EXECUTIVE INCENTIVE ROYALTY AGREEMENT
THIS EXECUTIVE INCENTIVE ROYALTY
AGREEMENT (this “Agreement”) is
entered effective as of the 16th day of March, 2010, between and among FX
ENERGY, INC., a Nevada corporation (the “Company”); the
several executive employees of the Company identified on Schedule I hereto and
who have executed and delivered to the Company counterpart signature pages to
this Agreement (each, a “Participant,” and
together, the “Participants”); and
FX Royalty, LLC, a Utah limited liability company duly constituted and appointed
by the Participants to hold and administer the interests granted to the
Participants pursuant to this Agreement (“Participant
Designee”), on the following:
Premises
The Company desires to maximize the
economic incentive to the Participants to encourage the highest potential
drilling, accelerate and increase production and reserves, maximize the
Company’s profitability, and generally enhance the Company’s ability to
incentivize and retain valuable employees upon whom, in large measure, the
continued profitability of the Company depends. Accomplishing these
goals, particularly through exploration on a limited budget, requires excellent
exploration concepts, well-executed land acquisition strategies, creative
financing, collaborative industry relationships, careful drilling, and prudent
production. The grants set forth in this Agreement provide benefits
only from production to provide an economic incentive for bringing ▇▇▇▇▇ online
as quickly as practicable. These grants provide Participants having
managerial, professional, or other key decision-making responsibilities with an
opportunity to participate in the results of successful acquisition,
exploration, and production.
Agreement
NOW THEREFORE, UPON THESE PREMISES,
which are incorporated herein by reference, and for and in consideration of the
mutual promises and covenants set forth herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, it is
hereby agreed as follows:
Article
I
Definitions;
Interpretation
1.01 Definitions. The
following words and phrases shall have the meanings set forth below unless the
context clearly indicates otherwise.
“Arbitration Decision”
shall mean the decision of the arbitrator or arbitrators resulting from the
dispute resolution process set forth in Article IV.
“Cause” has the
meaning set forth in the particular employee’s written employment agreement with
the Company.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Company” means FX
Energy, Inc., together with its subsidiaries, and any successor
thereto.
“Conveyed Royalty
Interest” shall have the meaning set forth in
Section 2.01.
“Disabled” or “Disability” shall
mean the inability of a person to engage in any substantial, gainful activity or
inability to substantially perform his essential job functions, with or without
reasonable accommodation, as the result of any medically determinable physical
or mental impairment (as determined by a qualified physician reasonably
acceptable to the Company) that is expected to result in death within 24 months
or that is expected to last for a continuous period of not less than 12
months.
“Economic Value” shall
mean, respecting the Conveyed Royalty Interest and respecting the Company’s
retained interest in the same property, the present value, discounted at 10%, of
the estimated future cash flows from estimated quantities of crude oil and
natural gas, based on costs as of the end of the last completed fiscal year and
prices equivalent to the 12-month average for the last completed fiscal year,
from proved and probable reserves contained in such Prospect Areas, as
determined by probabilistic methods in which the full range of values that could
reasonably occur for each unknown parameter from the geoscience and engineering
data is used to generate a full range of possible outcomes and their associated
probabilities of occurrence, in accordance with the most recent adopted version
of the Petroleum Resources Management System developed by industry
organizations, including the Society of Petroleum Engineers, the World Petroleum
Council, the American Association of Petroleum Geologists, and the Society of
Petroleum Evaluation Engineers, and the requirements of SEC Regulation S-X,
Rule 4-10(a)(18), (19), and (22).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Participant” means a
person named on Schedule I to this Agreement.
“Participant Designee”
means FX Royalty, LLC, a Utah limited liability company duly constituted and
appointed by the Participants to hold and administer the interests granted to
the Participants pursuant to this Agreement.
