PROSPECT AGREEMENT
This Agreement is made this 17th day of April, 1998, between APACHE POLAND Sp. z
o.o., a corporation existing under Polish law having its principal office at Xx.
Xxxxxxxxxxx 0, 00-000 Xxxxxx, Xxxxxx ("Apache") and FX ENERGY POLAND Sp. z o.o.,
a corporation existing under Polish law, having its registered office at Xx.
Xxxxxxxxxxxx 0, Xxxxxx, Xxxxxx ("FX").
WHEREAS the Parties, together with the Geosynoptics Society of the University of
Mining and Metallurgy, entered into a Study Agreement dated March 15, 1998, (the
"Study Agreement") with the objective of studying and extracting geologically
useful data from a bank of data relating to the Polish Lowlands to be made
available by the Geosynoptics Society; and
WHEREAS the Parties desire to participate together in any prospects that they
may develop from such data:
NOW THEREFORE, in consideration of the provisions and of the mutual promises set
out below, it is agreed as follows:
1. Prospect Area
The Parties agree to establish a Covered Area which shall coincide with the
eight geologic units included in the Polish Lowlands included in the area
of interest identified in Attachment 1 to the Study Agreement. A copy of
the Study Agreement with Attachments is attached hereto for information
2. Duration
The term of this Agreement shall be two (2) years from the date of this
Agreement, unless the Parties mutually agree to extend it. The term of this
Agreement shall be extended if and to the extent the Study Agreement is
extended.
3. Scope
This Agreement shall apply to all geological prospects, each being a finite
and discrete geological feature which may be worthy of exploration,
appraisal or development drilling, within the Covered Area, which have been
developed by either party directly from use of the data covered by the
Study Agreement ("Covered Prospects") within the above term. This Agreement
shall not apply to unsolicited proposals made to either party by a third
party.
4. Participation in Offers or Applications for Mineral Rights
4.1 If either party desires to make an offer or application for mineral
rights to the Bureau of Concessions, the Polish Oil and Gas Company,
or any holder of usufruct rights, it shall call for a meeting of the
parties not less than forty-five (45) days prior to any planned offer
or application date to formally present a proposal to acquire
hydrocarbon rights over a Covered Prospect. At that meeting, each
party shall decide whether to make an offer(s) or application(s)
covering one or more Covered Prospects and, if so, the commercial
terms to be included in each. Each party shall endeavor to give notice
to the other of its proposed commercial terms for each offer or
application prior to such meeting. If the parties cannot unanimously
agree at such meeting upon the commercial terms to be included in an
offer or application for a Covered Prospect, then the most competitive
commercial terms (meaning those offering the highest sum of money
and/or work and/or sharing of benefits most favorable to the offeree)
thus proposed, shall be included in the said application. Prior to the
end of the meeting, each representative shall sign and be provided a
copy of the record of the terms discussed and settled upon, and this
record shall be deemed the final record of the commercial terms of the
parties.
4.2 Each party shall confirm by notice to the other parties not less than
thirty (30) days prior to the planned offer or application date
whether such party wishes to participate in each offer or application
or not, and shall confirm all commercial terms to be included. If a
party fails to give such notice, it shall be deemed to have elected
not to participate in such offer or application. A party may
participate in less than all of the offers or applications proposed.
4.3 Joint offers or applications shall be on a 50/50 basis unless
otherwise agreed.
4.4 If a party hereto elects not to make a given offer or application, the
participating party shall be at liberty to join with third parties in
respect of such offer or application, for any share of interest, and
shall be entitled to show any bona fide prospective participant any of
the data relevant to the corresponding Covered Prospect, provided such
prospective participant agrees to be bound by appropriate
confidentiality provisions.
4.5 The participating party, whether applying with a third party or not,
shall not reduce the commercial terms to be included in such offer or
application without giving notice at least fifteen (15) days prior to
the planned offer or application date to the non-participating party
advising it of such change and giving it the right to participate at
the level of 50%. Non-response to such a notice shall conclusively
waive the recipient's right to participate.
4.6 Any party which does not participate in an offer or application shall
have finally and conclusively waived all rights to have offered to it
under Article 5 below, any Covered Prospect which was the subject of
the offer or application.
5. Participation Otherwise than through Offers or Applications
5.1 If either party ("Acquiring Party") shall acquire an interest in a
Covered Prospect at any time within the term of this Agreement, it
shall offer to the other party within thirty (30) days from the date
of acquisition, an interest equal to one-half of the Acquiring Party's
interest in the Covered Prospect and all associated rights,
obligations, acreage and benefits, on the same terms and conditions as
apply to the interest of Acquiring Party. that is on a "ground floor"
basis.
5.2 The notice of the Acquiring Party shall describe in reasonable detail
the Covered Prospect and all associated rights and obligations, and
shall be given in writing. The notice shall be accompanied by all
relevant data and documents in the possession of the Acquiring Party
and shall make reasonable provision for the other party to have access
to any relevant data, information and documents previously reviewed by
but not in the possession of the Acquiring Party.
