EX-10.41






Exhibit 10.41





 









 





			
	CLIFFORD
	 	CLIFFORD CHANCE WONG PTE LTD
	CHANCE	 	 
	WONG
	 	EXECUTION COPY






NEW FIRST AMENDMENT AND RESTATEMENT AGREEMENT



Dated 12 January 2009



for

MI ENERGY CORPORATION



arranged by

STANDARD BANK ASIA LIMITED



with



STANDARD BANK ASIA LIMITED

acting as Agent



 





RELATING TO A BORROWING BASE FACILITY

AGREEMENT DATED 29 OCTOBER 2007, AS THE SAME

WAS AMENDED BY A WAIVER AND AMENDMENT

LETTER DATED 23 NOVEMBER 2007



 





 









 





CONTENTS




	 	 	 	 	 
	Clause	 	Page	 
	1. Definitions And Interpretation
	 	 	1	 
	2. Restatement
	 	 	2	 
	3. Representations
	 	 	2	 
	4. Continuity And Further Assurance
	 	 	3	 
	5. Acknowledgement Of Satisfaction Of Certain Conditions Subsequent
	 	 	3	 
	6. Release Of Far East Share Charge
	 	 	3	 
	7. Termination Of Amendment And Restatement Agreement Dated 6 June 2008
	 	 	3	 
	8. Waiver Of Subordination And Repayment Of Shareholder Loans
	 	 	3	 
	9. Write-Off
Of SPRB-ZR Loan
	 	 	4	 
	10. Miscellaneous
	 	 	4	 
	11. Governing Law
	 	 	4	 
	Schedule 1 Conditions Precedent 
	 	 	6	 
	Schedule 2 Restated Agreement 
	 	 	8	 
	Schedule 3 Form Of Prc Legal Opinion 
	 	 	9	 
	Schedule 4 Form Of ZR Guarantee
	 	 	10	 
	Schedule 5 Form Of Assignment Of ZR Guarantee 
	 	 	11	 






-1-









 






THIS AGREEMENT is dated 12 January 2009 and is made between:





	(1)	 	MI ENERGY CORPORATION, a corporation organised and existing under the laws of the Cayman
Islands and having an office at: c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands (the “Borrower”);






	(2)	 	STANDARD BANK ASIA LIMITED as arranger (the “Arranger”);






	(3)	 	THE LENDERS (as defined in the Original Facility Agreement);






	(4)	 	STANDARD BANK ASIA LIMITED as agent of the other Finance Parties (the “Agent”);






	(5)	 	STANDARD BANK ASIA LIMITED as security trustee for the other Secured Parties (the “Security
Trustee”);






	(6)	 	STANDARD BANK ASIA LIMITED as technical bank (the “Technical Bank”);






	(7)	 	STANDARD BANK PLC as offshore account bank (the “Offshore Account Bank”);
and
	 
	(8)	 	THE HEDGE COUNTERPARTIES (as defined in the Original Facility Agreement). IT IS AGREED as
follows:






	1.	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Definitions






	 	 	In this Agreement:






	 	 	“First Effective Date” means the date on which the Agent confirms to the Lenders and the
Company that it has received each of the documents listed in Schedule 1 (Conditions
Precedent) in a form and substance satisfactory to the Agent.






	 	 	“Interim Loan” has the meaning given in paragraph (a)(i) of Clause 8 (Waiver of Subordination
and Repayment of Shareholder Loans).






	 	 	“Original Facility Agreement” means the up to $150,000,000 borrowing base facility agreement
dated 29 October 2007 between the Borrower, the Agent, the Arranger, the Security Trustee,
the Lenders and others as the same was amended pursuant to a waiver and amendment letter
dated 23 November 2007.






	 	 	“Restated Agreement” means the Original Facility Agreement, as amended by this Agreement, the
terms of which are set out in Schedule 2 (Restated Agreement).






	 	 	“Transferred ZR Loan” has the meaning given in paragraph (a)(i) of Clause 8 (Waiver of
Subordination and Repayment of Shareholder Loans).






	 	 	“ZR Guarantee” has the meaning given in paragraph (a) of Clause 8 (Waiver of Subordination and
Repayment of Shareholder Loans).





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	1.2	 	Incorporation of defined terms






	 	(a)	 	Unless a contrary indication appears, a term defined in the Restated Agreement
has the same meaning in this Agreement.






	 	(b)	 	The principles of construction set out in the Restated Agreement shall have effect
as if set out in this Agreement.






	1.3	 	Clauses






	 	 	In this Agreement any reference to a “Clause” or a “Schedule” is, unless the context
otherwise requires, a reference to a Clause or a Schedule to this Agreement.






	1.4	 	Third party rights






	 	 	A person who is not a party to this Agreement has no right under the Contracts (Rights
of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.






	2.	 	RESTATEMENT
	 
	2.1	 	Restatement of the Original Facility Agreement






	 	 	With effect from the First Effective Date the Original Facility Agreement shall be
amended and restated so that it shall be read and construed for all purposes as set out in
Schedule 2 (Restated Agreement.)






	2.2	 	Waiver






	 	(a)	 	The Finance Parties permanently and irrevocably waive any Default which is continuing
and which has resulted from the Borrower’s breach of its obligations under Clause
22.25 (SPA) of the Original Facility Agreement.






	 	(b)	 	The Finance Parties:






	 	(i)	 	waive any Default which is continuing and has resulted from; and
	 
	 	(ii)	 	agree to waive any Default which may arise as a result of,






	 	 	 	the Borrower’s breach of its obligations to deliver Financial Projections on each
Scheduled Redetermination Date occurring prior to 30 September 2008 in accordance with
Clause 6.1 (Timing of Financial Projection) and Clause 6.2 (Preparation of Financial
Projection) of the Original Facility Agreement provided that the Agent may, by thirty
days’ prior notice to the Borrower and the Technical Bank, designate any Business Day
prior to 30 September 2008 as a “Redetermination Date”. The rights of the Agent in this
paragraph shall be in addition to (and without prejudice to) the rights conferred on
the Agent pursuant to paragraph (e) of the definition of “Redetermination Date”.






	3.	 	REPRESENTATIONS






	 	 	The Repeating Representations are deemed to be made by the Borrower (by reference to the
facts and circumstances then existing) on:






	 	(a)	 	the date of this Agreement; and





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	 	(b)	 	the First Effective Date.





	4.	 	CONTINUITY AND FURTHER ASSURANCE
	 
	4.1	 	Continuing obligations





	 	 	The provisions of the Original Facility Agreement and the other Finance Documents shall,
save as amended by this Agreement, continue in full force and effect.





	4.2	 	Further assurance





	 	 	The Borrower shall, at the reasonable request of the Agent and at its own expense, do
all such acts and things necessary to give effect to the amendments effected or to be
effected pursuant to this Agreement.
	 
	5.	 	ACKNOWLEDGEMENT OF SATISFACTION OF CERTAIN CONDITIONS SUBSEQUENT





	 	 	The Agent confirms that the Conditions Subsequent set out in paragraphs 1 and 2 of
Schedule 13 (Conditions Subsequent) of the Restated Agreement have been satisfied.
	 
	6.	 	RELEASE OF FAR EAST SHARE CHARGE





	 	 	The Lenders hereby instruct the Security Trustee to, and the Security Trustee shall,
release the Security constituted by the Far East Share Charge (as the same is or may be
amended and varied from time to time) in full at Share Exchange Closing.
	 
	7.	 	TERMINATION OF AMENDMENT AND RESTATEMENT AGREEMENT DATED 6 JUNE 2008





	 	 	The parties to this Agreement agree that the amendments to the Original Facility
Agreement contemplated by the first amendment and restatement agreement dated 6 June 2008
between the parties hereto (the “Original Amendment Agreement”) did not become effective
because all of the conditions precedent set out Schedule 1 (Conditions Precedent) thereto
were not received by the Agent. As such, the parties to this Agreement agree that the
Original Amendment Agreement and all terms and conditions thereof shall be terminated with
effect from the date of this Agreement.
	 
	8.	 	WAIVER OF SUBORDINATION AND REPAYMENT OF SHAREHOLDER LOANS





	(a)	 	If the Agent notifies the Borrower in writing that it has received a legal opinion in or
substantially in the form of the draft set out in Schedule 3 (Form of PRC Legal Opinion) or
otherwise in form and substance satisfactory to the Agent, opining that the steps set out in
paragraphs (i) and (ii) below are not contrary to the laws of the People’s Republic of China
or any regulation of any governmental authority of the People’s Republic of China then,
notwithstanding:





	 	(i)	 	the terms of any Subordination Agreement, the Borrower may transfer its rights and
obligations under the ZR Loan to Far East (the “Transferred ZR Loan”) in exchange for Far East
assuming a debt (the “Interim Loan”) of the same amount and on the same terms as the ZR Loan
to the Borrower, provided that the Borrower and Far East shall agree that part of the Interim




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	 	 	 	Loan shall be used to set-off the outstanding First MIE Loan in full and further
provided that Far East shall use part of the Transferred ZR Loan to set-off the
outstanding Far East Loan in full; and






	 	(ii)	 	the terms of the Borrower Debenture, the Borrower may forgive or write-off the
Interim Loan by an amount of up to $20,000,000 (or its equivalent in RMB),






	 	 	provided that if the Agent requires, the Borrower shall procure that ZR enters into a
guarantee (the “ZR Guarantee”) in favour of the Borrower in or substantially in the form set
out in Schedule 4 (Form of ZR Guarantee) guaranteeing the due and punctual payment by Far
East of all amounts outstanding from Far East under the Interim Loan from time to time and
further provided that upon the entry into of the ZR Guarantee, the Borrower shall enter into
an assignment in favour of the Security Trustee of the ZR Guarantee and Borrower’s rights
thereunder, in or substantially in the form set out in Schedule 5 (Form of Assignment of ZR
Guarantee).






	(b)	 	Notwithstanding the terms of the Borrower Debenture, the Borrower may forgive or write-off
any outstanding amount of the Interim Loan by way of deemed dividend distribution or
otherwise to the extent and in the amount of any subscription monies received by the Borrower
from third parties in connection with any issuance and allotment of shares in the Borrower to
such third parties.
	 
	9.	 	WRITE-OFF OF SPDB-ZR LOAN






	 	 	The Lenders and the Agent hereby agree and confirm that, notwithstanding any other term
of a Finance Document, the Borrower may write-off the outstanding amount of the SPDB-ZR Loan
pledged in the SPDB-ZR Loan Account and, following such a write-off, Far East may forgive or
write-off the Second MIE Loan.
	 
	10.	 	MISCELLANEOUS
	 
	10.1	 	Incorporation of terms






	 	 	The provisions of Clause 43 (Notices), Clause 45 (Partial Invalidity), Clause 46
(Remedies and waivers) and Clause 50 (Enforcement) of the Original Facility Agreement shall
be incorporated into this Agreement as if set out in full in this Agreement and as if
references in those clauses to “this Agreement” or “the Finance Documents” are references to
this Agreement.
	 
	10.2	 	Counterparts






	 	 	This 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 Agreement.
	 
	11.	 	GOVERNING LAW






	 	 	This Agreement and all non-contractual obligations arising out of or in connection with
it are governed by English law.









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This Agreement has been entered into on the date stated at the beginning of this Agreement.








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SCHEDULE 1



Conditions Precedent




	1.	 	The Borrower






	 	(a)	 	A copy of the constitutional documents of the Borrower, comprising:






	 	(i)	 	its certificate of incorporation and any certificate(s) of
incorporations on change of name;
	 
	 	(ii)	 	its current memorandum and articles of association;
	 
	 	(iii)	 	its current register of directors;
	 
	 	(iv)	 	its current register of members;
	 
	 	(v)	 	its current register of mortgages and charges (if any),






	 	 	 	or a certificate of a director of the Borrower certifying that the constitutional
documents previously delivered to the Agent for the purposes of the Original Facility
Agreement have not been amended and remain in full force and effect.






	 	(b)	 	A certificate of good standing of the Borrower.






	 	(c)	 	A copy of a resolution of the board of directors or other governing body of the
Borrower:






	 	(i)	 	approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement; and






	 	(ii)	 	authorising a specified person or persons to execute this
Agreement on its behalf.






	 	(d)	 	A specimen of the signature of each person authorised by the resolution referred to
in paragraph (c) above.






	 	(e)	 	A certificate of a director or secretary or chief financial officer (if authorised
by the directors) of the Borrower certifying that each copy document relating to it
specified in this Schedule 1 is correct, complete and in full force and effect as at a
date no earlier than the date of this Agreement.






	2.	 	MIH






	 	(a)	 	A copy of the constitutional documents of MIH, comprising:






	 	(i)	 	its certificate of incorporation and any certificate(s) of
incorporations on change of name;





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	 	(ii)	 	its current memorandum and articles of association;






	 	(iii)	 	its current register of directors;






	 	(iv)	 	its current register of members; and






	 	(v)	 	its current register of mortgages and charges (if any).






	 	(b)	 	A certificate of good standing of MIH.






	 	(c)	 	A copy of a resolution of the board of directors or other governing body of MIH:






	 	(i)	 	approving the terms of, and the transactions contemplated by, this
Agreement and resolving that it execute the Finance Documents to which it is
party; and






	 	(ii)	 	authorising a specified person or persons to execute the Finance
Documents to which it is party on its behalf.






	 	(d)	 	A specimen of the signature of each person authorised by the resolution referred to
in paragraph (c) above.






	 	(e)	 	A certificate of a director or secretary or chief financial officer (if authorised
by the directors) of MIH certifying that each copy document relating to it specified in
this Schedule 1 is correct, complete and in full force and effect as at a date no earlier
than the date of this Agreement.






	3.	 	Legal Opinions






	 	(a)	 	A legal opinion of Clifford Chance Wong Pte Ltd, legal advisers to the Lenders as
to matters of English law.






	 	(b)	 	A legal opinion of Walkers, legal advisers to the Lenders as to matters of Cayman
Islands law.






	4.	 	Other documents and evidence






	 	(a)	 	The First MIH Share Charge, duly executed by MIH and the Security Trustee.






	 	(b)	 	The Second MIH Share Charge, duly executed by MIH and the Security Trustee.






	 	(c)	 	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 this Agreement or for the validity and enforceability of this Agreement.









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SCHEDULE 2



Restated
Agreement



- 8 -









 





			
	CLIFFORD
	 	CLIFFORD CHANCE WONG PTE LTD
	CHANCE	 	 
	WONG	 	 






Up to $150,000,000



BORROWING BASE FACILITY AGREEMENT



dated 29 October 2007

amended pursuant to a waiver and amendment letter dated 23 November 2007

amended and restated as at the First Effective Date



for



MI ENERGY CORPORATION



arranged by



STANDARD BANK ASIA LIMITED



with



STANDARD BANK ASIA LIMITED

acting as Agent, Security Trustee and

Technical Bank



and



STANDARD BANK PLC

acting as Offshore Account Bank



 





BORROWING BASE FACILITY AGREEMENT



 





 









 





CONTENTS




	 	 	 	 	 
	Clause	 	Page
	1. Definitions And Interpretation
	 	 	1	 
	2. The Facility
	 	 	27	 
	3. Purpose
	 	 	27	 
	4. Conditions Of Utilisation
	 	 	29	 
	5. Borrowing Base Assets
	 	 	30	 
	6. Borrowing Base Amount
	 	 	32	 
	7. Utilisation Of Facility
	 	 	35	 
	8. Repayment
	 	 	37	 
	9. Prepayment And Cancellation
	 	 	38	 
	10. Interest
	 	 	40	 
	11. Interest Periods
	 	 	41	 
	12. Changes To The Calculation Of Interest
	 	 	41	 
	13. Fees
	 	 	42	 
	14. Tax Gross Up And Indemnities
	 	 	44	 
	15. Increased Costs
	 	 	47	 
	16. Other Indemnities
	 	 	48	 
	17. Mitigation By The Lenders
	 	 	50	 
	18. Costs And Expenses
	 	 	50	 
	19. Representations
	 	 	52	 
	20. Information Undertakings
	 	 	57	 
	21. Financial Covenants
	 	 	60	 
	22. General Undertakings
	 	 	61	 
	23. Events Of Default
	 	 	70	 
	24. Changes To The Lenders
	 	 	76	 
	25. Changes To The Hedge Counterparties
	 	 	79	 
	26. Changes To The Borrower
	 	 	79	 
	27. The Agent, The Arranger And The Technical Bank
	 	 	80	 
	28. The Offshore Account Bank
	 	 	85	 
	29. The Security Trustee
	 	 	88	 
	30. Change Of Security Trustee And Delegation
	 	 	94	 
	31. Indemnities And Information
	 	 	96	 
	32. Security And Priority
	 	 	98	 
	33. Hedge Counterparties: Rights And Obligations
	 	 	99	 
	34. Entitlement To Enforce
	 	 	100	 






 









 





	 	 	 	 	 
	Clause	 	Page
	35. Effect Of Insolvency Event
	 	 	100	 
	36. Turnover Of Receipts
	 	 	102	 
	37. Sharing
	 	 	103	 
	38. Enforcement Of Security
	 	 	104	 
	39. Disposals And Claims
	 	 	104	 
	40. Application Of Proceeds
	 	 	105	 
	41. Payment Mechanics
	 	 	108	 
	42. Set-Off
	 	 	110	 
	43. Notices
	 	 	110	 
	44. Calculations And Certificates
	 	 	112	 
	45. Partial Invalidity
	 	 	112	 
	46. Remedies And Waivers
	 	 	113	 
	47. Amendments And Waivers
	 	 	113	 
	48. Counterparts
	 	 	114	 
	49. Governing Law
	 	 	115	 
	50. Enforcement
	 	 	115	 
	Schedule 1 The Original Lenders
	 	 	116	 
	Schedule 2 Conditions Precedent
	 	 	117	 
	Schedule 3 Requests
	 	 	121	 
	Part 1 Form Of Utilisation Request
	 	 	121	 
	Part 2 Form Of Selection Notice
	 	 	122	 
	Schedule 4 Form Of Transfer Certificate
	 	 	123	 
	Schedule 5 Form Of Accession Undertaking
	 	 	125	 
	Schedule 6 Existing Security
	 	 	127	 
	Schedule 7 Timetables
	 	 	128	 
	Schedule 8 The Accounts
	 	 	129	 
	Schedule 9 Form Of Subordination Agreement
	 	 	136	 
	Schedule 10 Hedging
	 	 	152	 
	Schedule 11 Operating Budgets
	 	 	153	 
	Schedule 12 Existing Financial Indebtedness
	 	 	154	 
	Schedule 13 Conditions Subsequent
	 	 	155	 
	Schedule 14 Insurance
	 	 	156	 
	Schedule 15 Existing Trade Credit
	 	 	172	 






 









 




THIS AGREEMENT is dated 29 October 2007, was amended pursuant to a waiver and amendment
agreement dated 23 November 2007, is amended and restated as of the First Effective Date and is
made between:





	(1)	 	MI ENERGY CORPORATION,  a corporation organised and existing under the laws of the Cayman
Islands and having an office at: c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands (the “Borrower”);






	(2)	 	STANDARD BANK ASIA LIMITED as arranger (the “Arranger”);






	(3)	 	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as original lenders
(the “Original Lenders”);






	(4)	 	STANDARD BANK ASIA LIMITED as agent of the other Finance Parties (the “Agent”);






	(5)	 	STANDARD BANK ASIA LIMITED as security trustee for the other Secured Parties (the “Security
Trustee”);
	 
	(6)	 	STANDARD BANK ASIA LIMITED as technical bank (the “Technical Bank”); and






	(7)	 	STANDARD BANK PLC as offshore account bank (the “Offshore Account Bank”).




IT IS AGREED as follows:




SECTION 1

INTERPRETATION





	1.	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Definitions






	 	 	In this Agreement:






	 	 	“Accession Undertaking” means an undertaking in substantially the form set out in Schedule 5
(Form of Accession Undertaking).






	 	 	“Account Banks” means the Offshore Account Bank and the Onshore Account Bank. 


“Accounts” means
the Offshore Accounts and the Onshore Accounts.






	 	 	“Accounts Assignment” means the security over accounts agreement relating to the Offshore
Collection Account and the Debt Service Reserve Account to be entered into between the
Borrower and the Security Trustee.






	 	 	“Adverse Variation” means, in relation to the Material Insurances:






	 	(a)	 	any material reductions of amounts or scope of cover;





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	 	(b)	 	any material increase to levels of deductible or excess or self insurance arrangements;






	 	(c)	 	any material reduction in the scope of risks insured or to coverage terms, or the inclusion
of new exclusions or exceptions; and






	 	(d)	 	any material reduction in or cancellation, discontinuance, non-renewal or avoidance of any
cover provided under any Material Insurance.






	 	 	“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.
	 
	 	 	“Agreed Acquisition” means any acquisition made by the Borrower with the prior written approval of
the Agent (acting on the instructions of the Majority Lenders).






	 	 	“Asset Life Cover Ratio” means, at any time, the ratio of (a) Discounted Projected Net Cash Flow
to the Reserve Tail Date to (b) the principal amount of all Loans outstanding on the date on which
such ratio is determined.
	 
	 	 	“Assignment of ZR Guarantee” means the assignment by the Borrower of the ZR Guarantee and all its
rights thereunder entered or to be entered into between the Borrower and the Security Trustee.






	 	 	“Assumptions” means the Economic Assumptions and the Technical Assumptions used for the Financial
Model as delivered pursuant to paragraph 5(a) of Schedule 2
(Conditions Precedent) to produce
Financial Projections, as such Assumptions may be changed or subsequently determined pursuant to
Clause 6 (Borrowing Base Amount).






	 	 	“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing,
notarisation or registration.






	 	 	“Available Commitment” means a Lender’s Commitment minus:






	 	(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,






	 	 	other than that Lender’s participation in any Loans that are due to be repaid or prepaid on or
before the proposed Utilisation Date.
	 
	 	 	“Available Facility” means, from time to time, the lower of (a) the aggregate of the Available
Commitments, (b) the Maximum Facility and (c) the Borrowing Base Amount.
	 
	 	 	“Availability Period” means the period from and including the date of this Agreement to the date
falling one Month prior to the Termination Date.






	 	 	“barrel” means 42 United States gallons at 60° Fahrenheit.





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	 	 	“Borrower Debenture” means the debenture creating assignments and fixed and floating charges to be
entered into between the Borrower and the Security Trustee in respect of the assets of the
Borrower described therein.
	 
	 	 	“Borrowing Base Amount” means the amount calculated pursuant to the Financial Model, and
thereafter as determined in accordance with Clause 6 (Borrowing Base Amount), to be equal to the
lower of:






	 	(a)	 	Discounted Projected Net Cash Flow on each Redetermination Date referred to in the Financial
Model to the Reserve Tail Date, divided by 1.60; and






	 	(b)	 	Discounted Projected Net Cash Flow on each Redetermination Date referred to in the Financial
Model to the Scheduled Maturity Date, divided by 1.50.






	 	 	“Borrowing Base Asset” means at any time any Field which qualifies as a Borrowing Base Asset at
such time as determined by reference to Clause 5 (Borrowing Base Assets).






	 	 	“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;






	 	 	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.






	 	 	“Bridge Facility Agreement” means the $20,000,000 bridge facility agreement dated 19 September
2007 and made between the Borrower and Standard Bank Asia Limited.






	 	 	“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general
business in Hong Kong and Singapore and:






	 	(a)	 	for any day on which payments are to be made in dollars, New York;






	 	(b)	 	for any day on which LIBOR is to be determined, London; and






	 	(c)	 	for any day on which a notice to the Borrower is to be delivered, Beijing.






	 	 	“Calculation Date” means each of 31 March, 30 June, 30 September and 31 December of each calendar
year, provided that if any such date is not a Business Day, the “Calculation Date” shall be the
Business Day immediately preceding such date.





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	 	 	“Calculation Period” means each period commencing on the day after a Calculation Date and ending on
the immediately following Calculation Date.
	 
	 	 	“Capital Expenditure” means, for the Borrower and for any period, the sum of, without duplication,
all expenditures that are capital in nature made, directly or indirectly, by the Borrower during
such period in connection with the development and/or production of hydrocarbon reserves or the
acquisition or replacement of plant, equipment and fixed assets or related infrastructure,
including without limitation:






	 	(a)	 	value added or similar Taxes payable by the Borrower in respect of any items referred to in
this definition; and






	 	(b)	 	any other costs and/or expenses which the Agent and the Borrower agree shall be Capital
Expenditure.






	 	 	“Charged Property” means all the assets of the Borrower which from time to time are, or are
expressed to be, the subject of the Transaction Security.






	 	 	“CNPC” means China National Petroleum Corporation.






	 	 	“Commission Accounts” means the Offshore Commission Account and the Onshore Commission Account and
“Commission Account” means any of them.






	 	 	“Commitment” means:






	 	(a)	 	in relation to an Original Lender, the amount set opposite its name under the heading
“Commitment” in Schedule 1 (The Original Lenders) 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.
	 
	 	 	“Commitment Letter” means the letter entered or to be entered into between the Arranger and the
Borrower.
	 
	 	 	“Compensation” means:






	 	(a)	 	all proceeds of insurance claims, insurance premium refunds, returns, ex gratia payments or
otherwise that are payable by insurers and are to be received by the Borrower (net of amounts
which the Borrower must pay to any third party in respect of the relevant claim, and excluding
proceeds from any claims which have been advised to the Agent prior to the date of this
Agreement and which have been included in the Financial Model); and






	 	(b)	 	all proceeds from any other form of loss compensation (including in relation to expropriation
and liquidated damages) paid to the Borrower.





- 4 -









 






	 	 	“Conditions Subsequent” means each of the
documents and evidence listed in Schedule 13 (Conditions
Subsequent).
	 
	 	 	“Control” means in respect of a person by another person that that other person has the power to
direct the management and operating and financial policies of such person, whether through the
ownership of voting capital, by contract or otherwise.






	 	 	“Creditors” means the Lenders and the Hedge Counterparties.






	 	 	“Crude Oil Price Assumption” means the assumption as to the crude oil price which is an input to
the Financial Model in producing a Financial Projection.






	 	 	“Daan Field” means the production area forming part of the Daan PSC.






	 	 	“Daan PSC” means the production sharing contract dated 6 December 1997 between Global Oil
Corporation and CNPC and all subsequent amendments, revisions and modifications thereto.






	 	 	“Debt Service” means, in respect of any period, all principal, interest, fees and other amounts
which fall due for payment by the Borrower in respect of any Financial Indebtedness during such
period.






	 	 	“Debt Service Cover Ratio” means, at any time, the ratio of (a) Projected Net Cash Flow in any
Calculation Period plus the balance standing to the credit of the Debt Service Reserve Account at
the start of that Calculation Period to (b) Debt Service in that Calculation Period.






	 	 	“Debt Service Reserve Account” means the account designated as such bearing the account number to
be advised by the Offshore Account Bank to the Borrower in the name of the Borrower opened with
the Offshore Account Bank (as such account may be re-designated, substituted or replaced from time
to time).






	 	 	“Debt Service Reserve Requirement” means at any time on or after the first day of an Interest
Period, all amounts of scheduled principal and interest due and payable or which would be due and
payable by the Borrower under the Finance Documents up to and including:






	 	(a)	 	the date falling six Months after the first day of such Interest Period (calculated by the
Agent in its sole discretion on the basis of LIBOR for a period of six Months beginning on the
first day of such Interest Period); or






	 	(b)	 	(if earlier) the Termination Date.






	 	 	“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.





- 5 -









 






	 	 	“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Trustee in
accordance with the terms of this Agreement and the relevant Security Documents.
	 
	 	 	“Disclosure Letter” means the letter dated the date of this Agreement from the Borrower to the
Agent disclosing information constituting specifically identified exceptions to the
representations and warranties set out in Clause 19 (Representations).
	 
	 	 	“Discounted Projected Net Cash Flow” means, from the relevant date upon which the calculation is
made to the relevant date to which the calculation is to refer, the aggregate of all Projected Net
Cash Flow arising in such period, discounted annually at the Discount Rate to the date upon which
the calculation is made.






	 	 	“Discount Rate” means, for any calculation period, eight per cent. (8%).
	 
	 	 	“Distribution Account” means the account designated as such bearing the account number to be
advised by the Offshore Account Bank to the Borrower in the name of the Borrower opened with the
Offshore Account Bank (as such account may be re-designated, substituted or replaced from time to
time).
	 
	 	 	“Economic Assumptions” means the Exchange Rate Assumption, the Crude Oil Price Assumption and
assumptions as to interest rates, inflation rates, gas prices, tariffs, tax rates (including
withholding taxes) and any other inputs relating to amounts due under the Finance Documents,
hedging agreements and other agreements under which Financial Indebtedness arises or may arise,
and which are inputs to the Financial Model in producing a Financial Projection.






	 	 	“Enforcement Action” means:






	 	(a)	 	the acceleration of any Liabilities or any declaration that any Liabilities are
prematurely due and payable (other than as a result of it becoming unlawful for a Lender to
perform its obligations under, or of any mandatory prepayment arising under, the Finance
Documents) or payable on demand or the premature termination or close out of any Hedge
Liabilities;






	 	(b)	 	the taking of any steps to enforce or require the enforcement of any Transaction Security
(including the crystallisation of any floating charge forming part of the Transaction
Security);






	 	(c)	 	the making of any demand against the Borrower in relation to any guarantee, indemnity or
other assurance against loss in respect of any Liabilities or exercising any right to
require the Borrower to acquire any Liability (including exercising any put or call option
against the Borrower for the redemption or purchase of any Liability);






	 	(d)	 	the exercise of any right of set-off against the Borrower in respect of any Liabilities;





- 6 -









 






	 	(e)	 	the suing for, commencing or joining of any legal or arbitration proceedings against the
Borrower to recover any Liabilities;






	 	(f)	 	the entering into of any composition, assignment or arrangement with the Borrower; or






	 	(g)	 	the petitioning, applying or voting for, or the taking of any steps (including the
appointment of any liquidator, receiver, administrator or similar officer) in relation to the
winding up, dissolution, administration or reorganisation of the Borrower or any suspension of
payments or moratorium of any indebtedness of the Borrower, or any analogous procedure or step
in any jurisdiction.






	 	 	“Environmental Claim” means any claim, proceeding or investigation by any person in respect of any
Environmental Law.
	 
	 	 	“Environmental Law” means any applicable law in any jurisdiction in which the Borrower conducts
business which relates to the pollution or protection of the environment or harm to or the
protection of human health or the health of animals or plants.






	 	 	“Environmental Permits” means any permit, licence, consent, approval and other authorisation and
the filing of any notification, report or assessment required under any Environmental Law for the
operation of the business of the Borrower conducted on or from the properties owned or used by the
Borrower.






	 	 	“Environmental Report” means an environmental report prepared by Environmental Resources
Management (S) Pte Ltd and dated

 27 June 2007 relating to the Daan Field, the Miao 3 Field and the
Moliqing Field and addressed to, and/or capable of being relied upon by, the Arranger and the
other Finance Parties.






	 	 	“Equator Principles” means those principles set out in the paper titled “An industry approach for
financial institutions in determining, assessing and managing environmental and social risk in
project financing”, dated July 2006 and developed and adopted by the International Finance
Corporation and other banks and financial institutions, as applicable to the Borrowing Base Assets
from time to time.
	 
	 	 	“Environmental Management Plan” means the environmental management plan prepared by the Borrower in
accordance with the Equator Principles and applicable laws in the People’s Republic of China in
relation to the Borrower’s operations in connection with the Borrowing Base Assets, setting out:






	 	(a)	 	monitoring and mitigation arrangements;






	 	(b)	 	operational procedures;






	 	(c)	 	management and institutional measures; and





- 7 -









 






	 	(d)	 	a preliminary decommissioning and restoration plan identifying disposal options for all
equipment and materials, including products used and waste generated onsite,






	 	 	to be implemented by the Borrower in respect of the Borrower’s operations at the Borrowing Base
Assets, incorporating the Equator Principles and all applicable Environmental Laws, as submitted by
the Borrower and approved by the Agent provided that if adherence to any aspect of the Equator
Principles by the Borrower would contravene any applicable law of the People’s Republic of China or
any provision of a PSC, the Environmental Management Plan shall be prepared without regard to that
aspect of the Equator Principles.
	 
	 	 	“Equity” means cash received by the Borrower as the proceeds of subscription for ordinary shares,
convertible preference shares or Subordinated Indebtedness.
	 
	 	 	“Event of Default” means any event or circumstance specified as such in Clause 23 (Events of
Default).
	 
	 	 	“Exchange Rate Assumption” means the assumption as to the exchange rate which is an input to the
Financial Model in producing a Financial Projection.
	 
	 	 	“Existing Financial Indebtedness” means any Financial Indebtedness which exists at the date of this
Agreement pursuant to the agreements listed in Schedule 12 (Existing Financial Indebtedness).
	 
	 	 	“Existing Security” means any Security which exists at the date of this Agreement pursuant to the
agreements listed in Schedule 6 (Existing Security) except to the extent the principal amount
secured by that Security exceeds the amount stated in that Schedule.
	 
	 	 	“Existing Trade Credit” means Financial Indebtedness owing by the Borrower to each of the parties
and in the amounts more particularly detailed in Schedule 15 (Existing Trade Credit).
	 
	 	 	“Facility” means the revolving loan facility made available under this Agreement as described in
Clause 2.1 (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 Business Days’
written notice) as the office or offices through which it will perform its obligations under this
Agreement.
	 
	 	 	“Far East” means Far East Energy Ltd., a company organised under the laws of Hong Kong.
	 
	 	 	“Far East Loan” means the loan, in an amount not exceeding $51,959,559.24, made by ZR to Far East
and documented pursuant to a repayment agreement dated 19 September 2007.




- 8 -









 












	 	 	“Far East Share Charge” means the charge over shares to be entered into between Far East and the
Security Trustee in relation to 67% of the shares in the capital of the Borrower, which Far East
will own up to Share Exchange Closing.






	 	 	“Fee Letter” means any letter or letters entered or to be entered into between the Arranger and
the Borrower (or the Agent or Security Trustee and the Borrower) setting out any of the fees
referred to in Clause 13 (Fees).






	 	 	“Field” means any field bearing hydrocarbons (including oil, gas, condensate, natural gas liquids
and all components of any of them) which the Borrower has a concession to exploit from the
applicable governmental authority.
	 
	 	 	“Finance Documents” means each of this Agreement, the Security Documents, the Onshore Account
Agreement, the Commitment Letter, any Fee Letter, any Subordination Agreement, any other document
designated as such by the Agent and the Borrower and any document that amends, supplements,
modifies or waives any provision of any of the foregoing.






	 	 	“Finance Party” means each of the Agent, the Security Trustee, the Offshore Account Bank, the
Technical Bank, the Arranger and each 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 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);






	 	(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;




- 9 -









 






	 	(i)	 	any amount raised by the issue of shares which are unconditionally redeemable at the
option of the holder (or in respect of which all conditions for redemption have been met)
before the Scheduled Maturity Date; and
	 
	 	(j)	 	(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.






	 	 	“Financial Model” means the financial model computer programme referred to in paragraph 5(a) of
Schedule 2 (Conditions Precedent) having the capacity to:






	 	(a)	 	input all Assumptions, in order to






	 	(b)	 	produce the Financial Projections required pursuant to this Agreement,






	 	 	each within the time for delivery of each Financial Projection required under this Agreement, as
the same may be modified from time to time as permitted by Clause 6.4 (Modification of Financial
Model).






	 	 	“Financial Projection” means a financial projection generated by running the Financial Model in
accordance with Clause 6 (Borrowing Base Amount) and which will set out, inter alia:






	 	(a)	 	the Borrowing Base Amount as at the relevant Redetermination Date;






	 	(b)	 	the Reserve Tail Date;






	 	(c)	 	a statement of the remaining reserves in respect of each Borrowing Base Asset, based on the
most recent Independent Reserves Report or Lenders’ Technical Report in relation to such
Borrowing Base Asset;






	 	(d)	 	the Projected Payments;






	 	(e)	 	the Discounted Projected Net Cash Flow in respect of the period from the relevant
Redetermination Date to:






	 	(i)	 	the Reserve Tail Date; and;
	 
	 	(ii)	 	the Scheduled Maturity Date;






	 	(f)	 	the Asset Life Cover Ratio for the next Calculation Period; and






	 	(g)	 	the Debt Service Cover Ratio for the next Calculation Period.






	 	 	“First Amendment and Restatement Agreement”
means the new first amendment and restatement agreement dated
           
January 2009 between the
parties hereto which
amended and restated this Agreement with effect from the First Effective Date.








	 	 	“First Effective Date” has the meaning given in the First Amendment and Restatement Agreement.




- 10 -









 












	 	 	“First MIE Loan” means the loan, in an amount not exceeding $42,470,741.19, made by Far East to
the Borrower and documented pursuant to a repayment agreement dated 19 September 2007.






	 	 	“First MIH Share Charge” means the charge over shares to be entered into between MIH and the
Security Trustee in relation to 67% of the shares in the capital of the Borrower, which MIH will
own upon and from Share Exchange Closing.






	 	 	“Half-year Date” means each of 30 June and 31 December of each calendar year, provided that if any
such date is not a Business Day, the “Half-year Date” shall be the Business Day immediately
preceding such date.






	 	 	“Hedge Agreement” means an agreement on the terms of the International Swaps and Derivatives
Association, Inc., Master Agreement, together with any schedule thereto and any transaction
confirmations thereunder, with such amendments as are agreed between the Borrower and the Hedge
Counterparty that are consistent with the requirements of Schedule 10 (Hedging) or as are
otherwise reasonably acceptable to the Agent, or any other format reasonably acceptable to the
Agent.






	 	 	“Hedge Counterparties” means each financial institution named on the signing pages as a Hedge
Counterparty and any financial institution which becomes a Hedge Counterparty in accordance with
the terms of Clause 33 (Hedge Counterparties: Rights and Obligations) or Clause 25 (Change of
Hedge Counterparties).






	 	 	“Hedge Liabilities” means the Liabilities owed by the Borrower to the Hedge Counterparties under
or in connection with the Hedge Agreements.
	 
	 	 	“Hedging Costs” means any amounts due and payable to any Hedge Counterparty under any Hedge
Agreement during the relevant period.






	 	 	“Hedging Transaction” means any hedging transaction entered into by the Borrower in connection
with protection against or benefit from fluctuation in any interest rate, currency exchange rate
and/or commodity price.






	 	 	“Holding Company” means, in relation to a company or corporation, any other company or corporation
in respect of which it is a Subsidiary.






	 	 	“IFRS” means international accounting
standards within the meaning of IAS Regulation 1606 / 2002
to the extent applicable to the relevant financial statements.
	 
	 	 	“Independent Engineer” means Gaffney, Cline & Associates or any other independent petroleum
engineering consultant approved by the Simple Majority Lenders in consultation with the Borrower.






	 	 	“Independent Reserves Report” means a reserves report, prepared by the Independent Engineer, which
includes estimated oil and gas Proved Reserves, Probable Reserves, PP Reserves and PU Reserves
arising to the Borrower from the Borrowing Base Assets, production profiles and all costs related
to the development and operations at the Borrowing Base Assets.





- 11 -









 






	 	 	“Insolvency Event” means, in relation to the Borrower:






	 	(a)	 	any resolution is passed or order made for the winding up, dissolution, administration or
reorganisation of the Borrower or an administrator is appointed to the Borrower;






	 	(b)	 	any composition, assignment or arrangement is made with any of its creditors;






	 	(c)	 	the appointment of any liquidator (other than in respect of a solvent liquidation to which
the Majority Lenders have consented), receiver, administrator, administrative receiver,
compulsory manager or other similar officer in respect of the Borrower or any of its assets;
or






	 	(d)	 	any analogous procedure or step is taken in any jurisdiction.






	 	 	“Insurance Adviser” means Jardine Lloyd Thompson or any other independent insurance consultant
approved by the Majority Lenders.






	 	 	“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 Loan” has the meaning given in the First Amendment and Restatement Agreement.






	 	 	“LCCU” means Liaoyuan City Credit Union Stock Co., Ltd.
	 
	 	 	“Lender” means:






	 	(a)	 	each Original Lender; and






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






	 	 	which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.
	 
	 	 	“Lenders’ Technical Report” means a report prepared by the Independent Engineer, which includes
estimated oil and gas Proved Reserves, Probable Reserves, PP Reserves and PU Reserves arising to
the Borrower from the Borrowing Base Assets and projections of production profiles and all costs
related to the development and operation of the Borrowing Base Assets.






	 	 	“Liabilities” means all liabilities for the payment of money owed by the Borrower to the Finance
Parties under or pursuant to the Finance Documents or any Hedge Counterparty under or pursuant to
a Hedge Agreement, whether in respect of principal, interest or otherwise, whether actual or
contingent, whether owed jointly or severally and whether owed as principal or surety or in any
other capacity.









- 12 -









 









	 	 	“LIBOR” means, in relation to any Loan, and subject to Clause 12.2 (Market Disruption):






	 	(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.






	 	 	“Loan” means a loan made or to be made under the Facility or the principal amount outstanding for
the time being of that loan.






	 	 	“Majority Lenders” means:






	 	(a)	 	if there are no Loans then outstanding, a Lender or Lenders whose Commitments
aggregate more than sixty seven per cent. (67%) of the Total Commitments (or, if the Total
Commitments have been reduced to zero, aggregate more than sixty seven per cent. (67%) 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 sixty seven per cent. (67%) of all the Loans then outstanding.






	 	 	“Margin” means:






	 	(a)	 	for each Interest Period which began prior to the First Effective Date, two point seven five
per cent (2.75%) per annum; and






	 	(b)	 	for each Interest Period which begins on or after the First Effective Date, five point seven
five per cent (5.75%) per annum.






	 	 	“Material Adverse Effect” means a material adverse effect on:






	 	(a)	 	the business, operations, property or financial condition of the Borrower;






	 	(b)	 	the ability of the Borrower to perform its material obligations under any Finance Document to
which it is a party; or






	 	(c)	 	the validity or enforceability of any Transaction Document or the rights or remedies of any
Finance Party under any Finance Document or the rights or remedies of the Borrower under any
Project Document.






	 	 	“Material Insurances” has the meaning given in Clause 22.18 (Insurance).





- 13 -









 






	 	 	“Maximum Facility” means $150,000,000, reducing to the following amounts on the following Repayment
Dates:





	 	 	 	 	 	 	 	 	 
	Amount ($)	 	 	 	 	Repayment Date	 
	 	142,000,000	 	 	 
	 	9th
	 	134,000,000	 	 	 
	 	10th
	 	126,000,000	 	 	 
	 	11th
	 	118,000,000	 	 	 
	 	12th
	 	110,000,000	 	 	 
	 	13th
	 	102,000,000	 	 	 
	 	14th
	 	94,000,000	 	 	 
	 	15th
	 	86,000,000	 	 	 
	 	16th
	 	78,000,000	 	 	 
	 	17th
	 	70,000,000	 	 	 
	 	18th
	 	62,000,000	 	 	 
	 	19th
	 	54,000,000	 	 	 
	 	20th
	 	46,000,000	 	 	 
	 	21st
	 	38,000,000	 	 	 
	 	22nd
	 	30,000,000	 	 	 
	 	23rd
	 	0	 	 	 
	 	24th







	 	 	“Miao 3 Field” means the production area forming part of the Miao 3 PSC.
	 
	 	 	“Miao 3 PSC” means the production sharing contract dated 16 December 1997 between Global Oil
Corporation and CNPC and all subsequent amendments, revisions and modifications thereto.






	 	 	“Microbes” means Microbes, Inc.
	 
	 	 	“MIE SPA” means the shares purchase agreement entered or to be entered into between Standard Bank
PLC, Zhang Ruilin, Zhao Jiangwei, Shang Zhiguo and Far East in relation to the sale by Far East and
the purchase by Standard Bank PLC of 197,049 ordinary shares in the capital of MIH.





- 14 -









 






	 	 	“MIH” means MIE Holdings Corporation, an exempted company incorporated with limited liability in
the Cayman Islands.






	 	 	“Moliqing Field” means the production area forming part of the Moliqing PSC.
	 
	 	 	“Moliqing PSC” means the production sharing contract dated 25 September 1998 between Global Oil
Corporation and CNPC and all subsequent amendments, revisions and modifications thereto.
	 
	 	 	“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)	 	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; and






	 	(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 “Monthly” will be construed accordingly. The above rules will only apply to the last Month of
any period.






	 	 	“Obligors” means the Borrower, Far East and (from and after Share Exchange Closing), MIH.






	 	 	“Offshore Accounts” means:






	 	(a)	 	the Offshore Collection Account;






	 	(b)	 	the Debt Service Reserve Account;






	 	(c)	 	any Offshore Commission Account;






	 	(d)	 	the Distribution Account; and






	 	(e)	 	any other operating or office account denominated in dollars (or any other currency freely
convertible into dollars as may be agreed with the Agent from time to time) opened or
maintained by the Borrower outside the People’s Republic of China, used for the purpose of
paying operating costs, wages and other general administrative costs and expenses included in
the then current Operating Budget, in respect of which the account number and account bank
have at any time been notified in writing to the Agent.






	 	 	“Offshore Collection Account” means the account designated as such bearing the account number to
be advised by the Offshore Account Bank to the Agent and the Borrower in the name of the Borrower
opened with the Offshore Account Bank (as such account may be re-designated, substituted or
replaced from time to time).





- 15 -









 






	 	 	“Offshore Commission Account” has the meaning given to such term in Schedule 8 (The
Accounts).






	 	 	“Onshore Account Agreement” means the onshore accounts agreement entered or to be entered
into between the Borrower, the Agent and the Onshore Account Bank.






	 	 	“Onshore Account Bank” means the bank or financial institution notified by the Borrower to
the Agent as being the “Onshore Account Bank” and agreed to by the Agent.






	 	 	“Onshore Accounts” means:






	 	(a)	 	the Onshore Collection Account;






	 	(b)	 	the Onshore Payments Account;






	 	(c)	 	any Onshore Commission Account;






	 	(d)	 	the SPDB-ZR Loan Account; and






	 	(e)	 	any other operating or office account denominated in RMB opened or
maintained by the Borrower with a domestic bank in the People’s Republic of China,
used for the purpose of paying operating costs, wages and other general administrative
costs and expenses included in the then current Operating Budget, in respect of which
the account number and account bank have at any time been notified in writing to the
Agent.






	 	 	“Onshore Collection Account” means the account designated as such bearing the account number
to be advised by the Onshore Account Bank to the Agent and the Borrower in the name of the
Borrower opened with the Onshore Account Bank (as such account may be re-designated,
substituted or replaced from time to time).






	 	 	“Onshore Commission Account” has the meaning given to such term in Schedule 8 (The Accounts).






	 	 	“Onshore Payments Account” means the account numbered            in
the name of the Borrower and maintained with Citic Ka Wah Bank Limited, Beijing Branch, into
which Permitted Payments may be paid from time to time in accordance with Schedule 8 (The
Accounts) (as such account may be re-designated, substituted or
replaced from time to time
with the consent of the Agent).