“Prospect Area” means
an oil or gas exploration area deemed by the Company, in its sole discretion, to
warrant treatment under the Agreement as a separate incentive pool for
Participants, together with the Company’s legal rights to explore for, develop,
and produce oil or gas therefrom, whether by lease, license, usufruct,
concession, farm-in, joint operation or participation, or other interests or
rights. A Prospect Area may, for convenience, include one or more
whole leases, usufructs, or other legal parcels. The acquisition of
additional legal rights that increase the Company’s interest in a particular
previously designated Prospect Area may, at the discretion of the Company at the
time of such acquisition, be either added to the existing Prospect Area or
designated as a separate Prospect Area. A Prospect Area may also
consist of, at the discretion of the Company, acquired interests in prospects,
producing properties, or other oil and gas projects or
opportunities. The Company’s designation of a Prospect Area shall be
conclusive and shall be subject to modification only by the Company, in its sole
and absolute discretion, provided that no such
modification shall alter, impair, or diminish any Conveyed Royalty Interest of
any Participant.
“Royalty Interest”
means an overriding royalty interest or an economic interest equivalent to an
overriding royalty interest in all oil and gas produced at the surface, free of
expenses of operations or production, for so long as the Company has an interest
in such well. Each such Royalty Interest or equivalent shall be
proportionately reduced in proportion to the Company’s Working Interest so that,
for example, a 3% royalty or equivalent interest in a well in which the Company
has a 50% Working Interest shall be reduced to a 1-1/2% royalty or equivalent
interest.
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“Working Interest”
means an interest that entitles the owner of the interest to explore, develop,
and operate the property; to bear the costs of exploration, development, and
operation; and to share in the production or the proceeds
therefrom. A royalty interest that entitles the holder to an interest
in oil and gas produced, free of expenses of operations or production, is not a
Working Interest.
1.02 Interpretation. Section
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. Except
when the context clearly requires to the contrary: (a) all
references in this Agreement to designated “Sections” are to the
designated Sections and other subdivisions of this Agreement; (b) instances
of gender or entity-specific usage (e.g., “his,” “her,” “its,” or “individual”)
shall not be interpreted to preclude the application of any provision of this
Agreement to any individual or entity; (c) the word “or” shall not be
applied in its exclusive sense; (d) “including” shall mean that the items
listed are illustrative and not exclusive or limiting; (e) references to
laws, regulations, and other governmental rules (collectively, “rules”), as well as
to contracts, agreements, and other instruments (collectively, “instruments”), shall
mean such rules and instruments as in effect at the time of determination
(taking into account any amendments thereto effective at such time without
regard to whether such amendments were enacted or adopted after the Effective
Date) and shall include all successor rules and instruments thereto;
(f) references to “$,” “cash,” or “dollars” shall mean the lawful currency
of the United States; (g) references to “federal” shall be to laws,
agencies, or other attributes of the United States (and not to any state or
locality thereof); (h) the meaning of the terms “domestic” and “foreign”
shall be determined by reference to the United States; (i) references to
“days” shall mean calendar days; references to “business days” shall mean all
days other than Saturdays, Sundays, and days that are legal holidays in the
state of Utah; (j) references to monthly or annual anniversaries shall be
to the actual calendar months or years at issue (taking into account the actual
number of days in any such month or year); (k) days, business days, and
times of day shall be determined by reference to local time in Utah;
(l) the English language version of this Agreement shall govern all
questions of interpretation relating to this Agreement, notwithstanding that
this Agreement may have been translated into, and executed in, other languages;
(m) whenever in this Agreement a person or group is permitted or required
to make a decision in its “discretion” or under a grant of similar authority or
latitude, such person or group shall be entitled to consider only such interests
and factors as it deems appropriate, in its absolute discretion; and
(n) whenever in this Agreement a person or group is permitted or required
to make a decision in its “good faith” or under another express standard, the
person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or other applicable
law.
Article
II
Grant
of Royalty Interest
2.01 Grant to the Participant
Designee for the Benefit of the Participants. The Company
hereby conveys and grants to the Participant Designee, for the benefit of the
Participants, a 3% Royalty Interest, proportionately reduced to the extent the
Company’s Working Interest is less than 8/8ths, in each Prospect Area in which
the Company owns, as of the date of adoption of the Agreement, a Working
Interest (a “Conveyed
Royalty Interest”). Further, upon the start of drilling on any
new well, the Conveyed Royalty Interest as to such well shall be reduced to less
than 3% in proportion as the Company’s Working Interest in such new well at that
time is less than 8/8ths. There shall be excluded from the Conveyed
Royalty Interest any ▇▇▇▇▇ that have proved or probable reserves in the
Company’s reserve report as of December 31, 2009, whether or not such ▇▇▇▇▇ are
then producing.
