Document:

ex1093k123109.htm

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    AGREEMENT
NO.

    

    For
the Sale of Natural Gas

    

    between

    

    FX
Energy Poland Sp. z o.o.

    

    and

    

    POLSKIE
GÓRNICTWO NAFTOWE I GAZOWNICTWO S.A.

    

    

    This
Agreement (“Agreement”)
was signed on 19.06.2009 in Warsaw between:

    

    FX
ENERGY POLAND Sp. z o.o. with its
registered seat in Warsaw, at ul. Chałubinskiego 8, 00-613 Warsaw,
entered into the National Court Register by the District Court in Warsaw under
the KRS No. 0000052459, NIP 521-275-14-81, share capital PLN 1 895 000 (one
million eight hundred ninety five thousand), hereinafter referred to
as “FX”, the “Seller” or a “Party”, represented
by:

    

    1.       David
N. Pierce – member of the Management Board; and

    

    2.       Zbigniew
Tatys - member of the Management Board.............................,

    

    and

    

    Polskie
Górnictwo Naftowe i Gazownictwo Spółka Akcyjna with its registered office
in Warsaw at ul. Kasprzaka 25, entered in the Companies Register of the National
Court Register by the District Court for the City of Warsaw, XIX Commercial
Division of the National Court Register, under number KRS 0000059492, NIP number
525-000-80-28, REGON number 012216736-00027, hereinafter referred to as the
“Purchaser” or a “Party”, represented
by:

    

    1.       Artur
Bieliński – Director of Gas Trading Department; and

    

    2.       Bartosz
Motyka-Radłowski – Director of Controlling Department.

    

    

    § 1

    

    
      	
              1.

            	
              In
      this Agreement, the below terms shall have the following
      meanings:

            

    

    

    
      	
               
      

            	
              1/

            	
              Contract
      Day - a period starting at 10:00 p.m. of any given calendar day and
      ending at 10:00 p.m. of the following calendar
  day;

            

    

    

    
      	
               
      

            	
              2/

            	
              Sale
      Commencement Day - the Contract Day on which the sale of the Gas in
      Delivery Point commences;

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    
      	
               
      

            	
              3/

            	
              Sale
      Closure Day – the Contract Day on which the production from the
      Field is ceased, or the Seller loses its title to the
  Gas;

            

    

    

    
      	
               
      

            	
              4/

            	
              Gas
      – the 49% share in the ownership of a mix of hydrocarbons and
      non-flammable gaseous components including methane and nitrogen as main
      components, belonging to the Seller, which is not a gaseous fuel according
      to the Energy Law, and which conforms to the parameters specified in
      Appendix No. 1, produced from the Field on the basis of the Joint
      Operating Agreement,
      other than the part of the mineral used in for the purposes of
      operation of the mining plant;

            

    

    

    
      	
               
      

            	
              5/

            	
              Joint
      Operating Agreement – Joint operating agreement covering a part of
      the Foresudetic Monocline, entered into on 12 May 2000 between the Buyer
      and the Seller, on the basis of which the Seller will have the right of
      ownership of the Gas, and any agreement related to the Field, which will
      replace it;

            

    

    

    
      	
               
      

            	
              [NOTE:
      NUMBER 6 IS OMITTED IN THE POLISH
VERSION]

            

    

    

    
      	
               
      

            	
              7/

            	
              Contract
      Month - a period starting at 10:00 p.m. of the last day of the
      calendar month directly preceding the given calendar month, and ending at
      10:00 p.m. of the last day of the given calendar
  month;

            

    

    

    
      	
               
      

            	
              8/

            	
              Normal
      Cubic Meter (Nm3)
      - means the amount of gas required to fill a space of one cubic metre with
      an absolute pressure of 101.325 kPa (one hundred and one point three two
      five kilopascals) and at thermodynamic temperature of 273.15 K (two
      hundred and seventy three point one five Kelvin); unless expressly stated
      otherwise, all quantities of the Gas referred to herein shall be expressed
      in Nm3;

            

    

    

    
      	
               
      

            	
              9/

            	
              Sale
      Period - the period commencing on the Sale Commencement Day and
      ending on the Sale Closure Day;

            

    

    

    
      	
               
      

            	
              10/

            	
              Planned
      Maintenance Work - renovation, construction, maintenance and
      modernization work:

            

    

    

    
      	
               
      

            	
              (a)

            	
              conducted
      by the Purchaser in the Purchaser’s installations, which affects the
      Purchaser’s ability to take the Gas at the Delivery
  Point;

            

    

    

    
      	
               
      

            	
              (b)

            	
              conducted
      by the Seller in the Delivery System, which affects the Seller’s ability
      to sell the Gas at the Delivery Point, including, without limitation, any
      periodic tests conducted on the
Field;

            

    

    

    
      	
               
      

            	
              11/

            	
              Annual
      Statement– is defined in Appendix No.
1;

            

    

    

    
      	
               
      

            	
              12/

            	
              Monthly
      Statement– is defined in Appendix No.
1;

            

    

    

    2

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    
      	
               
      

            	
              13/

            	
              Energy
      Law – an act dated 10 April 1997 – Energy law (unified text:
      Journal of Laws of 2006 No. 89, item
625);

            

    

    

    
      	
               
      

            	
              14/

            	
              Delivery
      Point - the point at which the connection pipe at the outlet of the
      Metering System is linked to the Purchaser’s installation through the main
      valve;

            

    

    

    
      	
               
      

            	
              15/

            	
              Contract
      Year - a period starting at 10:00 p.m. on the last day of any
      calendar year and ending at 10:00 p.m. of the last day of the following
      calendar year, provided that:

            

    

    

    
      	
               
      

            	
              (a)

            	
              the
      first Contract Year shall commence at 10:00 p.m. on the Sale Commencement
      Day and shall continue until 10:00 p.m. on last day of the same calendar
      year;

            

    

    

    
      	
               
      

            	
              (b)

            	
              if
      this Agreement terminates on any day other than December 31, the last
      Contract Year shall end at 10:00 p.m. on the last day of effectiveness of
      the Agreement;

            

    

    

    
      	
               
      

            	
              16/

            	
              Quality
      Specification – a set of physical and chemical parameters of the
      Gas specified in Appendix No. 1;

            

    

    

    
      	
               
      

            	
              17/

            	
              Gas
      Station - a set of installations used, whether jointly or
      separately, to reduce, process, control, measure and distribute the
      Gas;

            

    

    

    
      	
               
      

            	
              18/

            	
              Delivery
      System - installations used for the purposes of producing,
      processing, compressing, testing, measuring and selling the Gas at the
      Delivery Point;

            

    

    

    
      	
               
      

            	
              19/

            	
              Tariff
      – the set of prices and fee rates, and conditions of their application,
      prepared by the Seller and introduced as binding for customers specified
      therein, according to the procedures set forth in the Energy Law; in
      particular the Tariff shall set out the prices and fee rates for the
      consumers of the Lw class low-methane
gas;

            

    

    

    
      	
               
      

            	
              20/

            	
              Metering
      System - gas meters and
      other metering devices, as well as the systems connecting those devices,
      described in Appendix No. 1, used to measure the quantity of the Gas sold
      at the Delivery Point, owned by the
Seller;

            

    

    

    
      	
               
      

            	
              21/

            	
              Field
      - means the gas field located in the “Roszków” mining area – the natural
      gas accumulation in the Rotligend sandstone, located in the area of
      Wielkopolskie province, Jarocin district, in Jarocin and Jaraczewo
      municipalities;

            

    

    

    
      	
              2.