	 	 	“Operating Budget” means, for any year, the operating budget agreed or determined in
accordance with Schedule 11 (Operating Budgets).






	 	 	“Operational Lock-Up Period” means any period during which the aggregate amounts of the Loans
exceed the Borrowing Base Amount.






	 	 	“Original Financial Statements” means the unaudited financial statements of the Borrower for
each of the financial years ended 31 December 2004, 31 December 2005 and 31 December 2006.





- 16 -









 






	 	 	“Party” means a party to this Agreement.






	 	 	“Payment Instructions” means a payment instruction from the Borrower to PetroChina in relation to
the Borrower’s entitlement under a PSC in an agreed form.
	 
	 	 	“PD Reserves” means reserves classified as proved developed reserves in an Independent Reserves
Report or a Lenders’ Technical Report in accordance with the principles approved by the Society of
Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists
and the Society of Professional Evaluation Engineers as published in March 2007.






	 	 	“Permitted Financial Indebtedness” means any of the following:






	 	(a)	 	Financial Indebtedness under the Finance Documents;






	 	(b)	 	Financial Indebtedness under the Bridge Facility Agreement provided that such Financial
Indebtedness is repaid in full on the first Utilisation Date;






	 	(c)	 	Subordinated Indebtedness;






	 	(d)	 	Existing Financial Indebtedness, provided that all Existing Financial Indebtedness is repaid in full on or before the first Utilisation Date;






	 	(e)	 	Existing Trade Credit;






	 	(f)	 	trade credit obtained in the ordinary course of business on an arm’s length basis and on
normal commercial terms; and






	 	(g)	 	Financial Indebtedness in respect of bank guarantees, performance bonds, letters of credit or
standby letters of credit which have been taken into account in the most recent Financial
Projection, in each case arising in the ordinary course of business of the Borrower not
exceeding an aggregate in any financial year of $5,000,000 or its equivalent in other
currencies.






	 	 	“Permitted Loans” means:






	 	(a)	 	the ZR Loan; and






	 	(b)	 	loans made by the Borrower with funds which have been withdrawn from the Distribution
Account.






	 	 	“Permitted Payments” means (without double counting) all costs, liabilities, expenses and payments
incurred or required to be paid by the Borrower during the relevant period including:






	 	(a)	 	transportation tariffs and sales and marketing costs (if any);






	 	(b)	 	other operating costs, whether fixed or variable;






	 	(c)	 	Taxes and royalties;





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	 	(d)	 	payments due to Microbes under or pursuant to the SPA;






	 	(e)	 	Capital Expenditure and maintenance costs and expenditure; and






	 	(f)	 	other general and administrative costs and expenses.






	 	 	“PetroChina” means
PetroChina Company Limited.






	 	 	“Probable Reserves” means hydrocarbon reserves classified as such (in an Independent Reserves
Report or a Lenders’ Technical Report) in accordance with the principles approved by the Society of
Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists
and the Society of Professional Evaluation Engineers as published in March 2007.






	 	 	“Project Documents” means:






	 	(a)	 	the PSCs;






	 	(b)	 	crude oil sales contract relating to the Daan Field, Miao 3 Field and Moliqing Field dated 28
December 2000 by and between Microbes and China National Petroleum Sales Corporation and its
amendment dated 5 March 2004 by and among PetroChina, China National Petroleum Sales
Corporation, Microbes, INC. and the Borrower;






	 	(c)	 	Cooperation Agreement dated 30 June 2005 by and between Far East, Fullfame Enterprises
Limited and the Borrower;






	 	(d)	 	any material contract for drilling, operation or maintenance relating to the Borrowing Base
Assets to which the Borrower is a party and in respect of which the contract price exceeds
$2,500,000;






	 	(e)	 	any insurance policy, slip, certificate or other insurance document relating to the Material
Insurances;






	 	(f)	 	the Termination Agreement (if any);






	 	(g)	 	any other document designated as such by the Agent and the Borrower; and






	 	(h)	 	any document that amends, supplements, modifies or waives any provision of any of the
foregoing.






	 	 	“Projected Net Cash Flow” means, in respect of each relevant period for which it is to be
calculated, Revenues during such period minus Projected Payments during such period.






	 	 	“Projected Payments” means (without double counting) all costs, liabilities, expenses and payments
projected to be incurred or required to be paid by the Borrower during the relevant period which
are included in the then current Financial Projection including, without limitation:






	 	(a)	 	transportation tariffs and sales and marketing costs (if any);




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	 	(b)	 	Capital Expenditure and maintenance costs and expenditure;






	 	(c)	 	other operating costs, whether fixed or variable;






	 	(d)	 	general and administrative costs and expenses;






	 	(e)	 	Hedging Costs; and






	 	(f)	 	Taxes and royalties,






	 	 	but excluding amounts of principal, interest and fees due and payable by the Borrower under the
Finance Documents.






	 	 	“Proved Reserves” means hydrocarbon reserves classified as such (in an Independent Reserves Report
or a Lenders’ Technical Report) in accordance with the principles approved by the Society of
Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists
and the Society of Professional Evaluation Engineers as published in March 2007.






	 	 	“PSC Pledge” means the pledge of the Borrower’s share of production under the PSCs to be entered
into between the Borrower and the Security Trustee.






	 	 	“PSCs” means the Daan PSC, the Miao 3 PSC and the Moliqing PSC.
	 
	 	 	“PU Reserves” means reserves classified as proved undeveloped reserves in an Independent Reserves
Report or a Lenders’ Technical Report in accordance with the principles approved by the Society of
Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists
and the Society of Professional Evaluation Engineers as published in March 2007.






	 	 	“Put Price” has the meaning given in the MIE SPA.
	 
	 	 	“Put Right” has the
meaning given in the MIE SPA.
	 
	 	 	“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).






	 	 	“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any
part of the Charged Property appointed in accordance with the terms of the Security Documents.






	 	 	“Redetermination Date” means each of the following dates:






	 	(a)	 	each of (i) the Business Day falling three Months after the first Utilisation Date
and (ii) 30 September 2008;





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	 	(b)	 	commencing one Month prior to 31 December 2007, the Business Day falling one Month prior
to each Half-year Date;






	 	(c)	 	the Business Day falling one Month prior to the date of a proposed addition of a Borrowing
Base Asset pursuant to Clause 5.3 (New Fields as Borrowing Base Assets);






	 	(d)	 	the Business Day falling one Month prior to the date of a proposed withdrawal of a Borrowing
Base Asset pursuant to Clause 5.5.1;






	 	(e)	 	any Business Day notified by the Borrower to the Agent and the Technical Bank by not less
than thirty days prior notice provided that such notification may only be given twice in any
12-month period;






	 	(f)	 	any Business Day notified by the Agent to the Borrower and the Technical Bank by not less
than thirty days prior notice following the occurrence and during the continuance of an Event
of Default; and






	 	(g)	 	any Business Day notified by the Agent to the Borrower and the Technical Bank by not less
than thirty days prior notice following:






	 	(i)	 	the receipt of Compensation in an amount exceeding $2,000,000 by the
Borrower; or






	 	(ii)	 	receipt by the Agent of a written request from the Borrower,






	 	 	 	provided that such notification may only be given once in any period between two
Redetermination Dates.






	 	 	“Reference Banks” means the Agent and two other international banks appointed by the Agent with
the consent of the Borrower.






	 	 	“Relevant Interbank Market” means the London interbank market.
	 
	 	 	“Repayment Date” means 31 March, 30 June, 30 September and 31 December of each calendar year,
provided that if any such date is not a Business Day, the “Repayment Date” shall be the Business
Day immediately preceding such date.






	 	 	“Repeating Representations” means each of the representations set out in Clauses 19.1 (Status) to
and including 19.4 (Power and Authority) (other than sub-Clause 19.4.3), Clause 19.6 (Governing
law and enforcement), 19.13 (Financial Statements) to and including Clause 19.15 (No proceedings
pending or threatened) and Clause 19.19 (Borrowing Base Assets).
	 
	 	 	“Reserve Tail Date” means the date notified by the Technical Bank to the Borrower, as determined
and re-calculated in each Financial Projection, as the date on which the aggregate of the Proved
Reserves in the Borrowing Base Assets are projected to fall below twenty-five per cent. (25%) of
the aggregate of the Proved Reserves as





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	 	 	estimated in, or determined by reference to, the most recent Independent Reserves Report or
Lenders’ Technical Report.






	 	 	“Revenues” means:






	 	(a)	 	for the purpose of calculating Projected Net Cash Flow, one hundred per cent (100%) of all
projected revenues arising from PD Reserves and PU Reserves for the relevant calculation
period; and






	 	(b)	 	for all other purposes, all actual revenues of the Borrower during the relevant period.






	 	 	“Scheduled Redetermination Date” means each Redetermination Date referred to in paragraphs (a) and
(b) of the definition of “Redetermination Date”.






	 	 	“Scheduled Maturity Date” means the date falling 72 Months after the date of this Agreement.






	 	 	“Screen Rate” means the British Bankers’ Association Interest Settlement Rate for dollars for the
relevant period, displayed on the appropriate page of the Telerate screen provided that, 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.






	 	 	“Second MIE Loan” means the loan, in an amount of $2,500,000, made by Far East to the Borrower
pursuant to the terms of an intercompany loan agreement dated 26 June 2008 entered into between
Far East as lender and the Borrower as borrower.






	 	 	“Second MIH Share Charge” means the charge over shares to be entered into between MIH and the
Security Trustee in relation to 16% of the shares in the capital of the Borrower, which MIH will
own upon and from Share Exchange Closing.
	 
	 	 	“Secured Obligations” means all obligations at any time due, owing or incurred by any Obligor to
any Secured Party under the Finance Documents, whether present or future, actual or contingent
(and whether incurred solely or jointly and whether as principal or surety or in some other
capacity).






	 	 	“Secured Parties” means the Security Trustee, the Agent, the Offshore Account Bank and each
Creditor from time to time party to this Agreement, and any Receiver or Delegate.






	 	 	“Security” means a mortgage, charge, pledge, hypothecation, lien (statutory or other), assignment,
encumbrance, deed of trust, deposit arrangement, preference, priority or other security interest
securing any obligation of any person or any other agreement or arrangement having a similar
effect.






	 	 	“Security Documents” means:






	 	(a)	 	the Accounts Assignment;




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	 	(b)	 	the Borrower Debenture;






	 	(c)	 	(until Share Exchange Closing) the Far East Share Charge;






	 	(d)	 	the First MIH Share Charge;






	 	(e)	 	the Second MIH Share Charge;






	 	(f)	 	the PSC Pledge;






	 	(g)	 	each notice to any person, and each acknowledgment executed by any person in favour of the
Security Trustee, in relation to any rights of the Borrower over which Security has been
granted in favour of the Security Trustee, in each case required to be delivered under or
pursuant to the Security Documents;






	 	(h)	 	any Security entered into by the Borrower pursuant to Clause 5.3.5 (New Fields as
Borrowing Base Assets);






	 	(i)	 	the Assignment of ZR Guarantee;






	 	(j)	 	any other document designated as such by the Agent and the Borrower; and






	 	(k)	 	any document that amends, supplements, modifies or waives any provision of any of the
foregoing.






	 	 	“Selection Notice” means a notice substantially in the form set out in Part 2 of Schedule 3
(Requests) given in accordance with Clause 10 (Interest Periods).






	 	 	“Share Exchange Agreement” means the share exchange agreement entered or to be entered into
between Far East and MIH pursuant to which MIH will authorise the sale and issuance to Far East of
shares in MIH and Far East will convey and transfer shares in the Borrower to MIH.
	 
	 	 	“Share Exchange Closing” has the meaning given to “Closing” in the Share Exchange Agreement.






	 	 	“Simple Majority Lenders” means:






	 	(a)	 	if there are no Loans then outstanding, a Lender or Lenders whose Commitments
aggregate more than fifty per cent. (50%) of the Total Commitments (or, if the Total
Commitments have been reduced to zero, aggregate more than fifty per cent. (50%) 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 fifty per cent. (50%) of all the Loans then outstanding.






	 	 	“SPA” means the stock purchase agreement which was made by and between Microbes as seller and Far
East as Buyer on 11 August 2003 in relation to the purchase of all





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	 	 	issued and outstanding common stock of the Borrower, and all subsequent amendments, revisions and
modifications thereto.






	 	 	“SPDB” means Shanghai Pudong Development Bank Dalian Branch.






	 	 	“SPDB-ZR Loan” means the loan by SPDB to ZR in an amount equal to the RMB equivalent of $10,500,000
to enable ZR to comply with payment obligations in connection with the purchase of all shares in
the Borrower not owned by Far East at the date of this Agreement from Fullfame Enterprises Limited.
	 
	 	 	“SPDB-ZR Loan Account” means the account notified as such by the Borrower to the Agent in the name
of the Borrower and maintained with SPDB into which the Borrower will deposit (a) the sum of
$2,500,000 (or its equivalent in RMB) from the proceeds of the Second MIE Loan and (b) a further
sum of up to $8,000,000 (or its equivalent in RMB) to enable SPDB to make the SPDB-ZR Loan.






	 	 	“Specified Time” means a time determined in accordance with Schedule 7 (Timetables).
	 
	 	 	“Subordinated Indebtedness” means all unsecured Financial Indebtedness of any person which is
subordinated to the Financial Indebtedness outstanding under this Agreement and all other amounts
owing under the Finance Documents pursuant to a Subordination Agreement.






	 	 	“Subordination Agreement” means any subordination agreement entered into by the Borrower or Far
East and the Agent with any person substantially on the terms set out in Schedule 9 (Form of
Subordination Agreement) or on such other terms as may be acceptable to the Agent.






	 	 	“Subsidiary” means in relation to any corporation or other entity, a corporation or other entity:






	 	(a)	 	which is controlled, directly or indirectly, by the first mentioned corporation or other
entity;






	 	(b)	 	more than half the issued share capital or other entity interests of which is beneficially
owned, directly or indirectly by the first mentioned corporation; or






	 	(c)	 	which is a Subsidiary of another Subsidiary of the first mentioned corporation or other
entity,






	 	 	and for this purpose, a corporation or other entity shall be treated as being controlled by
another if that other corporation or other entity is able to direct its affairs and/or to control
the composition of its board of directors or equivalent body.






	 	 	“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).





- 23 -









 






	 	 	“Technical Assumptions” means assumptions as to the business and operations of the Borrower (that
do not constitute Economic Assumptions) and which are inputs to the Financial Model in producing a
Financial Projection and which include such statements, projections and estimates determined in
accordance with Clause 6 (Borrowing Base Amount).






	 	 	“Termination Agreement” means an agreement entered or to be entered into between the Borrower, Far
East and Microbes terminating the ongoing rights of Microbes under the SPA, including in relation
to board representation and payment of a percentage of the Borrower’s net oil revenues, in form and
substance satisfactory to the Agent (acting reasonably).






	 	 	“Termination Date” means the day falling on the earlier of:






	 	(a)	 	the Scheduled Maturity Date; and






	 	(b)	 	the Reserve Tail Date provided that if such date is not a Business Day, the Termination Date
shall fall on the Business Day immediately preceding the Reserve Tail Date.






	 	 	“Total Commitments” means the aggregate of the Commitments.






	 	 	“Transaction Documents” means the Finance Documents and the Project 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 5 (Form
of Transfer Certificate) or any other form agreed between the Agent and the Borrower.






	 	 	“Transfer Date” means, in relation to a transfer, the later of:






	 	(a)	 	the proposed Transfer Date specified in the Transfer Certificate; and






	 	(b)	 	the date on which the Agent executes the Transfer Certificate.






	 	 	“Transferred ZR Loan” has the meaning given in the First Amendment and Restatement Agreement.






	 	 	“Unpaid Sum” means any sum due and payable but unpaid by the Borrower under the Finance Documents.
	 
	 	 	“Unscheduled Redetermination Date” means any Redetermination Date referred to in paragraphs (c) to
(g) of the definition of “Redetermination Date”.






	 	 	“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.





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	 	 	“Utilisation Request” means a notice substantially in the form set out in Part 1 of Schedule
3 (Requests).





	 	 	“VAT” means value added tax and any other tax of a similar nature.





	 	 	 “ZR”  means Mr
Zhang Ruilin (PRC passport number





	 	 	“ZR Guarantee” has the meaning given in the First Amendment and Restatement Agreement.





	 	 	“ZR Loan” means the loan, in an amount not exceeding $119,206,906.36, made by the Borrower
to ZR and documented pursuant to a repayment agreement dated 19 September 2007.





	1.2	 	Construction





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





	 	(a)	 	the “Agent”, the “Arranger”, the “Security Trustee”, the “Offshore
Account Bank”, the “Onshore Account Bank”, the “Security Trustee”,
the “Technical Bank”, any “Finance Party”, any “Lender”, any “Hedge Counterparty”,
any “Secured Party”, or any “Party” shall be construed so as to include its
successors in title, permitted assigns and permitted transferees;





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





	 	(c)	 	a “Finance Document” or “Project Document” any other agreement or
instrument is a reference to that Finance Document or Project Document other
agreement or instrument as amended or novated and includes any agreement or
instrument that replaces it;





	 	(d)	 	“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;





	 	(e)	 	a “person” includes any person, firm, company,
corporation, government, state or agency of a state or any association, trust or
partnership (whether or not having separate legal personality) of two or more of
the foregoing;





	 	(f)	 	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
regulatory, self-regulatory or other authority or organisation;





	 	(g)	 	the words “include”, “includes” and “including” are not limiting;



- 25 -








 












	 	(h)	 	“asset” includes a reference, in respect of a person, to the whole or any part
of the present or future business, undertaking, property, assets, rights
(including intellectual property rights) and revenues (including any right to
receive revenues) of such person;






	 	(i)	 	“agreed form” means, in relation to any document, agreement or
instrument, that the same is in form and substance agreed between the Borrower
and the Agent and initialled (for the purposes of identification only) by the
Borrower and the Agent;






	 	(j)	 	“or”, “other” and “otherwise” shall be construed disjunctively and
not as implying similarity (unless the word “similar” or some other word of like
meaning is added);






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






	 	(l)	 	unless otherwise indicated, a time of day is a reference to Hong
Kong time.






	 	1.2.2	 	Clause and Schedule headings are for ease of reference only.






	 	1.2.3	 	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.






	 	1.2.4	 	a Default or Event of Default “continuing” or words of similar effect shall mean a
Default or Event of Default which has occurred and which has not been:






	 	(a)	 	cured or remedied to the satisfaction of the Majority Lenders; or






	 	(b)	 	waived in accordance with the terms of the Finance Documents.






	1.3	 	Currency Symbols and Definitions
	 
	 	 	“$” and “dollars” denote lawful currency of the United States of America.
	 
	 	 	“RMB” denotes lawful currency of the People’s Republic of China.
	 
	1.4	 	Third party rights






	 	1.4.1	 	Unless expressly provided to the contrary in this Agreement, a person who is not a
Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or
to enjoy the benefit of any term of any Finance Document.
	 
	 	1.4.2	 	Notwithstanding any term of this Agreement, the consent of any person who is not a
Party is not required to rescind or vary any Finance Document at any time.









- 26 -









 








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 reducing
revolving dollar loan facility in an aggregate amount equal to the Total Commitments. The
Total Commitments may be increased by reference to the value of the Borrowing Base Assets from
time to time included in the Financial Projections, with the prior written consent of all the
Lenders.
	 
	2.2	 	Finance Parties’ rights and obligations






	 	2.2.1	 	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.






	 	2.2.2	 	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 the Borrower shall be a separate and independent debt.






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






	3.	 	PURPOSE
	 
	3.1	 	Purpose of the Facility






	 	 	The Borrower shall apply all amounts borrowed by it under the Facility in the following order
of priority:






	 	3.1.1	 	first:






	 	(a)	 	in repayment in full of the Financial Indebtedness of the Borrower
under the Bridge Facility Agreement;






	 	(b)	 	towards repayment of Financial Indebtedness of the Borrower owed to
SPDB and LCCU, in an amount of up to $70,000,000; and






	 	(c)	 	to fund the Debt Service Reserve Account up to the Debt Service
Reserve Requirement;






	 	3.1.2	 	second:






	 	(a)	 	in paying the costs of developing, maintaining, operating and
managing the interest of the Borrower in any Borrowing Base Asset;




- 27 -









 












	 	(b)	 	paying the costs incurred or to be incurred by the Borrower in connection with
any Hedge Agreements; and






	 	(c)	 	paying fees, costs and expenses incurred by the Borrower in
connection with the transactions contemplated by the Finance Documents;






	 	3.1.3	 	third, in an amount not exceeding $20,000,000 as follows:






	 	(a)	 	in an amount not exceeding $5,000,000 in financing (whether by
disbursement or reimbursement) the payment of amounts due and payable by the
Borrower to Microbes under the SPA, subject to delivery of evidence that demand
has been made on the Borrower in relation to such amounts and, in the case of
reimbursement, evidence of payment, in each case in form and substance reasonably
satisfactory to the Agent; and/or






	 	(b)	 	the balance thereof, either:






	 	(i)	 	in financing a payment to Microbes pursuant to the
Termination Agreement; or
	 
	 	(ii)	 	if the Borrower has complied with its obligations under
Clause 22.25 (SPA) but a Termination Agreement has not been signed by 31
January 2008, and provided that all amounts which have fallen due and payable
by the Borrower to Microbes under the SPA at such time (other than any amount
being disputed in good faith and in respect of which adequate reserves are
being maintained in a manner satisfactory to the Agent) have been (or will,
from the proceeds of such Utilisation, be) paid in full, for the general
corporate purposes of the Borrower;






	 	3.1.4	 	fourth, after the Agent (acting on the instructions of the Majority Lenders) has
confirmed that it is satisfied that the Facilities have been Utilised and applied in
accordance with clause 3.1.1, 3.1.2 and 3.1.3 (in the case of Clauses 3.1.2(a), 3.1.2(b)
and 3.1.3(b) to a reasonably acceptable level at any given time):






	 	(a)	 	financing any Agreed Acquisition; and






	 	(b)	 	for the general corporate purposes of the Borrower in an amount not
exceeding $5,000,000.






	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 Schedule 2 (Conditions Precedent) in form and
substance satisfactory to the Agent (acting reasonably). The Agent shall notify the Borrower
and the Lenders promptly upon being so satisfied.
	 
	4.2	 	Further Conditions Precedent






	 	 	The Lenders will only be obliged to comply with Clause 7.6 (Lenders’ participation) if:






	 	4.2.1	 	save in the case of a deemed Utilisation pursuant to Clause 7.3 (Deemed
Utilisation), on the date of the applicable Utilisation Request and on the proposed
Utilisation Date:






	 	(a)	 	no Default is continuing or would result from the proposed Loan; and






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






	 	4.2.2	 	the proposed Utilisation will not cause the Available Facility to be exceeded; and






	 	4.2.3	 	in relation the first Utilisation, the Borrower has contracted hedging
transactions, in accordance with Schedule 10 (Hedging), satisfactory to the Majority
Lenders.






	4.3	 	Loan Limit






	 	 	The Borrower may not Utilise any amount of the Facility exceeding $120,000,000 without
the prior written consent of the Agent (acting on the instructions of all the Lenders).




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SECTION 3







BORROWING BASE AMOUNT





	5.	 	BORROWING BASE ASSETS
	 
	5.1	 	General Rules






	 	 	A Field may only be a Borrowing Base Asset to the extent of the interest of the Borrower in
such Field and if, and for so long as:






	 	(a)	 	the Borrower’s interest is not subject to any Security (other than Security
permitted pursuant to Clause 22.5.3 (Negative Pledge)); and






	 	(b)	 	all material Authorisations applicable to the development and operation of such
Field and then required to have been obtained by law, regulation, contract or customary
practice in the People’s Republic of China or under any Project Document have been
obtained are in full force and effect and have not been revoked.






	5.2	 	Fields as Borrowing Base Assets






	 	 	Without prejudice to Clause 5.1 (General Rules), each of the Daan Field, the Miao 3 Field and
the Moliqing Field are, to the extent of the allocation entitlement of the Borrower under the
relevant PSC (and without prejudice to the rights and interests of PetroChina thereunder),
Borrowing Base Assets as at the date of this Agreement.






	5.3	 	New Fields as Borrowing Base Assets






	 	 	The Borrower may at any time submit a written application to Agent requesting, by not less
than sixty days notice, that a new Field be included as a Borrowing Base Asset, in which
event, such Field will become a Borrowing Base Asset with effect from the date that the Agent
notifies the Borrower that the Majority Lenders (acting reasonably) are satisfied that:






	 	5.3.1	 	all material Authorisations applicable to the development and operation of such
new Field and then required by law, regulation, contract or customary practice in the
People’s Republic of China or under any Project Document to have been obtained, for the
development and operation of the new Field have been obtained and are in full force and
effect;






	 	5.3.2	 	all relevant Field, infrastructure and pipeline information and plans has been
reviewed and found satisfactory by the Technical Bank (acting reasonably);






	 	5.3.3	 	an Independent Reserves Report in relation thereto has been provided to the Agent
and approved by the Technical Bank (acting reasonably);






	 	5.3.4	 	a Financial Projection demonstrating the Borrowing Base Amount (and being prepared
using Proved Reserves and Probable Reserves at the discretion of the Technical Bank after
inclusion of the new Field) has been provided to the Agent; and




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	 	5.3.5	 	documentation in relation to the granting of Security to the Agent over the
Borrower’s interest in the new Field has been agreed with the Security Trustee and
such Security is consistent with documentation governing Security over the other
Borrowing Base Assets,






	 	 	provided that such notification will be deemed to have been given to the Borrower if (x) the
Agent has failed to notify the Borrower to the contrary within 90 days following delivery by
the Borrower of a written application to the Agent under this Clause 5.3 and (y) the Security
referred to in Clause 5.3.5 has been created and perfected.
	 
	5.4	 	Withdrawal of Borrowing Base Assets by the Agent






	 	5.4.1	 	A Field shall cease to be a Borrowing Base Asset on the date the Agent gives notice
to the Borrower that such Field fails to satisfy any of the conditions specified in
Clause 5.1 (General Rules) (which notice shall specify which conditions are not
satisfied).






	 	5.4.2	 	If, within five Business Days of the Agent advising the Borrower that a Field has
ceased to be a Borrowing Base Asset in accordance with Clause 5.4.1 above, the Borrower
produces evidence satisfactory to the Agent, acting reasonably, that the conditions
specified in Clause 5.1 (General Rules) have been and continue to be fulfilled in respect
of that Field, then such Field shall be immediately reinstated as a Borrowing Base Asset
and the provisions of the Finance Documents shall continue to apply as if such Field had
not ceased to be a Borrowing Base Asset.






	 	5.4.3	 	Within fifteen Business Days of the Agent advising the Borrower that a Field has
ceased to be a Borrowing Base Asset in accordance with Clause 5.4.1 above, and provided
that the Field has not been reinstated as a Borrowing Base Asset under Clause 5.4.2
above, the Technical Bank shall deliver to the Lenders and the Borrower a Financial
Projection reflecting such removal and the Borrower shall, within three Business Days of
receipt of such Financial Projection, make a prepayment or repayment of the Loans in an
amount necessary to ensure that, following the removal of such Field, the Loans do not
exceed the Available Facility.






	5.5	 	Withdrawal of Borrowing Base Assets by the Borrower






	 	5.5.1	 	The Borrower may request that a Field shall cease to be a Borrowing Base Asset by
giving to the Agent not less than thirty days’ notice of its intention to withdraw that
Field as a Borrowing Base Asset.






	 	5.5.2	 	As soon as practicable following receipt of notice from the Borrower pursuant to
Clause 5.5.1 the Agent shall request the Technical Bank to deliver to the Lenders and the
Borrower a Financial Projection reflecting such withdrawal and specifying the amount if
any by which the Borrower must repay or prepay the Loans if it wishes to withdraw such
Field as a Borrowing Base Asset.




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	 	5.5.3	 	At any time during a period of thirty days commencing on the date of delivery of
the Financial Projection under Clause 5.5.2, the Borrower may make a prepayment or
repayment of the Loans in an amount necessary to ensure that, following the withdrawal
of such Field, the Loans would not exceed the Available Facility and, upon the making
of such repayment or prepayment, such Field shall cease to be a Borrowing Base Asset.






	5.6	 	Release of Security






	 	5.6.1	 	Following the withdrawal of any Field in accordance with Clause 5.4 (Withdrawal of
Borrowing Base Assets by the Agent) or 5.5 (Withdrawal of Borrowing Base Assets by the
Borrower), and provided no Default has occurred and is continuing and prepayment or
repayment has been made as required in accordance with this Agreement, any Security
created over such Field in favour of the Security Trustee shall promptly be released by
the Security Trustee.






	 	5.6.2	 	If any Security created in favour of the Security Trustee over a Field which is
withdrawn in accordance with Clause 5.4 (Withdrawal of Borrowing Base Assets by the
Agent) or Clause 5.5 (Withdrawal of Borrowing Base Assets by the Borrower) is not
released by the Security Trustee due to the fact a Default has occurred and is
continuing, such Security shall promptly be released by the Security Trustee when such
Default is no longer continuing.






	6.	 	BORROWING BASE AMOUNT
	 
	6.1	 	Timing of Financial Projection
	 
	 	 	A Financial Projection shall be prepared for each Redetermination Date.
	 
	6.2	 	Preparation of Financial Projection






	 	6.2.1	 	Each Financial Projection shall be prepared by the Technical Bank utilising the
Financial Model and applying values for each of the Assumptions determined pursuant to
this Clause 6 (Borrowing Base Amount) for the purposes of that Financial Projection.
	 
	 	6.2.2	 	Each Financial Projection shall be in substantially the same form as the Financial
Model.
	 
	 	6.2.3	 	The Technical Bank shall, as of each Redetermination Date and no later than five
days prior to the relevant Redetermination Date, deliver a Financial Projection prepared
and determined in accordance with this Clause 6 (Borrowing Base Amount) to the
Borrower and each Finance Party. Subject to the provisions of this Clause 6, each
Financial Projection prepared and delivered by the Technical Bank shall (save for
manifest error) be final and binding on the Borrower and each Finance Party.
	 
	 	6.2.4	 	The Technical Bank shall revise any Financial Projection to correct any manifest
error agreed between the Technical Bank and/or the Agent and the Borrower.





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	6.3	 	Determination of Assumptions






	 	6.3.1	 	The Technical Bank shall, no later than thirty days prior to a Scheduled
Redetermination Date, prepare and deliver to the Borrower the proposed Financial
Projection for that Scheduled Redetermination Date together with the Technical
Assumptions and the Economic Assumptions used in the preparation thereof. The Technical
Assumptions shall be determined by the Technical Bank acting reasonably on the basis of
its good faith opinion and by reference to the Lenders’ Technical Report prepared
specifically for the proposed Financial Projection and prices in the Economic Assumptions
will reflect any Hedge Agreements entered into by the Borrower in respect of the
Borrowing Base Assets. The Technical Bank shall at the same time deliver to the Borrower
a copy of the relevant Lenders’ Technical Report used for the purposes of the proposed
Financial Projection.






	 	6.3.2	 	If any of the Technical Assumptions used in the preparation of the proposed
Financial Projection is disputed by the Borrower and, following good faith discussions
for a period of ten days, the Technical Bank and the Borrower are unable to resolve the
dispute and agree on the relevant Technical Assumption, the Technical Bank shall prepare
the Financial Projection on the basis of the Technical Assumptions drawn from the
relevant Lenders’ Technical Report, as modified to take account of any changes requested
by the Borrower and agreed by the Technical Bank (acting reasonably, taking into account
any independent reserve reports or oil price forecasts provided by the Borrower, and
providing reasonable justification for its determination).






	 	6.3.3	 	The Economic Assumptions shall be determined by the Agent acting
reasonably on the basis of its good faith opinion. If any of the Economic Assumptions
used in the preparation of the proposed Financial Projection are disputed by the Borrower
and, following good faith discussions for a period of ten days, the Agent and the
Borrower are unable to resolve the dispute and agree on the relevant Economic Assumption,
the Agent shall prepare the Financial Projection on the basis of the Economic Assumptions
determined by it on a fair and reasonable basis, as modified to take account of any
changes requested by the Borrower and agreed by the Agent (acting reasonably, taking into
account any independent reserve reports or oil price forecasts provided by the Borrower,
and providing reasonable justification for its determination).






	 	6.3.4	 	In the case of any Financial Projection to be prepared on any Unscheduled
Redetermination Date, not later than twenty days prior to such Unscheduled
Redetermination Date, the Technical Bank shall notify the Borrower of all Assumptions
proposed to be used for preparing the relevant Financial Projection. The Assumptions
shall be determined by the Technical Bank acting reasonably on the basis of its good
faith opinion following consultation with the Borrower and otherwise, in the case of the
Technical Assumptions, by reference to the Lenders’ Technical Report prepared
specifically for the relevant Financial Projection (or, at the discretion of the
Technical Bank, the





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	 	 	 	last-delivered Lenders’ Technical Report) and, in the case of the Economic
Assumptions, prices will reflect any Hedge Agreements entered into by the Borrower in
respect of the Borrowing Base Assets.






	 	6.3.5	 	Subject to this Clause 6 (Borrowing Base Amount), the determination by the
Technical Bank of the Technical Assumptions and the Economic Assumptions shall be final
and binding on the Borrower and the Lenders and shall be used in preparing the relevant
Financial Projection.






	 	6.3.6	 	The Assumptions as determined pursuant to this Clause 6.3 (Determination of
Assumptions) shall be used in the Financial Projection for the relevant Redetermination
Date.






	6.4	 	Modification of Financial Model






	 	 	The Technical Bank or the Borrower may propose modifications to the computer programme
comprising the Financial Model at any time in order to correct any deficiency in its form or
structure and the Technical Bank shall make any modifications approved by both parties (such
approval not to be unreasonably withheld, conditioned or delayed) as soon as practicable.
	 
	6.5	 	Lenders’ Technical Report






	 	 	The Technical Bank shall request the Independent Engineer to deliver to the Technical Bank,
no later than forty days before each Scheduled Redetermination Date and, in the sole
discretion of the Technical Bank, at any other time in relation to any Unscheduled
Redetermination Date, a Lenders’ Technical Report.
	 
	6.6	 	Independent Engineer Review






	 	 	The Technical Bank shall request, and the Borrower shall permit (on reasonable prior notice)
the Independent Engineer to visit the site of the Borrowing Base Assets on an annual basis in
order to review the Borrowing Base Assets and the Technical Assumptions provided that:






	 	6.6.1	 	(subject to Clause 22.28 (Confidentiality)) the above requirements shall not
require the Borrower to breach any applicable laws or confidentiality requirements
binding on it;






	 	6.6.2	 	any such visit and/or review is in normal business hours and is subject to the
normal health, safety and security requirements of the Borrower applicable at the
relevant time;






	 	6.6.3	 	any such visit and/or review shall not interfere with or interrupt the operation
of the Borrowing Base Assets); and






	 	6.6.4	 	no more than four representatives of the Independent Engineer shall be present on
the site of the Borrowing Base Assets at any time.









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SECTION 4


UTILISATION





	7.	 	UTILISATION OF FACILITY
	 
	7.1	 	Delivery of a Utilisation Request for a Loan






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






	 	 	Each Utilisation Request relating to a Loan is irrevocable and will not be regarded as having
been duly completed unless:






	 	7.2.1	 	the proposed Utilisation Date is a Business Day within the Availability Period;






	 	7.2.2	 	the currency and amount of the Utilisation comply with Clause 7.4 (Currency and
amount of Loans); and






	 	7.2.3	 	the Utilisation Request specifies the account or accounts into which the proceeds
of the Utilisation are to be paid (together with the relevant amounts) which:






	 	(a)	 	in the case of payments to SPDB and LCCU, as permitted by paragraph
3.1.1(b) of Clause 3.1 (Purpose of the Facility) shall be the accounts specified
by such institutions in the letters delivered pursuant to paragraph 6(p) of
Schedule 2 (Conditions Precedent);






	 	(b)	 	in the case of payments to Microbes as permitted by paragraph 3.1.3
of Clause 3.1 (Purpose of the Facility) shall be the account specified by Microbes
in the Termination Agreement;






	 	(c)	 	in relation to the payment of fees, costs and expenses pursuant to
paragraph 6(d) of Schedule 2 (Conditions Precedent) shall be the account specified
by the Agent; and






	 	(d)	 	in the case of all other amounts, shall be the Offshore Collection
Account.






	7.3	 	Deemed Utilisation






	 	 	If, by 11.00 a.m. (Hong Kong time) three days prior to the last day of an Interest Period,
the Borrower has not delivered to the Agent a duly completed Utilisation Request in relation
to the then existing Loan then, subject to the terms of this Agreement (including the
Majority Lenders being satisfied that the provisions of Clause 4.2 (Further Conditions
Precedent) continue to be met) and unless the Borrower informs the Agent otherwise, the
Borrower shall be deemed to have issued a Utilisation Request for a Loan equal to the Loan
due to be repaid on such last day with a Utilisation Date being such last day and with an
Interest Period of a duration equal to the duration of the Interest Period of the previous
Loan.









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	7.4	 	Currency and amount of Loans






	 	7.4.1	 	The currency specified in a Utilisation Request must be dollars and the requested
Loan must be a minimum of $5,000,000 (and an integral multiple of $1,000,000) or, if
less, the Available Facility.






	 	7.4.2	 	The amount of any proposed Loan in a Utilisation Request must be an amount which
is not more than the Available Facility.






	7.5	 	Number of Utilisations






	 	 	The Borrower may not deliver more than three Utilisation Requests for Loans during each
three-month period between Repayment Dates.
	 
	7.6	 	Lenders’ participation






	 	7.6.1	 	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.






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






	 	7.6.3	 	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.






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SECTION 5

REPAYMENT, PREPAYMENT AND CANCELLATION





	8.	 	REPAYMENT
	 
	8.1	 	Repayment of Loans






	 	8.1.1	 	The Borrower shall repay each Loan on each Repayment Date falling on or after
the date falling 24 Months from the date of this Agreement, provided that, subject to
the terms of this Agreement:






	 	(a)	 	if the Agent has received a Utilisation Request requesting a
Loan on such Repayment Date of a principal amount greater than the relevant
Loan to be repaid or if the Borrower shall be deemed to have issued a
Utilisation Request (and having not informed the Agent otherwise) under Clause
7.3 (Deemed Utilisation) in such an amount, then no actual repayment of
principal need be made by the Borrower on such day and the amount advanced by
the Lenders on the relevant Utilisation Date will be the difference between
the relevant Loan to be repaid on such day and the Loan requested in the
Utilisation Request;
	 
	 	(b)	 	if the Agent has received a Utilisation Request requesting a
Loan on such Repayment Date of a principal amount equal to the relevant Loan
to be repaid or if the Borrower shall be deemed to have issued a Utilisation
Request (and having not informed the Agent otherwise) under Clause
7.3 (Deemed
Utilisation), then no actual repayment of principal need be made by the
Borrower on such day and no actual advance need be made by the Lenders on the
relevant Utilisation Date; and
	 
	 	(c)	 	if the Agent has received a Utilisation Request requesting a
Loan on such Repayment Date of a principal amount less than the relevant Loan
to be repaid, then the repayment of principal required to be made by the
Borrower on such day will be the difference between the relevant Loan to be
repaid and the Loan requested in the Utilisation Request,






	 	 	 	and, in each case, a Loan of the principal amount requested or deemed requested in
the Utilisation Request shall be deemed to have been made on such Utilisation
Date.
	 
	 	8.1.2	 	The Borrower shall, on each Repayment Date, effect such repayment of the Loans
from the amount standing to the credit of the Offshore Collection Account as will
reduce the principal amounts then outstanding under the Facility (after such repayment)
to the Available Facility applicable as at that Repayment Date.
	 
	 	8.1.3	 	Subject to the terms of this Agreement, if, following an Unscheduled
Redetermination Date, the Loans exceed the Available Facility as of such Unscheduled
Redetermination Date, the Borrower shall, within 30 days of such Unscheduled
Redetermination Date, repay an amount equal to the





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	 	 	 	difference between the Loans and the Available Facility as at that Unscheduled
Redetermination Date.
	 
	 	8.1.4	 	If, pursuant to this Clause 8.1, the Borrower actually repays (rather than
being deemed to repay under Clause 8.1.1) the whole or any part of any Loan before the
date falling 24 Months after the date of this Agreement, it shall, at the same time
that it makes such repayment, pay to the Agent, for the account of the Lenders, a fee
in dollars equal to zero point five per cent. (0.5%) of the amount repaid.
	 
	 	8.1.5	 	The Borrower must repay all outstanding Loans on the Termination Date.






	8.2	 	Reborrowing
	 
	 	 	Subject to the terms of this Agreement, any Loan repaid or amount prepaid under the
Facility shall be capable of being redrawn during the Availability Period.
	 
	9.	 	PREPAYMENT AND CANCELLATION
	 
	9.1	 	Illegality
	 
	 	 	If it becomes 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:






	 	9.1.1	 	that Lender shall promptly notify the Agent upon becoming aware of that event;
	 
	 	9.1.2	 	upon the Agent notifying the Borrower, the Commitment of that Lender will be
immediately cancelled; and
	 
	 	9.1.3	 	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	 	Voluntary cancellation
	 
	 	 	The Borrower may, if it gives the Agent not less than five Business Days (or such
shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part
(being a minimum amount and an integral multiple of $1,000,000) of the Maximum Facility. Any
cancellation under this Clause 9.2 shall reduce the Commitments of the Lenders rateably.
	 
	9.3	 	Voluntary prepayment






	 	9.3.1	 	The Borrower may, if it gives the Agent not less than five Business Days’ (or
such shorter period as the Majority Lenders may agree) prior notice, prepay the whole
or any part of the Loans (but, if in part, being an amount that reduces the aggregate
amount of the Loans by a minimum amount and integral multiple of $1,000,000).




- 38 -









 












	 	9.3.2	 	If, pursuant to this Clause 9.3, the Borrower prepays the whole or any part
of the Loans before the date falling 24 Months after the date of this Agreement, it
shall, at the same time that it makes such prepayment, pay to the Agent, for the
account of the Lenders, a fee in dollars equal to zero point five per cent. (0.5%)
of the amount prepaid.






	9.4	 	Right of repayment and cancellation in relation to a single Lender






	 	9.4.1	 	If:






	 	(a)	 	any sum payable to any Lender by the Borrower is required to
be increased under paragraph (c) of Clause 14.2 (Tax gross-up); or
	 
	 	(b)	 	any Lender claims indemnification from the Borrower under
Clause 14.3 (Tax indemnity) or Clause 15.1 (Increased costs),






	 	 	 	the Borrower may, whilst (in the case of paragraphs (a) and (b) above) the
circumstance giving rise to the requirement or indemnification continues, 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.
	 
	 	9.4.2	 	On receipt of a notice referred to in sub-clause 9.4.1 above, the Commitment
of that Lender shall immediately be reduced to zero.
	 
	 	9.4.3	 	On the last day of each Interest Period which ends after the Borrower has
given notice under sub-clause 9.4.1 above (or, if earlier, the date specified by the
Borrower in that notice), the Borrower shall repay that Lender’s participation in
the Loans.






	9.5	 	Restrictions






	 	9.5.1	 	Any notice of cancellation or prepayment given by any Party under this
Clause 9.5 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.
	 
	 	9.5.2	 	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.
	 
	 	9.5.3	 	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.
	 
	 	9.5.4	 	No amount of any Commitment cancelled under this Agreement may be subsequently
reinstated.
	 
	 	9.5.5	 	If the Agent receives a notice under this Clause 9.5 it shall promptly forward
a copy of that notice to either the Borrower or the affected Lender, as appropriate.





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SECTION 6

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:






	 	10.1.1	 	the Margin; and
	 
	 	10.1.2	 	LIBOR.






	10.2	 	Payment of interest






	 	10.2.1	 	Subject to Clause 10.2.2, the Borrower shall pay accrued interest on each Loan
on the last day of each Interest Period.
	 
	 	10.2.2	 	Prior to the first Repayment Date, the Borrower shall pay accrued interest on each
Loan on the date which falls three Months after the first Utilisation Date, and on each
date falling a multiple of three Months thereafter.






	10.3	 	Default interest






	 	10.3.1	 	If the Borrower 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
sub-clause 10.3.2 below, is two per cent. (2%) 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 Borrower on demand by the Agent.
	 
	 	10.3.2	 	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:






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






	 	10.3.3	 	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	 	Duration of Interest Periods






	 	11.1.1	 	The Borrower may select an Interest Period for a Loan in the Utilisation Request
for that Loan or (if that Loan has already been borrowed) in a Selection Notice.
	 
	 	11.1.2	 	Each Selection Notice is irrevocable and must be delivered to the Agent by the
Borrower not later than the Specified Time.
	 
	 	11.1.3	 	If the Borrower fails to deliver a Selection Notice to the Agent in accordance
with Clause 11.1.2 above, the relevant Interest Period will be one Month.
	 
	 	11.1.4	 	Subject to this Clause 11, the Borrower may select an Interest Period for a Loan of
one, two or three Months (or any other period agreed between the Borrower and the Agent
acting on the instructions of all the Lenders).
	 
	 	11.1.5	 	An Interest Period for a Loan shall not extend beyond the Termination Date.
	 
	 	11.1.6	 	Each Interest Period for a Loan shall start on the Utilisation Date (including a
deemed Utilisation Date in accordance with Clause 7.3 (Deemed Utilisation)) of that or
(if that Loan has already been made) on the last day of the preceding Interest Period
for that Loan.
	 
	 	11.1.7	 	Notwithstanding Clauses 11.1.1 to 11.1.6 above, an Interest Period relating to any
Unpaid Sum shall be determined by the Agent (acting reasonably).
	 
	 	11.1.8	 	Where two or more Utilisation Requests for Loans are issued, or deemed to have been
issued in accordance with Clause 7.3 (Deemed Utilisation), with the same Utilisation
Date, then such Loans shall be consolidated into and treated as a single Loan from such
date.






	11.2	 	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 immediately preceding Business Day (if there is not).
	 
	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.









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	12.2	 	Market disruption






	 	12.2.1	 	If a Market Disruption Event occurs in relation to a Loan for any Interest
Period, then the LIBOR applicable to each Lender’s share of that Loan for that Interest
Period shall be the rate per annum 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.
	 
	 	12.2.2	 	In this Agreement “Market Disruption Event” means:






	 	(a)	 	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
	 
	 	(b)	 	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 thirty five per cent. (35)%
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






	 	12.3.1	 	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.
	 
	 	12.3.2	 	Any alternative basis agreed pursuant to sub-clause 12.3.1 above shall, with the
prior consent of all the Lenders and the Borrower, be binding on all Parties.






	12.4	 	Break Costs






	 	12.4.1	 	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.
	 