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2.02 Participant Authorization of
Participant Designee. Each Participant hereby constitutes and
appoints the Participant Designee as such Participant’s duly constituted agent
and attorney-in-fact to take all action, provide all notices, execute all
documents, elect not to act, or to do each and every thing that the Participant
is obligated or permitted to do under this Agreement, in the name, place, and
stead of the Participant or the Participant Designee, as it shall
determine. The Company shall be entitled to rely on this Agreement as
the full and unconditional authorization and shall not be required at any time
to obtain any further or confirmatory evidence of such
authorization. The Participant Designee shall be the grantee of the
Conveyed Royalty Interest for the benefit of the Participants, and the
Participant Designee shall have full power and authority, on behalf of the
Participants, to execute and deliver any full or partial reconveyance required
or contemplated herein.
2.03 Allocation of the Conveyed
Royalty Interest. The Conveyed Royalty Interest shall be
allocated by the Participant Designee among the Participants in the percentages
set forth opposite their respective names on Schedule I. Such
allocation has been approved by the Compensation Committee and the Board of
Directors of the Company.
2.04 Company’s Reserved Rights
and Interests. The Conveyed Royalty Interest granted and
conveyed hereunder shall constitute a real property interest in the mineral
properties of the Company. At the discretion of the Participant
Designee, such real property interests may be, but shall not be required to be,
recorded in any public office for the recordation of conveyances of and
encumbrances on interests in real property. The Company shall always
be entitled to, at any time, dispose of the Company’s retained interest in any
and all Prospect Areas, including all ▇▇▇▇▇, and to determine, in its sole and
absolute discretion, the time, price, terms, and conditions of such
disposal. The Company retains the unconditional right at any time, in
its sole discretion, to begin, suspend, delay, resume, shut-in, abandon,
reschedule, or otherwise alter any exploration, development, production,
production enhancement, or any other act or failure to act respecting any
Prospect Area, whether or not a Conveyed Royalty Interest has been conveyed
respecting such Prospect Area.
2.05 Transfer or Farm Out of
Interest. If the Company sells, transfers, farms out, or
otherwise disposes of all or any portion of its retained interest in any
Prospect Area on which it has previously granted a Conveyed Royalty Interest,
the Company shall alone determine the price, terms, conditions, time, and all
other matters respecting the transaction. If the Company elects, in
its sole discretion, to include the Conveyed Royalty Interest, it shall have the
right to do so. In such case, all consideration received shall be
divided between the Company and the Participant Designee in proportion to their
respective Economic Values. Upon payment, the Participant Designee
shall deliver appropriate documents of conveyance or reconveyance.
2.06 Company Dissolution,
Liquidation, and Winding Up. The grants and conveyances
hereunder shall not affect in any way the right or power of the Company to make
or authorize any or all adjustments, recapitalization, or other changes in the
Company’s capital structure or its business. The grants and
conveyances hereunder shall not be affected should the Company be dissolved,
liquidated, or wound up, either voluntarily or involuntarily pursuant to
judicial proceedings or otherwise, including proceedings under the Bankruptcy
Code (Title 11 of the United States Code) or other receivership
law.
2.07 No Limitation of
Rights. Nothing in this Agreement shall be construed
to:
(a) limit
in any way the right of the Company to terminate a Participant’s employment with
the Company at any time;
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(b) evidence
any agreement or understanding, express or implied, that the Company will employ
a Participant in any particular capacity or for any particular remuneration;
or
(c) require
or obligate the Company to undertake, continue, or not suspend or terminate any
oil or gas exploration, development, or production activities.
Article
III
Continuation,
Limitation, and Termination of Conveyed Royalty Interest
3.01 Full
Participation. The Company shall pay, or shall direct the
purchaser of its produced and sold hydrocarbons to pay, to the Participant
Designee, the full amount due from time to time with respect to the Conveyed
Royalty Interest, except as expressly limited or terminated pursuant to the
provisions of this Article III.