5.3 The other party shall have thirty (30) days from receipt of the
Acquiring Party's notice to accept or reject in writing the offer of
the Acquiring Party. Failure to respond shall be deemed a rejection of
the offer.
5.4 If it accepts the Acquiring Party's offer, the other party shall
tender, within thirty (30) days following its acceptance, any cash
payment required to cover its half of obligations already incurred on
a ground floor basis, and shall become responsible for its pro rata
share of obligations from the date of its acceptance.
5.5 On acceptance of its offer, the Acquiring Party shall promptly take
all appropriate and necessary steps to vest title to one-half interest
in the other party, and to cause the latter to become a party to all
associated agreements.
5.6 If third parties or governmental agencies object to the introduction
of the other party, or if it is legally impossible to assign an
interest, the Acquiring Party shall hold one-half of its interest in
trust for the other party if permitted by law; provided that if such a
holding in trust is prohibited by law or is a breach of operative
agreements, the parties shall meet to consider methods by which the
intended beneficiary may participate in the risks and benefits of the
Covered Prospect.
6. Assignment
6.1 Assignments of the obligations, rights and benefits under this
Agreement to affiliates of either party shall be permitted on written
notice by one party to the other; but assignments to third parties
shall not be permitted unless both parties mutually agree.
6.2 The initial assignment (if among the parties hereto) of an interest in
Covered Prospects shall be governed by Article 5 above, and subsequent
assignments shall be governed by the applicable operating agreements.
6.3 This Agreement shall in any event bind the successors and assigns of
the parties. No right of withdrawal shall exist.
7. Confidentiality
7.1 The parties agree to hold confidential the terms of this Agreement,
the data covered by the Study Agreement and the data relating to any
Covered Prospect, in the manner set out in the Study Agreement and for
the duration of this Agreement; provided, however, that any Acquiring
Party having offered a Covered Prospect to the other party and such
offer having been rejected, shall be at liberty to offer the Covered
Prospect to a third party and for that purpose to disclose data
relating to the Covered Prospect in question on a confidential basis,
but without breach of the Study Agreement.
7.2 Notwithstanding the above, confidential information may be disclosed
if it becomes part of the public domain or is required to be disclosed
under applicable law or is required to be disclosed by any government
order, decree, rule or regulation or by any stock exchange to which a
party or an affiliate of a party is subject.
8. Notices
Notices authorized or required between the parties shall be addressed and
effective when delivered to the persons designated below. Each party shall
have the right to change its address at any time and/or designate that
notice be given to another address or person, by written notice to all
parties.
To Apache: Apache Poland Sp. z o.o.
Xx. Xxxxxxxxxxx 0
00-000 Xxxxxx, Xxxxxx
Attn: Xxxx Xxxxx
Phone: 00 00 000 0000
Fax: 00 00 000 0000
To FX: FX Energy, Inc.
0000 Xxxxxxxx Xxxxx, #000
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Phone: 801 /000-0000
Fax: 801 /000-0000
9. Applicable Law and Dispute Resolution
9.1 This Agreement shall be governed by, construed and interpreted in
accordance with the substantive laws of the State of Texas to the
exclusion of any conflicts of law rules which would defer the matter
to the laws of another jurisdiction.
9.2 In the event of a dispute relating to the interpretation, application
or effect of this Agreement, the matter shall be conclusively
determined by arbitration as set out below.
9.3 A single arbitrator shall be appointed by unanimous consent of the
Parties. If the Parties, however, cannot reach agreement on a single
arbitrator within thirty (30) days of the submission of a notice of
arbitration, each party shall appoint an arbitrator and the
International Chamber of Commerce in Paris shall appoint a third
arbitrator. All arbitrators shall be independent and shall not have
any financial interest in the dispute, controversy or claim.
9.4 The arbitration proceedings shall be held in Houston, Texas.
9.5 The arbitration proceedings shall be conducted in accordance with the
Arbitration Rules of the International Chamber of Commerce, in effect
on the date of this Agreement.
9.6 The costs of the arbitration proceedings (including attorneys' fees
and costs) shall be borne in the manner determined by the
arbitrator(s).
9.7 The decision of the sole arbitrator or a majority of the arbitrators,
as the case may be, shall be reduced to writing; and final and binding
without the right of appeal.
10. Miscellaneous
10.1 This agreement is the entire agreement of the parties hereto with
respect to this subject matter and supercedes all prior agreements
between the parties relating to this subject matter. This agreement
may only be altered, varied or amended by written instrument executed
by all the parties.
10.2 This agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall be
deemed one document.
10.3 The Parties agree to execute and deliver to each other all such
additional documents and instruments and do all such further acts and
things as may be reasonably requested by any Party to effectively
carry out the intent of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives the day, month and year first above
written.
APACHE POLAND Sp. z o.o. FX ENERGY POLAND So. z o.o.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxxx
