Document:

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.

- 5 -

 

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.

- 7 -

 

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;

- 1 -

 

	 	(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.

- 2 -

 

	 	 	“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.

- 3 -

 

	 	 	“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

- 22 -

 

	 	 	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).

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	 	 	“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.

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SECTION 2

THE FACILITY

	2.	 	THE FACILITY
	 
	2.1	 	The Facility

	 	 	Subject to the terms of this Agreement, the Lenders make available to the Borrower a 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

- 37 -

 

	 	 	 	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).

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	 	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

- 122 -

 

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:

- 125 -

 

	 	 	 
	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

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	 	(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	 

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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.

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	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;

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	 	(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

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	 	 	(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.

- 150 -

 

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

- 159 -

 

	 	 	 	 	 
	 	 	 	 	(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.

- 160 -

 

	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.

- 161 -

 

	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.

- 162 -

 

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

- 163 -

 

	 	 	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.

- 171 -

 

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

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[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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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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[Zhonglun 2009/01/05]

(iv) Declare deemed distribution dividend US$20,000,000

After deemed distribution dividend US$20,000,000,000

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(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

- 6 -

 

	 	 	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.

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	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.

- 4 -

 

	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/EX-10.42

Exhibit 10.42

 

 

DATED 28 July 2009

MI ENERGY CORPORATION

as Borrower

THE BANKS AND OTHER FINANCIAL INSTITUTIONS

named herein as Lenders

CITIC KA WAH BANK LIMITED

as Facility Agent

CHINA CITIC BANK CORPORATION LIMITED, Guangzhou Branch

as Onshore Security Agent

CITIC KA WAH BANK LIMITED

as Offshore Security Agent

 

FACILITY AGREEMENT

US$200,000,000

TRANSFERABLE TERM LOAN AND
REVOLVING CREDIT FACILITY

to MI ENERGY CORPORATION

 

 

 

CONTENTS

	 	 	 	 	 	 	 
	Number	 	Clause Heading	 	Page
	1.	 	Interpretation
	 	 	1	 
	2.	 	The Facility
	 	 	14	 
	3.	 	Conditions Precedent
	 	 	15	 
	4.	 	Tranche A Advance and Tranche B Advances
	 	 	19	 
	5.	 	Repayment, Prepayment and Cancellation — Term Facility
	 	 	22	 
	6.	 	Tranche C Advances, Repayments and Cancellation — Tranche C Facility
	 	 	24	 
	7.	 	Interest
	 	 	26	 
	8.	 	Market Disruption
	 	 	27	 
	9.	 	Change of Law or Circumstances
	 	 	28	 
	10.	 	Taxes and Other Deductions
	 	 	29	 
	11.	 	Fees and Expenses
	 	 	30	 
	12.	 	Payments and Evidence of Debt
	 	 	32	 
	13.	 	Representations and Warranties
	 	 	34	 
	14.	 	Undertakings
	 	 	37	 
	15.	 	Events of Default
	 	 	51	 
	16.	 	Default Interest
	 	 	54	 
	17.	 	Indemnities, Set-off and Pro Rata Sharing
	 	 	55	 
	18.	 	The Finance Parties
	 	 	57	 
	19.	 	Amendment
	 	 	64	 
	20.	 	Waiver and Severability
	 	 	65	 
	21.	 	Miscellaneous
	 	 	66	 
	22.	 	Assignment, Novation and Lending Offices
	 	 	67	 
	23.	 	Notices
	 	 	71	 
	24.	 	Governing Law and Jurisdiction
	 	 	72	 
	25.	 	Language
	 	 	73	 
	 	 	 	 	 	 	 
	Schedules	 	 
	 	 	 	 
	 	 	 
	 	 	 	 
	Schedule 1	 	The Lenders
	 	 	74	 
	Schedule 2	 	Form of Novation Certificate
	 	 	76	 
	Schedule 3	 	Financial Definitions
	 	 	81	 
	Schedule 4	 	Hedging Policy
	 	 	83	 
	Schedule 5	 	Operation of Accounts
	 	 	86	 
	Schedule 6	 	List of Existing Encumbrances of the Borrower
	 	 	93	 
	Schedule 7	 	List of Existing Loans and Guarantees given by the
Borrower
	 	 	94	 
	Schedule 8	 	List of Existing Loans and Guarantees given by the
Corporate Shareholder
	 	 	95	 
	Schedule 9	 	List of Existing Indebtedness of the Borrower
	 	 	96	 
	Schedule 10	 	List of Existing Indebtedness of the Corporate
Shareholder
	 	 	97	 
	Schedule 11	 	Status Report of the Conditions Precedent
	 	 	98	 
	Schedule 12	 	Form of Withdrawal Certificate
	 	 	99	 
	Schedule 13	 	Insurances
	 	 	101	 
	Schedule 14	 	The Existing Accounts
	 	 	119	 
	 	 	 
	 	 	 	 
	Execution	 	 
	 	 	121	 
	 	 	 
	 	 	 	 
	The Appendix	 	Form of Notice of Drawing
	 	 	1-1	 

 

 

THIS AGREEMENT is made on the 28th day of July 2009

BETWEEN:

	(1)	 	MI ENERGY CORPORATION, a company with limited liability incorporated under the laws of Cayman
Islands, with its registered address at c/o Maples Corporate Services Limited, P.O. Box 309,
Ugland House, Grand Cayman, KY1-1104, Cayman Islands as borrower (the “Borrower”);
	 
	(2)	 	THE BANKS AND OTHER FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders; and
	 
	(3)	 	CITIC KA WAH BANK LIMITED, a company with limited liability incorporated under the laws of
Hong Kong, with its registered office at No. 232 Des Voeux Road Central, Hong Kong as facility
agent (in this capacity, the “Facility Agent”);
	 
	(4)	 	CHINA CITIC BANK CORPORATION LIMITED, Guangzhou Branch, a company with limited
liability incorporated under the laws of the People’s Republic of China, with its business
address at 48/F, CITIC Plaza, 233 Tianhe Road North, 510613 Guangzhou, People’s Republic of
China as onshore security agent (in this capacity, the “Onshore Security Agent”); and
	 
	(5)	 	CITIC KA WAH BANK LIMITED, a company with limited liability incorporated under the laws of
Hong Kong, with its registered office at No. 232 Des Voeux Road Central, Hong Kong as offshore
security agent (in this capacity, the “Offshore Security Agent”).

IT IS AGREED as follows:

	1.	 	INTERPRETATION
	 
	1.1	 	Definitions. In this Agreement, unless the context requires otherwise:
	 
	 	 	“Advance” means the Tranche A Advance, a Tranche B Advance and/or a Tranche C Advance, as
the context may require;
	 
	 	 	“Adverse Variation” means, in relation to the Material Insurances:

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

“Assignee” means any person to which an assignment of all or part of the rights of any Lender has
taken effect in accordance with Clause 22.3;

“Break Costs” means the amount (if any) by which:

	 	(a)	 	the interest which a Lender should have received pursuant to the terms of this Agreement for
the period from the date of receipt of all or any part of the principal amount of an Advance
or Unpaid Sum to the last day of the current Interest Period in respect of that Advance 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 of interest 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
London 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;

“Business Day” means a day (excluding Saturday, Sunday and statutory holidays) on which banks are
open for business in Hong Kong, Guangzhou, Beijing and, if on that day a payment is to be made
under this Agreement, in New York City;

“Calculation Period” means (a) the period commencing from the date falling one (1) month after the
date of this Agreement up to the date falling three (3) months thereafter and (b) after the expiry
of the period referred to in (a) above, each successive three (3) month period, provided that the
last of such period shall end on the last day of the Tranche C Availability Period;

“Charge over Debt Service Reserve Account” means a charge over the Debt Service Reserve Account
executed or to be executed by the Borrower and the Offshore Security Agent, in an agreed form;

“Charge over Offshore Account” means a charge over the MIE Offshore Account executed or to be
executed by the Borrower and the Offshore Security Agent, in an agreed form;

“Charge over Onshore Account” means a charge over the MIE Onshore Account executed or to be
executed by the Borrower and the Onshore Security Agent, in an agreed form;

“China National Petroleum Corporation” or “CNPC” means China National Petroleum Corporation;

2

 

“CITIC Group” means CITIC Group (formerly China International Trust and Investment Corporation)
 and such companies that are subsidiaries and/or affiliates and are listed under the heading
“Finance” on the internet web page http://www.citic.com/wps/portal/citicen/st from time to
time (or the equivalent replacement internet web page and/or heading thereon);

“Commitments” means, in relation to each Lender, its Tranche A Commitment, Tranche B Commitment
and/or Tranche C Commitment;

“Commitment Fee Commencement Date” means the date falling one (1) month after the date of this
Agreement;

“Commitment Fee Payment Dates” means (a) the last day of each consecutive three (3) month period
commencing from the Commitment Fee Commencement Date and (b) and the last day of the Tranche C
Availability Period;

“Corporate Shareholder” means MIE Holdings Corporation, a limited liability company incorporated
under the laws of the Cayman Islands, with its registered address at c/o Maples Corporate Services
Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands;

“Crude Oil Sales Contract” means collectively (a) the Crude Oil Sales Contract of the Daan
Oilfield, the Moliqing Oilfield and the Miao 3 Oilfield of Jilin Province made between Microbes,
Inc. and China Petroleum Sales Corporation
 dated 28 December 2000 and (b) the
Supplemental Memorandum to the Crude Oil Sales Contract of the Daan Oilfield, the Miao 3 Oilfield
and the Moliqing Oilfields of Jilin Province made among PetroChina, Microbes, Inc. and China
Petroleum Sales Co., Ltd.  dated 5 March 2004 (including any amendments and supplemental
agreements to such agreements from time to time);

“Daan PSC” means collectively (a) the Contract for Petroleum Development and Production of the
Daan Oilfield of Jilin Province of the People’s Republic of China made between CNPC and Global Oil
Corporation dated 16 December 1997, (b) the Amendment Agreement to the Contract for Petroleum
Development and Production of the Daan Oilfield of Jilin Province of the PRC made among CNPC,
Global Oil Corporation and Microbes, Inc. dated 25 October 2000, (c) the Transfer Agreement dated
26 May 2001 between Microbes, Inc. and the Borrower and (d) the Amendment Agreement to the
Contract for Petroleum Development and Production of the Daan Oilfield of Jilin Province of the
PRC made among the Borrower, CNPC, Microbes, Inc. and Global Oil Corporation dated 20 December
2001 (including any amendments and supplemental agreements to such agreements from time to time);

“Daan Oilfield” means the Daan Oilfield located in the Jilin Province of the PRC;

“Daan Oilfield Project” means the project with respect to the development and operation of the
Daan Oilfield by the Borrower and CNPC pursuant to the Daan PSC;

3

 

“Debt Service Reserve Account” means the US Dollar denominated bank account designated as such and
opened or to be opened by the Borrower with the Facility Agent pursuant to paragraph 1.1 of
Schedule 5;

“Designated Accounting Firms” means:

	 	(a)	 	PricewaterhouseCoopers;
	 
	 	(b)	 	Deloitte Touche Tohmatsu;
	 
	 	(c)	 	Ernst & Young; and
	 
	 	(d)	 	KPMG;

“Eligible Transferee” means (a) any authorised institution within the meaning of section 2 of the
Banking Ordinance (Chapter 155 of the Laws of Hong Kong) or (b) any other bank or financial
institution authorised by the banking supervisory authorities of its place of incorporation to
conduct banking or deposit-taking business;

“Encumbrance” means, in relation to any person:

	 	(a)	 	any mortgage, charge, pledge, lien, encumbrance, hypothecation or other security interest or
security arrangement of any kind;
	 
	 	(b)	 	any arrangement whereby any rights are subordinated to any rights of any third party where
such arrangement affects or may affect the priority of any amount owing to the Finance
Parties; and
	 
	 	(c)	 	any contractual right of set-off (other than any right of set off arising under contracts
entered into by such person in the ordinary course of its day to day operations or under
standard banking mandate or documentation for the opening of bank accounts by such person with
banks or financial institutions);

“Event of Default” means any event or circumstance specified as such in Clause 15;

“Existing Accounts” means the bank accounts opened by the Borrower as specified in Schedule 14;

“Existing Agent” means Standard Bank Asia Limited;

“Existing Facility” means a loan facility of up to US$150,000,000 made available by the lenders
under the Existing Facility Agreement to the Borrower;

“Existing Facility Agreement” means a facility agreement dated 29 October 2007 (as amended from
time to time) entered into between, among others, the Existing Agent, the lenders named therein
and the Borrower with respect to the Existing Facility;

“Existing Security Documents” means all Encumbrances granted to secure the obligations of the
Borrower under the Existing Facility, being:

4

 

	 	(a)	 	a share charge dated 12 January 2009 executed by the Corporate Shareholder in respect
of 33,500 shares in the Borrower;
	 
	 	(b)	 	a borrower debenture dated 26 November 2007 executed by the Borrower;
	 
	 	(c)	 	an accounts assignment dated 26 November 2007 executed by the Borrower;
	 
	 	(d)	 	a rights pledge contract dated 30 October 2007 executed by the Borrower;
	 
	 	(e)	 	an assignment of a guarantee executed by Mr. Zhang Rui Lin dated 12 January 2009 executed by
the Borrower;

“Facility” means the facilities to be made available under this Agreement including the Tranche A
Facility, the Tranche B Facility and the Tranche C Facility;

“Far East Energy” means Far East Energy Limited, company with limited liability incorporated under
the laws of Hong Kong, with its registered office at Room 2105, 21/F, Office Tower, Langham Place,
8 Argyle Street, Mongkok, Kowloon, Hong Kong;

“Fee Letter” means any letter referred to in Clause 11.2 or 11.3;

“Final Repayment Date” means the date falling sixty (60) months after the date of this Agreement;

“Finance Documents” means this Agreement, any Fee Letter, any Security Document and any other
document designated as such by the Facility Agent and the Borrower and “Finance Document” means
any one of them;

“Finance Parties” means the Facility Agent, the Offshore Security Agent, the Onshore Security
Agent and the Lenders and “Finance Party” means any one of them;

“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China;

“Indonesia
JVs” has the meaning ascribed to it in Clause 14.2(e);

“Insurance
Adviser” means Marsh & McLennan Ltd. or any other independent insurance consultant
approved by the Majority Lenders;

“Insurance Assignment” means an insurance assignment executed or to be executed by the Borrower
and the Offshore Security Agent, in an agreed form;

“Interest Payment Date” means the last day of an Interest Period;

“Interest Period” means, in relation to any Advance or the Term Loan, an interest period
ascertained in accordance with Clause 7;

5

 

“JMC” means, in relation to any Oilfield Project, the Joint Management Committee established under
the PSC related to such Oilfield Project;

“Legal Reservations” means:

	 	(a)	 	the principle that equitable remedies are remedies which may be granted or refused at
the discretion of a court, the limitation of enforcement by laws relating to bankruptcy,
insolvency, liquidation, reorganisation, court schemes, moratoria, administration and other
laws generally affecting the rights of creditors;
	 
	 	(b)	 	the time barring of claims under applicable limitation laws, the possibility that an
undertaking to assume liability for or indemnify a person against non-payment of stamp duty
may be void and defences of set-off or counterclaim; and
	 
	 	(c)	 	any other general principles which are set out as qualifications as to matters of law in the
legal opinions delivered to the Facility Agent pursuant to Clause 3.1(y);

“Lenders” means the banks and financial institutions listed in Schedule 1 as Lenders and each
Assignee and Transferee but such term shall not include any Lender in respect of which (a) no
amount is or may become owing to or by it under this Agreement and (b) whose Commitment has been
cancelled or reduced to nil;

“Lending Office” means, in relation to each Lender, its office at the address specified in
Schedule 1 or such other office as may be selected by it from time to time pursuant to Clause
22.12;

“LIBOR” means, in relation to any Advance or the Term Loan:

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

as of 11:00 a.m. (London time) on the second (2nd) Business Day before the first day of the
Interest Period for that Advance or the Term Loan for which an interest rate is to be determined
for the offering of deposits in US Dollars of that Advance or the Term Loan and for a period
comparable to the Interest Period for that Advance or the Term Loan;

“Loan” means the Tranche A Loan, the Tranche B Loan and the Tranche C Loan;

“London Business Day” means a day on which US Dollar deposits may be dealt in on the London
interbank market;

“Main Operating Account” means the US Dollar denominated bank account

6

 

designated as such and opened or to be opened by the Borrower with the Facility Agent pursuant to
paragraph 1.3 of Schedule 5;

“Majority Lenders” means at any time Lenders whose aggregate Participations in the Loan exceed
fifty one per cent (51%) of the Loan or, if no Advance has yet been made, whose aggregate
Commitments exceed fifty one per cent (51%) of all the Commitments;

“Margin” means four point five per cent (4.5%);

“Material Adverse Effect” means, in the opinion of the Majority Lenders, a material adverse effect
on:

	 	(a)	 	the ability of the Borrower or the Corporate Shareholder to perform its obligations under any
of the Finance Documents to which it is or is to be a party;
	 
	 	(b)	 	the business, operations, assets, financial or other condition or prospects of the Borrower
or the Corporate Shareholder; or
	 
	 	(c)	 	the validity or enforceability of any Finance Document or the rights or remedies of any
Finance Party under the Finance Documents;

“Material Insurances” has the meaning ascribed to such term in Schedule 13;

“Miao 3 PSC” means collectively (a) the Petroleum Contract for Development and Production of the
Miao 3 Oilfield of Jilin Province of the People’s Republic of China made between CNPC and Global
Oil Corporation dated 16 December 1997, (b) the Amendment Agreement to the Contract for Petroleum
Development and Production of the Miao 3 Oilfield of Jilin Province of the PRC made among CNPC,
Global Oil Corporation and Microbes, Inc. dated 25 October 2000, (c) the Transfer Agreement dated
26 May 2001 between Microbes, Inc. and the Borrower and (d) the Amendment Agreement to the
Contract for Petroleum Development and Production of the Miao 3 Oilfield of Jilin Province of the
PRC made among the Borrower, CNPC, Microbes, Inc. and Global Oil Corporation dated 20 December
2001 (including any amendments and supplemental agreements to such agreements from time to time);

“Miao 3 Oilfield” means the Miao 3 Oilfield located in the Jilin Province of the PRC;

“Miao 3 Oilfield Project” means the project with respect to the development and operation of the
Miao 3 Oilfield by the Borrower and CNPC pursuant to the Miao 3 PSC;

“MIE Offshore Account” means the US Dollar denominated bank account designated as such opened or
to be opened by the Borrower with the Facility Agent pursuant to paragraph 1.1 of Schedule 5;

“MIE Onshore Account” means the Renminbi denominated bank account designated as such opened or to
be opened by the Borrower with the Onshore Account Bank pursuant to paragraph 1.2 of Schedule 5;

7

 

“Ministry of Commerce” or “MOC” means the Ministry of Commerce of the PRC or, as the context may
require, the relevant local commerce administration authority duly authorised by it;

“Moliqing PSC” means collectively (a) the Petroleum Contract for Development and Production of the
Moliqing Oilfield of Jilin Province of the People’s Republic of China made between CNPC and Global
Oil Corporation dated 25 September 1998, (b) the Amendment Agreement to the Contract for Petroleum
Development and Production of the Moliqing Oilfield of Jilin Province of the PRC made among CNPC,
Global Oil Corporation and Microbes, Inc. dated 25 October 2000, (c) the Transfer Agreement dated
26 May 2001 between Microbes, Inc. and the Borrower and (d) the Amendment Agreement to the Contract
for Petroleum Development and Production of the Moliqing Oilfield of Jilin Province of the PRC made
among the Borrower, CNPC, Microbes, Inc. and Global Oil Corporation dated 20 December 2001
(including any amendments and supplemental agreements to such agreements from time to time);

“Moliqing Oilfield” means the Moliqing Oilfield located in the Jilin Province of the PRC;

“Moliqing Oilfield Project” means the project with respect to the development and operation of
the Moliqing Oilfield by the Borrower and CNPC pursuant to the Moliqing PSC;

“Notice of Drawing” means a notice substantially in the form set out in the Appendix;

“Novation Certificate” means a certificate substantially in the form of Schedule 2;

“Oilfields” means the Daan Oilfield, the Miao 3 Oilfield and the Moliqing Oilfield and “Oilfield”
means any one of them;

“Oilfield Projects” means the Daan Oilfield Project, the Miao 3 Oilfield Project and the Moliqing
Oilfield Project and “Oilfield Project” means any one of them;

“Offshore Security Documents” means the Charge over Offshore Account, the Insurance Assignment,
the Pledge over Entitlements under PSCs, the Charge over Debt Service Reserve Account, the Share
Mortgage (Borrower), the Share Mortgage (FEE), the Share Mortgage (MIEH), the Subordination Deed
and the other Security Documents to which the Offshore Security Agent is a party;

“Onshore Account Bank” means China CITIC Bank Corporation Limited;

“Onshore Security Documents” means the Charge over Onshore Account and the other Security
Documents to which the Onshore Security Agent is a party;

“Participation” means in relation to each Lender, in respect of any amount owing to the Lenders
hereunder, the proportion of such amount which is owing to that Lender and, in respect of an
Advance, the proportion of that Advance which is to be made

8

 

available by that Lender and “Participation in the Facility” shall be construed accordingly;

“Personal Shareholders” means:

	 	(a)	 	Zhao Jiang Wei
 (holder of PRC
identity card no:   ),
whose correspondence address is Room 402, Block C, Yuanda Center, Huizhong Road,
Chaoyang, Beijing, PRC;
	 
	 	(b)	 	Zhang Rui Lin
 (holder of PRC identity card no:    ), whose correspondence address is Room 402, Block C, Yuanda Center, Huizhong Road,
Chaoyang, Beijing, PRC; and
	 
	 	(c)	 	Shang Zhi Guo
 (holder of PRC identity card no:    ), whose correspondence address is Room 402, Block C, Yuanda Center, Huizhong Road,
Chaoyang, Beijing, PRC;

“PetroChina” means PetroChina Company Limited;

“Pledge over Entitlements under PSCs” means a pledge agreement in respect of the entitlements of
the Borrower under the PSCs executed or to be executed by the Borrower and the Offshore Security
Agent, in an agreed form;

“Potential Event of Default” means any event or circumstance which with the giving of notice, the
passage of time or any determination of materiality (or any combination of them) would reasonably
be expected to become an Event of Default;

“PRC” or “China” means the People’s Republic of China, excluding, for the purpose of this
Agreement, the Special Administrative Region of Hong Kong, the Special Administrative Region of
Macau and Taiwan;

“PSCs” means the Daan PSC, the Miao 3 PSC and the Moliqing PSC and “PSC” means any one of them;

“Reference Bank” means the principal London office of The Hongkong and Shanghai Banking
Corporation, Standard Chartered Bank plc and Royal Bank of Scotland plc or such other banks as
may be appointed by the Facility Agent in consultation with the Borrower;

“RMB”
or “ Renminbi” means the lawful currency for the time being of the PRC;

“Rollover Tranche C Advance” means one or more Tranche C Advances:

	 	(a)	 	made or to be made on the same day that a maturing Tranche C Advance is due to be repaid;
	 
	 	(b)	 	the aggregate amount of which is equal to or less than the maturing Tranche C Advance; and

9

 

	 	(c)	 	made or to be made to the Borrower for the purpose of refinancing a maturing
Tranche C Advance;

“SAIC” means the State Administration of Industry and Commerce or, as the context may require, any
of its local branches duly authorised by it;

“SAFE” means the State Administration of Foreign Exchange or, as the context may require, any of
its local branches duly authorised by it;

“Screen Rate” means the British Bankers’ Association Interest Settlement Rate for US Dollars and
for the applicable period as displayed on the appropriate page of the Reuters screen. If the
agreed page is replaced or service ceases to be available, the Facility Agent may specify another
page or service displaying the appropriate rate after consultation with the Borrower and the
Lenders;

“Security Documents” means the Offshore Security Documents, the Onshore Security Documents and any
other document executed from time to time by whatever person as a further guarantee of or security
for all or any part of the Borrower’s obligations under this Agreement;

“Security Provider” means each of the Corporate Shareholder, Far East Energy, the Personal
Shareholders and, where the context permits, any person other than the Borrower which has provided
or subsequently provides a guarantee of or security for all or any part of the Borrower’s
obligations under this Agreement;

“Share Mortgage (Borrower)” means a share mortgage in respect of the entire issued share capital
of the Borrower executed or to be executed by the Corporate Shareholder and the Offshore Security
Agent, in an agreed form;

“Share Mortgage (FEE)” means a share mortgage in respect of the issued share capital of Far East
Energy owned by the Personal Shareholders (which constitutes 51% of the entire issued share
capital of Far East Energy) executed or to be executed by the Personal Shareholder and the
Offshore Security Agent, in an agreed form;

“Share Mortgage (MIEH)” means a share mortgage in respect of the issued share capital of the
Corporate Shareholder owned by Far East Energy (which constitutes 51% of the entire issued share
capital of the Corporate Shareholder) executed or to be executed by Far East Energy and the
Offshore Security Agent, in an agreed form;

“Subordination Deed” means a deed of subordination in respect of the indebtedness owing by the
Borrower to the Corporate Shareholder executed or to be executed by the Borrower, the Corporate
Shareholder and the Offshore Security Agent, in an agreed form;

“Subsidiary” in relation to any company means any other company or other entity directly or
indirectly under the control of the first-mentioned company; for this purpose “control” means
ownership of more than fifty per cent (50%) of the voting share capital or equivalent right of
ownership of such company or entity, or power to direct its policies and management whether by
contract or otherwise and “Holding Company” in relation to any company means the company of which
such last-

10

 

mentioned company is a Subsidiary;

“Term Advances” means the Tranche A Advance, the Tranche B Advances and the last Tranche C Advance
to be made pursuant to Clause 6.7, and “Term Advance” means any one of them;

“Term Loan” means the Tranche A Loan, the Tranche B Loan and the Tranche C Loan to the extent that
it is converted into a term facility pursuant to Clause 6.7;

“TPG” means TPG Star Energy Ltd.;

“Tranche A Advance” means the advance under the Tranche A Facility pursuant to Clause 4.1 or, as
the context may require, the principal amount advanced to the Borrower on such occasion;

“Tranche A Availability Period” means the period commencing on the date of this Agreement and
ending on the earlier to occur of (a) the date falling one (1) month after the date of this
Agreement and (b) the date on which the Tranche A Facility is fully drawn, cancelled or terminated
under the provisions of this Agreement;

“Tranche A Commitment” means, in relation to each Lender, the principal amount set opposite that
Lender’s name under the heading “Tranche A Commitment” in Schedule 1 or, as the case may be, in
any Novation Certificate, in each case as reduced by its Participation in the Tranche A Advance or
otherwise cancelled, reduced or transferred in accordance with this Agreement, being the maximum
amount from time to time which that Lender is committed to make available under the Tranche A
Facility;

“Tranche A Facility” means the facility designated as such in Clause 2.1(a)(i);

“Tranche A Loan” means the aggregate principal amount drawn and for the time being outstanding
under the Tranche A Facility;

“Tranche B Advance” means each advance under the Tranche B Facility pursuant to Clause 4.2 or, as
the context may require, the principal amount advanced to the Borrower on each such occasion;

“Tranche B Availability Period” means the period commencing on the date of this Agreement and
ending on the earlier to occur of (a) the date falling twenty four (24) months after the date of
this Agreement and (b) the date on which the Tranche B Facility is fully drawn, cancelled or
terminated under the provisions of this Agreement;

“Tranche B Commitment” means, in relation to each Lender, the principal amount set opposite that
Lender’s name under the heading “Tranche B Commitment” in Schedule 1 or, as the case may be, in
any Novation Certificate, in each case as reduced by its Participation in Tranche B Advances made
from time to time or otherwise cancelled, reduced or transferred in accordance with this
Agreement, being the maximum amount from time to time which that Lender is committed to make
available under the Tranche B Facility;

11

 

“Tranche B Facility” means the facility designated as such in Clause 2.1(a)(ii);

“Tranche B Loan” means the aggregate principal amount drawn and for the time being
outstanding under the Tranche B Facility;

“Tranche C Advance” means each advance under the Tranche C Facility pursuant to Clause 6.1
or, as the context may require, the principal amount advanced to the Borrower on each such
occasion;

“Tranche C Availability Period” means the period commencing on the date of this Agreement
and ending on the earlier to occur of (a) the date falling thirty six (36) months after
the date of this Agreement and (b) the date on which the Tranche C Facility is cancelled
or terminated under the provisions of this Agreement;

“Tranche C Commitment” means, in relation to each Lender, the principal amount set opposite
that Lender’s name under the heading “Tranche C Commitment” in Schedule 1 or, as the case
may be, in any Novation Certificate, in each case as reduced by its Participation in
Tranche C Advances made from time to time or otherwise cancelled, reduced or transferred in
accordance with this Agreement, being the maximum amount from time to time which that
Lender is committed to make available under the Tranche C Facility;

“Tranche C Facility” means the facility designated as such in Clause 2.1(a)(iii);

“Tranche C Loan” means the aggregate principal amount drawn and for the time being
outstanding under the Tranche C Facility;

“Transferee” means an Eligible Transferee to which all or any part of a Lender’s rights,
benefits and/or obligations under this Agreement have been transferred pursuant to Clause
22.4;

“Unpaid Sum” means any sum due and payable but unpaid by the Borrower or any Security
Provider under the Finance Documents;

“US Dollars” and “US$” mean the lawful currency for the time being of the United States of
America;

	1.2	 	Construction. In this Agreement, unless the context requires otherwise, any
reference to:
	 
	 	 	a document in “agreed form” is a document which is previously agreed in writing by or on
behalf of the Borrower and the Facility Agent or, if not so agreed, is in the form
reasonably specified or approved by the Facility Agent;
	 
	 	 	an “authorisation” includes any approvals, consents, licences, permits, franchises,
permissions, registrations, resolutions, directions, declarations and exemptions;
	 
	 	 	an Event of Default or Potential Event of Default which is “continuing” means an Event of
Default or Potential Event of Default which has not been remedied or waived;

12

 

	 	 	“including” or “includes” means including or includes without limitation;
	 
	 	 	“indebtedness” includes any obligation of any person for the payment or repayment of money,
whether present or future, actual or contingent, including but not limited to, any such
obligation:

	 	(a)	 	under or in respect of any acceptance, bill, bond, debenture, note or similar
instrument;
	 
	 	(b)	 	under or in respect of any guarantee, indemnity, counter-security or other
assurance against financial loss;
	 
	 	(c)	 	in respect of the purchase, hire or lease of any asset or service; or
	 
	 	(d)	 	in respect of any indebtedness of any other person whether or not secured by
or benefiting from an Encumbrance on any property or asset of such person;

“law” and/or “regulation” includes any constitutional provisions, treaties, conventions,
statutes, acts, laws, decrees, ordinances, subsidiary and subordinate legislation, orders,
rules and regulations having the force of law and rules of civil and common law and
equity;

an “order” includes any judgment, injunction, decree, determination or award of any court,
arbitration or administrative tribunal;

a “person” includes any individual, company, body corporate or unincorporate or other
juridical person, partnership, firm, joint venture or trust or any federation, state or
subdivision thereof or any government or agency of any thereof;

“tax” includes any tax, levy, duty, charge, impost, fee, deduction or withholding of any
nature now or hereafter imposed, levied, collected, withheld or assessed by any taxing or
other authority and includes any interest, penalty or other charge payable or claimed in
respect thereof and “taxation” shall be construed accordingly.