3.02 Limitation of Payments
Allocated to Individual Participants. If:
(a) a
Participant with more than 15 full years of employment with the Company
terminates his employment with the Company voluntarily after reaching age
65;
(b) a
Participant with less than 15 full years of employment with the Company dies
before reaching age 65;
(c) a
Participant with less than 15 full years of employment with the Company becomes
Disabled before reaching age 65; or
(d) the
Company’s employment of a Participant is terminated by the Company without Cause
prior to the Participant’s 15 full years of employment with the Company before
reaching age 65,
then the
participant will be deemed to have terminated employment (for purposes of this
paragraph) at the actual date of termination in case (a) above, or at the date
on which the participant reaches or would have reached age 65 and 15 full years
of employment in cases (b), (c) and (d) above. In all such cases, all
rights of the Participant Designee allocated to a particular Participant as set
forth on Schedule I shall be limited to participating in production from all
▇▇▇▇▇ commenced on or before the date of deemed termination, and all ▇▇▇▇▇
drilled thereafter into fields penetrated by any well commenced on or before the
date of such Termination, death, or Disability. The Company shall
promptly notify the Participant Designee of any limitation of payments allocated
to an individual Participant pursuant to this paragraph, specifying the basis
for such limitation of payments, and shall send a copy of such notice to such
Participant. A leave of absence for a period of up to 24 consecutive
months approved in writing by the Company shall not constitute a termination of
employment for purposes of computing years of service with the
Company. At the request of the Company, the Participant Designee
shall execute and deliver to the Company such confirmatory instruments or
reconveyances as the Company may reasonably request to evidence limitation of
payments allocated to an individual Participant in accordance with the
foregoing.
3.03 Termination of Payments
Allocated to Individual Participants. All rights of the
Participant Designee allocated to a particular Participant as set forth on
Schedule I shall be terminated if: (a) a Participant with less than 15 full
years of employment with the Company terminates his employment with the Company
voluntarily before reaching age 65, unless such termination is due to the
Participant’s death or Disability during his employment; or (b) the
Company’s employment of a Participant is terminated by the Company for Cause,
provided, however, that such
termination under either of the foregoing clauses (a) or (b) shall not alter any
obligation of the Company to pay the Participant Designee respecting any
production prior to the date of termination that has been allocated to such
Participant. Such forfeited payment and interest shall be reconveyed
by the Participant Designee to the Company. The Company shall
promptly notify the Participant Designee of any termination of payments
allocated to an individual Participant pursuant to this paragraph, specifying
the basis for such termination of payments, and shall send a copy of such notice
to such Participant. A leave of absence for a period of up to 24
consecutive months approved in writing by the Company shall not constitute a
termination of employment for purposes of computing years of service with the
Company. At the request of the Company, the Participant Designee
shall execute and deliver to the Company such confirmatory instruments or
reconveyances as the Company may reasonably request to evidence termination of
payments allocated to an individual Participant in accordance with the
foregoing.
3.04 Timing of
Payments. Payments to Participant Designee under this
Agreement shall be made monthly.
3.05 Limitations on
Transfers. Participant Designee shall have no power or right
to grant any right, title, or interest in any Conveyed Royalty Interest, either
directly through a purported assignment of any portion of the Conveyed Royalty
Interest held by the Participant Designee; indirectly through granting an
ownership, profits, distribution, revenue, or other interest in Participant
Designee; or through any other method or means. Further, the charter
documents of the Participant Designee shall include express prohibitions on the
transfer of any right, title, or interest, directly or indirectly in the
Participant Designee, to any person other than the Participants in the
percentages set forth on Schedule I, as adjusted as provided in this Agreement,
except for
transfers:
(a) upon
death pursuant to:
(i) a
will;
(ii) the
laws of descent and distribution; or
(iii) a
beneficiary designation form approved by the Participant Designee and executed
by a Participant that designates the persons to receive, upon the Participant’s
death, the right to payments under this Agreement that the Participant had upon
his death; or
(b) pursuant
to a qualified domestic relations order, as defined under Section 414(p) of
the Code, relating to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child, or other dependent of
the Participant.
