Dated This 12 day of January 2009 By and Among Standard Bank Plc, Zhang Ruilin, Zhao Jiangwei, Shang Zhiguo AND Far East Energy Limited SHARES PURCHASE AGREEMENT relating to the purchase of 197,049 Ordinary Shares of MIE HOLDINGS CORPORATION

Exhibit 10.23

Execution Version

Dated This 12 day of January 2009

By and Among

Standard Bank Plc,

Xxxxx Xxxxxx,

Xxxx Xxxxxxxx,

Shang Zhiguo

AND

Far East Energy Limited

SHARES PURCHASE AGREEMENT
relating to the purchase of 197,049 Ordinary Shares
of
MIE HOLDINGS CORPORATION

TABLE OF CONTENTS

1.		DEFINITIONS AND INTERPRETATION			2
2.		PURCHASE AND SALE OF THE ORDINARY SHARES; COMPLETION			9
3.		[INTENTIONALLY BLANK]			11
4.		[INTENTIONALLY BLANK]			11
5.		WARRANTIES AND UNDERTAKINGS			11
5A.		PUT OPTION			13
6.		[INTENTIONALLY BLANK]			16
7.		[INTENTIONALLY BLANK]			16
8.		SURVIVAL AND INDEMNITIES			16
9.		ANNOUNCEMENTS AND CONFIDENTIALITY			17
10.		RELEASE AND INDULGENCE			18
11.		NOTICES			18
12.		GOVERNING LAW			19
13.		ARBITRATION			19
14.		MISCELLANEOUS			20

SCHEDULES AND EXHIBITS

SCHEDULE 1		PARTICULARS OF THE SHAREHOLDERS IMMEDIATELY PRIOR TO THE COMPLETION AND IMMEDIATELY AFTER THE COMPLETION
SCHEDULE 2		[OMITTED]
SCHEDULE 3		COMPANY WARRANTIES
EXHIBIT 1		FORM OF OPTION AGREEMENT
EXHIBIT 2		FORM OF REPAYMENT ACKNOWLEDGEMENT
EXHIBIT 3		FORM OF SHARE EXCHANGE AGREEMENT
EXHIBIT 4		FORM OF STANDARD BANK AMENDMENT
EXHIBIT 5		FORM OF JILIN PROVINCE LIAOYUAN PEOPLE’S PROCURATORATE REPORT

THIS SHARES PURCHASE AGREEMENT (this “Agreement”) is made on the [    ] day of January 2009 by and among:

(1)		STANDARD BANK PLC, a financial institution incorporated in England, and/or one or more of its Affiliates (collectively, “Standard Bank”);
(2)		FAR EAST ENERGY LIMITED, a company incorporated in the Hong Kong Special Administrative Region of the People’s Republic of China (“FEEL”);
(3)		XXXXX XXXXXX, an individual whose passport number is X00000000 (“Zhang”);
(4)		ZHAO JIANGWEI, an individual whose passport number is X00000000 (“Zhao”); and
(5)		SHANG ZHIGUO, an individual whose passport number is Xx0000000 (“Shang” and together with Zhang and Zhao, the “FEEL Shareholders”).

(Standard Bank, FEEL and the FEEL Shareholders are hereinafter referred to collectively as the “Parties” and individually as a “Party”).

WHEREAS, MIE has issued 50,000 ordinary shares, par value US$1.00 each (the “MIE Ordinary Shares”), all of which are owned by FEEL;

WHEREAS, the Company has issued 1 ordinary share, par value US$1.00 each as at the date of this Agreement (which will be changed to US$0.01 each prior to the Completion) (the “Ordinary Shares”), which is owned by FEEL;

WHEREAS, prior to Completion, the Company will authorise the issuance of 10,000,000 Ordinary Shares;

WHEREAS, prior to Completion FEEL will exchange 50,000 MIE Ordinary Shares for 10,000,000 Ordinary Shares on the terms and subject to the conditions contained in this Agreement;

WHEREAS, FEEL desires to sell to Standard Bank and Standard Bank desires to purchase from FEEL 197,049 Ordinary Shares on the terms and subject to the conditions contained in this Agreement; and

NOW THEREFORE, in consideration of the premises and of the representations and warranties hereinafter contained, and upon the terms and subject to the conditions stated herein, the Parties agree as follows:

1.		DEFINITIONS AND INTERPRETATION
1.1		Definitions. In this Agreement the following words or expressions have the following meanings:

“Action” means any action, order, writ, injunction, judgment or decree outstanding or any claim, suit, litigation, proceeding

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		at law or in equity, labour dispute, arbitral action, governmental audit or governmental investigation.
“Affiliate”		means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, including, without limitation, any general partner, officer, director, member, manager or employee of such Person and any investment fund now or hereafter existing that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, such Person; provided, that (i) with respect to Standard Bank, Affiliate shall include any related entity or division within Standard Bank and any funds managed, controlled or advised by Standard Bank and/or its Affiliates, (ii) with respect to FEEL, Affiliate shall include Zhang and Zhao and each of their respective Affiliates; (iii) with respect to Zhang, Affiliate shall include FEEL and its Affiliates, Zhao and his Affiliates and Zhang’s direct family members; and (iv) with respect to Zhao, Affiliates shall include FEEL and its Affiliates, Zhang and his Affiliates and Zhao’s direct family members.
“Agreement”		has the meaning given such term in the Preamble.
“Business Day”		means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the Hong Kong SAR or the PRC.
“Company”		means MIE Holdings Corporation, an exempted company incorporated with limited liability in the Cayman Islands.
“Company Board”		means the board of directors for the time being of the Company or the Directors present or deemed present at a duly convened meeting of the Directors at which a quorum is present.
“Company Warranties”		means the warranties set forth in Schedule 3.
“Completion”		has the meaning given such term in Clause 2.2(a).
“Completion Date”		has the meaning given such term in Clause 2.2(a).
“Compliance with Financing Agreements”		has the meaning given such term in Clause 5A.1(c).
“Consent”		means any authorisation, waiver, release, exemption, consent or other approval of, from or imposed by, any Person (other than a Governmental Authority).

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“Election Notice”		has the meaning given such term in Clause 5A.1(b).
“Encumbrance”		means any deed to secure debt, assignment, security interest, security right, pledge, lien, charge, option, encumbrance and claim or right of any kind of third Persons, whether voluntarily incurred or arising by operation of law, including any agreement to give any of the foregoing in the future, and in relation to shares in the issued shares capital of a company, any right to appoint a proxy, exercisable by any party other than the holder of such shares.
“FEEL Board”		means the board of directors for the time being of FEEL or the FEEL Directors present or deemed present at a duly convened meeting of the FEEL Directors at which a quorum is present.
“FEEL Shareholders”		has the meaning given such term in the Preamble.
“General Warranty Expiration Date”		has the meaning given such term in Clause 8.1.
“Governmental Authority”		means any national or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, juridical, public, regulatory, legislative or statutory instrumentality, authority, body, agency, department, bureau or entity (including any zoning authority or any comparable authority) or any arbitrator with authority to bind a Person at law.
“Governmental Rule”		means any law, rule, regulation, ordinance, order, code, Permit, interpretation, judgment, decree, directive, guideline, policy or similar form of decision of any Governmental Authority having the effect and force of law.
“HKIAC”		has the meaning given such term in Clause 13.2(a).
“IFRS”		means the International Financial Reporting Standards.
“Indemnity Cap”		means an amount equal to 45% of the Purchase Price.
“Installment Purchase”		has the meaning given such term in Clause 5A.1(b).
“IPO Application Date”		means the date upon which an application is first submitted to a Recognised Exchange to list share of the Option Vehicle on such Recognised Exchange in connection with a proposed Qualified IPO; provided that the Buyer is given written notice of the intention to submit such application

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		on that date at least 60 days prior to such date; and further provided that such application to the Recognised Exchange is in fact submitted on that date.
“Joint Management Committee”		has the meaning given in the Production Sharing Contracts.
“Losses”		has the meaning given such term in Clause 8.2.
“Material Adverse Effect”		means a material adverse effect on the business, results of operation or financial condition of the Company and its Subsidiaries taken as a whole; provided, however, that Material Adverse Effect shall not be deemed to include the effects of (a) any changes or developments generally affecting the industry in which the Company or any of its Subsidiaries operates, which changes or developments do not disproportionately affect the Company relative to other participants in such industry in any material respect, (b) any changes or developments in connection with general economic, political or regulatory conditions, which changes do not disproportionately affect the Company or any of its Subsidiaries and (c) any changes or proposed changes in IFRS.
“MIE”		means MI Energy Corporation, an exempted company incorporated with limited liability in the Cayman Islands.
“MIE Board”		means the board of directors for the time being of MIE or the directors of MIE present or deemed present at a duly convened meeting of the board of directors of MIE at which a quorum is present.
“MIE Ordinary Shares”		has the meaning given such term in the first Recital.
“Notices”		has the meaning given such term in Clause 11.
“Option Agreement”		means the option agreement to be entered into by and between FEEL and Standard Bank in the form attached hereto as Exhibit 1.
“Ordinary Shares”		has the meaning given such term in the second Recital.
“Parties” or “Party”		has the meaning given such terms in the Preamble.
“Per Share Purchase Price”		means US$26.00 per Ordinary Share.
“Per Preferred Share Purchase Price”		means the per share purchase price of a Preferred Share in a Preferred Shares Transaction.
“Person”		means any natural person, individual, partnership, joint

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		venture, company, corporation, trust, estate, juridical entity, firm, association, statutory body, unincorporated organization, or Governmental Authority or any other entity whether acting in an individual, fiduciary or other capacity.
“PRC”		means the Peoples’ Republic of China.
“Production Sharing Contracts”		means collectively, the (i) Petroleum Contract for Development and Production of the Daan Oil Field of Jilin Province, PRC between GOC and China National Petroleum Corporation on December 16, 1997, as amended on October 25, 2000 and December 20, 2001, as amended, modified and supplemented; (ii) Petroleum Contract for Development and Production of the Miao3 Oil Field of Jilin Province, PRC between GOC and China National Petroleum Corporation on December 16, 1997, as amended on October 25, 2000 and December 20, 2001, as amended, modified and supplemented; (iii) Petroleum Contract for Development and Production of the Moliqing Oil Field of Jilin Province, PRC between GOC and China National Petroleum Corporation on September 25, 1998 and amended on October 25, 2000 and December 20, 2001, as amended, modified and supplemented, and “Production Sharing Contract” means any one of them.
“Preferred Shares”		has the meaning given such term in Clause 5.5.
“Preferred Shares Transaction”		has the meaning given such term in Clause 5.5
“Purchase Price”		means US$5,123,274, being the aggregate purchase price for the Purchased Shares.
“Purchased Shares”		means 197,049 Ordinary Shares purchased by Standard Bank at the Completion as set forth on Schedule 1.
“Put Exercise Notice”		has the meaning given such term in Clause 5A.1(a).
“Put Option Holder”		has the meaning given such term in Clause 5A.1(a).

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“Put Option Period”		means the earliest of:
		(1) in the event the Company does not complete a Qualified IPO within six (6) months after the IPO Application Date or a Preferred Shares Transaction is not consummated, the period commencing on the day preceding the date falling eighteen (18) months after the Completion and ending on the day preceding the date falling thirty-six (36) months after the Completion; and
		(2) in the event the Company conducts a Qualified IPO within six (6) months after the IPO Application Date, the period commencing on the Completion Date and ending on the date falling seven (7) days prior to the IPO Application Date.
“Put Price”		means a price per Put Share equal to the Put Share Original Issuance Price.
“Put Purchase Date”		has the meaning given such term in Clause 5A.1(b)(ii).
“Put Right”		has the meaning given such term in Clause 5A.1(a).
“Put Share Original Issuance Price”		means US$26.00.
“Put Shares”		has the meaning given such term in Clause 5A.1(a).
“Qualified IPO”		means a firm commitment public offering by the Company of its Shares on a Recognised Stock Exchange pursuant to a prospectus or offering circular under applicable securities laws resulting in (i) a market capitalization of at least US$400,000,000 (or its equivalent in the relevant currency) and (ii) the shares of the Company becoming freely tradable.
“Recognised Stock Exchange”		means NASDAQ, the New York Stock Exchange or the main board of any of the Stock Exchange of Hong Kong Limited, the Singapore Stock Exchange, or the London Stock Exchange or any other stock exchange of equal standing reasonably agreed by Standard Bank.
“Register of Members”		means the Register of Members of the Company maintained in the Cayman Islands.
“Repayment Acknowledgement”		means the repayment acknowledgement issued by Standard Bank to FEEL acknowledging repayment of the Standard Bank US$13 Million Facility in the form attached as Exhibit 2.
“Repurchase”		has the meaning given such term in the Share Exchange Agreement.