	 	12.4.2	 	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	 	General
	 
	 	 	The Borrower shall pay to the Arranger, the Agent, the Technical Bank and the Security
Trustee all fees in the amounts and at the times agreed in a Fee Letter.









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	13.2	 	Commitment fee
	 
	 	 	The Borrower shall pay to the Agent (for the account of the each Lender in the
proportion that each such Lender’s Available Commitment bears to the Total Commitments) a
commitment fee equal to 0.50 per cent. per annum, based on Available Commitments on the date
of this Agreement of $120,000,000 together with any additional Available Commitments made
available in accordance with Clause 4.3 (Loan Limits), which shall be paid to the Agent for
the account of the Lenders in arrear on the last day of each period of three Months which
falls during the Availability Period and on the last day of the Availability Period.









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SECTION 7

ADDITIONAL PAYMENT OBLIGATIONS





	14.	 	TAX GROSS UP AND INDEMNITIES
	 
	14.1	 	Definitions






	 	14.1.1	 	In this Agreement:
	 
	 	 	 	“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.
	 
	 	 	 	“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 the Borrower to a
Finance Party under Clause 14.2 (Tax gross-up) or a payment
under Clause 14.3 (Tax
indemnity).
	 
	 	14.1.2	 	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






	 	14.2.1	 	The Borrower shall make all payments to be made by it without any Tax Deduction,
unless a Tax Deduction is required by law.
	 
	 	14.2.2	 	The Borrower shall promptly upon becoming aware that it 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 the Borrower.
	 
	 	14.2.3	 	If a Tax Deduction is required by law to be made by the Borrower, the amount of the
payment due from the Borrower 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.
	 
	 	14.2.4	 	If the Borrower is required to make a Tax Deduction, the Borrower 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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	 	14.2.5	 	Within thirty days of making either a Tax Deduction or any payment required
in connection with that Tax Deduction, the Borrower 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.






	14.3	 	Tax indemnity






	 	14.3.1	 	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.
	 
	 	14.3.2	 	Sub-clause 14.3.1 above shall not apply:






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






	 	(i)	 	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
	 
	 	(ii)	 	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
	 
	 	(b)	 	to the extent a loss, liability or cost is compensated for by
an increased payment under Clause 14.2 (Tax gross-up).






	 	14.3.3	 	a Protected Party making, or intending to make a claim under sub-clause 14.3.1 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.
	 
	 	14.3.4	 	A Protected Party shall, on receiving a payment from the Borrower under this Clause
14.3, notify the Agent.






	14.4	 	Tax Credit
	 
	 	 	If the Borrower makes a Tax Payment and the relevant Finance Party determines that:






	 	14.4.1	 	a Tax Credit is attributable either to an increased payment of which that Tax Payment
forms part, or to that Tax Payment; and
	 
	 	14.4.2	 	that Finance Party has obtained, utilised and retained that Tax Credit,





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	 	 	the Finance Party shall pay an amount to the Borrower 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 Borrower.
	 
	14.5	 	Stamp taxes
	 
	 	 	The Borrower shall pay and, within three Business Days of demand, indemnify each
Finance Party against any cost, loss or liability that Finance Party incurs in relation to
all stamp duty, registration and other similar Taxes payable in respect of any Finance
Document.
	 
	14.6	 	Value added tax






	 	14.6.1	 	All amounts set out, or expressed to be payable, under a Finance Document by any
Party to a Finance Party which (in whole or in part) constitute the consideration for
VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such
supply, and accordingly, subject to sub-clause 14.6.2 below, if VAT is 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 the
consideration) an amount equal to the amount of the VAT (and such Finance Party shall
promptly provide an appropriate VAT invoice to such Party).
	 
	 	14.6.2	 	Where a Finance Document requires any Party to reimburse a Finance Party for any
costs or expenses, that Party shall also at the same time pay and indemnify the Finance
Party against all VAT incurred by the Finance Party in respect of the costs or expenses
to the extent that the Finance Party reasonably determines that neither it nor any
other member of any group of which it is a member for VAT purposes is entitled to
credit or repayment from the relevant tax authority in respect of the VAT.






	14.7	 	Tax exemption or reduction
	 
	 	 	Any Finance Party that is entitled to an exemption from or reduction in the rate of a
Tax Deduction under the laws of the jurisdiction in which the Borrower is located or
resident for tax purposes or under any treaty to which such jurisdiction is a party, with
respect to any payments under a Finance Document, shall use reasonable efforts to deliver to
the Borrower or to the Agent, and the Agent shall deliver to the Borrower, at the time or
times prescribed by applicable law or regulation or reasonably requested by the Borrower or
Agent, such properly completed and executed documentation prescribed by applicable law or
regulation as will permit such payments to be made without Tax Deduction or at a reduced
rate of Tax Deduction. In addition, a Finance Party shall use reasonable efforts to deliver
new applicable documentation upon the expiration or obsolescence of any previously delivered
documentation or, if requested by the Borrower or Agent, such other documentation prescribed
by applicable law or regulation or reasonably requested by the Borrower or Agent as will
enable the Borrower or Agent to determine whether or not payments to or in respect of that
Finance Party are subject to Tax Deduction or any information reporting requirements.









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	15.	 	INCREASED COSTS
	 
	15.1	 	Increased costs






	 	15.1.1	 	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, enacted or imposed after the date of this Agreement.
	 
	 	15.1.2	 	In this Agreement “Increased Costs” means:






	 	(a)	 	a reduction in the rate of return from the Facility or on a
Finance Party’s (or its Affiliate’s) overall capital;
	 
	 	(b)	 	an additional or increased cost; or
	 
	 	(c)	 	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






	 	15.2.1	 	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.
	 
	 	15.2.2	 	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






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






	 	(a)	 	attributable to a Tax Deduction required by law to be made by
the Borrower;
	 
	 	(b)	 	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 sub-clause 14.3.2 of
Clause 14.3 (Tax indemnity) applied); or
	 
	 	(c)	 	attributable to the breach by the relevant Finance Party or
its Affiliates of any law or regulation.





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	 	15.3.2	 	In this Clause 15.3, a reference to a “Tax Deduction” has the same meaning
given to the term in Clause 14.1 (Definitions).
	 
	 	15.3.3	 	Clause 15.1 (Increased Costs) does not apply to the extent that any Increased Cost is
claimed by a Finance Party and that Finance Party is repaid in full pursuant to Clause
9.4 (Right of repayment and cancellation in relation to a single Lender).






	16.	 	OTHER INDEMNITIES
	 
	16.1	 	Currency indemnity






	 	16.1.1	 	If any sum due from the Borrower 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:






	 	(a)	 	making or filing a claim or proof against the Borrower;
	 
	 	(b)	 	obtaining or enforcing an order, judgment or award in
relation to any litigation or arbitration proceedings,






	 	 	 	the Borrower shall, as an independent obligation, within three Business Days of
demand, indemnify each Finance Party 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.
	 
	 	16.1.2	 	The Borrower 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






	 	16.2.1	 	The Borrower shall, within three Business Days of demand, indemnify each Finance
Party against any cost, loss or liability incurred by that Finance Party as a result
of:






	 	(a)	 	the occurrence of any Event of Default;
	 
	 	(b)	 	a failure by an Obligor to pay any amount due from it under a
Finance Document on its due date, including any cost, loss or liability
arising as a result of Clause 36 (Turnover of Receipts) or 37 (Sharing);
	 
	 	(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); or





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






	 	16.2.2	 	The Borrower shall, within three Business Days of demand, pay to each Finance Party
an amount equal to any sum which such Finance Party was entitled to receive from an
Obligor under or in accordance with a Security Document but did not so receive when
due.






	16.3	 	Indemnity to the Agent and the Technical Bank






	 	16.3.1	 	The Borrower shall promptly indemnify the Agent against any reasonably incurred
and documented cost, loss or liability incurred by the Agent as a result of:






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






	 	16.3.2	 	The Borrower shall promptly indemnify the Technical Bank against any reasonably
incurred and documented cost, loss or liability incurred by the Technical Bank as a
result of appointing the Independent Engineer, except to the extent directly caused by
the gross negligence, fraud or wilful misconduct of the Technical Bank or the
Independent Engineer.






	16.4	 	Indemnity to the Security Trustee






	 	16.4.1	 	The Borrower shall promptly indemnify the Security Trustee and any Receiver or
Delegate against any reasonably incurred and documented cost, loss or liability
reasonably incurred by it as a result of:






	 	(a)	 	the taking, holding, protection or enforcement of the
Transaction Security;
	 
	 	(b)	 	the exercise of any of the rights, powers, discretions and
remedies vested in them by the Finance Documents or by law;
	 
	 	(c)	 	any default by the Borrower in the performance of any of the
obligations expressed to be assumed by it in the Finance Documents; or
	 
	 	(d)	 	which otherwise relate to any of the Transaction Security or
the performance of the terms of this Agreement,






	 	 	 	(otherwise, in each case, than as a result of its gross negligence or wilful
misconduct).
	 
	 	16.4.2	 	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 from the
proceeds of enforcement of the Transaction Security, all sums necessary to give effect
to the indemnity in this Clause 16.4.









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	17.	 	MITIGATION BY THE LENDERS
	 
	17.1	 	Mitigation






	 	17.1.1	 	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 14 (Tax gross-up and indemnities) or Clause 15
(Increased costs) including transferring its rights and obligations under the Finance
Documents to another Affiliate or Facility Office.
	 
	 	17.1.2	 	Sub-clause 17.1.1 above does not in any way limit the obligations of the Borrower
under the Finance Documents.






	17.2	 	Limitation of liability






	 	17.2.1	 	The Borrower shall 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).
	 
	 	17.2.2	 	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.
	 
	 	17.2.3	 	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
	 
	 	(c)	 	oblige any Finance Party to disclose any information relating
to its affairs (tax or otherwise) or any computations in respect of Tax.






	18.	 	COSTS AND EXPENSES
	 
	18.1	 	Transaction expenses
	 
	 	 	The Borrower shall within three Business Days of demand pay the Agent, the Security
Trustee, the Offshore Account Bank and the Arranger the amount of all costs and expenses
(including legal fees and out of pocket costs and expenses) reasonably incurred by and
documented any of them in connection with negotiation, preparation, printing and execution
of this Agreement and the other Finance Documents and in connection with the perfection of
all Security granted or purported to be granted pursuant to the Transaction Security.
	 
	18.2	 	Amendment costs
	 
	 	 	If (a) the Borrower requests an amendment, waiver or consent or (b) an amendment is
required pursuant to Clause 41.8 (Change of currency) in each case in relation to a





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	 	 	Finance Document, the Borrower shall, within three Business Days of demand, reimburse
the Agent for the amount of all external costs and expenses (including legal fees)
reasonably incurred by the Agent in responding to, evaluating, negotiating or complying
with that request or requirement.
	 
	18.3	 	Enforcement costs
	 
	 	 	The Borrower shall, within three Business Days of demand, pay to each Finance Party the
amount of all costs and expenses (including legal fees) incurred by that Finance Party in
connection with the exercise, enforcement or preservation of any rights, powers and remedies
under any Finance Document, the enforcement of the Transaction Security and any proceedings
instituted by or against any Finance Party (other than proceedings instituted by or against
the Borrower) as a consequence of taking, holding or enforcing the Transaction Security or
of exercising those rights, powers and remedies.
	 
	18.4	 	Independent Engineer’s fees
	 
	 	 	Subject to any agreement between the Agent and the Borrower in relation to the work
scope and fees of the Independent Engineer, and any limits agreed between the Borrower and
the Agent, the Borrower shall, within three Business Days of demand, pay to the Agent the
amount of all fees and expenses reasonably incurred by the Independent Engineer in carrying
out its duties pursuant to Clauses 6.5 (Lenders’ Technical Report) and 6.6 (Independent
Engineer Review).
	 
	18.5	 	Insurance Adviser’s fees
	 
	 	 	Subject to any agreement between the Agent and the Borrower in relation to the work
scope and fees of the Insurance Adviser, and any limits agreed between the Borrower and the
Agent, the Borrower shall, within three Business Days of demand, pay to the Agent the amount
of all fees and expenses reasonably incurred by the Insurance Adviser in advising the
Lenders in relation to the placement or renewal of the Material Insurances and the interests
of the Lenders therein.





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SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT





	19.	 	REPRESENTATIONS
	 
	 	 	The Borrower makes the representations and warranties set out in this Clause 19 to
each Finance Party on the date of this Agreement.
	 
	19.1	 	Status






	 	19.1.1	 	The Borrower is duly organised and validly existing under the law of its jurisdiction
of organisation.
	 
	 	19.1.2	 	The Borrower has the power to own its assets and carry on its business as it is being
conducted.






	19.2	 	Binding obligations
	 
	 	 	The obligations expressed to be assumed by the Borrower in each Finance Document and
Project Document to which it is a party are, subject to any general principles of law as at
the date of this Agreement limiting its obligations which are specifically referred to in
any legal opinion delivered pursuant to Clause 4 (Conditions of
Utilisation), legal, valid,
binding and enforceable obligations.
	 
	19.3	 	Non-conflict with other obligations
	 
	 	 	The entry into and performance by the Borrower of, and the transactions contemplated
by, the Finance Documents and the Project Documents to which it is a party do not and will
not conflict with:






	 	19.3.1	 	any material law or regulation applicable to it;
	 
	 	19.3.2	 	its constitutional documents; or
	 
	 	19.3.3	 	any material agreement or instrument binding upon it or any of its assets or
constitute a default (however described) under any such material agreement or
instrument or permit any counterparty to terminate any such material agreement or
instrument.






	19.4	 	Power and authority






	 	19.4.1	 	The Borrower 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.
	 
	 	19.4.2	 	No limit on the powers of the Borrower will be exceeded as a result of the borrowing,
grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
	 
	 	19.4.3	 	The Borrower has complied in all material respects with:





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	 	(a)	 	all applicable PRC regulations necessary for the conduct of its business
in the PRC, except where failure has not had and is not reasonably likely to
have a Material Adverse Effect; and
	 
	 	(b)	 	all applicable PRC regulations with which it is required to
comply in relation to the Borrowing Base Assets,






	 	 	 	including, in each case, all relevant SAFE rules and regulations in respect of
certificates, licenses and permits with which it must comply under applicable law.






	19.5	 	Validity and admissibility in evidence






	 	19.5.1	 	All Authorisations required or desirable:






	 	(a)	 	to enable the Borrower lawfully to enter into, exercise its
rights and comply with its obligations in the Finance Documents and the
Project Documents to which it is a party; and
	 
	 	(b)	 	to make the Finance Documents and the Project Documents to
which the Borrower is a party admissible in evidence in its jurisdiction of
organisation,






	 	 	 	have been obtained or effected and are in full force and effect.
	 
	 	19.5.2	 	All Authorisations necessary for the conduct of the business, trade and ordinary
activities of the Borrower, as the same are carried out from time to time, have been
obtained or effected and are in full force and effect.






	19.6	 	Governing law and enforcement






	 	19.6.1	 	The choice of English law as the governing law of this Agreement and any other
Finance Documents governed by English law will be recognised and enforced in the
jurisdiction of organisation of the Borrower.
	 
	 	19.6.2	 	Any judgment obtained in England in relation to this Agreement and any other Finance
Documents governed by English law will be recognised and enforced in the jurisdiction
of organisation of the Borrower.






	19.7	 	Insolvency 



No:






	 	19.7.1	 	corporate action, legal proceeding or other procedure or step described in
Clause 23.7 (Insolvency proceedings); or
	 
	 	19.7.2	 	creditors’ process described in Clause 23.8
(Creditors’ process),






	 	 	has been taken or, to its knowledge, threatened in relation to the Borrower and none of the
circumstances described in Clause 23.6 (Insolvency) applies to the Borrower.









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	19.8	 	Deduction of Tax
	 
	 	 	It is not required under the laws of the PRC to make any deduction for or on account
of Tax from any payment it may make under any Finance Document, provided that such payments
are sourced from the Offshore Collection Account maintained in London.
	 
	19.9	 	No filing or stamp taxes
	 
	 	 	Under the law of the jurisdiction of organisation of the Borrower 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
except if any of the Finance Documents to which it is a party is executed in, brought into
or produced before a court in the Cayman Islands.
	 
	19.10	 	No default






	 	19.10.1	 	No Default and, on the date of this Agreement and the first Utilisation Date,
no Default is continuing or is reasonably likely to result from the making of any
Utilisation or the entry into, the performance of, or any transaction contemplated by,
any Transaction Document.
	 
	 	19.10.2	 	No other event or circumstance is outstanding which constitutes (or, with the expiry
of a grace period, the giving of notice, the making of any determination or any
combination of any of the foregoing, would constitute) a default under, or permit any
counterparty to terminate, any agreement or instrument (other than a Transaction
Document) which is binding on it or to which its assets are subject which has or is
reasonably likely to have a Material Adverse Effect.






	19.11	 	Taxation






	 	19.11.1	 	It is not materially overdue in the filing of any Tax returns and it is not
overdue in the payment of any material amount in respect of Tax.
	 
	 	19.11.2	 	No claims or investigations are being, or are reasonably likely to be, made or
conducted against it with respect to Taxes.
	 
	 	19.11.3	 	It is resident for Tax purposes only in the jurisdiction of its incorporation and in
the People’s Republic of China and it currently files tax returns in relation to its
registered offices in the United States of America and in Kazakhstan.






	19.12	 	No misleading information
	 
	 	 	Save as disclosed in writing to the Agent and the Arranger prior to the date of this
Agreement, all written information supplied by it to the Lenders is true, complete and
accurate in all material respects as at the date it was given, is accurate and not
misleading in any material respect as of the date such written information was provided to
the Lenders and was prepared in good faith and with due care, and, prior to the date of
this Agreement, nothing has occurred and no information has been given or withheld that
would result in any information provided being untrue or misleading in any material
respect.









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	19.13	 	Financial statements






	 	19.13.1	 	Its financial statements most recently delivered under Clause 20.1.1 (Financial
statements)  were prepared in accordance with IFRS consistently applied.
	 
	 	19.13.2	 	Its financial statements most recently delivered under Clause 20.1.1 (Financial
statements)  fairly represent its financial condition and operations during the
financial year to which such financial statements relate.
	 
	 	19.13.3	 	There has been no material adverse change in its business or financial condition
since the date as at which the Original Financial Statements were prepared or, if
later, the date of the most recent audited financial statements delivered under Clause
20.1.1 (Financial statements).






	19.14	 	Pari passu ranking
	 
	 	 	Its payment obligations under the Finance Documents rank at least pari passu with the
claims of all its other unsecured and unsubordinated creditors, except for obligations
mandatorily preferred by law applying to companies generally.
	 
	19.15	 	No proceedings pending or threatened
	 
	 	 	No litigation, arbitration, administrative or regulatory proceedings of or before any
court, arbitral body or agency (or investigation before any governmental body or agency of
which it is aware) which, if adversely determined, could reasonably be expected, by
themselves or together with any other such proceedings to have a Material Adverse Effect
are current or (to the best of its knowledge and belief (having made due and careful
enquiry)) pending or threatened against it.
	 
	19.16	 	No breach of laws






	 	19.16.1	 	It has not breached any law or regulation which breach has or could reasonably
be expected to have a Material Adverse Effect.
	 
	 	19.16.2	 	No labour disputes are current or, to the best of its knowledge and belief (having
made due and careful enquiry), threatened against the Borrower which have or could
reasonably be expected to have a Material Adverse Effect.






	19.17	 	Environmental laws






	 	19.17.1	 	It is in compliance with Clause 22.9 (Environmental compliance)  and to the best
of its knowledge and belief (having made due and careful enquiry) no circumstances have
occurred which would prevent such compliance in a manner or to an extent which has, or
would reasonably be expected to have, a Material Adverse Effect.
	 
	 	19.17.2	 	No Environmental Claim has been commenced or (to the best of its knowledge and
belief (having made due and careful enquiry)) is threatened against it where that claim
could reasonably be expected, if determined against it, to have a Material Adverse
Effect.
	 
	 	19.17.3	 	The cost to the Borrower of compliance with Environmental Laws (including
Environmental Permits) and the cost of compliance with the recommendations





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	 	 	 	contained in the Environmental Report is adequately provided for in the Financial
Model.






	19.18	 	Good title to assets
	 
	 	 	The Borrower has a 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.
	 
	19.19	 	Borrowing Base Assets
	 
	 	 	The Borrower will have and maintain good, valid and merchantable title to the Borrowing
Base Assets, in each case to the extent of its interest in the relevant Field, subject to
the Transaction Security.
	 
	19.20	 	Legal and beneficial ownership
	 
	 	 	Each Obligor is the sole legal and beneficial owner of the assets over which it purports to
grant Security pursuant to the Security Documents.
	 
	19.21	 	Project Documents






	 	19.21.1	 	Each Project Document delivered pursuant to Clause 4.1 (Initial conditions
precedent), to its knowledge:






	 	(a)	 	is true, complete and correct (and no other agreements or
arrangements have been entered into in respect thereof which have not been
fully disclosed to the Agent);
	 
	 	(b)	 	has not been amended or varied in any way, except as
disclosed to the Agent prior to the date of this Agreement; and
	 
	 	(c)	 	is not the subject of any material dispute which has not been
disclosed to the Agent.






	 	19.21.2	 	The Project Documents and Finance Documents constitute all material contracts
and agreements to which the Borrower is a party which relate to the ownership,
operation or management of the Borrower or the Borrowing Base Assets (or any part
thereof).






	19.22	 	Disclosure
	 
	 	 	Notwithstanding anything to the contrary in this Clause 19 (Representations), each of the
representations and warranties set out in this Clause 19 (Representations) are subject to
and qualified by any fact, matter, event or circumstance which has been specifically
disclosed in the Disclosure Letter with respect to the identified representations and
warranties in this Clause 19 (Representations) which are set out in the Disclosure Letter.
	 
	19.23	 	Repetition
	 
	 	 	To the extent originally made by the Borrower on the date of this Agreement, the Repeating
Representations are deemed to be made by the Borrower to each Finance





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	 	 	Party on the First Effective Date, the date of each Utilisation Request and the first
day of each Interest Period (by reference to the facts and circumstances then existing).
	 
	20.	 	INFORMATION UNDERTAKINGS
	 
	 	 	The undertakings in this Clause 20 remain in force, in favour of the Finance Parties,
from the date of this Agreement for so long as any amount is outstanding under the Finance
Documents or any Commitment is in force.
	 
	20.1	 	Financial statements
	 
	 	 	The Borrower shall supply to the Agent in sufficient copies for all the Lenders:






	 	20.1.1	 	except with respect to the Original Financial Statements, which may be provided at
any time prior to the first Utilisation, as soon as the same become available, but in
any event within one hundred and twenty days after the end of each financial year of
the Borrower, commencing with the financial year in which the first Utilisation occurs,
the audited financial statements of the Borrower, and the audited consolidated
financial statements of the Borrower (if available), for that financial year; and
	 
	 	20.1.2	 	as soon as the same become available, but in any event within sixty days after the
end of each quarter of each financial year of the Borrower, commencing with the
financial quarter in which the first Utilisation occurs, the unaudited financial
statements of the Borrower, and the audited consolidated financial statements of the
Borrower (if available), for that financial quarter.






	20.2	 	Requirements as to financial statements
	 
	 	 	The Borrower shall procure that each set of financial statements delivered pursuant to
Clause 20.1 (Financial statements) is prepared using IFRS.
	 
	20.3	 	Information: miscellaneous
	 
	 	 	The Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the
Agent so requests):






	 	20.3.1	 	all information reasonably requested by the Technical Bank relating to the Borrowing
Base Assets to the extent that such information is available to the Borrower and is
necessary or desirable in relation to the delivery of any Financial Projection or
Lenders’ Technical Report;
	 
	 	20.3.2	 	all documents dispatched by the Borrower to its shareholders generally (or any class
of them) or its creditors generally at the same time as they are dispatched;
	 
	 	20.3.3	 	promptly upon becoming aware of them, the details of any litigation, arbitration or
administrative proceedings which are current, threatened or pending against an Obligor,
and which could reasonably be expected, if adversely determined, to have a Material
Adverse Effect;





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	 	20.3.4	 	promptly upon becoming aware, details of any material dispute under any
Project Document which could reasonably be expected to have a Material Adverse
Effect;
	 
	 	20.3.5	 	promptly upon becoming aware, details of any other matters which are likely
materially and adversely to affect the initial or further development,
construction, installation or commissioning of any Borrowing Base Asset;
	 
	 	20.3.6	 	forthwith upon becoming aware, details of any event of force majeure (however
described), or any suspension of production or transportation for a period greater than
thirty days, which has occurred in respect of a Borrowing Base Asset and of which the
Borrower is aware;
	 
	 	20.3.7	 	forthwith upon becoming aware, details of material defects or material malfunctions
in respect of a Borrowing Base Asset which could reasonably be expected to have a
Material Adverse Effect, together with a summary detailing the action being taken to
remedy such defects or malfunctions;
	 
	 	20.3.8	 	promptly, such further information regarding the financial condition, business and
operations of the Borrower as any Finance Party (through the Agent) may reasonably
request; and
	 
	 	20.3.9	 	as soon as possible after the occurrence thereof, notification of all material
accidents and incidents occurring at or affecting the site of any Borrowing Base Asset
including those pertaining to the environment,






	 	 	in each case, to the extent that such information is available to the Borrower and the
Borrower is not prohibited by applicable law or contractual confidentiality restrictions
from disclosing such information to the Agent.
	 
	20.4	 	Notification of default






	 	20.4.1	 	The Borrower shall notify the Agent of any Default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of its occurrence.
	 
	 	20.4.2	 	Promptly upon a request by the Agent, the Borrower shall supply to the Agent a
certificate signed by two of its directors 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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	20.5	 	Monthly Reports
	 
	 	 	In respect of each Borrowing Base Asset, the Borrower shall supply to the Agent within
fifteen Business Days after the end of each calendar month a copy of the operating report
prepared by its management relating to such Borrowing Base Asset in respect of that
calendar month, such report to include a production summary for that calendar month,
details of all drilling conducted in that calendar month and the progress of construction
of any surface units during that calendar month.
	 
	20.6	 	Know your customer checks






	 	20.6.1	 	If:






	 	(a)	 	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;
	 
	 	(b)	 	any change in the status of the Borrower after the date of this Agreement; or
	 
	 	(c)	 	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 sub-clause 20.6.1(c) 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, the Borrower 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 sub-clause 20.6.1(c)
above, on behalf of any prospective new Lender) in order for the Agent, such Lender
or, in the case of the event described in sub-clause 20.6.1(c) 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.
	 
	 	20.6.2	 	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.






	20.7	 	Environmental reporting






	 	20.7.1	 	The Borrower shall supply to the Agent, on or before each anniversary following
the First Effective Date, a report (in a form agreed between the





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	 	 	 	Borrower and the Agent) prepared by its management including confirmation of the
Borrower’s compliance with the Environmental Management Plan and all Environmental
Laws during the preceding 12 months, together with:






	 	(a)	 	if the Borrower is unable to provide such confirmation,
details of the relevant non-compliance and the steps being taken to remedy
such non- compliance; and
	 
	 	(b)	 	if the incorporation of any aspect of the Equator Principles
in the Environmental Management Plan would cause the Borrower to
contravene any applicable law of the People’s Republic of China or breach any
provision of any PSC, details of the relevant law or PSC provision and the
manner in which this would be contravened by compliance with the Equator
Principles.






	 	20.7.2	 	The Borrower may, with the consent of the Agent and shall, within one Month of
written request by the Agent, amend the Environmental Management Plan:






	 	(a)	 	to implement mitigation measures, corrective actions and
monitoring measures necessary to manage the environmental impacts and risks
identified in the Environmental Management Plan;
	 
	 	(b)	 	to comply with applicable Environmental Laws or the Equator
Principles (to the extent that such compliance will not cause the Borrower to
contravene any applicable law of the People’s Republic of China or breach any
provision of any PSC); or
	 
	 	(c)	 	for such other purpose as may be agreed between the Borrower
and the Agent.






	 	 	 	The Borrower shall notify the Agent within five Business Days after any such
amendment to the Environmental Management Plan is made.






	21.	 	FINANCIAL COVENANTS
	 
	21.1	 	Financial covenants
	 
	 	 	The Borrower shall ensure that, as at each Calculation Date falling six Months or more
after the date of this Agreement:






	 	21.1.1	 	the Asset Life Cover Ratio is greater than 1.95 : 1 at such date; and
	 
	 	21.1.2	 	the Debt Service Cover Ratio is greater than 1.75 : 1 at such date.






	21.2	 	Financial testing
	 
	 	 	The financial covenants set out in Clause 21.1 (Financial covenants) shall be tested by the
Technical Bank pursuant to the then current Financial Projection on each Calculation Date
and at any other time on notice to the Borrower if the Agent reasonably considers a Default
under Clause 21.1 (Financial covenants) has occurred.









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	22.	 	GENERAL UNDERTAKINGS
	 
	 	 	The undertakings in this Clause 22 (General Undertakings) are made to the Finance
Parties and 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.
	 
	22.1	 	Authorisations
	 
	 	 	The Borrower shall promptly:






	 	22.1.1	 	obtain, comply with and do all that is necessary to maintain in full force and
effect; and
	 
	 	22.1.2	 	supply certified copies to the Agent of,






	 	 	any material Authorisation required under applicable law or regulation to enable the
Borrower to perform its obligations under the Transaction Documents to which it is a party
(where the failure to obtain and comply with such Authorisation could reasonably be
expected to have a Material Adverse Effect) and each other Authorisation required to ensure
the legality, validity, enforceability or admissibility in evidence in the jurisdiction of
incorporation of the Borrower of any Transaction Document to which it is a party.
	 
	22.2	 	Compliance with laws






	 	22.2.1	 	The Borrower shall comply in all material respects with all laws (including
environmental laws) applicable to it and, in connection with its interest in the any
Field, shall comply with good oil and gas industry practice, if failure to comply in
either case could reasonably be expected to materially impair its ability to perform
its obligations under the Transaction Documents to which it is a party or if failure to
comply in either case could reasonably be expected to have a Material Adverse Effect.
	 
	 	22.2.2	 	The Borrower shall only engage drilling service providers which have obtained all
material Authorisations required for them to carry out their obligations under any
drilling service contract with the Borrower under applicable law and shall, within ten
Business Days, terminate the engagement of any drilling service provider which, to the
knowledge of the Borrower, has not obtained all such material Authorisations.






	22.3	 	Financial Indebtedness
	 
	 	 	The Borrower shall not incur or allow to remain outstanding any Financial Indebtedness
other than Permitted Financial Indebtedness.
	 
	22.4	 	Capital Expenditure
	 
	 	 	The Borrower shall not incur any Capital Expenditure, save for that which (a) has been
taken into account as a Permitted Payment in the most recent Financial Projection (or
exceeds such Permitted Payment by less than 10% in aggregate for such period) or (b) is to
be funded from the proceeds of a Loan and has been approved by the Technical Bank or (c) is
to be funded from amounts which have been transferred from





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	 	 	the Offshore Collection Account to the Distribution Account in accordance with Schedule 8
(The Accounts) or from Equity.
	 
	22.5	 	Negative pledge






	 	22.5.1	 	The Borrower shall not create or permit to subsist any Security over any of its
assets.
	 
	 	22.5.2	 	The Borrower shall not:






	 	(a)	 	sell, transfer or otherwise dispose of any of its assets on
terms whereby they are or may be leased to or re-acquired by it;
	 
	 	(b)	 	sell, transfer or otherwise dispose of any of its receivables
on recourse terms;
	 
	 	(c)	 	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
	 
	 	(d)	 	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.
	 
	 	22.5.3	 	Sub-clauses 22.5.1 and 22.5.2 above do not apply to:






	 	(a)	 	any netting or set-off arrangement entered into by the
Borrower in the ordinary course of its banking arrangements for the purpose of
netting debit and credit balances;
	 
	 	(b)	 	any other lien arising by operation of law and in the
ordinary course of business
	 
	 	(c)	 	any Security referred to in Schedule 6 (Existing
Security)
which is discharged in full as soon as reasonably practicable after the first
Utilisation Date and in any event by the date falling 30 days thereafter;
	 
	 	(d)	 	any Security entered into pursuant to any Finance Document; and
	 
	 	(e)	 	any Security over the SPBD-ZR Loan Account entered into by
the Borrower in favour of SPDB as Security for ZR’s obligations under the
SPDB-ZR Loan.






	22.6	 	Disposals






	 	22.6.1	 	Save as provided in this Clause 22.6 (Disposals) the Borrower shall not 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 asset
without the written consent of Security Trustee.





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	 	22.6.2	 	Sub-clause 22.6.1 above does not apply to any sale, lease, transfer or
other disposal:






	 	(a)	 	of the Borrower’s share of production from any Borrowing Base Asset;
	 
	 	(b)	 	of assets in exchange for other assets comparable as to type,
value and quality in the ordinary course of business of the Borrower;
	 
	 	(c)	 	where the higher of the market value or consideration
receivable (when aggregated with the higher of the market value or
consideration receivable for any other sale, lease, transfer or other disposal
by the Borrower, other than any permitted under paragraph (a) above) does not
exceed $750,000 (or its equivalent in another currency or currencies) in any
financial year; or
	 
	 	(d)	 	where the Agent (acting on the instructions of the Majority
Lenders) has consented in writing to such sale, lease, transfer or other
disposal.






	22.7	 	Merger
	 
	 	 	The Borrower shall not enter into any amalgamation, demerger or merger.     
	 
	22.8	 	Change of business
	 
	 	 	The Borrower shall procure that no substantial change is made to the general nature of
its business from that carried on at the date of this Agreement.
	 
	22.9	 	Environmental Compliance
	 
	 	 	The Borrower shall comply in all material respects with all Environmental Law and the
Environmental Management Plan and obtain and maintain any Environmental Permits where
failure to do so would reasonably be expected to have a Material Adverse Effect.
	 
	22.10	 	Environmental Claims
	 
	 	 	The Borrower shall inform the Agent in writing as soon as reasonably practicable upon
becoming aware of the same, if any Environmental Claim has been commenced or (to the best
of the Borrower’s knowledge and belief) is threatened against it, where the claim, if
determined against it, would reasonably be expected to have a Material Adverse Effect.
	 
	22.11	 	Loans
	 
	 	 	The Borrower shall not make or allow to remain outstanding any loans (other than Permitted
Loans) nor shall it grant any credit (save in the ordinary and usual course of business) to
or for the benefit of any person.
	 
	22.12	 	Hedging






	 	22.12.1	 	The Borrower shall comply with the requirements of
Schedule 10 (Hedging).
	 
	 	22.12.2	 	Save in accordance with Schedule 10 (Hedging) the Borrower shall not enter into any
Hedging Transaction without the prior consent of the Agent.






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	22.13	 	Taxation
	 
	 	 	The Borrower shall 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 (a) such payment is being contested in good faith, (b) adequate reserves are being
maintained for those Taxes and (c) such payment can be lawfully withheld).
	 
	22.14	 	Restricted Payments






	 	22.14.1	 	Except with the funds standing to the credit of the Distribution Account, the
Borrower shall not:






	 	(a)	 	declare, make or pay any dividend, charge, fee or other
distribution (or interest on any unpaid dividend, charge, fee or other
distribution) (whether in cash or in kind) on or in respect of its share
capital (or any class of its share capital);
	 
	 	(b)	 	repay or distribute any dividend or share premium reserve;
	 
	 	(c)	 	pay any management, advisory or other fee or commission to or
to the order of its shareholders;
	 
	 	(d)	 	redeem, repurchase, defease, retire or repay any of its share
capital or resolve to do so;
	 
	 	(e)	 	redeem, purchase or defease any Financial Indebtedness owed
to its shareholders;
	 
	 	(f)	 	repay, prepay or pay interest, fees or other amounts in
relation to any Subordinated Indebtedness save as permitted under the terms of
a Subordination Agreement;
	 
	 	(g)	 	make any investment in, or pay any fee or make any advance or
other kind of payment to, its shareholders; or
	 
	 	(h)	 	make any payment of the whole or any part of the Put Price,






	 	 	 	provided that the Borrower shall be entitled to perform its obligations under and
to make payments required to be made by it or permitted under the Finance
Documents.
	 
	 	22.14.2	 	In addition to and without prejudice to any other restrictions on such payments
contained in this Agreement, the Borrower shall not knowingly make any payments to, or
receive any payments from, any person having a direct or indirect legal or beneficial
interest in five per cent. or more of the Borrower’s issued share capital or any class
thereof, or any Affiliate of any such person, unless the Agent (acting reasonably) has
confirmed that all necessary ‘know you customer’ and similar checks have been carried
out in relation to such person under applicable law or regulation.






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	22.15	 	Syndication
	 
	 	 	The Borrower shall provide reasonable assistance to the Arranger in the primary
syndication of the Facility (including, without limitation, by making senior management
available for the purpose of making presentations to, or meeting, potential lending
institutions and providing all information necessary for the preparation of any information
memorandum or similar document in connection with such syndication) and will comply with all
reasonable requests for information from potential syndicate members prior to completion of
syndication.
	 
	22.16	 	The Accounts
	 
	 	 	The Accounts shall be maintained and operated in accordance with Schedule 8 (The
Accounts).
	 
	22.17	 	Borrowing Base Assets
	 
	 	 	The Borrower shall not (a) permanently abandon or (b) take any action in relation to
any change in operator of any Borrowing Base Asset, except in each case with the prior
written consent of the Majority Lenders (such consent not to be unreasonably withheld).
	 
	22.18	 	Insurances





	 	22.18.1	 	The Borrower shall effect and maintain or cause to be effected and maintained
from the date of this Agreement to the Repayment Date:





	 	(a)	 	all such insurance over its assets and undertaking (i) as
would be maintained as a matter of good oil and gas industry practice
(“good
industry practice”) and by an operator with a similar business to the Borrower
in the relevant jurisdiction, and (ii) as may be required to be maintained by
it by any applicable law or by the terms of any of the Project Documents to
which the Borrower is, at any time, a party; and
	 
	 	(b)	 	insurances relating to the Borrowing Base Assets covering
property damage, operator’s extra expenses (including control of well, limited
redrilling, seepage and pollution, clean-up and contamination), business
interruption and third party liability, in accordance with and as more fully
described in Part I of Schedule 14 (Insurances) as varied from time to time in
accordance with Clauses 22.18.3 and 22.18.6 (the “Material Insurances”).





	 	22.18.2	 	The Borrower shall procure that all Material Insurances shall be placed and
maintained with reputable Chinese insurers and that 70% of such insurance shall be
reinsured offshore with reinsurers which, at each inception or renewal of the relevant
Material Insurances:





	 	(a)	 	are rated at least A- by Standard & Poor’s or an equivalent
rating by A.M. Best or any other rating agency approved from time to time by
the Agent (such approval not to be unreasonably withheld or delayed) (and,




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	 	 	 	if such reinsurer has an equivalent rating from two or more such rating agencies,
all such ratings must be A- or equivalent); or
	 
	 	(b)	 	are otherwise approved in writing by the Agent (acting reasonably and
after consultation with the Insurance Adviser) prior to the relevant inception or
renewal.






	 	22.18.3	 	With respect to the Material Insurances effected by it pursuant to Clause 22.18.1(b), the
Borrower shall maintain those endorsements listed in Part II of
Schedule 14 (Insurance) to the
extent that such provisions are normally maintained from time to time as a matter of good
industry practice provided that the Borrower will notify the Agent 45 days prior to the
replacement or renewal of any Material Insurances if it believes that any of the endorsements
listed in Part II of Schedule 14 (Insurance) are not maintained as a matter of good industry
practice.
	 
	 	22.18.4	 	If any Adverse Variation is proposed to be made to the terms of any Material Insurance, the
Borrower shall promptly after becoming aware of the same, give written notice thereof to the
Agent. No Adverse Variation to any Material Insurance shall be effected or agreed by the
Borrower unless the Agent (acting reasonably in consultation with the Insurance Adviser)
notifies the Borrower in writing that such Adverse Variation is either not material to the
Finance Parties or is otherwise acceptable. The Agent will not unreasonably withhold
or delay such notification.
	 
	 	22.18.5	 	The Borrower shall procure that the Security Trustee receives a broker’s letter of
undertaking from any insurance broker acting on its behalf in relation to any placement or
renewal of the Material Insurances, substantially in the agreed form or otherwise acceptable
to the Agent (acting reasonably in consultation with the Insurance Adviser).
	 
	 	22.18.6	 	If at any time the Insurance Adviser confirms that any Material Insurance on the terms
complying with Schedule 14 (Insurance) is not available in the PRC or international insurance
or reinsurance market or is subject to premiums or endorsements which are not reasonable or
such insurance or reinsurance is not available on reasonable commercial terms, the Borrower
will (notwithstanding any provision to the contrary under the Finance Documents) not be
required to maintain such Material Insurances until such time as the Insurance Adviser
confirms that such Material Insurances have become available on reasonable commercial terms
(including without limitation cost).
	 
	 	22.18.7	 	The Borrower shall take all reasonable action to comply or procure compliance at all times
with the terms and conditions of all Material Insurances, and use reasonable efforts to
procure that nothing is at any time done, or suffered to be done, whereby any Material
Insurance may be impaired, suspended or rendered void or voidable in whole or in part, or any
claim becomes uncollectable in full or in part, including, without limitation





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	 	 	 	complying with all of the requirements imposed on it under the Material
Insurances.
	 
	 	22.18.8	 	Subject to paragraphs 22.18.9 and 22.18.10 below, the Borrower shall have the sole
conduct of claims under the Material Insurances arising out of any loss but shall keep
the Agent informed at regular intervals (and in any event at least once every six
months while any such claim is continuing) of the progress of such claim and the
application of any resulting insurance proceeds. That information shall identify for
each claim under each Material Insurance the type of claim, the amount of the claim,
the current status of that claim and such further information relating to that claim as
the Agent may reasonably request.
	 
	 	22.18.9	 	The Borrower shall promptly supply to the Agent details of any claim made under any
Material Insurance for an amount which is, net of the applicable deductible, in excess
of $1,000,000 (or its equivalent in other currencies) per occurrence or where the
amount of the claim, net of the applicable deductible, when aggregated with all
other amounts claimed under any Material Insurances during the period of twelve
months ending on the date of such claim, exceeds $3,000,000 (or its equivalent in other
currencies).
	 
	 	22.18.10	 	The Borrower shall not negotiate, compromise or settle any claim for either:






	 	(a)	 	less than 75% of the full amount of the relevant claim; or
	 
	 	(b)	 	more than $500,000 less than the full amount of the relevant claim,






	 	 	 	without the written consent of the Majority Lenders (with such consent not to be
unreasonably withheld or delayed).






	22.19	 	Project Documents






	 	22.19.1	 	The Borrower shall:






	 	(a)	 	comply in all material respects with its obligations under
each Project Document to which it is a party;
	 
	 	(b)	 	without prejudice to its ability to take emergency action in
order to preserve rights which would otherwise be lost, maintain and exercise
its rights under each Project Document to which it is a party having regard to
the interests of the Lenders under the Finance Documents;
	 
	 	(c)	 	promptly take all steps to avoid, remedy and/or mitigate any
breaches under any Project Document to which it is a party caused by it or for
which it is responsible;
	 
	 	(d)	 	not amend, modify or waive any provision of, or terminate,
any Project Document to which it is a party, without the consent of the Agent
(such consent not to be unreasonably withheld),





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	 	 	 	in each case to the extent that any failure to comply with any of sub-paragraph
(a) to and including (d) has or could reasonably be expected to have a Material
Adverse Effect.
	 
	 	22.19.2	 	The Borrower shall not enter into any agreement with its shareholders or any of its
Affiliates in a way which could be reasonably expected materially and adversely to
affect the interests of the Lenders under the Finance Documents.






	22.20	 	Access
	 
	 	 	The Borrower shall, upon reasonable notice (except where a Default has occurred and is
continuing, when no notice need be given):






	 	22.20.1	 	permit each Finance Party to examine (and copy all or extracts from) its books,
accounts, records and other documentation and/or data relating to its business and/or
assets; and
	 
	 	22.20.2	 	permit the Independent Engineer such access, to and to examine, its books, accounts,
records and other documentation and/or assets as may be necessary to enable the
preparation of Lenders’ Technical Reports by the Independent Engineer,






	 	 	provided that in each case:






	 	(a)	 	(subject to Clause 22.28 (Confidentiality)) the above
requirements shall not require the Borrower to breach any applicable laws or
confidentiality requirements binding on it;
	 
	 	(b)	 	any such visit and/or examination is in normal business hours
and is subject to the normal health, safety and security requirements of the
Borrower applicable at the relevant time;
	 
	 	(c)	 	any such visit and/or examination shall not interfere with or
interrupt the operation of the Borrowing Base Assets; and
	 
	 	(d)	 	no more than four representatives of the Finance Parties
and/or the Independent Engineer shall be present at the relevant place of
business of the Borrower at any time.






	22.21	 	Unlawful conduct
	 
	 	 	The Borrower shall not engage, directly or indirectly, in conduct which is corrupt or
unlawful under applicable law, including promising or giving any person any undue pecuniary
or other reward for the purpose of obtaining or retaining business or any improper
advantage.
	 
	22.22	 	Confidentiality
	 
	 	 	The Borrower shall, at the request of the Agent, promptly use reasonable endeavours to
obtain a release from all obligations of confidence that apply in respect of any document,
arrangement or information that the Finance Parties may have requested in accordance with
the Finance Documents.





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	22.23	 	Payment Instructions






	 	22.23.1	 	The Borrower shall, by 31 December 2009, deliver to PetroChina Payment
Instructions in relation to all payments under the Miao 3 PSC and the Moliqing PSC.
	 
	 	22.23.2	 	The Borrower shall not, without the prior written consent of the Agent, revoke,
terminate or amend the Payment Instructions.






	22.24	 	[Intentionally blank]
	 
	22.25	 	SPA






	 	22.25.1	 	The Borrower shall make all payments required to be made by it pursuant to the
SPA in accordance with, and at the times specified in, the SPA.
	 
	 	22.25.2	 	The Borrower shall, for a period commencing on the date of this Agreement and ending
on 31 January 2008, use reasonable efforts to procure that a Termination Agreement is
signed and becomes effective by 31 January 2008.






	22.26	 	Conditions Subsequent
	 
	 	 	The Borrower shall ensure that each of the Conditions Subsequent is satisfied in
accordance with its terms.
	 
	22.27	 	Acquisitions






	 	22.27.1	 	Save as otherwise provided under the Finance Documents, the Borrower shall not,
without the prior written consent of the Majority Lenders:






	 	(a)	 	acquire a company or any shares or a business or undertaking
(or, in each case, any interest in any of them); or
	 
	 	(b)	 	incorporate a company.






	 	22.27.2	 	Clause 22.27.1 does not apply to any acquisition by the Borrower of shares in MIH in
connection with the exercise by any person entitled thereto of the Put Right.