3.06 Manner of
Payments. The Company shall pay all amounts due pursuant to
this Agreement in cash in the currency received by the Company, or if requested
by the Participant Designee in U.S. dollars with the cost of exchange for the
account of the Participant Designee.
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3.07 Continuation of Payments;
Beneficiaries. The Company shall continue payments due
pursuant to this Agreement to the Participant Designee on behalf of each
Participant notwithstanding such Participant’s death or Disability, for as long
as any such Conveyed Royalty Interest continues, unless such Conveyed Royalty
Interest is terminated or forfeited in accordance with the terms of this
Agreement.
3.08 Payments due Minors or
Incapacitated Persons. The Company shall continue payments to
the Participant Designee notwithstanding the fact that all or any portion of
such payment for the benefit of any Participant is to a beneficiary who is a
minor or is incapacitated by reason of physical or mental disability, whether or
not legally adjudicated as such. The Company shall have no
responsibility to investigate the age or physical or mental condition of a
Participant or his beneficiary.
3.09 Participant’s Responsibility
for Taxes. Each Participant shall be solely liable for the
payment of any taxes imposed or arising out of the payment of amounts under this
Agreement, except for amounts levied or assessed against and to be borne by law
by the Company. The Participant Designee and each Participant shall
indemnify and hold the Company harmless from and against any taxes, additions
for late payment, interest, penalties, and other expenses that may be assessed
against such Participant on any payment or other activities under this Agreement
unless any such tax, addition for late payment, interest, penalty, or other
expense shall arise out of or be caused by the gross negligence, bad faith, or
willful misconduct of the Company (each as finally determined by a court of
competent jurisdiction or as agreed to by the parties). To the extent
that the Company becomes liable for any of the foregoing, the Company may, but
shall not be obligated to, satisfy such liability from any amount due the
Participant Designee for any Conveyed Royalty Interest allocated to such
Participant hereunder, and each Participant shall be deemed to have granted to
the Company a perfected, first-priority security interest in such payments
pursuant to this Agreement to secure payment of such taxes. No
payment to the Participant Designee for Conveyed Royalty Interest allocated to
any Participant will be made to such Participant unless the Company is supplied
with an original, signed Form W-9 or its equivalent before such
payment. The Participant Designee shall require, and the Participants
shall cause the Participant Designee to require, as a condition to any payment
to any recipient who is not an employee of the Company at the time of payment,
that such person acknowledge in writing his sole responsibility for the payment
of all amounts required to satisfy all federal, state, and local withholding
taxes applicable to such recipient with respect to such payments under this
Agreement.
Article
IV
Dispute
Resolution
4.01 Mediation and
Arbitration. In the event of any
dispute about the amount of the Economic Value pursuant to this Agreement, the
parties shall resolve such dispute in accordance with the provisions of this
Article IV. Within 14 days following notice by one party to the other
of the existence of a dispute, the parties shall submit their dispute to at
least four hours of mediation with a mutually acceptable mediator. In
the event the parties cannot agree on a mediator or resolve the dispute within
30 calendar days after notice of the existence of a dispute, the parties shall
submit the dispute to binding arbitration.
4.02 Arbitration
Procedures. All proceedings pursuant to this Article IV
shall be conducted in accordance with the laws relating to mediation,
arbitration, or alternative dispute resolution of the state of Utah, as modified
by the terms of this Article IV, supplemented to the extent agreed to by
the parties by the arbitration procedures published by United States Arbitration
& Mediation, without, however, being required to submit such matter to the
jurisdiction of United States Arbitration & Mediation, unless also agreed to
by the parties.