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“Share Exchange”		has the meaning given such term in the Share Exchange Agreement.
“Share Exchange Agreement”		means the share exchange agreement to be entered into by and between FEEL and the Company to effectuate the Share Exchange, Repurchase and Subscription in the form attached hereto as Exhibit 3.
“Shares”		means the Ordinary Shares and any other shares of the Company, whether fully or partly paid.
“Single Purchase”		has the meaning given such term in Clause 5A.1(b).
“Standard Bank US$13 Million Facility”		means the US$13 Million Term Facility Agreement dated 6 June 2008 by and between FEEL, Standard Bank, as lender, and other parties.
“Standard Bank Facility”		means the Borrowing Base Facility Agreement, dated 29 October 2007 by and between MIE, Standard Bank Asia Limited, as Arranger, Agent, Security Trustee and Technical Bank, Standard Bank Plc as the Offshore Account Bank and the Original Lenders (as such term is defined therein), as amended from time to time.
“Standard Bank Amendment”		means the Amendment Agreement by and among the parties to the Standard Bank Facility amending certain provisions thereto and approving the terms of this Transaction, in the form attached hereto in Exhibit 4.
“Subscription”		has the meaning set forth in the Share Exchange Agreement.
“Subsidiary”		means, with respect to any Person:
		(a)  any company or corporation more than 50% of whose shares of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such company or corporation (irrespectively of whether or not at the time shares of any class or classes of such company or corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through one or more Subsidiaries of such Person; and
		(b)  any partnership, association, joint venture or other entity in which such Person directly or indirectly through one or more Subsidiaries of such Person has more than a 50% equity interest.

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“Transaction Agreements”.		means this Agreement, and the Share Exchange Agreement.
“UNCITRAL Rules”		has the meaning given such term in Clause 13.2(a).
“US”		means the United States of America.
“US$”		means the lawful currency of the United States of America.
“Warrantor”		means FEEL.
“Warranty Claims”		has the meaning given such term in Clause 8.2.

1.2		Other Defined Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.
1.3		Principles of Construction.

	(a)		Any document expressed to be in “agreed form” means a document in or substantially in the form approved by, and signed for identification purposes by or on behalf of, all the Parties.
	(b)		The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
	(c)		The words “include,” “including” and “among other things” shall be deemed to be followed by “without limitation” or “but not limited to” whether or not they are followed by such phrases or words of similar import.
	(d)		Unless the context clearly requires otherwise, “or” is not exclusive.
	(e)		All references herein to a Party’s “knowledge” shall mean, with respect to the matter in question, if such Party (or any of the executive officers of such Party) has, or would reasonably be expected to have, after conducting a reasonable investigation, actual knowledge of the matter.
	(f)		Any reference to a statutory provision shall include such provision and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement so far as such modification or re-enactment applies or is capable of applying to any transactions entered into prior to the Completion and (so far as liability thereunder may exist or can arise) shall include also any past statutory provisions or regulations (as from time to time modified or re-enacted) which such provisions or regulations have directly or indirectly replaced.
	(g)		References to the Preamble, Recitals, Clauses, Schedules and Exhibits are to the preamble, recitals and clauses of and schedules and exhibits to this

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			Agreement.
	(h)		The headings are for convenience only and shall not affect the interpretation hereof.
	(i)		Unless the context otherwise requires or permits, references to the singular number shall include references to the plural number and vice versa and references to natural persons shall include bodies corporate.
	(j)		The Transaction Agreements are the result of negotiations between, and have been reviewed by, the respective parties to each such agreement. Accordingly, each such agreement shall be deemed to be the product of all parties thereto, and there shall be no presumption that an ambiguity should be construed in favor of or against any of Standard Bank, the FEEL Shareholders, or FEEL, as the case may be, thereto solely as a result of such party’s actual or alleged role in the drafting of any such agreement.
	(k)		This Agreement may be translated into one or more languages other than English. In the event of any inconsistency or contradiction between the texts, this English text shall prevail.

2.		PURCHASE AND SALE OF THE PURCHASED SHARES; COMPLETION
2.1		Sale of Ordinary Shares. Upon the terms and subject to the conditions of this Agreement, at the Completion, FEEL shall sell to Standard Bank, and Standard Bank shall purchase from FEEL, the Purchased Shares for a purchase price per Purchased Share equal to the Per Share Purchase Price.
2.2		Completion.

	(a)		The purchase and sale of the Purchased Shares and the other transactions contemplated by this Agreement shall be consummated (the “Completion”) at the offices of White & Case LLP, China Central Place, Tower 1, 19th Floor, 81 Xxxx Xxx Road, Beijing on the date of this Agreement (such date, the “Completion Date”).
	(b)		At the Completion, FEEL shall deliver to Standard Bank certified copies of the duly executed transfer instrument in respect of the Purchased Shares being purchased by Standard Bank and the current share certificate relating thereto (for cancellation), and the new share certificate relating thereto in the name of Standard Bank, and a certified copy of the Register of Members reflecting the sale and transfer by FEEL of the number of Purchased Shares being purchased by Standard Bank, against delivery of the Repayment Acknowledgement.

2.3 Deliveries by FEEL on or before the Completion Date. On the Completion Date, FEEL shall deliver to Standard Bank all of the following in agreed form:

(a) certified copies of the shareholder resolutions of (i) FEEL duly passed by each of the FEEL Shareholders, approving each of the matters in the resolutions of the FEEL Board referred to in (b) of this Clause 2.3, and (ii) the Company

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			duly passed by FEEL, approving each of the matters in the resolutions of the Company Board referred to in (c) of this Clause 2.3;
	(b)		certified copies of the resolutions of the FEEL Board approving the terms of the Transaction Agreements and the sale and transfer of the Purchased Shares to Standard Bank;
	(c)		certified copies of the resolutions of the Company Board:

	(i)		approving the terms of the Transaction Agreements to which the Company is a party;
	(ii)		authorising the issuance of the relevant share certificates in respect of the Purchased Shares in favour of Standard Bank; and
	(iii)		approving the entry of Standard Bank’s name in the Register of Members as holder of the Purchased Shares;

(d) copies of Consents as may be required to enable Standard Bank to be registered as holder of the Purchased Shares;

	(e)		the Standard Bank Amendment, duly executed by MIE; and
	(f)		the Option Agreement, duly executed by FEEL.

Prior to the Completion, FEEL shall have delivered to the Company the duly executed transfer instruments in respect of the Purchased Shares being purchased by Standard Bank and the current share certificate(s) representing that number of the Purchased Shares together with the resolutions of the Company Board authorising and directing:

	(a)		the issuance of the relevant new share certificate in respect of the Purchased Shares in favour of Standard Bank; and
	(b)		the entry of Standard Bank’s name in the Register of Members as holder of the Purchased Shares.

2.4		[Intentionally Blank]
2.5		Deliveries by Standard Bank on the Completion Date. On the Completion Date, Standard Bank shall deliver to FEEL:

	(a)		the originally executed Repayment Acknowledgement;
	(b)		the Standard Bank Amendment, duly executed by Standard Bank Asia Limited as Agent; and
	(c)		the Option Agreement, duly executed by Standard Bank.

2.6 Right to Rescind. If any of the documents required to be delivered on the Completion Date, insofar as it relates to an obligation of any Party, is not forthcoming for any

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reason or if in any other material respect the foregoing provisions of this Clause 2 are not fully complied with, FEEL (in the case of non-compliance under Clause 2.5) or Standard Bank (in any other case) shall be entitled (in addition to and without prejudice to all other rights or remedies available to it including the right to claim damages):

	(a)		to elect to rescind this Agreement;
	(b)		to effect the Completion so far as practicable having regard to the defaults which have occurred; or
	(c)		to fix a new day for the Completion.

2.7		[Intentionally Blank]
3.		INTENTIONALLY BLANK
4.		INTENTIONALLY BLANK
5.		WARRANTIES AND UNDERTAKINGS
5.1		Warranties of the Warrantor. The Warrantor hereby acknowledges that it has made the Company Warranties as set forth in Schedule 3 to Standard Bank and that the statements in Schedule 3 are true and correct as of the date hereof and as of the Completion Date, and Standard Bank has relied upon such Company Warranties to enter into this Agreement. Each of the Company Warranties shall be separate and independent and save as expressly otherwise provided shall not be limited by reference to any provision in this Agreement.
5.2		[Intentionally Blank].
5.3		Warranties by Standard Bank. Standard Bank hereby warrants to FEEL that:

	(a)		it is a company, corporation, limited partnership or financial institution, as the case may be, duly organized and validly existing under the laws of the jurisdiction in which it is organized;
	(b)		it has the full corporate power and authority and full legal capacity to execute, deliver and perform its obligations under the Transaction Agreements to which it is a party and each of such Transaction Agreements will be or have been duly executed and delivered and constitute or will constitute a valid and binding obligation of Standard Bank enforceable in accordance with its terms, except that such enforcement may be subject to or limited by bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights generally and subject to the application of general principles of equity;
	(c)		the execution, delivery and performance of the Transaction Agreements to which it is a party, and the purchase and acceptance of the Purchased Shares by Standard Bank will not result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) any Governmental Rule or

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			order of any Governmental Authority or any court, domestic or foreign, having jurisdiction over Standard Bank or any Subsidiary of Standard Bank or any of their respective properties, (ii) any material agreement or instrument to which Standard Bank or any such Subsidiary is a party or by which Standard Bank or any such Subsidiary is bound or to which any of the properties of Standard Bank or any such Subsidiary is subject, or (iii) the organizational documents of Standard Bank or any such Subsidiary other than where such breach, violation or default has not and is not reasonably likely to have an adverse affect on Standard Bank’s ability to perform its obligations under any of the Transaction Agreements;
	(d)		it is not and will not be required to give any notice or to make any filing with or obtain any Permit, consent, waiver or other authorisation from any governmental or regulatory authority or other Person in connection with the execution, delivery and performance of the Transaction Agreements;
	(e)		there is no legal, administrative, arbitration or other action or proceeding or governmental investigation pending, or, to the knowledge of Standard Bank, threatened, against Standard Bank that challenges the validity or performance of this Agreement or the Transaction Agreements to which it is a party or which, if successful, could hinder or prevent Standard Bank from performing its obligations hereunder or thereunder; and
	(f)		it has no contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement or the other Transaction Agreements.

5.4 Warranties by FEEL. FEEL warrants to Standard Bank that:

	(a)		it is a company duly organized and validly existing under the laws of the jurisdiction in which it is organized;
	(b)		immediately prior to Completion, it will be the lawful owner, beneficially and of record, of and will have valid and marketable title to 10,000,000 Ordinary Shares free and clear of any Encumbrances;
	(c)		it is not a party to any contract creating rights in respect of the 10,000,000 Ordinary Shares in any third Person or relating to the voting of such Shares or which would otherwise restrict its ownership of such Shares;
	(d)		it has the full power and authority and full legal capacity to execute, deliver and perform its obligations under the Transaction Agreements to which it is a party and each of such Transaction Agreements will be or have been duly executed and delivered and constitute or will constitute a valid and binding obligation of FEEL enforceable in accordance with its terms, except that such enforcement may be subject to or limited by bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights generally and subject to the application of general principles of equity; and

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(e) the execution, delivery and performance of the Transaction Agreements to which it is a party, and the sale and transfer of the Purchased Shares to Standard Bank will not result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) any Governmental Rule or order of any Governmental Authority or any court, domestic or foreign, having jurisdiction over FEEL or any Subsidiary of FEEL or any of their respective properties, (ii) any material agreement or instrument to which FEEL or any such Subsidiary is a party or by which FEEL or any such Subsidiary is bound or to which any of the properties of FEEL or any such Subsidiary is subject, or (iii) the organizational documents of FEEL or any such Subsidiary other than where such breach, violation or default has not had, and is not reasonably likely to have, an adverse affect on FEEL’s ability to perform its obligations under any of the Transaction Agreements.

5.5 Undertakings with respect to conversion of shareholding. During the period commencing on the date of the completion of the first transaction in which shares in the Company are issued to any person on terms which are not identical to the Ordinary Shares (such first series of shares being “Preferred Shares”), or any Ordinary Shares are converted to Preferred Shares and issued to any person (“Preferred Shares Investor”) for an aggregate amount of not less than $20,000,000 (such issuance or conversion, a “Preferred Shares Transaction”) and ending two (2) months after the date of completion of the Preferred Shares Transaction, Standard Bank shall have the right to require FEEL to promptly take all steps necessary to ensure that:

(a) all or part of the Ordinary Shares then held by Standard Bank are converted into Preferred Shares without charge or premium at the following conversion ratio:

Number of Preferred Shares =		Purchase Price
		Per Preferred Share Purchase Price

			with the same rights attributable thereto as all other such series of Preferred Shares in issue at the time of such conversion; and
	(b)		if the Ordinary Shares held by Standard Bank are converted into Preferred Shares pursuant to sub-clause (a), Standard Bank is included as a party to any shareholder agreement entered into between FEEL and such Preferred Shares Investor relating to such Preferred Shares Investor’s shareholding in the Company, with rights granted to Standard Bank appropriate to Standard Bank’s shareholding percentage in the Company upon such conversion.