            	
              All
      units of measurement used herein are units of the SI system in accordance
      with the Law on Measurements dated 11 May 2001 (consolidated text: Dz. U.
      of 2004, No. 243, item 2441).

            

    

     

    3

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    § 2

    

    
      	
              1.

            	
              The
      Seller undertakes to transfer title to the Gas to the Seller during the
      Sale Period and to surrender all the Gas to the Purchaser at the Delivery
      Point, and the Purchaser undertakes to take all the Gas and pay for it at
      the Gas Price specified in the
Agreement.

            

    

    

    
      	
              2.

            	
              The
      Seller hereby represents that it has obtained all material authorizations,
      including administrative permits, required for the execution and
      performance of the Agreement.

            

    

    

    
      	
              3.

            	
              This
      Agreement is entered into subject to the condition precedent of the
      Purchaser and the Seller entering into an agreement transferring to the
      Seller a 49% interest in the mining usufruct, based on which the Seller
      shall assume, as co-holder of mining usufruct, all rights and obligations
      under the mining usufruct agreement dated 29 February 2009 entered into
      between the State Treasury – Minister of Environment and the
      Purchaser.

            

    

    

    
      	
              4.

            	
              This
      Agreement shall terminate upon depletion of the Field or if geological
      conditions occur which shall render further exploitation
      impossible.

            

    

    

    
      	
              5.

            	
              The
      Sale Commencement Day shall occur no earlier than on the Contract Day on
      which the Purchaser, acting as the operator under the Joint Operating
      Agreement, commences extraction of Gas from the
  Field.

            

    

    

    
      	
              6.

            	
              The
      detailed rules for sale of the Gas to the Purchaser, including its
      technical and quantity parameters, the rules for the Purchaser to place
      orders for the Gas, the place of handover of the Gas, the rules for
      measuring the quality and quantity of the Gas, the rules for preparing
      Monthly and Annual Statements, and the rules for conducting the Planned
      Maintenance Work, as well as for introducing stoppages and restrictions in
      the delivery of the Gas, are defined in Appendix No. 1 hereto. Appendix 1
      shall be signed no later than by the Sale Commencement Day. If the Parties
      fail to agree upon the text of Appendix 1 by the Sale Commencement Day,
      the text of Appendix 1 as proposed in good faith by the Purchaser as the
      operator under the Joint Operating Agreement shall
  apply.

            

    

    

    

    § 3

    

    
      	
              1.

            	
              The
      Purchaser shall pay for the Gas amounts calculated as the product of the
      Gas sold (expressed in cubic meters) and the Gas Price
    (PGU).

            

    

    

    
      	
              2.

            	
              As
      long and the Purchaser applies the Tariff, the Gas Price (PGU) shall
      correspond to 0.95 (zero point ninety five) parts of the price for gaseous
      fuel specified in the Tariff for the off-takers of low-methane gas (the
      “Lw” sub-group) taking the largest amounts gaseous fuels from the
      transmission network operated by Operator Gazociagow Przesylowych
      Gaz-System S.A., in accordance with the following formula:

               

              PGU = 0.95 *PT

            

    

    4

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    

    where:

    

    PGU – the
Gas Price payable for the Gas sold in the Contract Month.

    

    PT – the
price for gaseous fuel specified in the Tariff for the off-takers of low-methane
gas (the “Lw” sub-group) taking the largest amounts of gaseous fuel from the
transmission network operated by Operator Gazociagow Przesylowych Gaz-System
S.A., being in effect on the last day of the Contract Month immediately
preceding the Contract Month when the Gas is delivered;

    

    
      	
              3.

            	
              If
      the Tariff is changed, the Gas Price shall change as of the first day of
      the Contract Month immediately following the month in which the change of
      the Tariff becomes effective.

            

    

    

    
      	
              4.

            	
              If
      the Purchaser ceases to use the Tariff, the Parties shall enter into
      negotiations aimed at determining the new Gas Price formula within 30
      (thirty) day following a notice to the Seller regarding that
      event.  If the Parties fail to agree upon a new Gas Price
      formula within 4 (four) months from the commencement of the said
      negotiations, each Party may terminate the Agreement subject to no less
      than 6 (six) month notice, effective as of the end of a Contract Year. For
      the avoidance of doubt, during the period between the day when the Tariff
      ceases to apply and the day when the Parties agree on a new Gas Price
      calculation formula, as well as during the termination notice period
      referred to in the preceding sentence, the Gas Price applicable on the
      last day of applicability of the Tariff shall
  apply.

            

    

    

    
      	
              5.

            	
              If
      the calorific value of the Gas sold is different from the calorific value
      defined in the Tariff for the prices of the “Lw” sub-group low-methane
      gas, the Gas Price shall be adjusted in accordance with the below
      formula:

            

    

    

    
      	
               
      

            	
              PGU
      (c) = PGU (t) * MCV/TCV

            

    

    

    
      	
               
      

            	
              where:

            

    

    

    PGU (c) – the
Gas Price payable for the Gas delivered in the Contract Month, taking into
account the actual calorific value of the Gas sold, as specified in the Monthly
Statement;

    

    PGU (t) – the
Gas Price calculated in accordance with section 2 above;

    

    MCV – is
the average monthly gross calorific value of the Gas sold in a given Contract
Month in accordance with the Monthly Statement, calculated in accordance with
Appendix No. 1, stated in MJ/Nm3;

    

    TCV – is
the gross calorific value specified in the Tariff for the prices of the “Lw”
sub-group low-methane gas sold in a given Contract Month, stated in MJ/Nm3.

     

    5

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    

    
      	
              6.