	1.3	 	Successors and Assigns. The expressions “Borrower”, “Lenders”, “Facility Agent”
“Offshore Security Agent”, “Onshore Security Agent” and “Finance Party” shall, where the
context permits, include their respective successors and permitted assigns and any persons
deriving title under them.
	 
	1.4	 	Miscellaneous. In this Agreement, unless the context requires otherwise, references
to provisions of any law or regulation shall be construed as references to those provisions as
replaced, amended, modified or re-enacted from time to time; words importing the singular
include the plural and vice versa and words importing a gender include every gender;
references to this Agreement or any other Finance Document shall be construed as references to
such document as the same may be amended, supplemented or novated from time to time; unless
otherwise stated, references to Clauses, Schedules and the Appendix are to clauses of and
schedules and the appendix to this Agreement and references to this Agreement include its
Schedules and the Appendix. Clause headings are inserted for reference only and shall be

13

 

	 	 	ignored in construing this Agreement.

	2.	 	THE FACILITY
	 
	2.1	 	Amount and Participations. Subject to the provisions of this Agreement:

	 	(a)	 	the aggregate principal amount of the Facility available to the Borrower is
US$200,000,000, comprising:

	 	(i)	 	a term facility of up to US$125,000,000;
	 
	 	(ii)	 	a term facility of up to US$60,000,000; and
	 
	 	(iii)	 	a revolving credit facility (which may be converted into a
term facility pursuant to Clause 6.7) of up to US$15,000,000 plus (as from the
last day of the Tranche A Availability Period) any amount of the Tranche A
Facility which becomes part of the Tranche C Facility in accordance with
Clause 4.7 (the “Additional Tranche C Amount”).

	 	(b)	 	Each Lender will participate in:

	 	(i)	 	the Tranche A Advance in the proportion which its Tranche A
Commitment (if any) bears to the aggregate Tranche A Commitments of all the
Lenders;
	 
	 	(ii)	 	each Tranche B Advance in the proportion which its Tranche B
Commitment (if any) bears to the aggregate Tranche B Commitments of all the
Lenders; and
	 
	 	(iii)	 	each Tranche C Advance in the proportion which its Tranche
C Commitment (if any) bears to the aggregate Tranche C Commitments of all the
Lenders.

	2.2	 	Purpose. The Borrower shall:

	 	(a)	 	Tranche A Facility. use the proceeds of the Tranche A Facility to
refinance the Existing Facility and to pay the associated expenses in respect of the
Facility;
	 
	 	(b)	 	Tranche B Facility. use the proceeds of the Tranche B Facility to
finance the costs incurred by the Borrower in respect of the exploration, development,
expansion and production of the Oilfield Projects; and
	 
	 	(c)	 	Tranche C Facility. use the proceeds of the Tranche C Facility to
meet the general corporate requirements of the Borrower.

Neither the Facility Agent nor any Lender shall have any responsibility to see to the
application of the proceeds by the Borrower.

14

 

	2.3	 	Lenders’ Several Liability. The rights and obligations of the Lenders
hereunder are several and accordingly:

	 	(a)	 	the amount at any time owing by the Borrower hereunder to each Lender or the
Facility Agent shall be a separate and independent debt and each Lender and the
Facility Agent shall be entitled to protect and enforce its respective rights arising
out of this Agreement;
	 
	 	(b)	 	the failure of any Lender to perform its obligations hereunder shall not
relieve any other Lender, the Facility Agent or the Borrower of any of its respective
obligations, nor shall any Lender or the Facility Agent be responsible for the
obligations of any other Lender.

	3.	 	CONDITIONS PRECEDENT
	 
	3.1	 	Conditions. The Lenders shall not be obliged to make any Advance to the
Borrower unless the Facility Agent shall have received:
	 
	 	 	Facility Agreement

	 	(a)	 	this Agreement duly executed by all the parties;
	 
	 	Corporate Documents
	 
	 	(b)	 	in relation to the Borrower, certified true copies of:

	 	(i)	 	its certificate of incorporation and memorandum and articles
of association;
	 
	 	(ii)	 	its current business licence issued by SAIC which evidences
that it has duly passed the annual examination in 2008;
	 
	 	(iii)	 	a list of its directors with their specimen signatures;
	 
	 	(iv)	 	a list of its shareholders and their respective shareholdings;
	 
	 	(v)	 	resolutions of its board of directors approving the borrowing
and the giving of security on the terms of this Agreement and the Security
Documents to which it is a party and the opening and operation of the MIE
Offshore Account, the Debt Service Reserve Account and the MIE Onshore Account
and authorising a person or persons to execute this Agreement, the relevant
Security Documents, all Notices of Drawing and any other notices or documents
required in connection herewith or therewith and to open and operate such bank
accounts, and the specimen signature(s) of such person(s);

	 	(c)	 	in relation to each of the Corporate Shareholder and Far East Energy, certified
true copies of:

15

 

	 	(i)	 	its certificate of incorporation, memorandum and articles of
association, bye-laws (if any) and all other constitutional documents;
	 
	 	(ii)	 	(only in relation to Far East Energy) its current business registration
certificate;
	 
	 	(iii)	 	a list of its directors with their specimen signatures;
	 
	 	(iv)	 	a list of its shareholders and their respective shareholdings;
	 
	 	(v)	 	resolutions of its board of directors and shareholders approving the
execution of the relevant Security Documents to which it is a party and authorising
a person or persons to execute such Security Documents and any other notices or
documents required in connection therewith, and the specimen signature(s) of such
person(s);

Security Documents

	 	(d)	 	(subject to Clause 3.3) the Pledge over Entitlements under PSCs duly executed by the Borrower
and the Offshore Security Agent together with (i) the written notice issued by the Borrower to
PetroChina in respect of the Pledge over Entitlements under PSCs; and (ii) the signed but
undated notice (but excluding the written acknowledgement from PetroChina to such notice) from
the Borrower and the Lenders to PetroChina in respect of the payment
arrangements of the relevant oil proceeds (each in an agreed form);
	 
	 	(e)	 	(Subject to Clause 3.3) the Charge over Debt Service Reserve Account duly executed by the
Borrower and the Offshore Security Agent;
	 
	 	(f)	 	(Subject to Clause 3.3) the Charge over Offshore Account duly executed by the Borrower and
the Offshore Security Agent;
	 
	 	(g)	 	(Subject to Clause 3.3) the Charge over Onshore Account duly executed by the Borrower and the
Onshore Security Agent;
	 
	 	(h)	 	(Subject to Clause 3.3) the Insurance Assignment duly executed by the Borrower and the
Offshore Security Agent including the written notice(s) issued by the Borrower to the
insurer(s) but excluding the written acknowledgement(s) from the insurer(s) to such
notice(s) (each in the form specified in the Insurance Assignment);
	 
	 	(i)	 	(subject to Clause 3.3) the Share Mortgage (Borrower) duly executed by the Corporate
Shareholder and the Offshore Security Agent together with the documents required to be
provided pursuant to Clause 2.2 of the Share Mortgage (Borrower) (including the certificates
in respect of 16,500 shares in the Borrower and instruments of
transfer in respect the shares subject to the Share Mortgage (Borrower), duly executed by the Corporate Shareholder
in blank) and an irrevocable authorisation letter issued by the Corporate Shareholder
authorising the Facility Agent to date and release the Share Mortgage (Borrower) pursuant to
Clause 4.3;

16

 

	 	(j)	 	the Share Mortgage (FEE) duly executed by the Personal Shareholders and the Offshore
Security Agent together with the documents required to be provided pursuant to Clause 2.2
of the Share Mortgage (FEE);
	 
	 	(k)	 	the Share Mortgage (MIEH) duly executed by Far East Energy and the Offshore Security Agent
together with the documents required to be provided pursuant to Clause 2.2 of the Share
Mortgage (MIEH);
	 
	 	(l)	 	the Subordination Deed duly executed by the Corporate Shareholder, the Borrower and the
Offshore Security Agent;

Miscellaneous

	 	(m)	 	certified true copies of the PSCs and the Crude Oil Sales Contract;
	 
	 	(n)	 	certified true copies of the PRC identity cards of the Personal Shareholders;
	 
	 	(o)	 	evidence reasonably satisfactory to the Facility Agent that (i) each of the Debt Service
Reserve Account and the MIE Offshore Account has been duly opened with the Facility Agent and
(ii) the MIE Onshore Account has been duly opened with the Onshore Account Bank;
	 
	 	(p)	 	the report dated 17 April 2009 issued by Ryder Scott Company Petroleum Consultants in
respect of the oil reserve of the Oilfields;
	 
	 	(q)	 	a certified true copy of the environmental evaluation report issued by ENSR International;
	 
	 	(r)	 	the following authorisations required for or in connection with the development,
construction and operation of the Oilfield Projects:

	 	(i)	 	a copy of the approval issued by the National Environmental Bureau of the
PRC in respect of the Daan Oilfield Project;
	 
	 	(ii)	 	certified true copies of the approvals issued by the Jilin Provincial
Environmental Bureau in respect of the Moliqing Oilfield Project and the Miao 3
Oilfield Project;
	 
	 	(iii)	 	copies of the approvals issued by the MOC in respect of the PSCs;
	 
	 	(iv)	 	copies of the approvals issued by the MOC in respect of the transfer of the
PSCs to the Borrower;
	 
	 	(v)	 	copies of the approvals issued by the National Development and Reform
Commission of the PRC in respect of the Oilfield Projects; and
	 
	 	(vi)	 	any other authorisations required to be obtained by the Borrower from any
governmental authority and any other material authorisations required to be obtained
by any other person from any governmental

17

 

	 	 	 	authorities for the aforesaid purpose arising as a result of the change in
any applicable law or regulation after the date of this Agreement;

	 	(s)	 	the current insurance policies issued by AON Hong Kong Limited or Ping An
Property and Casualty Insurance Company of China in respect of the Borrower’s
insurance coverage which shall be customary for operations of similar type in the oil
industry;
	 
	 	(t)	 	evidence satisfactory to the Majority Lenders that the Borrower has put in
place adequate internal hedging policies in respect of oil price volatility, interest
rate fluctuation and RMB/US Dollar currency risk which are customary for operations
of similar type in the oil industry (such hedging policies shall be in the form set
out in Schedule 4);
	 
	 	(u)	 	a copy of the investment agreement entered into between TPG and the
Corporate Shareholder in respect of the equity investment of US$50,000,000 by TPG in
the Corporate Shareholder, certified as a true copy by the Chief Financial Officer,
the Chief Operating Officer or a director of the Borrower;
	 
	 	(v)	 	a letter or e-mail from the Existing Agent confirming the total amount
required to be paid by the Borrower to the Existing Agent to discharge the Existing
Facility in full on the date on which the Tranche A Advance is proposed to be made
and the details of the bank account of the Existing Agent to which such amount shall
be paid;
	 
	 	(w)	 	the draft releases in respect of the Existing Security Documents in an
agreed form together with a copy of the deed of release executed by the Existing
Agent in respect of a share charge dated 12 January 2009 executed by the Corporate
Shareholder in respect of 8,000 shares in the Borrower;
	 
	 	(x)	 	evidence that all authorisations and filings, registrations and other
formalities which arise as a result of the change in any applicable law or regulation
after the date of this Agreement have been or will be obtained or completed in order
to ensure that the Finance Documents are valid and enforceable and to preserve the
priority of the Offshore Security Agent or, as the case may be, the Onshore Security
Agent under any Security Document (other than the evidence relating to the
authorisations, filings, registrations and other formalities specified in Clauses
14.1(s) and 14.1(t));
	 
	 	(y)	 	(i) a legal opinion in relation to Hong Kong law issued by Baker & McKenzie,
(ii) a legal opinion in relation to the Cayman Islands law issued by Conyers Dill &
Pearman and (iii) a legal opinion in relation to PRC law issued by Global Law Office;
	 
	 	(z)	 	a written confirmation of acceptance of appointment from Law Debenture
Services (H.K.) Limited as (in its standard form) process agent in Hong Kong for the
Borrower, the Corporate Shareholder and the Personal Shareholders.

	3.2	 	Facility Agent’s Approval. All the documents and evidence referred to in Clause 3.1

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	 	 	shall be in form and substance satisfactory to the Facility Agent and shall be supplied in
such number of copies or counterparts as the Facility Agent may require. Copies required to
be certified shall be certified in a manner satisfactory to the Facility Agent by a
director or responsible officer of the Borrower or other party concerned.
	 
	3.3	 	Escrow. The Security Documents listed in Clause 3.1(d) to Clause 3.1(i) (the
“Escrow Security Documents”) shall be held undated by the Facility Agent pending their dating
and delivery in accordance with Clause 4.3(c).
	 
	3.4	 	Waiver of Conditions Precedent. Upon receiving the written instructions of the
Majority Lenders, the Facility Agent may waive the provision of any document or evidence
referred to in Clause 3.1 as a condition precedent to the making of any Advance.
	 
	3.5	 	Notice. After all the documents and evidence referred
to in Clause 3.1 have been
received by the Facility Agent or otherwise waived by the Facility Agent pursuant to Clause
3.4, the Facility Agent shall give notice of that fact to the Borrower and the Lenders. The
status of the documents and evidence referred to in Clause 3.1 as at the date of this
Agreement is set out in a report annexed in Schedule 11, and the Facility Agent hereby
confirms that (i) the items stated as “satisfied” have been received and confirmed acceptable
by the Facility Agent; (ii) the items stated as “agreed form” shall be acceptable to the
Facility Agent on receipt of such items in such agreed form.
	 
	4.	 	TRANCHE A ADVANCE AND TRANCHE B ADVANCES
	 
	4.1	 	Availability of Tranche A Advance. Subject to Clause 4.3 and the other terms
and conditions of this Agreement, the Borrower may request the making of the Tranche A Advance
up to the full amount available under the Tranche A Facility on any one (1) Business Day
during the Tranche A Availability Period.
	 
	4.2	 	Availability of Tranche B Advances. Subject to Clauses 4.3 and 4.4 and the other
terms and conditions of this Agreement, the Borrower may request the making of a Tranche B
Advance on any Business Day during the Tranche B Availability Period, provided that:

	 	(a)	 	the amount of each Tranche B Advance shall be at least US$5,000,000
and an integral multiple of US$1,000,000;
	 
	 	(b)	 	the aggregate principal amount of all Tranche B Advances shall not exceed the
aggregate principal amount of the Tranche B Facility available for drawing under this
Agreement.

	4.3	 	Conditions to the Making of Tranche A Advance and Tranche B Advances. The making of
the Tranche A Advance and each Tranche B Advance is also subject to the conditions that:

	 	(a)	 	the requirements of Clause 3 shall have been satisfied before the first Notice
of Drawing is signed by the Chief Financial Officer, the Chief Operating Officer, a
director or any other duly authorised person of the Borrower and is

19

 

	 	 	 	given or at such later time as the Facility Agent may agree;
	 
	 	(b)	 	the Facility Agent shall have received not later than 11:00 a.m. (Hong Kong time) on the
third (3) Business Day before the date on which such Advance is to be made a duly completed
and signed original Notice of Drawing;
	 
	 	(c)	 	in relation to the Tranche A Advance only, the Facility Agent shall have received on or
before the date of the Notice of Drawing for such Advance evidence reasonably satisfactory to
it that, contemporaneously with the disbursements by the Facility Agent of the proceeds of
the Tranche A Advance into the bank account of the Existing Agent as specified in the letter
or e-mail referred to in Clause 3.1(v), the Facility Agent will receive the following;

	 	(i)	 	the original formal releases signed by the Existing Agent in respect of the
Existing Security Documents (which shall be in substantially the same form as the
draft releases referred to in Clause 3.1(w));
	 
	 	(ii)	 	the original share certificates in respect of the 33,500 shares in the
Borrower subject to the share charge referred to in paragraph (a) of the definition
of “Existing Security Documents”;
	 
	 	(iii)	 	a certified true copy of the cancellation letter signed by the Existing
Agent in respect of the payment arrangements in connection with the rights pledge
agreement referred to in paragraph (d) of the definition of “Existing Security
Documents” (and the Borrower shall arrange for such cancellation letter together with
the notice referred to in Clause 3.1(d)(ii) (which notice shall be dated on the same
date as cancellation letter) to be issued to PetroChina forthwith upon receiving the
same from the Existing Agent);

	 	(d)	 	no Event of Default or Potential Event of Default shall have occurred (or would be likely to
occur as a result of such Advance being made) and all representations and warranties made by
the Borrower in or in connection with this Agreement shall be true and correct in all material
respects as at the date such Advance is to be made with reference to the facts and
circumstances then subsisting;
	 
	 	(e)	 	not later than 11:00 a.m. (Hong Kong time) on the date on which such Advance is to be made,
the Facility Agent shall have received and found satisfactory such additional information,
legal opinions and documents relating to the Borrower or any Security Provider or any
Finance Document as the Facility Agent may reasonably require as a result of circumstances
which could have a Material Adverse Effect arising or becoming known to the Facility Agent or
the Lenders since the date of any previous Advance or, if no previous Advance has been made,
the date of this Agreement; and
	 
	 	(f)	 	in relation to any Tranche B Advance only, the Tranche A Advance shall have been made during
the Tranche A Availability Period.

20

 

	 	 	It is hereby agreed that, contemporaneously with the disbursements by the Facility Agent of
the proceeds of the Tranche A Advance into the bank account of the Existing Agent as
specified in the letter or e-mail referred to in Clause 3.1(v), the Facility Agent shall be
entitled to date and unconditionally deliver the Escrow Security Documents and the Escrow
Security Documents will automatically take effect.
	 
	4.4	 	Further Conditions to making of Tranche B Advances. Prior to the making of each
Tranche B Advance, the Facility Agent shall have received the following:

	 	(a)	 	the following evidence that TPG has duly completed its investment into the
Corporate Shareholder and that the Corporate Shareholder has duly injected a sum equal
to the amount of such investment proceeds (in an amount of not less than
US$50,000,000) into the Borrower:

	 	(i)	 	certified true copies of the share certificate(s) in
respect of the shares of the Corporate Shareholder issued to TPG;
	 
	 	(ii)	 	certified true copies of the bank account statements of the
Corporate Shareholder and the Borrower evidencing that such proceeds have
been injected by TPG into the Corporate Shareholder and a sum equal to the
amount of such proceeds has been transferred by the Corporate Shareholder
into the Borrower; and
	 
	 	(iii)	 	(if such proceeds are injected by the Corporate Shareholder
into the Borrower by way of equity contribution) certified true copies of the
share certificate(s) in respect of the new shares of the Borrower issued to
the Corporate Shareholder;

	 	(b)	 	the documents and evidence referred to in Clauses 4.3(c), 14.1(s) and 14.1(t);
	 
	 	(c)	 	a report issued by the Insurance Adviser in respect of the compliance of the
scope of the Borrower’s insurance coverage with the applicable industry practice.

	4.5	 	Notification. Upon receipt of the Notice of Drawing in respect of the Tranche A
Advance or a Tranche B Advance, the Facility Agent shall promptly notify the Lenders whereupon
each Lender shall, subject to the provisions of this Agreement, make available to the Borrower
its Participation in the Tranche A Advance or, as the case may be, the relevant Tranche B
Advance in accordance with Clause 12.1.
	 
	4.6	 	Notice of Drawing Irrevocable. A Notice of Drawing under the Tranche A Facility or
the Tranche B Facility once given shall be irrevocable and the Borrower shall be bound to draw
the Tranche A Advance or, as the case may be, the relevant Tranche B Advance in accordance
therewith, except as otherwise provided in this Agreement. If such Advance is not made in
accordance with the relevant Notice of Drawing as a result of any default or negligence by the
Borrower, the Borrower shall on demand pay to the Facility Agent for the account of each
Lender, each such Lender’s Break Costs arising as a consequence of the proposed Advance not
having been made in accordance with the Notice of Drawing.

21

 

	4.7	 	Cancellation. Any part of the Tranche A Facility which remains undrawn at the end
of the Tranche A Availability Period shall, at the written request of the Borrower to the
Facility Agent, be transferred to and form a part of the Tranche C Facility. Any part of the
Tranche B Facility undrawn at the end of the Tranche B Availability Period shall be cancelled.
	 
	5.	 	REPAYMENT, PREPAYMENT AND CANCELLATION — TERM FACILITY
	 
	5.1	 	Repayment. The Borrower shall repay the Term Loan (including the Tranche C Loan
which has been converted into a term facility pursuant to Clause 6.7) outstanding at the date
falling thirty six (36) months after the date of this Agreement by five (5) equal successive
half-yearly instalments, the first instalment to be paid on the date falling thirty six (36)
months after the date of this Agreement. Any prepayment pursuant to Clause 5.2 or Clause 5.6
shall reduce the amount of the repayment instalments in inverse order of maturity. Any
prepayment of a Lender’s Participation in the Term Loan pursuant to Clause 9.1 or 9.2 shall
reduce the amount of the repayment instalments pro rata.
	 
	5.2	 	Voluntary Prepayment. The Borrower may prepay all or part of the Term Loan, Provided
that:

	 	(a)	 	the Borrower shall have given to the Facility Agent not less than thirty (30)
days’ prior written notice specifying the amount and date of prepayment;
	 
	 	(b)	 	all other sums then due and payable under this Agreement shall have been paid;
and
	 
	 	(c)	 	if the prepayment is made from funds provided to the Borrower or the Corporate
Shareholder by any other bank or financial institution (but not funds provided by any
private equity fund or obtained by way of initial public offering, placement, rights
offering or other equity issue of the shares of the Borrower or the Corporate
Shareholder), at the time of prepayment the Borrower shall pay to the Facility Agent
for the account of the Lenders a prepayment fee equal to:

	 	(i)	 	zero point five percent (0.5%) of the amount prepaid if such
prepayment is effected within three (3) years from the date of this Agreement;
and
	 
	 	(ii)	 	zero point two percent (0.2%) of the amount prepaid if such
prepayment is effected on any day falling after three (3) years from the date
of this Agreement.

	 	 	For the avoidance of doubt, such prepayment fee is payable only in the case of a voluntary
prepayment under this Clause 5.2, and all other prepayments under this Agreement shall be
payable without premium or penalty, except for Break Costs (if any).

22

 

	5.3	 	Provisions Applicable to Prepayments. Any notice of prepayment given by the
Borrower under any provision of this Agreement shall be irrevocable and the Borrower shall
be bound to make a prepayment in accordance therewith. The Borrower may not prepay the
Term Loan or any part thereof except in accordance with the express terms of this
Agreement. Amounts prepaid may not be reborrowed under this Agreement.
	 
	5.4	 	Other Amounts. If the Term Loan or any part thereof is prepaid under any provision of
this Agreement, the Borrower shall also pay to the Facility Agent for the account of each
Lender concerned:

	 	(a)	 	at the time of prepayment, such Lender’s proportion of interest and
commitment fee accrued up to the date of prepayment and all other sums payable by the
Borrower under this Agreement for the account of such Lender; and
	 
	 	(b)	 	on demand, such amount as such Lender may certify to be its Break Costs if
such prepayment is not made on the last day of any Interest Period applicable to the
amount to be prepaid.

	 	5.5	 	No Voluntary Cancellation. Except as otherwise provided for in this Agreement, the
Borrower may not cancel (a) the undrawn Tranche A Facility before the end of the Tranche A
Availability Period and (b) all or any part of the undrawn Tranche B Facility before the end
of the Tranche B Availability Period.
	 
	 	5.6	 	Mandatory Prepayment. If the Borrower proposes to provide any of the loans referred
to in Clause 14.2(f)(i)(ee) or Clause 14.2(f)(i)(ff) (and such amount(s) has not previously
been provided in accordance with Clause 14.2(f)(i)(ee) or Clause 14.2(f)(i)(ff) and then
repaid), the Borrower shall make a prepayment in respect of the Term Loan and/or Tranche C
Advances on or before the Business Day immediately before any such loan is provided and such
prepayment shall be made in an amount determined in accordance with the formula below:

	 	 	whereby:

	 	(a)	 	PA means the amount required to be prepaid by the Borrower;
	 
	 	(b)	 	LA means the amount (or if applicable the US Dollar equivalent thereof) of the
relevant loan to be provided by the Borrower to the Corporate Shareholder pursuant to
Clause 14.2(f)(i)(ee) or Clause 14.2(f)(i)(ff).

	 	 	Notwithstanding any contrary provisions of this Agreement, any Tranche C Advances prepaid
pursuant to this Clause 5.6 shall not thereafter be available for further drawing under
the Tranche C Facility.
	 
	5.7	 	Final Repayment. The balance (if any) of the Term Loan together with all accrued
interest and other monies outstanding in connection with the Term Facility shall be
repaid on the Final Repayment Date.

23

 

	6.	 	TRANCHE C ADVANCES, REPAYMENTS AND CANCELLATION — TRANCHE C FACILITY
	 
	6.1	 	Availability. Subject to Clause 6.2 and the other terms and conditions of this
Agreement, the Borrower may request the making of a Tranche C Advance on any Business Day
during the Tranche C Availability Period, Provided that:

	 	(a)	 	the amount of each Tranche C Advance shall be at least US$1,000,000 and an
integral multiple of US$1,000,000;
	 
	 	(b)	 	the aggregate principal amount of all Tranche C Advances outstanding at any
one time shall not exceed the aggregate principal amount available under the Tranche
C Facility at such time.