5A. PUT OPTION

5A.1 Put Option.

(a) At any time during the Put Option Period, Standard Bank and its successors and assigns (“Put Option Holder”) shall have the right, exercisable only once and exercisable only if the Put Option Holder has not converted its Ordinary Shares into Preferred Shares pursuant to Clause 5.5, to require MIE to

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			purchase some or all of the Ordinary Shares (the “Put Shares”) then owned by such Put Option Holder (“Put Right”) by delivering written notice thereof to MIE (with a copy to the Company, FEEL and to the other shareholders of the Company) (the “Put Exercise Notice”) specifying the number of Put Shares to be purchased.
	(b)		Upon delivery by a Put Option Holder of the Put Exercise Notice, MIE shall elect whether it wishes to purchase the Put Shares (i) in one (1) installment (a “Single Purchase”) or (ii) in five (5) evenly spaced installments (with the installments being as nearly as practicable of equal numbers of Put Shares and the final installment being on a date no later than 18 months after the delivery of the Put Exercise Notice) (an “Installment Purchase”). The first installment in an Installment Purchase shall be made no later than 90 days after the date of delivery of the Put Exercise Notice. MIE shall notify (the “Election Notice”) the Put Option Holder no later than ten (10) days after the delivery of the Put Exercise Notice:

	(i)		of whether it has elected for a Single Purchase or an Installment Purchase;
	(ii)		of the dates of each installment (each a “Put Purchase Date”) and the number of Put Shares to be purchased on the date of each such installment;
	(iii)		of the Put Price payable on each Put Purchase Date, together with details of the method of calculation of the Put Price;
	(iv)		of the time and place for the closing of the sale and purchase of the Put Shares to be sold on each Put Purchase Date.

			If an Election Notice is not given in accordance with the foregoing provisions, MIE shall be deemed to have elected to purchase all the Put Shares in one installment on such date (which shall be treated as the Put Purchase Date but which shall be not earlier than 20 Business Days after the date of delivery of the Put Exercise Notice) and at such time and place as the Put Option Holder shall notify MIE (with a copy to the Company and FEEL).
	(c)		MIE shall have the obligation to purchase Put Shares on a Put Purchase Date in accordance with the above Clause 5A.1(b), but only up to the amount for which MIE has from time to time lawfully available funds to do so and to the extent that it will be in compliance, after giving effect to the payment for such purchase, with all of the terms of all of MIE’s existing financing agreements, including any covenants that would need to be satisfied during the 6-month period following such purchase of Put Shares, but only to the extent MIE has outstanding obligations under such financing agreements on the relevant Put Purchase Date (“Compliance with Financing Agreements”), provided, that if MIE does not fulfill its obligations to purchase Put Shares on the relevant Put Purchase Date as a result of the application of the restrictions set forth in this paragraph (c), MIE shall remain subject to the obligation to purchase the balance of the Put Shares as soon as it is able so to purchase in a manner that

14

			complies with such restrictions.
	(d)		The Company and FEEL shall be jointly and severally liable with MIE for the purchase of the Put Shares in the manner as set forth below; provided however, that Standard Bank shall not take any action under this paragraph (d) that would be reasonably likely to cause either the Company or FEEL to become insolvent (whether technically or otherwise) or the subject of any liquidation, bankruptcy or other similar proceedings, or cause a change of control of any of MIE, the Company or FEEL. If and to the extent that MIE is not required to purchase the relevant Put Shares on a Put Purchase Date as a result of the provisions of paragraph (c) above, then:

	(i)		the Company shall purchase, to the extent it is able under the laws of the Cayman Islands, and, in the event and to the extent that the Company can not or does not so purchase, FEEL shall purchase, on such Put Purchase Date at the Put Price the Put Shares which MIE would have been obliged to purchase on that date but for the operation of paragraph (c) above; and
	(ii)		to the extent FEEL fails to comply with its obligations under sub-paragraph (i) above (and without prejudice to any rights that Standard Bank may have against FEEL in respect of such failure), MIE shall purchase the relevant Put Shares forthwith upon having the lawfully available funds to do so and being in Compliance with Financing Agreements.

	(e)		A Put Share shall only be purchased if and to the extent that the relevant Put Price for such Put Share has been paid in full, and until payment of the relevant Put Price has been made in full, the Put Option Holder shall maintain all its right, title and interest in such Put Share.
	(f)		[Intentionally Blank]
	(g)		On or before the relevant Put Purchase Date, the Put Option Holder shall surrender the certificate or certificates representing the Put Shares to be purchased on the Put Purchase Date (or, if the Put Option Holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to MIE or the Company to indemnify MIE or the Company against any claim that may be made against MIE or the Company on account of the alleged loss, theft or destruction of such certificate) to MIE or the Company, in the manner and at the place designated in the Election Notice against payment in full of the relevant Put Price in immediately available funds to the order of the Person whose name appears on such certificate or certificates as the owner thereof (which payment shall be made by MIE, the Company or FEEL (as the case may be)). In the event that less than all of the Shares represented by a certificate are purchased, a new certificate representing the balance of the unsold Shares shall promptly be issued to the Put Option Holder by the Company and a certificate for the Put Shares purchased shall be issued by the Company to MIE or FEEL (as the case may be).

15

(h) Upon expiration of the Put Option Period, each Put Option Holder shall forfeit its right to exercise its Put Right.

5A.2		Cash Flows. Each of MIE, the Company and FEEL shall use its commercially reasonable efforts to maximize cash flow available to pay, if the Put Right is exercised, the Put Price to be paid to the Put Option Holder, provided, however, that all such efforts to maximize cash flow (i) shall be subject to the terms of any business plans approved by the Joint Management Committee and (ii) are consistent with, and in no way jeopardize or adversely affect, the Production Sharing Contracts. Standard Bank may propose a refinancing plan for approval by the Board to enable, if the Put Right is exercised, MIE, the Company or FEEL to pay the Put Price earlier than the payment dates contemplated by the Installment Purchase.
6.		[INTENTIONALLY BLANK]
7.		CONDITIONS
7.1.		[Intentionally Blank]
7.2.		Conditions Subsequent. Within 60 days following Completion, FEEL shall:

	(a)		confirm to Standard Bank in writing that it has received the original of the report from the Jilin Province Liaoyuan People’s Procuratorate, in form and substance of the Jilin Province Liaoyuan People’s Procuratorate report attached as Exhibit 5; and
	(b)		provide Standard Bank with copy (certified as a true copy of the original by a director or by its solicitors) of such report.

8.		SURVIVAL AND INDEMNITIES
8.1.		Survival. The warranties of the Parties contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Completion until the date falling on the earlier of (a) the expiration date of the lock-up period applicable to Standard Bank following the Qualified IPO and (b) the date falling thirty-six (36) months from the Completion Date (the “General Warranty Expiration Date”).
8.2.		FEEL Warranty Indemnities. Subject to and as from Completion, the Warrantor shall indemnify and hold harmless Standard Bank from and against any damages, deficiencies, losses (including loss of value of the Shares), costs, liabilities and expenses (“Losses”) resulting directly or indirectly from or arising in connection with any claims for breach of any of the Company Warranties (the “Warranty Claims”) brought prior to the General Warranty Expiration Date or breach of obligations under the Transaction Agreements.

16

8.3. Limitations. Notwithstanding Clauses 8.1 and 8.2, the Warrantor shall not be liable for any Losses in respect of a Warranty Claim:

	(a)		unless notice of the claim is given in writing by Standard Bank to the Warrantor setting out so far as reasonably practicable the details of the matter in respect of which the claim is made before the relevant Warranty Expiration Date, and any such claim shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be withdrawn six (6) months after such notice is given unless legal proceedings in respect thereof have been commenced;
	(b)		to the extent that the aggregate amount of Losses in respect of any breach of the Company Warranties for which the Warrantor would otherwise be liable exceeds the Indemnity Cap; and
	(c)		unless and until the aggregate amount of Losses in respect of breach of the Company Warranties for which the Warrantor would otherwise be liable exceeds US$1,000,000.

9.		ANNOUNCEMENTS AND CONFIDENTIALITY
9.1.		Announcements. No announcement, press release or circular in connection with the existence or the subject matter of the Transaction Agreements shall be made or issued by or on behalf of any Party without prior consent of the other Parties (such consent not to be unreasonably withheld or delayed). This shall not affect any announcement, press release or circular required by law or any regulatory body or the rules of any relevant stock exchange but the Party with an obligation to make an announcement or issue a press release or circular shall consult with the other Parties insofar as is reasonably practicable before complying with such an obligation.
9.2.		Confidentiality. Subject to Clause 9.3, each Party shall treat as confidential and not disclose or use any information received or obtained as a result of entering into the Transaction Agreements (or any agreement entered into pursuant to the Transaction Agreements) which relates to the provisions of the Transaction Agreements and any agreement entered into pursuant to the Transaction Agreements or the negotiations relating to the Transaction Agreements (and such other agreements); provided, however, that FEEL and the FEEL Shareholder may disclose such information to its lenders under the Standard Bank Facility.
9.3.		Exceptions to Confidentiality. Clause 9.2 shall not prohibit disclosure or use of any information if and to the extent that:

	(a)		the disclosure or use is required by law, any regulatory body or the rules and/or regulations of any relevant stock exchange, including any disclosure or use in an announcement, press release or circular required to be made or issued pursuant to Clause 9.1;
	(b)		the disclosure or use is required for the purpose of any judicial or regulatory proceedings arising out of the Transaction Agreements or any other agreement entered into under or pursuant to the Transaction Agreements or the disclosure

17

			is reasonably required to be made to a taxation authority in connection with the taxation affairs of the disclosing Party;
	(c)		the disclosure is made to employees, directors, officers, agents, Affiliates, fund investors and professional advisors, including financial advisors, consultants, accountants and legal counsel, of a Party or bona fide prospective purchasers of the Shares on terms that such employees, directors, officers, agents, Affiliates, fund investors, professional advisors and bona fide purchasers undertake to comply with the provisions of Clause 9.2 in respect of such information as if they were a party to the Transaction Agreements;
	(d)		the information becomes publicly available (other than by breach of any of the Transaction Agreements); or
	(e)		the other Parties have given prior written approval to the disclosure or use.

10.		RELEASE AND INDULGENCE
		Any liability to any Party may in whole or in part be released, compounded or compromised or time or indulgence given by any other Party in writing in their absolute discretion, as regards any of the Parties under such liability without in any way prejudicing or affecting their rights against any other Party or Parties under the same or a like liability whether joint and several or otherwise.
11.		NOTICES
		All notices, consents, and other communications under or pursuant to this Agreement (“Notices”) shall be in writing and in the English language and shall be delivered (A) by hand, (B) by facsimile (with receipt confirmed); provided, however, that a copy is promptly thereafter mailed by reputable private courier, return receipt requested, (C) by the addressee or (D) by such other means as the Parties may agree from time to time; in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses or facsimile numbers as a Party may designate as to itself by not less than five (5) Business Days notice to the other Parties):

if to Standard Bank, to		:		Standard Bank Plc
				Xxxxxx Bridge House
				00 Xxxxxxx Xxxx
				Xxxxxx XX 0X 0XX
				Fax: x000 0000 0000
				Attention: Xxxx Wixley c/o Standard Bank Asia Limited
if to Zhang, to		:		Xxxxx Xxxxxx
				Xxxxx 000, Xxxxx X, Xxxxx Xxxxx
				0 Xxx Xxxxx Xxxx
				Chaoyang District, Beijing 10010
				PRC
				Facsimile: (8610) 5123 8866

18

if to Zhao, to		:		Zhao Jiangwei
				Xxxxx 000, Xxxxx X, Xxxxx Xxxxx
				0 Xxx Xxxxx Xxxx
				Chaoyang District, Beijing 10010
				PRC
				Facsimile: (8610) 5123 8866
if to Shang, to		:		Shang Zhiguo
				Xxxxx 000, Xxxxx X, Xxxxx Xxxxx
				0 Xxx Xxxxx Xxxx
				Chaoyang District, Beijing 10010
				PRC
				Facsimile: (8610) 5123 8866
if to FEEL, to		:		Xxxxx 000, Xxxxx X, Xxxxx Xxxxx
				0 Xxx Xxxxx Xxxx
				Chaoyang District, Beijing 10010
				PRC
				Attention: Xx. Xxxxx Ruilin
				Facsimile: (8610) 5123 8866

12.		GOVERNING LAW
		This Agreement shall be governed by and construed in accordance with English law.
13.		ARBITRATION
13.1.		Amicable Settlement. Any and all disputes, controversies and conflicts between the Parties arising out of or relating to or in connection with this Agreement and the performance or non-performance of the obligations set forth herein shall, so far as is possible, be settled amicably between the Parties within thirty (30) days after written notice of such dispute, controversy or conflict has been given by one Party to the other Parties.
13.2.		Arbitration Procedure.

	(a)		Failing an amicable settlement thereof within the thirty (30)-day period specified in Clause 13.1, any and all disputes, controversies and conflicts arising out of or in connection with this Agreement or its performance (including the validity of this Agreement) shall be settled by three (3) arbitrators under the rules of the UNCITRAL Arbitration Rules (the “UNCITRAL Rules”) in accordance with the Hong Kong International Arbitration Centre (“HKIAC”) Procedures for the Administration of International Arbitration in force at the date of this Agreement. The place of arbitration shall be Hong Kong and the language used in the arbitral proceedings shall be English. The HKIAC shall act as the administering institute.
	(b)		The arbitrators shall be appointed by mutual consent of the Parties involved in

19

			the arbitration in accordance with the procedures set out in the UNCITRAL Rules regarding the appointment of arbitrators, failing which the appointing authority shall be HKIAC.
	(c)		The arbitral proceeding shall accord to each of the Parties the right to provide witnesses, including expert witnesses, the right of cross-examination of witnesses and the right to make both written and oral submissions.
	(d)		The arbitral award made and granted by the arbitrator shall be final, binding and incontestable and may be used as a basis for judgement thereon. All costs of arbitration (including, without limitation, those incurred in the appointment of the arbitrator) shall be apportioned in the arbitral award.

13.3.		Court Action. By agreeing to arbitration, the Parties do not intend to deprive any court of competent jurisdiction of its ability to issue any form of provisional remedy, including but not limited to a preliminary remedy in aid of arbitration, or order any interim injunction. A request for such provisional remedy or interim injunction by the parties to a court shall not be deemed a waiver of this agreement to submit to arbitration.
13.4.		Continued Performance During Arbitration. During the period of submission to arbitration and thereafter until the granting of the arbitral award, the Parties shall, except in the event of termination, continue to perform all their obligations under this Agreement without prejudice to a final adjustment in accordance with the said award.
13.5.		Survival. The provisions contained in this Clause 13 shall survive the termination or expiration of this Agreement.
14.		MISCELLANEOUS
14.1.		Fees and Expenses. Each Party shall bear its own expenses in connection with legal and other advisors retained by it in connection with the transaction.
14.2.		Successors and Assigns. This Agreement has been made solely for the benefit of the Parties and their respective successors, personal representatives, heirs and estates and permitted assigns and nothing herein is intended to confer any rights or remedies under or by reason of this Agreement to any other Person.
14.3.		Assignment. The provisions of this Agreement shall be binding upon and accrue to the benefit of the Parties and their respective successors and permitted assigns. Notwithstanding the foregoing, none of the Parties may assign its rights and obligations in whole or in part hereunder without the prior written consent of the other Parties, except that Standard Bank is permitted to assign its rights to purchase the Purchased Shares and Standard Bank may also assign its rights under this Agreement, in whole or in part, to any Person who acquires Shares held by Standard Bank.
14.4.		Further Assurances. Each Party undertakes to and with each other Party to do all things reasonably within its power which are necessary or desirable to give full effect to the spirit and intent of this Agreement.
14.5.		Amendments and Waivers. All amendments and other modifications hereof or

20

		waivers of the observance of any term hereof (either generally or in a particular instance and either retroactively or prospectively) shall be in writing and signed by each of the Parties.
14.6.		No Waiver. The failure of a Party at any time to require observance or performance by any other Party of any of the provisions of this Agreement shall in no way affect the Party’s right to require such observance or performance at any time thereafter, nor shall the waiver by any Party of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies otherwise provided by law.
14.7.		Severability. In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of all remaining provisions contained herein shall not in any way be affected or impaired thereby; and the invalid, illegal or unenforceable provisions shall be interpreted and applied so as to produce as near as may be the legal, economic and commercial result intended by the Parties.
14.8.		Counterparts. This Agreement may be signed in any number of counterparts, each of which is an original and all of which, taken together, constitute one and the same instrument. This Agreement may also be executed and delivered by facsimile signature and in any number of counterparts, each of which shall be deemed an original and all of which, taken together, constitute one and the same instruments.
14.9.		Entire Agreement. This Agreement contains the entire understanding and agreement between the Parties with respect to the subject matter hereof and supersedes and cancels all prior oral and written agreements or representations, if any, among the Parties or any of them relating to the subject matter thereof.

[Signature page follows]

21

IN WITNESS WHEREOF this Agreement has been duly executed as of the date and year first written above.

STANDARD BANK PLC
By:		/s/
		Name:
		Title:

22

FAR EAST ENERGY LIMITED
By:		/s/ Xxxxx Xxxxxx
		Name: Xxxxx Xxxxxx
		Title: Director
XXXXX XXXXXX
By:		/s/ Xxxxx Xxxxxx
		Name: Xxxxx Xxxxxx
		Title:
ZHAO JIANGWEI
By:		/s/ Zhao Jiangwei
		Name: Zhao Jiangwei
		Title:
SHANG ZHIGUO
By:		/s/ Shang Zhiguo
		Name: Shang Zhiguo
		Title:

23

SCHEDULE 1

PARTICULARS OF THE SHAREHOLDERS OF THE COMPANY
IMMEDIATELY PRIOR TO THE COMPLETION

		No. of Ordinary Shares legally
		and beneficially owned by the
Name of Shareholder/		Shareholder Immediately Prior				Percentage of Issued Share
Address and Fax Number		to Completion				Capital
Far East Energy Limited			10,000,000				100	%
Xxxxx 000, Xxxxx X, Xxxxx Xxxxx
0 Xxx Xxxxx Xxxx
Chaoyang District
Beijing 100101
PRC
Fax: (8610) 0000 0000
Total			10,000,000				100	%

PARTICULARS OF THE SHAREHOLDERS OF THE COMPANY
IMMEDIATELY AFTER THE COMPLETION

		No. of Ordinary Shares legally
		and beneficially owned				Percentage of Issued Share
Name of Shareholder/		immediately by the Shareholder				Capital
Address and Fax Number		after the Completion				(on as-converted basis)
Far East Energy Limited			9,802,951				98.02951	%
Xxxxx 000, Xxxxx X
Xxxxx Xxxxx
0 Xxx Xxxxx Xxxx
Chaoyang District
Beijing 100101
PRC
Fax: (8610) 0000 0000
Standard Bank Plc			197,049				1.97049	%
Xxxxxx Xxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxx XX 0X 0XX
Fax: x000 0000 0000
Total			10,000,000				100	%

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SCHEDULE 3

COMPANY WARRANTIES

1.		Corporate Existence. Each of the Company and MIE is duly organised and validly existing and in good standing under the laws of the Cayman Islands, and has all corporate power to own, lease and operate all of its property and to carry on its business as it is now being conducted.
2.		Authority. Except as set forth in the Standard Bank Facility, each of the Company and MIE has full power and authority and full legal capacity to execute, deliver and perform its obligations under this Agreement and the other Transaction Agreements to which it is a party. The execution and delivery by each of the Company and MIE of this Agreement and the other Transaction Agreements to which it is a party has been or will be, on or prior to the Completion Date, authorised by all necessary corporate action; and this Agreement is, and each of the other Transaction Agreements to which it is a party will be, when duly executed and delivered, a valid and binding obligation of the Company and MIE respectively, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally and subject to the application of general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
3.		Capitalisation.

	(a)		The authorised share capital of the Company on the Completion Date (without giving effect to the Share Exchange, the Repurchase, the Subscription and the sale and purchase to occur on the Completion Date under this Agreement) consists of (i) 15,000,000 shares of Ordinary Shares, 10,000,000 of which are issued and outstanding. All the Shares in the issued share capital of the Company are duly and validly authorized and issued, fully paid and non-assessable, and there is no Encumbrance over or affecting any of such shares. The shareholders of the Company immediately prior to the Completion are set forth in Schedule 1.
	(b)		Upon the sale and transfer of the Purchased Shares to Standard Bank, in accordance with the terms of this Agreement, Standard Bank will own valid, legal, beneficial and marketable title to such Purchased Shares, free and clear of any Encumbrances and with all rights attached thereto as set out in the articles of association of the Company.
	(c)		The authorised share capital of MIE on the date of this Agreement consists of (i) 50,000 shares of MIE Ordinary Shares, 50,000 of which are issued and outstanding. All the shares of MIE Ordinary Shares in the issued share capital of MIE are duly and validly issued, fully paid and non-assessable and there is no Encumbrance over or affecting any of such shares (other than any security interest that may have been granted to Standard Bank pursuant to the Standard Bank Facility). The shareholders of MIE as of the date of this Agreement and immediately prior to the Completion are set forth in Schedule 1 and at Completion the Company will be the sole person holding any interest in the

25

shares of MIE or in relation to any unissued shares in MIE (other than any security interest that may have been granted to Standard Bank pursuant to the Standard Bank Facility).

4.		Valid Issuance of Shares. The Purchased Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be duly and validly issued, fully paid, non-assessable and free of restrictions on transfer other than restrictions on transfer under the articles of association of the Company and the Transaction Agreements. Assuming the accuracy of the warranties of Standard Bank, the Purchased Shares will be issued, sold and transferred in compliance with all applicable securities laws.
5.		No Options. Neither the Company nor MIE has any outstanding commitment, obligation, options, warrants, rights (including conversion, pre-emption rights or rights of first refusal) to sell or to cause to be issued any share capital or any securities convertible into or exchangeable for, or rights to acquire, any share capital, other than as contemplated by the Transaction Agreements. No agreement or arrangement exists providing for the present or future allotment, issue or transfer of any share capital of the Company other than as contemplated by the Option Agreement. Except for this Agreement and the other Transaction Agreements, there is no agreement, arrangement or obligation of any kind (and no authorization therefor has been given) obligating the Company or MIE or any other person to repurchase, redeem or otherwise acquire any outstanding shares of its share capital or any securities convertible into or ultimately exchangeable or exercisable for any share capital. Except as set forth in the Standard Bank Facility, neither the Company nor MIE is a party or subject to any agreement, understanding or contractual rights, and, to the knowledge of the Company and MIE, there is no agreement, understanding or contractual rights with any Person, which affects or relates to distribution of dividends or the voting or giving of written consents with respect to any security or by a director of the Company or MIE.
6.		Subsidiaries. MIE has not and has never had any Subsidiaries and is not and has never been a legal or beneficial owner of any share or equity interests in any Person. The Company has no assets, and has not had any assets, other than cash and shares in MIE.

26

EXHIBIT 1

OPTION AGREEMENT

27

X X X X X X X X		XXXXXXXX CHANCE XXXX PTE LTD
C H A N C E
X X X X		EXECUTION COPY

DATED       JANUARY 2009

FAR EAST ENERGY LIMITED
as Seller

and

STANDARD BANK PLC
as Buyer

OPTION AGREEMENT

CONTENTS

Clause		Page
1. Interpretation			1
2. Grant of Option to Buy Shares			4
3. Exercise of Option			4
4. Cancellation of Option			4
5. Completion			4
6. Payment of Option Price			6
7. Warranties			6
8. Undertakings			7
9. General			7
10. Assignment			8
11. Notices			8
12. Governing Law and Jurisdiction			9
13. Counterparts			9
14. Invalidity			9
SCHEDULE 1 Form of Option Notice			10
SCHEDULE 2 Warranties			11
SCHEDULE 3 Completion Requirements			12

THIS DEED is made on       January 2009

BETWEEN:

(1)		FAR EAST ENERGY LIMITED, a company organised under the laws of Hong Kong (the “Seller”); and
(2)		STANDARD BANK PLC (the “Buyer”).

THE PARTIES AGREE as follows:

1.		INTERPRETATION
1.1		In this Deed:
		“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Hong Kong and the People’s Republic of China.
		“Completion” means completion of an exercise of the option to buy some or all of the Option Shares in accordance with this Deed.
		“Encumbrance” means a mortgage, charge, pledge, assignment by way of security, lease, easement, servitude, deposit arrangement, lien (statutory or other), option, restriction, financing or similar statement or notice filed under any recording or notice statute, preference, right of first refusal, right of pre-emption, third-party right or interest, other encumbrance or security interest of any kind, or another type of preferential arrangement (including, without limitation, a title transfer, retention arrangement, or conditional sale) having similar effect.
		“Final Completion” means the Completion following which the Option Value becomes $0.
		“IPO Application Date” means the date on which an application is first submitted to a Recognised Exchange to list shares of the Option Vehicle on such Recognised Exchange in connection with a proposed Qualified IPO, provided that at least 60 days prior to such date:

	(a)		the Buyer is given written notice of the Option Vehicle’s intention to submit such application on that date;
	(b)		the Seller notifies the Buyer of the identity of its advisers in connection with such proposed Qualified IPO; and

- 1 -

(c) the Seller provides the Buyer with a timetable (agreed between the Option Vehicle and its advisers in connection with the proposed Qualified IPO) for the listing of shares in the Option Vehicle in connection with the proposed Qualified IPO,

and further provided that such application to the Recognised Exchange is in fact submitted on such date.

