FX ENERGY POLAND SP. ZO.O FX ENERGY, INC. FX ENERGY NETHERLANDS PARTNERSHIP CV FX ENERGY NETHERLANDS BV and THE ROYAL BANK OF SCOTLAND PLC ____________________________________________ SUBORDINATION DEED ______________________________________ SUBORDINATION DEED

(1)

FX POLAND SP. ZO.O., (“Borrower”);

(2)

FX ENERGY, INC., (“Parent”);

(3)

FX ENERGY NETHERLANDS PARTNERSHIP CV., (“FX Partnership”);

(4)

FX ENERGY NETHERLANDS BV., (“FX Netherlands”); and

(4)

THE ROYAL BANK OF SCOTLAND PLC, (“Lender”).

(a)

The Parent, FX Partnership, FX Netherlands, the Borrower and the Lender entered into a senior facility agreement dated 17 November 2006 (the “Senior Facility Agreement”) pursuant to which the Lender has agreed to make Loans (as such term is defined in the Senior Facility Agreement) to the Borrower, subject to and on the terms and conditions set forth in the Senior Facility Agreement; and

(b)

It is a condition precedent to the disbursement of Loans under the Senior Facility Agreement that the Parent, FX Partnership, FX Netherlands and the Borrower enter into this Deed.

(a)

each reference to: “Subordinated Debt” or “Senior Debt” or “Subordinated Debt Documentation” is deemed to include a reference to any part of it;

(b)

headings are for convenience only and do not affect the interpretation of this Deed;

(c)

except where the context requires otherwise, words importing the singular include the plural and vice versa;

(d)

a reference to an Annex, Article, party, Schedule or Clause is a reference to that article or section of, or that party, annex or schedule to, this Deed;

(e)

a reference to a document includes an amendment or supplement to, or replacement or novation of, that document, but does not include any amendment, supplement, replacement or novation made in breach of this Deed;

(f)

a reference to a party to any document includes that party’s successors and permitted assigns;

(g)

a provision of a statute, rule, or regulation is, unless otherwise indicated, deemed to include a reference to such provision as amended, modified, or re-enacted;

(h)

the term “including” (and forms thereof) means “including without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;

(i)

a reference to any condition or representation by any person being to such person’s knowledge shall be deemed to be to such person’s knowledge after due inquiry;

(j)

covenants and undertakings given by two or more persons bind those persons jointly and severally; and

(k)

no part of this Deed is intended to or shall create a registrable Security.

(a)

pay, prepay or repay, or make any distribution in respect of, or purchase or acquire, the Subordinated Debt, in cash or kind (provided that for avoidance of doubt, if the conditions specified in Clause 0 are satisfied, the Borrower and FX Netherlands may make such payments);

(b)

permit any Affiliate to purchase or acquire the Subordinated Debt;

(c)

set off any amount against the Subordinated Debt;

(d)

create or permit to subsist Security over any of the Borrowing Base Assets except for the Security created by the Security Documents;

(e)

permit the Subordinated Debt to be evidenced by a negotiable instrument, unless the instrument is legended with this subordination and is deposited with the Lender;

(f)

convert the Subordinated Debt into share capital of the Borrower or FX Netherlands or any other Subordinated Creditor unless, simultaneously with such conversion and as a condition to the effectiveness thereof, the Lender receives a valid, first ranking and perfected Security interest over all of the shares issued in connection with such conversion;

(g)

take or omit to take any action whereby the subordination achieved by this Deed may be impaired;

(h)

amend or grant any waiver with respect to any provision of any Subordinated Debt Documentation; or

(i)

incur any Financial Indebtedness from any member of the Group unless and until such member of the Group becomes a party to this Subordination Deed as a Subordinated Creditor by executing an Accession Undertaking.