	6.2	 	Conditions of Drawing. The making of each Tranche C Advance is also subject to the
conditions that:

	 	(a)	 	the requirements of Clause 3 shall have been satisfied before the first Notice
of Drawing is signed by the Chief Financial Officer, the Chief Operating Officer, a
director or such other duly authorised person of the Borrower and is given or such
later time as the Facility Agent may agree;
	 
	 	(b)	 	the Facility Agent shall have received not later than 11:00 a.m. (Hong Kong
time) on the third (3) Business Day before the date on which the Tranche C Advance is
to be made a duly completed and signed original Notice of Drawing;
	 
	 	(c)	 	prior to the making of each Tranche C Advance, the Facility Agent shall have
received the documents and evidence referred to in Clauses 4.4(a), 4.4(b) and 4.4(c);
	 
	 	(d)	 	no Event of Default or (in relation only to a Tranche C Advance not being a
Rollover Tranche C Advance) Potential Event of Default shall have occurred (or would
be likely to occur as a result of such Tranche C Advance being made) and all
representations and warranties made by the Borrower in or in connection with this
Agreement shall be true and correct in all material respects as at the date such
Tranche C Advance is to be made with reference to the facts and circumstances then
subsisting;
	 
	 	(e)	 	not later than 11.00 a.m. (Hong Kong time) on the date on which such Tranche
C Advance is to be made, the Facility Agent shall have received and found
satisfactory such additional information, legal opinions and documents relating to
the Borrower or any Security Provider or any Finance Document as the Facility Agent
may reasonably require as a result of circumstances which could have a Material
Adverse Effect arising or becoming known to the Facility Agent or the Lenders since
the date of the previous Advance, or if no previous Advance has been made, the date
of this Agreement; and

24

 

	 	(f)	 	the Tranche A Advance shall have been made during the Tranche A
Availability Period.

	6.3	 	Notification. The Facility Agent shall promptly notify the Lenders of each Notice of
Drawing with respect to the Tranche C Facility whereupon each Lender shall, subject to the
provisions of this Agreement, make available to the Borrower its Participation in the relevant
Tranche C Advance in accordance with Clause 12.1.
	 
	6.4	 	Notice of Drawing Irrevocable. A Notice of Drawing under the Tranche C Facility once
given shall be irrevocable and the Borrower shall be bound to draw a Tranche C Advance in
accordance therewith, except as otherwise provided in this Agreement. If a Tranche C Advance
is not made in accordance with a Notice of Drawing as a result of any default or negligence
by the Borrower, the Borrower shall on demand pay to the Facility Agent for the account of
each Lender such amount (if any) as such Lender may certify to be its Break Costs arising as
a consequence of the proposed Tranche C Advance not having been made in accordance with such
Notice of Drawing.
	 
	6.5	 	Repayments. The Borrower shall repay each Tranche C Advance (other than the Final
Tranche C Advance (as defined in Clause 6.7)) in full on the Interest Payment Date applicable
to that Tranche C Advance. Any amount so repaid shall, subject to the terms of this
Agreement, be available for further Advances. Other than the Final Tranche C Advance made
pursuant to Clause 6.7, all Tranche C Advances and all accrued interest and other monies
outstanding in connection with the Tranche C Facility shall be repaid not later than the last
day of the Tranche C Availability Period. The Borrower may not prepay any Tranche C Advance
or any part thereof except in accordance with the express terms of this Agreement.
	 
	6.6	 	Renewals. If on any Interest Payment Date a Tranche C Advance is to be repaid and a
new Tranche C Advance made, then no actual payments by the Borrower or the Lenders shall be
required hereunder to the extent of the amount which is to be repaid and readvanced.
	 
	6.7	 	Conversion. Subject to the foregoing provisions of this Clause 6 and the other
terms of this Agreement, the Borrower may, during the period commencing from the fifteenth
(15th) Business Day before the last day of the Tranche C Availability Period and ending on
and including the last day of the Tranche C Availability Period, elect to convert the
Tranche C Facility into a term facility and make a final Tranche C Advance (the “Final
Tranche C Advance”) under the Tranche C Facility up to an amount equal to the aggregate of
the total principal amount of all existing Tranche C Advances then outstanding and the
amount of the Tranche C Facility then remaining available to be drawn. For the avoidance of
doubt, no further Tranche C Advance shall be made under the Tranche C Facility after the
Final Tranche C Advance is made. The Borrower shall repay the principal amount outstanding
under the Final Tranche C Advance in accordance with Clause 5.1.
	 
	6.8	 	No Voluntary Cancellation. Except as otherwise provided for in this Agreement, the
Borrower may not cancel all or any part of the undrawn Tranche C Facility.

25

 

	7.	 	INTEREST
	 
	7.1	 	Interest. The Borrower shall pay interest on each Tranche C Advance and on the Term
Loan (or each part thereof) in accordance with the provisions of this Clause.
	 
	7.2	 	Interest Periods — Term Loan. The Interest Periods applicable to each Term Advance
or, as the case may be, the Term Loan shall be one (1), two (2), three (3) or (subject to
availability) six (6) months as selected by the Borrower in accordance with Clause 7.3,
Provided that:

	 	(a)	 	the first Interest Period in relation to each Term Advance shall commence on
the date on which that Term Advance is made;
	 
	 	(b)	 	in relation to each Term Advance after the first Term Advance, the first
Interest Period shall end on the last day of the then current Interest Period in
respect of the Term Loan so that all existing Term Advances shall be consolidated
upon the expiry of each Interest Period (to the extent not already consolidated in
accordance with this paragraph);
	 
	 	(c)	 	each Interest Period (except the first Interest Period) in relation to each
Term Advance or, as the case may be, the Term Loan shall commence on the last day of
the preceding Interest Period;
	 
	 	(d)	 	any Interest Period which would otherwise end on a non-Business Day shall
instead end on the next following Business Day or, if that Business Day is in
another calendar month, on the immediately preceding Business Day;
	 
	 	(e)	 	if any Interest Period commences on the last Business Day of a calendar
month or on a day for which there is no numerically corresponding day in the
calendar month one (1), two (2), three (3) or six (6) months thereafter as the case
may be, that Interest Period shall, subject to paragraphs (b) and (f), end on the
last Business Day of such later calendar month; and
	 
	 	(f)	 	any Interest Period which would otherwise extend beyond a repayment date
under Clause 5.1 shall instead end on that repayment date, subject to adjustment in
accordance with Clause 12.5.

	7.3	 	Selection — Term Loan. Subject to Clause 7.2, the Borrower may select the length of
an Interest Period for any Term Advance or, as the case may be, the Term Loan by written
notice to be received by the Facility Agent not later than 12:00 noon (Hong Kong time) on
the third (3) Business Day before the start of that Interest Period, and if the Borrower
does not give such a notice it shall be deemed to have selected a one (1) month Interest
Period.
	 
	7.4	 	Interest Periods — Tranche C Advances. The Interest Period for each Tranche C
Advance (other than the Final Tranche C Advance made pursuant to Clause 6.7) shall commence
on the date on which the Tranche C Advance is made and end on the date one (1), two (2),
three (3) or (subject to availability) six (6) months thereafter as selected by the Borrower
in the relevant Notice of Drawing Provided that:

26

 

	 	(a)	 	any Interest Period which would otherwise end on a non-Business Day shall
instead end on the next following Business Day or, if that Business Day is in
another calendar month, on the immediately preceding Business Day;
	 
	 	(b)	 	any Interest Period which commences on the last Business Day of a calendar
month or on a day for which there is no numerically corresponding day in the calendar
month one (1), two (2), three (3) or six (6) months thereafter (as the case may be)
shall, subject to paragraph (c), end on the last Business Day of such later calendar
month; and
	 
	 	(c)	 	any Interest Period which would otherwise end after the Final Repayment Date
shall instead end on that date.

	 	 	For the avoidance of doubt, the Interest Period for the Final Tranche C Advance shall be
determined in accordance with Clause 7.2.
	 
	7.5	 	Non Availability. If the Borrower selects a six (6) month Interest Period and the
Facility Agent determines (which determination shall be conclusive and binding) that six (6)
month deposits in the relevant amount and currency are not for the time being available in
the London interbank market, the Borrower shall, subject as aforesaid, be deemed to have
selected a one (1) month Interest Period.
	 
	7.6	 	Rate and Calculation. The rate of interest applicable to the Term Loan (or any part
thereof) and to each Tranche C Advance shall be the rate per annum determined by the Facility
Agent to be the aggregate of LIBOR for that Interest Period and the Margin. Interest shall
accrue from day to day, shall be calculated on the basis of the actual number of days elapsed
and a 360 day year, including the first day of the period during which it accrues but
excluding the last, and shall be paid in arrear on each Interest Payment Date. The Agent
shall notify the Borrower and the Lenders of each interest rate determined under this Clause.
	 
	8.	 	MARKET DISRUPTION
	 
	8.1	 	Market Disruption. If a Market Disruption Event (as defined below) occurs in
relation to an Advance or the Term Loan for any Interest Period, then the rate of interest on
each Lender’s share of that Advance or the Term Loan for the Interest Period shall be the
rate per annum which is the sum of:

	 	(a)	 	the Margin; and
	 
	 	(b)	 	the higher of (x) the rate notified to the Facility 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 Advance or the Term Loan from
whatever source it may reasonably select and (y) in relation to a Market Disruption
Event under Clause 8.2(b), LIBOR.

	8.2	 	Market Disruption Events. In this Agreement, “Market Disruption Event” means:

27

 

	 	(a)	 	at or about 12:00 noon on the second London Business Day before the first day
of the relevant Interest Period the Screen Rate is not available or the Screen
Rate is zero or negative and none of the Reference Banks supplies a rate to the
Facility Agent to determine LIBOR for the relevant Interest Period; or
	 
	 	(b)	 	before close of business in London on the second London Business Day before
the first day of the relevant Interest Period, the Facility 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 London interbank market would be in excess of LIBOR.

	8.3	 	Alternative Basis of Interest or Funding. If a Market Disruption Event occurs and
the Facility Agent or the Borrower so requires, the Facility 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. Any alternative basis so agreed above
shall, with the prior consent of all the Lenders and the Borrower, be binding on all parties
to this Agreement. For the avoidance of doubt, in the event that no substitute basis is
agreed at the end of the thirty day period, the rate of interest shall continue to be
determined in accordance with the terms of this Agreement.
	 
	9.	 	CHANGE OF LAW OR CIRCUMSTANCES
	 
	9.1	 	Unlawfulness. If it becomes, or it becomes apparent that it is or will be, unlawful
or contrary to any legal requirement of any governmental, fiscal, monetary or other authority
or any other requirement of any supervisory or licensing authority of any Lender for any
Lender to give effect to its obligations hereunder, such Lender shall through the Facility
Agent so notify the Borrower, whereupon such Lender’s outstanding Commitment shall be
cancelled and its obligation to maintain its Participation in the Loan shall cease. The
Borrower shall forthwith after such notification, or such longer period as such Lender may
certify as being permitted by the relevant law, prepay such Lender’s Participation in the
Loan in full together with interest accrued thereon to the date of prepayment and any other
monies owing hereunder to such Lender.
	 
	9.2	 	Increased Cost. If a Lender determines that the introduction of, or any change in,
any applicable law or regulation or in the interpretation or application thereof or
compliance by such Lender with any applicable direction, request or requirement (whether or
not having the force of law, and including any such direction, request or requirement which
affects the manner in which such Lender of such Lender is required to or does allocate or
maintain capital in support of its assets or liabilities) of any competent governmental,
fiscal, monetary, or other authority does or will:

	 	(a)	 	subject such Lender to any tax or other payment with reference to sums
advanced or to be advanced by such Lender or payable by the Borrower under this
Agreement (except (i) tax on such Lender’s overall net income in the jurisdiction of
its principal office or Lending Office or (ii) as referred to in Clause 10); or

28

 

	 	(b)	 	impose on such Lender any other condition the effect of which is to (i)
increase the cost to such Lender participating in the Facility or (ii) reduce the
amount of any payment receivable by, or the effective return to, such Lender in
respect of the Facility or (iii) impose an additional cost on such Lender
resulting from such Lender’s Participation in the Facility,

	 	 	such Lender may through the Facility Agent so notify the Borrower, and the Borrower shall
from time to time upon demand (whether or not such Lender’s Participation in the Loan has
been repaid) pay to the Facility Agent for the account of such Lender such amounts as such
Lender may certify in good faith to be necessary to compensate it for such tax, payment,
increased cost or reduction (each an “increased cost”). Where such increased cost arises
from circumstances contemplated above which affect the Lender’s business generally or the
manner in which or extent to which that Lender allocates capital resources, the Lender
shall be entitled to such increased cost as it determines and certifies in good faith is
fairly allocable to its Participation in the Facility. Nothing in this Clause 9.2 shall
require any Lender to disclose confidential information relating to the organisation of its
business or the business of any Holding Company. The Borrower and the Facility Agent, in
consultation with such Lender, shall discuss whether any alternative arrangement may be
made to avoid such increased cost. So long as the circumstances giving rise to such
increased cost continue, the Borrower may, after giving the Facility Agent not less than
thirty (30) days’ prior written notice (which shall be irrevocable), prepay all (but not
only part of) such Lender’s Participation in the Loan in accordance with Clauses 5.3 and
5.4, and upon the giving of such notice such Lender’s outstanding Commitments shall be
cancelled.
	 
	10.	 	TAXES AND OTHER DEDUCTIONS
	 
	10.1	 	No Deductions or Withholdings. All sums payable by the Borrower under any
Finance Documents shall be paid in full without set-off or counterclaim or any restriction or
condition and free and clear of any tax or other deductions or withholdings of any nature. If
the Borrower or any other person is required by any law or regulation to make any deduction
or withholding (on account of tax or otherwise) from any payment for the account of any
Finance Party, the Borrower shall, together with such payment, pay such additional amount as
will ensure that such Finance Party receives (free and clear of any tax or other deductions
or withholdings) the full amount which it would have received if no such deduction or
withholding had been required. The Borrower shall promptly forward to the Facility Agent
copies of official receipts or other evidence showing that the full amount of any such
deduction or withholding has been paid over to the relevant taxation or other authority.
	 
	10.2	 	Advance Notification. If at any time the Borrower becomes aware that any such
deduction, withholding or payment contemplated by Clause 10.1 is or will be required, it
shall immediately notify the Facility Agent and supply all available details thereof.

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	11.	 	FEES AND EXPENSES
	 
	11.1	 	Commitment Fee. If the Tranche A Advance has been made under this Agreement, the
Borrower shall pay to the Facility Agent for the  pro rata account of the Lenders a commitment
fee in respect of each Calculation Period calculated on the daily available but undrawn
balance of the Facility on the basis of the actual number of days elapsed and a 360 day year
at the rate of:

	 	(a)	 	if the average amount of the Tranche B Loan and all outstanding Tranche C
Advances during any Calculation Period exceeds fifty percent (50%) of the aggregate
of the Tranche B Commitments and the Tranche C Commitments of all the Lenders as at
the date of this Agreement (as reduced by (i) any principal amount repaid or prepaid
by the Borrower under the Tranche B Facility from time to time, (ii) any principal
amount repaid or prepaid by the Borrower under the Tranche C Facility which is not
available for reborrowing following such repayment or prepayment and (iii) any amount
of the Tranche B Facility and/or the Tranche C Facility cancelled from time to time),
one percent (1%) per annum; or
	 
	 	(b)	 	if the average amount of the Tranche B Loan and all outstanding Tranche C
Advances during any Calculation Period is equal to or less than fifty percent (50%)
of the aggregate of the Tranche B Commitments and the Tranche C Commitments of all
the Lenders as at the date of this Agreement (as reduced by (i) any principal amount
repaid or prepaid by the Borrower under the Tranche B Facility from time to time,
(ii) any principal amount repaid or prepaid by the Borrower under the Tranche C
Facility which is not available for reborrowing following such repayment or
prepayment and (iii) any amount of the Tranche B Facility and/or the Tranche C
Facility cancelled from time to time), one point five percent (1.5%) per annum.

	 	 	The commitment fee shall accrue from day to day and be paid in arrears on each Commitment
Fee Payment Date.
	 
	11.2	 	Agency Fee. The Borrower shall pay to the Facility Agent for its own account an
agency fee in accordance with a letter of even date herewith addressed by the Facility Agent
to and accepted by the Borrower in accordance with the terms stated therein.
	 
	11.3	 	Arrangement Fee. The Borrower shall pay to the Facility Agent (for distribution to
the Lenders in such manner as agreed by the Lenders) a work and arrangement fee specified in
a letter of even date herewith (the “Work and Arrangement Fee Letter”) addressed by the
Facility Agent to and accepted by the Borrower in accordance with the terms stated therein.
In the event that the Tranche A Advance has not occurred during the Tranche A Availability
Period, the Borrower may, by notice to the Facility Agent, cancel all Commitments under the
Facility, and in such case no commitment fees or agency fees shall be payable under this
Clause 11 and the only payment to be made by the Borrower under the Work and Arrangement Fee
Letter shall be the Work Fee as specified in paragraph (a) of the Arrangement Fee Letter.
	 
	11.4	 	Expenses. The Borrower shall forthwith on demand and whether or not any Advance
is made pay to or reimburse each Finance Party for its own account for all reasonable

30

 

	 	 	costs, charges and expenses (including legal and other fees on a full indemnity basis and
travel and all other out-of-pocket expenses, provided that such travel expenses are
incurred in relation to the economy class of the relevant type of the transportation
involved) incurred by it in connection with:

	 	(a)	 	the negotiation, preparation, execution and (where relevant) registration of
the Finance Documents and any other documentation required thereunder;
	 
	 	(b)	 	any amendment, waiver or consent to any Finance Document if the same is
requested by the Borrower or any Security Provider.

	11.5	 	Enforcement Costs. The Borrower shall from time to time forthwith on demand pay to
or reimburse each of the Finance Parties for all costs, charges and expenses (including legal
and other fees on a full indemnity basis and all other out-of-pocket expenses) incurred by it
in investigating any event which it reasonably believes is an Event of Default or Potential
Event of Default or in exercising any of its rights or powers under any Finance Document or
in suing for or seeking to recover any sums due under any Finance Document or otherwise
preserving or enforcing its rights under any Finance Document or in defending any claims
brought against it in respect of any Finance Document or in releasing or re-assigning any
Security Document.
	 
	11.6	 	Taxes. The Borrower shall pay all present and future stamp and other like duties and
taxes (other than the stamp duty levied in the PRC which is payable by China CITIC Bank
Corporation Limited or CITIC Ka Wah Bank (China) Limited in respect of this Agreement) and
all notarial, registration, recording and other like fees which may be payable in respect of
any Finance Document and shall indemnify each Finance Party against all liabilities, costs
and expenses which may result from any default in paying such duties, taxes or fees.
	 
	11.7	 	Recovery of Costs. If any Finance Party is entitled to seek the payment or
reimbursement of any costs and expenses from any Security Provider under the terms of any
Security Documents to which such Security Provider is a party (the “Relevant Costs and
Expenses”), such Finance Party shall:

	 	(a)	 	firstly, make a demand to the Borrower for its payment or reimbursement of the
Relevant Costs and Expenses;
	 
	 	(b)	 	secondly, if the Borrower fails to meet such demand within ten (10) Business
Days, make a demand to the Corporate Shareholder (if the Corporate Shareholder is
liable for such Relevant Costs and Expenses) for its payment or reimbursement of the
Relevant Costs and Expenses;
	 
	 	(c)	 	thirdly, if the Corporate Shareholder fails to meet such demand within ten
(10) Business Days, make a demand to Far East Energy (if Far East Energy is liable for
such Relevant Costs and Expenses) for its payment or reimbursement of the Relevant
Costs and Expenses;
	 
	 	(d)	 	fourthly, if Far East Energy fails to meet such demand within ten (10)
Business Days, make a demand to the Personal Shareholders (if the Personal
Shareholders are liable for such Relevant Costs and Expenses) for their
payment or reimbursement of the Relevant Costs and Expenses.

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	12.	 	PAYMENTS AND EVIDENCE OF DEBT
	 
	12.1	 	Advances. Amounts to be advanced by the Lenders to the Borrower under this
Agreement shall be made available to the Facility Agent not later than 10:00 a.m. (Hong Kong
time) on the date on which such Advance is to be made by remittance
to the bank account (No.      ) of the Facility Agent with JPMorgan Chase Bank, New York (for account of CITIC Ka Wah Bank Limited, Hong Kong and quoting reference: Loan
Service Centre — “MI Energy”) (or to such other account as the Facility Agent may
designate). The Facility Agent shall make available to the Borrower the amounts received
by it by payment to such other account in Hong Kong as the Borrower shall have previously
agreed with the Facility Agent, provided that the proceeds of the Tranche A Advance
borrowed for the purpose of refinancing the Existing Facility shall be paid by the
Facility Agent to the bank account of the Existing Agent as specified in the letter or
e-mail from the Existing Agent referred to in Clause 3.1(v). The Borrower shall be deemed
to have borrowed the relevant amount when such payment is made by the Facility Agent.
	 
	12.2	 	Payments by Borrower. All payments by the Borrower under this Agreement shall be
made to the Facility Agent on the relevant due date in same day funds settled through the
Clearing House Automated Transfer System operated by the Hong Kong Interbank Clearing Limited
(or in such other funds as may then be customary for the settlement in US Dollars of
transactions of this nature) to the bank account (No. ) of the Facility Agent with
JPMorgan Chase Bank, New York (for account of CITIC Ka Wah Bank Limited, Hong Kong and
quoting reference: Loan Service Centre — “MI Energy”) (or to such other account as the
Facility Agent may designate), provided that (a) if the relevant payment is made through a
transfer from the Debt Service Reserve Account or the MIE Offshore Account, such payment
shall be made to the Facility Agent by no later than 1:00 p.m. (Hong Kong time) on the
relevant due date and (b) in any other cases, the Borrower shall procure that the Facility
Agent shall receive an authenticated SWIFT message in respect of the relevant payment by no
later than 1:00 p.m. (Hong Kong time) on the relevant due date. The Facility Agent shall
forthwith distribute to each Lender its due proportion (if any) of the amounts received by it
in like funds as are received by the Facility Agent and to such account in New York City as
such Lender shall have previously notified to the Facility Agent.
	 
	12.3	 	Allocation of Receipts. If any amount received by the Facility Agent in respect of
sums due from the Borrower hereunder is less than the full amount due, the Facility Agent
shall allocate the amount received towards sums owing under this Agreement in the following
order of priority: (a) expenses owing to the Facility Agent; (b) other expenses and fees
owing to the Offshore Security Agent and the Onshore Security Agent, (c) other expenses and
fees owing to the other Finance Parties; (d) interest on the Loan and on such interest; (e)
principal of the Loan; and (f) other sums.
	 
	12.4	 	Payments by Facility Agent and Refunds. Where any sum is to be paid to the
Facility Agent under any Finance Document for the account of the Borrower or any Finance
Party, the Facility Agent shall not be obliged to pay that sum to the Borrower or such

32

 

	 	 	Finance Party (as the case may be) or enter into or perform any related exchange contract
unless and until the Facility Agent has established to its satisfaction that it has
actually received that sum. Where any sum is to be paid under this Agreement to the
Facility Agent for the account of another person, the Facility Agent may assume that the
payment will be made when due and may (but shall not be obliged to) make such sum available
to the person so entitled and:

	 	(a)	 	Amounts Due from Borrower: if the Facility Agent distributes to a
Finance Party an amount which the Facility Agent should have but has not in fact
received from the Borrower (or from any other person for the Borrower’s account), such
Finance Party shall on request promptly refund such amount to the Facility Agent
together with interest thereon for the relevant period at the rate per annum certified
by the Facility Agent to represent the cost to it of funding such amount for such
period;
	 
	 	(b)	 	Refunds to Borrower: if the Facility Agent has distributed to a
Finance Party an amount which is required to be repaid to the Borrower (or to any
other person for the Borrower’s account), such Finance Party shall on request
promptly refund such amount to the Facility Agent together with such interest thereon
(if any) as is required to be paid to the Borrower; and
	 
	 	(c)	 	Amounts Due from Finance Parties: if the Facility Agent makes an
amount available to the Borrower which the Facility Agent should have but has not in
fact received from a Finance Party, the Borrower shall on request promptly refund
such amount to the Facility Agent together with interest thereon for the relevant
period at the rate per annum certified by the Facility Agent to represent the cost to
it of funding such amount for such period,

	 	 	and, in each such case, the person by which such sum was payable shall indemnify the
Facility Agent for all losses, liabilities, damages, costs and expenses which the Facility
Agent may incur as a consequence of such sum not having been paid when due.
	 
	12.5	 	Business Days. If any sum would otherwise become due for payment on a non-Business
Day that sum shall become due on the next following Business Day and interest shall be
adjusted accordingly, except that if any repayment due under Clause 5.1 or Clause 6.5 would
then become due in another calendar month such repayment shall become due on the immediately
preceding Business Day.
	 
	12.6	 	Evidence of Debt. The Facility Agent shall maintain on its books in accordance with
its usual practice a set of accounts recording the amounts from time to time owing by the
Borrower hereunder. In any legal proceeding and otherwise for the purposes of this Agreement
the entries made in such accounts shall, in the absence of manifest error, be conclusive and
binding on the Borrower as to the existence and amounts of the obligations of the Borrower
recorded therein.
	 
	12.7	 	Certificate Conclusive and Binding. Where any provision of this Agreement provides
that a Finance Party may certify or determine an amount or rate payable by the Borrower, a
certificate by such Finance Party as to such amount or rate shall be conclusive and binding
on the Borrower in the absence of manifest error.