            	
              Numbers
      used in the calculation of the Gas Price and the resulting PGU values
      shall be rounded up or down to the fifth (5) decimal place
      inclusive.  Numbers shall be rounded down if the digit subject
      to rounding is in the range between 0 and 4 inclusive, and shall be
      rounded up if the digit subject to rounding is in the range between 5 and
      9.

            

    

    

    
      	
              7.

            	
              The
      Gas Price and the other amounts stated herein are net of VAT, excise, and
      any similar tax or public charges.

            

    

    

    

    § 4

    

    
      	
              1.

            	
              The
      amounts due for Gas sold shall be paid monthly, on the basis of Monthly
      Statements.  Invoices shall be issued within seven (7) calendar
      days of the end of each Contract Month, and sent to the Purchaser by fax,
      and the original invoice shall be sent through persons or parties
      authorized to deliver mail on the Contract Day on which it is
      issued.

            

    

    

    
      	
              2.

            	
              The
      amounts due for Gas sold shall be paid by wire transfer from the
      Purchaser’s bank account to the bank account as specified in writing by
      the Seller, by the 30th calendar day following the end of the Contract
      Month in which the Gas has been
sold.

            

    

    

    
      	
              3.

            	
              The
      payment of amounts due under the Agreement shall be deemed to have been
      made on the date of crediting the recipient’s bank
  account.

            

    

    

    
      	
              4.

            	
              Any
      default in payment obligations hereunder shall result in interest being
      charged at the statutory rate established pursuant to Article 359 of the
      Polish Civil Code, calculated for each day of the default.  If
      the statutory rate ceases to be published, the applicable rate shall be
      agreed upon by the Parties in an amendment hereto.  Any charged
      interest for default shall be payable against an accounting
      note.

            

    

    

    
      	
              5.

            	
              The
      Parties shall notify each other in writing of any changes to the
      descriptions or the numbers of their respective bank accounts, and such
      notice shall specify both the former and the modified account
      details.  Such changes shall not constitute amendments to this
      Agreement. A Party which defaults in these obligations shall indemnify the
      other for all losses resulting from the
default.

            

    

    

    

    § 5

    

    
      	
              1.

            	
              Any
      complaints regarding invoices must be made in writing within ten (10)
      business days of receipt.

            

    

    

    6

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    
      	
              2.

            	
              If
      the complaint refers to a manifest error (e.g. a mathematical error), then
      the Party receiving the invoice shall be authorized to calculate the
      correct amount and pay such correct amount only within the time specified
      in § 4 section 2, provided that it gives the issuing Party, no later than
      on the date of payment, a written notice explaining its
      calculation.  The latter Party shall issue a correction invoice,
      without any delay after agreeing the correct amount with the
      former.

            

    

    

    
      	
              3.

            	
              Complaints
      disputing an invoice for reasons other than those stated in section 2
      above shall not release a Party from the duty to timely pay the amount
      stated in the invoice constituting the basis for the
      complaint.

            

    

    

    
      	
              4.

            	
              The
      provisions of § 4 and § 5 shall apply, mutatis mutandis, to payments
      against, and complaints concerning, accounting
  notes.

            

    

    

    

    § 6

    

    
      	
               
      

            	
              Subject
      to § 2.4 above, the Agreement shall
terminate:

            

    

    

    
      	
               
      

            	
              1)

            	
              on
      the Sale Closure Day; or

            

    

    

    
      	
               
      

            	
              2)

            	
              on
      the effective date of termination notice if the Agreement is terminated
      pursuant to § 7.

            

    

    

    

    § 7

    

    
      	
              1.

            	
              Either
      Party’s failure to perform, or inappropriate performance of the material
      provisions of this Agreement specified in section 2 below shall entitle
      the other Party to terminate the Agreement subject to at least 30 (thirty)
      calendar days’ notice effective as of the end of the Contract
      Year.

            

    

    

    
      	
              2.

            	
              Material
      provisions of the Agreement shall be considered non-performed or performed
      inappropriately, if:

            

    

    

    1)           a
Party obliged fails to pay the other an amount due under the Agreement and the
default continues for at least thirty (30) days and is not cured within an
additional 14 (fourteen) day period following a written notice calling for
payment and specifying the amount due; or

    

    2)           the
Seller sells any Gas to a third party without the Purchaser’s prior
consent.

    

    
      	
              3.

            	
              The
      Party entitled to terminate the Agreement for the reasons specified in
      section 2 above shall give the other Party a reasoned and properly
      documented written notice specifying the reasons, and date of termination
      of the Agreement pursuant to section 1 of this
  paragraph.

            

    

     

    7

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    

    
      	
              4.

            	
              If
      the Agreement is terminated due to the reasons specified n section 2 point
      1) above, the Seller shall be entitled to claim from the Purchaser
      liquidated damages equal to 6 (six) times the largest net monthly value of
      the Gas sold in the last full Contract
Year.

            

    

    

    
      	
              5.

            	
              If
      the Agreement is terminated due to the reasons specified n section 2 point
      2) above, the Purchaser shall be entitled to claim from the Seller
      liquidated damages equal to 6 (six) times the largest net monthly value of
      the Gas sold in the last full Contract Year, for each event referred to
      above.

            

    

    

    
      	
              6.

            	
              Each
      Party reserves the right to claim compensation for damages in excess of
      the liquidated damages specified
above.

            

    

    

    

    § 8

    

    The
Parties shall be liable for any failure to perform or inappropriate performance
of the Agreement pursuant to generally applicable terms.

    

    § 9

    

    
      	
              1.

            	
              The
      Parties shall attempt to resolve all disputes arising out of or in
      connection with this Agreement by direct negotiations.  If the
      Parties do not resolve the dispute within three (3) months of the delivery
      of either Party’s invitation to negotiate with the other, the dispute
      shall be referred to the competent state
court.

            

    

    

    
      	
              2.

            	
              The
      existence of any dispute shall not excuse either Party’s performance of
      its obligations hereunder.

            

    

    

    

    § 10

    

    Any
transfer to a third party of any rights and obligations arising hereunder
without the consent of the other Party shall be null and void, except for a
transfer of pecuniary claims.  If the Seller is required to transfer
all its rights hereunder by way of collateral assignment of rights to a bank
with its seat in an OECD country, or a financial institution with its seat in an
OECD country, licensed by a state authority of that country, the Seller shall
make a request therefor to the Purchaser, in which request the Seller shall
properly justify the necessity of such a transfer and shall state that such
transfer of rights under the Agreement shall be without prejudice to the
Purchaser’s duties and rights. The Purchaser shall notify the Seller within no
more than 30 (thirty) calendar days of receipt of the request as to whether it
agrees to or refuses its consent to the transfer.