	22.28	 	Environmental Management Plan
	 
	 	 	The Borrower shall no later than the date falling three Months after delivery of a
request by the Agent, deliver to the Agent (and, at the request of the Agent, in sufficient
copies for each of the Finance Parties), an Environmental Management Plan.
	 
	22.29	 	Amounts credited to the SPDB-ZR Loan Account
	 
	 	 	The Borrower shall ensure that not more than $10,500,000 in aggregate (or its
equivalent in RMB at the time of deposit) is credited to the SPDB-ZR Loan Account.






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	23.	 	EVENTS OF DEFAULT
	 
	 	 	Each of the events or circumstances set out in Clause 23 (Events of Default) is an
Event of Default.
	 
	23.1	 	Non-payment
	 
	 	 	The Borrower 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:






	 	23.1.1	 	its failure to pay is caused by administrative or technical error; and
	 
	 	23.1.2	 	payment is made within three Business Days of its due date.






	23.2	 	Financial covenants
	 
	 	 	Any requirement of Clause 21 (Financial covenants) is not satisfied.
	 
	23.3	 	Other obligations






	 	23.3.1	 	The Borrower does not comply with any provision of the Finance Documents to
which it is a party (other than those referred to in Clause 23.1
(Non-payment) and
Clause 23.2 (Financial covenants)).
	 
	 	23.3.2	 	Any Obligor (other than the Borrower) does not comply with any provision of the
Finance Documents to which it is a party.
	 
	 	23.3.3	 	No Event of Default under Clause 23.3.2 above will occur with respect to a breach of Clause 20 (Information Undertakings), Clauses 22.1
(Authorisations), 22.2 (Compliance with laws), 22.9 (Environmental
Compliance), 22.13 (Taxation), 22.18 (Insurances), paragraphs (b) and (c) of Clause
22.19 (Project Documents), or Clauses 22.20 (Access) and 22.22 (Confidentiality) if the
failure to comply is capable of remedy and is remedied within ten Business Days of the
Agent giving notice to the Borrower or the Borrower becoming aware of the failure to
comply.
	 
	 	23.3.4	 	No Event of Default under Clause 23.3.2 above will occur if the failure to comply is
capable of remedy and is remedied within ten Business Days of the Agent giving notice
to the Borrower or 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 an 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.
	 
	23.5	 	Cross default






	 	23.5.1	 	Any Financial Indebtedness of the Borrower is not paid when due nor within any
originally applicable grace period.





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	 	23.5.2	 	Any Financial Indebtedness of the Borrower is declared to be or otherwise
becomes due and payable prior to its specified maturity or is placed on demand, in
either case as a result of an event of default (however described).
	 
	 	23.5.3	 	Any commitment for any Financial Indebtedness of the Borrower is cancelled or
suspended by a creditor of the Borrower as a result of an event of default (however
described).
	 
	 	23.5.4	 	Any creditor of the Borrower becomes entitled to declare any Financial Indebtedness
of the Borrower due and payable prior to its specified maturity or to place it on
demand or to cancel or suspend any commitment for any such Financial Indebtedness as a
result of an event of default (however described).
	 
	 	23.5.5	 	No Event of Default will occur under this Clause 23.5 (Cross default):






	 	(a)	 	if the aggregate amount of Financial Indebtedness or
commitment for Financial Indebtedness falling within 23.5.1 to 23.5.4 above is
less than $5,000,000 in aggregate (or its equivalent in any other currency or
currencies); or
	 
	 	(b)	 	as a result of a failure to pay when due any Existing Trade Credit.






	23.6	 	Insolvency
	 
	 	 	Any of the following occurs in respect of an Obligor:






	 	23.6.1	 	it is unable to pay its debts as they fall due or is insolvent;
	 
	 	23.6.2	 	it admits its inability to pay its debts as they fall due;
	 
	 	23.6.3	 	the value of its assets is less than its liabilities (taking into account contingent
and prospective liabilities);
	 
	 	23.6.4	 	it suspends making payments on any of its debts or announces an intention to do so;
	 
	 	23.6.5	 	by reason of actual or anticipated financial difficulties, it commences negotiations
with one or more of its creditors with a view to rescheduling any of its indebtedness;
or
	 
	 	23.6.6	 	a moratorium is declared in respect of any of its indebtedness.






	23.7	 	Insolvency proceedings
	 
	 	 	Any corporate action, legal proceedings or other procedure or step is taken in relation
to:






	 	23.7.1	 	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 an Obligor;





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	 	23.7.2	 	a composition, compromise, assignment or arrangement with any creditor of an
Obligor;
	 
	 	23.7.3	 	the appointment of a liquidator (other than in respect of a solvent liquidation of an
Obligor to which the Majority Lenders have consented), receiver, administrative
receiver, administrator, compulsory manager or other similar officer (in each case,
whether out of court or otherwise) in respect of the Borrower or any of its assets; or
	 
	 	23.7.4	 	enforcement of any Security over any asset of an Obligor,

	 
	 	or any analogous procedure or step is taken in any jurisdiction.







	23.8	 	Creditors’ process
	 
	 	 	Any attachment, sequestration, distress or execution affects any asset or assets of
the Borrower having an aggregate value of not less than $200,000 and is not discharged
within fifteen Business Days.
	 
	23.9	 	Cessation of business
	 
	 	 	The Borrower ceases, or threatens to cease, to carry on all or substantially all of
its business.
	 
	23.10	 	Ownership of the Borrower






	 	23.10.1	 	At any time prior to Share Exchange Closing, Far East ceases to own (legally
and beneficially) at least sixty seven per cent (67%) of the issued share capital of
the Borrower.
	 
	 	23.10.2	 	At any time from and after Share Exchange Closing:






	 	(a)	 	(prior to the discharge of the Second MIH Share Charge
pursuant to Clause 29.3.3) Far East ceases to own (legally and beneficially)
at least eighty three per cent (83%) of the issued share capital of MIH; or
	 
	 	(b)	 	(on and from the discharge of the Second MIH Share Charge
pursuant to Clause 29.3.3) Far East ceases to own (legally and beneficially)
at least sixty seven per cent (67%) of the issued share capital of MIH; or
	 
	 	(c)	 	(prior to the discharge of the Second MIH Share Charge
pursuant to Clause 29.3.3) MIH ceases to own (legally and beneficially) at
least eighty three per cent (83%) of the issued share capital of the Borrower;
or
	 
	 	(d)	 	(on and from the discharge of the Second MIH Share Charge
pursuant to Clause 29.3.3) MIH ceases to own (legally and beneficially) at
least sixty seven per cent (67%) of the issued share capital of the Borrower.






	23.11	 	Unlawfulness and invalidity






	 	23.11.1	 	It is or becomes unlawful for an Obligor to perform any of its obligations
under the Transaction Documents to which it is a party or any Security created





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	 	 	 	or expressed to be created or evidenced by the Security Documents ceases to be
effective.
	 
	 	23.11.2	 	Any obligation or obligations of an Obligor under any Transaction Documents are not
or cease to be legal, valid, binding or enforceable and the cessation individually or
cumulatively materially and adversely affects the interests of the Lenders under the
Finance Documents.
	 
	 	23.11.3	 	Any Transaction Document ceases to be in full force and effect (other than as a
result of it lapsing following due performance by the parties of their obligations
thereunder) or any Security ceases to be legal, valid, binding, enforceable or
effective or is alleged by a party to it (other than a Finance Party) to be
ineffective.






	23.12	 	Repudiation
	 
	 	 	An Obligor repudiates a Finance Document or evidences an intention to repudiate a
Finance Document, any party to a PSC repudiates it or evidences an intention to repudiate
it or PetroChina repudiates a Payment Instruction or evidences an intention to repudiate a
Payment Instruction.
	 
	23.13	 	Qualification of Accounts
	 
	 	 	The audited accounts of the Borrower delivered pursuant to
Clause 20.1.1 (Financial
statements) are qualified by the auditors in any respect which has or could reasonably be
expected to have a Material Adverse Effect.
	 
	23.14	 	Expropriation
	 
	 	 	The authority or ability of the Borrower to conduct its business is limited or wholly
or substantially curtailed by any seizure, expropriation, nationalisation, intervention,
restriction or other action by or on behalf of any governmental, regulatory or other
authority or other person in relation to the Borrower or all or a material part of its
assets.
	 
	23.15	 	Borrowing Base Assets
	 
	 	 	All or any part of a Borrowing Base Asset is impaired, abandoned or nationalised, or
production from a Borrowing Base Asset is interrupted or impaired, in each case to an
extent that the Majority Lenders believe could reasonably be expected to have a Material
Adverse Effect.
	 
	23.16	 	Management and key personnel
	 
	 	 	Any change to the persons carrying out the roles of Chairman or CEO of the Borrower
occurs without the prior written consent of the Agent (acting on the instructions of the
Majority Lenders.
	 
	23.17	 	Litigation
	 
	 	 	Any litigation, arbitration, administrative, governmental, regulatory or other
official investigation, proceeding or dispute is commenced or threatened in relation to the
Transaction Documents or the transactions contemplated in the Transaction Documents





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	 	 	or against the Borrower or its assets which has or is reasonably likely to have a Material
Adverse Effect.
	 
	23.18	 	Material adverse change
	 
	 	 	Any event or circumstance occurs which the Majority Lenders reasonably believe could be
expected to have a Material Adverse Effect.
	 
	23.19	 	Security
	 
	 	 	Any Security Document does not or ceases to provide the Finance Parties the Security
intended to be created thereby, or any part of the Security created pursuant to any
Security Document lapses, becomes impaired, does not or ceases to have first priority, is
or becomes subject to any pari passu or prior ranking Security, ceases to be in full force
and effect in accordance with its terms or ceases to constitute, to the extent provided in
the Security Documents, valid and perfected Security over the Charged
Property provided
that no Event of Default shall occur under this Clause 23.19 if the circumstances referred
to above are capable of remedy and the Security Document in question is replaced in a
manner satisfactory to the Majority Lenders (acting reasonably) by the date falling 30 days
after such circumstances first occurred.
	 
	23.20	 	Payment Instructions
	 
	 	 	At any time after the date falling 60 days after a Payment Instruction has been delivered to
it, PetroChina does not or is or becomes unable to make any payment in accordance with the
terms of such Payment Instruction provided that no Event of Default shall occur under this
Clause if (i) PetroChina fails to pay any amount due and payable by it in accordance with
the relevant Payment Instruction and the amount owing but not paid is subsequently paid in
full within 30 days or (ii) such circumstances are (if capable of remedy) otherwise remedied
in a manner satisfactory to the Majority Lenders (acting reasonably) by the date falling 30
days after such circumstances first occurred.
	 
	23.21	 	Repayment of Interim Loan
	 
	 	 	The Interim Loan is not repaid in full by 30 June 2009.
	 
	23.22	 	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 in accordance with Clause 34 (Entitlement to Enforce),
by notice to the Borrower:






	 	23.22.1	 	cancel all or any part of the Commitments whereupon they shall immediately be
cancelled;
	 
	 	23.22.2	 	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, whereupon they shall become immediately due and payable;





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	 	23.22.3	 	declare that all or part of the Loans be payable on demand, whereupon they
shall immediately become payable on demand by the Agent on the instructions of the
Majority Lenders;
	 
	 	23.22.4	 	require the Security Trustee to take action to enforce all or any part of the
Security under the Security Documents, whereupon any such action shall be taken; and/or
	 
	 	23.22.5	 	exercise all other rights under any Finance Document and/or all other remedies
available at law.






	23.23	 	Make-whole
	 
	 	 	If, pursuant to Clause 23.22 (Acceleration), the Borrower is required to repay the
whole or any part of the Loans before the date falling 24 Months after the date of this
Agreement, it shall, at the same time that it makes such repayment, pay to the Agent, for
the account of the Lenders, a fee in dollars equal to zero point five (0.5%) of the amount
repaid.









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SECTION 9

CHANGES TO PARTIES





	24.	 	CHANGES TO THE LENDERS
	 
	24.1	 	Assignments and transfers by the Lenders
	 
	 	 	Subject to this Clause 24 (Changes to the Lenders), a Lender (the “Existing Lender”) may:






	 	24.1.1	 	assign any of its rights; or
	 
	 	24.1.2	 	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






	 	24.2.1	 	The consent of the Borrower or any other person is not required for an assignment of
any of its rights or transfer by novation of any of its rights and obligations by a
Lender.
	 
	 	24.2.2	 	An assignment will only be effective on execution by the Agent and the Security
Trustee of an Accession Undertaking delivered by the New Lender and performance by the
Agent and the Security Trustee of all “know your customer” or other checks relating to
any person that it requires to carry out in relation to such assignment to a New
Lender, the completion of which the Agent and the Security Trustee shall promptly
notify to the Existing Lender and the New Lender.
	 
	 	24.2.3	 	A transfer will only be effective if the procedure set out in Clause 24.5 (Procedure
for transfer) is complied with.
	 
	 	24.2.4	 	If:






	 	(a)	 	a Lender assigns or transfers any of its rights or obligations under the
Finance Documents or changes its Facility Office; and
	 
	 	(b)	 	as a result of circumstances existing at the date the
assignment, transfer or change occurs, the Borrower would be obliged to make a
payment to the New Lender or Lender acting through its new Facility Office
under Clause 14 (Tax gross-up and indemnities) or Clause 15 (Increased costs),






	 	 	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.









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	24.3	 	Assignment or transfer fee
	 
	 	 	The New Lender and any new Hedge Counterparty shall, on the date upon which an
assignment or transfer takes effect, pay to the Agent (for its own account) a fee of $1,000.
	 
	24.4	 	Limitation of responsibility of Existing Lenders






	 	24.4.1	 	Unless expressly agreed to the contrary, an Existing Lender makes no
representation or warranty and assumes no responsibility to a New Lender for:






	 	(a)	 	the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any other documents;
	 
	 	(b)	 	the financial condition of the Borrower;
	 
	 	(c)	 	the performance and observance by the Borrower of its
obligations under the Finance Documents or any other documents; or
	 
	 	(d)	 	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.
	 
	 	24.4.2	 	Each New Lender confirms to the Existing Lender and the other Finance Parties that
it:






	 	(a)	 	has made (and shall continue to make) its own independent
investigation and assessment of the financial condition and affairs of the
Borrower 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
	 
	 	(b)	 	will continue to make its own independent appraisal of the
creditworthiness of the Borrower and its related entities whilst any amount is
or may be outstanding under the Finance Documents or any Commitment is in
force.






	 	24.4.3	 	Nothing in any Finance Document obliges an Existing Lender to:






	 	(a)	 	accept a re-transfer from a New Lender of any of the rights
and obligations assigned or transferred under this Clause 24 (Changes to the
Lenders); or
	 
	 	(b)	 	support any losses directly or indirectly incurred by the New
Lender by reason of the non-performance by the Borrower of its obligations
under the Finance Documents or otherwise.






	24.5	 	Procedure for transfer






	 	24.5.1	 	Subject to the conditions set out in Clause 24.2 (Conditions of assignment or
transfer) a transfer is effected in accordance with sub-clause 24.5.2 below





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	 	 	 	when the Agent executes an otherwise duly completed Transfer Certificate delivered by the
Existing Lender and the New Lender and the Agent and the Security Trustee execute an
otherwise duly completed Accession Undertaking delivered by the new Lender. The Agent
(and, in the case of an Accession Undertaking, the Security Trustee) shall as soon as
reasonably practicable after receipt by it of a duly completed Transfer Certificate and a
duly completed Accession Undertaking appearing on its face to comply with the terms of
this Agreement and delivered in accordance with the terms of this Agreement (and after
performance of all “know your customer” or other checks relating to any person that it
requires to carry out in relation to such transfer to a New Lender) execute that Transfer
Certificate and Accession Undertaking. Each Party (other than the Existing Lender, the
New Lender (and, in the case of an Accession Undertaking, the Security Trustee))
irrevocably authorises the Agent to execute any such Transfer Certificate and Accession
Undertaking on its behalf.
	 
	 	24.5.2	 	On the Transfer Date:






	 	(a)	 	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, the Borrower and the Existing Lender shall
be released from further obligations towards one another under the Finance Documents
and their respective rights against one another under the Finance Documents shall be
cancelled (being the “Discharged Rights and Obligations”);
	 
	 	(b)	 	the Borrower 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 the Borrower and the New Lender have assumed
and/or acquired the same in place of the Borrower and the Existing Lender;
	 
	 	(c)	 	the Agent, the Arranger, the Security Trustee, the New Lender and 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 Arranger, the Security Trustee and the Existing Lender shall each be
released from further obligations to each other under the Finance Documents; and
	 
	 	(d)	 	the New Lender shall become a Party as a “Lender”.






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	24.6	 	Copy of Transfer Certificate to Borrower
	 
	 	 	The Agent shall, as soon as reasonably practicable after it has executed a Transfer
Certificate, send to the Borrower a copy of that Transfer Certificate.
	 
	24.7	 	Disclosure of information
	 
	 	 	Any Creditor may disclose to any of its Affiliates, any other Finance Party and any
other person:






	 	24.7.1	 	to (or through) whom that Creditor assigns or transfers (or may potentially assign or
transfer) all or any of its rights and obligations under this Agreement;
	 
	 	24.7.2	 	with (or through) whom that Creditor enters into (or may potentially enter into) any
sub-participation in relation to, or any other transaction under which payments are to
be made by reference to, this Agreement or the Borrower; or
	 
	 	24.7.3	 	to whom, and to the extent that, information is required to be disclosed by any
applicable law or regulation,






	 	 	any information about the Borrower and the Finance Documents as that Creditor shall consider
appropriate if, in relation to 

sub-clauses 24.7.1 and 24.7.2 above, the person to whom the
information is to be given has entered into a confidentiality undertaking.
	 
	25.	 	CHANGES TO THE HEDGE COUNTERPARTIES
	 
	 	 	A Hedge Counterparty may assign any of its rights and benefits or transfer by novation
any of its rights, benefits and obligations in respect of the Hedge Agreements to which it
is a party to another Hedge Counterparty if the conditions set out in
Clause 33.1 (Identity
of Hedge Counterparties) have been satisfied and the Agent and the Security Trustee have
executed an otherwise duly completed Accession Undertaking delivered by the relevant
assignee or transferee.
	 
	26.	 	CHANGES TO THE BORROWER
	 
	 	 	The Borrower may not assign any of its rights or transfer or otherwise dispose of any
of its rights or obligations under the Finance Documents.






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SECTION 10 
THE
FINANCE PARTIES





	27.	 	THE AGENT, THE ARRANGER AND THE TECHNICAL BANK
	 
	27.1	 	Appointment of the Agent






	 	27.1.1	 	Each other Finance Party appoints the Agent to act as its agent under and in
connection with the Finance Documents.
	 
	 	27.1.2	 	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.






	27.2	 	Duties of the Agent






	 	27.2.1	 	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.
	 
	 	27.2.2	 	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.
	 
	 	27.2.3	 	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.
	 
	 	27.2.4	 	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 or the Arranger)
under this Agreement it shall promptly notify the other Finance Parties.
	 
	 	27.2.5	 	The Agent’s duties under the Finance Documents are solely mechanical and
administrative in nature.






	27.3	 	Role of the Technical Bank
	 
	 	 	Each other Finance Party appoints the Technical Bank to act as technical bank under
this Agreement. Except for its obligations specifically set out in this Agreement, the
Technical Bank has no obligations of any kind to any Party under or in connection with any
Finance Document.
	 
	27.4	 	Role of the Arranger
	 
	 	 	Except as specifically provided in the Finance Documents, the Arranger has no
obligations of any kind to any other Party under or in connection with any Finance
Document.
	 
	27.5	 	No fiduciary duties






	 	27.5.1	 	Nothing in this Agreement constitutes the Agent, the Technical Bank or the
Arranger as a trustee or fiduciary of any other person.





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	 	27.5.2	 	Neither the Agent, the Technical Bank nor the Arranger 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.






	27.6	 	Business with the Borrower
	 
	 	 	The Agent, the Technical Bank and the Arranger may accept deposits from, lend money to
and generally engage in any kind of banking or other business with the Borrower without
consent from any Party.






	27.7	 	Rights and discretions of the Agent, the Arranger and the Technical Bank






	 	27.7.1	 	The Agent and the Technical Bank may rely on:






	 	(a)	 	any representation, notice or document believed by it to be
genuine, correct and appropriately authorised and shall have no duty to verify
any signature on any document; and
	 
	 	(b)	 	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.






	 	27.7.2	 	The Agent may assume (unless it has received notice to the contrary in its capacity
as agent for the Lenders) that:






	 	(a)	 	no Default has occurred (unless it has actual knowledge of a
Default arising under Clause 23.1 (Non-payment)); and
	 
	 	(b)	 	any right, power, authority or discretion vested in any Party
or the Majority Lenders has not been exercised.






	 	27.7.3	 	The Agent may engage, pay for and rely on the advice or services of any lawyers,
accountants, surveyors or other experts.
	 
	 	27.7.4	 	The Agent and the Technical Bank may act in relation to the Finance Documents through
their respective personnel and agents.
	 
	 	27.7.5	 	The Agent may disclose to any other Party any information it reasonably believes it
has received as agent under this Agreement.
	 
	 	27.7.6	 	Notwithstanding any other provision of any Finance Document to the contrary,
neither the Agent, the Technical Bank nor the Arranger is 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.






	27.8	 	Majority Lenders’ instructions






	 	27.8.1	 	Unless a contrary indication appears in a Finance Document, and subject in
particular to Clauses 34 (Entitlement to Enforce) and 47 (Amendments and Waivers), 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




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	 	 	 	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.






	 	27.8.2	 	Unless a contrary indication appears in a Finance Document, and subject in particular
to Clauses 34 (Entitlement to Enforce) and 47 (Amendments and Waivers), any
instructions given by the Majority Lenders will be binding on all the Finance Parties.
	 
	 	27.8.3	 	The Agent may refrain from acting in accordance with the instructions of the Majority
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.
	 
	 	27.8.4	 	In the absence of instructions from the Majority Lenders, the Agent may act (or
refrain from taking action) as it considers to be in the best interest of the Lenders.
	 
	 	27.8.5	 	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.






	27.9	 	Responsibility for documentation
	 
	 	 	None of the Agent, the Technical Bank and the Arranger:






	 	27.9.1	 	is responsible for the adequacy, accuracy and/or completeness of any information
(whether oral or written) supplied by the Agent, the Technical Bank, the Arranger, the
Borrower or any other person given in or in connection with any Finance Document; or
	 
	 	27.9.2	 	is responsible for the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document or any other agreement, arrangement or document
entered into, made or executed in anticipation of or in connection with any Finance
Document.






	27.10	 	Exclusion of liability






	 	27.10.1	 	Without limiting sub-clause 27.10.2 below, neither the Agent nor the
Technical Bank will be liable for any action taken by it under or in connection with
any Finance Document, unless directly caused by its gross negligence or wilful
misconduct.
	 
	 	27.10.2	 	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.





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	 	27.10.3	 	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.






	27.11	 	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 incurred by the Agent (otherwise than by reason of the Agent’s
gross negligence or wilful misconduct) in acting as Agent under the Finance Documents
(unless the Agent has been reimbursed by the Borrower pursuant to a Finance Document).






	27.12	 	Resignation of the Agent and the Technical Bank






	 	27.12.1	 	Each of the Agent and the Technical Bank may resign and appoint one of its
Affiliates as successor by giving notice to the other Finance Parties and the Borrower.
	 
	 	27.12.2	 	Alternatively each of the Agent and the Technical Bank may resign by giving 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 or Technical Bank
(as the case may be).
	 
	 	27.12.3	 	If the Majority Lenders have not appointed a successor Agent or Technical Bank in
accordance with sub-clause 27.12.2 above within thirty days after notice of resignation
was given, the Agent or the Technical Bank (after consultation with the Borrower) may
appoint a successor Agent or Technical Bank.
	 
	 	27.12.4	 	The retiring Agent or Technical Bank shall, at its own cost, make available to the
successor Agent or Technical Bank such documents and records and provide such
assistance as the successor Agent or Technical Bank may reasonably request for the
purposes of performing its functions as Agent or Technical Bank under the Finance
Documents.
	 
	 	27.12.5	 	The Agent’s or the Technical Bank’s resignation notice shall only take effect upon
the appointment of a successor.
	 
	 	27.12.6	 	The appointment of a successor shall only take effect on the date on which an
otherwise duly completed Accession Undertaking delivered by the successor Agent or
Technical Bank is executed by the retiring Agent or Technical Bank (as the case may be)
and the Security Trustee.
	 
	 	27.12.7	 	Upon the appointment of a successor, the retiring Agent or Technical Bank shall be
discharged from any further obligation in respect of the Finance




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	 	      	    	Documents but shall remain entitled to the benefit of this Clause 27 (Role of the
Agent, the Arranger and the Technical Bank). Its 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.






	27.13	 	Confidentiality






	 	27.13.1	 	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.
	 
	 	27.13.2	 	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.






	27.14	 	Relationship with the Lenders






	 	27.14.1	 	The Agent may treat each Lender as a Lender, entitled to payments under this
Agreement and acting through its Facility Office unless it has received not less than
five Business Days prior notice from that Lender to the contrary in accordance with
the terms of this Agreement.






	27.15	 	Credit appraisal by the Lenders
	 
	 	 	Without affecting the responsibility of the Borrower for information supplied by it or
on its behalf in connection with any Finance Document, each Lender confirms to the Agent
and the Arranger 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:






	 	27.15.1	 	the financial condition, status and nature of the Borrower;
	 
	 	27.15.2	 	the legality, validity, effectiveness, adequacy or enforceability of any Finance
Document and any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any Finance Document;
	 
	 	27.15.3	 	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 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
	 
	 	27.15.4	 	the adequacy, accuracy and/or completeness of any other information provided by the
Agent, 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.





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	27.16	 	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.






	27.17	 	Instructions to Security Trustee
	 
	 	 	The Agent shall inform the Security Trustee promptly upon the Secured Obligations being
discharged in full and the Borrower having no further actual or contingent obligation under
the Finance Documents.






	28.	 	THE OFFSHORE ACCOUNT BANK
	 
	28.1	 	No Agency
	 
	 	 	It is hereby agreed that the Offshore Account Bank shall be responsible for performing the
functions of an account bank expressly mentioned herein and the Offshore Account Bank shall
not, nor shall it be construed to be, the agent or trustee of any Finance Party.






	28.2	 	Rights of the Offshore Account Bank
	 
	 	 	The Offshore Account Bank may:






	 	28.2.1	 	engage and pay for the advice and services of any lawyers, accountants or other
experts whose advice or services may to it seem necessary, expedient or desirable and
rely upon any advice so obtained;
	 
	 	28.2.2	 	rely as to any matters of fact which might reasonably be expected to be within the
knowledge of any other party to any Finance Document upon a certificate signed by or on
behalf of such party;
	 
	 	28.2.3	 	rely upon any communication or document believed by it to be genuine; and
	 
	 	28.2.4	 	assume that no Default or Event of Default has occurred and that no other party to
any Finance Document is in breach of or default under its obligations thereunder,
unless it has actual knowledge or actual notice to the contrary.






	28.3	 	Excluded Obligations
	 
	 	 	Notwithstanding anything to the contrary expressed or implied herein, the Offshore
Account Bank shall not:






	 	28.3.1	 	be bound to enquire as to the occurrence or otherwise of any Default or Event of
Default or the performance by any other party to any of the Finance Documents of its
obligations thereunder;
	 
	 	28.3.2	 	be bound to exercise any right, power or discretion vested in the Offshore Account
Bank under this Agreement unless so instructed by the Agent;





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	 	28.3.3	 	be bound to account to any other party hereto for any sum or the profit
element of any sum received by it for its own account;
	 
	 	28.3.4	 	be bound to disclose to any other person any information relating to any other
person;
	 
	 	28.3.5	 	be under any fiduciary duty towards any other party hereto or under any obligations
other than those for which express provision is made in the Finance Documents; and
	 
	 	28.3.6	 	be liable under this Agreement or any other Finance Document, to any person for any
delay or failure to act:






	 	(a)	 	during any period as a result of time differences or
communication difficulties, other than by reason of its gross negligence or
wilful misconduct; or
	 
	 	(b)	 	where such failure is the result of any act or omission on
the part of any other person.






	28.4	 	Indemnification of the Offshore Account Bank
	 
	 	 	Save and to the extent that the same are recovered from the Borrower, each Lender
shall, from time to time within three Business Days of demand by the Agent, indemnify the
Offshore Account Bank, in proportion to its share of the Total Commitments at the time of
such demand against any and all costs, claims, losses, expenses (including legal fees) and
liabilities together with any VAT thereon which the Offshore Account Bank may incur,
otherwise than by reason of its own gross negligence or wilful misconduct, in acting in its
capacity as an account bank under the Finance Documents or otherwise in the performance of
its obligations thereunder.






	28.5	 	Exclusion of the Offshore Account Bank’s Liability
	 
	 	 	The Offshore Account Bank does not accept any responsibility for the accuracy and/or
completeness of any information supplied in connection with any Finance Document or for the
legality, validity, effectiveness, adequacy or enforceability of any Finance Document and
shall not be under any liability as a result of taking or omitting to take any action in
relation to the Offshore Accounts, save in the case of gross negligence or wilful
misconduct.
	 
	28.6	 	No Actions by the Offshore Account Bank
	 
	 	 	Each of the other Parties agrees that it will not assert or seek to assert against any
director, officer or employee of the Offshore Account Bank any claim it might have against
the Offshore Account Bank in respect of the matters referred to in
Clause 28.5 (Exclusion
of the Offshore Account Bank’s Liability).
	 
	28.7	 	Business of the Offshore Account Bank
	 
	 	 	The Offshore Account Bank may accept deposits from, lend money to and generally engage
in any kind of lending or other business with any party to any Finance Document.





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	28.8	 	Cessation by the Offshore Account Bank
	 
	 	 	The Offshore Account Bank may at any time (without assigning any reason therefor)
notify the Agent and the Borrower in writing that it wishes to cease to be the Offshore
Account Bank hereunder and, upon receipt of such notice, the Agent may, following
consultation with the Borrower, nominate another Lender as a successor to the Offshore
Account Bank.
	 
	28.9	 	Substitution of the Offshore Account Bank
	 
	 	 	Either:






	 	28.9.1	 	the Agent may and, if so instructed by the Majority Lenders, shall upon reasonable
grounds and with the prior written consent of the Borrower (such consent not to be
unreasonably withheld or delayed); or
	 
	 	28.9.2	 	the Borrower may upon reasonable grounds and with the prior written consent of the
Agent (such consent not to be unreasonably withheld or delayed),






	 	 	remove the Offshore Account Bank from its appointment hereunder at any time by giving not
less than fifteen days’ prior written notice to that effect to the Offshore Account Bank,
provided that:






	 	(a)	 	the removal of the Offshore Account Bank shall not be
effective until a successor is appointed in accordance with Clause 28.10
(Successor Offshore Account Bank); and
	 
	 	(b)	 	such successor Offshore Account Bank shall be a Lender.






	28.10	 	Successor Offshore Account Bank






	 	 	If a successor to the Offshore Account Bank is nominated under the provisions of Clause
28.8 (Cessation by the Offshore Account Bank) or Clause 28.9 (Substitution of the Offshore
Account Bank):






	 	28.10.1	 	the successor Offshore Account Bank shall accede to this Agreement on the date on
which an otherwise duly completed Accession Undertaking delivered
by the successor Offshore Account Bank is executed by the Agent and the Security
Trustee;






	 	28.10.2	 	the Offshore Account Bank shall (upon transfer to the successor Offshore Account
Bank of the balance on the Offshore Accounts maintained with it, the establishment by
the successor of new Offshore Accounts for the purposes of this Agreement and the
perfection of the Security under the Charge over Accounts in relation to such new
Offshore Accounts, in each case to the satisfaction of the Security Trustee) cease to
have any obligation hereunder in such capacity in relation to the Offshore Accounts
(but without prejudice to any accrued liabilities under this Agreement) but shall
remain entitled to the benefit of the provisions of this Clause 28.10 (Successor
Offshore Account Bank); and





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	 	28.10.3	 	the successor to the Offshore Account Bank and each of the other Parties
shall have the same rights and obligations amongst themselves as they would have
had if such successor to the Offshore Account Bank has been an original party
hereto.






	29.	 	THE SECURITY TRUSTEE
	 
	29.1	 	Trust






	 	29.1.1	 	The Security Trustee declares that it shall hold the Transaction Security on
trust for the Secured Parties on the terms contained in this Agreement.
	 
	 	29.1.2	 	Each of the parties to this Agreement agrees that the Security Trustee shall have
only those duties, obligations and responsibilities expressly specified in this
Agreement or in the Security Documents (and no others shall be implied).






	29.2	 	No independent power






	 	 	The Secured Parties shall not have any independent power to enforce, or have recourse
to, any of the Transaction Security or to exercise any rights or powers arising under the
Security Documents except through the Security Trustee.






	29.3	 	Releases






	 	29.3.1	 	[Intentionally blank]
	 
	 	29.3.2	 	Upon any disposal of any of the Charged Property:






	 	(a)	 	pursuant to the enforcement of the Transaction Security by a
Receiver or Delegate or the Security Trustee; or
	 
	 	(b)	 	if that disposal is permitted under the Finance Documents,






	 	 	 	the Security Trustee shall (at the cost of the Borrower), on direction by the
Agent release that property from the Transaction Security.






	 	29.3.3	 	If the Security Trustee is instructed by the Agent that the Agent is satisfied that:






	 	(a)	 	the ZR Loan has been repaid or prepaid such that the
outstanding amount of the ZR Loan is at least $50,000,000 less than it was at
the date of this Agreement; or






	 	(b)	 	the Borrower has received at least $50,000,000 in
subscription monies from third parties in connection with any issuance and
allotment of shares in the Borrower to such third parties; or





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	 	(c)	 	the amount of any repayment or prepayment referred to in paragraph (a),
when aggregated with the amount of any subscription monies referred to in
paragraph (b) received by the Borrower, is at least $50,000,000,






	 	 	 	the Security Trustee shall release, without recourse or warranty, the Security
constituted by the Second MIH Share Charge and the rights of the Security Trustee
under the Second MIH Share Charge.






	29.4	 	Security Trustee’s instructions






	 	 	The Security Trustee shall:






	 	29.4.1	 	unless a contrary indication appears in this Agreement, act in accordance with any
instructions given to it by the Agent and shall be entitled to assume that (i) any
instructions received by it from the Agent are duly given in accordance with the terms
of the Finance Documents and (ii) unless it has received actual notice of revocation,
that those instructions or directions have not been revoked;
	 
	 	29.4.2	 	be entitled to request instructions, or clarification of any direction, from the
Agent as to whether, and in what manner, it should exercise or refrain from exercising
any rights, powers and discretions and the Security Trustee may refrain from acting
unless and until those instructions or clarification are received by it; and
	 
	 	29.4.3	 	be entitled to carry out all dealings with the Secured Parties through their Agent
and may give to the Agent any notice or other communication required to be given by the
Security Trustee to the Secured Parties.






	29.5	 	Security Trustee’s actions






	 	 	Subject to the provisions of Clause 29.4 (Security Trustee’s Instructions):






	 	29.5.1	 	the Security Trustee may, in the absence of any instructions to the contrary, take
such action in the exercise of any of its powers and duties under the Finance Documents
which in its absolute discretion it considers to be for the protection and benefit of
all the Secured Parties; and
	 
	 	29.5.2	 	at any time after receipt by the Security Trustee of notice from the Agent directing
the Security Trustee to exercise all or any of its rights, remedies, powers or
discretions under any of the Finance Documents, the Security Trustee may, and shall if
so directed by the Agent, take any action as in its sole discretion it thinks fit to
enforce the Transaction Security.






	29.6	 	Security Trustee’s discretions






	 	 	The Security Trustee may:






	 	29.6.1	 	assume (unless it has received actual notice to the contrary from the Agent in its
capacity as trustee for the Secured Parties or has, if it is also the Agent, become
aware in its capacity as Agent) that (i) no Default has occurred and




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	 	 	 	the Borrower is not in breach of or defaulting under its obligations under any of
the Finance Documents and (ii) any right, power, authority or discretion vested by
any Finance Document in any person has not been exercised;






	 	29.6.2	 	if it receives any instructions or directions from the Agent to take any action in
relation to the Transaction Security, assume that all applicable conditions under the
Finance Documents for taking that action have been satisfied;
	 
	 	29.6.3	 	engage, pay for and rely on the advice or services of any lawyers,
accountants, surveyors or other experts (whether obtained by the Security Trustee or by
any other Secured Party) whose advice or services may at any time seem necessary,
expedient or desirable;
	 
	 	29.6.4	 	rely upon any communication or document believed by it to be genuine and, as to any
matters of fact which might reasonably be expected to be within the knowledge of a
Secured Party, any Lender or the Borrower, upon a certificate signed by or on behalf of
that person; and
	 
	 	29.6.5	 	refrain from acting in accordance with the instructions of the Agent (including
bringing any legal action or proceeding arising out of or in connection with the
Finance Documents) until it has received any indemnification and/or security that it
may in its absolute discretion require (whether by way of payment in advance or
otherwise) for all costs, losses and liabilities which it may incur in bringing any
action or proceedings.






	29.7	 	Security Trustee’s obligations






	 	 	The Security Trustee shall promptly inform the Agent of:






	 	29.7.1	 	the contents of any notice or document received by it in its capacity as Security
Trustee from the Borrower under any Finance Document; and
	 
	 	29.7.2	 	the occurrence of any Default or any default by the Borrower in the due performance
of or compliance with its obligations under any Finance Document of which the
Security Trustee has received notice from any other party to this Agreement.






	29.8	 	Excluded obligations






	 	 	Notwithstanding anything to the contrary expressed or implied in the Finance Documents,
the Security Trustee shall not:






	 	29.8.1	 	be bound to enquire as to (i) whether or not any Default has occurred or (ii) the
performance, default or any breach by the Borrower of its obligations under any of the
Finance Documents;
	 
	 	29.8.2	 	be bound to account to any other Party for any sum or the profit element of any sum
received by it for its own account;
	 
	 	29.8.3	 	be bound to disclose to any other person (including but not limited to any Secured
Party) (i) any confidential information or (ii) any other information if




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	 	 	 	disclosure would, or might in its reasonable opinion, constitute a breach of any
law or be a breach of fiduciary duty;






	 	29.8.4	 	be under any obligations other than those which are specifically provided for in the
Finance Documents; or






	 	29.8.5	 	have or be deemed to have any duty, obligation or responsibility to, or relationship
of trust or agency with, the Borrower.






	29.9	 	Exclusion of Security Trustee’s liability






	 	 	The Security Trustee shall not accept responsibility or be liable for:






	 	29.9.1	 	the adequacy, accuracy and/or completeness of any information (whether oral or
written) supplied by the Security Trustee or any other person in or in connection with
any Finance Document or the transactions contemplated in 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;
	 
	 	29.9.2	 	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;
	 
	 	29.9.3	 	any losses to any person or any liability arising as a result of taking or refraining
from taking any action in relation to any of the Finance Documents or the Transaction
Security or otherwise, whether in accordance with an instruction from the Agent or
otherwise unless directly caused by it gross negligence or wilful misconduct;
	 
	 	29.9.4	 	the exercise of, or the failure to exercise, any judgment, discretion or power given
to it by or in connection with any of the Finance Documents, the Transaction Security
or any other agreement, arrangement or document entered into, made or executed in
anticipation of or in connection with the Finance Documents or the Transaction
Security; or
	 
	 	29.9.5	 	any shortfall which arises on the enforcement of the Transaction Security.






	29.10	 	No proceedings






	 	 	No Party (other than the Security Trustee) may take any proceedings against any officer,
employee or agent of the Security Trustee in respect of any claim it might have against the
Security Trustee or in respect of any act or omission of any kind by that officer, employee
or agent in relation to any Finance Document or any Transaction Security and any officer,
employee or agent of the Security Trustee may rely on this Clause subject to Clause 1.4
(Third party rights) and the provisions of the Third Parties Act.





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	29.11	 	Own responsibility






	 	 	Without affecting the responsibility of the Borrower for information supplied by or on
its behalf in connection with any Finance Document, each Secured Party confirms to the
Security Trustee 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:






	 	29.11.1	 	the financial condition, status and nature of the Borrower;
	 
	 	29.11.2	 	the legality, validity, effectiveness, adequacy and 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;
	 
	 	29.11.3	 	whether that Secured Party 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 or the
Transaction Security;
	 
	 	29.11.4	 	the adequacy, accuracy and/or completeness of any information provided by the
Security Trustee or by any other person under or in connection with any Finance
Document, the transactions contemplated by any Finance Document or any other agreement,
arrangement or document entered into, made or executed in anticipation of, under or
in connection with any Finance Document; and
	 
	 	29.11.5	 	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 Secured Party warrants to the Security Trustee that it has not relied on and will
not at any time rely on the Security Trustee in respect of any of these matters.






	29.12	 	No responsibility to perfect Transaction Security






	 	 	The Security Trustee shall not be liable for any failure to:






	 	29.12.1	 	require the deposit with it of any deed or document certifying, representing or
constituting the title of the Borrower to any of the Charged Property;
	 
	 	29.12.2	 	obtain any licence, consent or other authority for the execution, delivery,
legality, validity, enforceability or admissibility in evidence of any of the Finance
Documents or the Transaction Security;





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	 	29.12.3	 	register, file or record or otherwise protect any of the Transaction
Security (or the priority of any of the Transaction Security) under any applicable
laws in any jurisdiction or to give notice to any person of the execution of any of
the Finance Documents or of the Transaction Security;
	 
	 	29.12.4	 	take, or to require the Borrower to take, any steps to perfect its title to any of
the Charged Property or to render the Transaction Security effective or to secure the
creation of any ancillary Security under the laws of any jurisdiction; or
	 
	 	29.12.5	 	require any further assurances in relation to any of the Security Documents.






	29.13	 	Insurance by Security Trustee






	 	29.13.1	 	The Security Trustee shall not be under any obligation to insure any of the
Charged Property, to require any other person to maintain any insurance or to verify
any obligation to arrange or maintain insurance contained in the Finance Documents.
The Security Trustee shall not be responsible for any loss which may be suffered by any
person as a result of the lack of or inadequacy of any such insurance.






	 	29.13.2	 	Where the Security Trustee is named on any insurance policy as an insured party, it
shall not be responsible for any loss which may be suffered by reason of, directly or
indirectly, its failure to notify the insurers of any material fact relating to the
risk assumed by such insurers or any other information of any kind, unless the Agent
shall have requested it to do so in writing and the Security Trustee shall have failed
to do so within fourteen days after receipt of that request.






	29.14	 	Custodians and nominees






	 	 	The Security Trustee may appoint and pay any person to act as a custodian or nominee
on any terms in relation to any assets of the trust as the Security Trustee may determine,
including for the purpose of depositing with a custodian this Agreement or any document
relating to the trust created under this Agreement.






	29.15	 	Acceptance of title






	 	 	The Security Trustee shall be entitled to accept without enquiry, and shall not be
obliged to investigate, any right and title that the Borrower may have to any of the
Charged Property and shall not be liable for or bound to require the Borrower to remedy any
defect in its right or title.






	29.16	 	Refrain from illegality






	 	 	The Security Trustee may refrain from doing anything which in its opinion will or may
be contrary to any relevant law, directive or regulation of any jurisdiction which would or
might otherwise render it liable to any person, and the Security Trustee may do anything
which is, in its opinion, necessary to comply with any such law, directive or regulation.









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	29.17	 	Business with the Borrower






	 	 	The Security Trustee may accept deposits from, lend money to, and generally engage in
any kind of banking or other business with the Borrower.






	29.18	 	Winding up of trust






	 	 	Without prejudice to Clause 29.3.3, if the Security Trustee, with the approval of the
Agent, determines that (a) all of the Secured Obligations and all other obligations secured
by any of the Security Documents have been fully and finally discharged and (b) none of the
Secured Parties is under any commitment, obligation or liability (actual or contingent) to
make advances or provide other financial accommodation to the Borrower pursuant to the
Finance Documents, the trusts set out in this Agreement shall be wound up and the Security
Trustee shall release, without recourse or warranty, all of the Transaction Security and
the rights of the Security Trustee under each of the Security Documents.






	29.19	 	Perpetuity period






	 	 	The perpetuity period under the rule against perpetuities, if applicable to this
Agreement, shall be the period of eighty years from the date of this Agreement.






	29.20	 	Powers supplemental






	 	 	The rights, powers and discretions conferred upon the Security Trustee by this
Agreement shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in
addition to any which may be vested in the Security Trustee by general law or otherwise.






	29.21	 	Trustee division separate






	 	29.21.1	 	In acting as trustee for the Secured Parties, the Security Trustee shall be
regarded as acting through its agency or trustee division which shall be treated as a
separate entity from any of its other divisions or departments;
	 
	 	29.21.2	 	If information is received by another division or department of the Security
Trustee, it may be treated as confidential to that division or department and the
Security Trustee shall not be deemed to have notice of it.






	29.22	 	Disapplication






	 	 	Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Trustee
in relation to the trusts constituted by this Agreement. Where there are any inconsistencies
between the Trustee Act 1925 or the Trustee Act 2000 and the provisions of this Agreement,
the provisions of this Agreement shall, to the extent allowed by law, prevail and, in the
case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall
constitute a restriction or exclusion for the purposes of that Act.






	30.	 	CHANGE OF SECURITY TRUSTEE AND DELEGATION






	30.1	 	Resignation of the Security Trustee






	 	30.1.1	 	The Security Trustee may resign and appoint one of its Affiliates as
successor by giving notice to the Agent.





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	 	30.1.2	 	Alternatively, the Security Trustee may resign by giving notice to the Agent
in which case the Majority Lenders (in consultation with the Borrower) may appoint
a successor Security Trustee.
	 
	 	30.1.3	 	If the Majority Lenders have not appointed a successor Security Trustee in accordance
with sub-Clause 30.1.2 above within thirty days after the notice of resignation was
given, the Security Trustee (after consultation with the Agent and the Borrower) may
appoint a successor Security Trustee.
	 
	 	30.1.4	 	The retiring Security Trustee shall, at its own cost, make available to the successor
Security Trustee such documents and records and provide such assistance as the
successor Security Trustee may reasonably request for the purposes of performing its
functions as Security Trustee under the Finance Documents.
	 
	 	30.1.5	 	The Security Trustee’s resignation notice shall only take effect upon (i) the
appointment of a successor and (ii) the transfer of all of the Transaction Security to
that successor.
	 
	 	30.1.6	 	Upon the appointment of a successor, the retiring Security Trustee shall be
discharged from any further obligation in respect of the Finance Documents but shall
remain entitled to the benefit of Clause 29 (The Security Trustee). Its 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.






	30.2	 	Delegation






	 	30.2.1	 	The Security Trustee may, at any time, delegate by power of attorney or
otherwise to any person for any period, all or any of the rights, powers and
discretions vested in it by any of the Finance Documents.
	 