33

 

	13.	 	REPRESENTATIONS AND WARRANTIES
	 
	13.1	 	Representations and Warranties. The Borrower represents and warrants to each
Finance Party that:

	 	(a)	 	Status: the Borrower is a company duly incorporated with limited
liability and validly existing under the laws of the Cayman Islands, and has full
power, authority and legal right to own its property and assets and to carry on its
business;
	 
	 	(b)	 	Power and authority: the Borrower has full power, authority and legal
right to enter into and engage in the transactions contemplated by the Finance
Documents to which it is a party and has taken or obtained all necessary corporate and
other action and consents to authorise the execution and performance of the Finance
Documents to which it is a party;
	 
	 	(c)	 	Binding obligations: subject to Legal Reservations, the Finance
Documents to which the Borrower is a party constitute, or when executed and delivered
will constitute, legal, valid and binding obligations of the Borrower enforceable in
accordance with their terms;
	 
	 	(d)	 	No conflict with other obligations: neither the execution of the Finance
Documents to which the Borrower is a party nor the performance by the Borrower of any
of its obligations or the exercise of any of its rights thereunder will conflict with
or result in a material breach of any law, regulation, judgment, order, authorisation,
agreement or obligation applicable to it or cause any limitation placed on it or the
powers of its directors to be exceeded or result in the creation of or oblige the
Borrower to create an Encumbrance in respect of any of its property or assets except in
favour of the Offshore Security Agent or the Onshore Security Agent under or pursuant
to the Security Documents to which the Borrower is a party;
	 
	 	(e)	 	No Encumbrances: no Encumbrance exists over all or any part of the
property, assets or revenues of the Borrower except (i) as created by the Existing
Security Documents until they are released and discharged by the Existing Agent, (ii)
as created by the Security Documents or (iii) liens arising by operation of law in the
ordinary course of business or (iv) as previously disclosed in writing to and agreed by
the Facility Agent (details of all Encumbrances over the property, assets or revenue of
the Borrower as at the date of this Agreement are set out in Schedule 6, and are
permitted);
	 
	 	(f)	 	No indebtedness: the Borrower has no indebtedness to any party except
indebtedness arising in the ordinary course of its business or as permitted under
Clause 14.2(g);
	 
	 	(g)	 	Investment interests: other than Global Oil Corporation which owns ten
percent (10%) of the foreign investment interest under the PSCs, the Borrower is the
sole foreign investment party under the PSCs and beneficially owns all

34

 

	 	 	 	rights and interests attributable to it under the PSCs, and all authorisations required
from any governmental or other authority (including without limitation the MOC) in
connection with the Borrower’s ownership of such rights and interests have been obtained
and are in full force and effect, other than the approvals referred to in Clause
14.1(u)(i);
	 
	 	(h)	 	Authorisations for Oilfield Projects: all material authorisations required from any
governmental or other authority or from any shareholders or creditors of the Borrower for or
in connection with the development and operation of the Oilfields by the Borrower and the
consummation of transactions under the PSCs and the Crude Oil Sales Contract (including
without limitation (i) the approvals issued by the MOC in respect of the PSCs, (ii) the
approvals issued by the MOC in respect of the transfer of the PSCs to the Borrower, (iii) the
approvals issued by the National Development and Reform Commission in respect of the Oilfield
Projects and (iv) the business licence issued to the Borrower by the SAIC) have been obtained
and are in full force and effect or, by the date on which the first Notice of Drawing is
given, will have been obtained and be in full force and effect and there has been no material
default under the conditions of any of the same;
	 
	 	(i)	 	Authorisations for Finance Documents: all authorisations required from any
governmental or other authority or from any shareholders or creditors of the Borrower for or
in connection with the execution, validity and performance of the Finance Documents to which
the Borrower is a party have been obtained and are in full force and effect or, by the date
on which the first Notice of Drawing is given, will have been obtained and be in full force
and effect and there has been no default under the conditions of any of the same;
	 
	 	(j)	 	No filings or taxes: other than (i) the registrations and filings as specified in
Clauses 14.1(s) and 14.1(t)(i), (ii) the registration of the Share Mortgage (MIEH) with the
Hong Kong Companies Registry and (iii) the stamp tax payable in the PRC by China CITIC Bank
or CITIC Ka Wah Bank (China) Limited on execution and/or drawdown of the Facility and (iv)
any taxes payable by any other Lenders from time to time in the PRC, it is not necessary in
order to ensure the validity, enforceability, priority or admissibility in evidence in
proceedings of any of the Finance Documents in Hong Kong, the Cayman Islands or the PRC that
any of them or any other document be filed or registered with any authority in Hong Kong, the
Cayman Islands or the PRC or that any tax be paid in respect thereof, 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 or the PRC;
	 
	 	(k)	 	No litigation: no litigation, arbitration or administrative proceeding is currently
taking place or (to the best of its knowledge and belief) pending or threatened against the
Borrower or its assets or revenues or any of its Subsidiaries or their respective assets or
revenues or otherwise in respect of any of the Oilfields or the Oilfield Projects which, if
adversely determined, might reasonably be expected to have a Material Adverse Effect;

35

 

	 	(l)	 	No default: the Borrower is not in default under any law, regulation, judgment,
order, authorisation, agreement or obligation applicable to it or its assets or revenues,
the consequences of which default could have a Material Adverse Effect, and no Event of
Default or Potential Event of Default has occurred;
	 
	 	(m)	 	Financial statements: the most recent audited financial statements of the Borrower
for the time being (including the audited profit and loss account and balance sheet) were
prepared in accordance with the International Financial Reporting Standards or the generally
accepted accounting principles in the United States of America and show a true and fair view
of the financial position of the Borrower as at the end of, and the results of its operations
for, the financial period to which they relate and, as at the end of such period the Borrower
did not have any significant liabilities (contingent or otherwise) or any unrealised or
anticipated losses which are not disclosed by or reserved against in, such financial
statements, and there has been no material adverse change in the business or financial
condition of the Borrower since the date of such financial statements;
	 
	 	(n)	 	No misleading information: all information provided to the Finance Parties by or on
behalf of the Borrower in connection with the Facility is true and accurate in all material
respects and all forecasts and projections contained therein were arrived at after due and
careful consideration on the part of the Borrower and were, in its considered opinion, fair
and reasonable when made; the Borrower is not aware of any fact which has not been disclosed
in writing to the Facility Agent which might have a material effect on any such information,
forecasts or projections or which might affect the willingness of the Lenders to lend upon
the terms of this Agreement;
	 
	 	(o)	 	Confirmation Letter: the letter or e-mail issued by the Existing Agent as referred
to in Clause 3.1(v) remains true and accurate and has not been amended or modified by the
Existing Agent or the Borrower;
	 
	 	(p)	 	Indonesia JVs: none of the Indonesia JVs has (i) conducted any operations or
business since its date of establishment (whether inside or outside of the PRC) or (ii) any
assets, liabilities and obligations (whether contingent or otherwise). None of the Borrower,
the Corporate Shareholder, Far East Energy and the Personal Shareholders has provided or is
under any obligation to provide any funds or financial assistance of any kind to any of the
Indonesia JVs or any third parties in connection with the Borrower’s investment in the
Indonesia JVs, other than the funds used by the Borrower to subscribe for the equity
interests in the Indonesia JVs. The Borrower’s involvement in each of the Indonesia JVs did
not, do not, and will not, have any adverse impact on the Borrower’s profit and loss
accounts;
	 
	 	(q)	 	SPVs: none of MI Daan Corporation, MI Moliqing Corporation and MI Miao 3 Corporation has
any interest in the PSCs or the Crude Oil Sales Contract;
	 
	 	(r)	 	Permitted Refinancing: (i) the Facility constitutes a Permitted Refinancing under
the refinancing letter agreement dated 19 June 2009 between the Borrower, the Corporate
Shareholder, Far East Energy and TPG and (ii) the Share Mortgage (MIEH) constitutes an
encumbrance over the shares of the

36

 

	 	 	 	Corporate Shareholder pursuant to the Standard Bank Facility (as defined in the
Second Amended and Restated Articles of Association of the Corporate Shareholder
dated 9 July 2009) and falls within the exemption under Article 10(e)(ii) of the
Second Amended and Restated Articles of Association of the Corporate Shareholder
dated 9 July 2009;
	 
	 	(s)	 	No immunity: the Borrower is generally subject to civil and
commercial law and to legal proceedings and neither the Borrower nor any of its
assets or revenues is entitled to any immunity or privilege (sovereign or otherwise)
from any set-off, judgment, execution, attachment or other legal process.

	13.2	 	Continuing Representation and Warranty. The Borrower also represents and warrants to
and undertakes with each of the Finance Parties that the foregoing representations and
warranties will be repeated on the date of each Advance and each Interest Payment Date with
reference to the facts and circumstances subsisting as at the date on which such
representations and warranties are deemed to be made.
	 
	13.3	 	Acknowledgement of Reliance. The Borrower acknowledges that each of the Finance
Parties has entered into this Agreement in reliance upon the representations and warranties
contained in this Clause.
	 
	14.	 	UNDERTAKINGS
	 
	14.1	 	Affirmative Undertakings. The Borrower undertakes and agrees with each Finance Party
that from the date of this Agreement and so long as any sums remain owing hereunder and under
the other Finance Documents it will, unless the Majority Lenders otherwise agree in writing:

	 	(a)	 	supply to the Facility Agent or procure the supply by others to the
Facility Agent in sufficient number for each Lender:

	 	(i)	 	as soon as they are available, but in any event within one
hundred and twenty (120) days after the end of each financial year of the
Borrower, certified copies of its consolidated financial statements in respect
of its financial year (including a profit and loss account and balance sheet)
audited and certified by a Designated Accounting Firm together with a
certificate signed by a director of the Borrower, its Chief Financial Officer
or any other duly authorised officer to the effect (aa) that such financial
statements are true in all material respects and present fairly the financial
position of the Borrower as at the end of, and the results of its operations
for, that financial year, (bb) that, at the end of that financial year, the
Borrower has complied with the financial undertakings contained in Clause 14.3
(and setting forth the relevant figures and the method of calculation) and
(cc) there did not exist any Event of Default or Potential Event of Default as
at the end of such year (if an Event of Default or Potential Event of Default
did exist, it shall specify the same);

37

 

	 	(ii)	 	as soon as they are available, but in any event within forty-five (45)
days after the end of the first half of each financial year of the Borrower, certified
copies of its unaudited consolidated financial statements (including a profit and loss
account and balance sheet) for that half year together with a certificate signed by a
director of the Borrower, its Chief Financial Officer or any other duly authorised officer
to the effect (aa) that, based on the information contained in the then latest report
issued by Ryder Scott Company Petroleum Consultants or such other independent and
reputable oil reserve consultant chosen by and appointed at the cost of the Borrower and
reasonably acceptable to the Facility Agent in respect of the oil resource of the
Oilfields, such financial statements are true in all material respects and present fairly
the financial position of the Borrower as at the end of, and the results of its operations
for, that first half, (bb) that, at the end of that first half, the Borrower has complied
with the financial undertakings contained in Clause 14.3 (and setting forth the relevant
figures and the method of calculation) and (cc) there did not exist any Event of Default
or Potential Event of Default as at the end of such half year (if an Event of Default or
Potential Event of Default did exist, it shall specify the same);
	 
	 	(iii)	 	as soon as they are available, but in any event within forty-five (45) days after the end
of the first and third quarters of each financial year of the Borrower, certified copies of
its unaudited financial statements (including a profit and loss account and balance sheet)
for the relevant quarter together with a certificate signed by a director of the Borrower,
its Chief Financial Officer or any other duly authorised officer to the effect that (aa)
based on the information contained in the then latest report issued by Ryder Scott Company
Petroleum Consultants or such other independent and reputable oil reserve consultant chosen
by and appointed at the cost of the Borrower and reasonably acceptable to the Facility Agent
in respect of the oil resource of the Oilfields, such financial statements are true in all
material respects and present fairly the financial position of the Borrower as at the end of,
and the results of its operations for, that quarter and (bb) there did not exist any Event of
Default or Potential Event of Default as at the end of such quarter (if an Event of Default
or Potential Event of Default did exist, it shall specify the same);
	 
	 	(iv)	 	within 30 days after the approval by the JMC of any Oilfield Project the crude oil
production plan for such Oilfield Project for the current and/or subsequent year, a copy of
such crude oil production plan;
	 
	 	(v)	 	within 60 days after any revision of any crude oil production plan for any Oilfield Project
is approved by the JMC of such Oilfield Project, a copy of the approved revision of such
crude oil production plan;
	 
	 	(vi)	 	within 30 days after the end of each month, copies of the following documents relating to
the Oilfield Projects certified as true copies by the Chief Financial Officer, the Chief
Operating Officer, a director or any other duly authorised officer of the Borrower: (aa) the
crude oil

38

 

	 	 	 	allocation table for the preceding month and (bb) the crude oil allocation
projection for the immediately following three (3) months (including such month),
and such crude oil allocation tables and crude oil allocation projections shall
include the oil output, the corresponding oil proceeds entitlement, oil proceeds
recovery situation and investment recovery amounts;
	 
	 	(vii)	 	within 30 days after the end of each month, a written report on the most
recent developments in respect of the Oilfield Projects;
	 
	 	(viii)	 	within 30 days after the end of each quarter, a written report on the Borrower’s
accounts payable in connection with the Oilfield Projects as at the end of that
quarter;
	 
	 	(ix)	 	promptly on request, such additional financial and other information or
data relating to the Borrower, the Corporate shareholder, any Oilfield and/or any
Oilfield Project which is in the possession of the Borrower or which the Borrower is
reasonably expected to be able to obtain and to the extent not restricted by any
confidentiality obligations applicable to it as any Lender or the Facility Agent may
from time to time reasonably request;

	 	(b)	 	keep records and books of account in respect of its business and permit the Facility Agent
and/or any professional consultants appointed by the Facility Agent during the continuance of
an Event of Default or Potential Event of Default to examine the records and books of account
of the Borrower or the Corporate Shareholder;
	 
	 	(c)	 	promptly inform the Facility Agent of:

	 	(i)	 	the occurrence of any Event of Default or Potential Event of Default;
	 
	 	(ii)	 	any litigation, arbitration or administrative proceeding as referred to in
Clause 13.1(k);
	 
	 	(iii)	 	any default under any PSC or the Crude Oil Sales Contract or any
termination or written repudiation by PetroChina of any PSC or the Crude Oil Sales
Contract, or any event of which it is aware that may lead to any PSC or the Crude
Oil Sales Contract to be repudiated or terminated;
	 
	 	(iv)	 	any Subordinated Indebtedness (as defined in the Subordination Deed) upon
the same being provided by the Corporate Shareholder to the Borrower;

	 	(d)	 	maintain its corporate existence and conduct its business in a proper and efficient manner
and in compliance with all laws, regulations, authorisations, agreements and obligations
applicable to it and the Oilfield Projects if failure so to comply would have a Material
Adverse Effect and pay all taxes imposed on it when due except for such payment of taxes
which is being contested in

39

 

	 	 	 	good faith and adequate reserves have been maintained for such taxes and the cost required
to contest them;
	 
	 	(e)	 	procure that:

	 	(i)	 	the Personal Shareholders will, jointly or individually, beneficially own
not less than fifty one per cent (51%) of the entire issued share capital of Far
East Energy and maintain the management control of Far East Energy;
	 
	 	(ii)	 	Far East Energy will beneficially own not less than fifty one per cent (51%) of the entire issued share capital of the Corporate Shareholder and Far East
Energy will maintain the management control of the Corporate Shareholder;
	 
	 	(iii)	 	the Corporate Shareholder will beneficially own the entire issued share
capital of the Borrower and maintain the management control of the Borrower;

	 	(f)	 	maintain in full force and effect all such authorisations as are referred to in Clauses
13.1(h) and 13.1(i), and take immediate steps to obtain and thereafter maintain in full force
and effect any other material authorisations which are necessary or advisable for the
purposes stated therein;
	 
	 	(g)	 	ensure that its obligations under this Agreement at all times
rank at least pari passu with
all other unsecured and unsubordinated obligations of the Borrower;
	 
	 	(h)	 	use the Facility exclusively for the purposes specified in Clause 2.2;
	 
	 	(i)	 	if the Borrower or the Corporate Shareholder intends at any time to obtain any financial
products or services (including without limitation financing, interest rate swaps, purchase
and sale of foreign exchange, RMB to US$ non-deliverable forwards, commodity or oil price
swaps or hedging transactions, financial advice or sponsorship for an initial public offering
in Hong Kong or the PRC, insurance brokerage services etc.), give (and procure that the
Corporate Shareholder will give) a right of first refusal in respect of the provision of such
products or services to the Lenders which are the original parties to this Agreement or such
member of CITIC Group as designated by such Lenders, provided that the terms offered by the
Lenders or any such Subsidiary or related company for such products or services match or are
better than those offered by other third party providers and provided further that this
paragraph (i) shall not restrict the Borrower or the Corporate Shareholder from seeking fee
quotations from any other third party provider in respect of any such financial products or
services;
	 
	 	(j)	 	carry out and maintain appropriate and customary hedging arrangements in accordance with
Schedule 4 in respect of the interest rate risks in relation to the Facility and the oil
price risks and RMB to US$ foreign exchange risks to which its business are exposed;

40

 

	 	(k)	 	comply with the provisions in Schedule 13 (Insurances);
	 
	 	(1)	 	continue to engage in business related to oil field exploration, development, investment,
extraction and sale or any business reasonably incidental thereto, and will not participate or
engage in any business other than that mentioned above;
	 
	 	(m)	 	procure that the annual production of the Oilfield Projects will not in aggregate materially
fall below the level of the crude oil production plan for that year as approved by JMCs of
the Oilfield Projects or any subsequent approved revision thereto (for the purpose of this
paragraph (m), “materially fall below” means falling below by ten per cent (10%) or more than
the level of the then approved production plan or any relevant revised plan);
	 
	 	(n)	 	procure that all of the Borrower’s oil products under the Oilfield Projects are sold to
PetroChina, unless (i) the sale is made to another third party approved in advance by the
Majority Lenders, (ii) a pledge is created over the entitlements of the Borrower under the
relevant sales contracts with the third party in favour of the Onshore Security Agent or
Offshore Security Agent on terms and in a form approved by the Majority Lenders and (iii) the
Facility Agent has received evidence satisfactory to it that the sales proceeds to be paid to
the Borrower by the third party will be paid directly into such bank account as designated by
the Majority Lenders;
	 
	 	(o)	 	comply with and satisfy all material environmental protection requirements imposed by the
applicable laws and regulations and those imposed by the Ministry of Environmental Protection
and the environmental protection authorities of the relevant local governments of the places
where the Oilfields are located and such other governmental agency in relation to
environmental protection matters established under the auspices of any national environmental
protection law and pass all relevant inspection and tests of such agencies; in the event of a
violation of the relevant laws or regulations or a failure to meet the applicable standards,
the Borrower will, as required by such relevant agencies, take all appropriate remedial
measures within the prescribed period of time (for the avoidance of doubt, the Borrower shall
be deemed to have complied with this provision if the relevant violation or failure is
remedied by the Borrower within the applicable time limit as provided aforesaid);
	 
	 	(p)	 	comply with the provisions in Schedule 5 (Operation of Accounts);
	 
	 	(q)	 	use its best endeavours, in accordance with any changes from time to time in the applicable
laws relating to the Finance Documents to carry out the procedures for all the
authorisations, recordals and registrations required for the Finance Documents and other
related procedures within the deadlines specified in applicable laws, and provide relevant
evidence thereof to the Facility Agent;
	 
	 	(r)	 	within thirty (30) days after the date of the Tranche A Advance, provide to the Facility
Agent

41

 

	 	(i)	 	the evidence referred to in Clause 4.4(a); and
	 
	 	(ii)	 	a certified true copy of the current “key man” insurance policy taken out
by the Borrower and issued by an insurer reasonably acceptable to the Majority
Lenders in respect of the loss or incapacity of Mr. Zhang Ruilin in his capacity as
the key executive of the Borrower (with the Offshore Security Agent being named as
the loss payee under such insurance policy);

	 	(s)	 	within twenty one (21) days after the date of the Tranche A Advance, provide to the
Facility Agent:

	 	(i)	 	certified true copies of the register of mortgages and charges of the
Borrower maintained at its registered office in the Cayman Islands noting the
particulars of each of the Charge over Debt Service Reserve Account, the Charge over
Offshore Account, the Charge over Onshore Account, the Pledge over Entitlements under
PSCs and the Insurance Assignment; and
	 
	 	(ii)	 	certified true copies of the register of mortgages and charges of the
Corporate Shareholder maintained at its registered office in the Cayman Islands
noting the particulars of the Share Mortgage (Borrower) and the Subordination Deed;

	 	(t)	 	within ninety (90) days after the date of this Agreement, provide to the Facility
Agent:

	 	(i)	 	written evidence satisfactory to the Facility Agent (acting on the
instructions of the Majority Lenders) that it has duly completed the procedures for
the following authorisations, registrations and recordals required for the validity
and enforceability of the Share Mortgage (FEE), the Charge over Onshore Account, the
Charge over Offshore Account, the Charge over Debt Service Reserve Account, the
Pledge over Entitlements under PSCs, the Subordination Deed and the Insurance
Assignment and the priority of the Offshore Security Agent’s and the Onshore Security
Agent’s security interest under such Security Documents:

	 	(aa)	 	the Share Mortgage (FEE) has been approved by and
registered with SAFE;
	 
	 	(bb)	 	each of the Charge over Onshore Account and the Pledge
over Entitlements under PSCs has been registered with SAFE;
	 
	 	(cc)	 	any other authorisations, registrations and recordals
required for such purposes and arisen as a result of the change in the
applicable law or regulation after the date of this Agreement,
	 
	 	provided that if the Borrower has provided to the Facility Agent a copy

42

 

	 	 	 	of a letter to SAFE making an attempt to obtain and effect the approval
and registrations referred to in paragraphs (aa) to (bb) above, the
Borrower shall be deemed to have been in compliance with this provision
with respect to such approval and registrations;
	 
	 	(ii)	 	the written acknowledgement from PetroChina to the notice
issued by the Borrower in respect of the Pledge over Entitlements under PSCs
(in an agreed form);
	 
	 	(iii)	 	the acknowledgement(s) from the insurer(s) in respect of
the business interruption insurances taken out by the Borrower in accordance
with Schedule 13 and the keyman insurances referred to in Clause 14.1(r)(ii)
to the notice(s) issued by the Borrower in respect of the Insurance Assignment
(in the form specified in the Insurance Assignment);
	 
	 	(iv)	 	a letter of undertaking issued by the insurance broker of
the Borrower in respect of the Material Insurances taken out by the Borrower
in accordance with Schedule 13 (in an agreed form);

	 	(u)	 	within twelve (12) months after the date of this Agreement, provide to the
Facility Agent:

	 	(i)	 	a copy of a letter from PetroChina verifying that the issue
of the foreign exchange investments in the Moliqing Oilfield and the Miao 3
Oilfield has been resolved and proceeds from all the PSCs can be paid in US
Dollar and remitted outside China;
	 
	 	(ii)	 	written evidence satisfactory to the Majority Lenders that
the Borrower has reached with PetroChina a settlement arrangement in respect
of the discussions relating to the potentially over-lifted oil in relation to
the Daan Oilfield Project in 2007 and 2008 (which arrangement must include
the method for calculating the relevant accounts payable, the amount payable
and the time for payment).

	14.2	 	Negative Undertakings. The Borrower undertakes and agrees with each Finance Party
that from the date of this Agreement and so long as any sums remain owing hereunder and
under the other Finance Documents it will, unless the Majority Lenders otherwise agree in
writing:

	 	(a)	 	not merge or consolidate with any other entity or take any step with a view
to dissolution, liquidation or winding-up;
	 
	 	(b)	 	not purchase or redeem and cancel its registered capital or make a
distribution of assets or other capital distribution to its shareholders or make a
repayment in respect of loans owing to any of its shareholders or other indebtedness
owing to any of its Affiliates or related companies, except for (i) any repayment of
loans owing to the Corporate Shareholder by way of set-off against advances made from
the Borrower to the Corporate Shareholder arising from the payment of (aa)
remunerations of key senior management staff of the Corporate Shareholder or (bb) any
other reasonable administrative

43

 

	 	 	 	expenses (as defined below) of the Corporate Shareholder or (ii) the repayment of any
other loans owing by the Borrower to the Corporate Shareholder from time to time if,
immediately after such repayment, the total amount of indebtedness owing by the Borrower
to the Corporate Shareholder then subject to the provisions for subordination contained in
the Subordination Deed is not less than the aggregate of the then outstanding principal
amount of the Facility and the then available but undrawn Commitments of the Lenders (for
the purpose of this paragraph (b), “administrative expenses of the Corporate Shareholder”
means the professional fees incurred by the Corporate Shareholder, other expenses incurred
by the Corporate Shareholder for the purpose of the initial public offering of its shares,
fees payable by the Corporate Shareholder to the relevant stock exchange or other
regulatory authorities applicable to the Corporate Shareholder, the remuneration of the
support staff of the Corporate Shareholder, the utility and rental expenses and other
expenses related to the office equipment of the Corporate Shareholder and any other
administrative expenses of the Corporate Shareholder);
	 
	 	(c)	 	not declare or pay to its shareholders dividends in cash in excess of:

	 	(i)	 	(in respect of any of its financial years within which no initial public
offering of the shares of the Corporate Shareholder takes place) 15% of its
consolidated net profit as at the end of such financial year; or
	 
	 	(ii)	 	(in respect of any of its financial years within which an initial public
offering of the shares of the Corporate Shareholder takes place and in respect of
each financial year thereafter) 30% of its consolidated net profit as at the end of
such financial year (for the avoidance of doubt, the amount of dividends permitted
to be paid in any financial year under this paragraph shall be in addition to any
IPO Midnight Dividends permitted to be paid in such financial year under the
provisions below),

	 	 	 	in each case except for any cash dividends in an aggregate amount not exceeding
US$20,000,000 (the “IPO Midnight Dividends”) that may be paid by the Borrower to the
Corporate Shareholder immediately before the initial public offering of the shares of the
Corporate Shareholder (but so that, in any event, the aforesaid permitted aggregate
amount of IPO Midnight Dividends together with the total amount of loans provided by the
Borrower to the Corporate Shareholder as permitted under Clause 14.2(f)(i)(ee) shall not
exceed US$30,000,000), provided that, notwithstanding any contrary provisions in this
Agreement, no dividend (in cash or otherwise) may be declared or paid by the Borrower to
its shareholders at any time during the continuance of an Event of Default;
	 
	 	(d)	 	not declare or pay to its shareholders any dividends (other than any dividends permitted
under Clause 14.2(c)) whether in cash or otherwise, except for any dividends to be paid for
the purpose of extinguishing the Borrower’s loan to Far East Energy (the “Deemed Dividends”)
if and only if:
	 
	 	(i)	 	the relevant Deemed Dividends are to be applied to set off or otherwise

44

 

	 	 	 	discharge the obligations owing to the Borrower under the loans referred to in
Clause 14.2(f)(i)(bb), and before such Deemed Dividends are declared, a
shareholder loan referred to in Clause 14.2(f)(ii)(aa) in an amount not less than
the amount of the proposed Deemed Dividends shall have been extended by the
Corporate Shareholder to the Borrower subject to the terms of the Subordination
Deed; or
	 
	 	(ii)	 	the relevant Deemed Dividends are to be applied to set off or otherwise
discharge the obligations owing to the Borrower by Far East Energy under the loans
referred to Clause 14.2(f)(i)(bb) and any other loans (in a total amount equal to the
amount of such Deemed Dividends) as approved by the Majority Lenders, and before such
Deemed Dividends are declared, the Lenders shall have received (1) evidence
reasonably satisfactory to the Majority Lenders that the initial public offering of
the shares of the Corporate Shareholder will occur imminently and (2) an undertaking
from the Corporate Shareholder in form and substance satisfactory to the Majority
Lenders that the Corporate Shareholder will inject into the Borrower by way of equity
contribution or shareholder’s loan (subject to the terms of the Subordination Deed)
the proceeds of its initial public offering in an amount not less than the amount of
the aforesaid loans owing by Far East Energy to the Borrower within ten (10) days
after such initial public offering;

	 	(e)	 	not (and procure that none of its Subsidiaries will) sell, transfer, lease or otherwise
assign, deal with or dispose of all or any part of its business or its assets or revenues,
whether by a single transaction or by a number of transactions whether related or not
(including without limitation the PSCs and Crude Oil Sales Contract and its ownership
interest in its Subsidiaries and any joint venture enterprises in which it holds any equity
interest (other than PT. MI Energy Indonesia, PT. Excel Delight International Energy, the
joint venture established pursuant to a joint venture agreement dated 3 May 2007 between PT.
MI Energy Indonesia and PT. Petro Muba and the joint venture established pursuant to a joint
venture company dated 2007 between PT. MI Energy Indonesia and Perusahaan Daerah Sarana
Pembangunan Muara Enim (collectively, the “Indonesia JVs”)), except as arising from its
normal business operations and upon arm’s length terms;
	 
	 	(f)	 	not (and procure that the Corporate Shareholder will not) directly or indirectly provide any
financing, make or grant a loan or advance or guarantee to any person (including without
limitation its shareholders) or in any other manner be or become directly or indirectly or
contingently liable for, or provide any form of security for, any indebtedness or other
obligation of any person (including without limitation its shareholders), except for the
following:

	 	(i)	 	in relation to the Borrower only (details of all loans and guarantees
specified below which are in existence as at the date of this Agreement are set out
in Schedule 7, and are permitted):

	 	(aa)	 	the making or granting of loans or guarantees within
its ordinary course of business and upon arm’s length terms

45

 

	 	 	 	(including the loans provided by it to the Corporate Shareholder as referred to in
Clause 14.2(h)(ii)(aa)) or guarantees arising from hedging contracts required for its
normal business (and not for speculative purposes);
	 
	 	(bb)	 	the loans provided by it to Far East Energy in an aggregate amount not exceeding
US$61,870,000 existing as at the date of this Agreement;
	 
	 	(cc)	 	the joint and several liabilities imposed upon it under the put option and initial public
offering deficiency payment owed to TPG under the Series A Preferred Shares Subscription And
Put Option Agreement dated 16 June 2009 between the Corporate Shareholder, the Borrower, Far
East Energy and TPG;
	 
	 	(dd)	 	the joint and several liabilities imposed upon it under the put option and initial public
offering deficiency payment owed to Standard Bank plc
(“SB”) under (A) the Shares Purchase
Agreement dated 12 January 2009 between Far East Energy, the Personal Shareholders and SB (as
amended by an amendment agreement dated 24 June 2009 between the Corporate Shareholder, the
Borrower, Far East Energy, the Personal Shareholders and SB) and (B) the Option Agreement
dated 12 January 2009 between Far East Energy and SB (as amended by a first amendment and
restatement agreement dated 26 June 2009 between the Corporate Shareholder, the Borrower, Far
East Energy and SB);
	 
	 	(ee)	 	(subject to Clause 14.2(c)) at any time before the initial public offering of the shares of
the Corporate Shareholder occurs, loans which may be provided by the Borrower to the
Corporate Shareholder after it has given five (5) Business Days’ written notice to the
Facility Agent, provided that the aggregate outstanding amount of all such loans (excluding
the loans provided by the Borrower to the Corporate Shareholder as referred to in Clause
14.2(h)(ii)(aa)) shall not exceed US$30,000,000;
	 
	 	(ff)	 	at any time after the initial public offering of the shares of the Corporate Shareholder
occurs, loans which may be provided by the Borrower to the Corporate Shareholder after it
has given five (5) Business Days’ written notice to the Facility Agent, provided that the
aggregate outstanding amount of all such loans (excluding the loans provided by the Borrower
to the Corporate Shareholder as referred to in Clause 14.2(h)(ii)(aa)) shall not exceed the
difference between US$40,000,000 and the total outstanding amount of loans provided by it to
the Corporate Shareholder pursuant to paragraph (ee) above,

46

 

	 	 	 	provided always that the Borrower shall only be permitted to provide any of the loans
referred to in paragraphs (ee) and (ff) above to the Corporate Shareholder subject to its
obligations under Clause 5.6 and if all the conditions in (1) to (4) below are complied
with:

	 	(1)	 	no Event of Default has occurred and is continuing as at the time of the
provision of such loan;
	 
	 	(2)	 	the financial covenants contained in Clause 14.3 are complied with as at
the time of the provision of such loan;
	 
	 	(3)	 	the amount standing to the credit of the Debt Service Reserve Account is
not less than the Debt Service Reserve Requirement (as defined in Schedule 5) as at
the time of the provision of such loan; and
	 