    

    

    [NOTE:
NUMBER 11 IS OMITTED IN THE POLISH VERSION]

    

    8

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    

    § 12

    

    
      	
              1.

            	
              Except
      as otherwise specifically provided, all notices authorized or required by
      this Agreement between the Parties, shall be in writing, in Polish, and
      delivered in person or by registered mail or by courier service with
      confirmed delivery, or by any electronic means of transmitting written
      communications which provides written confirmation of completed
      transmission.  Any communications relating to this Agreement
      shall be deemed delivered only when received by the Party to whom such
      notice is directed, and the time for that Party to deliver any notice in
      response to an originating notice shall run from the date the originating
      notice is received.  All communications shall be delivered to
      the following addresses of the respective
  Parties:

            

    

    

    
      	
              Purchaser:

            	
              Polskie
      Gornictwo Naftowe i Gazownictwo S.A.

            
	 
      	
              ul.
      Marcina Kasprzaka 25

            
	 
      	
              01-224
      Warsaw, Poland

            
	 
      	
              Phone:  +48
      22 589 45 31

            
	 
      	
              Fax:  +48
      22 589 46 31

            
	 
      	 
      
	
              Seller:

            	
              FX
      Energy Poland Sp. z o.o.

            
	 
      	
              ul.
      Chalubinskiego 8

            
	 
      	
              00-613
      Warsaw

            
	 
      	
              Poland

            
	 
      	
              Attention:
      Zbigniew Tatys

            
	 
      	
              Phone
      +48 22 8300074

            
	 
      	
              Fax
      +48 22 6306632

            

    

    

    
      	
              2.

            	
              The
      Parties undertake to inform each other forthwith of any changes referred
      to in section 1 above or otherwise they will bear the costs relating to an
      inappropriate performance of this undertaking.  Any changes
      concerning the matters referred to in this clause shall not be regarded as
      amendments to this Agreement.

            

    

    

    § 13

    

    
      	
              1.

            	
              Any
      amendment to the provisions of this Agreement must be in writing or shall
      otherwise be null and void.

            

    

    

    
      	
              2.

            	
              The
      following appendices constitute an integral part of this
      Agreement:

            

    

    

    
      	
               
      

            	
              1)

            	
              Appendix
      No. 1 – Technical conditions of Gas
sale,

            

    

    

    
      	
               
      

            	
              2)

            	
              Appendix
      No. 2. - current excerpts from the companies register regarding both
      parties to the Agreement, along with Power of Attorney for the authorized
      signatories.

            

    

    

    9

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Agreement
No.

             

            ______________________________________________________________________________

             

            

            

          

        

      

    

    

    
      	
              3.

            	
              This
      Agreement has been executed in two identical copies, one for each of the
      Parties.

            

    

    

    
      	
              SELLER

            	
              PURCHASER

            
	 
      	 
      
	
              /s/

            	
              /s/

            

    

    

    10ex1094k123109.htm

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXECUTIVE
INCENTIVE ROYALTY AGREEMENT

      

      THIS EXECUTIVE INCENTIVE ROYALTY
AGREEMENT (this “Agreement”) is
entered effective as of the 16th day of March, 2010, between and among FX
ENERGY, INC., a Nevada corporation (the “Company”); the
several executive employees of the Company identified on Schedule I hereto and
who have executed and delivered to the Company counterpart signature pages to
this Agreement (each, a “Participant,” and
together, the “Participants”); and
FX Royalty, LLC, a Utah limited liability company duly constituted and appointed
by the Participants to hold and administer the interests granted to the
Participants pursuant to this Agreement (“Participant
Designee”), on the following:

      

      Premises

      

      The Company desires to maximize the
economic incentive to the Participants to encourage the highest potential
drilling, accelerate and increase production and reserves, maximize the
Company’s profitability, and generally enhance the Company’s ability to
incentivize and retain valuable employees upon whom, in large measure, the
continued profitability of the Company depends.  Accomplishing these
goals, particularly through exploration on a limited budget, requires excellent
exploration concepts, well-executed land acquisition strategies, creative
financing, collaborative industry relationships, careful drilling, and prudent
production.  The grants set forth in this Agreement provide benefits
only from production to provide an economic incentive for bringing wells online
as quickly as practicable.  These grants provide Participants having
managerial, professional, or other key decision-making responsibilities with an
opportunity to participate in the results of successful acquisition,
exploration, and production.

      

      Agreement

      

      NOW THEREFORE, UPON THESE PREMISES,
which are incorporated herein by reference, and for and in consideration of the
mutual promises and covenants set forth herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, it is
hereby agreed as follows:

      

      Article
I

      Definitions;
Interpretation

      

      1.01           Definitions.  The
following words and phrases shall have the meanings set forth below unless the
context clearly indicates otherwise.

      

      “Arbitration Decision”
shall mean the decision of the arbitrator or arbitrators resulting from the
dispute resolution process set forth in Article IV.

      

      “Cause” has the
meaning set forth in the particular employee’s written employment agreement with
the Company.

      

      “Code” means the
Internal Revenue Code of 1986, as amended.

      

      “Company” means FX
Energy, Inc., together with its subsidiaries, and any successor
thereto.

      

      “Conveyed Royalty
Interest” shall have the meaning set forth in
Section 2.01.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      “Disabled” or “Disability” shall
mean the inability of a person to engage in any substantial, gainful activity or
inability to substantially perform his essential job functions, with or without
reasonable accommodation, as the result of any medically determinable physical
or mental impairment (as determined by a qualified physician reasonably
acceptable to the Company) that is expected to result in death within 24 months
or that is expected to last for a continuous period of not less than 12
months.

      

      “Economic Value” shall
mean, respecting the Conveyed Royalty Interest and respecting the Company’s
retained interest in the same property, the present value, discounted at 10%, of
the estimated future cash flows from estimated quantities of crude oil and
natural gas, based on costs as of the end of the last completed fiscal year and
prices equivalent to the 12-month average for the last completed fiscal year,
from proved and probable reserves contained in such Prospect Areas, as
determined by probabilistic methods in which the full range of values that could
reasonably occur for each unknown parameter from the geoscience and engineering
data is used to generate a full range of possible outcomes and their associated
probabilities of occurrence, in accordance with the most recent adopted version
of the Petroleum Resources Management System developed by industry
organizations, including the Society of Petroleum Engineers, the World Petroleum
Council, the American Association of Petroleum Geologists, and the Society of
Petroleum Evaluation Engineers, and the requirements of SEC Regulation S-X,
Rule 4-10(a)(18), (19), and (22).

      

      “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

      

      “Participant” means a
person named on Schedule I to this Agreement.