“Option” means the rights granted to the Buyer by Clause 2 (Grant of Option to Buy Shares).

“Option Notice” means a written notice in the form (or substantially the form) set out in Schedule 1 from the Buyer to the Seller exercising the Option pursuant to Clause 2 (Grant of Option to Buy Shares).

“Option Period” means the period commencing on and from (i) in the case of paragraphs (a) and (b) below, the date falling six months from the date of this Deed, and (ii) in the case of paragraph (c) below, the date of this Deed, to and including the earliest of:

	(a)		the day preceding the date falling 36 months after the SPA Completion;
	(b)		the date falling 30 days prior to the IPO Application Date; and
	(c)		the date falling two months after the consummation of the Preferred Shares Transaction.

“Option Price” means an amount in dollars calculated based on the following formula:

Requested Shares x Strike Price

“Option Shares” means the Ordinary Option Shares or the Preferred Option Shares, as the case may be.

“Option Value” means, at any time, $8,000,000 less the aggregate of the Option Prices paid by the Buyer to the Seller in connection with each Completion prior to such time.

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

“Ordinary Shares” means the ordinary shares of the Company, par value $0.01 each.

- 2 -

“Ordinary Option Shares” means, at any time, the number of Ordinary Shares calculated on the basis of the following formula:

Option Value

Ordinary Shares Strike Price

rounded up to the nearest share.

“Ordinary Shares Strike Price” means $26.00.

“Party” means a party to this Deed and “Parties” means both of them.

“Preferred Shares” means the first series of preferred shares of the Option Vehicle purchased and sold in a Preferred Shares Transaction.

“Preferred Option Shares” means, at any time, the number of Preferred Shares calculated on the basis of the following formula:

Option Value

Preferred Shares Strike Price

rounded up to the nearest share.

“Preferred Shares Strike Price” means the purchase price per Preferred Share under the Preferred Shares Transaction.

“Preferred Shares Transaction” means the first sale and purchase of Preferred Shares in the Option Vehicle after the date of this Deed, provided that the aggregate purchase price for such Preferred Shares is not less than $20,000,000 and further provided that such sale and purchase is completed on or prior to the date falling 30 days prior to the IPO Application Date.

“Qualified IPO” has the meaning given in the SPA.

“Recognised Exchange” has the meaning given in the SPA.

“Requested Shares” has the meaning given to it in Clause 3.2 (Exercise of Option).

“SPA” means the shares purchase agreement entered or to be entered into between the Buyer, Xxxxx Xxxxxx, Xxxx Xxxxxxxx, Shang Zhiguo and the Seller in relation to the sale by the Seller and the purchase by the Buyer of 197,049 ordinary shares in the capital of the Option Vehicle.

“SPA Completion” has the meaning given to “Completion” in the SPA.

“Strike Price” means the Ordinary Shares Strike Price or the Preferred Shares Strike Price, as the case may be.

“Warranty” means a statement contained in Schedule 2 and “Warranties” means all those statements.

- 3 -

1.2 In this Deed, a reference to:

	1.2.1		a Clause, paragraph or Schedule, unless the context otherwise requires, is a reference to a clause or paragraph of, or schedule to, this Deed;
	1.2.2		a reference to any agreement or document is a reference to that agreement or document as amended, consolidated, supplemented, novated or replaced from time to time; and
	1.2.3		“$” and “dollars” denote the lawful currency of the United States of America.

1.3		The headings in this Deed do not affect its interpretation.
2.		GRANT OF OPTION TO BUY SHARES
2.1		In consideration of the sum of $1 (the sufficiency of which the Seller hereby acknowledges), the Seller irrevocably grants to the Buyer an option to buy and to require the Seller to transfer to the Buyer (and/or such person(s) as the Buyer directs) (i) if the Option Vehicle does not issue any Preferred Shares pursuant to a Preferred Shares Transaction during the Option Period, all or any of the Ordinary Option Shares, or (ii) if the Option Vehicle issues any Preferred Shares pursuant to a Preferred Shares Transaction during the Option Period, any or all of the Preferred Option Shares.
2.2		The Option Shares shall be sold with full title guarantee free from any Encumbrance and with all rights attaching to the Option Shares at the date of the relevant Completion.
3.		EXERCISE OF OPTION
3.1		The Option may be exercised only by the delivery by the Buyer to the Seller of an Option Notice at any time during the Option Period.
3.2		The Option Notice must specify the date of Completion, which must be a Business Day not less than three Business Days after the delivery of the relevant Option Notice (notwithstanding that such Business Day may fall outside the Option Period) and the number of Option Shares to which the Option Notice relates (the “Requested Shares”).
3.3		The Option may be exercised by the Buyer in whole or in part and, if in part, on any number of occasions.
4.		CANCELLATION OF OPTION
		If the Buyer has not submitted an Option Notice prior to such time, the Option shall be automatically cancelled in full on the last day of the Option Period.
5.		COMPLETION
5.1		Completion shall take place by 3.00 p.m. on the date specified in the Option Notice at the offices of the Buyer’s legal advisers, or at another time or place agreed by the Seller and the Buyer.

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5.2 At Completion:

	5.2.1		the Seller shall deliver to the Buyer the documents specified in Schedule 3 (Completion Requirements);
	5.2.2		the Seller shall sign all documents and take all other action necessary to enable the Buyer (and/or such other person as the Buyer directs) to become the registered and beneficial owner of the Requested Shares being transferred to the Buyer (and/or such other person as the Buyer directs) including, without limitation, the use of the voting and other rights arising by its holding of shares in the capital of the Option Vehicle and to ensure that the Buyer’s (and/or such other person’s) name is entered in the register of members of the Option Vehicle as the holder of those Requested Shares; and
	5.2.3		the Buyer shall pay the Option Price to the Seller in accordance with Clause 6 (Payment of Option Price).

5.3 The Buyer is not obliged to pay the Option Price unless:

	5.3.1		the Seller complies with all of its obligations under this Clause 5 and Schedule 3 (Completion Requirements);
	5.3.2		the transfer to the Buyer (and/or such other person as the Buyer directs) of all of the relevant Requested Shares is completed simultaneously; and
	5.3.3		all such consents and/or waivers as may be required under any applicable laws and/or the Finance Documents for the transfer of the relevant Requested Shares to the Buyer (and/or such other person as the Buyer directs) have been obtained in form and substance satisfactory to the Buyer.

5.4 If Completion does not take place on the date set for Completion pursuant to Clause 5.1 because the Seller fails to comply with any of its obligations under this Clause 5 (whether or not such failure amounts to a repudiatory breach), the Buyer may, by notice to the Seller:

	5.4.1		proceed to Completion to the extent reasonably practicable (but if the Buyer exercises its option pursuant to this Clause 5.4.1, completion of the purchase of some of the Requested Shares does not affect the Buyer’s rights in connection with the other Requested Shares); or
	5.4.2		postpone Completion to a date not more than ten Business Days after the date set for Completion in Clause 5.1 (notwithstanding that such date may fall outside the Option Period); or
	5.4.3		terminate this Deed; or
	5.4.4		revoke the relevant Option Notice, in which case the Requested Shares specified in such Option Notice shall remain subject to the Option and may be included in a new Option Notice.

- 5 -

5.5		If the Buyer postpones Completion to another date in accordance with Clause 5.4.2, the provisions of this Deed apply as if that other date is the date set for Completion in Clause 5.1.
5.6		If the Buyer terminates this Deed pursuant to Clause 5.4.3 or Clause 7 (Warranties), each Party’s further rights and obligations cease immediately on termination, but termination does not affect a Party’s accrued rights and obligations at the date of termination.
6.		PAYMENT OF OPTION PRICE
		The Buyer shall pay the Option Price in cash into an account in the Seller’s name (as notified by the Seller to the Buyer) for value on the date of the relevant Completion.
7.		WARRANTIES
7.1		The Seller warrants to the Buyer that each Warranty is true, accurate and not misleading at the date of this Deed. On and immediately before Completion, the Seller is deemed to warrant to the Buyer that each Warranty is true, accurate and not misleading by reference to the facts and circumstances at the date of Completion. For this purpose an express or implied reference in a Warranty to the “date of this Deed” is to be construed as a reference to the “date of Completion”.
7.2		The Seller acknowledges that the Buyer is entering into this Deed in reliance on each Warranty which has also been given as a representation and with the intention of inducing the Buyer to enter into this Deed.
7.3		Between the date of this Deed and Final Completion, the Seller shall notify the Buyer immediately if it becomes aware of any fact or circumstance which constitutes or which would or might constitute a breach of Clause 7.1 or which would or might cause a Warranty to be untrue, inaccurate or misleading if given in respect of the facts or circumstances at the date the Seller becomes aware of the same.
7.4		If, at any time before Final Completion, the Buyer considers that the Seller is in breach of any provision of this Deed (whether or not such breach amounts to a repudiatory breach) or if the Seller gives a notice under Clause 7.3, the Buyer may, in its discretion, elect to proceed to Completion in respect of all or any of the Option Shares by delivery of an Option Notice or Option Notices in accordance with Clause 3 (Exercise of Option) or terminate this Deed.
7.5		If the Buyer terminates this Deed pursuant to Clause 7.4, the Seller shall indemnify the Buyer, and keep the Buyer indemnified, on demand against all its costs, liabilities, obligations, damages, expenses and losses however arising which the Buyer may suffer or incur by reason of any breach of any provisions of this Deed by the Seller.
7.6		Each Warranty is to be construed independently and (except where this Deed provides otherwise) is not limited by a provision of this Deed or another Warranty.

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8.		UNDERTAKINGS
		Until Final Completion, the Seller shall not (without having first obtained the Buyer’s written consent):

	(a)		sell, transfer or otherwise dispose of any interest in any of the Option Shares or any right attaching to the Option Shares (except as required pursuant to this Deed); or
	(b)		create or allow to be created any Encumbrance over the Option Shares (except pursuant to the Transaction Security).

9.		GENERAL
9.1		A variation of this Deed is valid only if it is in writing and signed by or on behalf of each Party.
9.2		The failure to exercise or delay in exercising a right or remedy provided by this Deed or by law does not impair or constitute a waiver of the right or remedy or an impairment of or a waiver of other rights or remedies. No single or partial exercise of a right or remedy provided by this Deed or by law prevents further exercise of the right or remedy or the exercise of another right or remedy.
9.3		The Buyer’s rights and remedies contained in this Deed are cumulative and not exclusive of rights or remedies provided by law.
9.4		Each date, time or period referred to in this Deed is of the essence. If the Parties agree in writing to vary a date, time or period, the varied date, time or period is of the essence.
9.5		Except to the extent that they have been performed and except where this Deed provides otherwise the obligations contained in this Deed remain in force after Final Completion and this Deed shall terminate automatically upon the performance in full of such obligations.
9.6		A person who is not a Party to this Deed has no right under the Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of this Deed but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
9.7		This Deed supersedes any previous written or oral agreement between the Parties in relation to the matters dealt with in this Deed and contains the entire agreement between the Parties relating to the subject matter of this Deed at the date hereof to the exclusion of any terms implied by law which may be excluded by contract.
9.8		The Seller shall bear all costs and expenses (including taxes and duties) in relation to this Deed.

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10.		ASSIGNMENT
10.1		The Seller may not (and may not purport to) assign or transfer or declare a trust of the benefit of or in any other way alienate any of its rights under this Deed in whole or in part without having first obtained the Buyer’s written consent.
10.2		The Buyer may assign its rights or transfer its rights and obligations under this Deed and the Seller agrees, at its own cost, to do all acts and things as may be required by the Buyer to effect any such assignment or transfer.
11.		NOTICES
11.1		Communications in writing
		Any communication to be made under or in connection with this Deed shall be made in writing and, unless otherwise stated, may be made by fax or letter.
11.2		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 this Deed is that identified with its name below, or any substitute address, fax number or department or officer as a Party may notify to the other Party by not less than five Business Days’ notice.
11.3		Delivery

11.3.1 Any communication or document made or delivered by one person to another under or in connection with this Deed 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 11.2 (Addresses), if addressed to that department or officer.
	11.3.2		Any communication or document to be made or delivered to the Buyer will be effective only when actually received by the Buyer and then only if it is expressly marked for the attention of the department or officer identified with the Buyer’s signature below (or any substitute department or officer as the Buyer shall specify for this purpose).