	 	(4)	 	immediately before and after the provision of such loan, the aggregate
amount standing to the credit of the MIE Offshore Account, the MIE Onshore Account,
the Debt Service Reserve Account and all other bank accounts of the Borrower
(including any joint account opened by the Borrower as operator of any Oilfield
Project) (such balances of the other bank accounts to be evidenced by copies of bank
statements of such bank accounts) is not less than the higher of (x) thirty per
cent, (30%) of the total amount of the capital expenditures of the Oilfield Projects
for that financial year of the Borrower as determined with reference to the then
latest investment budgets of the Oilfield Projects as approved by the relevant JMCs
and (y) RMB300,000,000 (or its equivalent in other currency or
currencies) (the “Requisite Amount”) (and the Borrower hereby undertakes to procure
that after any of the loans referred to in paragraphs (ee) and (ff) above is
provided to the Corporate Shareholder, the daily average balance of the total amount
standing to the credit of the aforesaid bank accounts during each month thereafter
shall not be less than the Requisite Amount from time to time);

	 	(ii)	 	in relation to the Corporate Shareholder only (details of all loans and guarantees
specified below which are in existence as at the date of this Agreement are set out in
Schedule 8, and are permitted):

	 	(aa)	 	(without prejudice to the Borrower’s obligations in Clause 14.2(b)) the
shareholder loans provided by it to the Borrower and funded by investment proceeds
of US$50,000,000 from TPG as described in Clause 4.4(a) and other equity or
quasi-equity funds of the Corporate Shareholder contributed by TPG or any other
investor of the Corporate Shareholder or by initial public offering, placement,
rights offering or other equity issue of the shares of the Corporate Shareholder;

47

 

	 	(bb)	 	the joint and several liabilities imposed upon it under the put
option and initial public offering deficiency payment owed to TPG under
the Series A Preferred Shares Subscription And Put Option Agreement dated
16 June 2009 between the Corporate Shareholder, the Borrower, Far East
Energy and TPG;
	 
	 	(cc)	 	the joint and several liabilities imposed upon it under
the put option and initial public offering deficiency payment owed to SB
under (A) the Shares Purchase Agreement dated 12 January 2009 between Far
East Energy, the Personal Shareholders and SB (as amended by an amendment
agreement dated 24 June 2009 between the Corporate Shareholder, the
Borrower, Far East Energy, the Personal Shareholders and SB) and (B) the
Option Agreement dated 12 January 2009 between Far East Energy and SB (as
amended by a first amendment and restatement agreement dated 26 June 2009
between the Corporate Shareholder, the Borrower, Far East Energy and SB);
	 
	 	(dd)	 	any financing, loan or advance to a third party which
principally engages in oil related businesses and such loan is made in
connection with merger and acquisition of oil related assets and/or
businesses carried out by the Corporate Shareholder;

	 	(g)	 	not (and procure that none of its Subsidiaries will) create or attempt or agree to create or
permit to arise or exist any Encumbrance over all or any part of its property, assets or
revenues except (i) any Encumbrance created under the Security Documents, (ii) any
Encumbrance created under the Existing Security Documents until such Existing Security
Documents are released and discharged by the Existing Agent, or (iii) any lien arising by
operation of law within the normal scope of its business and not in connection with the
borrowing or raising of money or credit;
	 
	 	(h)	 	not (and procure that the Corporate Shareholder will not) borrow or permit any borrowing to
continue to exist, except for the following:

	 	(i)	 	in relation to the Borrower only (details of all loans and guarantees
specified below which are in existence as at the date of this Agreement are set out
in Schedule 9, and are permitted):

	 	(aa)	 	the Existing Facility;
	 
	 	(bb)	 	the Loan borrowed from the Lenders pursuant to this
Agreement;
	 
	 	(cc)	 	loans provided to the Borrower by any bank or other
financial institution in the PRC, provided that the aggregate outstanding
amount of such loans does not at any time exceed US$10,000,000 (or the
equivalent amount in RMB);

48

 

	 	(dd)	 	(without prejudice to the Borrower’s obligations in Clause
14.2(b)) the shareholder loans provided to it by the Corporate
Shareholder referred to in Clause 14.2(d) or 14.2(f)(ii)(aa);

	 	(ii)	 	in relation to the Corporate Shareholder only (details of
all loans and guarantees specified below which are in existence as at the
date of this Agreement are set out in Schedule 10, and are permitted):

	 	(aa)	 	the loan(s) provided to it by the Borrower
required for paying the remunerations of its key senior management
staff or its other reasonable administrative expenses (as defined in
Clause 14.2(b));
	 
	 	(bb)	 	the loan(s) provided to it by the Borrower
referred to in Clauses 14.2(f)(i)(ee) and 14.2(f)(i)(ff);
	 
	 	(cc)	 	such other loans as approved by the Majority Lenders;

	 	(i)	 	not acquire a company or any shares or securities or a business or all or
substantially all of the assets of a third party or any interest in any of them;
	 
	 	(j)	 	not, without the consent of the Majority Lenders, amend or agree to any
amendment to any of the agreements referred to in Clause 14.2(f)(i)(cc), Clause
14.2(f)(i)(dd), Clause 14.2(f)(ii)(bb) or Clause 14.2(f)(ii)(cc) if such amendment
would increase the liabilities of the Borrower or the Corporate Shareholder as
specified in such clauses;
	 
	 	(k)	 	not enter into any agreement or obligation which might have a Material Adverse
Effect.

	14.3	 	Financial Undertakings. The Borrower undertakes and agrees with each Finance Party
that from the date of this Agreement and so long as any sums remain owing under this
Agreement and the other Finance Documents the Borrower will ensure that, unless the Majority
Lenders otherwise agree in writing:

	 	(a)	 	Consolidated Tangible Net Worth will be not be less than:

	 	(i)	 	(at any time during the period from the Borrower’s financial
year ending 31 December 2009
to its financial year ending 31
December
2011) RMB1,000,000,000;
	 
	 	(ii)	 	(at any time from and including the first day of the
Borrower’s financial year ending 31 December 2012) RMB1,500,000,000;

	 	(b)	 	the ratio of Consolidated Total Borrowing to Consolidated Tangible Net Worth
will not exceed:

	 	(i)	 	(at any time during the period from the Borrower’s financial
year ending 31 December 2009
to its financial year ending 31
December
2010) 140%;

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	 	(ii)	 	(at any time from and including the first day of the Borrower’s financial
year ending 31 December 2011) 100%;

	 	(c)	 	the ratio of Consolidated Total Borrowing to Consolidated EBITDA will not exceed:

	 	(i)	 	(at any time during the period from the Borrower’s financial year ending
31 December 2009 to its financial year ending
31 December 2010) 270%;
	 
	 	(ii)	 	(at any time during the period from the Borrower’s financial year ending
31 December 2011 to its financial year ending
31 December 2012) 220%;
	 
	 	(iii)	 	(at any time from and including the first day of the Borrower’s financial
year ending 31 December 2013) 180%;

	 	(d)	 	the Borrower’s total Capital Expenditure in any financial year will not exceed RMB1,000,000,000 (any revision to be made to such limit arising as a result of the requirements
in an annual investment budget of any Oilfield Project approved by the JMC of the relevant
Oilfield Project shall be subject to prior written agreement between the Borrower and the
Majority Lenders).

	 	 	The financial undertakings contained in this Clause 14.3 shall be tested for each financial year
and the first half of each financial year of the Borrower, and shall be tested by reference to:

	 	(aa)	 	(with respect to any financial undertaking to be tested in relation to any financial year of
the Borrower) the audited consolidated financial statements in respect of the relevant year
delivered by the Borrower to the Facility Agent pursuant to Clause
14.1 (a)(i); and
	 
	 	(bb)	 	(with respect to any financial undertaking to be tested in relation to the first half of any
financial year of the Borrower) the unaudited consolidated financial statements in respect of
the relevant half-year period delivered by the Borrower to the Facility Agent pursuant to
Clause 14.1(a)(ii).

	 	 	For the purpose of calculating Consolidated EBITDA to determine the compliance of the financial
undertaking in Clause 14.3(c) with respect to the first half of each financial year of the
Borrower, Consolidated EBITDA for the relevant first half shall be deemed to be in an amount equal
to two (2) times the Consolidated EBITDA as determined by reference to the consolidated financial
statements with respect to that first half delivered by the Borrower to the Facility Agent
pursuant to Clause 14.1(a)(ii).
	 
	 	 	Terms used in this Clause 14.3 shall have the meanings ascribed to them in Schedule 3.

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	15.	 	EVENTS OF DEFAULT
	 
	15.1	 	Events of Default. Each of the following events and circumstances shall be an
Event of Default:

	 	(a)	 	the Borrower fails to pay any amount payable under any Finance Document to which
it is a party when due or otherwise in accordance with the provisions thereof unless
its failure to pay is caused by administrative or technical error and payment is made
within seven (7) Business Days of its due date;
	 
	 	(b)	 	the Borrower fails duly and punctually to perform or comply with any of its
obligations or undertakings under any Finance Document (except for those set forth in
paragraphs 3.1 and 4 of Schedule 5) and, in respect only of a failure which in the
reasonable opinion of the Facility Agent is capable of remedy and which is not a
failure to pay money, does not remedy such failure to the Facility Agent’s satisfaction
within twenty one (21) Business Days (or such longer period as the Facility Agent may
approve) after receipt of written notice from the Facility Agent requiring it to do so;
	 
	 	(c)	 	the Borrower fails to perform or comply with any of its obligations or
undertakings under paragraphs 3.1 and 4 of Schedule 5 and, in respect only of a failure
in respect of its obligations under paragraph 3.1 of Schedule 5 which is solely caused
by a default of PetroChina, does not remedy such failure to the Facility Agent’s
satisfaction within twenty one (21) Business Days (or such longer period as the
Facility Agent may approve) after receipt of written notice from the Facility Agent
requiring it to do so;
	 
	 	(d)	 	any representation or warranty made or deemed to be made by the Borrower or any
Security Provider under any Finance Document to which it is a party proves to have been
incorrect or misleading in any material respect;
	 
	 	(e)	 	the Borrower defaults or receives notice of default under any agreement or
obligation relating to borrowing or any indebtedness of the Borrower becomes payable or
capable of being declared payable before its stated maturity or is not paid when due or
any Encumbrance, guarantee or other security now or hereafter created by the Borrower
becomes enforceable, provided that no Event of Default will occur under this paragraph
(e) if the aggregate amount of the aforesaid borrowing or indebtedness is less than
US$3,000,000 (or its equivalent in any other currency);
	 
	 	(f)	 	any of the authorisations referred to in Clause 13.1 (h) or 13.1 (i) is not
granted or ceases to be in full force and effect or is modified in a manner which, in
the reasonable opinion of the Majority Lenders, might have a material adverse effect
on the business or financial condition of the Borrower or on the Borrower’s ability to
perform its obligations under this Agreement or any Finance Document to which it is a
party, and in respect only of the non-availability or cessation or modification of any
such authorisation which in the reasonable opinion of the Facility Agent is capable of
remedy, such non-availability, cessation or modification is not remedied such failure
to the

51

 

	 	 	 	Facility Agent’s satisfaction within twenty one (21) Business Days (or such longer period
as the Facility Agent may approve) after receipt of written notice from the Facility Agent
requiring it to do so, or if any law, regulation, judgment or order (or the repeal or
modification of any of the foregoing) suspends, varies, terminates or excuses performance
by the Borrower of any of its obligations under this Agreement or under any Finance
Document to which it is a party or purports to do or could do any of the same;
	 
	 	(g)	 	a creditor takes possession of all or any part of the business or assets of the Borrower
having an aggregate value in excess of US$500,000 (or its equivalent in any other currency)
and such possession is not discharged within fifteen (15) Business Days or any execution or
other legal process is enforced against the business or any asset of the Borrower;
	 
	 	(h)	 	a petition is presented or a proceeding is commenced or an order or judgement is made or an
effective resolution is passed or any other action is taken for the winding-up, insolvency,
administration, reorganisation, reconstruction, dissolution or bankruptcy of the Borrower or
for the appointment of a liquidator, receiver, administrator, trustee or similar officer of
the Borrower or of all or any part of its business or assets;
	 
	 	(i)	 	(i) the Borrower suspends or stops payments to its creditors generally or seeks to enter
into any composition or other arrangement with its creditors, provided that any such
suspension, stop, composition or arrangement shall not constitute an Event of Default under
this paragraph (i) if (aa) it is effected in accordance with the normal industry practice of
operators with a similar business to the Borrower and is not caused by any financial,
operational or business problem of the Borrower which, in the reasonable opinion of the
Facility Agent, would have a Material Adverse Effect and (bb) none of the creditors involved
has taken any steps or proceedings against the Borrower in respect of the relevant payment
and if any step or proceeding is taken by any such creditor, the Borrower has duly made the
relevant payment to such creditor within seven (7) Business Days after such step or
proceeding or (ii) the Borrower is unable or admits its inability to pay its debts as they
fall due or is declared or becomes bankrupt or insolvent;
	 
	 	(j)	 	any event occurs which in the opinion of the Facility Agent appears to have an effect
analogous to the matters set out in paragraphs (g), (h) or (i) above in any jurisdiction in
which the Borrower is incorporated or carries on business;
	 
	 	(k)	 	the Borrower ceases to carry on its business or any substantial part thereof or materially
changes the nature or scope of its business or the Borrower disposes of or any governmental
or other authority expropriates all or any substantial part of its business or assets;
	 
	 	(l)	 	any event which has an effect equivalent or similar to any of the events described in any
of the above paragraphs occurs, mutatis mutandis, in relation to the Corporate Shareholder
or to any Subsidiary of the Borrower or if any such person (being an individual) commits an
act of bankruptcy, dies or becomes of unsound mind;

52

 

	 	(m)	 	Mr. Zhang Rui Lin and Mr. Zhao Jiang Wei collectively fail to beneficially own
(directly or indirectly) at least 51% of the entire issued share capital of the Corporate
Shareholder or the Borrower, provided that, in relation to any failure of Mr. Zhang Rui
Lin and Mr. Zhao Jiang Wei to beneficially own at least 51% of the entire issued share
capital of the Corporate Shareholder or the Borrower after the initial public offering of
the shares in the Corporate Shareholder which is caused by a placing of the shares in the
Corporate Shareholder to third party investors of the Corporate Shareholder or the
conversion of shares in the Corporate Shareholder by third party investors of the
Corporate Shareholders pursuant to convertible instruments issued by the Corporate
Shareholder, such failure shall not constitute an Event of Default under this paragraph
(m) if such failure is remedied within fourteen (14) days after the occurrence of such
failure;
	 
	 	(n)	 	Mr. Zhang Rui Lin ceases to be the Chairman of the Board of Directors of the Corporate
Shareholder;
	 
	 	(o)	 	Mr. Zhang Rui Lin ceases to maintain an active daily management control over the Corporate
Shareholder or the Borrower and such cessation is not remedied within fourteen (14) days the
date of such cessation;
	 
	 	(p)	 	this Agreement, any PSC, the Crude Oil Sales Contract or any other Finance Document ceases
for any reason to be in full force and effect or is terminated or repudiated or becomes
invalid or unenforceable in any material respect or it becomes impossible or unlawful for
the Borrower or any other party thereto to perform any of its material obligations under
this Agreement or any other Finance Documents or for a Lender to exercise all or any of its
material rights, powers and remedies hereunder or thereunder;
	 
	 	(q)	 	any dispute occurs under this Agreement, any PSC, the Crude Oil Sale Contract or any other
Finance Document or any provision thereof which could have a Material Adverse Effect, or it
becomes impossible or unlawful for the Borrower or any other party thereto to perform any of
its material obligations under any PSC or the Crude Oil Sale Contract;
	 
	 	(r)	 	(i) the Daan Oilfield Project or the Moliqing Oilfield Project is terminated or abandoned
or (ii) a substantial portion of the assets relating to the Daan Oilfield Project or the
Moliqing Oilfield Project is confiscated, seized, repossessed or subject to any enforced
compulsory purchase or expropriation;
	 
	 	(s)	 	the Miao 3 Oilfield Project is terminated or abandoned or a substantial portion of the
assets relating to the Miao 3 Oilfield Project is confiscated, seized, repossessed or
subject to any enforced compulsory purchase or expropriation, and such termination,
abandonment, confiscation, seizure, repossession, purchase or expropriation would have a
Material Adverse Effect;
	 
	 	(t)	 	any event of default (whatsoever called) occurs under any PSC or the Crude Oil Sales
Contract which has or, in the reasonable determination of the Facility Agent (acting in good
faith) would reasonably be expected to have a

53

 

	 	 	 	material adverse effect on the business, operations, assets or financial condition
of the Borrower or on the ability of the Borrower to perform its obligations under
this Agreement or under any other Finance Document to which it is a party;
	 
	 	(u)	 	any situation occurs which in the reasonable opinion of the Majority Lenders
gives reasonable ground to believe that an event having a Material Adverse Effect has
occurred.

	15.2	 	Declarations. At any time during the continuance of an Event of Default the Facility
Agent may, and upon written request by the Majority Lenders shall, by written notice to the
Borrower:

	 	(a)	 	declare the Loan, accrued interest and all other sums payable hereunder to be,
whereupon they shall become, immediately due and payable without further demand,
notice or other legal formality of any kind; and
	 
	 	(b)	 	declare the Facility terminated whereupon the obligation of the Lenders to
make further Advances hereunder shall immediately cease.

	16.	 	DEFAULT INTEREST
	 
	16.1	 	Rate of Default Interest. If the Borrower fails to pay any sum payable under this
Agreement when due, the following provisions shall apply:

	 	(a)	 	Normal Default Interest. Subject as provided in Clause 16.1(b), the
Borrower shall pay interest on such sum from and including the due date to the date of
actual payment (after as well as before judgment) at the rate per annum determined by
the Facility Agent to be the aggregate of:

	 	(i)	 	two per cent (2%);
	 
	 	(ii)	 	the Margin; and
	 
	 	(iii)	 	LIBOR (as determined by the Facility Agent on such date or
dates on or after the due date for payment as the Facility Agent may select)
calculated with reference to Interest Periods of the length last chosen by the
Borrower under this Agreement for any purpose and such amounts as the Facility
Agent, acting reasonably, considers appropriate or, if any of the
circumstances described in Clause 8.2 applies, the rate from time to time
certified by each respective Lender or the Facility Agent (as the case may be)
to be the rate representing the cost to it of funding the unpaid sum by
whatever means it considers to be appropriate.

	 	 	 	The Facility Agent shall notify the Borrower and the Lenders of the duration of
each such funding period and each interest rate determined under this Clause.

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	 	(b)	 	Modification for Advances. Where the unpaid sum is of principal which
became due and payable on a date during, but not the last day of, an Interest
Period relating thereto and none of the circumstances described in Clause 8.2 apply
in relation to such Interest Period, the first period selected by the Facility
Agent under Clause 16.1(a) in respect of such amount shall equal the unexpired
portion of the Interest Period and, for the duration of such period, there shall be
substituted for the rate specified in Clause 16.1(a) the rate of two per cent (2%)
above the rate calculated in accordance with (in respect of any sum in relation to
the Term Loan) Clause 7.2 and (in respect of any sum in relation to a Tranche C
Advance (other than the Final Tranche C Advance made pursuant to Clause 6.7) Clause
7.5 (including the Margin) and applicable to the unpaid amount immediately before
it fell due.

	16.2	 	Calculation of Default Interest. Interest at the rate or rates determined from time
to time as aforesaid shall accrue from day to day, shall be calculated on the basis of the
actual number of days elapsed and a 360 day year, shall be compounded at the end of each
successive funding period considered appropriate by the Facility Agent for the purposes of
Clause 16.1 and shall be payable from time to time on demand.
	 
	17.	 	INDEMNITIES, SET-OFF AND PRO RATA SHARING
	 
	17.1	 	General Indemnity. The Borrower shall indemnify each Finance Party against all
losses, liabilities, damages, costs and expenses which such Finance Party may incur as a
consequence of the information produced or approved by the Borrower being or being alleged to
be misleading or deceptive in any respect or any Event of Default or any other breach by the
Borrower of any of its obligations under any Finance Document to which it is a party.
	 
	17.2	 	Currency Indemnity. US Dollars shall be the currency of account and of payment in
respect of sums payable under the Finance Documents. If an amount is received in another
currency, pursuant to a judgment or order or in the liquidation of the Borrower or otherwise,
the Borrower’s obligations under the Finance Documents to which it is a party shall be
discharged only to the extent that the Finance Parties may purchase US Dollars with such
other currency in accordance with normal banking procedures upon receipt of such amount. If
the amount in US Dollars which may be so purchased, after deducting any costs of exchange and
any other related costs, is less than the relevant sum payable under the relevant Finance
Document, the Borrower shall indemnify the Finance Parties against
the shortfall. This
indemnity shall be an obligation of the Borrower independent of and in addition to its other
obligations under the Finance Documents and shall take effect notwithstanding any time or
other concession granted to the Borrower or any judgment or order being obtained or the
filing of any claim in the liquidation, dissolution or bankruptcy (or analogous process) of
the Borrower.
	 
	17.3	 	Set-Off. During the continuance of an Event of Default each Finance Party shall
have the right, without notice to the Borrower or any other person, to set off and apply any
credit balance on any account (whether subject to notice or not and whether matured or not
and in whatever currency) of the Borrower with such Finance Party, and any other
indebtedness owing by such Finance Party to the Borrower, against the

55

 

	 	 	liabilities of the Borrower under the Finance Documents to which it is a party, and each
Finance Party is authorised to purchase with the monies standing to the credit of any such
account such other currencies as may be necessary for this purpose. Each Finance Party
(other than the Facility Agent) shall forthwith notify the Facility Agent of the exercise of
any right under this Clause, and forthwith upon receiving such notice the Facility Agent
shall notify the Borrower of the same.
	 
	17.4	 	Pro Rata Sharing. If a Finance Party (a “Recovering Finance Party”) receives or
recovers any amount from the Borrower or otherwise in respect of sums due from the Borrower
(other than in accordance with Clause 12.2 or the terms of any Fee Letter) and applies that
amount to a payment due under the Finance Documents then:

	 	(a)	 	the Recovering Finance Party shall, within three (3) Business Days, notify
details of the receipt or recovery, to the Facility Agent;
	 
	 	(b)	 	the Facility Agent shall determine whether the receipt or recovery is in
excess of the amount the Recovering Finance Party would have been paid had the receipt
or recovery been received or made by the Facility Agent and distributed in accordance
with Clause 12.2 or the terms of the relevant Fee Letter, without taking account of
any tax which would be imposed on the Facility Agent in relation to the receipt,
recovery or distribution; and
	 
	 	(c)	 	the Recovering Finance Party shall, within three (3) Business Days of demand
by the Facility Agent, pay to the Facility Agent an amount (the “Sharing Payment”)
equal to such receipt or recovery less any amount which the Facility Agent determines
may be retained by the Recovering Finance Party as its share of any payment to be
made, in accordance with this Clause 17.4.

	 	 	The Facility Agent shall treat the Sharing Payment as if it had been paid by the Borrower
and distribute it between the Finance Parties (other than the Recovering Finance Party) in
accordance with this Clause 17.4. On a distribution by the Facility Agent under this Clause
17.4, the Recovering Finance Party will be subrogated to the rights of the Finance Parties
which have shared in the redistribution. If and to the extent that the Recovering Finance
Party is not able to rely on its rights of subrogation, the Borrower shall be liable to the
Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due
and payable. If any part of the Sharing Payment received or recovered by a Recovering
Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

	 	(i)	 	each Finance Party which has received a share of the relevant Sharing Payment
pursuant to this Clause 17.4 shall, upon request of the Facility Agent, pay to the
Facility Agent for the account of that Recovering Finance Party an amount equal to
the appropriate part of its share of the Sharing Payment (together with an amount as
is necessary to reimburse that Recovering Finance Party for its proportion of any
interest on the Sharing Payment which that Recovering Finance Party is required to
pay); and
	 
	 	(ii)	 	that Recovering Finance Party’s rights of subrogation in respect of any
reimbursement shall be cancelled and the Borrower will be liable to the reimbursing
Finance Party for the amount so reimbursed.

56

 

	 	 	This Clause 17.4 shall not apply to the extent that the Recovering Finance Party would not,
after making any payment pursuant to this Clause, have a valid and enforceable claim
against the Borrower. A Recovering Finance Party is not obliged to share with any other
Finance Party any amount which the Recovering Finance Party has received or recovered as a
result of taking legal or arbitration proceedings, if it notified that other Finance Party
of the legal or arbitration proceedings and that other Finance Party had an opportunity to
participate in those legal or arbitration proceedings but did not do so as soon as
reasonably practicable having received notice and did not take separate legal or
arbitration proceedings.
	 
	17.5	 	No Encumbrance. Clause 17.4 shall not constitute and shall not be construed as
constituting an Encumbrance by any Lender over all or any part of any sum received or
recovered by it in the manner set out in Clause 17.4.
	 
	18.	 	THE FINANCE PARTIES
	 
	18.1	 	Appointment.

	 	(a)	 	Each of the Finance Parties (other than the Facility Agent) hereby appoints
the Facility Agent to act as its agent in relation to the administration of the
Facility and authorises the Agent to take such action on its behalf and to exercise
and enforce such rights, powers and discretions as are expressly or by implication
delegated to the Agent by the terms of this Agreement and such rights, powers and
discretions as are reasonably incidental thereto.
	 
	 	(b)	 	Each of the Finance Parties (other than the Offshore Security Agent) hereby
appoints the Offshore Security Agent to act as its agent and trustee in relation to
the Offshore Security Documents and authorises the Offshore Security Agent to enter
into the Offshore Security Documents on its behalf and authorises the Offshore
Security Agent to settle the rights, benefits and interests as described in each
Offshore Security Document on trust on its behalf and authorises the Offshore Security
Agent to take such action on its behalf and to exercise and enforce such rights,
powers and discretions as are expressly or by implication delegated to the Offshore
Security Agent by the terms of the Offshore Security Documents and such rights, powers
and discretions as are reasonably incidental thereto.
	 
	 	(c)	 	Each of the Finance Parties (other than the Onshore Security Agent) hereby
appoints the Onshore Security Agent to act as its agent in relation to the Onshore
Security Documents and authorises the Onshore Security Agent to enter into the
Onshore Security Documents on its behalf and authorises the Onshore Security Agent to
take such action on its behalf and to exercise and enforce such rights, powers and
discretions as are expressly or by implication delegated to the Onshore Security
Agent by the terms of the Onshore Security Documents and such rights, powers and
discretions as are reasonably incidental thereto.

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	18.2	 	Covenant to Pay. Without prejudice to its respective obligations to the Finance
Parties under the other provisions of the Finance Documents to which it is a party, the
Borrower undertakes to each of the Offshore Security Agent and the Onshore Security Agent
to pay to it from time to time on demand (any such demand being expressed to be made under
this Clause) all amounts from time to time due and payable by it for the account of any
other party to this Agreement pursuant to any Finance Document to the extent not already
paid. Any payment made pursuant to any such demand shall, to the extent of such payment,
also discharge the Borrower’s obligation to make payment for the account of the person
concerned.
	 
	18.3	 	Nature of Duties. The duties and functions of the Facility Agent, the Offshore
Security Agent and the Onshore Security Agent shall be of a mechanical and administrative
nature only. Neither the Facility Agent, the Offshore Security Agent nor the Onshore Security
Agent shall be deemed to be a trustee of any Finance Party except as specified in the Finance
Documents nor shall be deemed to be an agent or trustee of the Borrower for any purpose except
as specified in Clause 22.6. The Facility Agent, the Offshore Security Agent and the Onshore
Security Agent shall have no duties or obligations except those expressly set out in the
Finance Documents.
	 
	18.4	 	Specific Duties. The Facility Agent shall:

	 	(a)	 	promptly account to each Lender for its due proportion of all payments
received by the Facility Agent from the Borrower or otherwise in connection with the
Facility;
	 
	 	(b)	 	promptly inform each Lender of:

	 	(i)	 	the contents of any document which the Facility Agent receives
in respect of the Facility and which it considers to be material; and
	 
	 	(ii)	 	any Event of Default of which an officer of the Facility Agent
acting in respect of the Finance Documents and in his capacity as such has
actual knowledge;

	 	(c)	 	except as otherwise provided in this Agreement, take or refrain from taking
any action in accordance with any lawful and proper instructions given to it by the
Majority Lenders, and any such instructions shall be binding on all the Finance
Parties, and the Facility Agent shall have no liability to the Borrower or any other
Finance Party if it acts (or refrains from taking any action) in accordance with any
lawful and proper instructions of the Majority Lenders;
	 
	 	(d)	 	consult with the other Finance Parties to the extent practicable before
making any declaration or demand under Clause 15.2 or effecting any amendment or
waiver under Clause 19.