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4.03 Qualifications of
Arbitrators. All arbitrators selected shall be independent:
(a) professional petroleum reserve engineers with more than 10 years of
international experience evaluating petroleum reserves using probabilistic
methods; (b) certified public accountants with more than 10 years of
experience with a firm of certified public accountants with national standing in
disclosure about oil and gas producing activities in financial statements
prepared in accordance with generally accepted accounting principles in the
United States; (c) attorneys with more than 10 years of experience in
preparing reports for companies subject to the periodic reporting requirements
of the Exchange Act that are subject to the requirements of Securities Act
Industry Guide 2, Disclosure of Oil and Gas Operations; or (d) other third
parties mutually acceptable to the parties who have knowledge and experience in
the evaluation of oil and gas interests. In the event of the failure,
refusal, or inability of any arbitrator to act, a new arbitrator shall be
appointed in his stead. Such appointment shall be made in the same
manner as provided for the appointment of such arbitrator so failing, refusing,
or being unable to act.
4.04 Single
Arbitrator. If the amount of the controversy is less than
$250,000, as claimed by the parties demanding arbitration or otherwise on the
agreement of all parties, the matter may be resolved by a single arbitrator as
provided in this section. The parties demanding arbitration shall
serve on all other parties, in the manner provided in this Agreement for giving
notices, a written demand for arbitration, stating the specific facts upon which
arbitration is demanded. Within 30 days after service of the demand
for arbitration, the parties upon whom the demand is made shall serve the
demanding parties a list of five potential arbitrators. Within 10
days after service of the list of potential arbitrators, the parties demanding
arbitration shall select an arbitrator and two alternate
arbitrators. Within 10 days after the parties demanding arbitration
have selected an arbitrator and two alternates, the parties to the arbitration,
by joint communication, shall contact the selected arbitrator to determine if he
is willing, able, and available to act as arbitrator. If the selected
arbitrator, for any reason, is unwilling, unable, or unavailable to act, then
the parties, again by joint communication, shall contact the first and, if
necessary, the second alternate to determine if he is willing, able, and
available to act as arbitrator. If none of the three chosen
individuals is willing, able, or available to act as arbitrator, then the
selection process set forth above shall be repeated until an arbitrator has been
appointed.
4.05 Multiple
Arbitrators. If the amount in controversy as claimed in the
written statement of the notice submitting the matter to arbitration equals or
exceeds $250,000 or by agreement of the parties to such arbitration, the matter
shall be determined by a panel of three arbitrators. The parties
notifying the other parties of the demand for arbitration shall include with
such demand the name of the arbitrator selected by such
parties. Within 30 days after notice of the demand for arbitration,
the parties upon whom the demand is made shall notify the demanding parties of
the arbitrator selected by such parties upon whom the demand is
made. If the second arbitrator is not so designated within or by the
time specified, then the appointment of such second arbitrator shall be made in
the same manner as is provided below for the appointment of a third arbitrator
in a case when the first and second arbitrator and the parties themselves are
unable to agree upon the third arbitrator. The first and second
arbitrator so designated or appointed shall meet within 20 days after the second
arbitrator is appointed and if, within 30 days after the second arbitrator is
appointed, the first and second arbitrator do not agree upon an Arbitration
Decision, they shall themselves appoint a third arbitrator, and in the event of
their being unable to agree upon such appointment within 10 days after the above
time, the third arbitrator shall be selected by the parties themselves if they
can agree thereon within a further period of 15 days. If the parties
do not so agree, then both parties by joint communication, or failing such joint
communication within seven days either party, may request such appointment by
the chief judge of the court having jurisdiction in the premises in the state
whose laws govern the interpretation and enforcement of this
Agreement.
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4.06 The
Proceedings. The arbitration shall be conducted pursuant to
such rules and procedures as the arbitrators may specify that are consistent
with the provisions of Section 4.02. The arbitration hearing
shall be held no later than 120 days after the appointment of the last
arbitrator, unless extended by the mutual agreement of all parties to the
arbitration. The rules of evidence shall be observed at the
arbitration proceeding. At the arbitrators’ discretion, the
arbitrators may require pre-hearing briefs from the
parties. Resolution of the dispute shall be based solely upon the
evidence presented, and the arbitrators may not consider any other
evidence. As reasonably required to allow full use and benefits of
this Agreement, the arbitrators may extend the time set for the giving of
notices and setting of hearings.
4.07 Costs and
Expenses. The fees, costs, and expenses of the arbitration
shall be paid one-half by the parties demanding arbitration and one-half by the
other parties to the arbitration, subject to an award of reimbursement of fees,
costs, and expenses by the arbitrators to the prevailing parties.