11.4 English language

	11.4.1		Any notice given under or in connection with this Deed must be in English.
	11.4.2		All other documents provided under or in connection with this Deed must be:

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	(a)		in English; or
	(b)		if not in English, and if so required by the Buyer, 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.

12.		GOVERNING LAW AND JURISDICTION
12.1		This Deed is governed by English law.
12.2		The courts of England have exclusive jurisdiction to settle any dispute arising from or connected with this Deed (a “Dispute”).
12.3		The Parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.
12.4		This Clause is for the benefit of the Buyer only. As a result it does not prevent the Buyer from taking proceedings relating to a Dispute (“Proceedings”) in any other court with jurisdiction. To the extent allowed by law, the Buyer may take concurrent Proceedings in any number of jurisdictions.
13.		COUNTERPARTS
		This Deed may be executed in any number of counterparts, each of which when executed and delivered is an original and all of which together evidence the same agreement.
14.		INVALIDITY
		If at any time any provision of this Deed is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair:

	14.1.1		the legality, validity or enforceability in that jurisdiction of any other provision of this Deed; or
	14.1.2		the legality, validity or enforceability under the law of any other jurisdiction of that or another provision of this Deed.

IN WITNESS WHEREOF, this Deed has been signed by the Buyer and duly executed as a deed by the Seller and is intended to be and is hereby delivered by it as a deed on the date specified above.

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SCHEDULE 1

Form of Option Notice

[BUYER’S LETTERHEAD]

To: Far East Energy Limited (the “Seller”)
[Address]

Date: [insert date]

OPTION NOTICE

1.		We refer to the Option Agreement dated [     ] between Far East Energy Limited and Standard Bank PLC (the “Option Agreement”).
2.		Terms defined in the Option Agreement shall have the same meanings in this Option Notice unless the context requires otherwise. References to a Clause are to a clause of the Option Agreement.
3.		The Buyer hereby notifies the Seller pursuant to Clause 3 (Exercise of Option) that it wishes to exercise the Option granted in Clause 2.1 to buy [insert number of shares required] Option Shares at a Strike Price of $[     ], subject to the terms of the Option Agreement.
4.		The date of Completion shall be [insert date].

Signed by [  ]

for and on behalf of

Standard Bank PLC

-10-

SCHEDULE 2

Warranties

1.		CAPACITY AND AUTHORITY
1.1		Incorporation and existence
		The Seller is a company established under the laws of Hong Kong and has been in continuous existence since its establishment.
1.2		Right, power, authority and action

	1.2.1		The Seller has the right, power and authority, and has taken all action necessary, to execute, deliver and exercise its rights, and perform its obligations, under this Deed and each document to be executed at or before Completion or for the exercise of the Option.
	1.2.2		The Seller has the right, power and authority to conduct its business as conducted at the date of this Deed.

1.3		Binding agreements
		The Seller’s obligations under this Deed and each document to be executed at or before Completion are, or when the relevant document is executed will be, valid, binding and enforceable in accordance with their terms.
2.		SHARES
2.1		Save for this Deed, there is no Encumbrance, and there is no agreement, arrangement or obligation to create or give an Encumbrance, in relation to any of the Option Shares. No person has claimed to be entitled to any Encumbrance in relation to any of the Option Shares.
2.2		The Seller has the right to transfer full legal and beneficial title to the Option Shares.
2.3		The Option Shares will be delivered to the Buyer (and/ or such person(s), as it directs) free from any Encumbrance.
2.4		The Option Shares are fully paid up and will rank at least pari passu with all other shares of the Option Vehicle of the same class in issue.

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SCHEDULE 3

Completion Requirements

1. At Completion, the Seller shall deliver to the Buyer:

	1.1.1		the share certificate(s) for the Requested Shares being transferred by the Seller;
	1.1.2		any stock transfer document or other document, executed by the Seller and in favour of the Buyer (or such person(s), as it directs), reasonably requested by the Buyer; and
	1.1.3		as evidence of the authority of each person executing a document referred to in this Schedule 3 on the Seller’s behalf:

	(a)		a copy of the minutes of a duly held meeting of the directors of the Seller (or a duly constituted committee thereof) authorising the execution by the Seller of the document and, where such execution is authorised by a committee of the board of directors of the Seller, a copy of the minutes of a duly held meeting of the directors constituting such committee or a relevant extract thereof; or
	(b)		a copy of the power of attorney conferring the authority, in each case certified to be true by a director or the secretary of the Seller.

1.2		The Seller shall ensure that at Completion a meeting of the board of directors of the Option Vehicle is held at which the directors vote in favour of the registration of the Buyer or such person(s), as it directs as member(s) of the Option Vehicle in respect of the Requested Shares (subject to the production of properly stamped transfers).
1.3		The Seller shall, within five Business Days of Completion:

	1.3.1		ensure that new share certificates for the Requested Shares are issued in the name of the Buyer (or such person(s), as it directs); and
	1.3.2		provide the Buyer with a certified copy of the register of members of the Option Vehicle evidencing the Buyer’s (or such other person’s) ownership of the Requested Shares.

1.4 The Seller shall promptly take all other action which may, in the opinion of the Buyer, be necessary to effect the transfer of the Requested Shares to the Buyer (or such person(s), as it directs).

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OPTION AGREEMENT BETWEEN
FAR EAST ENERGY LIMITED AND
STANDARD BANK PLC

SIGNATURE PAGE

The Seller

The COMMON SEAL of			)
FAR EAST ENERGY LIMITED			)
was affixed hereto			)
in the presence of:			)

Director
Address:		Xxxxx 000, Xxxxx X
		Xxxxx Xxxxxx
		0 Xxx Xxxxx Xxxx
		Chaoyang District
		Beijing 100101
		Peoples Republic of China
Attention:		Xx. Xxxxx Ruilin
Facsimile:		+ 86 10 8489 2290

OPTION AGREEMENT BETWEEN
FAR EAST ENERGY LIMITED AND
STANDARD BANK PLC

The Buyer

STANDARD BANK PLC

By:
Address:		Xxxxxx Xxxxxx Xxxxx
		00 Xxxxxxx Xxxx
		Xxxxxx XX0X 0XX
Attention:		Xxxx Wixley c/o Standard Bank Asia Limited
Facsimile:		x000 0000 0000

EXHIBIT 2

FORM OF REPAYMENT ACKNOWLEDGEMENT

[STANDARD BANK PLC’S LETTERHEAD]

To: Far East Energy Limited (the “Seller”)
[Address]

Date: [insert date]

1.		We refer to the Ordinary Shares Purchase Agreement dated                     , 2008 among Standard Bank Plc, Xxxxx Xxxxxx, Zhao Jiangwei, Shang Zhiguo and the Seller (the “Purchase Agreement”).
2.		We refer also to a Term Facility Agreement dated                     , 2008 among the Seller as Borrower, Standard Bank Asia Limited as Arranger, Agent and Security Trustee (“Standard Bank”), and the Original Lenders (as such term is defined therein) (the “Bridge Facility”).
3.		Terms defined in the Purchase Agreement shall have the same meanings in this Repayment Acknowledgement unless the context requires otherwise.
4.		Pursuant to Clause 7.4 of the Bridge Facility, as Standard Bank Plc is both party to the Purchase Agreement and a lender under the Bridge Facility, it shall, upon the transfer to it of the Purchased Shares at the Completion, be deemed to have been prepaid an amount equal to the Purchase Price for the Purchased Shares.
5.		Standard Bank Plc hereby notifies the Seller that, pursuant to Clause 7.4 of the Bridge Facility, in consideration of the transfer to Standard Bank Plc of the Purchased Shares at the Completion, the outstanding Loans made by it to the Seller under the Bridge Facility (amounting to US$5,123,274.09) shall be deemed to be fully and completely repaid upon such transfer.
6.		The date of the Completion shall be [insert date].
7.		This Repayment Acknowledgement is governed by English law.

Signed by [  ]

for and on behalf of

Standard Bank Plc

Cc: Standard Bank Asia Limited, as Agent

28

EXHIBIT 3

SHARE EXCHANGE AGREEMENT

29

SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (this “Agreement”) is dated as of                                          by and between Far East Energy Limited (“FEEL”) and MIE Holdings Corporation (“MIE Holdings”). Each of FEEL and MIE Holdings is hereinafter referred to as a “Party” and collectively as the “Parties”.

WHEREAS, FEEL owns 50,000 ordinary shares, par value US$1.00 each in the capital of MI Energy Corporation (the “FEEL Shares”);

WHEREAS, MIE Holdings has issued 1 ordinary share, par value US$1.00, which is owned by FEEL and which shall be sub-divided into 100 ordinary shares, par value US$0.01 each (each an “Ordinary Share”) prior to the Closing. MIE Holdings shall have an authorized share capital of US$100,000 divided into 10,000,000 ordinary shares of a par value of US$0.01 each prior to Closing;

WHEREAS, it is a condition to the completion of the Shares Purchase Agreement dated                                         (the “Shares Purchase Agreement”), entered into among Standard Bank Plc, FEEL, Xxxxx Xxxxxx, Xxxx Xxxxxxxx and Shang Zhiguo, that FEEL exchanges with MIE Holdings the FEEL Shares for 999,900 Ordinary Shares (the “Exchange Ordinary Shares”); and

WHEREAS, the Parties wish to consummate such exchange on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained in this Agreement, and in order to consummate the Share Exchange (as defined below), the Parties hereby agree as follows:

1. DEFINITIONS

     1.1 Definitions. In this Agreement, all capitalized but undefined terms have the meaning given such terms in the Purchase Agreement and the following words or expressions have the following meanings:

     “Agreement” has the meaning given such term in the preamble of this Agreement.

     “Completion” has the meaning given such term in the Share Purchase Agreement.

     “Closing” has the meaning given such term in Clause 2.3.

     “Exchange Ordinary Shares” has the meaning given such term in the third recital.

     “FEEL” has the meaning given such term in the preamble of this Agreement.

     “FEEL Shares” has the meaning given such term in the first recital.

     “MIE Holdings” has the meaning given such term in the preamble of this Agreement.

     “Ordinary Shares” has the meaning given such term in the second recital.

Page 2

     “Party” and “Parties” has the meaning given such terms in the preamble of this Agreement.

     “Share Exchange” has the meaning given such term in Clause 2.2.

     “Share Purchase Agreement” has the meaning given such term in the third recital.

2. SHARE EXCHANGE

     2.1 Authorization of Ordinary Shares. Upon the terms and subject to the conditions of this Agreement, MIE Holdings will authorize the sale and issuance to FEEL of the Exchange Ordinary Shares.

     2.2 Exchange. Upon the terms and subject to the conditions of this Agreement, at the Closing, FEEL shall sell, convey and transfer the FEEL Shares to MIE Holdings and MIE Holdings shall purchase from FEEL the FEEL Shares owned by FEEL in consideration of the issuance by MIE Holdings to FEEL of the Exchange Ordinary Shares (the “Share Exchange”).

     2.3 Closing. The closing of the Share Exchange (the “Closing”), shall be held immediately prior to the Completion. At the Closing, (a) FEEL shall deliver to MIE Holdings (i) board resolutions of MI Energy Corporation approving the transfer of the FEEL Shares to MIE Holdings; (ii) updated Register of Members of MI Energy Corporation evidencing the ownership of the FEEL Shares in the name of MIE Holdings; (iii) certificates representing the FEEL Shares duly endorsed for transfer and accompanied by appropriate share transfer forms duly executed in blank and (b) MIE Holdings shall deliver to FEEL (i) board resolutions of MIE Holdings approving the issuance of the Exchange Ordinary Shares to FEEL; (ii) updated Register of Members of MIE Holdings evidencing the ownership of the Exchange Ordinary Shares in the name of FEEL; (iii) certificates representing the Exchange Ordinary Shares issued in the name of FEEL.

3. REPRESENTATIONS AND WARRANTIES OF FEEL.

     FEEL represents and warrants to MIE Holdings that:

     3.1. It is a company, corporation, or limited partnership, as the case may be, duly organized and validly existing under the laws of the jurisdiction in which it is organized;

     3.2 It is the lawful owner, beneficially and of record, of and will have valid and marketable title to 50,000 MIE Ordinary Shares (which constitute all of the issued and allotted share capital of MI Energy Corporation), free and clear of any claims, liens, charges, encumbrances, security interests or other rights of any third parties or any options or purchase agreements or restrictions of any nature;

     3.3 It is not a party to any contract creating rights in respect of the 50,000 MIE Ordinary Shares in any third Person or relating to the voting of such Ordinary Shares or which would otherwise restrict its ownership of such Ordinary Shares;

     3.4 It has the full power and authority and full legal capacity to execute, deliver and perform its obligations under this Agreement and this Agreement has been duly executed

Page 3

and delivered and constitutes a valid and binding obligation of it enforceable in accordance with its terms, except that such enforcement may be subject to or limited by bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights generally and subject to the application of general principles of equity;

     3.5 The execution, delivery and performance of this Agreement will not result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) any Governmental Rule or order of any Governmental Authority or any court, domestic or foreign, having jurisdiction over it or any of their respective properties, (ii) any material agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, or (iii) the organizational documents of it other than where such breach, violation or default has not and is not reasonably likely to have an adverse affect on the ability to perform its obligations under this Agreement;

     3.6 It is not and will not be required to give any notice or to make any filing with or obtain any Permit, consent, waiver or other authorization from any governmental or regulatory authority or other Person in connection with the execution, delivery and performance of this Agreement; and

     3.7 There is no legal, administrative, arbitration or other action or proceeding or governmental investigation pending, or, to its knowledge, threatened, against it that challenges the validity or performance of this Agreement or which, if successful, could hinder or prevent it from performing its obligations hereunder.

4. MISCELLANEOUS

     4.1 Governing Law. The interpretation and construction of this Agreement, and all matters relating hereto, shall be governed by laws of the State of New York.

     4.2 Captions. The captions used herein are for reference purposes only, and shall not in any way affect the meaning or interpretation of this Agreement.

     4.3 Assignment. This Agreement and all covenants and agreements contained herein and rights, interests or obligations hereunder, by or on behalf of either Party, shall bind and inure to the benefit of the respective successors and permitted assigns of the Parties whether so expressed or not, except that neither this Agreement nor any of the covenants and agreements herein or rights, interests or obligations hereunder may be assigned or delegated by either Party, without the prior written consent of the other Party.

     4.4 Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.

     4.5 Entire Agreement. This Agreement, including the other documents referred to herein which form a part hereof, contains the entire understanding of the Parties with respect to the subject matter contained herein and therein. This Agreement supersedes all prior agreements and understandings between the Parties with respect to such subject matter.

     4.6 Amendments. This Agreement may not be changed, and any of the terms, covenants, representations, warranties and conditions cannot be waived, except pursuant to an instrument in writing signed by both Parties or, in the case of a waiver, by the Party waiving compliance.

Page 4

     4.7 Severability. If any term, provision, agreement, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, agreements, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a reasonably acceptable manner in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible.

[Signature page follows]

Page 5

IN WITNESS WHEREOF, this Agreement has been executed by each Party on the date first above written.

		FAR EAST ENERGY LIMITED
		By:		/s/ Xxxxx Xxxxxx Name: Xxxxx Xxxxxx
				Title:   Director
		MIE HOLDINGS CORPORATION
		By:		/s/ Xxxxxxx Xxxxxxxx Name: Xxxxxxx Xxxxxxxx
				Title:   Director

EXHIBIT 4

STANDARD BANK AMENDMENT

30

XXXXXXXX		XXXXXXXX CHANCE XXXX PTE LTD
CHANCE
XXXX		EXECUTION COPY

NEW FIRST AMENDMENT AND RESTATEMENT AGREEMENT

Dated                      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

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THIS AGREEMENT is dated                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, X.X. Xxx 000 XX, Xxxxxx House, South Church Street, Xxxxxx 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) Xxx 0000 to enforce or to enjoy the benefit of any term of this Agreement.

2. RESTATEMENT

2.1 Restatement of the Original Facility Agreement

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

2.2 Waiver

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

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

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

3. REPRESENTATIONS

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

(a) the date of this Agreement; and

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(b) the First Effective Date.

4. CONTINUITY AND FURTHER ASSURANCE

4.1 Continuing obligations

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

4.2 Further assurance

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

5. ACKNOWLEDGEMENT OF SATISFACTION OF CERTAIN CONDITIONS SUBSEQUENT

		The Agent confirms that the Conditions Subsequent set out in paragraphs 1 and 2 of Schedule 13 (Conditions Subsequent) of the Restated Agreement have been satisfied.
6.		RELEASE OF FAR EAST SHARE CHARGE
		The Lenders hereby instruct the Security Trustee to, and the Security Trustee shall, release the Security constituted by the Far East Share Charge (as the same is or may be amended and varied from time to time) in full at Share Exchange Closing.

7. TERMINATION OF AMENDMENT AND RESTATEMENT AGREEMENT DATED 6 JUNE 2008

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

8. WAIVER OF SUBORDINATION AND REPAYMENT OF SHAREHOLDER LOANS

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

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

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			Loan shall be used to set-off the outstanding First MIE Loan in full and further provided that Far East shall use part of the Transferred ZR Loan to set-off the outstanding Far East Loan in full; and
	(ii)		the terms of the Borrower Debenture, the Borrower may forgive or write-off the Interim Loan by an amount of up to $20,000,000 (or its equivalent in RMB),

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

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

9.		WRITE-OFF OF SPDB-ZR LOAN
		The Lenders and the Agent hereby agree and confirm that, notwithstanding any other term of a Finance Document, the Borrower may write-off the outstanding amount of the SPDB-ZR Loan pledged in the SPDB-ZR Loan Account and, following such a write-off, Far East may forgive or write-off the Second MIE Loan.
10.		MISCELLANEOUS
10.1		Incorporation of terms
		The provisions of Clause 43 (Notices), Clause 45 (Partial Invalidity), Clause 46 (Remedies and waivers) and Clause 50 (Enforcement) of the Original Facility Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to “this Agreement” or “the Finance Documents” are references to this Agreement.
10.2		Counterparts
		This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
11.		GOVERNING LAW
		This Agreement and all non-contractual obligations arising out of or in connection with it are governed by English law.

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

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SCHEDULE 1
Conditions Precedent

1. The Borrower

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

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

			or a certificate of a director of the Borrower certifying that the constitutional documents previously delivered to the Agent for the purposes of the Original Facility Agreement have not been amended and remain in full force and effect.
	(b)		A certificate of good standing of the Borrower.
	(c)		A copy of a resolution of the board of directors or other governing body of the Borrower:

	(i)		approving the terms of, and the transactions contemplated by, this Agreement and resolving that it execute this Agreement; and
	(ii)		authorising a specified person or persons to execute this Agreement on its behalf.

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

2. MIH

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

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

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	(ii)		its current memorandum and articles of association;
	(iii)		its current register of directors;
	(iv)		its current register of members; and
	(v)		its current register of mortgages and charges (if any).

	(b)		A certificate of good standing of MIH.
	(c)		A copy of a resolution of the board of directors or other governing body of MIH:

	(i)		approving the terms of, and the transactions contemplated by, this Agreement and resolving that it execute the Finance Documents to which it is party; and
	(ii)		authorising a specified person or persons to execute the Finance Documents to which it is party on its behalf.

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

3. Legal Opinions

	(a)		A legal opinion of Xxxxxxxx Chance Xxxx Pte Ltd, legal advisers to the Lenders as to matters of English law.
	(b)		A legal opinion of Walkers, legal advisers to the Lenders as to matters of Cayman Islands law.

4. Other documents and evidence

	(a)		The First MIH Share Charge, duly executed by MIH and the Security Trustee.
	(b)		The Second MIH Share Charge, duly executed by MIH and the Security Trustee.
	(c)		A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by this Agreement or for the validity and enforceability of this Agreement.

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SCHEDULE 2
Restated Agreement

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SCHEDULE 3
Form of PRC Legal Opinion

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SCHEDULE 4
Form of ZR Guarantee

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SCHEDULE 5
Form of Assignment of ZR Guarantee

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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:

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

The Lenders

STANDARD BANK PLC

By:

The Hedge Counterparties

STANDARD BANK PLC

By:

XXXXXXXX		XXXXXXXX CHANCE XXXX PTE LTD
CHANCE
XXXX

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 Xxxxxxx			00
00. 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, X.X. Xxx 000 XX, Xxxxxx House, South Church Street, Xxxxxx Town, Grand Cayman, Cayman Islands (the “Borrower”);

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

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

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

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

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

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

IT IS AGREED as follows:

SECTION 1
INTERPRETATION

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement:

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

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

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

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

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

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

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	(b)		any material increase to levels of deductible or excess or self insurance arrangements;
	(c)		any material reduction in the scope of risks insured or to coverage terms, or the inclusion of new exclusions or exceptions; and
	(d)		any material reduction in or cancellation, discontinuance, non-renewal or avoidance of any cover provided under any Material Insurance.

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

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

“Asset Life Cover Ratio” means, at any time, the ratio of (a) Discounted Projected Net Cash Flow to the Reserve Tail Date to (b) the principal amount of all Loans outstanding on the date on which such ratio is determined.

“Assignment of ZR Guarantee” means the assignment by the Borrower of the ZR Guarantee and all its rights thereunder entered or to be entered into between the Borrower and the Security Trustee.

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

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

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

(a) the amount of its participation in any outstanding Loans; and

(b) in relation to any proposed Utilisation, the amount of its participation in any Loans that are due to be made on or before the proposed Utilisation Date.

other than that Lender’s participation in any Loans that are due to be repaid or prepaid on or before the proposed Utilisation Date.

“Available Facility” means, from time to time, the lower of (a) the aggregate of the Available Commitments, (b) the Maximum Facility and (c) the Borrowing Base Amount.

“Availability Period” means the period from and including the date of this Agreement to the date falling one Month prior to the Termination Date.

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

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“Borrower Debenture” means the debenture creating assignments and fixed and floating charges to be entered into between the Borrower and the Security Trustee in respect of the assets of the Borrower described therein.

“Borrowing Base Amount” means the amount calculated pursuant to the Financial Model, and thereafter as determined in accordance with Clause 6 (Borrowing Base Amount), to be equal to the lower of:

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

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

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

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

(a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

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

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

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

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

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

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

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“Calculation Period” means each period commencing on the day after a Calculation Date and ending on the immediately following Calculation Date.

“Capital Expenditure” means, for the Borrower and for any period, the sum of, without duplication, all expenditures that are capital in nature made, directly or indirectly, by the Borrower during such period in connection with the development and/or production of hydrocarbon reserves or the acquisition or replacement of plant, equipment and fixed assets or related infrastructure, including without limitation:

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

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

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

“CNPC” means China National Petroleum Corporation.

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

“Commitment” means:

(a) in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Commitment transferred to it under this Agreement; and

(b) in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Commitment Letter” means the letter entered or to be entered into between the Arranger and the Borrower.

“Compensation” means:

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

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

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“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.

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“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 redesignated, 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;

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(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

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(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.

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“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;

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(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.

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“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 Xxxxxxx, Xxxxx & 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.

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“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 Xxxxx Xxxxxxxx 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.

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“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).

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“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, Xxxxx Xxxxxx, 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.

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“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).

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“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 18100018600002717 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.

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“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

- 20 -

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

“Revenues” means:

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

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

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

“Screen Rate” means the British Bankers’ Association Interest Settlement Rate for dollars for the relevant period, displayed on the appropriate page of the Telerate screen provided that, if the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders.

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

“Second MIH Share Charge” means the charge over shares to be entered into between MIH and the Security Trustee in relation to 16% of the shares in the capital of the Borrower, which MIH will own upon and from Share Exchange Closing.

“Secured Obligations” means all obligations at any time due, owing or incurred by any Obligor to any Secured Party under the Finance Documents, whether present or future, actual or contingent (and whether incurred solely or jointly and whether as principal or surety or in some other capacity).

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

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

“Security Documents” means:

(a) the Accounts Assignment;

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	(b)		the Borrower Debenture;
	(c)		(until Share Exchange Closing) the Far East Share Charge;
	(d)		the First MIH Share Charge;
	(e)		the Second MIH Share Charge;
	(f)		the PSC Pledge;
	(g)		each notice to any person, and each acknowledgment executed by any person in favour of the Security Trustee, in relation to any rights of the Borrower over which Security has been granted in favour of the Security Trustee, in each case required to be delivered under or pursuant to the Security Documents;
	(h)		any Security entered into by the Borrower pursuant to Clause 5.3.5 (New Fields as Borrowing Base Assets);
	(i)		the Assignment of ZR Guarantee;
	(j)		any other document designated as such by the Agent and the Borrower; and
	(k)		any document that amends, supplements, modifies or waives any provision of any of the foregoing.

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

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

“Share Exchange Closing” has the meaning given to “Closing” in the Share Exchange Agreement.

“Simple Majority Lenders” means:

	(a)		if there are no Loans then outstanding, a Lender or Lenders whose Commitments aggregate more than fifty per cent. (50%) of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregate more than fifty per cent. (50%) of the Total Commitments immediately prior to the reduction); or
	(b)		at any other time, a Lender or Lenders whose participations in the Loans then outstanding aggregate more than fifty per cent. (50%) of all the Loans then outstanding,

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

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

“SPDB” means Shanghai Pudong Development Bank Dalian Branch.

“SPDB-ZR Loan” means the loan by SPDB to ZR in an amount equal to the RMB equivalent of $10,500,000 to enable ZR to comply with payment obligations in connection with the purchase of all shares in the Borrower not owned by Far East at the date of this Agreement from Fullfame Enterprises Limited.

