exv4w1



 






Exhibit 4.1




 

 



Parallel Petroleum Corporation




10 1/4% 
Senior Notes due 2014




Indenture




Dated as of
 July 31, 2007





Wells Fargo Bank, National Association,




as Trustee



 

 















 








TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	 	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Other Definitions
	 	 	30	 
	Section 1.3 Incorporation by Reference of Trust Indenture Act
	 	 	31	 
	Section 1.4 Rules of Construction
	 	 	31	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	THE SECURITIES
	 	 	 	 
	 
	 	 	 	 
	Section 2.1 Form and Dating
	 	 	32	 
	Section 2.2 Execution and Authentication
	 	 	33	 
	Section 2.3 Registrar and Paying Agent
	 	 	34	 
	Section 2.4 Paying Agent to Hold Money in Trust
	 	 	34	 
	Section 2.5 Holder Lists
	 	 	35	 
	Section 2.6 Transfer and Exchange
	 	 	35	 
	Section 2.7 Replacement Securities
	 	 	49	 
	Section 2.8 Outstanding Securities
	 	 	49	 
	Section 2.9 Temporary Securities
	 	 	49	 
	Section 2.10 Cancellation
	 	 	50	 
	Section 2.11 Defaulted Interest
	 	 	50	 
	Section 2.12 CUSIP Numbers
	 	 	50	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	REDEMPTION
	 	 	 	 
	 
	 	 	 	 
	Section 3.1 Notices to Trustee
	 	 	51	 
	Section 3.2 Selection of Securities to Be Redeemed
	 	 	51	 
	Section 3.3 Notice of Redemption
	 	 	51	 
	Section 3.4 Effect of Notice of Redemption
	 	 	52	 
	Section 3.5 Deposit of Redemption Price
	 	 	52	 
	Section 3.6 Securities Redeemed in Part
	 	 	52	 
	Section 3.7 Optional Redemption
	 	 	53	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 4.1 Payment of Securities
	 	 	53	 
	Section 4.2 SEC Reports
	 	 	54	 
	Section 4.3 Incurrence of Indebtedness
	 	 	55	 
	Section 4.4 Restricted Payments
	 	 	58	 






i









 







	 	 	 	 	 
	Section 4.5 Liens
	 	 	61	 
	Section 4.6 Dividend and Other Payment Restrictions Affecting Subsidiaries
	 	 	62	 
	Section 4.7 Asset Sales
	 	 	63	 
	Section 4.8 Transactions With Affiliates
	 	 	66	 
	Section 4.9 Designation of Restricted and Unrestricted Subsidiaries
	 	 	67	 
	Section 4.10 Future Subsidiary Guarantees
	 	 	67	 
	Section 4.11 Business Activities
	 	 	67	 
	Section 4.12 Change of Control
	 	 	68	 
	Section 4.13 Maintenance of Office or Agency for Registration of Transfer, Exchange and
Payment of Securities
	 	 	69	 
	Section 4.14 Appointment to Fill a Vacancy in the Office of Trustee
	 	 	70	 
	Section 4.15 Provision as to Paying Agent
	 	 	70	 
	Section 4.16 Maintenance of Corporate Existence
	 	 	71	 
	Section 4.17 Compliance Certificate
	 	 	71	 
	Section 4.18 Taxes
	 	 	71	 
	Section 4.19 Stay, Extension and Usury Laws
	 	 	72	 
	Section 4.20 Payments for Consent
	 	 	72	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	SUCCESSOR COMPANY
	 	 	 	 
	 
	 	 	 	 
	Section 5.1 Merger, Consolidation or Sale of Assets
	 	 	72	 
	Section 5.2 Successor Substituted
	 	 	73	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	DEFAULTS AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 6.1 Events of Default
	 	 	74	 
	Section 6.2 Acceleration of Maturity; Rescission and Annulment
	 	 	76	 
	Section 6.3 Other Remedies
	 	 	76	 
	Section 6.4 Waiver of Past Defaults
	 	 	77	 
	Section 6.5 Control by Majority
	 	 	77	 
	Section 6.6 Limitation on Suits
	 	 	77	 
	Section 6.7 Rights of Holders to Receive Payment
	 	 	78	 
	Section 6.8 Collection Suit by Trustee
	 	 	78	 
	Section 6.9 Trustee May File Proofs of Claim
	 	 	78	 
	Section 6.10 Priorities
	 	 	78	 
	Section 6.11 Undertaking for Costs
	 	 	79	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	TRUSTEE
	 	 	 	 
	 
	 	 	 	 
	Section 7.1 Duties of Trustee
	 	 	79	 
	Section 7.2 Rights of Trustee
	 	 	80	 






ii









 






	 	 	 	 	 
	Section 7.3 Individual Rights of Trustee
	 	 	81	 
	Section 7.4 Trustee’s Disclaimer
	 	 	81	 
	Section 7.5 Notice of Defaults
	 	 	81	 
	Section 7.6 Reports by Trustee to Holders
	 	 	81	 
	Section 7.7 Compensation and Indemnity
	 	 	82	 
	Section 7.8 Replacement of Trustee
	 	 	82	 
	Section 7.9 Successor Trustee by Merger
	 	 	83	 
	Section 7.10 Eligibility; Disqualification
	 	 	84	 
	Section 7.11 Preferential Collection of Claims Against Company
	 	 	84	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	DISCHARGE OF INDENTURE; DEFEASANCE
	 	 	 	 
	 
	 	 	 	 
	Section 8.1 Discharge of Liability on Securities; Defeasance
	 	 	84	 
	Section 8.2 Conditions to Defeasance
	 	 	86	 
	Section 8.3 Delivery and Application of Trust Money
	 	 	87	 
	Section 8.4 Repayment to Company
	 	 	87	 
	Section 8.5 Indemnity for Government Securities
	 	 	87	 
	Section 8.6 Reinstatement
	 	 	87	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	 
	 	 	 	 
	AMENDMENTS
	 	 	 	 
	 
	 	 	 	 
	Section 9.1 Without Consent of Holders
	 	 	88	 
	Section 9.2 With Consent of Holders
	 	 	88	 
	Section 9.3 Compliance with Trust Indenture Act
	 	 	90	 
	Section 9.4 Revocation and Effect of Consents and Waivers
	 	 	90	 
	Section 9.5 Notation on or Exchange of Securities
	 	 	90	 
	Section 9.6 Trustee to Sign Amendments
	 	 	90	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	 
	 	 	 	 
	SUBSIDIARY GUARANTEE
	 	 	 	 
	 
	 	 	 	 
	Section 10.1 Subsidiary Guarantee
	 	 	91	 
	Section 10.2 Limitation on Liability
	 	 	92	 
	Section 10.3 Execution and Delivery of Subsidiary Guarantee
	 	 	93	 
	Section 10.4 Successors and Assigns
	 	 	93	 
	Section 10.5 No Waiver
	 	 	93	 
	Section 10.6 Right of Contribution
	 	 	93	 
	Section 10.7 No Subrogation
	 	 	94	 
	Section 10.8 Modification
	 	 	94	 
	Section 10.9 Merger, Consolidation or Sale of Assets of a Guarantor; Release of a
Guarantor
	 	 	94	 






iii









 






	 	 	 	 	 
	ARTICLE XI
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 11.1 Trust Indenture Act Controls
	 	 	95	 
	Section 11.2 Notices
	 	 	95	 
	Section 11.3 Communication by Holders with other Holders
	 	 	97	 
	Section 11.4 Certificate and Opinion as to Conditions Precedent
	 	 	97	 
	Section 11.5 Statements Required in Certificate or Opinion
	 	 	97	 
	Section 11.6 When Securities Disregarded
	 	 	97	 
	Section 11.7 Legal Holidays
	 	 	97	 
	Section 11.8 Governing Law
	 	 	98	 
	Section 11.9 No Personal Liability of Directors, Officers, Employees and Shareholders
	 	 	98	 
	Section 11.10 Successors
	 	 	98	 
	Section 11.11 Multiple Originals; Counterparts
	 	 	98	 
	Section 11.12 Severability
	 	 	98	 
	Section 11.13 Table of Contents; Headings
	 	 	98	 
	Section 11.14 No Adverse Interpretation of Other Agreements
	 	 	99	 






EXHIBITS




Exhibit A – Form of Security

Exhibit B – Form of Certificate of Transfer

Exhibit C – Form of Certificate of Exchange

Exhibit D – Form of Notation of Subsidiary Guarantee

Exhibit E – Form of Supplemental Indenture to be Delivered by Future Guarantors




iv









 







CROSS-REFERENCE TABLE




	 	 	 	 	 
	Trust Indenture Act Section	Indenture Section
	310	 	(a)(1) 
	 	7.10
	 	 	(a)(2) 
	 	7.10
	 	 	(a)(3) 
	 	N.A.
	 	 	(a)(4) 
	 	N.A.
	 	 	(b)
	 	7.8; 7.10
	 	 	(c)
	 	N.A.
	311	 	(a)
	 	7.11
	 	 	(b)
	 	7.11
	 	 	(c)
	 	N.A.
	312	 	(a)
	 	2.5
	 	 	(b)
	 	11.3
	 	 	(c)
	 	11.3
	313	 	(a) 
	 	7.6
	 	 	(b)(1) 
	 	N.A.
	 	 	(b)(2) 
	 	7.6
	 	 	(c)
	 	7.6
	 	 	(d)
	 	7.6
	314	 	(a)
	 	4.2; 4.12; 11.2
	 	 	(b)
	 	N.A.
	 	 	(c)(1) 
	 	11.4
	 	 	(c)(2) 
	 	11.4
	 	 	(c)(3) 
	 	N.A.
	 	 	(d)
	 	N.A.
	 	 	(e)
	 	11.5
	 	 	(f)
	 	N.A.
	315	 	(a)
	 	7.1
	 	 	(b)
	 	7.5; 11.2
	 	 	(c)
	 	7.1
	 	 	(d)
	 	7.1
	 	 	(e)
	 	6.11
	316	 	(a)(last sentence) 
	 	11.6
	 	 	(a)(1)(A) 
	 	6.5
	 	 	(a)(1)(B) 
	 	6.4
	 	 	(a)(2) 
	 	N.A.
	 	 	(b)
	 	6.7
	317	 	(a)(1) 
	 	6.8
	 	 	(a)(2) 
	 	6.9
	 	 	(b)
	 	2.4
	318	 	(a)
	 	11.1







N.A. means Not Applicable.