4.08 Exclusive Method for
Determination. Arbitration shall be the sole and exclusive
remedy among the parties respecting the resolution of disputes pursuant to this
Agreement. Awards shall include the arbitrators’ written, reasoned
opinion and, at either party’s written request within 10 days after issuance of
the award, shall be subject to reversal and remand, modification, or reduction
by the arbitrators within 30 days of the delivery of the arbitrators’ written
opinion following a review of the records and arguments of the
parties. Such opinion and determination shall be in writing and shall
be delivered by the arbitrators to the Participant Designee and all Participants
in such proceeding (the “Arbitration
Decision”)
4.09 Enforcement and
Jurisdiction. Unless all the parties to an arbitration
otherwise consent in writing, the location of the arbitration hearings and the
place of entry of the award shall be in Salt Lake County, Utah. The
parties consent to exclusive jurisdiction of, and agree that sole venue will lie
in, the state and federal courts in and for such county and state, including the
entry of a judgment on the award. The arbitration award shall be
final and binding and shall not be reviewable in any court on any grounds except
corruption, fraud, or for demonstrable partiality or corruption of the
arbitrators. The parties intend to eliminate all other court review
of the award and the arbitration proceedings. Except for proceedings
to enforce or confirm an award or a proceeding brought by all parties to the
dispute to vacate or modify an award, the initiation of any suit relating to a
claim that is arbitrable under this Agreement shall constitute a material breach
of this Agreement. In addition:
(a) The
parties understand that by agreeing to this binding arbitration provision, they
waive their rights to trial by
jury respecting any matter being arbitrated.
(b) Except
as necessary in a judicial proceeding allowable under this Section 4.09,
all matters relating to any arbitration shall be confidential, including the
existence and subject of the arbitration.
Article
V
Miscellaneous
5.01 Right to Dismiss
Participants. The Company may terminate the employment of any
Participant as freely and with the same effect as if this Agreement were not in
existence.
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5.02 Notification of
Address. The address of each Participant is set forth below
his respective name on Schedule I. Each Participant shall file with
the Company from time to time, in writing, any changes to his mailing address
and the mailing address of each of his beneficiaries. Any
communication, statement, or notice addressed to a Participant or beneficiary at
his last mailing address filed with the Company, or as shown on the Company’s
records, will be binding on the Participant and his beneficiaries for all
purposes of the Agreement. The Company shall not be required to
search for or locate a Participant or beneficiary.
5.03 Offset. The
Company shall have the right to offset from any amount payable hereunder to the
Participant Designee for the benefit of any Participant any amount that such
Participant owes to the Company, without the consent of the Participant (or his
beneficiary, following the Participant’s death).
5.04 Severability. If
any provision of this Agreement is, becomes, or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person, payment, or
circumstance under any law the Company deems applicable, then such provision
should be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended, then such provision should be stricken
as to such jurisdiction, person, payment, or circumstance, and the remainder of
this Agreement will remain in full force and effect.
5.05 Governing Law; Limitations;
Venue. The construction and interpretation of this Agreement
shall be governed by the laws of the state of Utah without reference to conflict
of law principles thereof. Any action or other legal proceeding with
respect to the Agreement may be brought only within the period ending on the
earlier of: (a) one year after the date the claimant in such
action or proceeding knows or with the exercise of reasonable care should have
known of the facts giving rise to the claim; or (b) the expiration of the
applicable statute of limitations period under applicable
law. Exclusive jurisdiction over any such actions or legal
proceedings shall reside in the state and federal courts in and for Salt Lake
County, Utah.
DATE: March
16, 2010
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FX
ENERGY, INC.
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Attest:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Corporate
Secretary
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President
and Chief Executive Officer
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10
SCHEDULE
I
TO
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Name
of Participant
|
Allocation
of Conveyed Royalty Interest
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
0.5283%
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
0.4717
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
0.3019
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
0.4717
|
|
|
▇▇▇▇
▇▇▇▇▇▇
|
0.2830
|
|
|
Others
|
0.9434
|
|
|
3.0000%
|