      

      “Participant Designee”
means FX Royalty, LLC, a Utah limited liability company duly constituted and
appointed by the Participants to hold and administer the interests granted to
the Participants pursuant to this Agreement.

      

      “Prospect Area” means
an oil or gas exploration area deemed by the Company, in its sole discretion, to
warrant treatment under the Agreement as a separate incentive pool for
Participants, together with the Company’s legal rights to explore for, develop,
and produce oil or gas therefrom, whether by lease, license, usufruct,
concession, farm-in, joint operation or participation, or other interests or
rights.  A Prospect Area may, for convenience, include one or more
whole leases, usufructs, or other legal parcels.  The acquisition of
additional legal rights that increase the Company’s interest in a particular
previously designated Prospect Area may, at the discretion of the Company at the
time of such acquisition, be either added to the existing Prospect Area or
designated as a separate Prospect Area.  A Prospect Area may also
consist of, at the discretion of the Company, acquired interests in prospects,
producing properties, or other oil and gas projects or
opportunities.  The Company’s designation of a Prospect Area shall be
conclusive and shall be subject to modification only by the Company, in its sole
and absolute discretion, provided that no such
modification shall alter, impair, or diminish any Conveyed Royalty Interest of
any Participant.

      

      “Royalty Interest”
means an overriding royalty interest or an economic interest equivalent to an
overriding royalty interest in all oil and gas produced at the surface, free of
expenses of operations or production, for so long as the Company has an interest
in such well.  Each such Royalty Interest or equivalent shall be
proportionately reduced in proportion to the Company’s Working Interest so that,
for example, a 3% royalty or equivalent interest in a well in which the Company
has a 50% Working Interest shall be reduced to a 1-1/2% royalty or equivalent
interest.

       

      2

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      “Working Interest”
means an interest that entitles the owner of the interest to explore, develop,
and operate the property; to bear the costs of exploration, development, and
operation; and to share in the production or the proceeds
therefrom.  A royalty interest that entitles the holder to an interest
in oil and gas produced, free of expenses of operations or production, is not a
Working Interest.

      

      1.02           Interpretation.  Section
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.  Except
when the context clearly requires to the contrary:  (a) all
references in this Agreement to designated “Sections” are to the
designated Sections and other subdivisions of this Agreement; (b) instances
of gender or entity-specific usage (e.g., “his,” “her,” “its,” or “individual”)
shall not be interpreted to preclude the application of any provision of this
Agreement to any individual or entity; (c) the word “or” shall not be
applied in its exclusive sense; (d) “including” shall mean that the items
listed are illustrative and not exclusive or limiting; (e) references to
laws, regulations, and other governmental rules (collectively, “rules”), as well as
to contracts, agreements, and other instruments (collectively, “instruments”), shall
mean such rules and instruments as in effect at the time of determination
(taking into account any amendments thereto effective at such time without
regard to whether such amendments were enacted or adopted after the Effective
Date) and shall include all successor rules and instruments thereto;
(f) references to “$,” “cash,” or “dollars” shall mean the lawful currency
of the United States; (g) references to “federal” shall be to laws,
agencies, or other attributes of the United States (and not to any state or
locality thereof); (h) the meaning of the terms “domestic” and “foreign”
shall be determined by reference to the United States; (i) references to
“days” shall mean calendar days; references to “business days” shall mean all
days other than Saturdays, Sundays, and days that are legal holidays in the
state of Utah; (j) references to monthly or annual anniversaries shall be
to the actual calendar months or years at issue (taking into account the actual
number of days in any such month or year); (k) days, business days, and
times of day shall be determined by reference to local time in Utah;
(l) the English language version of this Agreement shall govern all
questions of interpretation relating to this Agreement, notwithstanding that
this Agreement may have been translated into, and executed in, other languages;
(m) whenever in this Agreement a person or group is permitted or required
to make a decision in its “discretion” or under a grant of similar authority or
latitude, such person or group shall be entitled to consider only such interests
and factors as it deems appropriate, in its absolute discretion; and
(n) whenever in this Agreement a person or group is permitted or required
to make a decision in its “good faith” or under another express standard, the
person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or other applicable
law.

      

      

      Article
II

      Grant
of Royalty Interest

      

      2.01           Grant to the Participant
Designee for the Benefit of the Participants.  The Company
hereby conveys and grants to the Participant Designee, for the benefit of the
Participants, a 3% Royalty Interest, proportionately reduced to the extent the
Company’s Working Interest is less than 8/8ths, in each Prospect Area in which
the Company owns, as of the date of adoption of the Agreement, a Working
Interest (a “Conveyed
Royalty Interest”).  Further, upon the start of drilling on any
new well, the Conveyed Royalty Interest as to such well shall be reduced to less
than 3% in proportion as the Company’s Working Interest in such new well at that
time is less than 8/8ths.  There shall be excluded from the Conveyed
Royalty Interest any wells that have proved or probable reserves in the
Company’s reserve report as of December 31, 2009, whether or not such wells are
then producing.

       

      3

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2.02           Participant Authorization of
Participant Designee.  Each Participant hereby constitutes and
appoints the Participant Designee as such Participant’s duly constituted agent
and attorney-in-fact to take all action, provide all notices, execute all
documents, elect not to act, or to do each and every thing that the Participant
is obligated or permitted to do under this Agreement, in the name, place, and
stead of the Participant or the Participant Designee, as it shall
determine.  The Company shall be entitled to rely on this Agreement as
the full and unconditional authorization and shall not be required at any time
to obtain any further or confirmatory evidence of such
authorization.  The Participant Designee shall be the grantee of the
Conveyed Royalty Interest for the benefit of the Participants, and the
Participant Designee shall have full power and authority, on behalf of the
Participants, to execute and deliver any full or partial reconveyance required
or contemplated herein.

      

      2.03           Allocation of the Conveyed
Royalty Interest.  The Conveyed Royalty Interest shall be
allocated by the Participant Designee among the Participants in the percentages
set forth opposite their respective names on Schedule I.  Such
allocation has been approved by the Compensation Committee and the Board of
Directors of the Company.

      

      2.04           Company’s Reserved Rights
and Interests.  The Conveyed Royalty Interest granted and
conveyed hereunder shall constitute a real property interest in the mineral
properties of the Company.  At the discretion of the Participant
Designee, such real property interests may be, but shall not be required to be,
recorded in any public office for the recordation of conveyances of and
encumbrances on interests in real property.  The Company shall always
be entitled to, at any time, dispose of the Company’s retained interest in any
and all Prospect Areas, including all wells, and to determine, in its sole and
absolute discretion, the time, price, terms, and conditions of such
disposal.  The Company retains the unconditional right at any time, in
its sole discretion, to begin, suspend, delay, resume, shut-in, abandon,
reschedule, or otherwise alter any exploration, development, production,
production enhancement, or any other act or failure to act respecting any
Prospect Area, whether or not a Conveyed Royalty Interest has been conveyed
respecting such Prospect Area.