“SPDB-ZR Loan Account” means the account notified as such by the Borrower to the Agent in the name of the Borrower and maintained with SPDB into which the Borrower will deposit (a) the sum of $2,500,000 (or its equivalent in RMB) from the proceeds of the Second MIE Loan and (b) a further sum of up to $8,000,000 (or its equivalent in RMB) to enable SPDB to make the SPDB-ZR Loan.

“Specified Time” means a time determined in accordance with Schedule 7 (Timetables).

“Subordinated Indebtedness” means all unsecured Financial Indebtedness of any person which is subordinated to the Financial Indebtedness outstanding under this Agreement and all other amounts owing under the Finance Documents pursuant to a Subordination Agreement.

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

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

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

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

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

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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 Xx Xxxxx Xxxxxx (PRC passport number X00000000).
		“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;

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	(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) Xxx 0000 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;

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	(b)		paying the costs incurred or to be incurred by the Borrower in connection with any Hedge Agreements; and
	(c)		paying fees, costs and expenses incurred by the Borrower in connection with the transactions contemplated by the Finance Documents;

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

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

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

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

	(a)		financing any Agreed Acquisition; and
	(b)		for the general corporate purposes of the Borrower in an amount not exceeding $5,000,000.

3.2		Monitoring
		No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

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4.		CONDITIONS OF UTILISATION
4.1		Initial Conditions Precedent
		The Borrower may not deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent (acting reasonably). The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied.

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

4.2.1 save in the case of a deemed Utilisation pursuant to Clause 7,3 (Deemed Utilisation), on the date of the applicable Utilisation Request and on the proposed Utilisation Date:

	(a)		no Default is continuing or would result from the proposed Loan; and
	(b)		the Repeating Representations to be made by the Borrower are true in all material respects;

	4.2.2		the proposed Utilisation will not cause the Available Facility to be exceeded; and
	4.2.3		in relation the first Utilisation, the Borrower has contracted hedging transactions, in accordance with Schedule 10 (Hedging), satisfactory to the Majority Lenders.

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

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SECTION 3
BORROWING BASE AMOUNT

5.		BORROWING BASE ASSETS
5.1		General Rules
		A Field may only be a Borrowing Base Asset to the extent of the interest of the Borrower in such Field and if, and for so long as:

	(a)		the Borrower’s interest is not subject to any Security (other than Security permitted pursuant to Clause 22.5.3 (Negative Pledge)); and
	(b)		all material Authorisations applicable to the development and operation of such Field and then required to have been obtained by law, regulation, contract or customary practice in the People’s Republic of China or under any Project Document have been obtained are in full force and effect and have not been revoked.

5.2		Fields as Borrowing Base Assets
		Without prejudice to Clause 5.1 (General Rules), each of the Daan Field, the Miao 3 Field and the Moliqing Field are, to the extent of the allocation entitlement of the Borrower under the relevant PSC (and without prejudice to the rights and interests of PetroChina thereunder), Borrowing Base Assets as at the date of this Agreement.
5.3		New Fields as Borrowing Base Assets
		The Borrower may at any time submit a written application to Agent requesting, by not less than sixty days notice, that a new Field be included as a Borrowing Base Asset, in which event, such Field will become a Borrowing Base Asset with effect from the date that the Agent notifies the Borrower that the Majority Lenders (acting reasonably) are satisfied that:

	5.3.1		all material Authorisations applicable to the development and operation of such new Field and then required by law, regulation, contract or customary practice in the People’s Republic of China or under any Project Document to have been obtained, for the development and operation of the new Field have been obtained and are in full force and effect;
	5.3.2		all relevant Field, infrastructure and pipeline information and plans has been reviewed and found satisfactory by the Technical Bank (acting reasonably);
	5.3.3		an Independent Reserves Report in relation thereto has been provided to the Agent and approved by the Technical Bank (acting reasonably);
	5.3.4		a Financial Projection demonstrating the Borrowing Base Amount (and being prepared using Proved Reserves and Probable Reserves at the discretion of the Technical Bank after inclusion of the new Field) has been provided to the Agent; and

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

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

	5.4.1		A Field shall cease to be a Borrowing Base Asset on the date the Agent gives notice to the Borrower that such Field fails to satisfy any of the conditions specified in Clause 5.1 (General Rules) (which notice shall specify which conditions are not satisfied).
	5.4.2		If, within five Business Days of the Agent advising the Borrower that a Field has ceased to be a Borrowing Base Asset in accordance with Clause 5.4.1 above, the Borrower produces evidence satisfactory to the Agent, acting reasonably, that the conditions specified in Clause 5.1 (General Rules) have been and continue to be fulfilled in respect of that Field, then such Field shall be immediately reinstated as a Borrowing Base Asset and the provisions of the Finance Documents shall continue to apply as if such Field had not ceased to be a Borrowing Base Asset.
	5.4.3		Within fifteen Business Days of the Agent advising the Borrower that a Field has ceased to be a Borrowing Base Asset in accordance with Clause 5.4.1 above, and provided that the Field has not been reinstated as a Borrowing Base Asset under Clause 5.4.2 above, the Technical Bank shall deliver to the Lenders and the Borrower a Financial Projection reflecting such removal and the Borrower shall, within three Business Days of receipt of such Financial Projection, make a prepayment or repayment of the Loans in an amount necessary to ensure that, following the removal of such Field, the Loans do not exceed the Available Facility.

5.5 Withdrawal of Borrowing Base Assets by the Borrower

	5.5.1		The Borrower may request that a Field shall cease to be a Borrowing Base Asset by giving to the Agent not less than thirty days’ notice of its intention to withdraw that Field as a Borrowing Base Asset.
	5.5.2		As soon as practicable following receipt of notice from the Borrower pursuant to Clause 5.5.1 the Agent shall request the Technical Bank to deliver to the Lenders and the Borrower a Financial Projection reflecting such withdrawal and specifying the amount if any by which the Borrower must repay or prepay the Loans if it wishes to withdraw such Field as a Borrowing Base Asset.

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

5.6 Release of Security

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

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

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

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6.3 Determination of Assumptions

	6.3.1		The Technical Bank shall, no later than thirty days prior to a Scheduled Redetermination Date, prepare and deliver to the Borrower the proposed Financial Projection for that Scheduled Redetermination Date together with the Technical Assumptions and the Economic Assumptions used in the preparation thereof. The Technical Assumptions shall be determined by the Technical Bank acting reasonably on the basis of its good faith opinion and by reference to the Lenders’ Technical Report prepared specifically for the proposed Financial Projection and prices in the Economic Assumptions will reflect any Hedge Agreements entered into by the Borrower in respect of the Borrowing Base Assets. The Technical Bank shall at the same time deliver to the Borrower a copy of the relevant Lenders’ Technical Report used for the purposes of the proposed Financial Projection.
	6.3.2		If any of the Technical Assumptions used in the preparation of the proposed Financial Projection is disputed by the Borrower and, following good faith discussions for a period of ten days, the Technical Bank and the Borrower are unable to resolve the dispute and agree on the relevant Technical Assumption, the Technical Bank shall prepare the Financial Projection on the basis of the Technical Assumptions drawn from the relevant Lenders’ Technical Report, as modified to take account of any changes requested by the Borrower and agreed by the Technical Bank (acting reasonably, taking into account any independent reserve reports or oil price forecasts provided by the Borrower, and providing reasonable justification for its determination).
	6.3.3		The Economic Assumptions shall be determined by the Agent acting reasonably on the basis of its good faith opinion. If any of the Economic Assumptions used in the preparation of the proposed Financial Projection are disputed by the Borrower and, following good faith discussions for a period of ten days, the Agent and the Borrower are unable to resolve the dispute and agree on the relevant Economic Assumption, the Agent shall prepare the Financial Projection on the basis of the Economic Assumptions determined by it on a fair and reasonable basis, as modified to take account of any changes requested by the Borrower and agreed by the Agent (acting reasonably, taking into account any independent reserve reports or oil price forecasts provided by the Borrower, and providing reasonable justification for its determination).
	6.3.4		In the case of any Financial Projection to be prepared on any Unscheduled Redetermination Date, not later than twenty days prior to such Unscheduled Redetermination Date, the Technical Bank shall notify the Borrower of all Assumptions proposed to be used for preparing the relevant Financial Projection. The Assumptions shall be determined by the Technical Bank acting reasonably on the basis of its good faith opinion following consultation with the Borrower and otherwise, in the case of the Technical Assumptions, by reference to the Lenders’ Technical Report prepared specifically for the relevant Financial Projection (or, at the discretion of the Technical Bank, the

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

	6.3.5		Subject to this Clause 6 (Borrowing Base Amount), the determination by the Technical Bank of the Technical Assumptions and the Economic Assumptions shall be final and binding on the Borrower and the Lenders and shall be used in preparing the relevant Financial Projection.
	6.3.6		The Assumptions as determined pursuant to this Clause 6.3 (Determination of Assumptions) shall be used in the Financial Projection for the relevant Redetermination Date.

6.4		Modification of Financial Model
		The Technical Bank or the Borrower may propose modifications to the computer programme comprising the Financial Model at any time in order to correct any deficiency in its form or structure and the Technical Bank shall make any modifications approved by both parties (such approval not to be unreasonably withheld, conditioned or delayed) as soon as practicable.
6.5		Lenders’ Technical Report
		The Technical Bank shall request the Independent Engineer to deliver to the Technical Bank, no later than forty days before each Scheduled Redetermination Date and, in the sole discretion of the Technical Bank, at any other time in relation to any Unscheduled Redetermination Date, a Lenders’ Technical Report.
6.6		Independent Engineer Review
		The Technical Bank shall request, and the Borrower shall permit (on reasonable prior notice) the Independent Engineer to visit the site of the Borrowing Base Assets on an annual basis in order to review the Borrowing Base Assets and the Technical Assumptions provided that:

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

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SECTION 4
UTILISATION

7.		UTILISATION OF FACILITY
7.1		Delivery of a Utilisation Request for a Loan
		The Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
7.2		Completion of a Utilisation Request for a Loan
		Each Utilisation Request relating to a Loan is irrevocable and will not be regarded as having been duly completed unless:

	7.2.1		the proposed Utilisation Date is a Business Day within the Availability Period;
	7.2.2		the currency and amount of the Utilisation comply with Clause 7.4 (Currency and amount of Loans); and
	7.2.3		the Utilisation Request specifies the account or accounts into which the proceeds of the Utilisation are to be paid (together with the relevant amounts) which:

	(a)		in the case of payments to SPDB and LCCU, as permitted by paragraph 3.1.1(b) of Clause 3.1 (Purpose of the Facility) shall be the accounts specified by such institutions in the letters delivered pursuant to paragraph 6(p) of Schedule 2 (Conditions Precedent);
	(b)		in the case of payments to Microbes as permitted by paragraph 3.1.3 of Clause 3.1 (Purpose of the Facility) shall be the account specified by Microbes in the Termination Agreement;
	(c)		in relation to the payment of fees, costs and expenses pursuant to paragraph 6(d) of Schedule 2 (Conditions Precedent) shall be the account specified by the Agent; and
	(d)		in the case of all other amounts, shall be the Offshore Collection Account.

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

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7.4 Currency and amount of Loans

	7.4.1		The currency specified in a Utilisation Request must be dollars and the requested Loan must be a minimum of $5,000,000 (and an integral multiple of $1,000,000) or, if less, the Available Facility.
	7.4.2		The amount of any proposed Loan in a Utilisation Request must be an amount which is not more than the Available Facility.

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

	7.6.1		If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.
	7.6.2		The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making that Loan.
	7.6.3		The Agent shall notify each Lender of the amount of each Loan and the amount of its participation in that Loan, in each case by the Specified Time.

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SECTION 5
REPAYMENT, PREPAYMENT AND CANCELLATION

8.		REPAYMENT
8.1		Repayment of Loans

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

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

and, in each case, a Loan of the principal amount requested or deemed requested in the Utilisation Request shall be deemed to have been made on such Utilisation Date.

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

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

8.2		Reborrowing
		Subject to the terms of this Agreement, any Loan repaid or amount prepaid under the Facility shall be capable of being redrawn during the Availability Period.
9.		PREPAYMENT AND CANCELLATION
9.1		Illegality
		If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan:

	9.1.1		that Lender shall promptly notify the Agent upon becoming aware of that event;
	9.1.2		upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and
	9.1.3		the Borrower shall repay that Lender’s participation in the Loans made to the Borrower on the last day of the Interest Period for each Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).

9.2		Voluntary cancellation
		The Borrower may, if it gives the Agent not less than five Business Days (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount and an integral multiple of $1,000,000) of the Maximum Facility. Any cancellation under this Clause 9.2 shall reduce the Commitments of the Lenders rateably.
9.3		Voluntary prepayment

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

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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;