Person to which such sale,  assignment,  transfer,  lease,  conveyance  or other
disposition  is made,  to be  substituted  for and  assume all  obligations  and
liabilities  of, the

                                       21
<PAGE>

Company  under this Note with the same  effect as if such  successor  Person had
been named as the Company herein.

13.      Activities in Poland.

The  Company  may  not  conduct  any  exploration,   development  or  production
activities  with respect to natural gas in Poland  through any entity other than
FXEP without the prior written consent of the Holder.

14.      Amendments and Supplements.

Except as otherwise  expressly provided herein, this Note may only be amended or
supplemented with the prior written consent of the Holder.

15.      Security Agreements.

15.1.    This Note is  secured by  security  interests  in  certain  contractual
         rights of FXEP,  which  security  interests  are granted by FXEP to the
         Holder  pursuant to the terms of the Security  Agreements  set forth in
         Annex C.  Subject to the prior  written  consent of the  Holder,  which
         consent  shall not be  unreasonably  withheld,  the security  interests
         created by the Security Agreements may be replaced from time to time by
         pledges or assignments  of rights,  assets or other property of FXEP or
         any other security; provided that the value of the replacement security
         interests are at the time of  replacement  at least twice the amount of
         the outstanding principal and interest due on the Note at such time. If
         the replacement security consists of Natural Gas reserves, the security
         value shall be determined on the basis of P90 reserves net of estimated
         capital  expenditures and operating costs,  discounted to present value
         at a 10% discount rate.

15.2.    If the consents  described in Section 3(a)(1) are not obtained prior to
         the  Conditions  Date,  for so long as any amounts  remain  outstanding
         under the Note, the Company undertakes to:

(a)      cause all  proceeds  to be  received  by FXEP from any and all sales of
         natural  gas from the  Kleka 11 well and any other  well in the  Fences
         Area to be  deposited  into  the  bank  account  described  in  Section
         3(a)(2)(B);

(b)      procure that FXEP shall (i) open a bank account in Poland promptly upon
         entering into any agreement to sell natural gas produced from the Wilga
         well or from any other well  pledged to the Holder in  accordance  with
         Section  15.1,  (ii) cause all proceeds to be received by FXEP from any
         and all sales of  natural  gas from the Wilga  well,  or from any other
         well  pledged to the Holder in  accordance  with  Section  15.1,  to be
         deposited  into such bank  account and (iii) pledge such account to the
         Holder in a manner  consistent  with  Section  3(a)(2)(B).  Such pledge
         shall be in addition to the security created under Section 15.1 and any
         agreement  or  agreements  evidencing

                                       22
<PAGE>

         such pledge shall be in a form reasonably  acceptable to the Holder and
         deemed  each to be a Security  Agreement;  and (c)  continue to use its
         best efforts to obtain the consents described in Section 3(a)(1).

16.      Notices.

Any notice or  communication  required or  permitted to be given under this Note
shall be in writing addressed to the respective party as set forth below and may
be personally  served or mailed by registered or certified mail (return  receipt
requested)  postage  prepaid or sent  prepaid by  recognized  overnight  courier
service  or  facsimile.  The  Company  or the  Holder by notice to the other may
designate   additional  or  different   addresses  for  subsequent   notices  or
communications.

All other notices or communications shall be in writing.

         If to the Company:

         FX Energy, Inc.
         3006 Highland Drive, Suite 206
         Salt Lake City, UT 84106
         Attention of:  David Pierce
         facsimile: (1) 801 486 5575

         If to the Holder:

         Rolls-Royce Power Ventures Limited
         150 Victoria Street
         London SW1E 5LB
         Attention of: Graeme Fairbairn
         facsimile: (44) 20 7227 9001

17.      Cancellation.

After all unpaid principal and interest owed on this Note has been paid in full,
this Note shall be surrendered to the Company for  cancellation and shall not be
reissued.

18.      Replacement of Note.

In the event that this Note shall at any time become  mutilated  or destroyed or
stolen  or lost  and such  mutilated  Note or  evidence  of the  loss,  theft or
destruction of this Note has been  delivered to the Company,  a new Note of like
tenor will be issued by the Company in exchange for the Note so mutilated, or in
lieu of the Note so destroyed  or stolen or lost.  Every new Note issued in lieu
of any mutilated,  destroyed,  lost or stolen Note shall  constitute an original
additional contractual obligation of the Company,  whether or not the mutilated,
destroyed,  lost or stolen Note shall be at any time enforceable by anyone.  Any
new Note  delivered  pursuant

                                       23
<PAGE>

to this paragraph shall be so dated that neither gain nor loss in interest shall
result from such exchange.

19.      Expenses.

The Company  will pay all costs  associated  with the Note and the  Registration
Rights  Agreement other than costs incurred by the Holder and the Holder's legal
fees.

20.      Public Announcements.

Neither  the Company  nor the Holder  shall issue any press  release or make any
other public announcement  relating to the transactions which are the subject of
this Note or the Gas Option  Agreement or the  material  content of this Note or
the Gas Option  Agreement  without the prior written  consent of the other party
hereto,  except if required  under  applicable law or the rules of Nasdaq or any
stock exchange on which such party's shares are listed; provided,  however, that
if such disclosure is required,  prior to such disclosure, a party shall provide
a copy of such  announcement  to the other party  hereto.  At any time after the
date of hereof, the Company may make a public announcement in the form set forth
in Annex D.

21.      Governing Law.

THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS NOTE WITHOUT REGARD
TO CONFLICT OF LAW PROVISIONS THEREOF.

22.      Severability.

In case any provision in this Note shall be invalid,  illegal or  unenforceable,
the validity,  legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

23.      Headings.

The headings of the Sections of this Note have been inserted for  convenience of
reference  only,  are not to be  considered a part  hereof,  and shall in no way
modify or restrict any of the terms or provisions hereof.

                     [The next page is the Signature Page.]

                                       24
<PAGE>

                        Signature Page to the Conditions

Agreed and Accepted:



------------------------------
for and on behalf of
FX Energy, Inc.
Name:
Title:




------------------------------
for and on behalf of
Rolls-Royce Power Ventures Limited
Name:
Title:



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