	18.5	 	Rights and Powers. The Facility Agent may:

	 	(a)	 	perform any of its duties and functions through its directors, officers,
employees or agents;
	 
	 	(b)	 	engage and pay for the advice or services of lawyers, accountants or other

58

 

	 	 	 	professional advisers or experts as the Facility Agent may consider necessary or desirable
and rely and act upon such advice;
	 
	 	(c)	 	refrain from exercising any of its rights, powers and discretions unless and until
instructed to do so, and as to the manner of doing so, by the Majority Lenders, and refrain
from acting upon any instructions to take enforcement action until it has been indemnified or
secured to its satisfaction against any liabilities, costs and expenses which it may incur;
	 
	 	(d)	 	(but shall not be obliged to) in the absence of any instructions from the Majority Lenders
(or, if appropriate, the Lenders), act (or refrain from taking action) as it considers to be
in the best interest of the Finance Parties;
	 
	 	(e)	 	refrain from taking any action which in its opinion would or might contravene any law or
regulation or render it liable to any person, and do all things which in its opinion may be
necessary in order to comply with any law or regulation;
	 
	 	(f)	 	if any Finance Party owes an amount to the Facility Agent under any Finance Document, after
giving notice to that Finance Party deduct an amount not exceeding the amount owed by the
Finance Party from any payment which the Facility Agent would otherwise be obliged to make to
that Finance Party under the Finance Documents and apply the amount deducted in or towards
satisfaction of the amount owed to the Facility Agent, and for the purposes of the Finance
Documents that Finance Party shall be regarded as having received any amount so deducted;
	 
	 	(g)	 	disclose to the other Finance Parties any information which, in the opinion of the Facility
Agent, is received by it in its capacity as the Facility Agent;
	 
	 	(h)	 	deduct from any amount received by it for the account of the other Finance Parties pro rata
any unpaid fees, costs and expenses of the Facility Agent incurred by it in connection with
the Finance Documents;
	 
	 	(i)	 	assume that no Event of Default or Potential Event of Default has occurred, that any
representation made by the Borrower or any Security Provider in or in connection with any
Finance Document is true and that no party is in breach of its obligations under any Finance
Document unless the Facility Agent receives specific written notice to the contrary;
	 
	 	(j)	 	rely upon any communication or document which it believes to be genuine and, as to any
matters of fact which can reasonably be expected to be within the knowledge of any other party
to any Finance Document, rely upon a certificate signed by or on behalf of that party;
	 
	 	(k)	 	assume that each Lending Office is that identified in Schedule 1 or in the Novation
Certificate under which any Transferee became a party to this Agreement until it has
received from the relevant Lender or Transferee a notice designating another office as its
Lending Office and may act upon such notice until the same is superseded by a further such
notice; and

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	 	(l)	 	deposit any instruments, documents or deeds delivered to it with any bank or
professional custodian or with its or any Finance Party’s legal advisers and shall
not be liable for any loss thereby incurred in the absence of any gross negligence
or wilful default by it and the Facility Agent shall not be in any way liable for
any loss incurred through the misconduct or default of such delegate.

	18.6	 	No Liability to Finance Party. The Facility Agent shall have no liability or
obligation to any other Finance Party:

	 	(a)	 	as a result of any failure or delay by the Borrower or any other party in
performing its respective obligations under any Finance Document;
	 
	 	(b)	 	for the authorisation, execution, legality, validity, enforceability,
effectiveness, genuineness or sufficiency of any Finance Document or any other
document relevant to this transaction or for the collectability of any sum payable
under any Finance Document;
	 
	 	(c)	 	for:

	 	(i)	 	the accuracy or completeness of any information supplied by
any person at any time whether or not such information was or is circulated by
the Facility Agent;
	 
	 	(ii)	 	the accuracy of any representation, warranty or statement
(whether written or oral) made in or at any time in connection with any
Finance Document;

	 	(d)	 	to take any steps to ascertain whether an Event of Default or Potential Event
of Default has occurred or whether the Borrower or any other party is otherwise in
breach of any of its respective obligations or any representation or warranty under
any Finance Document;
	 
	 	(e)	 	to provide any credit or other information relating to the
Borrower or any Security Provider or otherwise relating to the Facility, except as expressly stated in
this Agreement;
	 
	 	(f)	 	to account for any sum received by the Facility Agent (other than for the
account of the other Finance Parties) by way of fees or reimbursement of expenses in
connection with any Finance Document or for any benefit received by it arising out of
any present or future banking or other relationship with the Borrower or any Security
Provider or any person connected with the Borrower or any Security Provider;
	 
	 	(g)	 	for any delay (or any related consequences) in crediting an account with any
amount required to be paid by the Facility Agent under any Finance Document if the
Facility 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 Facility Agent for that purpose;

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	 	(h)	 	as a result of any act or omission by the Facility Agent or any director,
officer, employee or agent of the Facility Agent in connection with the Facility,
except in the case of the Facility Agent’s gross negligence or wilful misconduct.

	 	 	Each other Finance Party agrees that it will not seek to make any claim against any
director, officer, employee or agent of the Facility Agent in respect of any of the
matters described in this Clause 18.6.
	 
	18.7	 	No Liability to Borrower. The Facility Agent shall have no liability or obligation
to the Borrower as a result of any failure or delay by any Finance Party or any other party
in performing its respective obligations under any Finance Document.
	 
	18.8	 	Indemnity. The Lenders shall indemnify the Facility Agent upon demand from and
against all claims, actions, liabilities, damages, penalties, losses, costs and expenses
(including legal fees) which the Facility Agent may incur in any way relating to or arising
out of any Finance Document or relating to or arising out of any action taken or omitted to
be taken by the Facility Agent in seeking to protect, exercise or enforce the rights of the
Finance Parties or otherwise in connection with the Facility, (including, without limitation,
the costs, charges and expenses referred to in Clauses 11.4 and 11.5) unless and to the
extent that any of the foregoing results directly from the Facility Agent’s gross negligence
or wilful misconduct. The Lenders shall be severally liable under the foregoing indemnity in
proportion to their respective Participations in the Loan or, if no Advance has yet been
made, in proportion to their respective Commitments, in each case calculated at the time of
the Facility Agent’s demand, or, if the Loan has been fully repaid, in proportion to their
respective Participations in the Loan immediately before such repayment. The Borrower shall
immediately on demand reimburse each Lender for any payment made under this Clause.
	 
	18.9	 	Acknowledgement by other Finance Parties. Each of the other Finance Parties
acknowledges to and agrees with the Facility Agent that:

	 	(a)	 	it has itself been and will continue to be solely responsible for making its
own independent analysis of and investigations into the status, creditworthiness,
prospects, business, operations, assets and condition of the Borrower, each Security
Provider and any other person referred to herein and for making its own decisions as
to the entering into or the taking or not taking of any action in connection with this
transaction;
	 
	 	(b)	 	any due diligence in respect of the Borrower, the Security Providers and the
transactions contemplated under the Finance Documents required to comply with the
requirements under the applicable law relating to anti-money laundering shall remain
the responsibility of each other Finance Party, and it is expressly agreed that the
Borrower shall, and shall procure each of the Security Providers to, provide any
information required by any Finance Party as soon as practicable for the purpose of
complying with such Finance Party’s obligations under the applicable law relating to
anti-money laundering;
	 
	 	(c)	 	it has not relied upon any representation or statement made by the Facility

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	 	 	 	Agent as being an inducement to enter into any of the Finance Documents.

	18.10	 	Certifications by Facility Agent. Where any provision of any Finance Document
provides that the Facility Agent may certify or determine an amount or rate payable by the
other Finance Parties or any of them, a certificate by the Facility Agent as to such amount or
rate shall be conclusive and binding on each such other Finance Party in the absence of
manifest error.
	 
	18.11	 	No Restriction of Business. The Facility Agent shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise such rights and
powers as if it was not acting as an agent and trustee in relation to any of the Finance
Documents. The Facility Agent may engage in any banking or other business with the Borrower
or any Security Provider or any person connected with the Borrower or any Security Provider
and may treat as confidential, and shall not be obliged to disclose to any other Finance
Party, any information which it receives in connection with such other business.
	 
	18.12	 	Resignation of Facility Agent. The Facility Agent may resign at any time by giving
not less than thirty (30) days’ prior written notice to the Lenders and the Borrower. The
Majority Lenders, on behalf of the Finance Parties, shall have the right to appoint a
successor Facility Agent, but if they do not do so within the period of such notice the
retiring Facility Agent may appoint a successor Facility Agent. The Facility Agent’s
resignation shall not take effect until a successor Facility Agent has been appointed. Upon
such appointment the successor Facility Agent shall succeed to and become vested with all the
rights, powers, discretions and duties of the retiring Facility Agent and the retiring
Facility Agent shall be discharged from any further duties and obligations hereunder. The
parties to this Agreement agree to execute whatever documents may be necessary to effect such
a change of Facility Agent. After any retiring Facility Agent’s resignation the provisions of
this Clause 18 shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Facility Agent.
	 
	18.13	 	Security Agent. The following provisions shall apply to the Offshore Security Agent
in its capacity as trustee in relation to any of the Offshore Security Documents and the
Onshore Security Agent in its capacity as agent in relation to any of the Onshore Security
Documents.

	 	(a)	 	each of the Offshore Security Agent and the Onshore Security Agent:

	 	(i)	 	may accept without enquiry or objection such title as the
Borrower or the relevant Security Provider may have to any assets which are
subject to any of the Security Documents to which it is a party and shall not
be liable for any lack of or defect in such title, whether apparent or not and
whether capable of remedy or not;
	 
	 	(ii)	 	may procure that any investment or all or any part of the
property and assets charged or assigned under the Security Documents to which
it is a party, or the proceeds thereof, is held and/or registered in the name
of its nominee;

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	 	(b)	 	neither the Offshore Security Agent nor the Onshore Security Agent:

	 	(i)	 	shall be liable for any omission or delay in giving notice to any third
party, or effecting any filing or registration, or obtaining any authorisation, or
otherwise perfecting the security constituted by any of the Security Documents to
which it is a party;
	 
	 	(ii)	 	shall be obliged to hold any share certificates, title or other documents
relating to the assets charged under any of the Security Documents to which it is a
party in its own possession or to take any steps to protect or preserve such
documents, and may permit the Borrower or the relevant Security Provider (or its
lawyers or representatives) to retain such documents in its possession if it is
reasonable in the circumstances;

	 	(c)	 	unless provided otherwise in any Security Document to which it is a party, monies which are
received by the Offshore Security Agent or the Onshore Security Agent and held by it as
trustee in relation to any of the Security Documents to which it is a party may be invested
in its name or under its control in any investment authorised by Hong Kong law for the
investment of trust money by trustees or in any other investments which may be selected by
it, and if not otherwise invested such monies may be placed on deposit in its name or under
its control at such bank or institution (including the Offshore Security Agent or the Onshore
Security Agent) and upon such terms as it may think fit;
	 
	 	(d)	 	each of the Finance Parties (other than the Offshore Security Agent) authorises the Offshore
Security Agent (by itself or by such person(s) as it may nominate) to execute and enforce the
Security Documents to which it is a party as trustee, as agent or as otherwise provided, and
confirms that the Offshore Security Agent shall have an independent right to release from any
Security Document to which it is a party any asset permitted to be disposed of under this
Agreement or the relevant Security Document and authorises the Offshore Security Agent to
execute any document which is reasonably required to achieve the release of any property or
asset subject to the relevant Security Document to which it is a party as permitted or
required by the terms of this Agreement or the relevant Security Document;
	 
	 	(e)	 	each of the Finance Parties (other than the Onshore Security Agent) authorises the Onshore
Security Agent (by itself or by such person(s) as it may nominate) to execute and enforce
the Security Documents to which it is a party as agent or as otherwise provided, and
confirms that the Onshore Security Agent shall have an independent right to release from any
Security Document to which it is a party any asset permitted to be disposed of under the
relevant Security Document and authorises the Onshore Security Agent to execute any document
which is reasonably required to achieve the release of any property or asset subject to the
relevant Security Document as permitted or required by the terms of the relevant Security
Document;
	 
	 	(f)	 	each of the Offshore Security Agent and the Onshore Security Agent may

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	 	 	 	appoint any person established or resident in any jurisdiction (whether a trust
corporation or not) to act as a trustee or agent, either separately or jointly with
it, in relation to any of the Security Documents to which it is a party if it
considers that such an appointment is necessary or desirable for the purpose of
conforming with any legal requirement in any relevant jurisdiction or otherwise for
the purpose of holding, administering, protecting or enforcing any of the Security
Documents to which it is a party, and any such trustee or agent shall have such
powers and discretions (not exceeding those conferred it) and such obligations as
shall be conferred or imposed on it by it;
	 
	 	(g)	 	in relation to any Security Document governed by a law other than Hong Kong
or Chinese law, each Finance Party:

	 	(i)	 	shall execute and deliver any Security Document which, under
applicable law, cannot be entered into by the Offshore Security Agent on its
behalf, for example, because the security constituted by the Security
Document must be entered into by it as creditor having a pro rata claim of
the claims secured thereby;
	 
	 	(ii)	 	shall grant the Offshore Security Agent power of
representation in relation to the execution, enforcement and administration
of the Security Documents; and
	 
	 	(iii)	 	shall enter into such notarial deeds or other deeds or
documents as are required under any applicable law relating to the security
constituted by the Security Documents to enable the Offshore Security Agent
or another attorney-in-fact to execute any Security Document on such Finance
Party’s behalf and administer and enforce such security;

	 	(h)	 	Clauses 18.5 to 18.12 shall also apply to each of the Offshore Security
Agent and the Onshore Security Agent as if references therein to the Offshore
Security Agent or, as the case may be, the Onshore Security Agent.

	18.14	 	No Partnership. Nothing contained or implied in this Agreement shall constitute or
be deemed to constitute a partnership between any of the parties to this Agreement.
	 
	18.15	 	Change of Name and Reorganisation of Lenders. In the event that any Lender changes
its name or enter into any reorganisation, merger, amalgamation and consolidation with any
other entity, such Lender shall at the request of the Facility Agent and at its own cost
provide a legal opinion in form and substance satisfactory to the Facility Agent confirming
that the surviving entity shall assume the obligations of such Lender under the Finance
Documents by not later than 15 days (or such longer period as the Facility Agent may agree
in writing) after the change in name, reorganisation, merger, amalgamation and consolidation
takes effect. Should such Lender fail to do so, the Facility Agent shall be entitled (but
not obliged) to require such Lender to transfer its rights and obligations under the Finance
Documents in accordance with Clause 22.4.

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	19.	 	AMENDMENT
	 
	 	 	Any amendment or waiver of any provision of this Agreement and any waiver of any default
under this Agreement shall only be effective if made in writing and signed by or on behalf
of the party against whom the amendment or waiver is asserted. For these purposes, any
amendment or waiver which is made in writing by the Facility Agent at the direction of the
Majority Lenders shall be binding on all Finance Parties, except that the written approval
of all Lenders is required where that amendment or waiver relates to:

	 	(a)	 	an increase of the Facility or of any Lender’s Commitment or the length of
the Tranche A Availability Period, the Tranche B Availability Period or the Tranche C
Availability Period or the amount or currency of or the due date for any payment of
principal or interest on the Loan;
	 
	 	(b)	 	a reduction in the rate or rates of interest or any commitment or other fees
or other amounts payable to the Lenders hereunder;
	 
	 	(c)	 	any voluntary or mandatory prepayment;
	 
	 	(d)	 	any amendment of the definition of “Majority Lenders” or of the provisions
of this Clause;
	 
	 	(e)	 	the provision of any guarantee of or security for the Borrower’s obligations
under this Agreement or the release or amendment of any Security Document or the
release of any security created thereby; or
	 
	 	(f)	 	any provision of this Agreement which expressly requires the consent of all
Lenders.

	 	 	Any amendment affecting the rights of the Facility Agent, the Offshore Security Agent or
the Onshore Security Agent shall also require the consent of the Facility Agent, the
Offshore Security Agent or, as the case may be, the Onshore Security Agent. Without
prejudice to the generality of the foregoing, any amendment of any provision of this
Agreement shall only be effective if signed by the Borrower.
	 
	20.	 	WAIVER AND SEVERABILITY
	 
	 	 	Time is of the essence of this Agreement but no failure or delay by any Finance Party in
exercising any right, power or remedy hereunder shall impair such right, power or remedy or
operate as a waiver thereof, nor shall any single or partial exercise of the same preclude
any further exercise thereof or the exercise of any other right, power or remedy. The
rights, powers and remedies herein provided are cumulative and do not exclude any other
rights, powers and remedies provided by law. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, the legality, validity and enforceability of such provision under the law of
any other jurisdiction, and of the remaining provisions of this Agreement, shall not be
affected or impaired thereby.

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	21.	 	MISCELLANEOUS
	 
	21.1	 	Execution. This Agreement shall become effective as of the date hereof.
	 
	21.2	 	Entire Agreement. The Finance Documents constitute the entire obligation of the
Finance Parties and supersede any previous expressions of intent or understandings in respect
of this transaction.
	 
	21.3	 	Publicity. No announcement or other publicity in connection with this Agreement or
relating in any way to the Facility shall be made or arranged except with the Facility
Agent’s and the Borrower’s prior written consent.
	 
	21.4	 	Counterparts.

	 	(a)	 	This Agreement (i) 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; and (ii) the executed signature pages of each party to this Agreement
may be collated into and attached to any number of single copies of this Agreement,
pursuant to paragraph (b) below, as if each of them had been executed by the parties
in a single copy, and this has the same effect as if this Agreement had been executed
in the relevant number of single copies,
	 
	 	(b)	 	If the parties to this Agreement choose to execute the same in accordance
with paragraph (a)(ii) above, each party will transmit its signed signature page(s)
either to (i) Baker & McKenzie (or such other person authorised by each party to this
Agreement) or (ii) the Facility Agent (or such other person authorised by the
Facility Agent) (each person referred to in paragraphs (i) and (ii) above a
“Recipient”), and the Recipient shall be and shall be deemed to be authorised by each
such party, upon receipt of the executed signature pages of each party to this
Agreement, to collate and attach them into single copies of this Agreement (with one
executed signature page of each party being collated into and attached to one such
single copy). For the avoidance of doubt, the Recipient shall have no further duties
connected with its position as Recipient.

	21.5	 	“Know your customer” checks.

	 	(a)	 	If:

	 	(i)	 	the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation made
after the date of this Agreement;
	 
	 	(ii)	 	any change in the status of the Borrower or the composition of
the shareholders of the Borrower after the date of this Agreement; or
	 
	 	(iii)	 	a proposed assignment or transfer by a Lender of any of its
rights and/or obligations under this Agreement to a party that is not a
Lender prior to such assignment or transfer,

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

	22.	 	ASSIGNMENT, NOVATION AND LENDING OFFICES
	 
	22.1	 	The Borrower. The Borrower shall not assign or transfer all or any part of its
rights or obligations under this Agreement.
	 
	22.2	 	Assignment and Novation. A Lender may:

	 	(a)	 	assign all or any part of its rights under the Finance Documents in
accordance with Clause 22.3; or
	 
	 	(b)	 	transfer by novation all or a portion of its rights, benefits and
obligations under the Finance Documents in accordance with Clause 22.4,

	 	 	(any such assignment or transfer by novation being referred to in this Clause 22 as a
“transfer”). The Borrower shall execute and do all such documents, acts and things as the
Facility Agent may reasonably require for perfecting and completing any such transfer.
	 
	22.3	 	Assignment by Lenders. Subject to Clause 22.5, any Lender may at any time without
the consent of any person assign all or any of its rights under the Finance Documents to any
other person, Provided that:

	 	(a)	 	any transfer of rights together with a novation of obligations to the same
person may only be made in accordance with the novation procedure set out in Clause
22.4; and
	 
	 	(b)	 	no such assignment shall take effect until the proposed assignee has (i)
agreed with the Facility Agent and the other Lenders that it shall be under the same
obligations towards each of them as it would have been under if it had been a

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	 	 	 	party hereto as a Lender, (ii) paid the Facility Agent for its own account a fee of
one thousand US Dollars (US$1,000) and (iii) paid all sums which have been demanded
under Clause 22.8.

	22.4	 	Novation by Lenders. Subject to Clause 22.5, any Lender may at any time transfer by
novation all or part of its rights, benefits and/or obligations under or arising out of the
Finance Documents to any person. Such transfer shall be effected by:

	 	(i)	 	the Eligible Transferee delivering a completed original Novation Certificate
duly executed by such Lender and the intended Transferee to the Facility Agent (for
this purpose only, for itself and as agent for and on behalf of the Borrower and the
other Lenders) together with a fee for the account of the Facility Agent of one
thousand US Dollars (US$1,000); and
	 
	 	(ii)	 	the Facility Agent executing such Novation Certificate to acknowledge
receipt thereof.

	 	 	Upon delivery and execution of a Novation Certificate in accordance with the above
conditions, all parties to this Agreement agree that, on the later of the date specified
as the Transfer Date in such Novation Certificate and the fifth (5th) Business Day
following the date of receipt thereof by the Facility Agent (unless the Facility Agent
agrees a shorter period):

	 	(a)	 	to the extent only that in such Novation Certificate the Lender which is
party thereto seeks to transfer its rights and/or its obligations under the Finance
Documents, the Borrower and such Lender shall each be released from further
obligations to the other hereunder and their respective rights against the other
shall be cancelled (such rights and obligations being referred to in this Clause 22.4
as “discharged rights and obligations”);
	 
	 	(b)	 	the Borrower and the Transferee which is party to such Novation Certificate
shall each assume obligations towards the other and/or acquire rights against the
other which differ from such discharged rights and obligations only insofar as the
Borrower and such Transferee have assumed and/or acquired the same in place of the
Borrower and such Lender; and
	 
	 	(c)	 	the Facility Agent, such Transferee, the other Lenders, the Offshore
Security Agent and the Onshore Security Agent shall acquire the same rights and
assume the same obligations between themselves as they would have acquired and
assumed had such Transferee been an original party hereto as a Lender with the rights
and obligations acquired or assumed by it as a result of such transfer.

	22.5	 	Consent of Borrower. Notwithstanding any contrary provisions in this Agreement, the
prior written consent of the Borrower is required for an assignment or transfer by a Lender
pursuant to this Clause to any person not being an Eligible Transferee, unless such
assignment or transfer is made at a time when an Event of Default is continuing. In the
event that consent of the Borrower is not required for an assignment or transfer pursuant to
this Clause, the Facility Agent shall inform the Borrower of any such assignment or transfer
promptly after such assignment or
transfer.

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	22.6	 	Authority. Each of the Borrower, the other Lenders, the Offshore Security Agent and
the Onshore Security Agent hereby irrevocably authorises the Facility Agent without further
reference to it to acknowledge receipt of each Novation Certificate delivered to it in
accordance with Clause 22.4 by its execution thereof. Upon receipt of any Novation
Certificate, the Facility Agent shall send a copy thereof to the Borrower but the Borrower
agrees that failure to do so shall not invalidate any transfer. The Facility Agent shall incur
no liability to the Borrower, any Lender by virtue of its acting in accordance with the
provisions of this Clause.
	 
	22.7	 	Reliance. The Facility Agent and the Borrower may rely on and act in accordance with
any Novation Certificate which has been delivered to and accepted by the Facility Agent in
accordance with Clause 22.4 and which appears to be complete and regular on its face. Neither
of them shall incur any liability to any party by so doing and the Facility Agent shall not
be obliged to check or enquire whether a purported Transferee is an Eligible Transferee
Provided that if it has actual notice that any proposed Transferee is not an Eligible
Transferee and the transfer is not otherwise in compliance with Clause 22.5, the Facility
Agent is hereby authorised and is required to refuse to accept the relevant Novation
Certificate.
	 
	22.8	 	Reimbursement of Facility Agent. Any Lender seeking to effect any transfer under
this Clause 22 shall reimburse the Facility Agent on demand for all costs, charges and
expenses (including legal fees on a full indemnity basis) reasonably incurred in connection
therewith.
	 
	22.9	 	Payments. The Facility Agent shall distribute payments received by it in relation to
all or any part of a share of Commitment or Participation to the Lender indicated in the
records of the Facility Agent as being so entitled on that date Provided that the Facility
Agent is authorised to distribute payments to be made on the date on which any transfer
becomes effective pursuant to any part of this Clause to the Lender so entitled immediately
before such transfer took place regardless of the period to which such sums relate.
	 
	22.10	 	Participations. A Lender may at any time grant one or more participations in its
rights and/or obligations under the Finance Documents but no other party thereto shall be
concerned in any way with any participation so granted.
	 
	22.11	 	Disclosure. A Finance Party may disclose to:

	 	(a)	 	any actual or potential successor;
	 
	 	(b)	 	any other person:

	 	(i)	 	to (or through whom) that Finance Party assigns or transfers
(or may assign or transfer) all or any of its rights or obligations under the
Finance Documents;
	 
	 	(ii)	 	with (or through whom) that Finance Party enters (or may
potentially enter) into any participation or hedging arrangement in relation
to this

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	 	 	 	Agreement or any other transaction under which payments are to be made by
reference to this Agreement, the Borrower or any Security Provider;

	 	(c)	 	any Holding Company of such Finance Party;
	 
	 	(d)	 	any Subsidiary of such Finance Party or of its Holding Company;
	 
	 	(e)	 	its head office and any other branch, office or unit;
	 
	 	(f)	 	any other Finance Party;
	 
	 	(g)	 	any other Security Provider; or
	 
	 	(h)	 	any other person permitted by the Borrower or any other Security Provider; or
	 
	 	(i)	 	any professional adviser and other person which provides services of any
kind to such Finance Party in connection with the operation of its business
(including, without limitation, any rating agency, insurer or insurance broker,
direct or indirect provider of credit protection, debt collection agency, credit
reference agency or contractor),

	 	 	on a confidential basis such information about the Borrower, any other Security Provider
and the Finance Documents as such Finance Party shall consider appropriate. Any Finance
Party and any person to whom disclosure has been made pursuant to this Clause may also
make such disclosures as may be required by or pursuant to any applicable (i) law or
regulation of Hong Kong or elsewhere and (ii) (whether or not having the force of law) any
guideline, directive or request from a governmental, intergovernmental or supranational
body, authority, agency, department or regulatory, self-regulatory or other authority or
organisation of Hong Kong or elsewhere with which such Finance Party or other person is
customarily expected to comply.
	 
	22.12	 	Lending Offices. Each Lender shall act initially through its Lending Office
specified in Schedule 1 and may act subsequently through any of its other offices as
selected by it from time to time. A Lender shall promptly notify the Facility Agent of any
change of its Lending Office.
	 
	22.13	 	Relevant Costs. If:

	 	(a)	 	a Lender assigns or transfers any of its rights or obligations under the
Finance Documents or changes its Lending 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 Lending Office under Clause 9 or 10 or 11.6,

	 	 	then the new Lender or Lender acting through its new Lending Office is only entitled to
receive payment under those Clauses to the same extent as the existing Lender or

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	 	 	Lender acting through its previous Lender Office would have been if the assignment,
transfer or change had not occurred.
	 
	23.	 	NOTICES
	 
	23.1	 	Delivery. Each notice, demand or other communication to be given or made under this
Agreement shall be in writing and delivered or sent to the relevant party at its address or
fax number set out below (or such other address or fax number as the addressee has by five (5)
days’ prior written notice specified to the other parties):

	 	 	 	 	 	 	 
	To the Borrower:	 	MI Energy Corporation
	 	 	Room 402, Block C
	 	 	Yuanda Center
	 	 	Huizhong Road, Chaoyang
	 	 	Beijing
	 	 	PRC
	 
	 	 	 	 	 	 
	 

	 	Fax Number
	 	:
	 	(8610) 5123 8866
	 

	 	Attention
	 	:
	 	Mr. Zhang Rui Lin / Mr. Forrest
	 

	 	 	 	 	 	Dietrich / Mr. Allen Mak
	 
	 	 	 	 	 	 
	To the Facility Agent:	 	CITIC Ka Wah Bank Limited
	 	 	9/F, Lippo Centre, Tower One
	 	 	89 Queensway
	 	 	Hong Kong
	 
	 	 	 	 	 	 
	 

	 	Fax Number
	 	:
	 	(852) 3603 4398
	 

	 	Attention
	 	:
	 	Ms. Janice Sze/Ms. Windy Lau

	 	 	and to the Lenders at their respective Lending Offices.
	 
	23.2	 	Deemed Delivery. Any notice, demand or other communication so addressed to the
relevant party shall be deemed to have been delivered (a) if given or made by letter, when
actually delivered to the relevant address and (b) if given or made by fax, when despatched
with electronic confirmation of complete and error-free transmission, Provided that, if such
day is not a working day in the place to which it is sent, such notice, demand or other
communication shall be deemed delivered on the next following working day at such place.
	 