(a)

demand or receive payment of, or any distribution in respect or on account of, the Subordinated Debt, in cash or kind, from the Borrower or FX Netherlands or any other source, or apply any money or assets in discharge of Subordinated Debt (provided that for avoidance of doubt, if the conditions specified in Clause 2.1 are satisfied, a Subordinated Creditor may receive such payments);

(b)

set off the Subordinated Debt against any amount owed by it to the Borrower or FX Netherlands;

(c)

permit to subsist or receive the benefit of a Security, guarantee, indemnity or assurance against loss from the Borrower, FX Netherlands or any other person as security for the Subordinated Debt;

(d)

permit the Subordinated Debt to be evidenced by a negotiable instrument, unless the instrument is legended with this subordination and is deposited with the Lender;

(e)

convert the Subordinated Debt into share capital of the Borrower or FX Netherlands or any other Subordinated Creditor unless, simultaneously with such conversion and as a condition to the effectiveness thereof, the Lender receives a valid, first ranking and perfected Security interest over all of the shares (or in the case of FX Partnership, all of the partnership interest) issued in connection with such conversion;

(f)

subject to Clause 0, accelerate the Subordinated Debt or otherwise declare the Subordinated Debt prematurely payable on the occurrence of an Acceleration Event or otherwise;

(g)

subject to Clause 0, enforce the Subordinated Debt by execution or otherwise;

(h)

subject to Clause 0, initiate, support or take any steps which would cause an Insolvency Event; or

(i)

amend or grant any waiver with respect to any provision of any Subordinated Debt Document.

(a)

the Subordinated Debt will be subordinate in right of payment to the Senior Debt;

(b)

the Lender may and is irrevocably authorized on behalf of each Subordinated Creditor to:

(i)

claim, enforce and prove for the Subordinated Debt or take any analogous action anywhere;

(ii)

file claims and proofs, give receipts and take all such proceedings and do all such things as the Lender sees fit to recover the Subordinated Debt or take any analogous action anywhere; and

(iii)

receive all distributions on the Subordinated Debt for application towards the Senior Debt;

(c)

if and to the extent that the Lender is not entitled to do any of the things mentioned in Clause 4.1(b), each Subordinated Creditor will do so immediately or as directed by the Lender;

(d)

each Subordinated Creditor will hold all payments and distributions in cash or in kind received or receivable by it in respect of the Subordinated Debt from the Borrower or its estate or from any other source in trust for the Lender to the extent of the Senior Debt and will pay and transfer them to the Lender for application towards the Senior Debt until the Senior Debt is irrevocably paid in full;

(e)

the trustee in bankruptcy, liquidator, assignee or other person distributing the assets of the Borrower or their proceeds is, pursuant to any provision of any insolvency law, directed to make all payments and distributions on the Subordinated Debt direct to the Lender until the Senior Debt is irrevocably paid in full, and each Subordinated Creditor will give all such notices and do all such things as the Lender may direct to give effect to this Clause 4.1(e).

(a)

it is a company (or in the case of FX Partnership, a limited partnership) duly organized and validly existing under the laws of its jurisdiction of incorporation, and it has the corporate or other power and has obtained all required Authorizations to own its assets, conduct its business as presently conducted and to enter into and comply with its obligations under this Deed and each other Transaction Document to which it is a party;

(b)

its execution and delivery of this Deed and each other Transaction Document to which it is a party and the performance of its obligations under this Deed and each such Transaction Document have been duly authorized;

(c)

its execution and delivery of this Deed and each other Transaction Document to which it is a party and the performance of its obligations under this Deed will not cause it to be in breach of any other agreement to which it is a party;

(d)

it has duly executed this Deed and each other Transaction Document to which it is a party, and this Deed and each such Transaction Document constitute its valid and legally binding obligations enforceable in accordance with their terms;

(e)

neither its execution and delivery of this Deed and each other Transaction Document to which it is a party nor its performance of its obligations under this Deed and each such Transaction Document will (i) conflict with or result in a material breach of any of the terms, conditions or provisions of, or constitute a material default or require any consent under, any indenture, mortgage, agreement or other instrument or arrangement to which it is a party or that is binding or purports to be binding upon it or (ii) violate any judgment, decree or order or any statute, rule or regulation or any of the terms or provisions of its constitutive documents;

(f)

all Authorisations required for the execution and delivery by it of this Deed and each other Transaction Document to which it is a party and the performance by it of its obligations under this Deed and each such Transaction Document have been duly obtained or granted and are in full force and effect;

(g)

neither it nor any of its property enjoys any right of immunity from set-off, suit or execution in respect of its assets or its obligations under this Deed;