	 	30.2.2	 	The delegation may be made upon any terms and conditions (including the power to
sub-delegate) and subject to any restrictions that the Security Trustee may think fit
in the interests of the Secured Parties.






	30.3	 	Additional Security Trustees






	 	30.3.1	 	The Security Trustee may at any time appoint (and subsequently remove) any
person to act as a separate trustee or as a co-trustee jointly with it (i) if it
considers that appointment to be in the interests of the Secured Parties or (ii) for
the purposes of conforming to any legal requirements, restrictions or conditions which
the Security Trustee deems to be relevant or (iii) for obtaining or enforcing any
judgment in any jurisdiction, and the Security Trustee shall give prior notice to the
Agent of that appointment.






	 	30.3.2	 	Any person so appointed shall have the rights, powers and discretions (not exceeding
those conferred on the Security Trustee by this Agreement) and the duties and
obligations that are conferred or imposed by the instrument of appointment.





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	 	30.3.3	 	The remuneration that the Security Trustee may pay to that person, and any
costs and expenses incurred by that person in performing its functions pursuant to
that appointment shall, for the purposes of this Agreement, be treated as costs
and expenses incurred by the Security Trustee unless such costs and expenses arise
as a result of the wilful misconduct or gross negligence of that person.






	31.	 	INDEMNITIES AND INFORMATION
	 
	31.1	 	Security Trustee’s additional remuneration






	 	31.1.1	 	In the event of (i) the occurrence of a Default or (ii) the Security Trustee
reasonably considering it necessary or expedient in connection with its role as such or
the Transaction Security or (iii) the Security Trustee being requested by the Borrower
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 (together with any applicable VAT) as may
be agreed between them.
	 
	 	31.1.2	 	If the Security Trustee and the Borrower fail to agree upon the nature of those
duties or upon any additional remuneration, that dispute shall be determined by the
President of the Law Society of Hong Kong (acting as an expert and not as an
arbitrator) selected by the Security Trustee and approved by the Borrower (the costs of
that nomination and of the President of the Law Society of Hong Kong being payable by
the Borrower) and the determination of the President of the Law Society of Hong Kong
shall be final and binding upon the parties to this Agreement.






	31.2	 	Indemnification of the Security Trustee






	 	 	Each Creditor shall (in the proportion that the Liabilities due to it bears to the
aggregate of the Liabilities due to all the Creditors for the time being (or, if the
Liabilities of each of those Creditors is zero, immediately prior to their being reduced to
zero)), indemnify the Security Trustee, within three business days of demand, against any
cost, loss or liability incurred by the Security Trustee (otherwise than by reason of the
Security Trustee’s gross negligence or wilful misconduct) in acting as Security Trustee
under the Finance Documents (unless the Security Trustee has been reimbursed by the
Borrower pursuant to a Finance Document or was not entitled to such reimbursement as a
result of its own gross negligence or wilful misconduct) and the Borrower shall indemnify
each Creditor against any payment made by it under this
Clause.






	31.3	 	Information and dealing






	 	 	The Creditors shall provide to the Security Trustee from time to time (through the Agent)
any information that the Security Trustee may reasonably specify as being necessary or
desirable to enable the Security Trustee to perform its functions as trustee. Each Creditor
shall deal with the Security Trustee exclusively through the Agent. The









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Agent shall be under no obligation to act as agent or otherwise on behalf of any Hedge Counterparty
except as specifically referred in, and for the purposes of, this Agreement.








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SECTION 11




SECURITY AND PRIORITY




	32.	 	SECURITY AND PRIORITY
	 
	32.1	 	Waiver of defences






	 	 	Neither the provisions of this Agreement, nor the obligations of the Borrower hereunder,
will be affected by an act, omission, matter or thing which, but for this Clause 32.1,
would reduce, release or prejudice the subordination and priorities in this Agreement
including:






	 	32.1.1	 	any time, waiver or consent granted to, or composition with any person;
	 
	 	32.1.2	 	the release of the Borrower or any other person under the terms of any composition or
arrangement with any creditor of the Borrower;
	 
	 	32.1.3	 	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,
the Borrower 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 Transaction Security;
	 
	 	32.1.4	 	any incapacity or lack of power, authority or legal personality of or dissolution or
change in the members or status of the Borrower or any other person;
	 
	 	32.1.5	 	any amendment (however fundamental) or replacement of a Finance
Document or any other document or security;
	 
	 	32.1.6	 	any unenforceability, illegality, invalidity or non-provability of any obligation of
any person under any Finance Document or any other document or security;
	 
	 	32.1.7	 	any intermediate payment or discharge of any of the Liabilities of the Creditors in
whole or in part; or
	 
	 	32.1.8	 	any insolvency or similar proceedings affecting any person.






	32.2	 	Priorities not affected






	 	 	Except as otherwise provided in this Agreement the priorities referred to in this Clause 32
(Ranking and Priority) will:






	 	32.2.1	 	not be affected by any reduction or increase in the principal amount secured by the
Transaction Security in respect of the Liabilities of the Creditors or by any
intermediate reduction or increase in, amendment or variation to any of the Finance
Documents, or by any variation or satisfaction of, any of the Liabilities or any other
circumstances;





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	 	32.2.2	 	apply regardless of the order in which or dates upon which the Finance
Documents and this Agreement are executed or registered or notice of them is given
to any person; and






	 	32.2.3	 	secure the Liabilities of the Creditors in the order specified, regardless of the
date upon which any of the Liabilities arise or of any fluctuations in the amount of
any of the Liabilities outstanding.






	33.	 	HEDGE COUNTERPARTIES: RIGHTS AND OBLIGATIONS
	 
	33.1	 	Identity of Hedge Counterparties






	 	 	No person providing hedging facilities to the Borrower shall be entitled to share in
any of the Transaction Security or in the benefit of any guarantee or indemnity in respect
of any of the liabilities arising in relation to those hedging facilities unless they are a
party to this Agreement as a Hedge Counterparty. A Lender, or an Affiliate of a Lender, may
become a Hedge Counterparty, and the Liabilities arising in respect of its hedging
facilities shall be treated as Hedge Liabilities, with effect from the date on which an
otherwise duly completed Accession Undertaking delivered by that Lender or Affiliate has
been executed by the Agent and the Security Trustee. No other person may become a Hedge
Counterparty without the consent of all the Lenders.






	33.2	 	Security






	 	 	The Hedge Counterparties may not take, accept or receive the benefit of any Security,
guarantee, indemnity or other assurance against loss from the Borrower in respect of the
Hedge Liabilities other than the Transaction Security.






	33.3	 	Amendments






	 	 	The Hedge Counterparties may not amend the Hedge Agreements in accordance with their
terms at any time unless either the prior consent of the Majority Lenders is obtained or if
the amendment is an administrative, technical or procedural change only.






	33.4	 	Termination of Hedging transactions






	 	 	If:






	 	(a)	 	following the occurrence of an Event of Default (and while the same is
continuing) a settlement amount or other amount falls due from a Hedge Counterparty
to the Borrower on termination of any hedging transaction under the Hedge
Agreements; or
	 
	 	(b)	 	on termination of any hedging transaction under the Hedge Agreements occurring
after the commencement of any Enforcement Action, a settlement amount or other
amount falls due from the Borrower to a Hedge Counterparty,






	 	 	then that amount shall be paid directly to the Security Trustee, treated as the proceeds of
enforcement of the Transaction Security and applied in accordance with the terms of this
Agreement.









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	34.	 	ENTITLEMENT TO ENFORCE
	 
	34.1	 	Lenders: permitted enforcement
	 
	 	 	Nothing in this Agreement shall prevent the Lenders from taking Enforcement Action
that they are otherwise entitled to take under applicable law and in accordance with the
terms of the Finance Documents.
	 
	34.2	 	Hedge Counterparties: permitted enforcement
	 
	 	 	The Hedge Counterparties shall not take any Enforcement Action at any time except that
they may terminate or close out any hedging transaction under any Hedge Agreement prior to
its stated maturity (and shall notify the Agent if they do so) if permitted to do so by the
terms of such Hedge Agreement and:






	 	34.2.1	 	the Majority Lenders have accelerated their Liabilities or declared them prematurely
due and payable; or
	 
	 	34.2.2	 	the Majority Lenders have cancelled the Commitments and are no longer making Loans
available; or
	 
	 	34.2.3	 	the Borrower has defaulted on a payment due under the Hedge Agreements; or
	 
	 	34.2.4	 	an Illegality or Tax Event (each as defined in the 1992 ISDA Master Agreement) has
occurred in respect of any Hedge Agreement; or
	 
	 	34.2.5	 	an Event of Default has occurred under Clause 23.1 (Non-payment) in respect of any
Finance Document (other than a Hedge Agreement) or under Clause 23.3 (Other
obligations); or
	 
	 	34.2.6	 	an Event of Default has occurred under Clause 23.6 (Insolvency) or 23.7 (Insolvency
Proceedings); or
	 
	 	34.2.7	 	the consent of the Majority Lenders is obtained.






	34.3	 	Hedge Counterparties: required enforcement
	 
	 	 	The Hedge Counterparties shall, if permitted to do so by the terms of such Hedge
Agreement, promptly terminate or close out any hedging transaction under each Hedge
Agreement prior to its stated maturity following a request by the Security Trustee if the
Majority Lenders have accelerated their Liabilities or declared them prematurely due and
payable in accordance with Clause 23.22 (Acceleration).
	 
	35.	 	EFFECT OF INSOLVENCY EVENT
	 
	35.1	 	Acceleration and claim
	 
	 	 	After the occurrence of an Insolvency Event in relation to the Borrower (and while the
same is continuing), each Creditor may, to the extent it is entitled to do so under
applicable law and in accordance with the terms of the Finance Documents or any Hedge
Agreement, exercise any right it may have in respect of the Borrower to:





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	 	35.1.1	 	accelerate any of its Liabilities or declare them prematurely due and
payable or payable on demand or prematurely close out or terminate any Hedge
Liabilities;
	 
	 	35.1.2	 	make a demand under any guarantee, indemnity or other assurance against loss in
respect of any Liabilities of the Borrower;
	 
	 	35.1.3	 	exercise any right of set off or take or receive any payment in respect of any
Liabilities; or
	 
	 	35.1.4	 	claim and prove in the liquidation of the Borrower for the Liabilities owing to
it.






	35.2	 	Payment of distributions






	 	 	After the occurrence of an Insolvency Event in relation to the Borrower, it is
intended (as among the Creditors) that the person responsible for the distribution of
the assets of the Borrower shall be directed to pay any distributions in respect of
any of the Liabilities to the Security Trustee until the Liabilities of the Secured
Parties have been paid in full, and each of the Creditors shall act in a manner
consistent with such intention.






	35.3	 	Insolvency Set-Off






	 	 	To the extent that any of the Liabilities is discharged by way of set-off
(mandatory or otherwise) after the occurrence of an Insolvency Event, any Creditor
which benefited from that set-off shall pay an amount equal to the amount of its
Liabilities discharged by that set-off to the Security Trustee for application in
accordance with Clause 40 (Application of Proceeds).






	35.4	 	Filing of claims






	 	 	After the occurrence of an Insolvency Event in relation to the Borrower which is
continuing, each of the Creditors irrevocably authorises the Security Trustee to:






	 	35.4.1	 	take any Enforcement Action;
	 
	 	35.4.2	 	demand, sue, prove and give receipt for any or all of the Liabilities;
	 
	 	35.4.3	 	collect and receive all distributions on, or on account of, any or all of the
Liabilities; and
	 
	 	35.4.4	 	file claims, take proceedings and do all other things the Security Trustee
considers reasonably necessary to recover the Liabilities,






	 	 	in each case, to the extent it is entitled to do so under applicable law and in
accordance with the terms of the Finance Documents or (in the case of a Hedge
Counterparty) the relevant Hedge Agreement.






	35.5	 	Creditors’ actions






	 	 	The Creditors will do all things that the Security Trustee reasonably requests in
order
to give effect to this Clause 35 (Effect of Insolvency Event) and, if the Security
Trustee





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	 	 	is not entitled to take any of the actions contemplated by
this Clause 35 (Effect of
Insolvency Event) or if the Security Trustee requests any Creditor to take that action, that
Creditor will undertake those actions itself in accordance with the reasonable instructions
of the Security Trustee or will grant a power of attorney to the Security Trustee (on such
terms as the Security Trustee may reasonably require) to enable the Security Trustee to take
such action.
	 
	36.	 	TURNOVER OF RECEIPTS
	 
	36.1	 	Turnover by the Creditors
	 
	 	 	Subject to Clause 36.2 (Permitted assurance and
receipts) if at any time prior to the
discharge in full of the Liabilities of the Creditors, any Creditor receives or recovers:






	 	36.1.1	 	any payment or distribution of, or on account of or in relation to, any of the
Liabilities which is not permitted by Clause 40 (Application of Proceeds); 
	 
	 	36.1.2	 	any amount by way of set-off in respect of any of the Liabilities owed to them which
does not give effect to a payment permitted by Clause 40 (Application of Proceeds); 
	 
	 	36.1.3	 	the proceeds of any enforcement of any Transaction Security except in accordance with
Clause 40 (Application of Proceeds); or
	 
	 	36.1.4	 	any distribution in cash or in kind made as a result of the occurrence of an
Insolvency Event in respect of the Borrower,






	 	 	that Creditor will hold that amount on trust for the Security Trustee and promptly pay that
amount to the Security Trustee or, if this trust cannot be given effect to or if in respect
of any Creditor this trust has the effect of creating a proprietary or security interest
over that amount registrable under the Companies Act 1985, that Creditor shall pay an
amount equal to that receipt or recovery to the Security Trustee, in each case to be held
on trust by the Security Trustee for application in accordance with the terms of this
Agreement.






	36.2	 	Permitted assurance and receipts






	 	 	Nothing in this Agreement shall restrict the ability of any Creditor:






	 	36.2.1	 	to arrange with any person (other than the Borrower) any assurance against loss in
respect of, or reduction of its credit exposure to, the Borrower (including assurance
by way of credit based derivative or sub-participation); or






	 	36.2.2	 	to receive or recover any sum in respect of its Liabilities as a result of any
assignment or transfer permitted by Clause 24 (Changes to the Lenders) or 25 (Changes
to the Hedge Counterparties),






	 	 	and that Creditor shall not be obliged to account to any other Party for any sum received
by it as a result of that action.









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	37.	 	SHARING
	 
	37.1	 	Recovering Creditor’s rights






	 	37.1.1	 	Any amount paid by a Creditor (a “Recovering Creditor”) to the Security Trustee
under Clause 35 (Effect of Insolvency Event) or 36 (Turnover of Receipts) shall be
treated as having been paid by the Borrower and distributed in accordance with the
terms of this Agreement.
	 
	 	37.1.2	 	On a distribution of that amount by the Security Trustee, the Recovering Creditor
will be subrogated to the rights of the Creditors which have shared in the
redistribution.
	 
	 	37.1.3	 	If and to the extent that the Recovering Creditor is not able to rely on its rights
under Clause 37.1.2 the Borrower shall be liable to the Recovering Creditor for a debt
equal to the amount received or recovered by the Recovering Creditor and paid to the
Security Trustee (the “Shared Amount”) which is immediately due and payable.






	37.2	 	Reversal of redistribution






	 	 	If any part of the Shared Amount received or recovered by a Recovering Creditor
becomes repayable to the Borrower and is repaid by that Recovering Creditor to the
Borrower, then:






	 	37.2.1	 	each Creditor which has received a share of the relevant Shared Amount shall, upon
request of the Security Trustee, pay to the Security Trustee for account of that
Recovering Creditor an amount equal to the appropriate part of its share of the Shared
Amount (together with an amount as is necessary to reimburse that Recovering Creditor
for its proportion of any interest on the Shared Amount which that Recovering Creditor
is required to pay); and
	 
	 	37.2.2	 	that Recovering Creditor’s rights of subrogation in respect of any
reimbursement shall be cancelled and the Borrower will be liable to each reimbursing
Creditor for the amount so reimbursed.






	37.3	 	Exceptions






	 	37.3.1	 	Clause 36 (Turnover of Receipts) shall not apply to the extent that the
Recovering Creditor would not, after making any payment pursuant to this Clause,
have a valid and enforceable claim against the Borrower.
	 
	 	37.3.2	 	A Recovering Creditor is not obliged to share with any other Creditor any amount
which the Recovering Creditor has received or recovered as a result of taking legal or
arbitration proceedings, if:






	 	(a)	 	it notified that other Creditor of the legal or arbitration proceedings; and
	 
	 	(b)	 	that other Creditor 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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	37.4	 	Deferral of Subrogation
	 
	 	 	No Creditor will exercise any rights which it may have by reason of the performance by
it of its obligations under the Finance Documents to take the benefit (in whole or in part
and whether by way of subrogation or otherwise) of any rights under the Finance Documents
of any Creditor which ranks ahead of it in accordance with the priorities set out in Clause
32 (Ranking and Priority) until such time as all of the Liabilities of each prior ranking
Creditor have been irrevocably paid in full.
	 
	38.	 	ENFORCEMENT OF SECURITY
	 
	38.1	 	Agent’s directions
	 
	 	 	The Security Trustee will enforce the Transaction Security only at the request the
Agent. At all times after the request to commence enforcement has been issued and subject
to the terms of this Agreement, the Security Trustee will act on the directions of the
Agent who shall be entitled to give directions and do any other things in relation to the
enforcement of the Transaction Security (including in connection with, but not limited to,
the disposal, collection or realisation of assets subject to the Transaction Security) that
it considers appropriate including (without limitation) determining the timing and manner
of enforcement against any particular person or asset.
	 
	38.2	 	Waiver of right to enforce
	 
	 	 	To the extent permitted under applicable law and subject to Clause 40 (Application of
Proceeds), each of the Secured Parties and the Borrower waives all rights it may otherwise
have to require that the Transaction Security be enforced in any particular order or manner
or at any particular time or that any sum received or recovered from any person, or by
virtue of the enforcement of any of the Transaction Security or of any other security
interest, which is capable of being applied in or towards discharge of any of the Secured
Obligations is so applied.
	 
	39.	 	DISPOSALS AND CLAIMS
	 
	39.1	 	Proceeds of disposals and claims before Enforcement Action
	 
	 	 	Prior to the commencement of any Enforcement Action on any disposal permitted by the
Finance Documents the Security Trustee shall be authorised (at the cost of the Borrower) to
release the assets disposed of from the Transaction Security and is authorised to execute
or enter into, on behalf of and without the need of any letter of authority from the
Lenders any release of the Transaction Security or any other claim
over such assets and to issue any certificates of non-crystallisation of any floating
charge that may, in the absolute discretion of the Security Trustee, be considered
necessary or desirable.
	 
	39.2	 	Disposal after Enforcement Action
	 
	 	 	If any assets are sold or otherwise disposed of by (or on behalf of) the Security
Trustee or by the Borrower at the request of the Security Trustee (acting on the
instructions of or with the consent of the Agent) either as a result of the enforcement of
the Transaction Security or a disposal by the Borrower after any Enforcement Action
permitted under applicable law and in accordance with the terms of the Finance





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	 	 	Documents or (in the case of a Hedge Counterparty) the relevant Hedge Agreement, the
Security Trustee shall be authorised (at the cost of the Borrower) to release those assets
from the Transaction Security and is authorised to execute or enter into, on behalf of and,
without the need for any further authority from any of the Lenders or the Borrower:






	 	39.2.1	 	any release of the Transaction Security or any other claim over that asset and to
issue any certificates of non-crystallisation of any floating charge that may, in the
absolute discretion of the Security Trustee, be considered necessary or desirable; and
	 
	 	39.2.2	 	if the asset disposed of consists of all of the shares in the capital of the Borrower
and if the Security Trustee wishes to dispose of any Liabilities owed by the Borrower,
any agreement to dispose of all or part of those Liabilities on behalf of the Finance
Parties (with the proceeds thereof being applied as if they were the proceeds of
enforcement of the Transaction Security) provided that the Security Trustee shall take
reasonable care to obtain a fair market price in the prevailing market conditions
(though the Security Trustee shall have no obligation to postpone any disposal in order
to achieve a higher price).






	39.3	 	Releases






	 	 	The Creditors and the Borrower shall execute any assignments, transfers, releases or other
documents that the Security Trustee may reasonably consider to be necessary to give effect
to the releases or disposals contemplated in this Clause 39 (Disposals and claims).






	40.	 	APPLICATION OF PROCEEDS
	 
	40.1	 	Order of application






	 	 	Subject to Clause 3 (Utilisation) all amounts from time to time received or recovered by
the Agent or the Security Trustee pursuant to the terms of any Finance Document or in
connection with the realisation or enforcement of all or any part of the Transaction
Security shall be applied in the following order of priority:






	 	40.1.1	 	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the
Agent, the Technical Bank, the Offshore Account Bank, the Security Trustee and any
Receiver or Delegate under the Finance Documents;
	 
	 	40.1.2	 	second, in payment of all costs and expenses reasonably incurred by a Creditor in
connection with any realisation or enforcement of the Transaction Security taken in
accordance with the terms of this Agreement;
	 
	 	40.1.3	 	third, in payment through the Agent to the Lenders and Hedge Counterparties for
application (in accordance with the terms of the Finance Documents) towards the
discharge of the Liabilities, pro rata;




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	 	40.1.4	 	if the Borrower is not under any further actual or contingent liability
under any Finance Document, in payment to any person to whom the Agent or Security
Trustee is obliged to pay in priority to the Borrower; and
	 
	 	40.1.5	 	the balance, if any, in payment to the Borrower.






	 	 	The provisions of this Clause 40.1 shall override any application made by the Borrower.
	 
	40.2	 	Investment of proceeds






	 	 	Prior to the application of the proceeds of the Transaction Security in accordance with
Clause 40.1 (Order of Application) the Security Trustee may, at its discretion, hold all or
part of those proceeds in an interest bearing suspense or impersonal account(s) in the name
of the Security Trustee or of the Agent with such financial institution (including itself)
and for so long as the Security Trustee shall think fit (the interest being credited to the
relevant account) pending the application from time to time of those monies at the Security
Trustee’s discretion in accordance with the provisions of this Clause 40.2.






	40.3	 	Currency Conversion






	 	40.3.1	 	For the purpose of, or pending the discharge of, any of the Secured
Obligations the Security Trustee may convert any moneys received or recovered by the
Security Trustee from one currency to another, at the then current spot rate at which
the Security Trustee is offering to purchase from its general corporate customers the
currency in which the Secured Obligations are due with the amount received.
	 
	 	40.3.2	 	The obligations of the Borrower to pay in the due currency shall only be satisfied to
the extent of the amount of the due currency purchased after deducting the costs of
conversion.






	40.4	 	Permitted Deductions






	 	 	The Security Trustee shall be entitled (a) to set aside by way of reserve amounts
required to meet and (b) to make and pay, any deductions and withholdings (on account of
taxes or otherwise) which it is or may be required by any applicable law to make from any
distribution or payment made by it under this Agreement, and to pay all taxes which
may be assessed against it in respect of any of the Charged Property, or as a consequence
of performing its duties, or by virtue of its capacity as Security Trustee under any of the
Finance Documents or otherwise (other than in connection with its remuneration for
performing its duties under this Agreement).






	40.5	 	Good Discharge






	 	40.5.1	 	Any payment to be made in respect of the Secured Obligations by the Security
Trustee may be made to the Agent on behalf of the Lenders and to the Agent on behalf
of the Hedge Counterparties and any payment made in that way shall be a good
discharge, to the extent of that payment, by the Security Trustee.





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	 	40.5.2	 	The Security Trustee is under no obligation to make the payments to the
Agent under sub-Clause 40.5.1 of this Clause 40.5 in the same currency as that in
which the Liabilities of the relevant Lender are denominated.






	40.6	 	Calculation of Amounts






	 	 	For the purpose of calculating any person’s share of any sum payable to or by it, the
Security Trustee shall be entitled to:






	 	40.6.1	 	notionally convert the Liabilities owed to any person into a common base currency
(decided in its discretion by the Security Trustee), that notional conversion to be
made at the then current spot rate at which the Security Trustee is offering to
purchase from its general corporate customers the notional base currency with the
actual currency of that person’s Liabilities at the time at which that calculation is
to be made; and
	 
	 	40.6.2	 	assume that all moneys received or recovered as a result of the enforcement of the
Transaction Security are applied in discharge of the Liabilities in accordance with
the terms of the Finance Documents under which those Liabilities have arisen.





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SECTION 12




ADMINISTRATION




	41.	 	PAYMENT MECHANICS
	 
	41.1	 	Payments to the Agent






	 	41.1.1	 	On each date on which the Borrower or a Lender is required to make a payment under a
Finance Document, the Borrower or that 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.
	 
	 	41.1.2	 	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.






	41.2	 	Distributions by the Agent






	 	 	Each payment received by the Agent under the Finance Documents for another Party shall,
subject to Clause 41.3 (Distributions to the Borrower), Clause 41.4 (Clawback) and Clause
27.16 (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 Business Days’ notice
with a bank in the principal financial centre of the country of that currency.






	41.3	 	Distributions to the Borrower






	 	 	The Agent may (with the consent of the Borrower or in accordance with Clause 42 (Set-off))
apply any amount received by it for the Borrower in or towards payment (on the date and in
the currency and funds of receipt) of any amount due from the Borrower under the Finance
Documents or in or towards purchase of any amount of any currency to be so applied.






	41.4	 	Clawback






	 	41.4.1	 	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.
	 
	 	41.4.2	 	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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	41.5	 	No set-off by Borrower






	 	 	All payments to be made by the Borrower under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for) set-off or
counterclaim.






	41.6	 	Business Days






	 	41.6.1	 	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).
	 
	 	41.6.2	 	During any extension of the due date for payment of any principal or Unpaid Sum under
this Agreement which arises due to the operation of Clause 41.6.1, interest is payable
on the principal or Unpaid Sum at the rate payable on the original due date.






	41.7	 	Currency of account






	 	41.7.1	 	Subject to sub-clauses 41.7.2 and 41.7.3 below, dollars is the currency of
account and payment for any sum due from the Borrower under any Finance Document.
	 
	 	41.7.2	 	Each payment in respect of costs, expenses or Taxes shall be made in the currency in
which the costs, expenses or Taxes are incurred.
	 
	 	41.7.3	 	Any amount expressed to be payable in a currency other than dollars shall be paid in
that other currency.






	41.8	 	Change of currency






	 	41.8.1	 	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:






	 	(a)	 	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
	 
	 	(b)	 	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).






	 	41.8.2	 	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.









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	42.	 	SET-OFF






	 	 	A Finance Party may set off any matured obligation due from the Borrower under the
Finance Documents (to the extent beneficially owned by that Finance Party) against any
matured obligation owed by that Finance Party to the Borrower, 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.






	43.	 	NOTICES
	 
	43.1	 	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, letter or e-mail.






	43.2	 	Addresses






	 	 	The address, fax number and e-mail address (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:






	 	43.2.1	 	in the case of each Creditor and the Borrower, that identified with its name below;
	 
	 	43.2.2	 	in the case of each entity that becomes a Creditor in accordance with Clause 24
(Changes to the Lenders) or Clause 27 (Changes to Hedge Counterparties), that notified
in writing to the Agent on or prior to the date on which it becomes a Party; and
	 
	 	43.2.3	 	in the case of the Agent, the Technical Bank, the Security Trustee and the Offshore
Account Bank, that identified with its name below,






	 	 	or any substitute address, fax number, e-mail address 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 Business Days’ notice.






	43.3	 	Delivery






	 	43.3.1	 	Any communication or document made or delivered by one person to another
under or in connection with the Finance Documents will only be effective:






	 	(a)	 	if by way of fax, when received in legible form; or
	 
	 	(b)	 	if by way of letter, when it has been left at the relevant
address or five 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 43.2 (Addresses), if addressed to that department or
officer.





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	 	43.3.2	 	Any communication or document to be made or delivered to the Agent or 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 or Security
Trustee shall specify for this purpose).
	 
	 	43.3.3	 	All notices from or to the Borrower shall be sent through the Agent.
	 
	 	43.3.4	 	All notices to a Creditor from the Security Trustee shall be sent through the Agent.






	43.4	 	Notification of address and fax number






	 	 	Promptly upon receipt of notification of an address, fax number or e-mail address or
change of address, fax number or e-mail address pursuant to Clause 43.2 (Addresses) or
changing its own address, fax number or e-mail address, the Agent shall notify the other
Parties.






	43.5	 	Electronic communication






	 	43.5.1	 	Any communication to be made between the Agent or the Security Trustee and a
Creditor under or in connection with the Finance Documents may be made by electronic
mail or other electronic means, if the Agent or the Security Trustee and the relevant
Creditor:






	 	(a)	 	agree that, unless and until notified to the contrary, this
is to be an accepted form of communication;
	 
	 	(b)	 	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
	 
	 	(c)	 	notify each other of any change to their address or any other
such information supplied by them.






	 	43.5.2	 	Any electronic communication made between the Agent or the Security
Trustee and a Creditor will be effective only when actually received in readable
form and in the case of any electronic communication made by a Creditor to the
Agent or the Security Trustee only if it is addressed in such a manner as the Agent
or the Security Trustee shall specify for this purpose.






	43.6	 	English language






	 	43.6.1	 	Any notice given under or in connection with any Finance Document must be in
English.
	 
	 	43.6.2	 	All other documents provided under or in connection with any Finance Document must
be:






	 	(a)	 	in English; or





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	 	(b)	 	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.






	44.	 	CALCULATIONS AND CERTIFICATES
	 
	    44.1	 	Evidence of Indebtedness






	 	44.1.1	 	Each Creditor shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Creditor under the Finance
Documents from time to time, including the amounts payable and paid to such Creditor
from time to time thereunder.
	 
	 	44.1.2	 	The Agent shall also maintain accounts in which it will record (a) the amount of each
Loan made hereunder, (b) the amount of any principal, interest or any other amount due
and payable or to become due and payable from the Borrower to each Lender under any
Finance Document and (c) the amount of any sum received by the Agent hereunder from the
Borrower and each Lender’s share thereof.
	 
	 	44.1.3	 	The entries maintained in the accounts maintained pursuant to sub-clauses 44.1.1 and
44.1.2 above shall be prima facie evidence of the existence and amounts of the
indebtedness therein recorded provided that the failure of the Agent or any Creditor to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay such indebtedness in accordance the terms of
the Finance Documents.






	44.2	 	Certificates and Determinations






	 	 	Any certification or determination by a Secured 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.






	44.3	 	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
three hundred and sixty days or, in any case where the practice in the Relevant
Interbank Market differs, in accordance with that market practice.






	45.	 	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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	46.	 	REMEDIES AND WAIVERS
	 
	 	 	No failure to exercise, nor any delay in exercising, on the part of any Finance Party,
any right or remedy under the Finance Documents shall operate as a waiver, nor shall any
single or partial exercise of any right or remedy 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.
	 
	47.	 	AMENDMENTS AND WAIVERS
	 
	47.1	 	Required consents






	 	47.1.1	 	Subject to Clause 47.2 (Exceptions) and Clause 39.3 (Releases) any term of the
Finance Documents may be amended or waived only with the consent of the Majority
Lenders and the Borrower and any such amendment or waiver will be binding on all
Parties.
	 
	 	47.1.2	 	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.






	47.2	 	Exceptions






	 	47.2.1	 	An amendment or waiver that has the effect of changing or which relates to:






	 	(a)	 	the definition of “Majority Lenders” in Clause 1.1 (Definitions);
	 
	 	(b)	 	an extension to the date of payment of any amount under the
Finance Documents;
	 
	 	(c)	 	a reduction in the Margin (other than as contemplated in such
definition) or in the amount of any payment of principal, interest, fees or
commission payable;
	 
	 	(d)	 	an increase in or an extension of any Commitment;
	 
	 	(e)	 	a change to an Obligor;
	 
	 	(f)	 	any provision which expressly requires the consent of all the Lenders;
	 
	 	(g)	 	Clause 2.2 (Finance Parties’ rights and obligations),
Clause 24 (Changes to the Lenders) or this Clause 47 (Amendments and
Waivers),






	 	 	 	shall not be made without the prior consent of all the Lenders.






	 	47.2.2	 	An amendment or waiver that has the effect of changing or which relates to:






	 	(a)	 	the definitions of “Creditor”, “Enforcement Action”,
“Liabilities”, “Hedge Liabilities”, “Hedge Agreement”, “Hedge
Counterparties”, “Insolvency Event”, “Secured Parties”, “Security Documents”
and “Transaction Security” in Clause 1.1 (Definitions);





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	 	(b)	 	Clause 25 (Changes to Hedge Counterparties);
	 
	 	(c)	 	the provisions of Section 11 (Security and Priority);
	 
	 	(d)	 	Clause 43 (Notices); or
	 
	 	(e)	 	this Clause 47,






	 	 	 	in a manner which could reasonably be considered to be materially adverse to the
Hedge Counterparties, shall not be made without the consent of the Hedge
Counterparties.






	 	47.2.3	 	An amendment or waiver which relates to the rights or obligations of the Agent, the
Technical Bank, the Security Trustee, the Offshore Account Bank or the Arranger may not
be effected without the consent of the Agent, the Technical Bank, the Security Trustee,
the Offshore Account Bank or the Arranger, as the case may be.
	 
	 	47.2.4	 	An amendment or waiver that has the effect of changing, or which relates to, the
provisions of Section 11 (Security and Priority) may be made with the consent of the
Majority Lenders and the Hedge Counterparties without reference to the Borrower.
	 
	 	47.2.5	 	Notwithstanding Clauses 47.2.1 and 47.2.2, any term of the Finance Documents
may be amended or waived in connection with an initial public offering of shares in the
Borrower or a Holding Company of the Borrower with the consent of the Majority Lenders
and the Borrower.






	48.	 	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 13




GOVERNING LAW AND ENFORCEMENT




	49.	 	GOVERNING LAW






	 	 	This Agreement and all non-contractual obligations arising out of or in connection with
it are governed by English law.






	50.	 	ENFORCEMENT
	 
	50.1	 	Jurisdiction






	 	50.1.1	 	For the benefit of the Finance Parties, the Borrower agrees that the courts of
England have (subject to sub-clause 50.1.3) exclusive jurisdiction to settle any
dispute arising out of or in connection with this Agreement (including a dispute
regarding the existence, validity or termination of this Agreement and claims for
set-off and counterclaim) (a “Dispute”) and for such purpose the Borrower irrevocably
submits to the jurisdiction of the English courts.
	 
	 	50.1.2	 	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.
	 
	 	50.1.3	 	This Clause 50.1 (Jurisdiction) is for the benefit of the Finance Parties only. As a
result, no Finance Party shall be prevented from taking 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.






	50.2	 	Service of process






	 	 	Without prejudice to any other mode of service allowed under any relevant law, the Borrower:






	 	50.2.1	 	irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100
Wood Street, London EC2V 7EX, United Kingdom, as its agent for service of process in
relation to any proceedings before the English courts in connection with any Finance
Document;






	 	50.2.2	 	agrees that failure by an agent for service of process to notify the Borrower of the
process will not invalidate the proceedings concerned; and






	 	50.2.3	 	if the agent referred to in Clause 50.2.1 ceases to be appointed, agrees to appoint
another agent with an address in England, promptly upon request by the Agent and
authorises the Agent to appoint another agent if the Borrower fails to appoint one
following such request.




This Agreement has been entered into on the date stated at the beginning of this Agreement and
executed as a deed by the Parties and is intended to be and is delivered by them as a deed on the
date specified above.




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SCHEDULE 1




The Original Lenders



	 	 	 	 	 
	Name of Original Lender	 	Commitment ($)
	 
	 	 	 	 
	Standard Bank PLC
	 	 	120,000,000	 






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SCHEDULE 3




Requests



Part 1



Form of Utilisation Request



From:




To:       [Agent]




Dated:




Dear Sirs




MI Energy Corporation — $150,000,000 Facility Agreement

dated [     ] (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)
	 

	 	Amount:
	 	[     ] or, if less, the Facility







	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 Offshore Collection Account] / [the Debt Service Reserve Account] / [insert Standard Bank account for retention of fees,
costs and expenses] / [insert Standard Bank account for repayment of Bridge Facility]
[insert details of accounts specified by SPDB and LCCU for direct disbursement in repayment
of their loans] / [insert details of account specified by Microbes for direct disbursement in
payment of the settlement sum under the Termination Agreement] / [insert details of account
for payment of any other item contemplated under Clause 3.1].1
	 
	5.	 	This Utilisation Request is irrevocable.





Yours faithfully




 





authorised signatory for



MI Energy Corporation





 




			
	1	 	Complete as appropriate.






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Part
2 

Form of Selection Notice




From:




To:       [Agent]




Dated:




Dear Sirs




MI
Energy Corporation — $150,000,000 Facility Agreement

 dated [     ] (the “Agreement”)





	1.	 	We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement
have the same meaning in this Selection Notice unless given a different meaning in this
Selection Notice.
	 
	2.	 	We refer to the Loan which has an Interest Period ending on [     ].
	 
	3.	 	We request that the next Interest Period for the Loan is [one / two / three] Months.
	 
	4.	 	This Selection Notice is irrevocable.





Yours faithfully




 






authorised signatory for

MI Energy Corporation




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SCHEDULE 4




Form of Transfer Certificate



	 	 	 
	To:

	 	[  ] as Agent
	 
	 	 
	From:

	 	[The Existing
Lender] (the “Existing Lender”) and
[The New Lender] (the “New Lender”)
	 
	 	 
	Dated:
	 	 






MI Energy Corporation — $150,000,000 Facility Agreement

dated [  ] (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, address, e-mail address, fax number and attention details
for notices of the New Lender for the purposes of Clause 43.2 (Addresses) are set out
in the Schedule.






	3.	 	The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations
set out in Clause 24.4 (Limitation of responsibility of Existing Lenders).






	4.	 	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.	 	This Transfer Certificate is governed by English law.





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THE SCHEDULE




Commitment/rights and obligations to be transferred



[insert relevant details]



[Facility Office address, fax number, e-mail address, 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 5




Form of Accession Undertaking




	To: 	 	[Insert full name of current Security Trustee], for itself and each of the other
Parties to the Facility Agreement referred to below.




THIS UNDERTAKING is made on [date] by [insert full name of new Lender / Hedge Counterparty / Agent
/ Technical Bank] (the “Acceding [Lender / Hedge Counterparty / Agent / Technical Bank]”) in
relation to the Facility Agreement (the “Facility
Agreement”) dated  [  ] between [INSERT NAME OF
SECURITY TRUSTEE] as security trustee, [INSERT NAMES OF AGENT] as agent, the Lenders, the Borrower
and others. Terms defined in the Facility Agreement shall bear the same meanings when used in this
Undertaking.



In consideration of the Acceding [Lender / Hedge Counterparty / Agent / Technical Bank] being
accepted as [a Lender / Agent / Hedge Counterparty / Technical Bank] for the purposes of the
Facility Agreement, the Acceding [Lender / Hedge Counterparty / Agent / Technical Bank] confirms
that, as from [date], it intends to be party to the Facility Agreement as a [Lender / Agent /
Hedge Counterparty / Technical Bank], and undertakes to perform all the obligations expressed in
the Facility Agreement to be assumed by [an Agent / a Lender / a Hedge Counterparty / a Technical
Bank] and agrees that it shall be bound by all the provisions of the Facility Agreement, as if it
had been an original party to the Facility Agreement.



[The following documents, having been approved in accordance with the terms of the Facility
Agreement shall be treated as “Hedge Agreements” for the purpose of the Facility Agreement:
[specify documents].]



This Undertaking shall be governed by and construed in accordance with English law.



THIS UNDERTAKING has been entered into on the date stated above.



Acceding [Lender / Agent / Hedge Counterparty / Technical Bank]



[EXECUTED as a deed

[insert full name of Acceding

Lender, Hedge Counterparty, Agent or Technical Bank]



By:



Address:



Fax:




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	Accepted by the Security Trustee:

	 	Accepted by the Agent
	 
	 	 
	for and on behalf of

	 	for and on behalf of
	 
	 	 
	[Insert actual name
of Security Trustee]

	 	[Insert actual name of Agent]
	 
	 	 
	Date:

	 	Date:






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SCHEDULE 6




Existing
Security



In relation to the Borrower:





	1.	 	Agreement on Maximum Amount Mortgage for Comprehensive Credit Grant (Reference
No.75012006281077) dated 16 June 2006 by and between the Borrower and SPDB.






	2.	 	Cooperative Exploitation Right Maximum Amount Pledge Agreement (Reference No. 75012006281077)
dated 16 June 2006 by and between the Borrower and SPDB.






	3.	 	Pledge of Deposit Bill (Reference No. DL1505010033) provided by the Borrower as security for
the Short-term Loan Agreement (Reference No. DL1505010033).






	4.	 	Pledge Agreement (Reference No. 200501045) dated 9 July 2005 by and between Far East and
LCCU.






	5.	 	Asset Mortgage Agreement dated 6 September 2006 by and between MIE and LCCU as security for
the Loan Agreement (Reference No. 2006302).






	6.	 	Agreement on Maximum Amount Mortgage for Comprehensive Credit Grant (Reference No.
ZD7501200728164701) dated 24 August 2007 by and between the Borrower and SPDB.






	7.	 	Cooperative Exploitation Right Maximum Amount Pledge Agreement (Reference No.
ZZ7501200728164701) dated 24 August 2007 by and between the Borrower and SPDB.






	8.	 	RMB Entity Fixed Term Deposit Pledge Agreement (Reference No.
YZ7501200728133101) dated 10 July 2007 by and between the Borrower and SPDB.






	9.	 	RMB Entity Fixed Term Deposit Pledge Agreement (Reference No.
YZ7501200728184901) dated 7 September 2007 by and between the Borrower and SPDB.





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SCHEDULE 7




Timetables



	 	 	 
	Delivery of a duly completed

	 	U-5
	Utilisation Request (Clause 7.1

	 	9.30 a.m.
	(Delivery of a Utilisation Request for a
Loan)) or a Selection Notice (Clause 11
(Interest Periods))
	 	 
	 
	 	 
	Agent notifies the Lenders of the Loan

	 	U-3
	in accordance with Clause 7.6

	 	3.00 p.m.
	(Lenders’ participation)
	 	 
	 
	 	 
	LIBOR is fixed

	 	Quotation Day as of
	 
	 	 
	 

	 	11:00 a.m.








 




			
	“U” = 	 	date of Utilisation or, in the case of a Loan that has already been borrowed, the
first day of the relevant Interest Period for that Loan
	 
	“U - X” =	 	 X Business Days prior to “U”






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SCHEDULE 8




The
Accounts




	1.	 	ESTABLISHMENT OF THE ACCOUNTS
	 
	1.1	 	The Borrower shall establish with the Offshore Account Bank, and in accordance with the
provisions of the Finance Documents shall maintain, the Offshore Accounts referred to in
paragraphs (a) to (c) (inclusive) of that definition.
	 
	1.2	 	The Borrower shall establish with the Onshore Account Bank, and in accordance with the
provisions of the Finance Documents shall maintain, the Onshore Collection Account.
	 
	2.	 	NOTICE OF SECURITY INTERESTS
	 
	 	 	The Borrower hereby gives notice to the Offshore Account Bank of the Security granted
by the Borrower to the Finance Parties over the Offshore Collection Account and the Debt
Service Reserve Account and the Offshore Account Bank acknowledges the same.
	 
	3.	 	OTHER ACCOUNTS
	 
	 	 	The Borrower shall not, without the prior written consent of the Agent, maintain or
establish any account other than the (a) the Accounts and (b) any joint account which is
required to be maintained separately by the Borrower as operator of any Borrowing Base
Asset or any other Field.
	 
	4.	 	INTEREST
	 
	 	 	Any amounts from time to time standing to the credit of the Offshore Accounts shall
bear interest in the currency in which such amount is denominated in accordance with the
rates of interest generally applicable to similar accounts held with the Offshore Account
Bank. All interest earned on the balance standing to the credit of an Offshore Account shall
be credited to the Offshore Account in respect of which the same was earned.
	 
	5.	 	DEPOSITS
	 
	5.1	 	The Borrower shall procure that all revenues received by it are paid into the Offshore
Collection Account and to the extent not already in dollars shall be converted by the Offshore
Account Bank in accordance with Clause 10 (Currencies).
	 
	5.2	 	Paragraph 5.1 shall not apply:






	 	(a)	 	to interest earned on any Account;
	 
	 	(b)	 	to the payment of any insurance proceeds received by the Borrower in respect of
any contracts of insurance in relation to any Borrowing Base Asset or other




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	 	 	 	Field which are required to be paid into a joint account under any joint
operating agreement in respect of any Borrowing Base Asset or other Field;






	 	(c)	 	to payments made with the proceeds of a Utilisation made by the Agent direct to
third parties pursuant to a valid Utilisation Request and in accordance with the
requirements of Clause 3.1 (Purpose of the Facility) of this Agreement;
	 
	 	(d)	 	during the period from the date of this Agreement to 31 December 2009, to
payments made by PetroChina pursuant to the Moliqing PSC and the Miao 3 PSC which are
received in the Onshore Collection Account;
	 
	 	(e)	 	to the proceeds of the Second MIE Loan received by the Borrower from Far East
provided that the Borrower directs Far East that such proceeds are to be paid directly
into the SPDB-ZR Loan Account and such proceeds are paid by Far East (for the
Borrower’s account) directly into the SPDB-ZR Loan Account;
	 
	 	(f)	 	to the proceeds of any sums received by the Borrower from SPDB in connection
with the closure of the SPDB-ZR Loan Account following the full repayment by ZR of the
SPBD-ZR Loan, provided that the Borrower first applies all such proceeds in repayment
of the Second MIE Loan; and
	 
	 	(g)	 	to a sum of up to $8,000,000 (or its equivalent in RMB) provided that the
Borrower deposits such sum into the SPBD-ZR Loan Account for the purpose of securing
such amounts in favour of SPDB to facilitate the making by SPDB of the SPDB-ZR Loan to
ZR.






	6.	 	WITHDRAWALS FROM THE ONSHORE COLLECTION ACCOUNT
	 
	6.1	 	Promptly following receipt of any payment in the Onshore Collection Account, the Borrower
shall be entitled to direct the Onshore Account Bank to pay up to 10% of such amount (an
“Onshore Commission Amount”) to an account (an “Onshore Commission Account”) notified by it to
the Agent and the Onshore Account Bank for onward transmission to Global Oil Corporation. The
provisions of Clauses 6.2 and 6.3 shall not apply with respect to any such Onshore Commission
Amount.
	 