	23.3	 	Facility Agent. All communications between the Lenders and the Borrower in relation
to this Agreement shall be made through the Facility Agent.
	 
	23.4	 	Language. Each notice, demand or other communication hereunder and any other
documents required to be delivered hereunder shall be either in English or Chinese
accompanied by a certified translation thereof into the English language.

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	24.	 	GOVERNING LAW AND JURISDICTION
	 
	24.1	 	Law. This Agreement and the rights and obligations of the parties hereunder shall be
governed by and construed in accordance with the laws of Hong Kong.
	 
	24.2	 	Jurisdiction. The Borrower irrevocably agrees for the benefit of each of the Finance
Parties that any legal action or proceeding arising out of or relating to this Agreement may
be brought in the courts of Hong Kong and irrevocably submits to the
non-exclusive
jurisdiction of such courts.
	 
	24.3	 	Process Agent. The Borrower hereby appoints Law
Debenture Services (H.K.) Limited
(the “Process Agent”) to be its agent to accept on behalf of the Borrower service of process
issued by the Facility Agent in relation to this Agreement. In the event of any action being
commenced in relation to this Agreement, the Borrower agrees that the process by which such
action is commenced shall be sufficiently served on the Borrower, and shall be deemed to have
been so served, if addressed to the Process Agent and left at or sent by post to the
following address:

Room 3105, Alexandra House

18 Chater Road, Central, Hong Kong

	 	 	or to the registered office for the time being of the Process Agent. Notice of any change
of Process Agent and/or its address for service in Hong Kong may be given to the Facility
Agent in writing by the Borrower, in which case the new details of the new Process Agent
and/or address will only apply with effect from the fifteenth (15th) day after receipt of
such notice by the Facility Agent. If service of process on the Process Agent is
impracticable because the address for service has ceased to exist or otherwise, the
Borrower agrees that, so long as the Facility Agent has arranged for the relevant
documents to be couriered to the Borrower’s address as set out in Clause 23.1 (whether or
not the Borrower has received such documents), the process shall be sufficiently served by
inserting an advertisement of such process in an issue of a daily newspaper in Hong Kong,
whereupon service shall be deemed to have been effected on the day of publication of such
advertisement.
	 
	24.4	 	No Limitation on Right of Action. Nothing herein shall limit the right of the
Finance Parties to commence any legal action against the Borrower and/or its property in any
other jurisdiction or to serve process in any manner permitted by law, and the taking of
proceedings in any jurisdiction shall not preclude the taking of proceedings in any other
jurisdiction whether concurrently or not.
	 
	24.5	 	Waiver; Final Judgment Conclusive. The Borrower irrevocably and unconditionally
waives any objection which it may now or hereafter have to the choice of Hong Kong as the
venue of any legal action arising out of or relating to this Agreement and agrees not to
claim that any court thereof is not a convenient or appropriate forum. The Borrower also
agrees that a final judgment against it in any such legal action shall be final and
conclusive and may be enforced in any other jurisdiction, and that a certified or otherwise
duly authenticated copy of the judgment shall be conclusive evidence of the fact and amount
of its indebtedness.

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	24.6	 	Waiver of Immunity. The Borrower irrevocably and unconditionally waives any
immunity to which it or its property may at any time be or become entitled, whether
characterised as sovereign immunity or otherwise, from any set-off or legal action in Hong
Kong or elsewhere, including immunity from service of process, immunity from jurisdiction
of any court or tribunal, and immunity of any of its property from attachment prior to
judgment or from execution of a judgment.
	 
	25.	 	LANGUAGE
	 
	 	 	This Agreement shall be prepared and executed in both English and Chinese. In case of any
inconsistency between the English version and the Chinese version of this Agreement, the
English version shall prevail.

IN WITNESS whereof this Agreement has been executed by the parties hereto on the date stated at
the beginning of this Agreement.

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Schedule 1

The Lenders

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Tranche A	 	Tranche B	 	Tranche C
	Name and Lending Office	 	Commitment	 	Commitment	 	Commitment
	CITIC Ka Wah Bank Limited

9/F., Lippo Centre, Tower One

89 Queensway 

Hong Kong	 	US$48,500,000	 	US$30,000,000	 	US$7,500,000 plus,
subject to Clause
4.7, such portion of
any Additional
Tranche C Amount as
in the proportion
which its Tranche A
Commitment bears to
the aggregate
Tranche A
Commitments of all
Lenders
	Fax Number : (852) 3603 4333

	 	 	 	 	 	 
	Attention :     Mr. Benjamin Ng /

                      Mr. Mark Ng

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CITIC Ka Wah Bank (China) 

Limited, Beijing Branch	 	US$14,000,000	 	 	 	Subject to Clause
4.7, such portion
of any Additional
Tranche C Amount as
in the proportion
which its Tranche A
Commitment bears to
the aggregate
Tranche A
Commitments of all
Lenders
	Room 3201-3205, Full Tower

No. 9 Dongsanhuanzhonglu

Chaoyang District

Beijing

People’s Republic of China	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Fax
Number: (8610) 8591 1168

	 	 	 	 	 	 
	Attention:     Mr. Frederick Wan /

                     Ms. Helen Huang

	 	 	 	 	 	 

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	 	 	 	 	Tranche A	 	Tranche B	 	Tranche C
	Name and Lending Office	 	Commitment	 	Commitment	 	Commitment
	China CITIC Bank Corporation 

Limited, Guangzhou Branch	 	US$62,500,000	 	US$30,000,000	 	US$7,500,000 plus,
subject to Clause
4.7, such portion
of any Additional
Tranche C Amount as
in the proportion
which its Tranche A
Commitment bears to
the aggregate
Tranche A
Commitments of all
Lenders
	48/F, CITIC Plaza

233 Tianhe Road North

510613 Guangzhou

People’s Republic of China	 	 	 	 	 	 
	Fax Number : (8620) 8752 0176

	 	 	 	 	 	 
	Attention :     Ms. Chen Hua /

                       Mr. Chen Gu

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total:
	 	US$125,000,000	 	US$60,000,000	 	US$15,000,000 plus,
subject to Clause
4.7, any Additional
Tranche C Amount

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Schedule 2

Form of Novation Certificate

			
	To:	 	CITIC Ka Wah Bank Limited

as agent for itself and on behalf of the Finance Parties and the Borrower each as
defined below and as agent and trustee under the Offshore Security Documents and as agent
for the Onshore Security Agent under the Onshore Security Documents

NOVATION CERTIFICATE

Relating to the agreement (the “Facility Agreement”) dated                     2009 whereby a loan
facility was made available to MI Energy Corporation (the “Borrower”) by the Lenders (as therein
defined) on whose behalf CITIC Ka Wah Bank Limited (the “Facility Agent”) acted as agent in
connection therewith. Terms defined in the Facility Agreement shall have the same meanings when
used herein.

	1.	 	[          ] (the “Transferor”) confirms the accuracy of the summary of its
Participation in the Facility set out in the Schedule below and
requests [     ] (the “Transferee”) to accept and procure the transfer to
the Transferee of [the whole] / [[     ] per cent] of its [Tranche A] /
[Tranche B] / [Tranche C] Commitment and/or its Participation in the
[Tranche A] / [Tranche B] / [Tranche C] Loan and the corresponding
benefit of the Security Documents by countersigning and delivering
this Novation Certificate to the Facility Agent at its address for the
service of notices specified in the Facility Agreement.
	 
	2.	 	The Transferee hereby requests the Facility Agent to accept this Novation
Certificate as being delivered to the Facility Agent pursuant to Clause
22.4 of the Facility Agreement so as to take effect in accordance with the
terms thereof on [      ] 200• (the “Transfer Date”) or on such later date as may be determined in
accordance with the terms of Clause 22.4 and confirms and agrees as contemplated by such Clause.
	 
	3.	 	The Transferee hereby:

	 	(a)	 	undertakes with the Transferor and each of the other parties to the Facility
Agreement that it will perform in accordance with their terms all those obligations
which by the terms of any Finance Document are expressed to be assumed by it after
receipt of this Novation Certificate by the Facility Agent and satisfaction of the
conditions (if any) subject to which this Novation Certificate is expressed to take
effect;
	 
	 	(b)	 	appoints the Facility Agent to act as its agent as provided in the Facility
Agreement;
	 
	 	(c)	 	appoints the Offshore Security Agent to act as its agent and trustee as
provided in the Offshore Security Documents and authorises it, in its capacity as
trustee

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	 	 	 	to settle the rights, benefits and interests as described in each Offshore
Security Document on trust on its behalf;

	 	(d)	 	appoints the Onshore Security Agent to act as its agent as provided in the
Onshore Security Documents;
	 
	 	(e)	 	expressly agrees to all the terms of the Facility Agreement and the Security
Documents.

	4.	 	The Transferee warrants that it has received copies of the Facility Agreement and each of the
Security Documents together with such other information as it has required in connection with
this transaction and that it has not relied and will not hereafter rely on the Transferor or
any other Finance Party to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such document or information and
further agrees that it has not relied and will not rely on the Transferor or any other Finance
Party to assess or keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower or any other party to any Finance
Document.
	 
	5.	 	Neither the Transferor nor the Facility Agent (either on its own behalf or on behalf of any
other Finance Party or other person) makes any representation or warranty or assumes any
responsibility with respect to the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document or any document relating thereto or assumes any
responsibility for the financial condition of the Borrower, any Security Provider or any other
party or for the performance and observance by the Borrower or any other party of any of its
obligations under the Finance Documents or any document relating thereto and any and all such
conditions and warranties, whether express or implied by law or otherwise, are hereby
excluded.
	 
	6.	 	By its execution of this Novation Certificate, the Transferee hereby represents to the
Transferor and each of the other parties to the Finance Documents that:

	 	(a)	 	it is an Eligible Transferee; and
	 
	 	(b)	 	it is duly incorporated, validly existing, has full power, authority and legal
right to enter into the transactions contemplated by, and perform the
obligations assumed pursuant to, this Novation Certificate and the relevant Finance
Documents and has taken all necessary action to authorise execution of this Novation
Certificate.

	7.	 	The Transferor hereby gives notice that nothing herein or in any Finance Document (or any
document relating thereto) shall oblige the Transferor to:

	 	(a)	 	accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under any Finance Document hereby transferred; or
	 
	 	(b)	 	support any losses directly or indirectly sustained or incurred by the
Transferee (i) by reason of the non-performance by the Borrower or any other party to
any Finance Document or any document relating thereto of its

77

 

	 	 	 	obligations under any such document or (ii) otherwise.

The Transferee hereby acknowledges the absence of any such obligation as is referred to in (a) or
(b) above.

	8.	 	This Novation Certificate and the rights and obligations of the parties hereto shall
be governed by and construed in accordance with the laws of Hong Kong.

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The Schedule

Transferor’s Participation in the Facility

	 	 	 
	Tranche A Commitment
	 	Participation in the Tranche A Loan
	 
	 	 
	Tranche B Commitment
	 	Participation in the Tranche B Loan
	 
	 	 
	Tranche C Commitment
	 	Participation in the Tranche C Loan

Amount to be Transferred

	 	 	 
	Tranche A Commitment	 	Tranche A Participation            
	%
	 	% 
	 
	Amount:
	 	Amount:
	 
	US$
	 	US$

	 	 	 
	Tranche B Commitment	 	Tranche B Participation     
	%
	 	% 
	 
	Amount:
	 	Amount:
	 
	US$
	 	US$

	 	 	 
	Tranche C Commitment	 	Tranche C Participation     
	%
	 	% 
	 
	Amount:
	 	Amount:
	 
	US$
	 	US$

	 	 	 	 	 	 	 	 	 	 	 
	[Transferor]	 	 	 	[Transferee]	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	By:
	 	 	 	 
	Date
	 	 	 	 	 	Date:	 	 	 	 
	Address:
	 	 

	 	 	 	 	 	 

	 	 

Tel:

Fax:

79

 

Bank account(s)

for payments:

Receipt acknowledged.

	 	 	 	 	 
	Facility Agent	 	 
	By:
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

 

			
	•	 	This Novation Certificate is not a security and is of no value to any person other than the
Transferor, the Transferee and the Borrower.

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Schedule 3

Financial Definitions

For the purpose of Clause 14.3, unless the context requires otherwise:

“Borrowed Money” means indebtedness (other than ordinary trade indebtedness) incurred in respect
of (a) money borrowed from any bank or financial institution which carries out banking business
and (b) any bond, convertible bond or note;

“Capital Expenditure” means any expenditure or obligation in respect of expenditure which, in
accordance with GAAP, would be treated as capital expenditure;

“Consolidated EBITDA” means, in relation to the Borrower and its Subsidiaries, in respect of any
financial period, their consolidated earnings before Consolidated Interest Expense, taxation,
depreciation and amortization after exceptional items, determined by reference to the Relevant
Financial Statements

“Consolidated Interest Expense” means, in relation to the Borrower and its Subsidiaries on a
consolidated basis, in respect of any financial period, the aggregate amount of interest payable
by the Borrower and its Subsidiaries in respect of Borrowed Money during such financial period;

“Consolidated Tangible Net Worth” means, in relation to the Borrower and its Subsidiaries on a
consolidated basis, the aggregate of the shareholder equity of the Borrower as shown in the
Relevant Financial Statements of the relevant financial year of the Borrower or the relevant half
year, after adding back:

	(a)	 	the aggregate amount of Deemed Dividends declared by the Borrower up to the end of such
financial year or half year;
	 
	(b)	 	the aggregate amount of IPO Midnight Dividends paid by the Borrower up to the end of such
financial year or half year;
	 
	(c)	 	the aggregate value of the put option arrangements entered into by the Borrower with Standard
Bank plc with respect to the price of crude oil which has been written off up to the end of
such financial year or half year (provided that the maximum aggregate value of such write off
shall not exceed RMB 227,673,000 (or its equivalent in any other currency));

but after:

	 	(i)	 	deducting therefrom to the extent not already deducted or written off in
determining reserves any amount attributable to intangible assets including, goodwill
arising on the consolidation of a future Subsidiary;
	 
	 	(ii)	 	making such adjustments as may be appropriate to reflect any variation in the
amount of such paid-up share capital or the amounts standing to the credit of such
reserves (other than profit and loss account) which shall have occurred since the date
of the Relevant Financial Statements or which would result from

81

 

	 	 	 	any transaction for the purpose of which the Consolidated Tangible Net Worth is
being computed or any transaction to be carried out contemporaneously therewith and
so that for this purpose if the Borrower proposes to issue or has issued shares for
cash and the issue has been underwritten by a financial institution or financial
institutions satisfactory to the Facility Agent then such shares shall be deemed to
have been issued and the amount (including any premium) of the subscription moneys
payable in respect thereof (not being moneys payable later than four (4) months
after the date of allotment) shall be deemed to have been paid up at the date on
which the issue of such shares was underwritten and such underwriting became
unconditional;

	 	(iii)	 	deducting therefrom, to the extent included in such reserves as a result of
the acquisition by the Borrower of a controlling interest or jointly controlled
interest in a subsidiary and if not otherwise deducted, any amount attributable to
the interests of the Borrower or its Subsidiaries in that subsidiary or jointly
controlled subsidiary outside such group of companies insofar as the same exceeds the
cost of such interests; and

	 	(iv)	 	making such other adjustments (if any) as the auditors for the time being of
the Borrower consider appropriate (including proper adjustments to take account of
any minority or other interests in any subsidiary);

“Consolidated Total Borrowing” means the aggregate indebtedness of the Borrower and its
Subsidiaries owed in respect of Borrowed Money;

“GAAP” means the then accounting principles adopted by the Borrower (which shall be either the
International Financial Reporting Standards or the generally accepted accounting principles in the
United States of America);

“Relevant Financial Statements” means, at any particular time, the then latest consolidated
financial statements of the Borrower delivered to the Facility Agent pursuant to Clause
14.1(a)(i) or 14.1(a)(ii).

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Schedule 4

Hedging Policy

Oil hedging

	 	•	 	Not to engage in speculative oil hedging
	 
	 	•	 	Oil hedging to cover a reasonable portion of the Borrower’s portion of monthly oil
production
	 
	 	•	 	When determining oil hedging, take into account the following factors:

	 	1)	 	annual projections of oil production
	 
	 	2)	 	forward curve of oil prices
	 
	 	3)	 	expected investments into drilling each year and the level of production
derived from such investment
	 
	 	4)	 	other factors which may affect oil hedge (eg tax, government policies/law,
bank requirements, IPO requirements, etc)

	 	•	 	Oil hedging should not cover an excessively long period where oil prices cannot be
ascertained with a reasonable degree of certainty. Oil hedging should be restricted to
cover a reasonable period where there oil prices can be determined with a reasonable
degree of certainty (eg Up to 2 years).
	 
	 	•	 	Hedging should concentrate on protecting downside; upside should be retained by the
Borrower.
	 
	 	•	 	Hedging should be to manage oil price risk, and must not introduce additional risk or
uncertainty to the Borrower’s future income.
	 
	 	•	 	Hedging must consider the uncertainty in the spread between the hedge marker price
and the Borrower’s contract price.
	 
	 	•	 	All oil hedging to be approved by Board of Directors of the Borrower.

Interest hedging

	 	•	 	Not to engage in speculative interest hedging
	 
	 	•	 	Interest hedging should be considered when current interest rates are very low and
there is a reasonable assumption that interest rate will increase in the foreseeable
future
	 
	 	•	 	Interest hedging will be considered when there is a bank loan outstanding where the
interest rate is a floating rate
	 
	 	•	 	Interest hedging should only be considered when it reduces risk and uncertainty in
the amount of future interest payments that may need to be made by the Borrower, and when
such payments are critical to the Borrower’s future financial
performance.

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	 	•	 	When determining interest rate hedging, the following factors should be considered:

	 	1)	 	Tenor of bank loan with floating interest rate
	 
	 	2)	 	Forward curve of interest rate
	 
	 	3)	 	Cost of interest swap compared to current interest rate
	 
	 	4)	 	Likelihood of actual interest rate exceeding interest rate swap during
interest hedging period
	 
	 	5)	 	Do not commit to interest hedging for full amount of loan to allow for future
interest rate hedging on portion of loan not covered by interest rate hedge depending
on how interest rates move in the future
	 
	 	6)	 	Other factors (eg tax, government policies/law, bank requirements, IPO
requirements, etc)

	 	•	 	Interest hedging should not cover an excessively long period where interest rates
cannot be ascertained with a reasonable degree of certainty. Interest hedging should be
restricted to cover a reasonable period where interest rates can be determined with a
reasonable degree of certainty (eg Up to 2 years)
	 
	 	•	 	All interest rate hedging to be approved by the Board of Directors of the Borrower

RMB Hedging

	 	•	 	Not to engage in speculative RMB hedging
	 
	 	•	 	RMB hedging should be considered when there is a reasonable assumption that RMB will
strengthen against US$ in the foreseeable future
	 
	 	•	 	RMB hedging will be considered when there is a US$ bank loan outstanding or when we are
listed (ie to provide for dividends to shareholders)
	 
	 	•	 	RMB hedging will be considered when necessary to protect the amount needed to be
invested for project development and operations.
	 
	 	•	 	RMB hedging will consider oil price dependency on strength/weakness of the US$, that
is, the Borrower’s income is linked to the US$, but its expenditures are linked to the RMB.
	 
	 	•	 	When determining RMB hedging, the following factors should be considered:

	 	1)	 	Tenor of bank loan and the debt servicing (principle, interest and fees)
required each period
	 
	 	2)	 	Forward curve of RMB/US$
	 
	 	3)	 	Cost of RMB/US$ swap compared to current exchange rate for RMB/US$
	 
	 	4)	 	Likelihood of actual RMB/US$ rate exceeding RMB/US$ swap rate during RMB/US$
hedging period
	 
	 	5)	 	Cashflow projections during the tenor of US$ bank loan
	 
	 	6)	 	Amount of RMB cashflow generated from the Moliqing Oilfield and the Miao 3
Oilfield and RMB denominated expenses for all oilfields and Beijing office expenses

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	 	7)	 	Any excess RMB cashflows after taking into account (6) can be considered for RMB/US$
hedging to the extent required to service US$ loan, pay dividends, settle US$/HK$
expenses, overseas M&A, etc
	 
	 	8)	 	Do not commit to RMB hedging for full amount of loan to allow for RMB interest rate
hedging on portion of loan not covered by interest rate hedge depending on how interest
rates move in the future
	 
	 	9)	 	Other factors (eg tax, government policies/law, bank requirements, IPO requirements,
etc)

	 	•	 	RMB/US$ hedging should not cover an excessively long period where RMB/US$ exchange rates
cannot be ascertained with a reasonable degree of certainty. RMB/US$ hedging should be
restricted to cover a reasonable period where RMB/US$ exchange rates can be determined with a
reasonable degree of certainty (eg Up to 2 years)
	 
	 	•	 	All RMB/US$ hedging to be approved by the Board of Directors of the Borrower

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Schedule 5

Operation of Accounts

	1.	 	Establishment of Accounts

	1.1	 	The Borrower has established with the Facility Agent (a) the MIE Offshore Account and (b) the
Debt Service Reserve Account and, in accordance with the terms of this Agreement, shall
maintain such accounts.

	1.2	 	The Borrower has established with the Onshore Account Bank the MIE Onshore Account and, in
accordance with the terms of this Agreement, shall maintain such account.

	1.3	 	The Borrower has established with the Facility Agent the Main Operating Account and, in
accordance with the terms of this Agreement, shall maintain such
account. For the avoidance of
doubt, the Facility Agent shall provide standard banking services with respect to the Main
Operating Account in accordance with the General Terms and Conditions of the Facility Agent as
published and amended from time to time.

	1.4	 	The Borrower shall not, without the prior written notice to the Facility Agent, open any bank
account with any bank, other than the Existing Accounts.

	1.5	 	The Borrower hereby authorises and agrees that each of the Facility Agent and the Onshore
Security Agent may at any time obtain from the Onshore Account Bank copies of the full
statement of the balance of and payments into and from the MIE Onshore Account from time to
time.

	2.	 	Interest

Any amounts from time to time standing to the credit of the MIE Offshore Account, the MIE
Onshore Account and/or the Debt Service Reserve Account 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 Facility Agent and Onshore Account Bank respectively. All interest
earned on the balance standing to the credit of any such account shall be credited to the account
in respect of which the same was earned. The Borrower shall be entitled to put any amounts
standing to the balance of such accounts (or any amount thereof) into time deposits and other
liquid investments with the Facility Agent or Onshore Account Bank (as applicable), provided that
no Blocking Event (as defined below) is continuing.

	3.	 	Deposits

	3.1	 	The Borrower shall procure that (aa) PetroChina will pay all amounts payable to the Borrower
under the PSCs to (in respect of amounts paid in RMB) the MIE Onshore Account and (in respect
of amounts paid in US Dollars) the MIE Offshore Account in accordance with the terms of its
acknowledgement letter described in Clause 14.1(t)(ii) and PetroChina will pay all amounts
payable to the Borrower under the Crude Oil Sales Contract to (in respect of amounts

86

 

	 	 	paid in RMB) the MIE Onshore Account and (in respect of amounts paid in US Dollars)
the MIE Offshore Account and (bb) PetroChina will comply with the arrangements under the
acknowledgement letter referred to in Clause 14.1(t)(ii) and will not amend or modify any
of such arrangements without the prior written consent of the Facility Agent.

	3.2	 	If at any time PetroChina pays the amounts payable to the Borrower under the PSCs and the
Crude Oil Sales Contract to the bank account (account number: ) opened by the
Borrower with the Existing Agent, the Borrower shall within fourteen (14) days after the
payment of such amounts into such bank account arrange for such amounts to be transferred to
the MIE Offshore Account.

	4.	 	Withdrawals

	4.1	 	Upon receipt of any payment by PetroChina into the MIE Onshore Account or the MIE Offshore
Account, the Borrower shall be entitled to withdraw an amount of up to 10% of such amount and
use such amount for onward transmission to Global Oil Corporation (notwithstanding that a
Blocking Event may be continuing at such time).

	4.2	 	Subject to the provisions below and paragraph 4.3 of this Schedule 5, the Borrower shall be
entitled to withdraw amounts standing to the credit of the MIE Onshore Account, MIE Offshore
Account or Debt Service Reserve Account (but, in relation to the Debt Service Reserve Account,
only to the extent that the balance of such account exceeds the Debt Service Reserve
Requirement) for any purpose, except as otherwise restricted under this Agreement:

	 	(a)	 	(in relation to any withdrawal from the MIE Offshore Account or the Debt
Service Reserve Account) the Borrower shall have delivered a certificate (in the form
set out in Schedule 12) signed by a Director or the Chief Financial Officer of the
Borrower to the Facility Agent (i) stating that none of the Blocking Events is
continuing as at the date of the certificate and (in the case of a withdrawal from the
MIE Offshore Account) specifying that such withdrawal is to be made for the
purpose(s) as specified in paragraph (c) below (and such certificate may request an
immediate withdrawal), or, (ii) specifying each Blocking Event that is continuing
as at the date of the certificate, the purpose of such withdrawal (which, in the case
of a withdrawal from the MIE Offshore Account, shall be the purpose(s) as specified in
paragraph (c) below)_and specifying a date of withdrawal not sooner than the date
falling three (3) Business Days after the date of such certificate;
	 
	 	(b)	 	(in relation to any withdrawal from the MIE Onshore Account) the Borrower
shall have delivered a certificate (in the form set out in Schedule 12) signed by a
Director or the Chief Financial Officer of the Borrower to the Onshore Security Agent
(i) stating that none of the Blocking Events is continuing as at the date of the
certificate and

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	 	 	 	specifying that such withdrawal is to be made for the purpose(s) as specified in
paragraph (d) below (and such certificate may request an immediate withdrawal), or, (ii)
specifying each Blocking Event that is continuing as at the date of the certificate, the
purpose of such withdrawal and specifying a date of withdrawal not sooner than the date
falling three (3) Business Days after the date of such certificate;
	 
	 	(c)	 	the amounts withdrawn by the Borrower from the MIE Offshore Account shall only be applied for
the purposes and in the order of priority set out below:

	 	(i)	 	to make payment of the amounts referred to in paragraph 4.1 of this
Schedule 5;
	 
	 	(ii)	 	to make payment of taxes and royalties incurred or required to be paid by
the Borrower;
	 
	 	(iii)	 	to transfer to the joint accounts opened with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch by the Borrower as operator of the
Oilfield Projects the amounts required for the exploration, investment, extraction,
operation and development of the Oilfield Projects;
	 
	 	(iv)	 	to make payment of amounts due and payable under the Finance Documents or
to fund the Debt Service Reserve Account up to the Debt Service Reserve Requirement;
	 
	 	(v)	 	if elected by the Borrower, to make repayment of shareholder’s loans to
its shareholder(s) as permitted under Clause 14.2(b);
	 
	 	(vi)	 	if elected by the Borrower, to make payment of dividends to the Corporate
Shareholder as permitted under Clause 14.2(c) and 14.2(d) or to provide loans to the
Corporate Shareholder as permitted under Clause 14.2(f);
	 
	 	(vii)	 	to transfer to the Main Operating Account any other amounts;

	 	(d)	 	all amounts withdrawn from the MIE Onshore Account shall be applied towards, after paying the
amounts referred to in paragraph 4.1 of this Schedule 5, paying or discharging the
development and production costs, daily operating expenses or taxes or royalties in respect
of the Oilfields;
	 
	 	(e)	 	if any withdrawal is made for the purpose of the payment of dividends by the Borrower to its
shareholders, such payment shall be in compliance with the provisions in Clauses 14.2(c) and
14.2(d);
	 
	 	(f)	 	if any withdrawal is made for the purpose of the provision of loans by the Borrower to the
Corporate Shareholders, such payment shall be in compliance with the provisions in Clauses
14.2(f).

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	4.3	 	At any time that (a) an Event of Default has occurred and for so long as the same is
continuing, (b) the financial covenants set out in Clause 14.3 are not satisfied, or (c)
the Debt Service Reserve Account is not funded to the amount of the Debt Service Reserve
Requirement (each a “Blocking Event”), the Facility Agent may notify (with a simultaneous
copy of such notice to the Borrower setting out reasonable details of the relevant Blocking
Event(s)) (i) itself in its capacity as account bank for the MIE Offshore Account and/or
the Debt Service Reserve Account, and/or (ii) the Onshore Account Bank as account bank of
the MIE Onshore Account, of the occurrence and continuance of such event and upon receipt
of such notice by the Facility Agent or the Onshore Account Bank (as relevant) until
revocation of such notice by the Facility Agent (to be given promptly after such Blocking
Event ceases to continue, with a copy to the Borrower):

	 	(a)	 	the Borrower shall not be permitted to request any transfers, payments or
withdrawals from the MIE Offshore Account, MIE Onshore Account and/or Debt Service
Reserve Account (as notified) unless the relevant transfer, payment or withdrawal has
been approved by the Facility Agent, provided that, for the avoidance of doubt, the
parties to this Agreement agree that the Facility Agent may deliver a notice that only
imposes partial limits or restrictions on withdrawals from such
account(s);
	 
	 	(b)	 	the MIE Offshore Account, MIE Onshore Account and/or Debt Service Reserve
Account (as notified) shall be operated, and transfers and withdrawals shall be made,
solely on the instructions of the Facility Agent.