 




			
	Note:  	 	This Cross-Reference Table shall not, for any purpose, be deemed to be part of this
Indenture.




v









 










     INDENTURE, dated as of July 31, 2007, between PARALLEL PETROLEUM CORPORATION, a Delaware
corporation (the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as trustee (the “Trustee”).



     Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Company’s 10 1/4% Senior Notes due 2014 issued on the date hereof
(the “Initial Securities”), the Holders of any Additional Securities (as defined herein) issued
hereafter and, if and when issued in exchange for the Initial Securities or any Additional
Securities as provided in a Registration Rights Agreement (as hereinafter defined), the Company’s
10 1/4% Senior Notes due 2014 provided in exchange for such Initial Securities or Additional
Securities:



ARTICLE I




DEFINITIONS AND INCORPORATION BY REFERENCE




Section 1.1 Definitions




     “144A Global Security” means a Global Security substantially in the form of Exhibit A
hereto bearing the Global Security Legend and the Private Placement Legend, that has the “Schedule
of Exchanges of Interests in the Global Security” attached thereto, and that is deposited with or
on behalf of, and registered in the name of, the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Securities initially sold in reliance
on Rule 144A.



     “ACNTA” means (without duplication), as of the date of determination:



     (1) the sum of:




	 	(a)	 	discounted future net revenue from proved crude oil and natural
gas reserves of the Company and its Restricted Subsidiaries calculated in
accordance with SEC guidelines before any state or federal income taxes, as
estimated in a reserve report prepared as of the end of the Company’s most
recently completed fiscal year, which reserve report is prepared, reviewed or
audited by independent petroleum engineers, as increased by, as of the date of
determination, the discounted future net revenue of:






	 	(i)	 	estimated proved crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries attributable to
acquisitions consummated since the date of such year-end reserve
report, and
	 
	 	(ii)	 	estimated proved crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries attributable to
extensions, discoveries and other additions and upward determinations
of estimates of proved crude oil and natural gas reserves (including
previously estimated development costs incurred during the period and
the accretion of discount since the prior year end) due to














 






	 	 	 	exploration, development or exploitation, production or other
activities which reserves were not reflected in such year-end reserve
report,




in the case of the determination made under each of clauses (i) and (ii) above,
calculated in accordance with SEC guidelines (utilizing the prices utilized in such
year-end reserve report), and decreased by, as of the date of determination, the
discounted future net revenue attributable to





	 	(iii)	 	estimated proved crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries reflected in
such year-end reserve report produced or disposed of since the date of
such year-end reserve report, and
	 
	 	(iv)	 	reductions in the estimated proved crude oil
and natural gas reserves of the Company and its Restricted Subsidiaries
reflected in such year-end reserve report since the date of such
year-end reserve report attributable to downward determinations of
estimates of proved crude oil and natural gas reserves due to
exploration, development or exploitation, production or other
activities conducted or otherwise occurring since the date of such
year-end reserve report, in each case calculated in accordance with SEC
guidelines (utilizing the prices utilized in such year-end reserve
report);




provided, however, that, in the case of each of the determinations made pursuant to
clauses (i) through (iv), such increases and decreases shall be as estimated by the
Company’s engineers, except that if as a result of such acquisitions, dispositions,
discoveries, extensions or revisions, there is a Material Change, then such
increases and decreases in the discounted future net revenue shall be confirmed in
writing by an independent petroleum engineer;





	(b)	 	the capitalized costs that are attributable to crude oil and
natural gas properties of the Company and its Restricted Subsidiaries to which
no proved crude oil and natural gas reserves are attributed, based on the
Company’s books and records as of a date no earlier than the date of the
Company’s latest annual or quarterly financial statements;
	 
	(c)	 	the Net Working Capital on a date no earlier than the date of
the Company’s latest annual or quarterly financial statements; and
	 
	(d)	 	the greater of (I) the net book value on a date no earlier than
the date of the Company’s latest annual or quarterly financial statements and
(II) the appraised value, as estimated by independent appraisers within the
immediately preceding 12 months, of other tangible assets of the Company and
its Restricted Subsidiaries;










2









 












	 	(2)	 	minus, to the extent not otherwise taken into account in the immediately
preceding clause (1), the sum of:






	 	(a)	 	minority interests;
	 
	 	(b)	 	any net gas balancing liabilities of the Company and its
Restricted Subsidiaries reflected in the Company’s latest audited financial
statements;
	 
	 	(c)	 	the discounted future net revenue, calculated in accordance
with SEC guidelines (utilizing the same prices utilized in the Company’s
year-end reserve report), attributable to reserves subject to participation
interests, royalty interests, overriding royalty interests, net profits
interests or other interests of third parties, pursuant to participation,
partnership, vendor financing or other agreements then in effect, or which
otherwise are required to be delivered to third parties;
	 
	 	(d)	 	the discounted future net revenue, calculated in accordance
with SEC guidelines (utilizing the same prices utilized in the Company’s
year-end reserve report), attributable to reserves that are required to be
delivered to third parties to fully satisfy the obligations of the Company and
its Restricted Subsidiaries with respect to Volumetric Production Payments on
the schedules specified with respect thereto; and
	 
	 	(e)	 	the discounted future net revenue, calculated in accordance
with SEC guidelines, attributable to reserves subject to Dollar-Denominated
Production Payments that, based on the estimates of production included in
determining the discounted future net revenue specified in the immediately
preceding clause (1)(a) (utilizing the same prices utilized in the Company’s
year-end reserve report), would be necessary to satisfy fully the obligations
of the Company and its Restricted Subsidiaries with respect to
Dollar-Denominated Production Payments on the schedules specified with respect
thereto.




If the Company changes its method of accounting from the full cost method to the successful efforts
method or a similar method of accounting, ACNTA will continue to be calculated as if the Company
were still using the full cost method of accounting. In determining ACNTA, the Company may, at its
option, use reserve reports prepared as of the end of the Company’s most recently completed fiscal
quarter in lieu of using year-end reserve reports.




     “Acquired Debt” means (without duplication), with respect to any specified Person:




	 	(1)	 	Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person, whether
or not such Indebtedness is incurred in connection with, or in contemplation of, such
other Person merging with or into, or becoming a Restricted Subsidiary of, such
specified Person; and




3









 












	 	(2)	 	Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.





     “Additional Assets” means:




	 	(1)	 	any non-current properties or assets to be used by the Company or any
Restricted Subsidiary in the Oil and Gas Business; and
	 
	 	(2)	 	the Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary;
provided, however, that such Restricted Subsidiary is primarily engaged in the Oil and
Gas Business.





     “Additional Interest” means, with respect to any Securities, the additional interest thereon,
if any, required by the Registration Rights Agreement applicable to such Securities.



     “Additional Securities” means any Securities (other than the Initial Securities or the
Exchange Securities) issued under this Indenture in accordance with Sections 2.2 and
4.3 hereof, as part of the same series as the Initial Securities to the extent outstanding
and any Exchange Securities then outstanding.



     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control,” as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control. For purposes of this definition, the terms “controlling,”
“controlled by” and “under common control with” shall have correlative meanings.



     “Applicable Premium” means, with respect to a Security at any redemption date, the greater of
(x) 1.0% of the principal amount of such Security and (y) the excess of (A) the present value at
such time of (1) the redemption price of such Security as of August 1, 2011 (without regard to
accrued and unpaid interest) plus (2) all required interest payments due on such Security through
August 1, 2011, computed using a discount rate equal to the Treasury Rate plus 50 basis points,
over (B) the principal amount of such Security.



     “Agent” means any Registrar or Paying Agent.



     “Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial
interests in any Global Security, the rules and procedures of the Depositary, Euroclear or
Clearstream that apply to such transfer or exchange.



4









 





     “Asset Sale” means:




	 	(1)	 	the sale, lease, conveyance or other disposition (including, without
limitation, by means of a sale and leaseback transaction) of any assets, including,
without limitation, any sale of hydrocarbons or other mineral products as a result of
the creation of Production Payments and Reserve Sales; provided, however, that the
sale, lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole will be governed by
Section 4.12 hereof or Section 5.1 hereof and not by the provisions of
Section 4.7 hereof; and
	 
	 	(2)	 	the issuance of Equity Interests by any of the Company’s Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries (other than
directors’ qualifying shares or shares required by applicable law to be held by a
Person other than the Company or a Restricted Subsidiary).





     Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:




	 	(1)	 	any single transaction or series of related transactions that results in Net
Proceeds to the Company and its Restricted Subsidiaries of less than $2.0 million;
	 
	 	(2)	 	a transfer of assets between or among the Company and its Restricted
Subsidiaries (including a Person that will become a Restricted Subsidiary immediately
following such Asset Sale);
	 
	 	(3)	 	an issuance of Equity Interests by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary;
	 
	 	(4)	 	a disposition of cash or Cash Equivalents;
	 
	 	(5)	 	a Permitted Investment or a Restricted Payment that is permitted by Section
4.4 hereof;
	 
	 	(6)	 	a disposition of crude oil, natural gas or other hydrocarbons or other mineral
products in the ordinary course of the Oil and Gas Business operations of the Company
and its Subsidiaries;
	 
	 	(7)	 	any abandonment, relinquishment, farm-in, farm-out, lease and sub-lease of
developed or undeveloped properties made or entered into in the ordinary course of
business, but excluding any disposition as a result of the creation of a Production
Payment and Reserve Sale;
	 
	 	(8)	 	the provision of services, equipment and other assets for the operation and
development of the Company’s and its Restricted Subsidiaries’ oil and natural gas
wells, in the ordinary course of the Company’s and its Restricted Subsidiaries’ Oil and
Gas Business, notwithstanding that such transactions may be recorded as asset sales in
accordance with full cost accounting guidelines;










5









 












	 	(9)	 	the creation or perfection of a Lien (but not the sale or other disposition of
any asset subject to such Lien);
	 
	 	(10)	 	Asset Swap;
	 
	 	(11)	 	any Production Payments and Reserve Sales arising from incentive compensation
programs on terms that are reasonably customary in the Oil and Gas Business for
geologists, geophysicists and other providers of technical services to the Company or a
Restricted Subsidiary;
	 
	 	(12)	 	the surrender or waiver of contract rights or the settlement, release or
surrender of contract, tort or other claims of any kind; and
	 
	 	(13)	 	any assignment of an overriding royalty or net profits interest to an employee
or consultant of the Company or any of its Restricted Subsidiaries in the ordinary
course of business in connection with the generation of prospects or the development of
oil and natural gas projects.





     “Asset Swap” means any concurrent purchase and sale or exchange of any oil or natural gas
property or interest therein between the Company or any of its Restricted Subsidiaries and another
Person; provided, that (i) any cash received must be applied in accordance with Section 4.7
hereof as if the Asset Swap were an Asset Sale and (ii) the value of the property received by the
Company or any Restricted Subsidiary in such transaction (including any cash) is at least equal to
the Fair Market Value of the property (including any cash) so purchased and sold or exchanged.



     “Attributable Debt” in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be extended. Such
present value shall be calculated using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with GAAP. As used in the preceding sentence, the “net
rental payments” under any lease for any such period shall mean the sum of rental and other
payments required to be paid with respect to such period by the lessee thereunder, excluding any
amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease that is terminable by the
lessee upon payment of penalty, such net rental payment shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated.



     “Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal or state law
for the relief of debtors.



     “Beneficial Owner” has the meaning assigned to such term in Rule l3d-3 and Rule l3d-5 under
the Exchange Act.



     “Board of Directors” means, with respect to any Person, the board of directors of such Person
or any duly authorized committee thereof.



6









 





     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the applicable Person to have been duly adopted by its Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the Trustee.



     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to close.



     “Capital Lease Obligation” means, at the time any determination thereof is to be made, the
amount of the liability of a Person in respect of a capital lease that would at that time be
required to be capitalized on a balance sheet of such Person in accordance with GAAP.



     “Capital Stock” means:




	 	(1)	 	in the case of a corporation, corporate stock;
	 
	 	(2)	 	in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;
	 
	 	(3)	 	in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
	 
	 	(4)	 	any other interest or participation (other than any debt security convertible
into an Equity Interest) that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.





     “Cash Equivalents” means:




	 	(1)	 	United States dollars;
	 
	 	(2)	 	securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having maturities
of not more than one year from the date of acquisition;
	 
	 	(3)	 	certificates of deposit and Eurodollar time deposits with maturities of nine
months or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding nine months and demand deposits, trust accounts, time deposits and overnight
bank deposits, in each case, with any lender party to a Credit Facility or any domestic
commercial bank having capital and surplus in excess of $250.0 million and a Thomson
BankWatch rating of “B” or better;
	 
	 	(4)	 	repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (2) and (3) above entered into with any
financial institution meeting the qualifications specified in clause (3) above;
	 
	 	(5)	 	commercial paper having the highest rating obtainable from Moody’s Investors
Service, Inc. (or its successor) or Standard & Poor’s Ratings Services (or its










7









 














	 	successor)	 	and in each case maturing within nine months after the date of
acquisition; and






	 	(6)	 	money market or other mutual funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.





     “Change of Control” means the occurrence of any of the following:




	 	(1)	 	the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a whole;
	 
	 	(2)	 	the adoption by the Board of Directors of a plan of liquidation or dissolution
of the Company;
	 
	 	(3)	 	the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any “person” (as such term is used in
Section 13(d)(3) of the Exchange Act), becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Company, measured by voting
power rather than number of shares;
	 
	 	(4)	 	the first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors; or
	 
	 	(5)	 	the Company consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other property, other than any
such transaction where the Voting Stock of the Company outstanding immediately prior to
such transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a majority of
the outstanding shares of such Voting Stock of such surviving or transferee Person
immediately after giving effect to such issuance.





     “Clearstream” means Clearstream Banking, société anonyme, or any successor securities
clearance agency.



     “Code” means the U.S. Internal Revenue Code of 1986 and any successor statute thereto, in each
case as amended from time to time.



     “Commodity Agreement” means any crude oil or natural gas hedging agreement and other agreement
or arrangement entered into in the ordinary course of business and designed to protect the Company
or any Restricted Subsidiary against fluctuations in crude oil or natural gas prices.



8









 





     “Company” means the Person named as the “Company” in the first paragraph of this instrument
until a successor Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Company” shall mean such successor Person.



     “Consolidated Cash Flow” means, with respect to any Person for any period, without
duplication, the Consolidated Net Income of such Person for such period plus:




	 	(1)	 	provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for taxes
was deducted in computing such Consolidated Net Income; plus
	 
	 	(2)	 	Fixed Charges, to the extent that any such expense was deducted in computing
such Consolidated Net Income; plus
	 
	 	(3)	 	depreciation, depletion, amortization (including amortization of intangibles
but excluding amortization of prepaid cash expenses that were paid in a prior period),
“ceiling limitation” write-downs, impairment, exploration expense and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents an
accrual of or reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation, depletion,
amortization, write-downs, impairment, exploration expense and other non-cash expenses
were deducted in computing such Consolidated Net Income; plus
	 
	 	(4)	 	unrealized non-cash losses resulting from foreign currency balance sheet
adjustments required by GAAP to the extent such losses were deducted in computing such
Consolidated Net Income; minus
	 
	 	(5)	 	non-cash items increasing such Consolidated Net Income for such period, other
than revenues that were accrued in the ordinary course of business; minus (to the
extent included in determining Consolidated Net Income)
	 
	 	(6)	 	the sum of:






	 	(a)	 	the amount of deferred revenues that are amortized during the
period and are attributable to reserves that are subject to Volumetric
Production Payments; and
	 
	 	(b)	 	amounts recorded in accordance with GAAP as repayments of
principal and interest pursuant to Dollar-Denominated Production Payments,




in each case, on a consolidated basis and determined in accordance with GAAP.




     Notwithstanding the preceding, the provision for taxes based on the income or profits of, and
the depreciation, depletion and amortization, impairment, exploration expense and other non-cash
charges of, a Restricted Subsidiary of the Company shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of the Company only to the extent that a



9









 







corresponding amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant
to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Subsidiary or its stockholders.



     “Consolidated Net Income” means, with respect to any specified Person for any period, the
aggregate of the net income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP, provided that there shall be excluded
therefrom:




	 	(1)	 	the net income (or loss) of any Person that is not a Restricted Subsidiary
accounted for by the equity method of accounting, except to the extent of the amount of
dividends or distributions paid in cash to the specified Person or a Restricted
Subsidiary thereof;
	 
	 	(2)	 	the net income of any Restricted Subsidiary to the extent that the declaration
or payment of dividends or similar distributions by that Restricted Subsidiary of that
net income is not at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or its
stockholders;
	 
	 	(3)	 	the cumulative effect of a change in accounting principles;
	 
	 	(4)	 	any write-downs of non-current assets; provided, however, that any “ceiling
limitation” write-downs under SEC guidelines shall be treated as capitalized costs, as
if such write-downs had not occurred;
	 
	 	(5)	 	any unrealized non-cash gains or losses or charges in respect of hedge or
non-hedge derivatives (including those resulting from the application of FAS 133);
	 
	 	(6)	 	any gain (or loss), together with any related provision for taxes on such gain
(or loss), realized in connection with, the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries prior to its Stated Maturity;
	 
	 	(7)	 	any extraordinary or non-recurring gain (or loss), together with any related
provision for taxes on such extraordinary or non-recurring gain (or loss); and
	 
	 	(8)	 	any non-cash compensation charge arising from any grant of stock, stock options
or other equity-based awards.





     “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors of the Company who:




	 	(1)	 	was a member of such Board of Directors on the Issue Date; or




10









 












	 	(2)	 	was nominated for election, appointed or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination, appointment or election.





     “Corporate Trust Office of the Trustee” means the office of the Trustee at which at any time
its corporate trust business in relation to this Indenture and the Securities shall be
administered, which office at the date hereof is located at 201 Main Street, 3rd Floor, Fort Worth,
Texas 76102-5489, Attention: Corporate Trust Services.



     “Credit Facilities” means, with respect to the Company or any Guarantor, one or more debt
facilities or commercial paper facilities (including, without limitation, the Existing Credit
Facility), in each case with banks or other lenders in the business of providing loans of the types
described hereinafter, providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each case, as amended,
restated, modified, supplemented, extended, renewed, refunded, replaced or refinanced in whole or
in part from time to time.



     “Currency Agreements” means, at any time as to the Company and its Restricted Subsidiaries,
any foreign currency exchange agreement, option or future contract or other similar agreement or
arrangement entered into in the ordinary course of business and designed to protect against or
manage the Company or any of its Restricted Subsidiaries’ exposure to fluctuations in foreign
currency exchange rates.