      

      2.05           Transfer or Farm Out of
Interest.  If the Company sells, transfers, farms out, or
otherwise disposes of all or any portion of its retained interest in any
Prospect Area on which it has previously granted a Conveyed Royalty Interest,
the Company shall alone determine the price, terms, conditions, time, and all
other matters respecting the transaction.  If the Company elects, in
its sole discretion, to include the Conveyed Royalty Interest, it shall have the
right to do so.  In such case, all consideration received shall be
divided between the Company and the Participant Designee in proportion to their
respective Economic Values.  Upon payment, the Participant Designee
shall deliver appropriate documents of conveyance or reconveyance.

      

      2.06           Company Dissolution,
Liquidation, and Winding Up.  The grants and conveyances
hereunder shall not affect in any way the right or power of the Company to make
or authorize any or all adjustments, recapitalization, or other changes in the
Company’s capital structure or its business.  The grants and
conveyances hereunder shall not be affected should the Company be dissolved,
liquidated, or wound up, either voluntarily or involuntarily pursuant to
judicial proceedings or otherwise, including proceedings under the Bankruptcy
Code (Title 11 of the United States Code) or other receivership
law.

      

      2.07           No Limitation of
Rights.  Nothing in this Agreement shall be construed
to:

      

      (a)           limit
in any way the right of the Company to terminate a Participant’s employment with
the Company at any time;

       

      4

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)           evidence
any agreement or understanding, express or implied, that the Company will employ
a Participant in any particular capacity or for any particular remuneration;
or

      

      (c)           require
or obligate the Company to undertake, continue, or not suspend or terminate any
oil or gas exploration, development, or production activities.

      

      

      Article
III

      Continuation,
Limitation, and Termination of Conveyed Royalty Interest

      

      3.01           Full
Participation.  The Company shall pay, or shall direct the
purchaser of its produced and sold hydrocarbons to pay, to the Participant
Designee, the full amount due from time to time with respect to the Conveyed
Royalty Interest, except as expressly limited or terminated pursuant to the
provisions of this Article III.

      

      3.02           Limitation of Payments
Allocated to Individual Participants.  If:

      

      (a)           a
Participant with more than 15 full years of employment with the Company
terminates his employment with the Company voluntarily after reaching age
65;

      

      (b)           a
Participant with less than 15 full years of employment with the Company dies
before reaching age 65;

      

      (c)           a
Participant with less than 15 full years of employment with the Company becomes
Disabled before reaching age 65; or

      

      (d)           the
Company’s employment of a Participant is terminated by the Company without Cause
prior to the Participant’s 15 full years of employment with the Company before
reaching age 65,

      

      then the
participant will be deemed to have terminated employment (for purposes of this
paragraph) at the actual date of termination in case (a) above, or at the date
on which the participant reaches or would have reached age 65 and 15 full years
of employment in cases (b), (c) and (d) above.  In all such cases, all
rights of the Participant Designee allocated to a particular Participant as set
forth on Schedule I shall be limited to participating in production from all
wells commenced on or before the date of deemed termination, and all wells
drilled thereafter into fields penetrated by any well commenced on or before the
date of such Termination, death, or Disability.  The Company shall
promptly notify the Participant Designee of any limitation of payments allocated
to an individual Participant pursuant to this paragraph, specifying the basis
for such limitation of payments, and shall send a copy of such notice to such
Participant.  A leave of absence for a period of up to 24 consecutive
months approved in writing by the Company shall not constitute a termination of
employment for purposes of computing years of service with the
Company.  At the request of the Company, the Participant Designee
shall execute and deliver to the Company such confirmatory instruments or
reconveyances as the Company may reasonably request to evidence limitation of
payments allocated to an individual Participant in accordance with the
foregoing.

      

5

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3.03           Termination of Payments
Allocated to Individual Participants.  All rights of the
Participant Designee allocated to a particular Participant as set forth on
Schedule I shall be terminated if: (a) a Participant with less than 15 full
years of employment with the Company terminates his employment with the Company
voluntarily before reaching age 65, unless such termination is due to the
Participant’s death or Disability during his employment; or (b) the
Company’s employment of a Participant is terminated by the Company for Cause,
provided, however, that such
termination under either of the foregoing clauses (a) or (b) shall not alter any
obligation of the Company to pay the Participant Designee respecting any
production prior to the date of termination that has been allocated to such
Participant.  Such forfeited payment and interest shall be reconveyed
by the Participant Designee to the Company.  The Company shall
promptly notify the Participant Designee of any termination of payments
allocated to an individual Participant pursuant to this paragraph, specifying
the basis for such termination of payments, and shall send a copy of such notice
to such Participant.  A leave of absence for a period of up to 24
consecutive months approved in writing by the Company shall not constitute a
termination of employment for purposes of computing years of service with the
Company.  At the request of the Company, the Participant Designee
shall execute and deliver to the Company such confirmatory instruments or
reconveyances as the Company may reasonably request to evidence termination of
payments allocated to an individual Participant in accordance with the
foregoing.

      

      3.04           Timing of
Payments.  Payments to Participant Designee under this
Agreement shall be made monthly.

      

      3.05           Limitations on
Transfers.  Participant Designee shall have no power or right
to grant any right, title, or interest in any Conveyed Royalty Interest, either
directly through a purported assignment of any portion of the Conveyed Royalty
Interest held by the Participant Designee; indirectly through granting an
ownership, profits, distribution, revenue, or other interest in Participant
Designee; or through any other method or means.  Further, the charter
documents of the Participant Designee shall include express prohibitions on the
transfer of any right, title, or interest, directly or indirectly in the
Participant Designee, to any person other than the Participants in the
percentages set forth on Schedule I, as adjusted as provided in this Agreement,
except for
transfers:

      

      (a)           upon
death pursuant to:

      

      (i)           a
will;

      

      (ii)           the
laws of descent and distribution; or

      

      (iii)           a
beneficiary designation form approved by the Participant Designee and executed
by a Participant that designates the persons to receive, upon the Participant’s
death, the right to payments under this Agreement that the Participant had upon
his death; or

      

      (b)           pursuant
to a qualified domestic relations order, as defined under Section 414(p) of
the Code, relating to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child, or other dependent of
the Participant.