	6.2	 	Subject to Clause 6.3 and 6.4, the Borrower shall, until all amounts standing to the
credit of the Onshore Collection Account have been withdrawn, withdraw amounts from the
Onshore Collection Account as required only to make:






	 	(a)	 	Permitted Payments which are included in the then current Operating Budget for
the month in which the relevant Permitted Payment is made (or, for the period
commencing on the date of this Agreement and ending on the first Repayment Date, were
included in the Technical Assumptions used in the Financial Model); and






	 	(b)	 	additional Permitted Payments provided that such additional Permitted
Payments do not exceed 10% of the aggregate Permitted Payments included in




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	 	 	 	the relevant Operating Budget for such calendar month (or, for the period
commencing on the date of this Agreement and ending on the first Repayment Date,
included in the Technical Assumptions used in the Financial Model).






	6.3	 	At any time an Event of Default is continuing the Agent may, by notice to the Onshore Account
Bank in accordance with the terms of the Onshore Account Agreement, direct that:






	 	(a)	 	the Borrower shall not be permitted to request any transfers, payments or
withdrawals from the Onshore Collection Account unless the relevant transfer, payment
or withdrawal has been approved by the Agent; and
	 
	 	(b)	 	the Onshore Collection Account shall be operated, and transfers and
withdrawals made, solely on the instructions of the Agent.






	6.4	 	At any time during an Operational Lock-up Period the Agent may, by notice to the Onshore
Account Bank in accordance with the terms of the Onshore Account Agreement, direct that:






	 	(a)	 	the Borrower shall not be permitted to request any transfers, payments or
withdrawals from the Onshore Collection Account unless the relevant transfer, payment
or withdrawal has been approved by the Agent; and
	 
	 	(b)	 	the Onshore Collection Account shall be operated, and transfers and
withdrawals made, solely on the instructions of the Agent,






	 	 	provided that the Agent shall direct the Onshore Account Bank to permit withdrawals from
the Onshore Collection Account requested by the Borrower to make Permitted Payments which
are included in the then current Operating Budget and which are due and payable at such
time (or, for the period commencing on the date of this Agreement and ending on the first
Repayment Date, were included in the Technical Assumptions used in the Financial Model)
and which are scheduled to fall due during the immediately succeeding calendar month in
respect of:






	 	(i)	 	Taxes and royalties (including, for the avoidance of doubt, those payable
under or pursuant to the PSCs);
	 
	 	(ii)	 	salaries, and other essential operating costs or expenses; and
	 
	 	(iii)	 	Capital Expenditure which must be incurred by the Borrower in order to
avoid a breach of a PSC.






	7.	 	WITHDRAWALS FROM THE OFFSHORE ACCOUNTS






	7.1	 	Promptly following receipt of any payment in the Offshore Collection Account, the Borrower
shall be entitled to direct the Offshore Account Bank to pay up to 10% of such amount (an
“Offshore Commission Amount”) to an account (an “Offshore Commission Account”) notified by it
to the Agent and the Offshore Account Bank for




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	 	 	onward transmission to Global Oil Corporation. The provisions of Clauses 7.2 to 7.4 shall
not apply with respect to any such Offshore Commission Amount.






	7.2	 	Subject to Clause 7.3, the Borrower may withdraw amounts from the Offshore Collection
Account for the purposes and in the order of priority set out below on the last Business Day
of each calendar month:






	 	(a)	 	to the extent that the amounts standing to the credit of the Onshore Collection
Account and the Onshore Payments Account are insufficient to fund such Permitted
Payments, by credit to the Onshore Payments Account to make:






	 	(i)	 	Permitted Payments which are included in the then current
Operating Budget (or, for the period commencing on the date of this Agreement
and ending on the first Repayment Date, were included in the Technical
Assumptions used in the Financial Model) and which are due or scheduled to
fall due during the immediately succeeding calendar month; and
	 
	 	(ii)	 	additional Permitted Payments provided that such additional
Permitted Payments do not exceed 10% of the aggregate Permitted Payments
included in the relevant Operating Budget for such calendar month (or, for the
period commencing on the date of this Agreement and ending on the first
Repayment Date, included in the Technical Assumptions used in the Financial
Model);






	 	(b)	 	to make payment pari passu of any and all:






	 	(i)	 	interest, principal or other amounts then due and payable
under the Finance Documents; and






	 	(ii)	 	Hedging Costs then due and payable under any Hedging Agreement;






	 	(c)	 	to fund the Debt Service Reserve Account up to the Debt Service Reserve
Requirement;
	 
	 	(d)	 	if the Borrower elects, to fund voluntary prepayments or repayments pursuant
to Clauses 5.5.3, 8.1.3 or 9.3 of this Agreement;
	 
	 	(e)	 	to make payments of any and all interest, principal or other amounts then due
and payable in respect of any Permitted Financial Indebtedness (other than under the
Finance Documents or in respect of any Subordinated Indebtedness) and any other payment
required to be made by the Borrower under a Project Document, to the extent not already
expressly contemplated by this Clause 7;
	 
	 	(f)	 	by transfer to the Distribution Account provided that (i) no Default is
continuing, (ii) the amount standing to the credit of the Debt Service Reserve Account
is equal to the Debt Service Reserve Requirement, (iii) (x) the ZR Loan has been repaid
or prepaid such that the outstanding amount of the ZR Loan is at least $50,000,000 less
than it was as at 29 October 2007 (or, when




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	 	 	 	the ZR Loan is Transferred to Far East as contemplated by paragraph (a)(i) of
clause 8 (Waiver Of Subordination And Repayment Of Shareholder Loans) of the First
Amendment and Restatement Agreement, the Transferred ZR Loan has been repaid or
prepaid such that it is at least $50,000,000 less than the amount of the ZR Loan as
at 29 October 2007) or (y) the Borrower has received at least $50,000,000 in
subscription monies from third parties in connection with any issuance and
allotment of shares in the Borrower to such third parties or (z) the amount of any
such repayment or prepayment, when aggregated with the amount of any such
subscription monies received by the Borrower, is at least $50,000,000, and (iv) on
such date:






	 	(1)	 	the Asset Cover Life Ratio exceeds 1.95:1; and






	 	(2)	 	the Debt Service Cover Ratio exceeds 1.75:1.






	7.3	 	During any Operational Lock-Up Period, the Borrower may withdraw amounts from the Offshore
Collection Account for the purposes and in the order of priority set out below on the last
Business Day of each calendar month:






	 	(a)	 	by credit to the Onshore Payments Account, to make Permitted Payments which are
included in the then current Operating Budget (or, for the period commencing on the
date of this Agreement and ending on the first Repayment Date, were included in the
Technical Assumptions used in the Financial Model) and which are due or scheduled to
fall due during the immediately succeeding calendar month in respect of:






	 	(i)	 	Taxes and royalties (including, for the avoidance of
doubt, those payable under or pursuant to the PSCs);
	 
	 	(ii)	 	salaries, and other essential operating costs and expenses; and
	 
	 	(iii)	 	Capital Expenditure which must be incurred by the
Borrower in order to avoid a breach of a PSC;






	 	(b)	 	towards the prepayment of the Loans so as to ensure that, after effecting such
prepayment, the outstanding Loans are equal to the Available Facility.






	7.4	 	At any time after an Event of Default has occurred and for so long as the same is continuing,
the Agent may notify the Offshore Account Bank of the occurrence of such event and upon
receipt by the Offshore Account Bank of such notice until revocation of such notice by the
Agent:






	 	(a)	 	the Borrower shall not be permitted to request any transfers, payments or
withdrawals from the Offshore Collection Account or the Debt Service Reserve Account
unless the relevant transfer, payment or withdrawal has been approved by the Agent;
and





- 133 -









 






	 	(b)	 	the Offshore Collection Account and the Debt Service Reserve Account shall be
operated, and transfers and withdrawals shall be made, solely on the instructions
of the Agent.






	7.5	 	If the Borrower fails to make any payment of any amount under the Finance Documents on the
due date for payment, the Agent may direct the Offshore Account Bank to transfer monies
standing to the credit of the Debt Service Reserve Account in an amount not exceeding the
amount due and payable but unpaid by the Borrower by payment to the account of the Agent for
the purpose of making such payment in accordance with such Finance Document.






	7.6	 	Except as set out in the Finance Documents, no person shall be entitled to require the
Offshore Account Bank to make, and the Offshore Account Bank shall not make, any payment out
of funds standing to the credit of the Offshore Accounts.






	7.7	 	Notwithstanding anything to the contrary contained herein:






	 	(a)	 	the Borrower may make transfers and withdrawals from the Distribution Account
at any time without restriction; and






	 	(b)	 	any amount contributed to the Borrower by a shareholder in accordance with the
provisions of this Agreement for the purpose of a buy-back or redemption of the
Minority Shares may be applied by the Borrower to fund and complete such buy-back or
redemption and, if it is so applied within 7 days of receipt of the same by the
Borrower, the provisions of Clauses 7.2 to 7.4 above shall not apply with respect to
such amount.






	8.	 	OPERATION OF DEBT SERVICE RESERVE ACCOUNT






	 	(a)	 	The Borrower shall ensure that, on the first Utilisation Date, the Debt Service
Reserve Account is funded in an amount equal to the Debt Service Reserve Requirement.
	 
	 	(b)	 	After the first Utilisation Date, the Borrower shall ensure that payments are
made into the Debt Service Reserve Account in accordance with Clause 7.1 as required to
ensure that the balance standing to the credit of the Debt Service
Reserve Account is at least equal to the Debt Service Reserve Requirement.
	 
	 	(c)	 	Sums standing to the credit of the Debt Service Reserve Account shall on each
Repayment Date, if necessary and to the extent required following the application for
such purpose of any amounts standing to the credit of the Offshore Collection Account
in accordance with Clause 7, be distributed by the Offshore Account Bank in payment to
the Agent (on behalf of the Lenders pro rata) of principal and interest due but unpaid
under the Facility on such Repayment Date.




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	 	(d)	 	If at any time the amount standing to the credit of the Debt Service Reserve
Account exceeds the Debt Service Reserve Requirement the Offshore Account Bank
shall:






	 	(i)	 	if the Asset Cover Life Ratio exceeds 1.95 : 1 and the Debt
Service Cover Ratio exceeds 1.75 : 1, promptly transfer such excess amount to
the Distribution Account; and






	 	(ii)	 	if either the Asset Cover Life Ratio does not exceed 1.95 :
1 or the Debt Service Cover Ratio does not exceed 1.75 : 1, promptly transfer
such excess amount to the Offshore Collection Account.






	 	(e)	 	The Offshore Account Bank shall rely on certifications by the Agent for amounts
transferred or withdrawn from the Debt Service Reserve Account.






	9.	 	ACCOUNT MANDATES






	 	 	The Offshore Account Bank shall maintain the Accounts in accordance with:






	 	(a)	 	any mandate agreed between the Borrower and the Offshore Account Bank; and






	 	(b)	 	the provisions of the Finance Documents,






	 	 	provided that, if there is any conflict between the Finance Documents and any mandate
agreed between the Borrower and the Offshore Account Bank, the provisions of the Finance
Documents shall prevail but only to the extent that the Offshore Account Bank would not be
in breach of any law as a result.






	10.	 	CURRENCY






	 	 	The Borrower shall direct the Offshore Account Bank to convert monies received by it or paid
by it or paid on its behalf to the Offshore Account Bank for crediting to an Offshore
Account which is not denominated in the currency of that Offshore Account
into the currency of such Offshore Account. Any such conversion by the Account Bank shall be
made at rates of exchange which are generally applicable to similar transactions carried out
by the Offshore Account Bank for its corporate customers.






	11.	 	GENERAL PROVISIONS






	11.1	 	The Offshore Account Bank will provide the Borrower, for each calendar month, a full
statement of the balance of and payments into and from the Offshore Accounts. Copies of such
statements will be provided to the Agent.






	11.2	 	The Offshore Account Bank agrees that it shall not claim or exercise any security interest,
set-off or counterclaim or other right in respect of the Offshore Accounts, the funds in such
Offshore Accounts or debts represented by them.






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SCHEDULE 9




Form
Of Subordination Agreement



MI ENERGY CORPORATION




as Borrower



[•]

as Junior Creditor




and




STANDARD BANK ASIA LIMITED

as Security Trustee




 






SUBORDINATION AGREEMENT

(MIE LOAN — BORROWING BASE FACILITY)



 










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CONTENTS




	 	 	 	 	 
	Clause	 	Page
	1. Definitions And Interpretation

	 	 	138	 
	2. Subordination

	 	 	139	 
	3. Representations

	 	 	140	 
	4. Other Obligations

	 	 	142	 
	5. Turnover

	 	 	142	 
	6. Subordination On Insolvency

	 	 	143	 
	7. Provisions As To Subordination

	 	 	144	 
	8. Rights Of The Security Trustee

	 	 	145	 
	9. Parties

	 	 	146	 
	10. Notices

	 	 	146	 
	11. Amendments

	 	 	147	 
	12. Further Assurance

	 	 	147	 
	13. Law

	 	 	147	 
	14. Enforcement

	 	 	148	 
	15. Perpetuity Period

	 	 	148	 
	16. Failure Of Trust

	 	 	148	 










- 137 -









 








THIS AGREEMENT is dated




BETWEEN





	(1)	 	MI ENERGY CORPORATION, a corporation organised and existing under the laws of the Cayman
Islands and having an office at: c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands (the “Borrower”);
	 
	(2)	 	[•] [a company organised under the laws of [•]] (the “Junior Creditor”); and






	(3)	 	STANDARD BANK ASIA LIMITED as security trustee for the Secured Parties (as defined in the
Facility Agreement) (the “Security Trustee”).





WHEREAS:





	1.	 	The Lenders (as defined in the Facility Agreement) have agreed to make available to the
Borrower loan facilities of up to $150,000,000 upon the terms and subject to the conditions of
the Facility Agreement.






	2.	 	It is a condition under the Facility Agreement that the Junior Parties enter into this
Agreement.




IT IS AGREED as follows:





	1.	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Terms defined
	 
	 	 	In this Agreement:
	 
	 	 	“Facility Agreement” means the facility agreement dated [     ] between MI Energy Corporation as
borrower, Standard Bank Asia Limited as agent, arranger, security trustee, technical bank
and account bank and the financial institutions defined therein as the Lenders, as the same
may be amended, restated, varied or supplemented from time to time.
	 
	 	 	“Finance Documents” has the meaning given in the Facility Agreement. 



“Junior
Parties” means the Borrower and the Junior Creditor.
	 
	 	 	“Senior Liabilities” means all obligations at anytime due, owing or incurred by the Borrower
to the Secured Parties under the Finance Documents, whether present or future, actual or
contingent (and whether incurred solely or jointly and whether as principal or surety or in
some other capacity).
	 
	 	 	“Subordinated Indebtedness” has the meaning given in Clause 2.1.2(a).
	 
	 	 	“Subordination Period” means the period beginning on the date of this Agreement and ending
on the date on which the Security Trustee is satisfied that the Senior Liabilities have been
irrevocably paid or discharged in full.










- 138 -









 












	1.2	 	Terms defined in other Finance Documents
	 
	 	 	Unless defined in this Agreement or the context otherwise requires, a term defined in
the Facility Agreement or in any other Finance Document has the same meaning in this
Agreement or any notice given under or in connection with this Agreement, as if:






	 	1.2.1	 	the term “Borrower” appearing in the Facility Agreement referred to any Junior
Party; and
	 
	 	1.2.2	 	all references in such defined terms to the Facility Agreement were a
reference to this Agreement or such notice.






	1.3	 	Construction






	 	 	Clause 1.2 (Construction) of the Facility Agreement will apply as if incorporated in
this Agreement or in any notice given under or in connection with this Agreement, as if all
references in that Clause to the Facility Agreement were a reference to this Agreement or
such notice.






	1.4	 	Application of provisions in Facility Agreement
	 
	 	 	Clauses 44.1 (Evidence of Indebtedness), 44.2 (Certificates and Determinations), 45
(Partial invalidity), 46 (Remedies and waivers) and 47 (Amendments and waivers) of the
Facility Agreement are deemed to form part of this Agreement as if expressly incorporated
into it as if all references in such Clauses to:






	 	1.4.1	 	the Facility Agreement were a reference to this Agreement; and
	 
	 	1.4.2	 	the Borrower were a reference to the Junior Parties.






	1.5	 	Third party rights
	 
	 	 	A person who is not a party to this Agreement has no rights under the Contracts
(Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this
Agreement.






	2.	 	SUBORDINATION






	 	2.1.1	 	Except as provided in this Agreement, the rights of the Junior Creditor in
respect of the Subordinated Indebtedness are subordinated to the Senior Liabilities.
	 
	 	2.1.2	 	The Junior Creditor undertakes to the Secured Parties that it shall not,
except as the Agent has previously consented in writing:






	 	(a)	 	unless Clause 6 (Subordination on insolvency) applies,
demand or receive payment or any distribution in respect, or on account of,
any indebtedness owing to it by the Borrower (“Subordinated Indebtedness”) or
apply any money or assets in discharge of the Subordinated Indebtedness;
	 
	 	(b)	 	discharge any of the Subordinated Indebtedness by set off;





- 139 -









 






	 	(c)	 	permit to subsist or receive any Security for any of the Subordinated
Indebtedness;
	 
	 	(d)	 	permit to subsist or receive any guarantee or other assurance
against loss in respect of any of the Subordinated Indebtedness;
	 
	 	(e)	 	amend, vary, waive or release any term relating to the
Subordinated Indebtedness or allow any of the foregoing to occur; or
	 
	 	(f)	 	assign, factor or dispose of, or create or permit to subsist
any Security over, any of the Subordinated Indebtedness or its proceeds or any
interest in the Subordinated Indebtedness or its proceeds to, or in favour of,
any person other than the Secured Parties.






	 	2.1.3	 	The Borrower undertakes to the Secured Parties that it shall not, except as
the Agent has previously consented in writing:






	 	(a)	 	make any payment which the Junior Creditor is prohibited
from receiving by the terms of this Agreement; or
	 
	 	(b)	 	take or omit to take any action or step whereby the
subordination of all or any of the Junior Liabilities as contemplated by this
Agreement could reasonably be expected to be terminated, impaired or adversely
affected.






	 	2.1.4	 	Notwithstanding anything else to the contrary herein, the Secured Parties
agree that the Junior Creditor shall be entitled to at any time claim and receive, and
the Borrower shall be entitled to make, in each case subject to compliance with the
applicable order of priority, payment of any amount that the Borrower is permitted to
transfer to the Distribution Account pursuant to Schedule 8 (The Accounts) of the
Facility Agreement and any amount that the Borrower is permitted to pay to the Junior
Creditor pursuant to paragraphs 6.2 and 7.2 of Schedule 8 (The Accounts) of the
Facility Agreement.






	3.	 	REPRESENTATIONS
	 
	 	 	Each Junior Party makes the representations and warranties set out in this Clause 3
(Representations) to each Secured Party.






	3.1	 	Status






	 	3.1.1	 	It is duly organised and validly existing under the law of its jurisdiction of
organisation.
	 
	 	3.1.2	 	It has the power to own its assets and to carry on its business as it is being
conducted.






	3.2	 	Binding obligations
	 
	 	 	The obligations expressed to be assumed by it in this Agreement are, subject to any
general principles of law as at the date of this Agreement limiting its obligations which
are specifically referred to in any legal opinion delivered pursuant to Clause 4





- 140 -









 






	 	 	(Conditions of Utilisation) of the Facility Agreement, legal, valid, binding and
enforceable obligations.
	 
	3.3	 	Non-conflict with other obligations
	 
	 	 	The entry into and performance by it of, and the transactions contemplated by, this
Agreement do not and will not conflict with:






	 	3.3.1	 	any material law or regulation applicable to it;
	 
	 	3.3.2	 	its constitutional documents; or
	 
	 	3.3.3	 	any material agreement or instrument binding upon it or any of its assets or
constitute a default (however described) under any such material agreement or
instrument, or permit any counterparty to terminate any such material agreement or
instrument.






	3.4	 	Power and authority
	 
	 	 	It has the power to enter into, perform and deliver, and has taken all necessary
action to authorise its entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement.






	3.5	 	Validity and admissibility in evidence
	 
	 	 	All Authorisations required or desirable:






	 	3.5.1	 	to enable it lawfully to enter into, exercise its rights and comply with its
obligations under this Agreement; and
	 
	 	3.5.2	 	to make this Agreement admissible in evidence in its jurisdiction of
organisation,






	 	 	have been obtained or effected and are in full force and effect.
	 
	3.6	 	Governing law and enforcement






	 	3.6.1	 	The choice of English law as the governing law of this Agreement will be
recognised and enforced in its jurisdiction of organisation.
	 
	 	3.6.2	 	Any judgment obtained in England in relation to this Agreement will be
recognised and enforced in its jurisdiction of organisation.






	3.7	 	Repetition
	 
	 	 	The representations and warranties set out in Clauses 3.1 (Status) to 3.4 (Power and
authority) and Clause 3.6 (Governing law and enforcement) are made by each Junior Party on
the date of this Agreement on the date of each Utilisation Request and on the first day of
each Interest Period (by reference to the facts and circumstances then existing).





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	4.	 	OTHER OBLIGATIONS






	 	4.1.1	 	The Junior Creditor undertakes to the Security Trustee that unless Clause 6
(Subordination on insolvency) applies, it shall not, except if the Security Trustee has
previously consented in writing:






	 	(a)	 	enforce the Subordinated Indebtedness by execution of
judgment or otherwise; or
	 
	 	(b)	 	initiate or support or permit to be taken any steps with a
view to any insolvency, dissolution or similar proceedings in respect of the
Borrower (whether relating to the default in payment of the Subordinated
Indebtedness or any other liability owed).






	 	4.1.2	 	The Junior Creditor undertakes to the Security Trustee that, following the
occurrence of an Event of Default which is continuing, it shall not, except if the
Security Trustee has previously consented in writing:






	 	(a)	 	unless Clause 6 (Subordination on insolvency) applies:






	 	(i)	 	declare any Subordinated Indebtedness
prematurely due and payable; or
	 
	 	(ii)	 	otherwise exercise any remedy for the recovery
of the Subordinated Indebtedness;






	 	(b)	 	subordinate any of the Subordinated Indebtedness or its
proceeds to any person other than the Secured Parties;
	 
	 	(c)	 	transfer by novation or otherwise any of its rights or
obligations in respect of any Subordinated Indebtedness to any person; or
	 
	 	(d)	 	take or omit to take any action whereby the subordination
intended to be effected by this Agreement may be impaired.






	 	4.1.3	 	The undertakings given by each Junior Party in this Clause 4 (Other
obligations) and in paragraphs (b) and (c) of Clause 2 (Subordination) will remain in
force until the end of the Subordination Period.






	5.	 	TURNOVER
	 
	5.1	 	Turnover






	 	5.1.1	 	If:






	 	(a)	 	the Junior Creditor receives a payment or distribution in
respect of any of the Subordinated Indebtedness; or
	 
	 	(b)	 	any person makes any payment or distribution on account of
the purchase or other acquisition of any of the Subordinated Indebtedness,





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	 	 	 	the Junior Creditor shall hold the same in trust for and as the property of the
Secured Parties and pay and distribute it to the Security Trustee for application
towards the liabilities of the Borrower under the Finance Documents until such
liabilities are irrevocably paid in full.






	 	5.1.2	 	If any of the Subordinated Indebtedness is discharged by set-off at a time or
in a manner which is contrary to this Agreement, the Junior Creditor will immediately
pay an amount equal to that discharge to the Security Trustee for application towards
the liabilities of the Borrower under the Finance Documents until such liabilities are
irrevocably paid in full.






	5.2	 	Exercise of Junior Creditor rights
	 
	 	 	In the event:






	 	5.2.1	 	of any dissolution, winding up, liquidation or reorganisation of the Borrower;
or
	 
	 	5.2.2	 	that any Event of Default is continuing,






	 	 	the Security Trustee may, and is hereby irrevocably authorised and empowered (in its own
name or in the name of the Junior Creditor or otherwise) but will have no obligation to:






	 	(a)	 	demand, sue for, collect and/or secure every payment or distribution of assets
of the Borrower to which the Junior Creditor would be entitled in respect of the
Subordinated Indebtedness; and
	 
	 	(b)	 	file claims and proofs of claim in the name of the Junior Creditor in respect
of the Subordinated Indebtedness or take any other action as the Security Trustee may
deem necessary or advisable for the exercise or enforcement of any of the rights or
interests of the Security Trustee.






	6.	 	SUBORDINATION ON INSOLVENCY
	 
	 	 	If an Event of Default occurs and is continuing, then:






	 	6.1.1	 	the Subordinated Indebtedness will be subordinate in right of payment to the
liabilities of the Borrower under the Finance Documents;
	 
	 	6.1.2	 	the Security Trustee on behalf of the Secured Parties shall, and is
irrevocably authorised on behalf of the Junior Creditor to:






	 	(a)	 	claim, enforce and prove for the Subordinated Indebtedness;
	 
	 	(b)	 	file claims and proofs, give receipts and take all such
proceedings and do all such things as it sees fit to recover the Subordinated
Indebtedness; and





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	 	(c)	 	receive all distributions on the Subordinated Indebtedness for
application towards the liabilities of the Borrower under the Finance
Documents until such liabilities are irrevocably paid in full;






	 	6.1.3	 	if and to the extent that the Security Trustee is not entitled to do any of
the foregoing, the Junior Creditor will do so in good time in accordance with any
directions as may be given to the Junior Creditor by the Security Trustee;
	 
	 	6.1.4	 	the Junior Creditor will hold all distributions in cash or in kind received or
receivable by it in respect of the Subordinated Indebtedness in trust for and as the
property of the Secured Parties and will (at the Junior Creditor’s expense) pay and
transfer the same to the for application towards the liabilities of the Borrower under
the Finance Documents until such liabilities are irrevocably paid in full; and
	 
	 	6.1.5	 	the trustee in bankruptcy, liquidator, assignee or other person distributing
the assets of the Borrower or its proceeds is directed to pay distributions on the
Subordinated Indebtedness direct to the Secured Parties for application towards the
liabilities of the Borrower under the Finance Documents until such liabilities are
irrevocably paid in full. The Junior Creditor will give all such notices and do all
such things as the Agent may direct to give effect to this provision.






	7.	 	PROVISIONS AS TO SUBORDINATION
	 
	7.1	 	Continuing agreement
	 
	 	 	This Agreement will apply in respect of the Senior Liabilities notwithstanding any
intermediate payment in whole or in part of the Senior Liabilities.
	 
	7.2	 	Waiver
	 
	 	 	The subordination effected by, and the obligations of each Junior Party to the
Security Trustee under, this Agreement will not be affected by any act, omission or
circumstances which, but for this provision, might operate to release or otherwise
exonerate all or any of the Junior Parties from their respective obligations under this
Agreement or affect such obligations including, without limitation, and whether or not
known by any Junior Party or any other person:






	 	7.2.1	 	any Security or right of any Secured Party in respect of the Senior Liabilities;
	 
	 	7.2.2	 	any time or indulgence granted by the Security Trustee to any Junior Party or
to any other person or any variation, amendment, novation, supplement or extension of
the terms of any Finance Document or any Security in respect of the Senior Liabilities;
	 
	 	7.2.3	 	any arrangement or compromise between the Security Trustee and any Junior
Party or any other person;





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	 	7.2.4	 	any dealing with, exchange, release or invalidity of any Finance Document or
any Security in respect of the Senior Liabilities;
	 
	 	7.2.5	 	any omission on the part of the Security Trustee to enforce any of its rights
against the Borrower or any other person or any Security in respect of the Senior
Liabilities;
	 
	 	7.2.6	 	the winding-up, dissolution or administration of any Junior Party or any other
person or any change in its status, function or control;
	 
	 	7.2.7	 	any of the obligations of any Junior Party or any other person under any
Finance Document to which it is a party being or becoming illegal, invalid or
unenforceable;
	 
	 	7.2.8	 	any action taken or purported to be taken under Clause 12 (Further assurance)
(whether or not any such action is authorised by such Clause); or
	 
	 	7.2.9	 	any other fact or circumstances whatsoever and whether or not similar to any
of the foregoing which could or might in any way diminish any Junior Party’s or any
other person’s obligations or the rights of the Security Trustee under this Agreement.






	7.3	 	Consent to Finance Documents
	 
	 	 	The Junior Creditor irrevocably consents to the terms of each Finance Document and to
any amendment or waiver made to any Finance Document pursuant to Clause 47 (Amendments and
waivers) of the Facility Agreement.






	8.	 	RIGHTS OF THE SECURITY TRUSTEE
	 
	8.1	 	Delegation by the Security Trustee






	 	8.1.1	 	The Security Trustee may, at any time, delegate by power of attorney or otherwise
to any person for any period, all or any of the rights, powers and discretions vested
in it by this Agreement.
	 
	 	8.1.2	 	The delegation may be made upon any terms and conditions (including the power
to sub-delegate) and subject to any restrictions that the Security Trustee may think
fit in the interests of the Secured Parties.
	 
	 	8.1.3	 	The Security Trustee will not be liable for any losses to Junior Party or any
liability arising as a result of taking or refraining from taking any action in
relation to this Agreement, whether in accordance with an instruction from the Agent or
otherwise unless directly caused by its gross negligence or wilful misconduct and
references in this Agreement to the Security Trustee will where the context so admits
include references to any delegates so appointed.






	8.2	 	Waiver of defences
	 
	 	 	Neither the provisions of this Agreement, nor the obligations of the Junior Parties
hereunder, will be affected by an act, omission, matter or thing which, but for this





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	 	 	Clause 8.2, would reduce, release or prejudice the subordination and priorities in this
Agreement including:






	 	8.2.1	 	any time, waiver or consent granted to, or composition with any person;
	 
	 	8.2.2	 	the release of any Junior Party or any other person under the terms of any
composition or arrangement with any creditor of such Junior Party;
	 
	 	8.2.3	 	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, the Borrower 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 Transaction Security;
	 
	 	8.2.4	 	any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of a Junior Party or any other person;
	 
	 	8.2.5	 	any amendment (however fundamental) or replacement of this Agreement or any
other document or security;
	 
	 	8.2.6	 	any unenforceability, illegality, invalidity or non-provability of any
obligation of any person under this Agreement or any other document or security;
	 
	 	8.2.7	 	any intermediate payment or discharge of any of the Senior Liabilities in
whole or in part; or
	 
	 	8.2.8	 	any insolvency or similar proceedings affecting any person.






	9.	 	PARTIES
	 
	 	 	No Junior Party may assign or otherwise transfer its rights and obligations under this
Agreement.






	10.	 	NOTICES
	 
	10.1	 	Communications in writing
	 
	 	 	Any communication to be made under or in connection with this Agreement shall be made
in writing and, unless otherwise stated, may be made by fax, letter or e-mail.
	 
	10.2	 	Addresses
	 
	 	 	The address, fax number and e-mail address (and the department or officer, if any, for
whose attention the communication is to be made) of each party to this Agreement for any
communication or document to be made or delivered under or in connection with this Agreement
is:






	 	10.2.1	 	in the case where a person becomes a party to this Agreement on the day on which this
Agreement is entered into, that identified with its name in the execution pages to this
Agreement; and





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	 	10.2.2	 	in the case where a person becomes a party to this Agreement after the
day on which this Agreement is entered into, that notified in writing to the
Security Trustee on or prior to the date on which it becomes a party to this
Agreement,






	 	 	or any substitute address, fax number, e-mail address or department or officer as that
party may notify to the other parties by not less than five Business Days’ notice.
	 
	10.3	 	Delivery






	 	10.3.1	 	Any communication or document made or delivered by one person to another under
or in connection with this Agreement will only be effective:






	 	(a)	 	if by way of fax, when received in legible form; or
	 
	 	(b)	 	if by way of letter, when it has been left at the relevant
address or five 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 10.2 (Addresses), if addressed to that department or
officer.
	 
	 	10.3.2	 	Any communication or document to be made or delivered to the Security Trustee will be
effective only when actually received by the Security Trustee and then only if it is
expressly marked for the attention of the department or officer identified with the
Security Trustee’s signature below (or any substitute department or officer as the
Security Trustee shall specify for this purpose).






	10.4	 	Notification of address and fax number
	 
	 	 	Promptly upon receipt of notification of an address, fax number or e-mail address or
change of address, fax number or e-mail address pursuant to Clause 10.2 (Addresses)  or
changing its own address, fax number or e-mail address, the Security Trustee shall notify
the other parties to this Agreement.
	 
	11.	 	AMENDMENTS
	 
	 	 	No amendment may be made to this Agreement (whether in writing or otherwise) without
the prior written consent of the parties to this Agreement.
	 
	12.	 	FURTHER ASSURANCE
	 
	 	 	Each Junior Party agrees that it will, as soon as reasonably practicable, at the
direction of the Security Trustee (acting reasonably), execute and deliver at its own
expense any document (executed as a deed or under hand as the Security Trustee may direct)
and do any act or thing required to confirm or establish the validity and enforceability of
the subordination effected by, and the obligations of each Junior Party to the Secured
Parties under, this Agreement.
	 
	13.	 	LAW
	 
	 	 	This Agreement is governed by English law.





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	14.	 	ENFORCEMENT
	 
	14.1	 	Jurisdiction






	 	14.1.1	 	For the benefit of the Secured Parties, each Junior Party agrees that the courts
of England have (subject to paragraph (c) below) exclusive jurisdiction to settle any
dispute arising out of or in connection with this Agreement (including a dispute
regarding the existence, validity or termination of this Agreement and claims for
set-off and counterclaim) (a “Dispute”) and for such purpose each Junior Party
irrevocably submits to the jurisdiction of the English courts.
	 
	 	14.1.2	 	The parties to this Agreement 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.
	 
	 	14.1.3	 	This Clause 14.1 (Jurisdiction) is for the benefit of the Secured Parties only. As a
result, no Secured Party shall be prevented from taking proceedings relating to a
Dispute in any other courts with jurisdiction. To the extent allowed by law, the
Secured Parties may take concurrent proceedings in any number of jurisdictions.






	14.2	 	Service of Process
	 
	 	 	Without prejudice to any other mode of service allowed under any relevant law, each
Junior Party:






	 	14.2.1	 	irrevocably appoints [•] as its agent for service of process in relation to any
proceedings before the English courts in connection with this Agreement;
	 
	 	14.2.2	 	agrees that failure by an agent for service of process to notify the Junior Parties
of the process will not invalidate the proceedings concerned; and
	 
	 	14.2.3	 	if the agent referred to in paragraph (a) ceases to be appointed, agrees to appoint
another agent with an address in England, promptly upon request by the Security Trustee
and authorises the Security Trustee to appoint another agent if the relevant Junior
Party fails to appoint one following such request.






	15.	 	PERPETUITY PERIOD
	 
	 	 	The perpetuity period for the trusts in this Agreement is 80 years.






	16.	 	FAILURE OF TRUST
	 
	 	 	If, for any reason, a trust in favour of, or a holding of property for, the Secured
Parties is invalid or unenforceable, the Junior Creditor will pay and deliver to the
Security Trustee (for the account of the Secured Parties) an amount equal to the relevant
payment, receipt or recovery.




This Agreement has been signed by the Security Trustee and entered into as a deed by the
Junior Parties on the date stated at the beginning of this Agreement.




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EXECUTION PAGE




	 	 	 	 	 	 	 	 	 	 	 
	The Borrower
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	EXECUTED AS A DEED by MI

	 	 	)	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	ENERGY CORPORATION:	 	 	)	 	 	Duly Authorised Signatory	 	 
	 

	 	 	)	 	 	 	 	 	 	 
	 

	 	 	)	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	)	 	 	 	 	 	 	 
	 

	 	 	)	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	)	 	 	 	 	 	 	 






In the presence of:




	 	 	 	 	 
	 	 	 
	Signature of witness	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 
	 
	 

	 	 

	 	 
	 
	 

	 	 

	 	 
	Occupation:
	 	 	 	 
	 

	 	 

	 	 
	(Note: These details are to be completed
in the witness’s own handwriting.)	 	 










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The Junior Creditor




	 	 	 	 	 
	[•]2

	 	 	)	 
	 

	 	 	)	 






	 	 	 
	 

[Authorised Signatory]

	 	 






	 	 	 
	 

[Authorised Signatory]

	 	 






Address:




Attention:




Facsimile:






 




			
	2	 	Local counsel to advise on format of signature block.





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The Security Trustee




SIGNED for and on behalf of

STANDARD BANK ASIA LIMITED




By:




Name:




Title:




Address:




Attention:




Facsimile:




E-mail:








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SCHEDULE 10




Hedging




	1.	 	Minimum Hedging
	 
	 	 	The Borrower shall enter into Hedge Transactions in amounts and at rates and prices at least
sufficient to ensure that, as determined by the Technical Bank (acting reasonably in
consultation with the Borrower) on a projected basis by reference to the then current
Financial Model, the Borrower will not breach the provisions of Clause 21 (Financial
Covenants) at any time on or before the Scheduled Maturity Date.






	2.	 	Maximum Hedging
	 
	 	 	The Borrower shall not enter into Hedge Transactions for speculative purposes or:






	 	(a)	 	in relation to oil prices, which fix or cap the price of oil produced by the
Borrower relating to volumes exceeding 20% of production for the relevant period;
	 
	 	(b)	 	in relation to interest rates, which relate to more than 100% of the actual
exposure of the Borrower; or
	 
	 	(c)	 	in relation to currency, which relate to more than 100% of the actual exposure
of the Borrower.






	3.	 	Permitted Hedge Counterparties
	 
	 	 	The Borrower may only enter into a Hedge Transaction by entering into a Hedge Agreement
with a Hedge Counterparty.
	 
	4.	 	Termination of Permitted Hedge Agreements
	 
	 	 	A transaction under Hedge Agreement may be terminated prior to its maturity:






	 	(a)	 	by the Borrower only in the circumstances provided for in such Hedge Agreement;
or
	 
	 	(b)	 	by a Hedge Counterparty at the request of the Agent, if the Hedge
Counterparty is entitled to do so pursuant to the terms of such Hedge Agreement and the
Agent has issued a notice under Clause 34.3 (Hedge Counterparties: required
enforcement) of this Agreement; or
	 
	 	(c)	 	by a Hedge Counterparty only in the circumstances provided for in such Hedge
Agreement and as permitted by Clause 34.2 (Hedge Counterparties: permitted
enforcement).





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SCHEDULE 11




Operating Budgets




	1.	 	The Borrower must, not later than 60 days before the end of each of its financial years,
provide to the Agent a draft operating budget for the following financial year, showing a
forecast of likely expenditure (including capital expenditure) anticipated to be incurred in
each month during the following financial year.






	2.	 	If the draft operating budget submitted under paragraph 1 above is approved by the Majority
Lenders (following consultation with the Independent Engineer), it will become the Operating
Budget for that financial year. The Majority Lenders shall give the Borrower reasonable
details of their reasons for rejecting any draft operating budget.






	3.	 	If a draft operating budget is rejected, and the Majority Lenders (following consultation
with the Independent Engineer) and the Borrower cannot agree on an Operating Budget by the
date falling one Month prior to the start of the financial year to which such draft operating
budget applies, the matter will be referred to the Independent Engineer.






	4.	 	The determination of the Independent Engineer will (save in the case of manifest error) be
final and binding on all the Parties and will be used in the relevant Operating Budget,
provided that the Independent Engineer must act reasonably in making such determination and if
requested by the Borrower must give the Borrower reasonable details of the reasons for their
determination.






	5.	 	If the matter is referred to the Independent Engineer, the Operating Budget will be compiled
using items in the previous Operating Budget until such time as the Independent Engineer has
provided a final determination provided that Capital Expenditure which must be incurred by the
Borrower in order to avoid a breach of a PSC shall be deemed to be approved and included in
the Operating Budget.





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SCHEDULE 12




Existing Financial Indebtedness



In relation to the Borrower:





	1.	 	Comprehensive Credit Grant Contract (Reference No. 200501045) dated 9 July 2005 by and
between the Borrower and LCCU;






	2.	 	Loan Agreement (Reference No. 2006364) dated 15 November 2006 by and between the Borrower and
LCCU;






	3.	 	Loan Agreement (Reference No. 2006379) dated 28 November 2006 by and between the Borrower and
LCCU;






	4.	 	Loan Agreement (Reference No. 2007013) dated 25 January 2007 by and between the Borrower and
LCCU;






	5.	 	Loan Agreement (Reference No. 2007149) dated 28 May 2007 by and between the Borrower and
LCCU;






	6.	 	Loan Agreement (Reference No. 2007171) dated 13 June 2007 by and between the Borrower and
LCCU;






	7.	 	Loan Agreement (Reference No. 2007172) dated 14 June 2007 by and between the Borrower and
LCCU;






	8.	 	Loan Agreement (Reference No. 2007273) dated 24 October 2007 by and between the Borrower and
LCCU;






	9.	 	Comprehensive Credit Grant Agreement (Reference No. 75012006281077) dated 16 June 2006 by and
between the Borrower and SPDB;






	10.	 	Short-term Loan Agreement (Reference No. 75012007281331) dated 10 July 2007 by and between
the Borrower and SPDB;






	11.	 	Comprehensive Credit Grant Agreement (Reference No. 75012007281331) dated 24 August 2007 by
and between the Borrower and SPDB;






	12.	 	Short-term Loan Agreement (Reference No. 75012007281652) dated 6 September 2007 by and
between the Borrower and SPDB;






	13.	 	Short-term Loan Agreement (Reference No. 75012007281849) dated 7 September 2007 by and
between the Borrower and SPDB;






	14.	 	Short-term Loan Agreement (Reference No. 75012007281851) dated 12 September 2007 by and
between the Borrower and SPDB; and
	 
	15.	 	The First MIE Loan.





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SCHEDULE 13




Conditions Subsequent




	1.	 	The Borrower shall, by the date falling 60 days after the date of this Agreement, deliver
to the Agent evidence satisfactory to the Agent that the inconsistencies between the
Borrower’s foreign exchange registration certificate and the Borrower’s business license in
relation to the duration of the Borrower’s operations have been rectified.






	2.	 	The Borrower shall, by the date falling 60 days after the date of this Agreement, deliver to
the Agent evidence satisfactory to the Agent that the business scope of the Borrower, as
updated in the Borrower’s business licence pursuant to paragraph 1(e) of Schedule 2
(Conditions Precedent), is reflected in the Borrower’s foreign exchange registration
certificate, state tax registration certificate and local tax registration certificate.






	3.	 	The Borrower shall procure that MIH will, as soon as reasonably practicable after Share
Exchange Closing, enter particulars of the security interests created pursuant to the First
MIH Share Charge and the Second MIH Share Charge in its register of mortgages and charges to
comply with Section 54 of the Companies Law (as amended) of the Cayman Islands.






	4.	 	The Borrower shall, at Share Exchange Closing, deliver or procure to be delivered to the
Agent and the Security Trustee the documents referred to in Clause 3.1 (Deposit of
Certificates) of each of the First MIH Share Charge and the Second MIH Share Charge.






	5.	 	The Borrower shall, promptly following Share Exchange Closing, deliver to the Agent and the
Security Trustee the Borrower’s Register of Members containing the annotations referred
to in Clause 3.4.1 (Annotation of Register of Members) of each of the First MIH Share Charge
and the Second MIH Share Charge.





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SCHEDULE 14




Insurance



PART I

MATERIAL INSURANCES




	1.	 	ALL RISKS (INCLUDING MACHINERY BREAKDOWN) INSURANCE  — FIXED ASSETS





	 	 	 	 	 
	Minimum Cover:	 	“All Risks” of physical loss of or damage to all real
and personal onshore property (including, but not
limited to, the buildings, structures, equipment,
spares and consumables, terminal, pipelines and
everything connected therewith) comprising the
Borrowing Base Assets or leased equipment and
machinery. Including inland transit within the
People’s Republic of China.
	 
	 	 	 	 
	Minimum Sum insured:	 	As necessary according to the PSCs and confirmed by
the Technical Bank. To include sublimit for
unscheduled properties, items under care, custody
and control that are not scheduled and unscheduled
property in transit
	 
	 	 	 	 
	Maximum Deductible:	 	To be approved by the Agent (acting in consultation
with the Insurance Adviser). Preferably $100,000
e.e.o. but $50,000 in respect of transit coverage.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower and, if required under the PSCs,
Petrochina, GOC and the Joint Management
Committee.
	 
	 	 	 	 
	Required Extensions:

	 	(a)
	 	Cost escalation clause/additional cost of
working clause;
	 
	 	 	 	 
	 

	 	(b)
	 	strikes, riots and civil commotion and
	 
	 	 	 	 
	 

	 	(c)
	 	removal of wreck (25% of sum insured);
	 
	 	 	 	 
	 

	 	(d)
	 	additional costs of complying with
public/local authority requirements;
	 
	 	 	 	 
	 

	 	(e)
	 	automatic reinstatement of sum insured;
	 
	 	 	 	 
	 

	 	(f)
	 	interim payments clause;
	 
	 	 	 	 
	 

	 	(g)
	 	basis of settlements clause;
	 
	 	 	 	 
	 

	 	(h)
	 	capital additions clause; and






- 156 -









 





	 	 	 	 	 
	 

	 	(i)
	 	debris removal, demolition costs and
professional fees; and
	 
	 	 	 	 
	 

	 	(j)
	 	coverage for property in the course of
construction, installation or erection
	 
	 	 	 	 
	 

	 	(k)
	 	suitable multiple insured clause.
	 
	 	 	 	 
	Other terms	 	The policy must include standard industrial all risks
wording in respect of the processing assets, including
but not limited to electrical sub-station and the central
processing station.






- 157 -









 






	2.	 	OPERATOR’S EXTRA EXPENSES incl. Control of Well, Redrilling / Extra
Expenses, Seepage and Pollution, Clean-up and Contamination





	 	 	 	 	 
	Form of wordings	 	EED  —  8/86 with suitable endorsements as per
Interest
	 
	 	 	 	 
	Minimum combined
limit	 	$10,000,000 combined single limit, any one
occurrence.
	 
	 	 	 	 
	 	 	But $1,000,000 e.e.o. in respect of Care, Custody
and Control.
	 
	 	 	 	 
	Maximum Deductible:	 	All except CCC (see below):
	 
	 	 	 	 
	 	 	As agreed by the Agent (acting in consultation with
the Insurance Adviser). Preferably combined single of
less than $500,000
	 
	 	 	 	 
	 	 	Care, Custody and Control cover:
	 
	 	 	 	 
	 	 	As agreed by the Agent (acting in consultation with
the Insurance Adviser). Preferably USD 50,000
e.e.o.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower and, if required under the PSCs,
CNCPC/Petrochina, GOC and the Joint Management
Committee.
	 
	 	 	 	 
	Main exclusions:	 	As agreed by the Required Lenders (acting in
consultation with the Insurance Adviser).
	 