     “Custodian” means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.



     “Default” means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.



     “Definitive Security” means a certificated Security registered in the name of the Holder
thereof and issued in accordance with Section 2.6 hereof, substantially in the form of
Exhibit A hereto except that such Security shall not bear the Global Security Legend and
shall not have the “Schedule of Exchanges of Interests in the Global Security” attached thereto.



     “Depositary” means The Depository Trust Company, until a successor shall have been appointed
and become such Depositary pursuant to this Indenture and thereafter shall mean its successor.



     “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable, in each case at the option
of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the
Securities mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require the Company to
repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that



11









 







the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.4 hereof.



     “Dollar-Denominated Production Payments” mean production payment obligations recorded as
liabilities in accordance with GAAP, together with all undertakings and obligations in connection
therewith.



     “Equity Interests” mean Capital Stock and all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock and excluding any interests under the Company’s Incentive and Retention Plan, as
amended).



     “Equity Offering” means:




	 	(1)	 	any public offering of common stock of the Company registered under the
Securities Act (other than on Form S-8 or any successor thereto) and other than any
issuance of securities under any benefit plan of the Company; and
	 
	 	(2)	 	any unregistered offering of common stock of the Company, so long as, at the
time of the consummation thereof, the Company has a class of common equity securities
registered pursuant to Section 12(b) or 12(g) under the Exchange Act.





     “Euroclear” means Euroclear Bank S.A./N.V., or any successor securities clearance agency.



     “Exchange Act” means the Securities Exchange Act of 1934 and any successor statute thereto, in
each case as amended from time to time.



     “Exchange Offer Registration Statement” means the registration statement of the Company
relating to any offer to exchange Exchange Securities for either Initial Securities or Additional
Securities pursuant to a Registration Rights Agreement.



     “Exchange Securities” means Securities issued in an exchange offer for Initial Securities or
Additional Securities in accordance with a Registration Rights Agreement.



     “Exchanging Dealer” means a broker-dealer that exchanges Securities in a Registered Exchange
Offer that it has acquired for its own account as a result of market making activities or other
trading activities.



     “Existing Credit Facility” means the senior secured revolving credit facility of the Company
under the Third Amended and Restated Credit Agreement, dated as of December 23, 2005, as amended as
of the Issue Date, by and among the Company and the commercial lending institutions that are agents
and lenders thereunder.



     “Existing Indebtedness” means Indebtedness outstanding on the Issue Date.



     “Fair Market Value” means, with respect to any Asset Sale (or Asset Swap) or Restricted
Payment (or Investment or Permitted Investment), the price that would be negotiated in an



12









 







arm’s-length transaction between a willing seller and a willing and able buyer, neither of
which is under any compulsion to complete the transaction, as such price is determined in good
faith by:




	 	(1)	 	if the value of such Asset Sale (or Asset Swap having a value of more than $5.0
million) or Restricted Payment (or Investment or Permitted Investment) is less than
$10.0 million, an officer of the Company, as evidenced by an Officers’ Certificate
delivered to the Trustee; and
	 
	 	(2)	 	if the value of such Asset Sale (or Asset Swap) or Restricted Payment (or
Investment or Permitted Investment) is $10.0 million or greater, the Board of Directors
of the Company, as evidenced by a board resolution delivered to the Trustee in the form
of an Officers’ Certificate.





     “Fixed Charge Coverage Ratio” means, with respect to any specified Person for any period, the
ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such
Person for such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees, redeems or repays any Indebtedness (other than revolving
credit borrowings unless the commitments to lend associated with such revolving credit borrowings
are permanently reduced or canceled) or issues, repurchases or redeems preferred stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving
pro forma effect to such incurrence, assumption, Guarantee, redemption or repayment of
Indebtedness, or such issuance, repurchase or redemption of preferred stock, as if the same had
occurred at the beginning of the applicable four-quarter reference period.



     In addition, for purposes of calculating the Fixed Charge Coverage Ratio:




	 	(1)	 	acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date shall be given pro
forma effect as if they had occurred on the first day of the four-quarter reference
period, provided that any cost savings or operating improvements may be given such pro
forma effect only if they are permitted by Regulation S-X promulgated under the
Securities Act or any other regulation or policy of the SEC related thereto;
	 
	 	(2)	 	the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of prior to
the Calculation Date, shall be excluded;
	 
	 	(3)	 	the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the Calculation
Date, shall be excluded, but only to the extent that the obligations





13









 











	 	 	 	giving rise to such Fixed Charges will not be obligations of the specified Person or
any of its Restricted Subsidiaries following the Calculation Date;
	 
	 	(4)	 	any Person that is a Restricted Subsidiary on the Calculation Date will be
deemed to have been a Restricted Subsidiary at all times during such four-quarter
period; and
	 
	 	(5)	 	any Person that is not a Restricted Subsidiary on the Calculation Date will be
deemed not to have been a Restricted Subsidiary at any time during such four-quarter
period.





     “Fixed Charges” means, with respect to any Person for any period, the sum, without
duplication, of:




	 	(1)	 	the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not capitalized,
including, without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt, commissions, discounts
and other fees and charges incurred in respect of letters of credit or bankers’
acceptance financings, and net payments, if any, pursuant to Interest Rate Agreements,
but excluding prepayment penalties and unamortized costs associated with the repayment
of Indebtedness with the Net Cash Proceeds from the sale of the Initial Securities and
the termination of the Hedging Obligations in connection therewith; plus
	 
	 	(2)	 	any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or
Lien is called upon; plus
	 
	 	(3)	 	the product of (a) all dividend payments, whether paid or accrued and whether
or not in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividend payments on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company times (b) a fraction, the numerator
of which is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a decimal,




in each case, on a consolidated basis and in accordance with GAAP, less to the extent included
above any amortization by the Company and its Restricted Subsidiaries during such period of (a)
debt issuance costs and (b) capitalized (i) interest or (ii) commissions, discounts and fees and
charges incurred in respect of letters of credit or bankers’ acceptances financings.




14









 








     “Foreign Subsidiary” means any Restricted Subsidiary incorporated or organized under the laws
of a foreign jurisdiction and having substantially all its operations outside the United States of
America.



     “GAAP” means generally accepted accounting principles in the United States, which are in
effect from time to time.



     “Global Securities” means, individually and collectively, each of the Restricted Global
Securities and the Unrestricted Global Securities.



     “Global Security Legend” means the legend set forth in Section 2.6(g)(2), which is
required to be placed on all Global Securities issued under this Indenture.



     “Government Securities” means direct obligations, or certificates representing an ownership
interest in such obligations, of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of the United States of
America is pledged and that are not callable at the issuer’s option.



     “Guarantee” means, without duplication, any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any other obligation,
direct or indirect, contingent or otherwise, of such Person:




	 	(1)	 	to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods, securities or
services, to take-or-pay or to maintain financial statement conditions or otherwise),
or
	 
	 	(2)	 	entered into for the purpose of assuring in any other manner the obligee of
such Indebtedness of the payment therefor to protect such obligee against loss in
respect thereof (in whole or in part);




provided, however, that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business. The term “Guarantee” used as a verb has a
corresponding meaning.




     “Guarantors” means any Restricted Subsidiary of the Company that becomes a Guarantor after the
Issue Date in accordance with the provisions of this Indenture, and its successors and assigns.



     “Hedging Obligations” means, with respect to any Person, the obligations of such Person under
Currency Agreements, Interest Rate Agreements and Commodity Agreements.



     “Holder” means a person in whose name a Security is registered on the Registrar’s books.



     “IAI Global Security” means a Global Security substantially in the form of Exhibit A
hereto bearing the Global Security Legend and the Private Placement Legend, that has the



15









 





     “Schedule of Exchanges of Interests in the Global Security” attached thereto, and that is
deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued
in a denomination equal to the outstanding principal amount of the Securities initially sold to
Institutional Accredited Investors.



     “Indebtedness” means, with respect to any specified Person, without duplication,




	 	(1)	 	all obligations of such Person, whether or not contingent, in respect of:






	 	(a)	 	the principal of and premium, if any, in respect of outstanding
(i) Indebtedness of such Person for money borrowed and (ii) Indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
	 
	 	(b)	 	all Capital Lease Obligations of such Person and all
Attributable Debt in respect of sale and leaseback transactions entered into by
such Person;
	 
	 	(c)	 	the deferred purchase price of property, which purchase price
is due more than six months after the date of taking delivery of title to such
property, including all obligations of such Person for the deferred purchase
price of property under any title retention agreement, but excluding accrued
expenses and trade accounts payable arising in the ordinary course of business;
and
	 
	 	(d)	 	the reimbursement obligation of any obligor for the principal
amount of any letter of credit, banker’s acceptance or similar transaction;






	 	(2)	 	all net obligations of such Person in respect of Hedging Obligations, except to
the extent such net obligations are otherwise included in this definition;
	 
	 	(3)	 	all liabilities of others of the kind described in the preceding clause (1) or
(2) that such Person has Guaranteed or that are otherwise its legal liability;
	 
	 	(4)	 	Guarantees of production or payment by such Person with respect to a Production
Payment and Reserve Sale but excluding other contractual obligations of such Person
with respect to such Production Payment and Reserve Sale;
	 
	 	(5)	 	Indebtedness (as otherwise defined in this definition) of another Person
secured by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person, the amount of such obligations being deemed to be the lesser of






	 	(a)	 	the full amount of such obligations so secured and
	 
	 	(b)	 	the fair market value of such asset as determined in good faith
by such specified Person;




16









 












	 	(6)	 	Disqualified Stock of such Person or a Restricted Subsidiary in an amount equal
to the greater of the maximum mandatory redemption or repurchase price (not including,
in either case, any redemption or repurchase premium) or the liquidation preference
thereof;
	 
	 	(7)	 	the aggregate preference in respect of amounts payable on the issued and
outstanding shares of preferred stock of any of the Company’s Restricted Subsidiaries
that are not Guarantors in the event of any voluntary or involuntary liquidation,
dissolution or winding up (excluding any such preference attributable to such shares of
preferred stock that are owned by such Person or any of its Restricted Subsidiaries;
provided, that if such Person is the Company, such exclusion shall be for such
preference attributable to such shares of preferred stock that are owned by the Company
or any of its Restricted Subsidiaries); and
	 
	 	(8)	 	any and all deferrals, renewals, extensions, refinancings and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (1), (2), (3), (4),
(5), (6) or (7) or this clause (8), whether or not between or among the same parties.