(h)

all tax returns and reports of it required by law to be filed have been duly filed and all Tax, obligations, fees and other governmental charges upon it, or its properties, or its income or assets, which are due and payable or to be withheld, have been paid or withheld, other than those presently payable without penalty or interest;

(i)

to the best of its knowledge and belief, it is not in violation of any statute or regulation of any Governmental Authority and no judgment or order has been issued that has or is likely to have any materially adverse effect on its business prospects or financial condition or to make it improbable that it will be able to observe or comply with its obligations under this Deed;

(j)

it has not taken any corporate action nor have any other steps been taken or legal proceedings been started or (to the best of its knowledge and belief) threatened against it for its winding-up, dissolution, administration or re-organization or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or of any or all of its assets or revenues;

(k)

neither it nor any Affiliates, nor any person acting on its or their behalf, has made, with respect to the Project or any transaction contemplated by this Deed, any payment that would be prohibited by the Applicable Law, including any offer, gift, payment, promise to pay or authorization of the payment of any money or anything of value, directly or indirectly to any person for the purpose of influencing any act or decision or omission of any person in order to obtain, retain or direct business to, or secure improper benefit or advantage for the Borrower or any of its Affiliates; and

(l)

none of the representations and warranties in this Clause 5.1 omits any matter the omission of which makes any of such representations and warranties misleading.

(a)

discontinue, increase, reduce or otherwise vary in any way any credit or financial accommodation to the Borrower, any other Subordinated Creditor, or any other person or grant to the Borrower or any other person any new or increased facility or accommodation;

(b)

increase or otherwise vary the rate of interest, commission, fees or banking charges payable by the Borrower, any other Subordinated Creditor, or any other person to the Lender;

(c)

allow to the Borrower or to any other person any time, consideration or indulgence or make any concession to or compound with the Borrower, any other Subordinated Creditor, or any other person;

(d)

enter into, renew, vary or terminate any agreement or arrangement with or liability of the Borrower, any other Subordinated Creditor, or any other person or enter into, renew, vary, release or refrain from taking, perfecting or enforcing any present or future security, guarantee, indemnity or other assurance against loss or right which the Lender now or in the future holds from the Borrower or any other person;

(e)

release or discharge in whole or in part any Subordinated Creditor from this Deed; or

(f)

do or neglect to do anything or delay in doing anything that (but for this Clause 6.1(f)) might operate to release or reduce any Subordinated Creditor’s obligations under this Deed.

(a)

the absence of or any defective, excessive or irregular exercise of the powers of the Borrower or any other Subordinated Creditor, including lack of authority of any person purporting to be acting for the Borrower or any other Subordinated Creditor;

(b)

any security given or payment made to the Lender by the Borrower, any other Subordinated Creditor, or any other person being avoided or reduced under any law (English, Dutch, Polish or other applicable law) relating to bankruptcy, liquidation or analogous circumstances in force from time to time;

(c)

any change in the Lender’s, any Subordinated Creditor’s or the Borrower’s constitutive documents or composition (if a partnership or unincorporated body);

(d)

the insolvency of any Subordinated Creditor or the Borrower or any Subordinated Creditor or the Borrower not being a legal entity;

(e)

any guarantee, indemnity, other assurance against loss or security present or future held by the Lender being defective, void or unenforceable or not binding or not completed or perfected or the failure of the Lender to take any guarantee, indemnity or other assurance against loss or security;

(f)

this Deed or any of its terms not being or ceasing to be binding upon any other Subordinated Creditor, whether or not by agreement with the Lender the failure of any prospective Subordinated Creditor to execute or to perfect or to be bound by this Deed or any of its terms for any reason; or any of the subordinations intended to be established by this Deed being or becoming void, invalid or unenforceable;

(g)

any compromise or arrangement under any applicable insolvency law;

(h)

the existence or non-existence of any document (other than this Deed) or any fact, circumstance or mistake (whether or not known to each Subordinated Creditor, the Borrower, the Lender or any other person) or the construction or interpretation of any document, fact or circumstance that could or might at common law or in equity make the Senior Debt void, invalid, voidable or unenforceable; or

(i)

anything that would, in the absence of this Clause 6.2(i), release or reduce any Subordinated Creditor’s obligations to the Lender.