	 	 	 	 
	Required Extensions:

	 	(a)
	 	Underground Blowout
	 
	 	 	 	 
	 

	 	(b)
	 	Care, Custody and Control
	 
	 	 	 	 
	 

	 	(c)
	 	Suitable Multiple Insured Clause (6 paragraphs only)
	 
	 	 	 	 
	 

	 	(d)
	 	Evacuation Expenses if profile of risk
changes to higher exposure






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	3.	 	BUSINESS and CONTINGENT BUSINESS INTERRUPTION FOLLOWING ALL RISKS
(INCLUDING MACHINERY BREAKDOWN)





	 	 	 	 	 
	Minimum Cover:	 	Financial loss sustained as a result of any occurrence
covered by the All Risks policy described in item 1
above which causes interruption in the normal
commercial operations of the Borrower, including
but:
	 
	 	 	 	 
	 

	 	(a)
	 	debt servicing and hedging costs (which
includes interest, principal payments,
commitment fees, agency fees, other fees and
all other amounts owed to the Secured
Parties); and
	 
	 	 	 	 
	 

	 	(b)
	 	all amounts incurred by the Borrower by way
of fixed expenses, contractual payment
obligations (as and if contemplated under the
PSCs), interest, default interest and extension
payments unless otherwise agreed by the
Agent (acting in consultation with the
Insurance Advisor),
	 
	 	 	 	 
	 	 	in each case until the Termination Date.
	 
	 	 	 	 
	Minimum Sum insured:	 	An amount not less than the aggregate of (a) the debt
servicing costs referred to in paragraph (a) under the
heading “Minimum Cover” above, and (b) the
amounts referred to in paragraph (b) under the
heading “Minimum Cover” above provided that, in
each case, the Minimum Sum insured shall be no less
that the highest amount determined by reference to
“Minimum Cover” above in each of the three
Indemnity Periods next following the date on which
the Minimum Sum insured is determined.
	 
	 	 	 	 
	Indemnity Period:	 	A minimum of 6 months from the date following the
date of occurrence.
	 
	 	 	 	 
	Maximum Deductible:	 	To be approved by the Agent (acting in consultation
with the Insurance Advisor), but no more than 60
days.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower. Security Trustee (on behalf of the
Secured Parties) to be named loss payee.
	 
	 	 	 	 
	Required Extensions:

	 	(a)
	 	Delay or interruption caused by a risk of a
type indemnifiable under the All Risks






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	 	 	 	 	(including Machinery Breakdown) section of the package policy
which occurs in the vicinity of the Borrowing base Assets and which
hinders or prevents access to the Borrowing Base Assets. Including
the Increased Cost Of Working;
	 
	 	 	 	 
	 

	 	(b)
	 	payment on account / interim payment clause, together with
requested Lenders’ endorsements plus Multiple Insured Clause (6
paragraphs);
	 
	 	 	 	 
	 

	 	(c)
	 	suppliers’ and customers’ premises extensions, if relevant
and not contractually protected through other means, including at
least the Contingent Business Interruption in respect of the oil
pipelines used but not owned by the Company; and
	 
	 	 	 	 
	 

	 	(d)
	 	cut-through clause if insurer not rated appropriately.
	 
	 	 	 	 
	Main exclusions:	 	Permitted to include the following exclusions and others as
may be agreed by the Agent (acting in consultation with the
Insurance Adviser):
	 
	 	 	 	 
	 

	 	(a)
	 	loss caused by failure of the insured to obtain or extend
any permit, lease, licence or purchase order commitment; and
	 
	 	 	 	 
	 

	 	(b)
	 	fines or damages for breach of contract for late or
non-completion of orders.










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	4.	 	COMPREHENSIVE GENERAL LIABILITY INSURANCE





	 	 	 	 	 
	Minimum Cover:	 	Occurrence-based insurance in respect of all sums
which any insured becomes legally liable to pay in
respect of legal and contractual liability to third
parties (including other insured parties in accordance
with the cross-liability clause) for:
	 
	 	 	 	 
	 

	 	(a)
	 	death or bodily injury, or
	 
	 	 	 	 
	 

	 	(b)
	 	damage to third party property,
	 
	 	 	 	 
	 	 	arising out of the conduct of the Borrower’s business,
and professional costs (including legal defence costs)
and expenses incurred in dealing with any claim.
Using LSW 244 with 168 hour discovery period.
	 
	 	 	 	 
	Minimum limit of
liability:	 	For any one occurrence $15,000,000.
	 
	 	 	 	 
	Maximum Deductible:	 	Not to exceed $50,000 each claim for damage to third
party property. None for injury to / death of
individuals.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower and, if required under the PSCs,
CNCPC/Petrochina, GOC and the Joint Management
Committee.
	 
	 	 	 	 
	Geographical Limit:	 	Worldwide.
	 
	 	 	 	 
	Jurisdiction	 	Worldwide (excluding USA and Canada).
	 
	 	 	 	 
	Required Extensions:

	 	(a)
	 	Liabilities arising from sudden, unintended
and unexpected seepage, pollution and
contamination;
	 
	 	 	 	 
	 

	 	(b)
	 	Lenders’ endorsements
	 
	 	 	 	 
	 

	 	(c)
	 	a cross-liability clause
	 
	 	 	 	 
	 

	 	(d)
	 	cut-through clause if insurer not rated appropriately
	 
	 	 	 	 
	 

	 	(e)
	 	Deletion of exclusion 4a to Energy
Exclusions LSW 245.










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	5.	 	WORKMEN’S COMPENSATION/EMPLOYER’S LIABILITY
	 
	 	 	The Borrower must, in accordance with applicable laws and regulations:






	 	(a)	 	procure that there is in effect a policy or policies of insurance to
indemnify the legal and contractual liabilities of the Borrower and all its
sub-contractors of any tier for the accidental death or injury of any staff or
employee of the Borrower or its nominated agents, representatives or agents during the
course of his employment in connection with the Borrower’s business anywhere in the
People’s Republic of China; and
	 
	 	(b)	 	use its best endeavours to procure that there is in effect a policy or
policies of insurance to indemnify the legal and contractual liabilities of Petrochina
together with GOC and all their sub-contractors of any tier in respect of the
accidental death or injury of any staff or employee of Petrochina together with GOC
and sub-contractors of any tier or their nominated agents,
representatives or agents during the course of his employment in connection with the
Borrower’s business anywhere in the People’s Republic of China.






	6.	 	OTHER INSURANCES
	 
	 	 	Motor insurance as required by the relevant local law, and all other insurances,
potentially including aviation liability insurance, which are required to be purchased
pursuant to Clause 22.18 of this Agreement. Insurances are to be purchased in the name of
the Borrower, with the Finance Parties being named as co-insureds if the Agent so
requires, and for such sums insured as the Borrower and the Agent shall agree or, failing
that, as a prudent operator of the Borrower’s business (acting in accordance with good
insurance practices) would purchase.









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Part II




INSURANCE POLICY ENDORSEMENTS


All policies relating to the Material Insurances must contain the following provisions or
endorsements:





	1.	 	In this endorsement it is agreed that:
	 
	 	 	Borrower means MI Energy Limited.
	 
	 	 	JMC means Joint Management Committee
	 
	 	 	GOC means Global Oil Corporation.
	 
	 	 	“PetroChina” means PetroChina Company Limited.
	 
	 	 	PSC means Production Sharing Contract
	 
	 	 	Termination Date means the date on which all present and future obligations of the Borrower
to the Finance Parties under the Finance Documents have been unconditionally and
irrevocably discharged in full.
	 
	 	 	Finance Parties means the banks and other institutions which are loss payees hereunder and
are involved in providing funding, financing, financial accommodation and / or hedging
facilities to the Borrower. The phrase includes any agent and/or trustee, assignee,
transferee, successor or novated, replacement or additional creditor of or in relation to
any of the foregoing.
	 
	 	 	Insureds means, severally, the insureds named in this insurance policy.
	 
	 	 	Agent means Standard Merchant Bank (Asia) Ltd, Singapore Branch acting in that capacity for
the Finance Parties and includes its successors from time to time in that capacity.
	 
	 	 	Security Agent means Standard Merchant Bank (Asia) Ltd, Singapore Branch acting in that
capacity for the Secured Parties and includes its successors from time to time in that
capacity.
	 
	 	 	Material Insurances means:






	 	(a)	 	property all risks (including machinery breakdown) insurance — fixed assets
	 
	 	(b)	 	Operator’s Extra Expense (O.E.E.)
	 
	 	(c)	 	Comprehensive General Liability Insurance
	 
	 	(d)	 	business interruption and contingent business interruption insurance
following all risks





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	 	 	Comprehensive General Liability Insurance means insurance in respect of all sums which any
Insured becomes liable to pay in respect of legal liability to third parties.
	 
	2.	 	[The Insurers acknowledge that they have been notified that the Borrower has assigned by way
of first ranking security to the Finance Parties all its rights title and interest in this
insurance (or reinsurance as applicable) and in the subject matter of this insurance (or
reinsurance as applicable), and confirm that other than the notification under the security
referred to in paragraph 3 below, they have not been notified of any other assignment of or
security interest in the Borrower’s interest in this insurance (or reinsurance as applicable).
	 
	3.	 	The Insurers acknowledge that the Finance Parties and their respective officers, directors,
employees, agents and assigns are each loss payees under this policy. The Insurers waive all
rights of contribution against any other insurance (or reinsurance as applicable) effected by
the Finance Parties or their directors, officers, employees, agents or assigns.]3
	 
	4.	 	The Insurers acknowledge receipt of consideration for their insurance (or reinsurance as
applicable) hereunder and waive any claim that they might otherwise have against such party in
respect of any premium payable in respect of this insurance (or reinsurance as applicable).
	 
	5.	 	The Insurers acknowledge that the Insurance is primary to and not excess to (except in
respect of layers of third party cover effected specifically for the Borrower) or contributing
with any other insurance (or reinsurance as applicable) maintained by any Insured. The
Insurers waive all rights of contribution against any other insurances (or reinsurances as
applicable) effected by the Insured.
	 
	6.	 	The Insurers waive any claim for average or contribution in respect of any other insurance
(or reinsurance as applicable) of the insured risks or any other insurance (or reinsurance as
applicable) effected by the Finance Parties or their directors, officers or employees.
	 
	7.	 	The Insurers agree that each of the Insureds shall, for the purpose of this policy, be
treated as an individually and separately insured (or re-insured as applicable) party to the
insurance (or reinsurance as applicable) contract, and each shall be separately insured from
any other insured person in respect of its own insurable rights and interest, provided that
the total liability of the Insurers under each Part of this policy to the Insured collectively
shall not (unless the policy specifically permits otherwise) exceed the Limit of Indemnity
stated to be insured thereby. The liability of the Insurers under this policy to any one
Insured shall not be conditional upon the due observance and fulfilment by any other insured
(or re-insured as applicable) party of the terms and conditions of this policy or of any
contractual, pre-contractual or non-contractual duties imposed by law or contract upon that
insured party relating thereto, and shall not be affected by any failure in such observance or
fulfilment by any such







 




			
	3	 	To be included in endorsements relating to business interruption insurance only.





- 164 -









 






	 	 	other insured party. Without prejudice to the protections afforded to the Insured by
this endorsement, no one Insured represents or warrants the adequacy or accuracy of any
information provided or representation made by or on behalf of any other Insured.
	 
	8.	 	The Insurer hereby agrees to waive all rights of subrogation which it may have or acquire
against any of the parties comprising the Insureds, their affiliates, their consultants,
officers, directors and employees, and other parties to the extent required by contract.
	 
	9.	 	The Insurers acknowledge, for the benefit of the Insureds, that:






	 	(a)	 	they have received adequate information in order to evaluate the risk of
insuring (or re-insuring) the Borrower in respect of the risks hereby insured on the
assumption that such information is not materially misleading;
	 
	 	(b)	 	there is no information which has been relied on or is required by Insurers
in respect of their decision to make the Finance Parties or their directors, officers,
employees or agents loss payees;
	 
	 	(c)	 	no person has been authorised to make any representation on behalf of any of
the Finance Parties or their directors, offices, employees or agents in relation to
their becoming or being loss payees under this policy;
	 
	 	(d)	 	no Insured will be penalised or prejudiced in any way nor shall any of this
policy be rendered void by any non-disclosure of any information the disclosure of
which is prohibited or restricted by the laws, regulations, decrees or policies of the
People’s Republic of China or any provincial, municipal or local government or any
department, agency or bureau thereof or judicial body of the People’s Republic of
China having jurisdiction over the Borrower or any part of its business; and
	 
	 	(e)	 	the Finance Parties shall have no duty of disclosure except in relation to
information made available to them by any other Insured relating to the Borrower or
any part of its business, provided such information is not confidential.






	10.	 	If an Insured shall provide or suppress any information or make any claim knowing the same to
be false or fraudulent as regards amount or otherwise, the benefit to him of insurance (or
re-insurance as applicable) under this policy shall become void and all his claims hereunder
shall be forfeited.






	 	 	 	The rights and indemnity of any Insured who is not guilty of any fraud,
misrepresentation, non-disclosure or breach of condition shall not be prejudiced
or affected by any fraud, misrepresentation, non-disclosure, breach of warranty or
breach of condition by any other parties comprising the Insured.





- 165 -









 






	 	 	 	In any situation where it may be alleged that there has been a failure by any
Insured to advise material alterations or that there has been non-disclosure or
misrepresentation of information originally supplied, the Insurer shall not
exercise any rights to avoid the Policy as against the Insurer if such failure,
non-disclosure or misrepresentation was innocent and free of any fraudulent conduct
or intent to deceive, and provided the same shall be advised to the Insurer as soon
as it shall become known and any reasonable retrospective amendment of premium
and/or terms accepted by the Insured.
	 
	 	 	 	For the purposes of the indemnity granted by this policy claims made by any of the
parties defined as the Insured against any other party so described shall be
treated as though the party claiming was not named as the Insured in this policy,
provided always that nothing herein shall increase the limit of liability under
this policy.






	11.	 	[The Insurers shall not be entitled to offset any sums payable to the Finance Parties against
premium or other moneys owing by the Borrower, nor any sums owing to the Borrower under this
policy against any moneys owing by the Borrower under any other policy or
contract.]4






	12.	(a)	 	The Insurers’ right to repudiate, avoid, rescind or terminate this contract or to
treat the contact as terminated or suspended or to deny any otherwise valid claim
shall be limited to those circumstances in which the contract expressly so
provides, and each Insurer waives any right that it would otherwise have to do so
in any other circumstances on any ground.
	 
	 	(b)	 	Except in respect of any fraud on the part of an Insured, the Insurer
waives any right that it may have at law to claim damages against any person.






	13.	 	Currency Conversion Clause:
	 
	 	 	This clause applies in circumstances where an Insured has suffered a loss in a currency
other than dollars. An Insured suffers a loss in the currency or currencies in which that
Insured has actually incurred (or, failing that, has booked) the loss, liability or expense
for which it is claiming under this policy. In such circumstances the Insured is entitled
to indemnity or reimbursement for his loss under this policy, subject to any applicable
limit specified in the policy, by applying the Relevant Rate of Exchange as at the Relevant
Date.
	 
	 	 	The Relevant Rate of Exchange is rate determined by the Agent for this purpose by reference
to its spot rate of exchange in London for the purchase of the currency in which the loss
has been suffered by the Insured with dollars at or about 11.00 am on the Relevant Date or,
if no such spot rate exists on the Relevant Date, by such other method as the Agent (in
consultation with the Borrower) reasonably determines.
	 
	 	 	The Relevant Date is:





- 166 -









 






	 	(a)	 	in the case of loss or damage to property, the date or dates on which
the claimant Insured becomes obliged to pay for its repair, reinstatement or
replacement or (if earlier) the date on which the Insurers settle the claim of the
Insured;
	 
	 	(b)	 	in the case of a liability (or cross-liability) to a third party, the date
on which the claimant Insured becomes obliged to discharge that liability;
	 
	 	(c)	 	in the case of a claim for business or contingent business interruption,
the last date of the period of interruption to which the claim relates; and
	 
	 	(d)	 	in any other case, the date on which the claim is first presented as a
quantified claim to the Insurers by the Insured.






	 	 	The amount which the Insured is entitled to be indemnified or reimbursed pursuant to this
clause is called the Insured Loss.
	 
	14.	 	For the benefit of the Secured Parties (until the Termination Date), the insured parties
irrevocably authorise and instruct the Insurer to pay, and the Insurer agrees to pay, all
claims, returned premiums and any other moneys payable to any of them until the Termination
Date under or in relation to this contract (Insurance Proceeds) as follows:






	 	(a)	 	if the sum recoverable is in respect of third party claims to be paid
directly to a third party under the Comprehensive General Liability Insurance, such
sums shall be paid directly to that third party;
	 
	 	(b)	 	if the sum recoverable is in respect of Business and Contingent Business
Interruption Insurance sums shall be paid directly to the Security Trustee;
	 
	 	(c)	 	to the extent that sub-paragraph (a) or (b) above does not apply or
payments have not been made to the third party or named insured (as the case may be)
as contemplated therein, to one the following bank accounts of the Borrower in
accordance with the instructions of the Agent:





	 	 	 
	Offshore Collection Account:
	 
	 	 
	Bank name:

	 	Standard Bank Plc
	 
	 	 
	Account name:

	 	MI Energy Corp USD Collection Acc
	 
	 	 
	Account number:
	 	 
	 
	 	 
	Daan USD:
	 	 
	 
	 	 
	Bank Name:

	 	China CITIC Bank, Beijing Anzhen Branch
	 
	 	 
	Account Name:

	 	 (only Chinese translation of ‘MI Energy
Corporation’, but not MIE (China))








 




			
	4	 	To be included in endorsements relating to business interruption insurance only.





- 167 -









 





	 	 	 
	Account number:
	 	 
	 
	 	 
	Daan RMB:
	 	 
	 
	 	 
	Bank Name:

	 	China CITIC Bank, Beijing Anzhen Branch
	 
	 	 
	Account Name:

	 	 (only Chinese translation of ‘MI Energy
Corporation’, but not MIE (China))
	 
	 	 
	Account number:
	 	 
	 
	 	 
	Moliqing USD:
	 	 
	 
	 	 
	Bank Name:

	 	Industrial Bank, Beijing Yayuncun Branch
	 
	 	 
	Account Name:

	 	 (only Chinese translation of aMI Energy
Corporation’, but not MIE (China))
	 
	 	 
	Account number:
	 	 
	 
	 	 
	Moliqing RMB:
	 	 
	 
	 	 
	Bank Name:

	 	Agriculture Bank of China, Songyuan Branch
	 
	 	 
	Account Name:

	 	 (only Chinese translation of ‘MI Energy
Corporation’, but not MIE (China))
	 
	 	 
	Account number:
	 	 
	 
	 	 
	Miao3 USD:
	 	 
	 
	 	 
	Bank Name:

	 	Shenzhen Development Bank, Beijing Branch
	 
	 	 
	Account Name:

	 	 (only Chinese translation of ‘MI Energy
Corporation’, but not MIE (China))
	 
	 	 
	Account number:
	 	 
	 
	 	 
	Miao3 RMB:
	 	 
	 
	 	 
	Bank Name:

	 	Agriculture Bank of China, Songyuan Branch
	 
	 	 
	Account Name:

	 	
(only Chinese translation of ‘MI
Energy Corporation’, but not MIE (China))
	 
	 	 
	Account number:
	 	 







	 	 	 	provided that all such payments shall be made by the Insurer without any deduction or set-off on
any account or of any kind. Any monies received by the Insurer from any facultative re-insurers
of the risks insured under this policy shall be received and held by the Insurer in trust for the
relevant claimant Insured. A payment to the loss payee





- 168 -









 






	 	 	 	in accordance with this paragraph shall, to the extent of that
payment, discharge the liability of the Insurer to pay the Borrower or
other claimant insured. Each payment by the Insurer to a third party of a
claim against the Borrower under a Comprehensive General Liability
Insurance insured (or re-insured as applicable) by the Insurer shall be
applied directly to discharge fully and finally an insured liability of
the Borrower to that third party. The arrangements in this clause shall
continue to apply notwithstanding the liquidation or insolvency of the
Borrower or the Insurer.






	15.	 	Each Insurer severally agrees that neither the sums insured (or re-insured as applicable)
nor the risks covered under this policy and any renewal of it by that Insurer will be reduced
or amended in any way, and that no deductible, excess or retention will be increased, without
the prior written agreement of the Agent.
	 
	15.	 	The Insurers shall give to the Agent:






	 	(a)	 	at least 45 days’ notice in writing if any Insurer intends to cancel or
suspend this insurance (or reinsurance as applicable) or any cover under this
insurance (or reinsurance as applicable) for any reason;
	 
	 	(b)	 	at least 45 days’ notice in writing before avoiding for non payment of any
outstanding premium in order to give an opportunity for that premium to be paid within
the notice period;
	 
	 	(c)	 	at least 45 days’ notice in writing before any reduction in limits or
coverage, any increase in deductibles or any termination before the original expiry
date is to take effect;
	 
	 	(d)	 	notice as soon as is reasonably practicable and in any event within ten days
of any such act, omission or event of any act or omission or of any event of which the
Insurer has knowledge and which the Insurer considers may invalidate or render
unenforceable in whole or in part this insurance (or reinsurance as applicable) or any
claim under it which might entitle the Insurer to terminate rescind or repudiate this
policy in whole or in part, or treat it as avoided, terminated or suspended against
any insured (or re-insured) party;
	 
	 	(e)	 	at least 45 days’ notice in writing if they have not agreed to renew this
Insurance at its next expiry date (or have been invited to do so);
	 
	 	(f)	 	notice promptly (and in any event, within five days) if the Borrower has not
renewed this policy on or at least 45 days before its expiry date; and
	 
	 	(g)	 	at least 45 days’ notice in writing (or such lesser period as may be
specified from time to time in respect of war and kindred perils) prior to any action
or event which might make the policy void or voidable to the extent it is aware of
the same.





- 169 -









 






	 	 	 	The policy will not be cancelled or the coverage so altered or affected before the
expiry of the notice periods referred to above.






	17.	 	None of the Secured Parties is liable for the payment of any premium under this policy, but
this does not relieve the Borrower from its obligations to pay any premium due under this
policy.






	18.	 	Neither the Security Trustee nor the Agent is an agent or trustee of any party other than the
Secured Parties or, as the case may be, the Finance Parties for receipt of any notice or any
other purpose in relation to this insurance (or reinsurance as applicable).






	19.	 	All notices or other communications under or in connection with this policy will be given in
writing or by fax. Any such notice will be deemed to be given as follows:






	 	(a)	 	if in writing, when delivered; and
	 
	 	(b)	 	if by fax, on the date on which it is transmitted but only if (i) immediately
after the transmission, the sender’s fax machine records the correct
answerback (ii) the transmission date is a normal business day in the country of the
recipient at the time of transmission and is recorded as received before 5pm on that
date in the recipient’s time zone, failing which it shall be deemed to be given on the
next normal business day in the recipient’s country.
	 
	 	 	 	The address and fax number of the Security Trustee for all notices under or in
connection with this policy are those notified from time to time by the Agent for
this purpose to the Insurer. The initial address and fax number of the Security
Trustee are as follows:





	 	 	 
	The Security Trustee:

	 	Standard Bank Asia Limited
	 
	 	 
	Address:

	 	36th Floor, Two Pacific Place, 88
	 

	 	Queensway, Hong Kong
	 
	 	 
	Fax No:

	 	(852) 2822 7999
	 
	 	 
	Attention:

	 	Head of Loans Administration







	20.	 	No rights are conferred under the Contracts (Rights of Third Parties) Act 1999 on any
person other than an insured (or re-insured) party under this policy and the Finance Parties
to enforce any term of this contract.
	 
	21.	 	Notwithstanding any other provision of this contract, this contract shall be governed and
interpreted in accordance with PRC law. Each Insurer submits irrevocably to the jurisdiction
of the PRC courts for the determination of any and all issues arising out of or in connection
with this contract (including its validity and enforceability). Without prejudice to any
other mode of service, each Insurer:






	 	(a)	 	agrees to maintain an agent for service of process in PRC for so long as any
obligation under this contract is outstanding and to keep the Borrower and the Agent
informed as to the identity of that agent;





- 170 -









 






	 	(b)	 	agrees that failure by a process agent to notify it of the service of any
process will not invalidate the proceedings concerned;
	 
	 	(c)	 	agrees that if the appointment of any person mentioned paragraph (a) above
ceases to be effective, it shall immediately appoint a further person in PRC to accept
service of process on its behalf there and, failing such appointment within 15 days,
the Security Trustee is entitled to appoint such person by notice to the relevant
Insurer.






	22.	 	Each Insurer agrees that, in the event of damage to the insured property there shall be no
obligation on the Insured to reinstate or replace such property. If such property is not
reinstated or replaced the Insured shall nevertheless be entitled to receive as indemnity the
amounts payable calculated in accordance with this policy as if such reinstatement or
replacement had been effected.
	 
	23.	 	Each Insurer agrees:






	 	(a)	 	that each provision of this endorsement as applicable to it is reasonable;
	 
	 	(b)	 	not to contest the enforceability of any such provision in any proceeding
arising out of or in connection with this contract or its purported repudiation,
avoidance or termination;
	 
	 	(c)	 	not to rely on any finding that any wider duty (including any pre-contractual
or other non-contractual duty) was owed to Insurers than is expressed in this contract
to be owed and that any such duty owed was breached (whether by any Insured or any
agent of an Insured or any other person) to decline any claim or to repudiate, avoid
or terminate this contract even such breach of duty was negligent;
	 
	 	(d)	 	that each such provision is severable from every other provision of this
contract and is intended by it to be valid, binding and enforceable in accordance
with its terms notwithstanding any purported repudiation, avoidance or
termination; and
	 
	 	(e)	 	that the provisions of this specifically negotiated endorsement override any
inconsistent or incompatible provision elsewhere in the contract.






	23.	 	This provisions of this endorsement may only be amended by written agreement between duly
authorised representatives of the parties, such amendment to be endorsed on the contract
policy.






	24.	 	This endorsement overrides any conflicting provision in any policy to which it applies.





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SIGNATURES




THE BORROWER




	 	 	 	 	 	 	 	 	 	 	 
	EXECUTED AS A DEED by MI ENERGY CORPORATION:	 	 	)	 	 	(SIGNED)	 	 
	 	 	 	)	 	 	 
Duly Authorised Signatory	 	 
	 

	 	 	)	 	 	 	 	 	 	 
	 

	 	 	)

)	 	 	Name:
	 	FORREST DIETRICH
 

	 	 
	 

	 	 	)

)	 	 	Title:
	 	CEO
 

	 	 






In the presence of:




	 	 	 	 	 
	(SIGNED)	 	 
	 	 	 
	Signature of witness	 	 
	 
	 	 	 	 
	Name:

	 	B.M. GARLICK	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:

	 	SUITE 406 BLOCK C
 

	 	 
	 
	 	 	 	 
	 

	 	GRAND PLACE 5 HUI ZHONG ROAD	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	CHAOYANG DISTRICT BEIJING	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Occupation:

	 	SENIOR FINANCIAL ADVISOR	 	 
	 

	 	 	 	 




(Note: These details are to be completed in the
witness’s own handwriting.)




	 	 	 
	Address:

	 	Suite 406, Block C
	 

	 	Grand Palace
	 

	 	5 Hui Zhong Road
	 

	 	Chaoyang District
	 

	 	Beijing 100101
	 

	 	Peoples Republic of China
	 
	 	 
	Attention:

	 	Mr. Forrest Dietrich
	Facsimile:

	 	+86 10 51238866






 









 





THE ARRANGER




STANDARD BANK ASIA LIMITED




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY
	 
	 	 	 	 
	Address:	 	36th Floor, Two Pacific Place
	 

	 	88 Queensway	 	 
	 

	 	Hong Kong	 	 
	 
	 	 	 	 
	Attention:	 	Head of Loans Administration
	Facsimile:

	 	+852 2822 7999	 	 






THE AGENT




STANDARD BANK ASIA LIMITED




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY
	 
	 	 	 	 
	Address:	 	36th Floor, Two Pacific Place
	 

	 	88 Queensway	 	 
	 

	 	Hong Kong	 	 
	 
	 	 	 	 
	Attention:	 	Head of Loans Administration
	Facsimile:

	 	+852 2822 7999	 	 






 









 





THE SECURITY TRUSTEE




STANDARD BANK ASIA LIMITED




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY
	 
	 	 	 	 
	Address:	 	 36th Floor, Two Pacific Place
	 

	 	88 Queensway	 	 
	 

	 	Hong Kong	 	 
	 
	 	 	 	 
	Attention:	 	 Head of Loans Administration
	Facsimile:

	 	+852 2822 7999	 	 






THE TECHNICAL BANK




STANDARD BANK ASIA LIMITED




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY
	 
	 	 	 	 
	Address:	 	 36th Floor, Two Pacific Place
	 

	 	88 Queensway	 	 
	 

	 	Hong Kong	 	 
	 
	 	 	 	 
	Attention:	 	 Head of Loans Administration
	Facsimile:

	 	+852 2822 7999	 	 






 









 





THE OFFSHORE ACCOUNT BANK




STANDARD BANK PLC




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY
	 
	 	 	 	 
	Address:	 	 Cannon Bridge House
	 

	 	25 Dowgate Hill	 	 
	 

	 	London EC4R 2SB	 	 
	 
	 	 	 	 
	Attention:	 	 Head of Loans Administration
	Facsimile:

	 	+852 2822 7999	 	 






THE LENDERS




STANDARD BANK PLC




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY






THE HEDGE COUNTERPARTIES




STANDARD BANK PLC




	 	 	 	 	 
	By:

	 	(SIGNED)
	 	(SIGNED)
	 
	 	 	 	 
	Name:

	 	JOHN WIXLEY
	 	FRANCINE NG
	Title:

	 	ATTORNEY
	 	ATTORNEY






 









 





SCHEDULE
3




Form of PRC Legal Opinion




- 9 -











 





[Zhonglun 2009/01/05]




			
	 	 	 
	




I2/F-13/F, Building 01, China Merchants Tower,

No. 118 Jianguo Road, Beijing 100022, People’s Republic of China
	 	

http://www.zhonglun.com      









	 	 	 
	To:

	 	MI Energy Corporation
	 
	 	 
	CC:

	 	Standard Bank Asia Limited

Standard Bank PLC
	 
	 	 
	Date:

	 	January 5, 2009
	 
	 	 
	Re:

	 	Legal Opinion Regarding Debt Settlement among MI Energy
Corporation, Far East Energy Ltd. and Mr. Zhang and Related Issues






Dear Sir,



We, Zhong
Lun Law Firm (“Our Firm”), is a law firm legally registered in the People’s
Republic of China (“China” or the “PRC”). Our Firm is duly qualified to practice law within the
PRC and is authorized by the PRC Ministry of Justice to practice and to issue legal opinions in
relation to laws of the PRC, and such qualification and authorization have not been revoked,
suspended, restricted or limited in any manner whatsoever. Accordingly, Our Firm is duly
qualified and authorized to issue this Legal Opinion.



At the request of the Company, Our Firm is issuing this Legal Opinion in connection with the
debt settlement among MI Energy Corporation (“MIE” or the “Company”), Far East Energy Ltd.
(“FEEL”) and Mr. Zhang Rui Lin (“Mr. Zhang”) and related issues.



Unless otherwise provided herein, this Legal Opinion is given on the basis of the laws,
regulations, rules, directives, circulars, notices and administrative directions of the PRC
effective as at the date hereof (collectively, the “PRC Laws”) and is given on the basis that the
Legal Opinion will be governed by, and construed in accordance with such laws and regulations.
There is no assurance that such laws and regulations will not be repealed, amended,
re-interpreted or replaced in the immediate future or in the long term with or without
retrospective effect.



Our Firm does not purport to be experts on or generally familiar with or qualified to




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[Zhonglun 2009/01/05]



express legal opinion based on the laws of any jurisdiction other than the PRC. Accordingly
we express or imply no opinion on the laws of any jurisdiction other than the PRC.



Our Firm is issuing this Legal Opinion in accordance with the facts and information as at the date
of this Legal Opinion, the documents and materials provided to us by MIE, and Our Firm’s
understanding of the PRC Laws. For the purposes of rendering this Legal Opinion, Our Firm has
assumed that (a) all documents submitted to us as copies conform to their originals; (b) all
signatures, seals and chops on such documents are genuine and duly authorized; (c) all facts and
documents which may affect our opinions herein have been disclosed to us, and there has not been
or will not be any omission or misleading in respect of such disclosure; (d) other than the
citizens of the PRC and entities relevant to any of the documents or to such other documents as
referred to in this Legal Opinion which entities are established or established or organized under
the PRC Laws, all other non-PRC parties have the requisite power and authority to enter into, and
have duly executed and delivered the documents and performed their obligations thereunder and
these documents constitute legal, valid and binding obligations on the non-PRC parties thereto
under the laws (other than the PRC Laws) by which they are expressed to be governed. In addition,
we have made the necessary verbal queries and consultations with relevant PRC governmental
authorities, departments, branches and bureaus, as we consider necessary, advisable or desirable.



At the basis of the above, we are issuing our legal opinions as follows:




I Issue




The Inter-company and Shareholders Debts:



According to three Repayment Agreements dated as of September 18, 2007, FEEL has paid an aggregate
amount of USD42,470,741.19 to third parties on behalf of MIE and the outstanding balance as of
December 31, 2008 is USD24,919,681, Mr. Zhang had paid an aggregate amount of USD 51,959,559.24 to
third parties on behalf of FEEL and the outstanding balance as of December 31, 2008 is
USD52,055,023, and MIE had paid an aggregate amount of RMB equal to USD119,206,906.36 to third
parties on behalf of Mr. Zhang and the outstanding balance as of December 31, 2008 is
USD106,793,113 (RMB730,005,680). As a result:





	 	(i)	 	Mr. Zhang owes MIE a debt of USD106,793,113 (“Debt 1”);
	 
	 	(ii)	 	FEEL owes Mr. Zhang a debt of USD52,055,023 (“Debt 2”); and
	 
	 	(iii)	 	MIE owes FEEL a debt of USD24,919,681 (“Debt 3”).




All the debts are interest free and shall be repaid in whole or in part prior to July 31, 2010.




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[Zhonglun 2009/01/05]




Appendix 1 to this memorandum sets out the relations of the three debts.



The Proposed Solution:



We understand that for the purpose of clearing the obstacles for proposed IPOs or other financial
transactions (including private placement of series A shares) of MI Group (means MIE, FEEL and
MIEH, the to be established holding company of MIE), MIE, FEEL and Mr. Zhang propose to resolve the
abovementioned inter-company and shareholder debts by undertaking the following steps:





	 	(i)	 	Mr. Zhang to transfer the obligations under Debt 1 to FEEL (with an approval of
MIE), i.e., Mr. Zhang will owe FEEL an amount of USD106,793,113 (“Debt 1(a)”)
while at the same time FEEL will owe MIE the same amount (“Debt 1(b)”) and at
the same time Mr. Zhang to provide a personal guarantee to MIE for the
repayment/settlement of the transferred obligations, i.e., the Debt 1(b) (“Personal
Guaranty”);
	 
	 	(ii)	 	MIE to use part of Debt 1(b) to offset Debt 3 with FEEL;
	 
	 	(iii)	 	FEEL to use part of Debt 1(a) to settle Debt 2 with Mr. Zhang;
	 
	 	(iv)	 	MIE to settle with FEEL the remaining net Debt 1(b) with FEEL by an amount of
USD20,000,000 through deemed distributions (i.e. book entry, no cash is distributed) of
a dividends of the same amount;
	 
	 	(v)	 	MIE to settle with FEEL the remaining net Debt 1(b) with FEEL through deemed
distributions (i.e. book entry, no cash is distributed) of a dividends up to the amount
that MIE or MIEH receives from series A private placement proceed (“Series A
Investment”);
	 
	 	 	 	Any remaining net Debt 1(b) after the above settlements will remain and to be settled
between FEEL and MIE through a similar deemed distribution and settlement on the
precondition that any deemed distribution will be matched by inflow new equity
investment in MIE or MIEH, or to be repaid by FEEL or to be waived by Standard Bank Asia
Limited and Standard Bank PLC. At the period of time after the settlements in the above
(iv) to (v), the Personal Guaranty shall be adjusted according to an amount of the net
Debt 1(b) outstanding.






Appendix 2 to this memorandum sets out the operational steps of the proposed solution.



Legal Documents for the Proposed Settlement



The following documents shall be prepared for the proposed settlement:





	 	(i)	 	A tripartite debt assignment agreement among MIE, FEEL and Mr. Zhang regarding
assignment of Debt 1, the proposed settlement and the Personal Guaranty.





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[Zhonglun 2009/01/05]





	 	(ii)	 	Board/shareholder resolutions of MIE on the deemed distribution of dividend.





II Legal Analysis



Based on and subject to the above information, we would like to specify the risks and our
analysis as follows:



The Debt 1 is in violation of the PRC SAIC administration:



According to the Regulations of the People’s Republic of China on the Administration of Company
Registration and the Provisions on the Administration of Registration of the Business Scope of
Enterprises, as a registered branch of a foreign company, MIE shall conduct operations within the
range approved and registered and strictly in compliance with the PRC laws, including the PRC
foreign exchange law and the administration of the PRC State Administration for Industry and
Commerce (“SAIC”).



We note that the business scope of MIE branch in the PRC, as indicated in a business license
issued by the Jilin Administration of Industry and Commerce on July 11, 2007, does not include
extending loans to third parties. Therefore, the extension of Debt 1 by MIE to Mr. Zhang will
constitute a violation of PRC Laws, which, according to the PRC Company Law and Regulations of the
People’s Republic of China on the Administration of Company Registration, may subject MIE of
administrative penalty of fine up to RMB30,000, besides order on correction (which is likely in
the form of forced return of the debt amount), and the proposed settlement may be acceptable to
the Jilin Administration for Industry and Commerce.



Governmental approval/registration relating to foreign debt and guarantee overseas:



Since MIE is a foreign entity, the debt of Mr. Zhang shall constitute a foreign debt, i.e., a debt
owed by a PRC person to a foreign entity. Similarly, the Personal Guarantee which is between Mr.
Zhang and MIE shall constitute a foreign guarantee and the obligation of Mr. Zhang under which
shall also constitute a foreign debt (Article 7 of the Interim Provisions on the Management of
Foreign Debts ).



According to the Interim Provisions on the Management of Foreign Debts , which was promulgated
on January 8, 2003 by the National Development and Reform Commission , “NDRC”), the
Ministry of Finance and the Sate Administration for Foreign Exchange , “SAFE”) jointly,
PRC enterprises are not allowed to incur foreign debt except with prior approval of both NDRC and
SAFE. Furthermore, according to the Procedures for the Administration of Guarantees Overseas By
Institutions Within the Chinese Territory  promulgated by the People’s Bank of China




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[Zhonglun 2009/01/05]



(“PBOC”) on September 25, 1996 and its implementation rules, PRC institutions who
intends to provide guarantees to overseas parties shall first apply for approvals from SAFE. Both
of the above provisions shall be applied to institutions instead of an individual.



Note further that according to the Measures for the Administration of Individual Foreign Exchange
 promulgated by PBOC on December 25, 2006, where a PRC individual grants a loan
to anyone overseas, borrows a foreign debt, provides a guarantee overseas or directly participates
in any transaction involving overseas commodity futures or financial derivative products, he/she
shall abide by the relevant provisions and go through the corresponding registration formalities
at the foreign exchange authorities. However, as far as we are aware and as confirmed by oral
consultation with SAFE Beijing Branch, there are no implementation rules to stipulate the
procedures of registration formalities with respect to registration of personal foreign guaranty
or other foreign debt. Furthermore, we orally consulted with the SAFE Beijing Branch and they
confirm us that the foreign exchange authorities refuse to do any registration for PRC individuals
in the respect of individual foreign debt and guarantee overseas untill new implementation rules
issued.



Finally, we are not aware of any PRC Laws prohibiting a PRC individual from borrowing a foreign
debt or providing guarantees overseas.



Risk of Exchange Arbitrage:



Under the PRC foreign exchange laws, circulation of foreign exchange and use of RMB by foreign
company outside of China are strictly restricted. Specifically, according to Article 40 of the
Regulation of the PRC on Foreign Exchange Administration  promulgated by the PRC
State Council on January 29, 1996 and was amended on January 14, 1997 and August 5, 2008
respectively, a payment which shall be made in RMB but is made in foreign currency will constitute
exchange arbitrage and subject the relevant party to administrative liabilities (even criminal
penalties in serious violations).



Literally and strictly interpreting the Article 40, there is a risk that steps (i) to (vi) in Part
I of this memo, which concerns offshore payment of “onshore debts” which is denominated in RMB and
owed by Mr. Zhang, a PRC resident, may be regarded as a foreign exchange arbitrage by the relevant
authorities.



However, taking into consideration of the following, we are of the opinion that the debt
settlement may not constitute a foreign exchange arbitrage for the following reasons: firstly, as
discussed above, the debt owed by Mr. Zhang to MIE (or FEEL after the proposed assignment) to be
settled offshore, is legally a foreign debt, even though it is denominated in RMB. Satisfaction of
foreign debt using financial




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[Zhonglun 2009/01/05]



resources offshore is unlikely to constitute a foreign exchange arbitrage, especially when
the exchange authorities has no implemental rules to stipulate the procedures of registration
formalities and refuses to do the registration for the personal foreign debt. Secondly, unlike a
typical cross border exchange arbitrage where there are two parallel moving of funds, MIE will
settle the debts by book entry where there is no actual moving of funds. Furthermore, the purpose
of the debt settlement is to cure a past violation of law, which, therefore, is not a transaction
with a malicious intention of violating PRC law and shall not be subject to administrative
liabilities.



To further confirm our understanding, we have orally consulted with SAFE Beijing Branch on
November 19, 2008 (telephone number 010-68559845) at no name’s basis, and were indicated by the
officer that SAFE generally won’t investigate if there is no actual moving in and out of foreign
exchange across the border.



Registration
under Notice 75:


The Notice of the State Administration of Foreign Exchange on Relevant Issues concerning
Foreign Exchange Administration for Domestic Residents to Engage in Financing and in Return
Investment via Overseas Special Purpose Companies 

 , “Notice 75”) and Notice
of the General Affairs Department of the State Administration of Foreign Exchange on Printing and
Distributing the Operating Rules for the Notice of the State Administration of Foreign Exchange on
the Relevant Issues about Foreign Exchange Control over the Financing and Return Investment of
Domestic Residents through Overseas Special Purpose Companies 

, “Notice
106”) promulgated by SAFE on October 21, 2005 and May 29, 2007 respectively provides that:
where a special purpose vehicle conducts a change in capital (which is not relating to investment
back to China), the domestic resident shall, within 30 days of the event, apply to the relevant
local SAFE branch for modification or archival filing of the original Notice 75 registration
(“Notice 75 Registration”) of the overseas investments.



We are of the opinion that the proposed debt settlement and Personal Guaranty will constitute a
change in the capital of the overseas special purpose vehicles (including but not limited to FEEL
and MIE), therefore, Mr. Zhang and other PRC shareholders of MI Group shall apply for archival
filing of the Notice 75 Registration to file the proposed debt settlement and the related capital
change in MI Group to the Jilin branch of SAFE within 30 days after the settlement happens.




III Conclusion and Recommendation



To sum up, we are of the opinion that the proposed debt settlement and Personal Guaranty shall be
in no violation of PRC law and we are not aware of any PRC Laws




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[Zhonglun 2009/01/05]



prohibiting the proposed transactions.



However, given the lack of clarity in the PRC Laws on certain aspect of the proposed transactions,
to further safeguard the MI Group from any potential challenge/claims from the relevant
governmental authorities, we would suggest that Mr. Zhang and MIE to take the following steps:





	 	(i)	 	As indicated above, Mr. Zhang and other PRC resident shareholders of MI Group to
jointly file to the SAFE Jilin Branch for the Notice 75 Registration and the filings to
specifically explain the whole debt settlement process and its purpose Ideally, Mr.
Zhang and other PRC resident shareholders of MI Group to obtain acknowledgement of the
debt settlement from SAFE Jilin Branch through archival filing of the Notice 75
Registration.
	 
	 	(ii)	 	MIE to notify the Chinese partners to the PSC contracts, regarding the debt
settlement, since the later has a general supervisory power over the foreign exchange
activities of MIE.




This opinion is intended to be used in the context which is specifically referred to herein and
each paragraph should be looked at as a whole and no part should be extracted and referred to
independently.



This Legal Opinion is hereby rendered for and solely for the purposes of advising MIE on the debt
settlement and the related issues and shall not be used by any other parties for any other purpose
without our prior written consent except Standard Bank Asia Limited and Standard Bank PLC as loan
debtor to MIE for the purpose of approving the debt assignment and settlement as mentioned in this
Legal Opinion.




Yours faithfully,




Zhong Lun Law Firm




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[Zhonglun 2009/01/05]




Appendix 1









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[Zhonglun 2009/01/05]


Appendix 2


(i) Mr. Zhang transfers Debt 1 to FEEL:





(ii) After Mr. Zhang transfers Debt 1 to FEEL and MIE uses part of Debt 1(b) to offset Debt 3 with
FEEL:





(iii) After FEEL uses part if Debt 1(a) to offset Debt 2 with Mr. Zhang:





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(iv) Declare deemed distribution dividend US$20,000,000









After deemed distribution dividend US$20,000,000,000









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[Zhonglun 2009/01/05]



(V) After Series A Investment









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SCHEDULE 4




Form of ZR Guarantee



- 10 -









 





FINAL VERSION




DATED [     ]




MR ZHANG RUILIN

as Guarantor



in favour of




MI ENERGY CORPORATION



 






GUARANTEE



 






 









 






CONTENTS




	 	 	 	 	 
	Clause	 	Page	 
	1. Definitions
	 	 	1	 
	 
	 	 	 	 
	2. Guarantee
	 	 	1	 
	 
	 	 	 	 
	3.  Continuing Guarantee
	 	 	2	 
	 
	 	 	 	 
	4. Reinstatement
	 	 	2	 
	 
	 	 	 	 
	5. Waiver Of Defences
	 	 	2	 
	 
	 	 	 	 
	6. Guarantor Intent
	 	 	3	 
	 
	 	 	 	 
	7. Immediate Recourse
	 	 	3	 
	 
	 	 	 	 
	8. Appropriations
	 	 	4	 
	 
	 	 	 	 
	9. Deferral Of Guarantor’s Rights
	 	 	4	 
	 
	 	 	 	 
	10. Representations And Warranties
	 	 	4	 
	 
	 	 	 	 
	11. General Undertakings
	 	 	7	 
	 
	 	 	 	 
	12. Taxes
	 	 	7	 
	 
	 	 	 	 
	13. Currency Indemnity
	 	 	8	 
	 
	 	 	 	 
	14. Currency Conversion
	 	 	9	 
	 
	 	 	 	 
	15. Set Off
	 	 	9	 
	 
	 	 	 	 
	16. Notices
	 	 	9	 
	 
	 	 	 	 
	17. Additional Security
	 	 	10	 
	 
	 	 	 	 
	18. Assignments And Successors
	 	 	10	 
	 
	 	 	 	 
	19. Partial Invalidity
	 	 	11	 
	 
	 	 	 	 
	20. Remedies And Waivers
	 	 	11	 
	 
	 	 	 	 
	21. Amendments
	 	 	11	 
	 
	 	 	 	 
	22. Governing Law
	 	 	11	 
	 
	 	 	 	 
	23. Enforcement
	 	 	11	 






 









 






THIS GUARANTEE is made as a deed on [     ].