Subject to clause (4) of the preceding sentence, Production Payments and Reserve Sales shall not be
deemed to be Indebtedness.




     “Indenture” means this Indenture, as amended or supplemented from time to time.



     “Indirect Participant” means a Person who holds a beneficial interest in a Global Security
through a Participant.



     “Initial Purchasers” means, with respect to the Initial Securities, Jefferies & Company, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp.



     “Institutional Accredited Investor” means an institution that is an “accredited investor” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is not a QIB.



     “Interest Payment Date,” when used with respect to any Security, means the Stated Maturity of
an installment of interest on such Security.



     “Interest Rate Agreements” means, with respect to the Company and its Restricted Subsidiaries,
interest rate agreements, interest rate cap agreements and interest rate collar agreements and
other agreements or arrangements designed to protect such Person against fluctuations in interest
rates, with respect to any Indebtedness that is permitted to be incurred under this Indenture.



     “Investments” means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees of
Indebtedness or other obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of business), purchases
or other acquisitions for consideration of Indebtedness, Equity Interests or other securities,
together with all items that are or would be classified as investments on a balance



17









 




sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the Fair Market Value of
the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined
as provided in Section 4.4(d) hereof.




     “Issue Date” means July 31, 2007.



     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction.



     “Material Change” means an increase or decrease (excluding changes that result solely from
changes in prices and changes resulting from the incurrence of previously estimated future
development costs) of more than 25% during a fiscal quarter in the discounted future net revenues
from proved crude oil and natural gas reserves of the Company and its Restricted Subsidiaries,
calculated in accordance with clause (1)(a) of the definition of ACNTA; provided, however, that the
following will be excluded from the calculation of Material Change:




	 	(1)	 	any acquisitions during the fiscal quarter of crude oil and natural gas
reserves that have been estimated by a nationally recognized firm of independent
petroleum engineers and with respect to which a report or reports of such engineers
exist; and
	 
	 	(2)	 	any disposition of properties existing at the beginning of such fiscal quarter
that have been disposed of in compliance with Section 4.7 hereof.





     “Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock or the sale or
incurrence of any Indebtedness, means the cash proceeds of such issuance or sale net of attorneys’
fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or
commissions and brokerage, consultant and other fees and charges actually incurred in connection
with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale.



     “Net Proceeds” means the aggregate cash (or Cash Equivalents) proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation,
any cash received upon the sale or other disposition of any non-cash consideration received in any
Asset Sale), net of, without duplication:




	 	(1)	 	the direct costs relating to such Asset Sale, including, without limitation,
legal, title, engineering, environmental, accounting and investment banking fees, and
sales commissions, recording fees, title transfer fees and any relocation expenses
incurred as a result thereof;




18









 












	 	(2)	 	taxes paid or payable as a result thereof;
	 
	 	(3)	 	amounts required to be applied to the repayment of Indebtedness (other than
under the Credit Facilities) secured by a Lien on the asset or assets that were the
subject of such Asset Sale;
	 
	 	(4)	 	any reserve established in accordance with GAAP against liabilities associated
with such Asset Sale or any amount placed in escrow for adjustment in respect of the
purchase price of such Asset Sale, until such time as such reserve is reversed or such
escrow arrangement is terminated, in which case Net Proceeds shall be increased by the
amount of the reserve so reversed or the amount returned to the Company or its
Restricted Subsidiaries from such escrow arrangement, as the case may be; and
	 
	 	(5)	 	any distributions and other payments required to be made to minority interest
holders in any Restricted Subsidiaries as a result of such Asset Sale.





     “Net Working Capital” means:




	 	(1)	 	all current assets of the Company and its Restricted Subsidiaries, minus
	 
	 	(2)	 	all current liabilities of the Company and its Restricted Subsidiaries, except
current liabilities included in Indebtedness,




in each case determined in accordance with GAAP.




     “Non-Recourse Debt” means Indebtedness:




	 	(1)	 	as to which neither the Company nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (c) constitutes the lender;
	 
	 	(2)	 	no default with respect to which (including any rights that the holders thereof
may have to take enforcement action against an Unrestricted Subsidiary) would permit
upon notice, lapse of time or both any holder of any other Indebtedness of the Company
or any of its Restricted Subsidiaries (except the Securities) to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity; and
	 
	 	(3)	 	as to which the lenders have been notified in writing that they will not have
any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.





     “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, the
Controller or the Secretary of such Person.



19









 





     “Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers or
by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company and that
complies with Sections 11.4 and 11.5 of this Indenture and is delivered to the
Trustee.



     “Oil and Gas Business” means:




	 	(1)	 	the acquisition, exploration, exploitation, development, operation or
disposition of interests in, or obtaining production from, crude oil, natural gas or
other hydrocarbon properties;
	 
	 	(2)	 	the gathering, marketing, treating, processing (but not refining), storage,
selling or transporting of any production from such interests or properties and the
marketing of crude oil, natural gas, other hydrocarbons and minerals obtained from
unrelated Persons;
	 
	 	(3)	 	any business (except refining) relating to or arising from exploration for or
exploitation, development, production, treatment, processing, storage, transportation,
gathering or marketing of crude oil, natural gas, other hydrocarbons and minerals and
products produced in association therewith;
	 
	 	(4)	 	any business relating to oil field sales and services; or
	 
	 	(5)	 	any activity (except refining) that is ancillary, necessary or appropriate to
facilitate, or that is incidental to, the activities described in clauses (1) through
(4) of this definition.





     “Oil and Gas Liens” means:




	 	(1)	 	Liens on any specific crude oil or natural gas property or any interest
therein, construction thereon or improvement thereto to secure all or any part of the
costs incurred for surveying, exploration, drilling, extraction, development,
operation, production, construction, alteration, repair or improvement of, in, under or
on such property and the plugging and abandonment of wells located thereon (it being
understood that, in the case of producing properties, or any interest therein, costs
incurred for “development” will include costs incurred for all facilities relating to
such properties or to projects, ventures or other arrangements of which such properties
form a part or that relate to such properties or interests);
	 
	 	(2)	 	Liens on a crude oil or natural gas producing property to secure obligations
incurred or Guarantees of obligations incurred in connection with or necessarily
incidental to commitments for the purchase or sale of, or the transportation or
distribution of, the products derived from such property;
	 
	 	(3)	 	Liens arising under partnership agreements, oil and gas leases, overriding
royalty agreements, net profits agreements, production payment agreements, royalty
trust agreements, incentive compensation programs on terms that are reasonably
customary, in the Oil and Gas Business for geologists, geophysicists and other





20









 













	 	 	 	providers of technical services to the Company or a Restricted Subsidiary, farm-out
agreements, farm-in agreements, division orders, contracts for the sale, purchase,
exchange, transportation, gathering or processing of crude oil, natural gas or other
hydrocarbons, unitizations and pooling designations, declarations, orders and
agreements, development agreements, operating agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or other
disposal agreements, seismic or geophysical permits or agreements, and other
agreements that are customary in the Oil and Gas Business; provided, however, that
in all instances such Liens are limited to the assets that are the subject of the
relevant agreement, program, order or contract;
	 
	 	(4)	 	Liens securing Production Payments and Reserve Sales; provided that such Liens
are limited to the property that is subject to such Production Payments and Reserve
Sales, and such Production Payments and Reserve Sales either:






	 	(a)	 	were in existence on the Issue Date, or
	 
	 	(b)	 	constitute Asset Sales made in compliance with Section 4.7 hereof; and






	 	(5)	 	Liens on pipelines or pipeline facilities that arise by operation of law.





     “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable
to the Trustee and that complies with Sections 11.4 and 11.5 of this Indenture and
is delivered to the Trustee. The counsel may be an employee of or counsel to the Company or the
Trustee.



     “Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who
has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to
The Depository Trust Company, shall include Euroclear and Clearstream).



     “Permitted Business Investments” means Investments made in the ordinary course of, and of a
nature that is or shall have become customary in, the Oil and Gas Business, including through
agreements, transactions, interests or arrangements that permit one to share risk or costs, comply
with regulatory requirements regarding local ownership or satisfy other objectives customarily
achieved through the conduct of the Oil and Gas Business jointly with third parties, including
without limitation:




	 	(1)	 	ownership of crude oil, natural gas, other related hydrocarbon and mineral
properties or any interest therein or gathering, transportation, processing, storage or
related systems; and
	 
	 	(2)	 	the entry into operating agreements, joint ventures, processing agreements,
working interests, royalty interests, mineral leases, farm-in agreements, farm-out
agreements, processing agreements, development agreements, production sharing
agreements, area of mutual interest agreements, contracts for the sale, transportation
or exchange of crude oil and natural gas and related hydrocarbons and minerals,
unitization agreements, pooling arrangements, joint bidding




21









 












agreements, service contracts, partnership agreements (whether general or limited),
or other similar or customary agreements (including for limited liability
companies), transactions, properties, interests or arrangements, and Investments and
expenditures in connection therewith or pursuant thereto, in each case made or
entered into in the ordinary course of the Oil and Gas Business, excluding, however,
Investments in publicly-traded securities.