(a)

resort, for its own benefit, to any other means of payment at any time and in any order it thinks fit without releasing or reducing the obligations of any Subordinated Creditor under this Deed; and

(b)

claim the benefit of or enforce this Deed either before or after resorting to other means of payment and, if after, without entitling any Subordinated Creditor to any benefit from the other means of payment for so long as the Senior Debt remains due, owing or payable (whether actually or contingently).

(a)

will not be subrogated to any rights, security or monies held, received or receivable by the Lender;

(b)

will not be entitled to any right of contribution or indemnity in respect of any payment made or monies received on account of a Subordinated Creditor’s liability under this Deed;

(c)

may not claim, rank, prove or vote as a creditor of any Obligor or its estate in competition with the Lender; or

(d)

may not receive, claim or have the benefit of any payment, distribution or security from or on account of the Lender, or exercise any right of set off as against the Lender.

(a)

withhold affecting the liability of a Subordinated Creditor under this Deed:

(i)

refrain from applying or enforcing any other monies, security or rights held or received by the Lender in respect of those amounts; or

(ii)

apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise); and

(b)

hold in an interest-bearing suspense account any monies received from any Subordinated Creditor or on the account of the liability of any Subordinated Creditor under this Deed.

(a)

assign or dispose of, or create or permit to subsist any Security over, the Subordinated Debt or any interest in the Subordinated Debt or its proceeds to or in favour of any person;

(b)

subordinate any of the Subordinated Debt or its proceeds to any sums owing by the Borrower to any person other than the Lender; or

(c)

transfer by novation or otherwise any of its rights or obligations under any Subordinated Debt Documentation or in respect of any Subordinated Debt to any person.

(a)

The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed (including a dispute regarding the existence, validity or termination of this Deed) (a “Dispute”).

(b)

The parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no party will argue to the contrary.

(c)

This Clause 11.2 is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.

(a)

irrevocably appoints Law Debenture Corporate Services Limited, currently at Fifth Floor, 100 Wood Street, London, EC2V, England 7EX as its agent for service of process in relation to any proceedings before the English courts in connection with this Deed and/or any Finance Document; and

(b)

agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

(a)

agrees not to claim any immunity from proceedings brought by the Lender against that Obligor in relation to this Deed and/or any Finance Document and to ensure that no such claim is made on its behalf;

(b)

consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and

(c)

waives all rights of immunity in respect of it or its assets.

(a)

the liability of each Subordinated Creditor under this Deed shall, unless the context otherwise requires, be joint and several;

(b)

any communication under this Deed shall be deemed to be served on every Subordinated Creditor if served on any Subordinated Creditor; and

(c)

if any person is admitted as a partner of such firm the other partners shall procure that such new partner undertakes to adopt and be bound by this Deed as if he had originally been a party to it.

(a)

The Obligors’ obligations hereunder to make payments in Dollars shall not be discharged or satisfied by any tender or any recovery pursuant to any judgment that is expressed in, paid in, or converted into any currency other than Dollars.

(b)

If the Lender receives an amount in respect of any Obligor’s liability under this Deed or any other Transaction Document or if that liability is converted into a claim, proof, judgment or order in a currency other than Dollars:

(i)

such Obligor shall indemnify the Lender as an independent obligation against any loss or liability arising out of or as a result of the conversion;

(ii)

if the amount received by the Lender, when converted into Dollars at a market rate in the usual course of its business is less than the amount owed in Dollars, such Obligor shall forthwith on demand pay to the Lender an amount in Dollars equal to the deficit;

(iii)

such Obligor shall pay to the Lender on demand any exchange costs and taxes payable in connection with any such conversion; and

(iv)

such Obligor waives any right it may have in any jurisdiction to pay any amount under this Deed in a currency other than that in which it is expressed to be payable.

(c)

The foregoing indemnity shall constitute a separate obligation of each Obligor distinct from its other obligations hereunder and shall survive the giving or making of any order or judgment in relation to any of such other obligations.