      

      3.06           Manner of
Payments.  The Company shall pay all amounts due pursuant to
this Agreement in cash in the currency received by the Company, or if requested
by the Participant Designee in U.S. dollars with the cost of exchange for the
account of the Participant Designee.

       

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      3.07           Continuation of Payments;
Beneficiaries.  The Company shall continue payments due
pursuant to this Agreement to the Participant Designee on behalf of each
Participant notwithstanding such Participant’s death or Disability, for as long
as any such Conveyed Royalty Interest continues, unless such Conveyed Royalty
Interest is terminated or forfeited in accordance with the terms of this
Agreement.

      

      3.08           Payments due Minors or
Incapacitated Persons.  The Company shall continue payments to
the Participant Designee notwithstanding the fact that all or any portion of
such payment for the benefit of any Participant is to a beneficiary who is a
minor or is incapacitated by reason of physical or mental disability, whether or
not legally adjudicated as such.  The Company shall have no
responsibility to investigate the age or physical or mental condition of a
Participant or his beneficiary.

      

      3.09           Participant’s Responsibility
for Taxes.  Each Participant shall be solely liable for the
payment of any taxes imposed or arising out of the payment of amounts under this
Agreement, except for amounts levied or assessed against and to be borne by law
by the Company.  The Participant Designee and each Participant shall
indemnify and hold the Company harmless from and against any taxes, additions
for late payment, interest, penalties, and other expenses that may be assessed
against such Participant on any payment or other activities under this Agreement
unless any such tax, addition for late payment, interest, penalty, or other
expense shall arise out of or be caused by the gross negligence, bad faith, or
willful misconduct of the Company (each as finally determined by a court of
competent jurisdiction or as agreed to by the parties).  To the extent
that the Company becomes liable for any of the foregoing, the Company may, but
shall not be obligated to, satisfy such liability from any amount due the
Participant Designee for any Conveyed Royalty Interest allocated to such
Participant hereunder, and each Participant shall be deemed to have granted to
the Company a perfected, first-priority security interest in such payments
pursuant to this Agreement to secure payment of such taxes.  No
payment to the Participant Designee for Conveyed Royalty Interest allocated to
any Participant will be made to such Participant unless the Company is supplied
with an original, signed Form W-9 or its equivalent before such
payment.  The Participant Designee shall require, and the Participants
shall cause the Participant Designee to require, as a condition to any payment
to any recipient who is not an employee of the Company at the time of payment,
that such person acknowledge in writing his sole responsibility for the payment
of all amounts required to satisfy all federal, state, and local withholding
taxes applicable to such recipient with respect to such payments under this
Agreement.

      

      

      Article
IV

      Dispute
Resolution

      

      4.01           Mediation and
Arbitration. In the event of any
dispute about the amount of the Economic Value pursuant to this Agreement, the
parties shall resolve such dispute in accordance with the provisions of this
Article IV.  Within 14 days following notice by one party to the other
of the existence of a dispute, the parties shall submit their dispute to at
least four hours of mediation with a mutually acceptable mediator.  In
the event the parties cannot agree on a mediator or resolve the dispute within
30 calendar days after notice of the existence of a dispute, the parties shall
submit the dispute to binding arbitration.

      

      4.02           Arbitration
Procedures.  All proceedings pursuant to this Article IV
shall be conducted in accordance with the laws relating to mediation,
arbitration, or alternative dispute resolution of the state of Utah, as modified
by the terms of this Article IV, supplemented to the extent agreed to by
the parties by the arbitration procedures published by United States Arbitration
& Mediation, without, however, being required to submit such matter to the
jurisdiction of United States Arbitration & Mediation, unless also agreed to
by the parties.

       

      7

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4.03           Qualifications of
Arbitrators.  All arbitrators selected shall be independent:
(a) professional petroleum reserve engineers with more than 10 years of
international experience evaluating petroleum reserves using probabilistic
methods; (b) certified public accountants with more than 10 years of
experience with a firm of certified public accountants with national standing in
disclosure about oil and gas producing activities in financial statements
prepared in accordance with generally accepted accounting principles in the
United States; (c) attorneys with more than 10 years of experience in
preparing reports for companies subject to the periodic reporting requirements
of the Exchange Act that are subject to the requirements of Securities Act
Industry Guide 2, Disclosure of Oil and Gas Operations; or (d) other third
parties mutually acceptable to the parties who have knowledge and experience in
the evaluation of oil and gas interests.  In the event of the failure,
refusal, or inability of any arbitrator to act, a new arbitrator shall be
appointed in his stead.  Such appointment shall be made in the same
manner as provided for the appointment of such arbitrator so failing, refusing,
or being unable to act.

      

      4.04           Single
Arbitrator.  If the amount of the controversy is less than
$250,000, as claimed by the parties demanding arbitration or otherwise on the
agreement of all parties, the matter may be resolved by a single arbitrator as
provided in this section.  The parties demanding arbitration shall
serve on all other parties, in the manner provided in this Agreement for giving
notices, a written demand for arbitration, stating the specific facts upon which
arbitration is demanded.  Within 30 days after service of the demand
for arbitration, the parties upon whom the demand is made shall serve the
demanding parties a list of five potential arbitrators.  Within 10
days after service of the list of potential arbitrators, the parties demanding
arbitration shall select an arbitrator and two alternate
arbitrators.  Within 10 days after the parties demanding arbitration
have selected an arbitrator and two alternates, the parties to the arbitration,
by joint communication, shall contact the selected arbitrator to determine if he
is willing, able, and available to act as arbitrator.  If the selected
arbitrator, for any reason, is unwilling, unable, or unavailable to act, then
the parties, again by joint communication, shall contact the first and, if
necessary, the second alternate to determine if he is willing, able, and
available to act as arbitrator.  If none of the three chosen
individuals is willing, able, or available to act as arbitrator, then the
selection process set forth above shall be repeated until an arbitrator has been
appointed.

      

      4.05           Multiple
Arbitrators.  If the amount in controversy as claimed in the
written statement of the notice submitting the matter to arbitration equals or
exceeds $250,000 or by agreement of the parties to such arbitration, the matter
shall be determined by a panel of three arbitrators.  The parties
notifying the other parties of the demand for arbitration shall include with
such demand the name of the arbitrator selected by such
parties.  Within 30 days after notice of the demand for arbitration,
the parties upon whom the demand is made shall notify the demanding parties of
the arbitrator selected by such parties upon whom the demand is
made.  If the second arbitrator is not so designated within or by the
time specified, then the appointment of such second arbitrator shall be made in
the same manner as is provided below for the appointment of a third arbitrator
in a case when the first and second arbitrator and the parties themselves are
unable to agree upon the third arbitrator.  The first and second
arbitrator so designated or appointed shall meet within 20 days after the second
arbitrator is appointed and if, within 30 days after the second arbitrator is
appointed, the first and second arbitrator do not agree upon an Arbitration
Decision, they shall themselves appoint a third arbitrator, and in the event of
their being unable to agree upon such appointment within 10 days after the above
time, the third arbitrator shall be selected by the parties themselves if they
can agree thereon within a further period of 15 days.  If the parties
do not so agree, then both parties by joint communication, or failing such joint
communication within seven days either party, may request such appointment by
the chief judge of the court having jurisdiction in the premises in the state
whose laws govern the interpretation and enforcement of this
Agreement.