“Permitted Investments” means:





	(1)	 	any Investment in the Company or in a Restricted Subsidiary of the Company;
	 
	(2)	 	any Investment in Cash Equivalents;
	 
	(3)	 	any Investment by the Company or any Restricted Subsidiary of the Company in a
Person if as a result of such Investment:






	 	(a)	 	such Person becomes a Restricted Subsidiary of the Company; or
	 
	 	(b)	 	such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company;






	(4)	 	any Investment made as a result of the receipt of non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with Section 4.7
hereof or a disposition of assets not constituting an Asset Sale;
	 
	(5)	 	any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company;
	 
	(6)	 	receivables owing to the Company or any Restricted Subsidiary created or
acquired in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances;
	 
	(7)	 	Capital Stock or other securities received in settlement of debts created in
the ordinary course of business and owing to the Company or any Restricted Subsidiary
or in satisfaction of judgments or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of a debtor or received in connection
with a work-out or recapitalization of the issuer or as a result of a foreclosure or
other transfer of title or perfection or enforcement of any Lien with respect to any
secured Investment in default;
	 
	(8)	 	Hedging Obligations, which transactions or obligations are incurred in
compliance with Section 4.3 hereof;
	 
	(9)	 	Permitted Business Investments; and





22









 






	(10)	 	other Investments in any Person having an aggregate Fair Market Value (measured
on the date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant to this
clause (10) since the Issue Date, not to exceed the greater of (a) $10.0 million or (b)
2.5% of ACNTA.




“Permitted Liens” means:





	(1)	 	Liens on any property or assets of the Company and any Guarantor securing
Indebtedness and other obligations under Credit Facilities that were permitted by the
terms of this Indenture to be incurred;






	(2)	 	Liens in favor of the Company or any Guarantors;






	(3)	 	Liens on any property or assets of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Restricted Subsidiary of
the Company, provided that such Liens were in existence prior to the contemplation of
such merger or consolidation and do not extend to any property or assets other than
those of the Person merged into or consolidated with the Company or the Restricted
Subsidiary;






	(4)	 	Liens on any property or assets existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such Liens were
not incurred in connection with the contemplation of such acquisition;






	(5)	 	Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the ordinary
course of business;






	(6)	 	Liens existing on the Issue Date;






	(7)	 	Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Company and its Restricted Subsidiaries;






	(8)	 	Liens securing Permitted Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, provided that any such Lien is limited to
all or part of the same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure) the Indebtedness being
refinanced or is in respect of property that is the security for a Permitted Lien
hereunder;






	(9)	 	Liens securing Hedging Obligations of the Company or any of its Restricted
Subsidiaries;






	(10)	 	Liens securing Indebtedness incurred in connection with the acquisition by the
Company or any Restricted Subsidiary of assets used in the Oil and Gas Business




23









 












	 	 	 	(including the office buildings and other real property used by the Company or such
Restricted Subsidiary in conducting its operations); provided that (i) such Liens
attach only to the assets acquired with the proceeds of such Indebtedness; (ii) such
Indebtedness is not in excess of the purchase price of such fixed assets; and (iii)
such Indebtedness is permitted to be incurred under Section 4.3 hereof;
	 
	 	(11)	 	any Lien incurred in the ordinary course of business incidental to the conduct
of the business of the Company or the Restricted Subsidiaries or the ownership of their
property (including (a) easements, rights of way and similar encumbrances, (b) rights
or title of lessors under leases (other than Capital Lease Obligations), (c) rights of
collecting banks having rights of setoff, revocation, refund or chargeback with respect
to money or instruments of the Company or the Restricted Subsidiaries on deposit with
or in the possession of such banks, (d) Liens imposed by law, including Liens under
workers’ compensation or similar legislation and mechanics’, carriers’, warehousemen’s,
materialmen’s, suppliers’ and vendors’ Liens, (e) Liens incurred to secure performance
of obligations with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like nature and incurred
in a manner consistent with industry practice and (f) Oil and Gas Liens, in each case
which are not incurred in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of property (other
than trade accounts payable arising in the ordinary course of business));
	 
	 	(12)	 	Liens for taxes, assessments and governmental charges not yet due or the
validity of which are being contested in good faith by appropriate proceedings,
promptly instituted and diligently conducted, and for which adequate reserves have been
established to the extent required by GAAP as in effect at such time;
	 
	 	(13)	 	Liens on cash collateral to secure Indebtedness permitted under Section
4.3(b)(9) or (12) hereof; and
	 
	 	(14)	 	other Liens securing Indebtedness in an aggregate principal amount not greater
than $5.0 million.





     “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries issued in exchange for, or the Net Cash Proceeds of which are used to
extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of
its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:




	 	(1)	 	the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus premium, if any, and accrued and unpaid interest on the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith);
	 
	 	(2)	 	(a) if the final maturity date of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is earlier than the final maturity date of




24









 












	 	 	 	the Securities, the Permitted Refinancing Indebtedness has a final maturity date no
earlier than the final maturity date of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded, or (b) if the final maturity date of the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is
later than the final maturity date of the Securities, the Permitted Refinancing
Indebtedness has a final maturity date at least 91 days later than the final
maturity date of the Securities;
	 
	 	(3)	 	the Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity
at the time such Permitted Refinancing Indebtedness is incurred that is equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
	 
	 	(4)	 	if the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Securities or a Subsidiary
Guarantee, such Permitted Refinancing Indebtedness is subordinated in right of payment
to the Securities or such Subsidiary Guarantee on terms at least as favorable, taken as
a whole, to the Holders of Securities as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;
and
	 
	 	(5)	 	such Indebtedness is not incurred by a Restricted Subsidiary if the Company is
the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded; provided, however, that a Restricted Subsidiary that is also a Guarantor
may Guarantee Permitted Refinancing Indebtedness incurred by the Company, whether or
not such Restricted Subsidiary was an obligor or guarantor of the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; provided further,
however, that if such Permitted Refinancing Indebtedness is subordinated to the
Securities, such Guarantee shall be subordinated to such Restricted Subsidiary’s
Subsidiary Guarantee to at least the same extent.





     “Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust, unincorporated organization, government or any
agency or political subsidiary thereof or any other entity.



     “Private Exchange” means an offer to exchange Private Exchange Securities for either Initial
Securities or Additional Securities in accordance with a Registration Rights Agreement.



     “Private Exchange Securities” means Exchange Securities issued in exchange for either Initial
Securities or Additional Securities other than pursuant to a Registered Exchange Offer.



     “Private Placement Legend” means the legend set forth in Section 2.6(g)(1) to be
placed on all Securities issued under this Indenture except where otherwise permitted by the
provisions of this Indenture.



     “Production Payments” means, collectively, Dollar-Denominated Production Payments and
Volumetric Production Payments.



25









 





     “Production Payments and Reserve Sales” means the grant or transfer by the Company or a
Restricted Subsidiary to any Person of a royalty, overriding royalty, net profits interest or
Production Payment in oil and natural gas properties, reserves or the right to receive all or a
portion of the production or the proceeds from the sale of production attributable to such
properties where, in the case of each of the foregoing, the holder of such interest has recourse
solely to such production or proceeds of production, subject to the obligation of the grantor or
transferor to operate and maintain, or cause the subject interests to be operated and maintained,
in a reasonably prudent manner or other customary standard or subject to the obligation of the
grantor or transferor to indemnify for environmental, title or other matters customary in the
foregoing interests.



     “QIB” means any “qualified institutional buyer” (as defined in Rule 144).



     “Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed
for such redemption by or pursuant to this Indenture.



     “Redemption Price,” when used with respect to any Security to be redeemed, means the price at
which it is to be redeemed pursuant to this Indenture.



     “Registered Exchange Offer” means an offer to exchange Exchange Securities for either Initial
Securities or Additional Securities pursuant to an Exchange Offer Registration Statement as
required by a Registration Rights Agreement.



     “Registration Rights Agreement” means, with respect to the Initial Securities, the
Registration Rights Agreement, dated as of the Issue Date, among the Company and the Initial
Purchasers, or any similar registration rights agreement with respect to Additional Securities.



     “Regulation D” means Regulation D promulgated under the Securities Act.



     “Regulation S” means Regulation S promulgated under the Securities Act.



     “Regulation S Global Security” means a permanent Global Security substantially in the form of
Exhibit A hereto bearing the Global Security Legend and the Private Placement Legend, that
has the “Schedule of Exchanges of Interests in the Global Security” attached thereto, and that is
deposited with or on behalf of, and registered in the name of, the Depositary or its nominee,
issued in a denomination equal to the outstanding principal amount of the Securities initially sold
in reliance on Regulation S.



     “Restricted Definitive Security” means a Definitive Security bearing the Private Placement
Legend.



     “Restricted Global Security” means a Global Security bearing the Private Placement Legend
(including the Regulation S Global Security).



     “Restricted Period” means the 40-day distribution compliance period as defined in Regulation
S.



26









 





     “Restricted Subsidiary” of a Person means any Subsidiary of the referenced Person that is not
an Unrestricted Subsidiary.



     “Rule 144” means Rule 144 promulgated under the Securities Act.



     “Rule 144A” means Rule 144A promulgated under the Securities Act.



     “Rule 903” means Rule 903 promulgated under the Securities Act.



     “Rule 904” means Rule 904 promulgated under the Securities Act.



     “SEC” means the U.S. Securities and Exchange Commission.



     “Securities” means securities issued under this Indenture. The Initial Securities, the
Exchange Securities and the Additional Securities shall be treated as a single class for all
purposes under this Indenture, and unless otherwise provided or the context otherwise requires, all
references to the Securities shall include the Initial Securities, the Exchange Securities and the
Additional Securities.