BY:





	(1)	 	MR ZHANG RUILIN of Suite 406, Block C, Grand Place, 5 Hui Zhong Road, Chaoyang District,
Beijing 100101 P.R.China, Fax: +86 10 8489 2290 (PRC passport number G18206054) (the
“Guarantor”) in favour of:
	 
	(2)	 	MI ENERGY CORPORATION (“MIE”) a corporation organised and existing under the laws of the
Cayman Islands and having an office at: c/o M&C Corporate Services Limited, P.O. box 309 GT,
Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.
	 
	1.	 	DEFINITIONS
	 
	1.1	 	In this Guarantee:
	 
	 	 	“Facility Agreement” means the up to $150,000,000 borrowing base facility agreement dated
29 October 2007 between MIE as Borrower, Standard Bank Asia Limited as Agent, Arranger and
Security Trustee, the Lenders named and others as the same was amended pursuant to a waiver
and amendment letter dated 23 November 2007 and as amended and restated pursuant to a new
first amendment and restatement agreement dated                                         .
	 
	 	 	“FEEL” means Far East Energy Limited, a corporation organised and existing under the laws
of the Special Administration of Hong Kong and having an office at Room 2105, 21/F, Office
Tower Langham Place, 8 Argyle Street, Mongkok, Kowloon, Hong Kong.
	 
	 	 	“Interim Loan” has the meaning given to it in Clause [  ] of the Tripartite Agreement.
	 
	 	 	“Relevant Jurisdiction” means the Guarantor’s jurisdiction of domicile from time to time.
	 
	 	 	“SAFE” means the State Administration of Foreign Exchange of the PRC including its
successors.
	 
	 	 	“Tripartite Agreement” means the Tripartite Agreement dated [                    ] among MIE, FEEL and the
Guarantor.
	 
	1.2	 	Terms defined in the Facility Agreement shall, unless otherwise defined herein, have the same
meaning herein and the principles of construction set out in clauses 1.2 (Construction) and
1.3 (Currency Symbols and Definitions) of the Facility Agreement
shall have effect as if set out in this Guarantee.
	 
	2.	 	GUARANTEE
	 
	2.1	 	In consideration of MIE entering into the Tripartite Agreement with FEEL and the
Guarantor, the Guarantor irrevocably and unconditionally:





- 1 -









 









	 	(a)	 	guarantees to MIE the due and punctual payment by FEEL to MIE of all
amounts outstanding from FEEL to MIE under the Interim Loan from time to time;
	 
	 	(b)	 	undertakes to MIE that whenever FEEL does not pay any amount when due under or
in connection with the Interim Loan, the Guarantor shall on demand pay that amount as
if he was the principal obligor; and
	 
	 	(c)	 	indemnifies MIE on demand against any cost, loss or liability suffered by MIE
if any obligation guaranteed by him is or becomes unenforceable, invalid or illegal.
The amount of the cost, loss or liability shall be equal to the amount which MIE would
otherwise have been entitled to recover.






	2.2	 	For the avoidance of doubt, the Guarantor shall not be obligated to pay any amounts due
under or in connection with this Guarantee prior to 30 June 2009.
	 
	3.	 	CONTINUING GUARANTEE
	 
	 	 	This Guarantee is a continuing guarantee and will extend to the ultimate outstanding
amount of the Interim Loan payable by FEEL to MIE, regardless of any intermediate payment
or discharge in whole or in part, and is intended to be binding on the personal
representatives, heirs and estate of the Guarantor.
	 
	4.	 	REINSTATEMENT
	 
	 	 	If any payment by FEEL or any discharge given by MIE (whether in respect of the
obligations of FEEL or any security for those obligations or otherwise) is avoided or
reduced as a result of insolvency or any similar event:






	 	(a)	 	the liability of the Guarantor shall continue as if the payment, discharge,
avoidance or reduction had not occurred; and
	 
	 	(b)	 	MIE shall be entitled to recover the value or amount of that security or
payment from the Guarantor, as if the payment, discharge, avoidance or reduction had
not occurred,






	 	 	provided that this Clause 4 shall not operate to increase the liability of the Guarantor
under this Guarantee beyond the liability he would have had but for the occurrence of any
of the circumstances described in this Clause 4.
	 
	5.	 	WAIVER OF DEFENCES
	 
	 	 	The obligations of the Guarantor under this Guarantee will not be affected by any act,
omission, matter or thing which, but for this Clause 5, would reduce, release or prejudice
any of his obligations under this Guarantee (without limitation and whether or not known to
him or MIE) including:






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










- 2 -









 














	 	(c)	 	the release of FEEL or any other person under the terms of any composition or
arrangement with any of its creditors;
	 
	 	(d)	 	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, FEEL or other person or any non-presentation, non-perfection 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;
	 
	 	(e)	 	any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of FEEL or any other person;
	 
	 	(f)	 	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 the Tripartite Agreement or
the Interim Loan or any other document or security;
	 
	 	(g)	 	any unenforceability, illegality, voidability or invalidity of any obligation
of any person under the Tripartite Agreement or the Interim Loan or any other document
or security;
	 
	 	(h)	 	any insolvency or similar proceedings; or
	 
	 	(i)	 	the bankruptcy, death or incapacity of the Guarantor.






	6.	 	GUARANTOR INTENT
	 
	 	 	Without prejudice to the generality of Clause 5 (Waiver of Defences), the Guarantor
expressly confirms that he intends that this guarantee shall extend from time to time to
any (however fundamental) variation, increase, extension or addition of or to any of FEEL’s
obligations in respect of the Tripartite Agreement or the Interim Loan and/or any facility
or amount made available to FEEL thereunder 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 purpose 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 for which FEEL has assumed liability under or in respect of, the Tripartite
Agreement or the Interim Loan.
	 
	7.	 	IMMEDIATE RECOURSE
	 
	 	 	The Guarantor waives any right he may have of first requiring MIE (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 the Guarantor under this Guarantee. This waiver
applies irrespective of any law or any provision of the Tripartite Agreement or any other
document or agreement to the contrary.









- 3 -









 












	8.	 	APPROPRIATIONS
	 
	 	 	Until all amounts which may be or become payable by FEEL under or in connection with
the Interim Loan have been irrevocably paid in full, MIE may:






	 	(a)	 	refrain from applying or enforcing any other moneys, security or rights held or
received by MIE (or any trustee or agent on its behalf) in respect of those amounts and
the Guarantor shall not be entitled to the benefit of the same; and
	 
	 	(b)	 	hold in an interest-bearing suspense account any moneys received from the
Guarantor or on account of the Guarantor’s liability under this Guarantee.






	9.	 	DEFERRAL OF GUARANTOR’S RIGHTS
	 
	 	 	Until all amounts which may be or become payable by FEEL under or in connection with
the Interim Loan have been irrevocably paid in full (the “Discharge Date”) and unless MIE
otherwise directs, the Guarantor will not exercise any rights which he may have by reason
of performance by him of his obligations under this Guarantee:






	 	(a)	 	to be indemnified by FEEL;
	 
	 	(b)	 	to claim any contribution from any other guarantor of FEEL’s obligations under
the Tripartite Agreement or the Interim Loan; and/or
	 
	 	(c)	 	to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of MIE under the Tripartite Agreement or the Interim Loan or
of any other guarantee or security taken pursuant to, or in connection with, the
Tripartite Agreement or the Interim Loan by MIE.






	 	 	If the Guarantor receives any benefit, payment or distribution in relation to such rights
at any time prior to the Discharge Date, he shall hold that benefit, payment or
distribution to the extent necessary to enable all amounts which may be or become payable
to MIE by FEEL under or in connection with the Interim Loan to be repaid in full on trust
for MIE and promptly upon receipt by it pay or transfer the same to MIE may direct.
	 
	10.	 	REPRESENTATIONS AND WARRANTIES
	 
	 	 	The Guarantor makes the representations and warranties set out in this Clause 10 to
MIE on the date of this Guarantee.
	 
	10.1	 	Status
	 
	 	 	He is a natural person with full capacity to enter into and perform his obligations under
this Guarantee.
	 
	10.2	 	Binding obligations
	 
	 	 	The obligations expressed to be assumed by him in this Guarantee are, subject to any general
principles of law as at the date of this Guarantee limiting his obligations, which





- 4 -









 








	 	 	are specifically referred to in any legal opinion delivered in connection with his entry
into of this Guarantee, legal, valid, binding and enforceable obligations.
	 
	10.3	 	Non-conflict with other obligations
	 
	 	 	The entry into and performance by him of, and the transactions contemplated by, this
Guarantee do not and will not conflict with:






	 	(a)	 	any material law or regulation applicable to him; or
	 
	 	(b)	 	any material agreement or instrument binding upon him or any of his assets or
constitute a default (however described) under any such material agreement or
instrument or permit any counterparty to terminate any such material agreement or
instrument.






	10.4	 	Validity and admissibility in evidence
	 
	 	 	All Authorisations required or desirable:






	 	(a)	 	to enable him lawfully to enter into, exercise his rights and comply with his
obligations in this Guarantee; and
	 
	 	(b)	 	to make this Guarantee admissible in evidence in the Relevant Jurisdiction,

	 
	 	

have been
obtained or effected and are in full force and effect.






	10.5	 	Governing law






	 	(a)	 	The choice of governing law of this Guarantee will be recognised and enforced in
the Relevant Jurisdiction.
	 
	 	(b)	 	Subject to any general principles of law set out in any legal opinion delivered
in connection with his entry into of this Guarantee, any judgment obtained in relation
to this Guarantee in England will be recognised and enforced in the Relevant
Jurisdiction.






	10.6	 	Bankruptcy
	 
	 	 	No:






	 	(a)	 	action, legal proceeding or other procedure or step in relation
to:






	 	(i)	 	bankruptcy;
	 
	 	(ii)	 	a composition, compromise, assignment or arrangement with
any of his creditors;
	 
	 	(iii)	 	the appointment of a trustee in bankruptcy or other
similar officer in respect of him or of any of his assets; or




- 5 -









 








	 	(iv)	 	enforcement of any Security over any of his assets,
	 
	 	(v)	 	or any analogous procedure or step; or






	 	(b)	 	creditors’ process described in clause 23.8 (Creditors’ process) of the
Facility Agreement,






	 	 	has to his knowledge been threatened in relation to him.
	 
	10.7	 	No filing or stamp taxes
	 
	 	 	Under the law of the Relevant Jurisdiction it is not necessary that this Guarantee 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 this Guarantee or the
transactions contemplated by this Guarantee except that it is noted that while there is a
legal requirement in the PRC for this Guarantee to be registered with SAFE, he is, at the
date of this Guarantee, unable to register this Guarantee with SAFE due to an absence of
rules on application procedures.
	 
	10.8	 	No misleading information
	 
	 	 	Save as disclosed in writing to MIE prior to the date of this Guarantee, all written
information supplied by him to MIE is true, complete and accurate in all material respects
as at the date it was given, is accurate and not misleading in any material respect as of
the date such written information was provided to MIE and was prepared in good faith and
with due care and, prior to the date of this Guarantee, nothing has occurred and no
information has been given or withheld that would result in any information being untrue or
misleading in any respect.
	 
	10.9	 	No proceedings pending or threatened
	 
	 	 	No litigation, arbitration or administrative proceedings or investigations of or
before, any court, arbitral body or agency (or investigation before any governmental body
or agency of which it is aware) which, if adversely determined, could reasonably be
expected by themselves or together with any other such proceedings to have a Material
Adverse Effect are current or (to the best of his knowledge and belief) pending or
threatened against him.
	 
	10.10	 	Ownership
	 
	 	 	The Guarantor and Zhao Jiangwei collectively own 99.99% of the issued share capital of
FEEL.
	 
	10.11	 	Repetition
	 
	 	 	The representations set out in Clauses 10.1 (Status) to 10.10 (Ownership) (except for
Clause 10.4 (Validity and admissibility in evidence)) are deemed to be made by the Guarantor
(by reference to the facts and circumstances then existing) on each date that





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	 	 	the Repeating Representations are made or are deemed to be made under the Facility
Agreement.
	 
	11.	 	GENERAL UNDERTAKINGS
	 
	 	 	The undertakings in this Clause 11 remain in force from the date of this Guarantee for
so long as any amount is outstanding under the Interim Loan.
	 
	11.1	 	Authorisations
	 
	 	 	The Guarantor shall promptly:






	 	(c)	 	obtain, comply with and do all that is necessary to maintain in full force and
effect; and
	 
	 	(d)	 	supply certified copies to MIE of,






	 	 	any material Authorisation required under any law or regulation of the Relevant
Jurisdiction to enable him to perform his obligations under this Guarantee (where failure
to obtain and comply with such Authorisation could reasonably be expected to have a
Material Adverse Effect) and each other Authorisation required to ensure the legality,
validity, enforceability or admissibility in evidence in the Relevant Jurisdictions of this
Guarantee.
	 
	11.2	 	Compliance with laws
	 
	 	 	The Guarantor shall comply in all material respects with all laws applicable to him,
if failure to comply could reasonably be expected to materially impair his ability to
perform his obligations under this Guarantee.
	 
	12.	 	TAXES
	 
	12.1	 	Definitions






	 	(a)	 	In this Guarantee:
	 
	 	 	 	“Tax Deduction” means a deduction or withholding for or on account of Tax from a
payment under this Guarantee.
	 
	 	 	 	“Tax Payment” means either the increase in a payment made by the Guarantor to MIE
under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).
	 
	 	(b)	 	Unless a contrary indication appears, in this Clause 12.1 a reference to
“determines” or “determined” means a determination made in the absolute discretion of
the person making the determination.





- 7 -









 








	12.2	 	Tax gross-up






	 	(a)	 	The Guarantor shall make all payments to be made by him without any Tax
Deduction, unless a Tax Deduction is required by law.
	 
	 	(b)	 	The Guarantor shall promptly upon becoming aware that he must make a Tax
Deduction (or that there is any change in the rate or the basis of a Tax Deduction)
notify MIE accordingly.
	 
	 	(c)	 	If a Tax Deduction is required by law to be made by a Guarantor, the amount of
the payment due from him 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)	 	If a Guarantor is required to make a Tax Deduction, he 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.
	 
	 	(e)	 	Within thirty days of making either a Tax Deduction or any payment required in
connection with that Tax Deduction, the Guarantor shall deliver to MIE evidence
reasonably satisfactory to MIE that the Tax Deduction has been made or (as applicable)
any appropriate payment paid to the relevant taxing authority.






	12.3	 	Tax indemnity






	 	(a)	 	The Guarantor shall (within three Business Days of demand by MIE) pay to MIE an
amount equal to the loss, liability or cost which MIE determines will be or has been
(directly or indirectly) suffered for or on account of Tax by MIE in respect of this
Guarantee.
	 
	 	(b)	 	Paragraph (a) above shall not apply:






	 	(i)	 	with respect to any Tax assessed on MIE under the law of the
jurisdiction in which MIE is incorporated or, if different, the jurisdiction
(or jurisdictions) in which MIE is treated as resident for tax purposes; or
	 
	 	(ii)	 	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 MIE; or
	 
	 	(iii)	 	to the extent a loss, liability or cost is compensated for
by an increased payment under Clause 12.2 (Tax gross-up).






	13.	 	CURRENCY INDEMNITY
	 
	13.1	 	If any sum (a “Sum”) due from the Guarantor under this Guarantee or any order,
judgment, award given or made in relation hereto has to be converted from the





- 8 -









 







	 	 	currency (the “First Currency”) in which such Sum is payable into another currency
(the “Second Currency”) for the purpose of:






	 	(a)	 	making or filing a claim or proof against the Guarantor;
	 
	 	(b)	 	obtaining an order, judgment, award in any court or other tribunal; or
	 
	 	(c)	 	enforcing any order, judgment, award given or made in relation hereto,






	 	 	the Guarantor shall, as an independent obligation, within three Business Days of demand,
indemnify each person to whom such Sum is due from and 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 for such purpose to convert that Sum from the First Currency into the
Second Currency and (b) the rate or rates of exchange available to such person at the time
of receipt of such Sum.
	 
	13.2	 	The Guarantor waives any right he may have in any jurisdiction to pay any amount under this
Guarantee in a currency or currency unit other than that in which it is expressed to be
payable.
	 
	14.	 	CURRENCY CONVERSION
	 
	14.1	 	For the purpose of or pending the discharge of any of the Secured Obligations MIE may
convert any moneys received or recovered by MIE from one currency to another, at the spot rate
at which MIE is able to purchase the currency in which the Secured Obligations are due with
the amount received.
	 
	14.2	 	The obligations of the Guarantor to pay in the due currency shall only be satisfied to the
extent of the amount of the due currency purchased after deducting the costs of conversion.
	 
	15.	 	SET OFF
	 
	 	 	MIE may set off any matured obligation due from the Guarantor under this Guarantee (to
the extent beneficially owed by that Finance Party) against any matured obligation owed by
MIE to the Guarantor, regardless of the place of payment, booking branch or currency of
either obligation. If the obligations are in different currencies, MIE may convert either
obligation at a market rate of exchange in its usual course of business for the purpose of
the set-off.
	 
	16.	 	NOTICES
	 
	16.1	 	Communications in writing
	 
	 	 	Any communication to be made under or in connection with this Guarantee shall be made
in writing and, unless otherwise stated, may be made by fax or letter.





- 9 -









 







	16.2	 	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 Guarantee is that identified with its name
below or any substitute address, 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 Business Days’ notice.
	 
	16.3	 	Delivery






	 	(a)	 	Any communication or document made or delivered by one person to another under or
in connection with this Guarantee will only be effective:






	 	(i)	 	if by way of fax, when received in legible form; or
	 
	 	(ii)	 	if by way of letter, when it has been left at the relevant
address or five 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 16.2 (Addresses), if addressed to that department or
officer.






	17.	 	ADDITIONAL SECURITY






	 	(a)	 	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.
	 
	 	(d)	 	The liability of the Guarantor under this Guarantee shall not be discharged or
affected in any way (i) by reason of the invalidity, voidability or unenforceability
as regards any other guarantee or any other security or (ii) by the Finance Parties
releasing, discharging, compounding with or varying the liability under any other
guarantee or making any other arrangement with, the Borrower, any Obligor or any other
person.






	18.	 	ASSIGNMENTS AND SUCCESSORS
	 
	 	 	MIE may at any time assign or transfer all or any of its rights and benefits under this
Guarantee and this Guarantee shall remain in effect despite any amalgamation or merger
(however effected) relating to MIE. References to MIE shall be deemed to include any
assignee, transferee or successor in title of MIE and any person who, under the laws of its
jurisdiction of incorporation or domicile, has assumed the rights and obligations of MIE
under this Guarantee or to which under such laws the same have been transferred.





- 10 -









 







	19.	 	PARTIAL INVALIDITY
	 
	 	 	If at any time, any provision of this Guarantee is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Guarantee nor of such
provisions under the law of any other jurisdiction shall in any way be affected or impaired
thereby.
	 
	20.	 	REMEDIES AND WAIVERS
	 
	 	 	No failure to exercise, nor any delay in exercising, on the part of MIE, any right or
remedy under this Guarantee shall operate as a waiver, nor shall any single or partial
exercise of any right or remedy prevent any further or other exercise of any other right or
remedy. The rights and remedies provided in this Guarantee are cumulative and not exclusive
of any rights or remedies provided by law.
	 
	21.	 	AMENDMENTS
	 
	 	 	Any term of this Guarantee may be amended or waived only with the consent of MIE and the
Guarantor in writing and any such amendment or waiver will be binding on the Guarantor and
MIE.
	 
	22.	 	GOVERNING LAW
	 
	 	 	This Guarantee is governed by English law.
	 
	23.	 	ENFORCEMENT
	 
	23.1	 	Jurisdiction






	 	(b)	 	The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this Guarantee (including a dispute regarding the
existence, validity or termination of this Guarantee) (a “Dispute”).
	 
	 	(c)	 	The Guarantor agrees that the courts of England are the most appropriate and
convenient courts to settle Disputes and, accordingly, the Guarantor will not argue to
the contrary.






	23.2	 	Service of process
	 
	 	 	Without prejudice to any other mode of service allowed under any relevant law, the
Guarantor:






	 	(a)	 	irrevocably appoints [  ] of [  ] as his agent for service of process in
relation to any proceedings before the English courts in connection with this
Guarantee; and
	 
	 	(b)	 	agrees that failure by a process agent to notify the Guarantor of the process
will not invalidate the proceedings concerned.





- 11 -









 




IN WITNESS WHEREOF this Guarantee has been executed as a deed by the Guarantor and is intended to
be and is hereby delivered as a deed on the date specified above.




- 12 -









 





	 	 	 
	The Guarantor
	 	 
	 
	 	 
	Signed as deed by

	 	     ) 
	ZHANG RUILIN

	 	     )                                                                  
	in the presence of:

	 	     ) 
	 
	 	 
	 

	 	Signature of witness
	 


	 	 
	 
	 	 
	 

	 	Name of witness
	 


	 	 
	 
	 	 
	 

	 	Address of witness
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


	 	 






	 	 	 
	Address:

	 	Suite 402, Block C, Grand Place
	 

	 	5 Hui Zhong Road
	 

	 	Chaoyang District
	 

	 	Beijing 100101
	 

	 	P.R.China
	 
	 	 
	Fax No.:

	 	+86 10 8489 2290 






 









 






MIE




MI ENERGY CORPORATION




By:




	 	 	 
	 


	 	 






	 	 	 
	Address:

	 	Room 406, Building C
	 

	 	Yuanda Center
	 

	 	No. 5 Huizhong Road
	 

	 	Chaoyang District, Beijing
	 

	 	PRC






- 14 -









 





SCHEDULE 5




Form of Assignment of ZR Guarantee



- 15 -









 





			
	 	 	 
	C L I F F O R D
	 	CLIFFORD CHANCE WONG PTE LTD
	 	 	 
	C H A N C E
	 	EXECUTION COPY
	 	 	 
	W O N G	 	 






DATED            JANUARY 2009




MI ENERGY CORPORATION

as Assignor



and



STANDARD BANK ASIA LIMITED

as Security Trustee



 





ASSIGNMENT OF ZR GUARANTEE



 





 









 









CONTENTS




	 	 	 	 	 
	Clause	 	Page	 
	1 Definitions And Interpretation
	 	 	1	 
	 
	 	 	 	 
	2 Covenant To Pay
	 	 	2	 
	 
	 	 	 	 
	3 Assignment
	 	 	2	 
	 
	 	 	 	 
	4 Notice Of Assignment
	 	 	2	 
	 
	 	 	 	 
	5 Further Advances
	 	 	2	 
	 
	 	 	 	 
	6 Assignor’s Representations
	 	 	3	 
	 
	 	 	 	 
	7 Assignor’s Undertakings
	 	 	3	 
	 
	 	 	 	 
	8 Enforcement
	 	 	4	 
	 
	 	 	 	 
	9 Further Assurance
	 	 	4	 
	 
	 	 	 	 
	10 Power Of Attorney
	 	 	5	 
	 
	 	 	 	 
	11 Receiver
	 	 	5	 
	 
	 	 	 	 
	12 Effectiveness Of Security
	 	 	5	 
	 
	 	 	 	 
	13 Release Of Security
	 	 	6	 
	 
	 	 	 	 
	14 Subsequent Interests And Accounts
	 	 	7	 
	 
	 	 	 	 
	15 Currency Conversion
	 	 	7	 
	 
	 	 	 	 
	16. Application Of Moneys
	 	 	7	 
	 
	 	 	 	 
	17 Assignment
	 	 	7	 
	 
	 	 	 	 
	18 Notices
	 	 	8	 
	 
	 	 	 	 
	19 Law
	 	 	8	 
	 
	 	 	 	 
	20 Enforcement
	 	 	8	 
	 
	 	 	 	 
	Schedule 1 Form Of Notice Of Assignment
	 	 	9	 










 









 











THIS ASSIGNMENT is made as a deed on            January 2009




BETWEEN:





	(1)	 	MI ENERGY CORPORATION, a corporation organised and existing under the laws of the Cayman
Islands and having an office at: c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands (the “Assignor”); and
	 
	(2)	 	STANDARD BANK ASIA LIMITED as security trustee of the Secured Parties on the terms and
conditions set out in the Facility Agreement (the “Security Trustee” which expression shall
include any person for the time being appointed as trustee or as an additional trustee for the
purpose of and in accordance with the Facility Agreement).





IT IS AGREED as follows:





	1	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this Assignment:
	 
	 	 	“Assigned Property” means the rights and property expressed to be assigned in Clause 3
(Assignment).
	 
	 	 	“Collateral Rights” means all rights, powers and remedies of the Security Trustee provided
by this Assignment or by law.
	 
	 	 	“Facility Agreement” means the facility agreement dated 29 October 2007 between the
Company, as borrower, the Arranger, the Agent, the Security Trustee the Technical Bank, the
Account Bank and the Lenders (each as defined in that agreement) as the same was amended
pursuant to a waiver and amendment letter dated 23 November 2007 and as amended and
restated pursuant to a first amendment agreement dated                     
January 2009 (and as may be further amended, restated, varied, novated or
supplemented from time to time).
	 
	 	 	“Notice of Assignment” means a notice of assignment substantially in the form of the
Schedule.
	 
	 	 	“Secured Obligations” means all obligations at any time due, owing or incurred by any
Obligor to any Secured Party under the Finance Documents, whether present or future, actual
or contingent (and whether incurred solely or jointly and whether as principal or surety or
in some other capacity).
	 
	 	 	“ZR Guarantee” means the guarantee dated on or about the date of this Assignment by ZR in
favour of the Assignor in respect of Far East’s obligations to the Assignor under the
Interim Loan.





- 1 -









 






	1.2	 	Terms defined in other Finance Documents
	 
	 	 	Unless defined in this Assignment or the context otherwise requires, a term defined in
the Facility Agreement or in any other Finance Document has the same meaning in this
Assignment or any notice given under or in connection with this Assignment, as if all
references in such defined terms to the Facility Agreement or other Finance Document were a
reference to this Assignment or such notice.
	 
	1.3	 	Construction
	 
	 	 	Clause 1.2 (Construction) of the Facility Agreement will apply as if incorporated in
this Assignment or in any notice given under or in connection with this Assignment, as if
all references in such Clauses to the Facility Agreement were a reference to this
Assignment or such notice.
	 
	1.4	 	Third party rights
	 
	 	 	A person who is not a party to this Assignment has no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this Assignment.
	 
	2	 	COVENANT TO PAY
	 
	 	 	The Assignor covenants with the Security Trustee to discharge each of the Secured
Obligations on their due date in accordance with their respective terms.
	 
	3	 	ASSIGNMENT
	 
	3.1	 	The Assignor assigns absolutely and with full title guarantee to the Security Trustee all
of its right, title and interest, present and future, in, under and to the ZR Guarantee,
without limitation, all present and future claims, causes of action, payments and proceeds in
respect thereof.
	 
	3.2	 	The Security Trustee shall not be under any obligation in relation to the ZR Guarantee as a
consequence of this Assignment and the Assignor shall at all times remain liable to perform
all obligations expressed to be assumed by it in respect of the ZR Guarantee.
	 
	4	 	NOTICE OF ASSIGNMENT
	 
	 	 	The Assignor shall promptly deliver to the Security Trustee a Notice of Assignment duly
executed by or on behalf of the Assignor and shall procure that the Notice of Assignment is
acknowledged by ZR.
	 
	5	 	FURTHER ADVANCES
	 
	 	 	Subject to the terms of the Facility Agreement the Lenders are under an obligation to
make further advances to the Assignor and that obligation shall be deemed to be
incorporated into this Assignment as if set out in this Assignment.





- 2 -









 










	6	 	ASSIGNOR’S REPRESENTATIONS
	 
	 	 	The Assignor represents and warrants to the Security Trustee on the date specified
above and on each day for the duration of this Assignment that:






	 	(a)	 	the ZR Guarantee is in full force and effect, enforceable in accordance with
its terms and at the date specified above it is not in breach of any term or condition
of the ZR Guarantee;
	 
	 	(b)	 	there are no restrictions on the Assignor’s ability to assign all or any of its
rights under the ZR Guarantee or any of the other Assigned Property;
	 
	 	(c)	 	it is, and will be, the sole legal and beneficial owner of the Assigned
Property; and
	 
	 	(d)	 	other than by way of this Assignment or as permitted pursuant to the Facility
Agreement, it has not sold or otherwise disposed of, or created, granted or permitted
to subsist any security interest over, all or any of its right, title and interest in
the Assigned Property.






	7	 	ASSIGNOR’S UNDERTAKINGS
	 
	 	 	The Assignor undertakes to the Security Trustee for the duration of this Assignment
that it shall:






	 	(a)	 	not sell, assign, transfer or otherwise dispose of all or any part of the
Assigned Property;
	 
	 	(b)	 	not create, grant or permit to subsist any Security over all or any of its
right, title and interest in the Assigned Property;
	 
	 	(c)	 	promptly notify the Security Trustee of any circumstances which give rise, or
may reasonably be expected to give rise, to a claim on or under the Assigned Property;
	 
	 	(d)	 	not vary, rescind or amend the ZR Guarantee except with the prior written
consent of the Security Trustee;
	 
	 	(e)	 	promptly comply with its obligations in respect of the ZR Guarantee;
	 
	 	(f)	 	not take or omit to take any action which might result in (i) the alteration or
impairment of any rights in the Assigned Property; (ii) any default of any of its
obligations in respect of the ZR Guarantee; (iii) any right to terminate the ZR
Guarantee becoming exercisable by the counterparty thereto; and
	 
	 	(g)	 	not exercise any rights of counterclaim or set-off arising in respect of the
ZR Guarantee.






- 3 -









 










	8	 	ENFORCEMENT
	 
	8.1	 	After the occurrence of an Event of Default which is continuing, the security created by
or pursuant to this Assignment is immediately enforceable and the Security Trustee may,
without notice to the Assignor or prior authorisation from any court, in its absolute
discretion:






	 	(a)	 	exercise in relation to the ZR Guarantee all of the rights of an absolute owner;
	 
	 	(b)	 	assign any or all of the Assigned Property to any person on such terms as the
Security Trustee considers appropriate; and
	 
	 	(c)	 	collect, recover or compromise, and give a good discharge for, any moneys paid
or payable to the Assignor under or in respect of the Assigned Property, and enforce
(in any way whatsoever including, without limitation, by way of instituting
proceedings in the Assignor’s name) any rights or claims arising under or in respect
of the Assigned Property.






	8.2	 	The power of sale or other disposal in Clause 8.1 shall operate as a variation and extension
of the statutory power of sale under Section 101 of the Law of Property Act 1925 and such
power shall arise (and the Secured Obligations shall be deemed due and payable for that
purpose) on execution of this Assignment. The restrictions contained in Sections 93 and 103
of the Law of Property Act 1925 shall not apply to this Assignment or to any exercise by the
Security Trustee of its right to consolidate mortgages or its power of sale.
	 
	8.3	 	A certificate in writing by an officer or agent of the Security Trustee that the power of
sale or disposal has arisen and is exercisable shall be conclusive evidence of that fact in
favour of a purchaser of all or any part of the Assigned Property.
	 
	9	 	FURTHER ASSURANCE
	 
	9.1	 	The Assignor shall promptly at its own cost do all such acts or execute all such documents
(including the execution and delivery of any Notice of Assignment) that the Security Trustee
may reasonably specify (and in such form as the Security Trustee may require in favour of the
Security Trustee or its nominee(s)) for the purpose of (a) exercising the Collateral Rights,
(b) securing and perfecting its security over or title to all or any part of the Assigned
Property or (c) facilitating any dealings by the Security Trustee pursuant to the powers
granted to the Security Trustee under this Assignment.
	 
	9.2	 	The Assignor shall as soon as practicable upon the execution of this Assignment enter
particulars of the security interests created pursuant to this Assignment in its register of
mortgages and charges to comply with section 54 of the Companies Law (as amended) of the
Cayman Islands.





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	10	 	POWER OF ATTORNEY
	 
	10.1	 	Appointment and powers






	 	(a)	 	The Assignor, by way of security, irrevocably appoints the Security Trustee to be
its attorney and in its name, on its behalf and as its act and deed to execute, deliver
and perfect all documents and do all things which the Assignor is obliged to do under
this Assignment but has failed to do that the Security Trustee may consider to be
necessary for (a) carrying out any obligation imposed on the Assignor under this
Assignment or (b) exercising any of the Collateral Rights;
	 
	 	(b)	 	The Assignor shall ratify and confirm all things done and all documents
executed by the Security Trustee in the exercise of that power of attorney.






	10.2	 	Ratification
	 
	 	 	The Assignor shall ratify and confirm all things done and all documents executed by any
attorney in the exercise or purported exercise of all or any of his powers.
	 
	11	 	RECEIVER
	 
	11.1	 	After the occurrence of an Event of Default or if a petition or application is presented
for the making of an administration order in relation to or for the judicial management of the
Assignor or if any person who is entitled to do so gives written notice of its intention to
appoint an administrator or judicial manager of the Assignor or files such a notice with the
court, the Security Trustee may by writing (acting through an authorised officer of the
Security Trustee) without prior notice to the Assignor appoint one or more persons to be
receiver (“Receiver”) of the whole or any part of the Assigned Property (each such person
being (a) entitled to act individually as well as jointly and (b) for all purposes deemed to
be the agent of the Assignor).
	 
	11.2	 	In addition to the powers of the Security Trustee conferred by Clause 8.1, each person
appointed pursuant to Clause 11.1 shall have, in relation to the part of the Assigned Property
in respect of which he was appointed, all the powers (a) conferred by the Law of Property Act
1925 on a receiver appointed under that Act, (b) of an administrative receiver set out in
Schedule 1 to the Insolvency Act 1986 (whether or not such person is an administrative
receiver) and (c) (if such person is an administrative receiver) all the other powers
exercisable by an administrative receiver in relation to the Assignor by virtue of the
Insolvency Act 1986.
	 
	12	 	EFFECTIVENESS OF SECURITY
	 
	12.1	 	The security created by this Assignment and the Collateral Rights shall be cumulative, in
addition to and independent of every other security which the Security Trustee may at any time
hold for the Secured Obligations or any rights, powers and remedies provided by law. No prior
security held by the Security Trustee over the whole or any part of the Assigned Property
shall merge into the security constituted by this Assignment.










- 5 -









 














	12.2	 	This Assignment shall remain in full force and effect as a continuing security for the
Secured Obligations unless and until the Secured Obligations have been discharged in full
and none of the Secured Parties is under any further actual or contingent obligation to make
advances or provide other financial accommodation to the Assignor under any of the Finance
Documents (unless discharged earlier by the Security Trustee).
	 
	12.3	 	No failure on the part of the Security Trustee to exercise, or delay on its part in
exercising, any Collateral Right shall operate as a waiver, nor shall any single or partial
exercise of a Collateral Right prevent any further or other exercise of that or any other
Collateral Right.
	 
	12.4	 	If, at any time, any provision of this Assignment is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, the legality, validity or
enforceability of (a) the remaining provisions of this Assignment and (b) such provision under
the law of any other jurisdiction shall not in any way be affected or impaired thereby.
	 
	12.5	 	None of the Security Trustee, its nominee(s) or any receiver appointed pursuant to this
Assignment shall be liable by reason of (a) taking any action permitted by this Assignment,
(b) any neglect or default in connection with the Assigned Property or (c) the taking
possession or realisation of all or any part of the Assigned Property, except in the case of
gross negligence or wilful default upon its part.
	 
	13	 	RELEASE OF SECURITY
	 
	13.1	 	Upon the Secured Obligations being irrevocably paid or discharged in full, and the
Security Trustee and the Secured Parties having no further actual or contingent obligations to
make advances or provide other financial accommodation to the Assignor or any other person
under the Finance Documents, the Security Trustee shall, at the request and cost of the
Assignor, (such cost, if any, to be reasonably incurred), promptly reassign to the Assignor
the Assigned Property and deliver such written notices to the Notice of Assignment
counterparties as the Assignor may reasonably require without recourse to, and without any
representations or warranties by, the Security Trustee or any of its nominee(s).
	 
	13.2	 	If the Security Trustee considers that any amount paid or credited to it is capable of being
avoided or reduced by virtue of any bankruptcy, insolvency, liquidation or similar laws, the
liability of the Assignor under this Assignment and the security constituted by this
Assignment shall continue and such amount shall not be considered to have been irrevocably
paid.
	 
	13.3	 	Notwithstanding any discharge, release or settlement from time to time between any Secured
Party and the Assignor, if any security, disposition or payment granted or made to any Secured
Party in respect of the Secured Obligations by an Obligor or any other person is avoided or
set aside or ordered to be surrendered, paid away, refunded or reduced by virtue of any
provision, law or enactment relating to bankruptcy, insolvency, liquidation, winding up,
composition or arrangement for the time being in




- 6 -









 







	 	 	force or for any other reason, the Security Trustee shall, in its sole and absolute
discretion, be entitled (to the extent possible under applicable law) hereafter to enforce
this Assignment as if no such discharge, release or settlement had occurred.
	 
	14	 	SUBSEQUENT INTERESTS AND ACCOUNTS
	 
	 	 	If the Security Trustee at any time receives notice of any subsequent mortgage,
assignment, charge or other interest affecting all or any part of the Assigned Property,
all payments made by the Assignor to the Security Trustee or any of the Secured Parties
after that time shall be treated as having been credited to a new account of the Assignor
and not as having been applied in reduction of the Secured Obligations as at the time when
the Security Trustee received notice.
	 
	15	 	CURRENCY CONVERSION
	 
	 	 	For the purpose of or pending the discharge of any of the Secured Obligations the
Security Trustee may convert any money received, recovered or realised or subject to
application by it under this Assignment from one currency to another, as the Security
Trustee thinks fit, and any such conversion shall be effected at the Security Trustee’s
spot rate of exchange for the time being for obtaining such other currency with the first
currency.
	 
	16.	 	APPLICATION OF MONEYS
	 
	 	 	All moneys received or recovered by the Security Trustee or any Receiver under this
Assignment shall be applied in the order set out in clause 40.1 (Order of application) of
the Facility Agreement.
	 
	17	 	ASSIGNMENT
	 
	17.1	 	Successors
	 
	 	 	This Assignment shall be binding upon and shall inure to the benefit of each party and
its direct or subsequent legal successors, permitted transferees and assigns.
	 
	17.2	 	Security Trustee Successors
	 
	 	 	This Assignment shall remain in effect despite any amalgamation or merger (however
effected) relating to the Security Trustee; and references to the Security Trustee shall
include any assignee or successor in title of the Security Trustee and any person who, under
the laws of its jurisdiction of incorporation or domicile, has assumed the rights and
obligations of the Security Trustee under this Assignment or to which, under such laws,
those rights and obligations have been transferred.
	 
	17.3	 	Disclosure
	 
	 	 	The Security Trustee shall be entitled to disclose such information concerning the
Assignor, this Assignment and the ZR Guarantee as the Security Trustee considers appropriate
to any actual or proposed direct or indirect successor or to any person to whom information
may be required to be disclosed by applicable law.




- 7 -









 







	18	 	NOTICES
	 
	 	 	Any communication to be made under or in connection with this Assignment shall be made
in accordance with the terms of the Facility Agreement.
	 
	19	 	LAW
	 
	 	 	This Assignment and all non-contractual obligations arising out of or in connection
with it are governed by English law.
	 
	20	 	ENFORCEMENT
	 
	20.1	 	Jurisdiction of English Courts






	 	(a)	 	The courts of England have exclusive jurisdiction to settle any dispute arising out
of or in connection with this Assignment (including a dispute regarding the existence,
validity or termination of this Assignment) (a “Dispute”).
	 
	 	(b)	 	The parties agree that the English courts are the most appropriate and
convenient courts to settle Disputes between them and, accordingly, no party will argue
to the contrary.
	 
	 	(c)	 	This Clause 20 is for the benefit of the Security Trustee only. As a result and
notwithstanding Clause 20.1 (a), it does not prevent the Security Trustee from taking
proceedings relating to a Dispute in any other courts with jurisdiction. To the extent
allowed by law, the Security Trustee may take concurrent proceedings in any number of
jurisdictions.






	20.2	 	Service of Process
	 
	 	 	Without prejudice to any other mode of service allowed under any relevant law, the
Assignor:






	 	(a)	 	irrevocably appoints Law Debenture Corporate Services Limited of Fifth Floor,
100 Wood Street, London EC2V 7EX as its agent for service of process in relation to any
proceedings before the English courts in connection with this Assignment; and
	 
	 	(b)	 	agrees that failure by an agent for service of process to notify the Assignor
of the process will not invalidate the proceedings concerned.




IN WITNESS WHEREOF this Assignment has been signed on behalf of the Security Trustee and executed
as a deed by the Assignor and is intended to be and is hereby delivered by it as a deed on the
date specified above.




- 8 -









 





SCHEDULE 1




Form
of Notice of Assignment




	To:	 	 Mr. Zhang Ruilin





Date: [  ]




Dear Sirs,





	1.	 	We hereby give you notice that we have assigned to Standard Bank Asia Limited (the “Security
Trustee”) pursuant to an assignment entered into by us in favour of the Security Trustee dated
[  ] all our right, title and interest in and to [details of the ZR Guarantee] (the
“Guarantee”) including all moneys which may be payable in respect of the Guarantee.
	 
	2.	 	With effect from your receipt of this notice, you are authorised and instructed, without
requiring further approval from us, to provide the Security Trustee with such information
relating to the Guarantee as it may from time to time reasonably request and to send copies of
all notices issued by you under the Guarantee to the Security Trustee as well as to us.
	 
	3.	 	With effect from your receipt of a notice from the Security Trustee that the security
constituted by an assignment of the Guarantee dated [  ] between ourselves and the Security
Trustee is enforceable:






	 	(a)	 	all payments by you to us under or arising from the Guarantee (the “Payments”)
shall be made to the Security Trustee or to its order as it may specify in writing from
time to time;
	 
	 	(b)	 	all remedies provided for in the Guarantee or available at law or in equity
shall be exercisable by the Security Trustee;
	 
	 	(c)	 	all rights to compel performance of the Guarantee shall be exercisable by the
Security Trustee although we shall remain liable to perform all the obligations assumed
by us under the Guarantee; and
	 
	 	(d)	 	all rights, interests and benefits whatsoever accruing to or for the benefit of
ourselves arising from the Guarantee shall belong to the Security Trustee.






	4.	 	These instructions may not be revoked, nor may the terms of the Guarantee be amended, varied,
waived or terminated, without the prior written consent of the Security Trustee.
	 
	5.	 	Please acknowledge receipt of this notice by signing the acknowledgement on the enclosed copy
letter and returning it to the Security Trustee at 36th Floor, Two Pacific Place, 88
Queensway, Hong Kong marked for the attention of “Head of Loans Administration”.




- 9 -









 






	6.	 	This notice is governed by English law.





Yours faithfully,



                                        

For and on behalf of

MI ENERGY CORPORATION




- 10 -









 





Acknowledgement




[On
copy only:]





	To: 	 	Standard Bank Asia Limited as Security Trustee




I acknowledge receipt of a notice in the terms set out above and confirm that I have not
received notice of any previous assignments or charges of or over any of the rights, interests and
benefits in and to the Guarantee and that I will comply with the terms of the notice from the
Assignor.



I acknowledge receipt of instructions from you in connection with the assignment of the Guarantee
and confirm that I shall act in accordance with them until I receive written notification from you
to the contrary.




                                        

Mr Zhang Ruilin




Dated:




- 11 -









 






SIGNATURE PAGES TO

ASSIGNMENT OF ZR GUARANTEE




THE ASSIGNOR




	 	 	 	 	 	 	 	 	 
	EXECUTED AS A DEED by MI

	 	 	)	 	 	 	 	 
	 	 	 	 	 	 	 
	ENERGY CORPORATION:

	 	 	)	 	 	 	 	Duly Authorised Signatory
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 






In the presence of:




	 	 	 	 	 
	 	 	 
	Signature of witness
	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Occupation:
	 	 	 	 
	 

	 	 	 	 





(Note: These details are to be completed
in the witness’s own handwriting.)




 









 





SIGNATURE PAGES TO

ASSIGNMENT OF ZR GUARANTEE




The Security Trustee




STANDARD BANK ASIA LIMITED




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 





 









 





MI ENERGY CORPORATION

NEW FIRST AMENDMENT AND RESTATEMENT AGREEMENT TO

$150,000,000 BORROWING BASE FACILITY AGREEMENT




SIGNATURES




The Borrower




	 	 	 	 	 
	MI ENERGY CORPORATION	 	 
	 
	 	 	 	 
	By:

		/s/ Forrest Dietrich	 	 






The Agent




STANDARD BANK ASIA LIMITED




By:




The Arranger




STANDARD BANK ASIA LIMITED




By:




The Security Trustee




STANDARD BANK ASIA LIMITED




By:




The Technical Bank




STANDARD BANK ASIA LIMITED




By:




The Offshore Account Bank




STANDARD BANK PLC




By:




 









 





MI ENERGY CORPORATION

NEW FIRST AMENDMENT AND RESTATEMENT AGREEMENT TO

$150,000,000 BORROWING BASE FACILITY AGREEMENT




SIGNATURES




The Borrower




MI ENERGY CORPORATION




By:




The Agent




	 	 	 	 	 
	STANDARD BANK ASIA LIMITED	 	 
	 
	 	 	 	 
	By:

	 	/s/	 	 






The Arranger




	 	 	 	 	 
	STANDARD BANK ASIA LIMITED	 	 
	 
	 	 	 	 
	By:

	 	/s/	 	 






The Security Trustee




	 	 	 	 	 
	STANDARD BANK ASIA LIMITED	 	 
	 
	 	 	 	 
	By:

	 	/s/	 	 






The Technical Bank




	 	 	 	 	 
	STANDARD BANK ASIA LIMITED	 	 
	 
	 	 	 	 
	By:

	 	/s/	 	 






The
Offshore Account Bank 




	 	 	 	 	 
	STANDARD BANK PLC	 	 
	 
	 	 	 	 
	By:

	 	/s/
	 	






 









 





MI ENERGY CORPORATION

NEW FIRST AMENDMENT AND RESTATEMENT AGREEMENT TO

$150,000,000 BORROWING BASE FACILITY AGREEMENT




The Lenders




	 	 	 	 	 
	STANDARD BANK PLC	 	 
	 
	 	 	 	 
	By:

	 	/s/
	 	
	 
	 	 	 	 
	The Hedge Counterparties	 	 
	 
	 	 	 	 
	STANDARD BANK PLC	 	 
	 
	 	 	 	 
	By:

	 	/s/