       

      8

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4.06           The
Proceedings.  The arbitration shall be conducted pursuant to
such rules and procedures as the arbitrators may specify that are consistent
with the provisions of Section 4.02.  The arbitration hearing
shall be held no later than 120 days after the appointment of the last
arbitrator, unless extended by the mutual agreement of all parties to the
arbitration.  The rules of evidence shall be observed at the
arbitration proceeding.  At the arbitrators’ discretion, the
arbitrators may require pre-hearing briefs from the
parties.  Resolution of the dispute shall be based solely upon the
evidence presented, and the arbitrators may not consider any other
evidence.  As reasonably required to allow full use and benefits of
this Agreement, the arbitrators may extend the time set for the giving of
notices and setting of hearings.

      

      4.07           Costs and
Expenses.  The fees, costs, and expenses of the arbitration
shall be paid one-half by the parties demanding arbitration and one-half by the
other parties to the arbitration, subject to an award of reimbursement of fees,
costs, and expenses by the arbitrators to the prevailing parties.

      

      4.08           Exclusive Method for
Determination.  Arbitration shall be the sole and exclusive
remedy among the parties respecting the resolution of disputes pursuant to this
Agreement.  Awards shall include the arbitrators’ written, reasoned
opinion and, at either party’s written request within 10 days after issuance of
the award, shall be subject to reversal and remand, modification, or reduction
by the arbitrators within 30 days of the delivery of the arbitrators’ written
opinion following a review of the records and arguments of the
parties.  Such opinion and determination shall be in writing and shall
be delivered by the arbitrators to the Participant Designee and all Participants
in such proceeding (the “Arbitration
Decision”)

      

      4.09           Enforcement and
Jurisdiction.  Unless all the parties to an arbitration
otherwise consent in writing, the location of the arbitration hearings and the
place of entry of the award shall be in Salt Lake County, Utah.  The
parties consent to exclusive jurisdiction of, and agree that sole venue will lie
in, the state and federal courts in and for such county and state, including the
entry of a judgment on the award.  The arbitration award shall be
final and binding and shall not be reviewable in any court on any grounds except
corruption, fraud, or for demonstrable partiality or corruption of the
arbitrators.  The parties intend to eliminate all other court review
of the award and the arbitration proceedings.  Except for proceedings
to enforce or confirm an award or a proceeding brought by all parties to the
dispute to vacate or modify an award, the initiation of any suit relating to a
claim that is arbitrable under this Agreement shall constitute a material breach
of this Agreement.  In addition:

      

      (a)           The
parties understand that by agreeing to this binding arbitration provision, they
waive their rights to trial by
jury respecting any matter being arbitrated.

      

      (b)           Except
as necessary in a judicial proceeding allowable under this Section 4.09,
all matters relating to any arbitration shall be confidential, including the
existence and subject of the arbitration.

      

      

      Article
V

      Miscellaneous

      

      5.01           Right to Dismiss
Participants.  The Company may terminate the employment of any
Participant as freely and with the same effect as if this Agreement were not in
existence.

       

      9

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      5.02           Notification of
Address.  The address of each Participant is set forth below
his respective name on Schedule I.  Each Participant shall file with
the Company from time to time, in writing, any changes to his mailing address
and the mailing address of each of his beneficiaries.  Any
communication, statement, or notice addressed to a Participant or beneficiary at
his last mailing address filed with the Company, or as shown on the Company’s
records, will be binding on the Participant and his beneficiaries for all
purposes of the Agreement.  The Company shall not be required to
search for or locate a Participant or beneficiary.

      

      5.03           Offset.  The
Company shall have the right to offset from any amount payable hereunder to the
Participant Designee for the benefit of any Participant any amount that such
Participant owes to the Company, without the consent of the Participant (or his
beneficiary, following the Participant’s death).

      

      5.04           Severability.  If
any provision of this Agreement is, becomes, or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person, payment, or
circumstance under any law the Company deems applicable, then such provision
should be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended, then such provision should be stricken
as to such jurisdiction, person, payment, or circumstance, and the remainder of
this Agreement will remain in full force and effect.

      

      5.05           Governing Law; Limitations;
Venue.  The construction and interpretation of this Agreement
shall be governed by the laws of the state of Utah without reference to conflict
of law principles thereof.  Any action or other legal proceeding with
respect to the Agreement may be brought only within the period ending on the
earlier of:  (a) one year after the date the claimant in such
action or proceeding knows or with the exercise of reasonable care should have
known of the facts giving rise to the claim; or (b) the expiration of the
applicable statute of limitations period under applicable
law.  Exclusive jurisdiction over any such actions or legal
proceedings shall reside in the state and federal courts in and for Salt Lake
County, Utah.

      

      DATE:  March
16, 2010

      

      
        	 
      	
                FX
      ENERGY, INC.

              
	
                Attest:

              	 
      	 
      
	 
      	 
      	 
      
	
                /s/
      Scott J. Duncan

              	
                By:

              	
                /s/
      David N. Pierce

              
	
                Scott
      J. Duncan

              	 
      	
                David
      N. Pierce

              
	
                Corporate
      Secretary

              	 
      	
                President
      and Chief Executive Officer

                 

              

      

      10

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
I

      TO

      EXECUTIVE
INCENTIVE ROYALTY AGREEMENT

      

      

      
        	
                Name
      of Participant

              	 
      	
                Allocation
      of Conveyed Royalty Interest

              
	 
      	 
      	 
      
	
                David
      N. Pierce

                 

              	 
      	
                0.5283%

              
	
                Andrew
      W. Pierce

                 

              	 
      	
                0.4717

              
	
                Thomas
      B. Lovejoy

                 

              	 
      	
                0.3019

              
	
                Jerzy
      B. Maciolek

                 

              	 
      	
                0.4717

              
	
                Clay
      Newton

                 

              	 
      	
                0.2830

              
	
                Others

              	 
      	
                0.9434

              
	 
      	 
      	
                3.0000%

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]