     “Securities Act” means the Securities Act of 1933 and any successor statute thereto, in each
case as amended from time to time.



     “Securities Custodian” means the custodian with respect to a Global Security (as appointed by
the Depositary) or any successor Person, and shall initially be the initial Registrar.



     “Senior Debt” means:




	 	(1)	 	all Indebtedness of the Company or any Guarantor outstanding under Credit
Facilities and all Hedging Obligations with respect thereto; and
	 
	 	(2)	 	any other Indebtedness of the Company or any Guarantor permitted to be incurred
by it under the terms of this Indenture, unless such Indebtedness is Subordinated
Indebtedness;




provided, that Senior Debt shall not include (1) any liability for federal, state, local or other
taxes owed or owing by the Company; (2) any intercompany Indebtedness of the Company or any of its
Subsidiaries to the Company or any of its Affiliates; (3) any trade payables; or (4) the portion of
any Indebtedness that is incurred in violation of this Indenture.




     “Shelf Registration Statement” means a registration statement of the Company used by a Holder
in connection with its offer and sale of Securities pursuant to a Registration Rights Agreement.



     “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as
defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as
such Regulation is in effect on the Issue Date.



27









 





     “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which such payment of interest or principal was scheduled to be
paid in the original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.



     “Subordinated Indebtedness” means Indebtedness of the Company (or a Guarantor) that is
expressly subordinated or junior in right of payment to the Securities (or a Subsidiary Guarantee,
as appropriate) pursuant to a written agreement to that effect.



     “Subsidiary” means any subsidiary of the Company. A “subsidiary” of any Person means:




	 	(1)	 	any corporation, association or other business entity (other than a
partnership) of which more than 50% of the total voting power of Voting Stock is at the
time owned or controlled, directly or through another subsidiary, by that Person or one
or more of the other subsidiaries of that Person (or a combination thereof); and
	 
	 	(2)	 	any partnership (a) the sole general partner of which is such Person or a
subsidiary of such Person, (b) the only general partners of which are that Person or
one or more subsidiaries of that Person (or any combination thereof), or (c) as to
which such Person and its subsidiaries are entitled to receive more than 50% of the
assets of such partnership upon its dissolution, but only if GAAP requires that the
financial results of such partnership be consolidated with those of such Person.





     “Subsidiary Guarantee” means a Guarantee by a Guarantor of the Company’s Obligations pursuant
to Article X hereof.



     “Treasury Rate” means, with respect to the Securities as of any redemption date, the yield to
maturity at the time of computation of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that
has become publicly available at least two Business Days prior to the redemption date (or, if such
Statistical Release is no longer published, any publicly available source or similar market data))
most nearly equal to the period from the Redemption Date to August 1, 2011; provided, however, that
if the period from the Redemption Date to August 1, 2011 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the Treasury Rate shall
be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to the final maturity for the Securities is less than
one year, the weekly average yield on actually traded United States Treasury securities adjusted to
a constant maturity of one year shall be used. The Company will (a) calculate the Treasury Rate no
later than the second Business Day preceding the applicable Redemption Date and (b) on or prior to
such Redemption Date file with the Trustee an Officers’ Certificate setting forth the Applicable
Premium and the Treasury Rate and showing the calculation of each in reasonable detail.



28









 





     “Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 as in force at the Issue
Date, except as provided in Section 9.3; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, “Trust Indenture Act” or “TIA” means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.



     “Trustee” means the Person named as the “Trustee” in the first paragraph of this Indenture
until a successor Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee
hereunder.



     “Trust Officer” means the Chairman of the Board, the President or any other officer or
assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.



     “Unrestricted Definitive Security” means one or more Definitive Securities that do not bear
and are not required to bear the Private Placement Legend.



     “Unrestricted Global Security” means a permanent Global Security substantially in the form of
Exhibit A attached hereto that bears the Global Security Legend, that has the “Schedule of
Exchanges of Interests in the Global Security” attached thereto, and that is deposited with or on
behalf of and registered in the name of the Depositary, representing a series of Securities that do
not bear the Private Placement Legend.



     “Unrestricted Subsidiary” means any Subsidiary of the Company that is designated by the Board
of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent
that such Subsidiary:




	 	(1)	 	has no Indebtedness other than Non-Recourse Debt;
	 
	 	(2)	 	is not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the Company
or such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company;
	 
	 	(3)	 	is a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any obligation (a) to subscribe for additional Equity Interests or (b)
to maintain or preserve such Person’s financial condition or to cause such Person to
achieve any specified levels of operating results;
	 
	 	(4)	 	such Subsidiary, either alone or in the aggregate with all other Unrestricted
Subsidiaries, does not operate, directly or indirectly, all or substantially all of the
business of the Company and its Subsidiaries; and
	 
	 	(5)	 	has not Guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries.





     Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be
evidenced to the Trustee by filing with the Trustee a copy of the Board Resolution giving effect



29









 






to such designation certified in an Officers’ Certificate that also certifies that such
designation complied with the preceding conditions and was permitted by Section 4.4, in
which case such designation shall be effective as of the date specified in such resolution hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of
this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to
be incurred as of such date under Section 4.3 hereof, the Company shall be in default of
such covenant.




     “U.S. Person” means any U.S. person as defined for purposes of Regulation S.



     “Volumetric Production Payments” mean production payment obligations recorded as deferred
revenue in accordance with GAAP, together with all undertakings and obligations in connection
therewith.



     “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at
the time entitled (without reference to the occurrence of any contingency) to vote in the election
of the directors, managers or trustees of such Person.



     “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:




	 	(1)	 	the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the number
of years (calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by
	 
	 	(2)	 	the then outstanding principal amount of such Indebtedness.





Section 1.2 Other Definitions




	 	 	 
	“Affiliate Transaction”

	 	Section 4.8(a)
	“Asset Sale Offer”

	 	Section 4.7(c)
	“Asset Sale Payment”

	 	Section 4.7(c)
	“Asset Sale Payment Date”

	 	Section 4.7(d)
	“Authenticating Agent”

	 	Section 2.2
	“Calculation Date”

	 	Section 1.1 (“Fixed Charge Coverage Ratio”)
	“Change of Control Offer”

	 	Section 4.12(a)
	“Change of Control Payment”

	 	Section 4.12(a)
	“Change of Control Payment Date”

	 	Section 4.12(a)
	“covenant defeasance option”

	 	Section 8.1(b)
	“Defaulted Interest”

	 	Section 2.11
	“Event of Default”

	 	Section 6.1
	“Excess Proceeds”

	 	Section 4.7(c)
	“incur”

	 	Section 4.3(a)
	“Initial Securities”

	 	Preamble






30









 








	 	 	 
	“legal defeasance option”

	 	Section 8.1(b)
	“Legal Holiday”

	 	Section 11.7
	“Obligations”

	 	Section 10.1
	“Paying Agent”

	 	Section 2.3
	“Payment Default”

	 	Section 6.1(6)
	“Permitted Asset Exchange”

	 	Section 1.1 (“Asset Sale”)
	“Permitted Indebtedness”

	 	Section 4.3(b)
	“Registrar”

	 	Section 2.3
	“Restricted Payment”

	 	Section 4.4(a)






Section 1.3 Incorporation by Reference of Trust Indenture Act




     This Indenture is subject to the mandatory provisions of the Trust Indenture Act which are
incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act
terms have the following meanings:



     “Commission” means the SEC,



     “indenture securities” means the Securities,



     “indenture security holder” means a Holder,



     “indenture to be qualified” means this Indenture,



     “indenture trustee” or “institutional trustee” means the Trustee and



     “obligor” on the indenture securities means the Company and any other obligor (including any
Guarantor) on the indenture securities.



     All other Trust Indenture Act terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act by reference to another statute or defined by an
SEC rule have the meanings assigned to them by such definitions.


Section 1.4 Rules of Construction




     Unless the context otherwise requires:




	 	(1)	 	a term has the meaning assigned to it;
	 
	 	(2)	 	an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;
	 
	 	(3)	 	“or” is not exclusive;
	 
	 	(4)	 	“including” means including without limitation;
	 
	 	(5)	 	words in the singular include the plural and words in the plural include the
singular;





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	 	(6)	 	references to sections of or rules under the Exchange Act or the Securities Act
shall be deemed to include substitute, replacement or successor sections or rules
adopted by the SEC from time to time; and
	 
	 	(7)	 	“herein,” “hereof” and other words of similar import refer to this Indenture as
a whole (as amended or supplemented from time to time) and not to any particular
Article, Section or other subdivision.





ARTICLE II




THE SECURITIES



Section 2.1 Form and Dating




     (a) General. The Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A hereto. Any notation of Subsidiary Guarantee shall
be substantially in the form of Exhibit D hereto, and shall be notated on the Securities.
The Securities may have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication. The Securities shall be in
denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the
Securities shall constitute, and are hereby expressly made, a part of this Indenture and the
Company, and the Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any provision of any
Security or any Subsidiary Guarantee conflicts with the express provisions of this Indenture, the
provisions of this Indenture (to the extent permitted by law) shall govern and be controlling.



     (b) Global Securities. Securities issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Security Legend thereon and the “Schedule
of Exchanges of Interests in the Global Security” attached thereto). Securities issued in
definitive form shall be substantially in the form of Exhibit A attached hereto (but
without the Global Security Legend thereon and without the “Schedule of Exchanges of Interests in
the Global Security” attached thereto). Each Global Security shall represent such of the
outstanding Securities as shall be specified therein, and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to time endorsed
thereon and that the aggregate principal amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Security to reflect the amount of any increase or decrease in the
aggregate principal amount of outstanding Securities represented thereby shall be made by the
Trustee or the Securities Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.6 hereof.