	5.	 	MIE Onshore Account

	5.1	 	The Borrower shall be entitled to, from time to time, open a new bank account (the
“Replacement Onshore Account”) with the Onshore Account Bank and designate such new account as
the MIE Onshore Account in accordance with the terms of the Charge over Onshore Account,
provided that the account that was previously the MIE Onshore Account (the “Old Onshore
Account”) shall remain open until such time as PetroChina commences to pay all amounts payable
(in respect of amounts to be paid in RMB) to the Borrower under the PSCs and the Crude Oil
Sales Contract to the Replacement Onshore Account, and prior to such time the Borrower shall,
within fourteen (14) days after the payment of such amounts into the Old Onshore Account,
arrange for such amounts to be transferred to the Replacement Onshore Account.

	5.2	 	After the Facility Agent (acting reasonably) is satisfied that PetroChina has commenced to
pay all amounts under the PSCs and the Crude Oil Sales Contract into the MIE Offshore Account
(but in any event not before the date on which the Facility Agent has received the evidence
referred to in Clause 14.1(u)(i)), the Charge over Onshore Account shall, promptly at the
request of the Borrower and at the cost of the Borrower, be released, and the Borrower shall
be entitled to close the MIE Onshore Account.

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	6.	 	Debt Service Reserve Account

	6.1	 	The Borrower shall ensure that payments are made into the Debt Service Reserve Account 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.

	6.2	 	The Borrower may, on or prior to any repayment date that occurs under Clause 5.1 or Clause
6.5 or any Interest Payment Date, either pay an appropriate additional amount into the Debt
Service Reserve Account or pay the amounts required to be paid on such repayment date or
Interest Payment Date directly to the Facility Agent. Sums standing to the credit of the Debt
Service Reserve Account shall on each repayment date that occurs under Clause 5.1 or Clause
6.5 or Interest Payment Date, if necessary and to the extent not paid directly to the Facility
Agent, be distributed by the Facility Agent in payment to the Lenders (pro rata) of principal
and interest due but unpaid on such repayment date or, as the case may be, Interest Payment
Date.

	6.3	 	If the Borrower or any Security Provider fails to make any payment of any amount under the
Finance Documents on the due date for payment, the Facility Agent may (and the Borrower hereby
irrevocably authorises and instructs the Facility Agent to) transfer, without any prior notice
to or authority from the Borrower, from the Debt Service Reserve Account to the bank account
of the Facility Agent such sum in an amount not exceeding the amount due and payable but
unpaid by the Borrower or such Security Provider for the purpose of making such payment in
accordance with the Finance Documents. If any such transfer is made by the Facility Agent
pursuant to this paragraph 6.3, the Facility Agent shall notify the Borrower in writing
promptly after such transfer.

	6.4	 	If the amount standing to the credit of the Debt Service Reserve Account is at any time less
than the Debt Service Reserve Requirement, the Facility Agent may give a written notice to the
Borrower notifying it of such event (with reasonable details of the relevant shortfall). If
the Borrower fails to, within twenty (20) Business Days after the date of the written notice
of the Facility Agent, pay into the Debt Service Reserve Account such additional amounts as
are required to ensure that immediately after such payment the amount standing to the credit
of the Debt Service Reserve Account is at least equal to the Debt Service Reserve Requirement,
the Facility Agent may (and the Borrower hereby irrevocably authorises and instructs the
Facility Agent to) transfer, without any prior notice to or authority from the Borrower, from
the MIE Offshore Account to the Debt Service Reserve Account such sum in an amount not
exceeding the shortfall in the Debt Service Reserve Requirement. If any such transfer is made
by the Facility Agent pursuant to this paragraph 6.4, the Facility Agent shall notify the
Borrower in writing promptly after such transfer.

	6.5	 	In this Schedule 5, “Debt Service Reserve Requirement” means at any time the aggregate
amounts (as certified by the Facility Agent in accordance with

90

 

	 	 	Clause 12.7 from time to time and containing reasonable details of such calculation)
of scheduled principal and interest and other sums (including commitment fees) due and
payable by the Borrower under the Finance Documents up to and including the date falling
six months thereafter.
	 
	7.	 	Main Operating Account

	 	 	The Borrower shall procure that all payments to be made by it to any third party
shall be effected through the Main Operating Account, except that:

	 	(a)	 	the Borrower may make payments permitted under paragraphs 4.2(c)(i) to (vi)
of this Schedule 5 directly through the MIE Offshore Account;
	 
	 	(b)	 	the Borrower may transfer from the Main Operating Account to the US Bank
Account (as defined in Schedule 14) the amounts required to pay the remuneration of
senior management and the other staff employed by the office of the Borrower in the
United States, the legal and other professional fees, insurance premium and the other
administrative expenses incurred by the office of the Borrower in the United States
for the purpose of discharging such amounts;
	 
	 	(c)	 	during each calendar month, the Borrower may transfer from the Main Operating
Account to any of its bank accounts such other amount and may pay such other amount to
any third party through any such bank account, Provided that:

	 	(i)	 	the amount of each such transfer (other than any transfer
to the US Bank Account pursuant to paragraph (b) above) shall not exceed
US$300,000 (or its equivalent in any other currency);
	 
	 	(ii)	 	the aggregate amount of all such transfers (other than any
transfer to the US Bank Account pursuant to paragraph (b) above) during such
calendar month shall not exceed US$1,000,000 (or its equivalent in any other
currency); and
	 
	 	(iii)	 	before each such transfer (other than any transfer to the
US Bank Account pursuant to paragraph (b) above) is effected, the Borrower
shall have provided with the Facility Agent a copy of the relevant document
evidencing the purpose for which the funds to be transferred are to be used.

	8.	 	Account Mandates

	8.1	 	In the event of any conflict between any mandate or other account opening documents
entered into by the Borrower with the Facility Agent and/or the Onshore Account Bank and the
terms of this Schedule 5, the terms of this Schedule 5 shall prevail (but only to the extent
that the Facility Agent and/or Onshore Account Bank would not be in breach of any applicable
law as a result).

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	8.2	 	No right of set-off or other right given by applicable law or under any mandate
or other account opening documents entered into by the Borrower in relation to the Main
Operating Account shall be used for the benefit of the Finance Parties in relation to any
payments due and payable by the Borrower under the Finance Documents except during the
continuance of an Event of Default.

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Schedule 6

List of Existing Encumbrances of the Borrower

	1.	 	The Existing Security Documents to which the Borrower is a party.

	2.	 	Deposit of up to RMB47,000,000 with Shanghai Pudong Development Bank as guarantee for the
obligations of Guotai Oil Development Corporation.

93

 

Schedule 7

List of Existing Loans and Guarantees given by the Borrower

	1.	 	US Dollar loan provided to Far East Energy in the principal amount of
US$11,873,439.68.

	2.	 	US Dollar loan provided to the Corporate Shareholder in the principal amount of
US$216,650.85.

94

 

Schedule 8

List of Existing Loans and Guarantees given by the Corporate Shareholder

	1.	 	US Dollar loan provided to the Borrower in the principal amount of
US$49,999,992.25.

95

 

Schedule 9

List of Existing Indebtedness of the Borrower

	1.	 	The Existing Facility.

	2.	 	US Dollar loan provided by the Corporate Shareholder in the principal amount of
US$49,999,992.25.

96

 

Schedule 10

List of Existing Indebtedness of the Corporate Shareholder

	1.	 	US Dollar loan provided by the Borrower in the principal amount of US$216,650.85.

97

 

Schedule 11

Status Report of the Conditions Precedent

98

 

Schedule 12

Form of Withdrawal Certificate

To: [CITIC Ka Wah Bank Limited] / [China CITIC Bank Corporation Limited, Guangzhou
Branch]

From: MI Energy Corporation

Date: [       ]

Proposed withdrawal from Account (No: [       ])

	1.	 	We refer to the US$200,000,000 facility agreement dated [     ] 2009 (the “Facility Agreement”)
entered into between, among others,
ourselves as borrower, the lenders named
therein and CITIC Ka Wah Bank Limited as
facility agent. Terms defined in the
Facility Agreement have the same meaning
when used in this certificate.
	 
	2.	 	This is a withdrawal certificate referred to in paragraph 4.2[(a)]/[(b)] of Schedule 5 to the
Facility Agreement.
	 
	3.	 	We wish to make a withdrawal from our account (No: [     ]) with you on the following terms:

	 	(a)	 	Withdrawal date: [     ]
[Note: If any of the conditions in 5(a) to (c) below is
not satisfied, the requested withdrawal date cannot be earlier than 3 Business Days
after the date of this certificate];
	 
	 	(b)	 	Amount of withdrawal: [US$]/[RMB][     ];
	 
	 	(c)	 	[Purpose of withdrawal: [     ].]* / [The withdrawal is to be made for the purpose set out in paragraph
[4.2(c)[ ]] / [4.2(d)] of Schedule 5 to the Facility Agreement.]**

	4.	 	Our payment instructions are: [     ].
	 
	5.	 	[We confirm that, as at the date of this certificate:

	 	(a)	 	no Event of Default has occurred and is continuing;
	 
	 	(b)	 	the financial covenants set out in clause 14.3 of the Facility Agreement are
satisfied; and
	 
	 	(c)	 	the Debt Service Reserve Account is funded to the amount of the Debt Service
Reserve Requirement.]***

	 	 	OR

	 	 	[Note: If any of the above conditions is not satisfied, specify details of the relevant
condition(s)]

99

 

Yours faithfully,

For and on behalf of 

MI Energy Corporation

 

Name:

Note

	*	-	Applicable for any withdrawal from the MIE Onshore Account or the Debt Service Reserve
Account or the MIE Offshore Account if any of the conditions in 5(a) to 5(c) is not satisfied.

	**	-	Applicable for any withdrawal from the MIE Offshore Account or the MIE Onshore Account
if the conditions in 5(a) to 5(c) are satisfied.

	***	-	Not required for any withdrawal from the MIE Onshore Account or the MIE Offshore Account
if made to pay Global Oil Corporation.

100

 

Schedule 13

Part I

Insurances

	1.	 	The Borrower shall effect and maintain or cause to be effected and maintained for so long as
any sums remain owing under this Agreement and any other Finance Documents:

	 	(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 PSCs; and
	 
	 	(b)	 	insurances relating to the Oilfields 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 II of this Schedule 13 as varied
from time to time in accordance with paragraphs 3 and 6 of Part I of this Schedule 13
(the “Material Insurances”).

	2.	 	The Borrower shall procure that all Material Insurances shall be placed and maintained
with reputable Chinese insurers and that seventy per cent. (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 Facility Agent (such
approval not to be unreasonably withheld or delayed) (and, 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 Facility Agent (acting reasonably
and after consultation with the Insurance Adviser) prior to the relevant inception or
renewal.

	3.	 	With respect to the Material Insurances effected by it pursuant to paragraph 1(b) of Part I
of this Schedule 13, the Borrower shall maintain those endorsements listed in Part III of this
Schedule 13 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 Facility Agent 45
days prior to the replacement or renewal of any Material Insurances if it believes that any of
the endorsements listed in Part III of this Schedule 13 are not maintained as a matter of good
industry practice.

	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

101

 

	 	 	written notice thereof to the Facility Agent. No Adverse Variation to any Material
Insurance shall be effected or agreed by the Borrower unless the Facility 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 Facility Agent will not unreasonably withhold or delay such notification.

	5.	 	The Borrower shall procure that the Offshore Security Agent 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 Facility Agent (acting reasonably in consultation with the Insurance Adviser).

	6.	 	If at any time the Insurance Adviser confirms that any Material Insurance on the terms
complying with this Schedule 13 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).

	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 complying with
all of the requirements imposed on it under the Material Insurances.

	8.	 	Subject to paragraphs 9 and 10 of Part I of this Schedule 13, the Borrower shall have the
sole conduct of claims under the Material Insurances arising out of any loss but shall keep
the Facility Agent informed at regular intervals (and in any event at least once every six (6)
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 Facility Agent may reasonably
request.

	9.	 	The Borrower shall promptly supply to the Facility Agent details of any claim made under any
Material Insurance for an amount which is, net of the applicable deductible, in excess of
US$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 (12) months ending on the date of such
claim, exceeds US$3,000,000 (or its equivalent in other currencies).

102

 

	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 US$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).

103

 

Part II

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 Oilfields and 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
Facility Agent. 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 Facility Agent (acting in
consultation with the Insurance Adviser). Preferably
US$100,000 e.e.o. but US$50,000 in respect of transit
coverage.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower and, if required under the PSCs,
PetroChina, Global Oil Corporation and the JMC.
	 
	 	 	 	 
	Required Extensions:

	 	(a)
	 	Cost escalation clause/additional cost
	 
	 	 	 	 
	 

	 	(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
	 
	 	 	 	 
	 

	 	(i)
	 	debris removal, demolition costs and

104

 

	 	 	 	 	 
	 

	 	 	 	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.

	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	 	US$10,000,000 combined single limit, any one limit
occurrence.
	 
	 	 	 	 
	 	 	But US$1,000,000 e.e.o. in respect of Care, Custody
and Control.
	 
	 	 	 	 
	Maximum Deductible:	 	All except CCC (see below):
	 
	 	 	 	 
	 	 	As agreed by the Facility Agent (acting in
consultation with the Insurance Adviser). Preferably combined
single of less than US$500,000
	 
	 	 	 	 
	 	 	Care, Custody and Control cover:
	 
	 	 	 	 
	 	 	As agreed by the Facility Agent (acting in
consultation with the Insurance Adviser). Preferably
US$50,000 e.e.o.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower and, if required under the PSCs,
CNPC/PetroChina, Global Oil Corporation and the JMC.
	 
	 	 	 	 
	Main exclusions:	 	As agreed by the Majority 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

105

 

	 	 	 	 	 
	 

	 	 	 	changes to higher exposure

	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
not limited to:
	 
	 	 	 	 
	 

	 	(a)
	 	debt servicing and hedging costs (which includes interest, principal payments, commitment
fees, agency fees, other fees and all other amounts owed to the Finance 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 Facility Agent (acting in consultation with
the Insurance Advisor),
	 
	 	 	 	 
	 	 	in each case until the date on which all amounts
owing under the Finance Documents are discharged in
full.
	 
	 	 	 	 
	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 Facility Agent (acting in
consultation with the Insurance Advisor), but no more
than 60 days.
	 
	 	 	 	 
	Insured Parties:	 	The Borrower, Offshore Security Agent (on behalf of
the Finance Parties) to be named loss payee.

106

 

	 	 	 	 	 
	Required Extensions:

	 	(a)
	 	Delay or interruption caused by a risk of a type
indemnifiable under the All Risks (including Machinery Breakdown) section of the package policy which
occurs in the vicinity of the Oilfields and which hinders or prevents access to the Oilfields. 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 Borrower;
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 Facility 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.

	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.

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	Minimum limit of liability:	 	For any one occurrence US$15,000,000.
	 
	 	 	 	 
	Maximum Deductible:	 	Not to exceed US$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, CNPC/PetroChina, Global Oil Corporation and
the JMC.
	 
	 	 	 	 
	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.

	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 Global Oil Corporation 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 Global
Oil Corporation 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.

108

 

	6.	 	KEYMAN INSURANCES

	 	 	 	 	 
	 

	 	Insured Person:
	 	Mr. Zhang Rui Lin.
	 
	 	 	 	 
	 

	 	Minimum sum insured:
	 	RMB10,000,000.
	 
	 	 	 	 
	 

	 	Minimum Term:
	 	5 years.
	 
	 	 	 	 
	 

	 	Loss Payee:
	 	Offshore Security Agent (on behalf of the Finance Parties).

	7.	 	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 Part I of this Schedule 13. Insurances are to be purchased in the name of the
Borrower, with the Finance Parties being named as co-insureds if the Facility Agent so
requires, and for such sums insured as the Borrower and the Facility Agent shall agree or,
failing that, as a prudent operator of the Borrower’s business (acting in accordance with
good insurance practices) would purchase.

109

 

Part III

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 Corporation.

	 	 	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 financing to the Borrower pursuant to a US$200,000,000 facility
agreement dated [     ] 2009. 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.

	 	 	Facility Agent means CITIC Ka Wah Bank Limited acting in that capacity for the Finance
Parties and includes its successors from time to time in that capacity.

	 	 	Offshore Security Agent means CITIC Ka Wah Bank Limited acting in that capacity for the
Finance 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

	 	 	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.

110

 

	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.]1

	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 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

 

			
	1	 	To be included in endorsements relating to business interruption insurance and
keyman insurance only.

111

 

	 	 	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.

	 	(a)	 	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.
	 
	 	(b)	 	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.

112

 

	 	(c)	 	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.]2

	12.	 	(a)     The Insurers’ right to repudiate, avoid, rescind or terminate this contract or to
treat the contract 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 US 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 Facility Agent for this purpose by
reference to its spot rate of exchange in Hong Kong for the purchase of the currency in
which the loss has been suffered by the Insured with US 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 Facility Agent (in consultation with the Borrower) reasonably determines.

	 	 	The Relevant Date is:

	 	(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;

 

			
	2	 	To be included in endorsements relating to business interruption insurance and
keyman insurance only.

113

 

	 	(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 Finance 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 endorsement 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:

	 	(i)	 	(unless an Event of Default is continuing and if the sums
recoverable do not exceed RMB10,000,000 (or the equivalent in any other
currency)) to the Borrower;
	 
	 	(ii)	 	(if the sums recoverable exceed RMB10,000,000 (or the
equivalent in any other currency)) to the Offshore Security Agent or such
other party as the Offshore Security Agent may specify;

	 	(c)	 	if the sum recoverable is in respect of Keyman Insurance sums shall be paid to
the Offshore Security Agent or such other party as the Offshore Security Agent may
specify;
	 
	 	(d)	 	to the extent that sub-paragraph (a) to (c) 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 of the following bank accounts of the Borrower in accordance with the
instructions of the Facility Agent:

	 	 	 	 	 
	 
	 	MIE Offshore Account:	 	 
	 
	 	Bank name:	 	CITIC Ka Wah Bank Limited
	 
	 	Account name:	 	MI Energy Corp USD Collection Acc
	 
	 	Account number:	 	 
	 
	 	 	 	 
	 
	 	Daan USD:	 	 
	 
	 	Bank Name:	 	China CITIC Bank Corporation Limited, Beijing Anzhen Branch
	 
	 	Account Name:	 	MI  (only Chinese translation of ‘MI
Energy Corporation’, but not MIE (China))
	 
	 	Account number:	 	_

114

 

	 	 	 	 	 
	 

	 	Daan RMB:	 	 
	 

	 	Bank Name:
	 	Agricultural Bank of China, Songyuan Branch
	 

	 	Account Name:
	 	MI  (only Chinese translation of ‘MI
Energy Corporation’, but not MIE (China))
	 

	 	Account number:	 	 
	 
	 	 	 	 
	 

	 	Moliqing USD:	 	 
	 

	 	Bank Name:
	 	China CITIC Bank Corporation Limited, Beijing Anzhen Branch
	 

	 	Account Name:
	 	MI  (only Chinese translation of ‘MI
Energy Corporation’, but not MIE (China))
	 

	 	Account number:	 	 
	 
	 	 	 	 
	 

	 	Moliqing RMB:	 	 
	 

	 	Bank Name:
	 	Agricultural Bank of China, Songyuan Branch
	 

	 	Account Name:
	 	MI  (only Chinese translation of ‘MI
Energy Corporation’, but not MIE (China))
	 

	 	Account number:	 	 
	 
	 	 	 	 
	 

	 	Miao3 USD:	 	 
	 

	 	Bank Name:
	 	China CITIC Bank Corporation Limited, Beijing Anzhen Branch
	 

	 	Account Name:
	 	MI
 (only Chinese
translation of ‘MI
Energy Corporation’, but not MIE (China))
	 

	 	Account number:	 	 
	 
	 	 	 	 
	 

	 	Miao3 RMB:	 	 
	 

	 	Bank Name:
	 	Agricultural Bank of China, Songyuan Branch
	 

	 	Account Name:
	 	MI  (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 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

115

 

	 	 	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 Facility Agent.

	16.	 	The Insurers shall give to the Facility 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.
	 
	 	 	 	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 Finance 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 Offshore Security Agent nor the Facility Agent is an agent or trustee of any
party other than the Finance Parties or, as the case may be, the Finance Parties for

116

 

	 	 	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 5 p.m. 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 Offshore Security Agent for all notices under or
in connection with this policy are those notified from time to time by the
Facility Agent for this purpose to the Insurer. The initial address and fax number
of the Offshore Security Agent are as follows:
	 
	 	 	 	The Offshore Security Agent: CITIC Ka Wah Bank Limited

	 	 	 	 	 
	 

	 	Address:
	 	9th Floor, Lippo Centre, Tower One
	 

	 	 	 	89 Queensway, Hong Kong
	 

	 	Fax No:
	 	(852) 3603 4398 
	 

	 	Attention:
	 	Ms. Janice Sze / Ms. Windy Lau

	20.	 	Notwithstanding any other provision of this endorsement, this endorsement 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 endorsement (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 endorsement is outstanding and to keep the Borrower and the
Facility Agent informed as to the identity of that agent;
	 
	 	(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 Offshore Security Agent is entitled to appoint such person by notice to the
relevant Insurer.

	21.	 	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.

117

 

	22.	 	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 provision 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.

118

 

Schedule 14

The Existing Accounts

	 	(a)	 	the MIE Offshore Account;

	 	(b)	 	the Debt Service Reserve Account;

	 	(c)	 	the MIE Onshore Account;

	 	(d)	 	the Main Operating Account;

	 	(e)	 	the US Dollar bank account opened by the Borrower with The Hongkong and Shanghai Banking
Corporation Limited, Causeway Bay Branch (No.:
      ) (the “HSBC Bank Account”);

	 	(f)	 	the US Dollar bank account opened by the Borrower with Woodforest National Bank, Houston
(No.:      ) (the “US Bank Account”);

	 	(g)	 	the US Dollar bank account opened by the Borrower with Standard Bank plc, London (No.:      );

	 	(h)	 	the US Dollar bank account opened by the Borrower with Standard Bank plc, London (No.:      );

	 	(i)	 	the US Dollar bank account opened by the Borrower with Standard Bank plc, London (No.:      );

	 	(j)	 	the US Dollar bank account opened by the Borrower with The Hongkong and Shanghai Banking
Corporation Limited, Causeway Branch (No.:      );

	 	(k)	 	the RMB bank account opened by the Borrower with Shanghai Pudong Development Bank, Dalian
Branch (No.:       );

	 	(l)	 	the RMB bank account opened by the Borrower with Shanghai Pudong Development Bank, Beijing
Branch (No.:       );

	 	(m)	 	the RMB bank account opened by the Borrower with China CITIC Bank Corporation Limited,
Beijing Anzhen Branch (No.:     );

	 	(n)	 	the US Dollar bank account opened by the Borrower with China CITIC Bank Corporation
Limited, Beijing Anzhen Branch (No.:      );

	 	(o)	 	the Hong Kong Dollar bank account opened by the Borrower with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch (No.:      );

119

 

	 	(p)	 	the RMB bank account opened by the Borrower with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch (No.:      );

	 	(q)	 	the US Dollar bank account opened by the Borrower with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch (No.:      );

	 	(r)	 	the RMB bank account opened by the Borrower with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch (No.:      );

	 	(s)	 	the US Dollar bank account opened by the Borrower with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch (No.:      );

	 	(t)	 	the RMB bank account opened by the Borrower with China CITIC Bank
Corporation Limited, Beijing Anzhen Branch (No.:      );

	 	(u)	 	the RMB bank account opened by the Borrower with Agricultural Bank of
China, Songyuan Branch (No.:      ).

The Borrower hereby gives notice to the Facility Agent that it intends to open two RMB bank
accounts with Agricultural Bank of China, Songyuan Branch.

120

 

	 	 	 	 	 
	THE BORROWER
	 	 	 	 
	 
	 	 	 	 
	SIGNED for and on behalf of 
MI ENERGY CORPORATION

by Forrest Dietrich

	 	)

)

)
	 	

/s/ Forrest Dietrich
	 
	 	 	 	 
	THE LENDERS
	 	 	 	 
	 
	 	 	 	 
	SIGNED for and on behalf of 
CITIC KA WAH BANK
LIMITED

by Sunny Ng 
      Stephen Ching

	 	)

)

)

)
	 	

/s/ Sunny Ng

/s/ Stephen Ching
	 
	 	 	 	 

	SIGNED
for and on behalf of 
CITIC KA WAH BANK (CHINA)

LIMITED, BEIJING BRANCH

by Eric Jor
      Frederick Wan

	 	)

)

)

)
	 	

/s/
/s/
	 
	 	 	 	 
	SIGNED
for and on behalf of 
CHINA CITIC BANK CORPORATION

LIMITED, GUANGZHOU BRANCH

by

	 	)

)

)

)
	 	

/s/ 

121

 

	 	 	 	 	 
	THE FACILITY AGENT
	 	 	 	 
	 
	 	 	 	 
	SIGNED for and on behalf of 
CITIC KA WAH BANK
LIMITED

by Sunny Ng 
      Stephen Ching

	 	)

)

)

)
	 	

/s/ Sunny Ng

/s/ Stephen Ching
	 
	 	 	 	 
	THE
ONSHORE SECURITY AGENT
	 	 	 	 
	 
	 	 	 	 
	SIGNED
for and on behalf of 
CHINA CITIC BANK CORPORATION

LIMITED, GUANGZHOU BRANCH

by

	 	)

)

)

)
	 	

/s/ 
	 
	 	 	 	 
	THE OFFSHORE SECURITY AGENT
	 	 	 	 
	 
	 	 	 	 
	SIGNED for and on behalf of 
CITIC KA WAH BANK
LIMITED

by Sunny Ng 
      Stephen Ching

	 	)

)

)

)
	 	

/s/ Sunny Ng

/s/ Stephen Ching

122

 

The Appendix

Form of Notice of Drawing

	From:   MI Energy Corporation

To:       CITIC Ka Wah Bank Limited

	               
                  
        200•

Dear Sirs,

US$200,000,000 Term Loan and Revolving Credit Facility:

Facility Agreement dated [      ] 2009

We refer to the above Facility Agreement, and hereby give notice that we wish to draw [a
Tranche A Advance] / [a Tranche B Advance] / [a Tranche C Advance] under the [Tranche A Facility] /
[Tranche B Facility] / [Tranche C Facility] on                                          200• in the amount of
US$                                        .

The proceeds of such Advance are to be used exclusively for the purposes specified in the Facility
Agreement.

The proceeds of such Advance should be disbursed as follows:

[Note: To insert amount and account details]

	[(i)	 	 In relation to a portion of the proceeds of such Advance in
the amount of US$[Note: This
amount shall not exceed US$122,000,000] which are required for discharging the principal,
accrued interest and other fees and expenses under the Existing Facility:

	 	 	[Note: To insert details of bank account of Standard bank]

	(ii)	 	In relation to a portion of the proceeds of such Advance in an amount of US$ [      ] which
are required for paying the arrangement fee referred to in clause 11.3 of the Facility
Agreement:

	 	 	[Note: To insert details of bank account of the
Facility Agent/]*

The first Interest Period in relation to the Advance shall be [ 
    ] month(s) (subject as
provided in clause [7.2 / 7.4] of the Facility Agreement).

We
confirm that:

	(a)	 	the representations and warranties set out in clause 13.1 of the Facility Agreement,
repeated with reference to the facts and circumstances subsisting at the date of this

 

			
	*	 	Applicable to Tranche A Advance only.

l-1

 

	 	 	notice, remain true and correct in all material respects;

	(b)	 	no Event of Default or Potential Event of Default has occurred which remains unwaived
or unremedied or would result from the making of such Advance;

	[(c)	 	 the proceeds of such Advance are to be utilised for such purposes and in such amount as
permitted under our latest annual budgeted plan of capital expenditure in respect of the [     ]
Oilfield Project as approved by the JMC of such Oilfield
Project.].‡‡‡

Terms defined in the Facility Agreement have the same meanings when used in this notice.

For and on behalf of

MI Energy Corporation

 

 

			
	‡‡‡
	 	Applicable to Tranche B Advance only

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