(d)

To the extent that the undertaking in the preceding paragraphs of this Clause 12.8 may be unenforceable because it is violative of any law or public policy, each Obligor will contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction at such undertaking.

(a)

All documents to be provided or communications to be given or made under this Deed shall be in the English language;

(b)

All other documents provided under or in connection with any Finance Document must be:

(ii)

if not in English, and if so required by the Lender, 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.

(a)

in the case of each Obligor, that identified with its name below;

(b)

in the case of the Lender, that identified with its name below

The Borrower

Address:

FX Energy Poland Sp. ZO.O

ul. Chalubinskiego 8

00-613 Warsaw, Poland

Fax: +48 ###-###-####

Attention: Country Manger

The Parent

Address:

FX Energy, Inc.

3006 Highland Drive, Suite 206

Salt Lake City, Utah, 84106

United States of America

Fax: +1 ###-###-####

Attention: Chief Financial Officer

FX Partnership

Address:

FX Energy C.V.

3006 Highland Drive, Suite 206

Salt Lake City, Utah, 84106

United States of America

Fax: +1 ###-###-####

Attention: Chief Financial Officer

FX Netherlands

Address:

FX Energy B.V.

3006 Highland Drive, Suite 206

Salt Lake City, Utah, 84106

United States of America

Fax: +1 ###-###-####

Attention: Chief Financial Officer

The Lender

Address:

The Royal Bank of Scotland plc

Project Finance

135 Bishopsgate

London EC2M 3UR

Fax: +44 (0)20 7085 5578

Attention: Colin Bousfield / Jonathan Verlander

(a)

may be exercised as often as necessary;

(b)

are cumulative and not exclusive of its rights under the general law; and

(c)

may be waived only in writing and specifically.

(a)

The rights and remedies of the Lender in relation to any misrepresentation or breach of warranty on the part of each of the Obligors shall not be prejudiced by any investigation by or on behalf of the Lender into the affairs of the Obligors, by the execution or the performance of this Deed or by any other act or thing which may be done by or on behalf of the Lender in connection with this Deed and which might, apart from this Clause 12.14, prejudice such rights or remedies; and

(b)

No course of dealing and no failure or delay by the Lender in exercising, in whole or in part, any power, remedy, discretion, authority or other right under this Deed or any other agreement shall waive or impair, or be construed to be a waiver of or an acquiescence in, such or any other power, remedy, discretion, authority or right under this Deed, or in any manner preclude its additional or future exercise; nor shall the action of the Lender with respect to any default, or any acquiescence by it therein, affect or impair any right, power or remedy of the Lender with respect to any other default. All waivers or consents given under this Deed shall be in writing.

(A)

The Additional Subordinated Creditor has proposed to provide a credit facility to [the Borrower] in the principal amount of [_____] US Dollars (US$[_____]) pursuant to the documents listed on Annex A to this Accession Undertaking (“Subordinated Debt Documentation”); and

(B)

It is a requirement of the Subordination Deed that the Additional Subordinated Creditor become a party to the Subordination Deed by executing and delivering this Accession Undertaking to the Lender.

(1)

The Additional Subordinated Creditor hereby adopts and agrees to the terms and conditions of, to be bound by and to perform and comply with all of the obligations under the Subordination Deed as if it were a named Subordinated Creditor therein.

(2)

The Additional Subordinated Creditor confirms that the representations and warranties set forth in Clause 0 of the Subordination Deed as applicable to a Subordinated Creditor are true and correct as of the date hereof and each subsequent Utilisation Date with respect to the Additional Subordinated Creditor.

(3)

Any notice, request or other communication to be given or made to the Additional Subordinated Creditor under this Accession Undertaking or the Subordination Deed shall be delivered to the address specified below or at such other address as it may notify the other parties to the Subordination Deed from time to time.

(4)

By their signatures below, the Lender and each of the existing Subordinated Creditors hereby acknowledge the addition of the Additional Subordinated Creditor as a Subordinated Creditor under the Subordination Agreement.

(5)

This Accession Undertaking shall be governed by and construed in accordance with the laws of England.

(6)

This Accession Undertaking may be executed in one or more counterparts and by one or more parties to any counterpart, each of which shall be deemed an original and all of which together shall constitute one and the same agreement.