     (c) Regulation S Global Securities. Any Securities offered and sold in reliance on Regulation
S shall be issued initially in the form of a Regulation S Global Security, which shall be deposited
on behalf of the purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or the nominee of the Depositary for the accounts of
designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. Prior to the expiration of



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the Restricted Period, any resale or transfer of beneficial interests in a Regulation S Global
Security to U.S. Persons shall not be permitted unless such resale or transfer is made pursuant to
Rule 144A or Regulation S.




     (d) 144A Global Securities. Any Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of a 144A Global Security, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian, and registered in
the name of the Depositary or the nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided.



     (e) IAI Global Securities. Any Securities offered and sold to Institutional Accredited
Investors shall be issued initially in the form of an IAI Global Security, which shall be deposited
on behalf of the purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or the nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided.



     (f) Definitive Securities. Notwithstanding any other provision of this Article II,
any issuance of Definitive Securities shall be at the Company’s discretion, except in the
circumstances set forth in Section 2.6(a) hereof.



Section 2.2 Execution and Authentication




     An Officer shall sign the Securities for the Company by manual or facsimile signature. One
Officer shall sign each notation of Subsidiary Guarantee for each Guarantor by manual or facsimile
signature.



     If an Officer whose facsimile signature is on a Security no longer holds that office at the
time the Trustee authenticates the Security, the Security shall be valid nevertheless.



     A Security shall not be valid until an authorized signatory of the Trustee manually
authenticates the Security. The signature of the Trustee on a Security shall be conclusive
evidence that such Security has been duly and validly authenticated and issued under this
Indenture.



     The Trustee shall authenticate and deliver: (i) Initial Securities for original issue in an
aggregate principal amount of $150,000,000, (ii) if and when issued, Additional Securities (which
may be issued in either a registered or a private offering under the Securities Act) and (iii)
Exchange Securities for issue only in an exchange offer pursuant to a Registration Rights
Agreement, and only in exchange for Initial Securities or Additional Securities of an equal
principal amount, in each case upon a written order of the Company signed by one Officer of the
Company. Such order shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and whether the Securities are to be
in global or definitive form and whether they are to bear the Private Placement Legend. The
Company may issue Additional Securities under this Indenture subsequent to the Issue Date, subject
to Section 4.3 of this Indenture; provided, however, that no Additional Securities may be
issued at a price that would cause such Additional Securities to have “original issue discount”
within the meaning of Section 1273 of the Code; and provided, further, that in no event may the
Company issue any Additional Securities if, as a result of any such issuance, the aggregate



33









 







principal amount of Securities outstanding would exceed the maximum aggregate principal amount
of Securities permitted under the Existing Credit Facilities or any other Credit Facilities, in
each case as in effect on the date of such issuance.



     The Trustee may appoint an agent (the “Authenticating Agent”) reasonably acceptable to the
Company to authenticate the Securities. Unless limited by the terms of such appointment, any such
Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such agent.



Section 2.3 Registrar and Paying Agent




     The Company shall at all times maintain in the continental United States an office or agency
where Securities may be presented for registration of transfer or for exchange (the “Registrar”),
and it shall likewise maintain an office or agency where Securities may be presented for payment
(the “Paying Agent”). The Registrar shall keep a register of the Securities and of their transfer
and exchange. The Company may have one or more co-registrars and one or more additional paying
agents. The term “Registrar” includes any co-registrar, and the term “Paying Agent” includes any
such additional paying agent.



     The Company or any of its Subsidiaries may act as Paying Agent, subject to the provisions of
Section 4.15, or as Registrar. Any Paying Agent or Registrar may resign as such upon 30
days’ prior written notice to the Company and the Trustee; upon resignation of any Paying Agent or
Registrar, the Company shall appoint a successor Paying Agent or Registrar, as the case may be,
complying with the requirements of this Section 2.3, no later than 30 days thereafter and
shall provide notice to the Trustee of such successor Paying Agent or Registrar.



     The Company initially appoints Wells Fargo Bank, National Association, as Registrar and Paying
Agent for the Securities at its Corporate Trust Office. The place of payment with respect to the
Securities, in addition to the Corporate Trust Office of the Trustee, shall be New York, New York,
and at such time, if ever, as the Securities are no longer represented by one or more Global
Securities, the Company shall appoint and maintain a Paying Agent in New York, New York, the
intention of the Company being that, after giving effect to the procedures of the Depositary
respecting payments on Global Securities, the Securities shall at all times be payable in New York,
New York.



     The immunities, protections and exculpations available to the Trustee under this Indenture
shall also be available to each Agent, and the Company’s obligations under Section 7.7 to
compensate and indemnify the Trustee shall extend likewise to each Agent.



Section 2.4 Paying Agent to Hold Money in Trust




     By at least 11:00 a.m. (New York City time) on the date on which any principal, premium, if
any, or interest on any Security is due and payable, the Company shall deposit with the Paying
Agent a sum sufficient to pay such principal, premium, if any, and interest when due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent
shall hold in trust for the benefit of Holders or the Trustee all money held by such Paying Agent
for the payment of principal, premium, if any, and interest (if any) on the



34









 










Securities and shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by
it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a
Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for
any funds disbursed by such Paying Agent. Upon complying with this Section 2.4, the Paying
Agent (if other than the Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee.



Section 2.5 Holder Lists




     The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders. If the Trustee is not the Registrar,
the Company shall furnish to the Trustee, in writing at least seven Business Days before each
Interest Payment Date and at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names and addresses of
Holders.



Section 2.6 Transfer and Exchange




     (a) Transfer and Exchange of Global Securities. A Global Security may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to
the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to
a successor Depositary or a nominee of such successor Depositary. Owners of beneficial interests
in Global Securities shall not be entitled to receive Definitive Securities unless:



          (1) the Company delivers to the Trustee and the Registrar notice from the Depositary that it
is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency
registered under the Exchange Act and, in either case, a successor Depositary is not appointed by
the Company within 90 days; or



          (2) there has occurred and is continuing an Event of Default and DTC notifies the Trustee and
the Registrar of its decision to exchange the Global Securities for Definitive Securities; provided
that in no event shall the Regulation S Global Security be exchanged by the Company for Definitive
Securities prior to the expiration of the Restricted Period.



     Upon the occurrence of either of the preceding events in (1) or (2) above, Definitive
Securities shall be issued in such names as the Depositary shall instruct the Trustee and the
Registrar. Global Securities also may be exchanged or replaced, in whole or in part, as provided
in Section 2.7 hereof. Every Security authenticated and delivered in exchange for, or in
lieu of, a Global Security or any portion thereof, pursuant to this Section 2.6 or
Section 2.7 hereof, shall be authenticated and delivered in the form of, and shall be, a Global
Security. A Global Security may not be exchanged for another Security other than as provided in
this Section 2.6(a); however, beneficial interests in a Global Security may be transferred
and exchanged as provided in Section 2.6(b), (c) or (f) hereof.



     (b) Transfer and Exchange of Beneficial Interests in the Global Securities. The transfer and
exchange of beneficial interests in the Global Securities shall be effected through the



35









 










Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.
Beneficial interests in the Restricted Global Securities shall be subject to restrictions on
transfer comparable to those set forth herein, including those set forth in the Private Placement
Legend, to the extent required by the Securities Act. Transfers of beneficial interests in the
Global Securities also shall require compliance with either subparagraph (1) or (2) below, as
applicable, as well as one or more of the other following subparagraphs, as applicable:



          (1) Transfer of Beneficial Interests in the Same Global Security. Beneficial interests in any
Restricted Global Security may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Security in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global
Security may not be to a U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Beneficial interests in any Unrestricted Global Security may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global
Security. No written orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.6(b)(1).




          (2) All Other Transfers and Exchanges of Beneficial Interests in Global Securities. In
connection with all transfers and exchanges of beneficial interests that are not subject to
Section 2.6(b)(1) above, the transferor of such beneficial interest must deliver to the
Registrar either:





               (A) (i) a written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary to credit
or cause to be credited a beneficial interest in another Global Security in an amount equal
to the beneficial interest to be transferred or exchanged; and




                 (ii) instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase; or




               (B) (i) a written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary to cause to
be issued a Definitive Security in an amount equal to the beneficial interest to be
transferred or exchanged; and




                 (ii) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Security shall be
registered to effect the transfer or exchange referred to in Section
2.6(b)(2)(B)(i) above; provided that in no event shall Definitive Securities be
issued upon the transfer or exchange of beneficial interests in the Regulation S
Global Security prior to the expiration of the Restricted Period. Upon consummation
of a Registered Exchange Offer by the Company in accordance with Section
2.6(f) hereof, the requirements of this Section 2.6(b)(2) shall be
deemed to have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such beneficial



36









 






interests in the Restricted Global Securities. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Securities
contained in this Indenture, the Securities or otherwise applicable under the
Securities Act, the principal amount of the relevant Global Security(s) shall be
adjusted pursuant to Section 2.6(h) hereof.



          (3) Transfer of Beneficial Interests to Another Restricted Global Security. A beneficial
interest in any Restricted Global Security may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Security if the transfer
complies with the requirements of Section 2.6(b)(2) above and the Registrar receives the
following:





          (A) if the transferee will take delivery in the form of a beneficial interest in the
144A Global Security, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (1) thereof;




          (B) if the transferee will take delivery in the form of a beneficial interest in the
Regulation S Global Security, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof; and




          (C) if the transferee will take delivery in the form of a beneficial interest in the
IAI Global Security, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (3) thereof, and a letter
from the transferee in the form of Annex A thereto.



          (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Security for
Beneficial Interests in the Unrestricted Global Security. A beneficial interest in any Restricted
Global Security may be exchanged by any holder thereof for a beneficial interest in an Unrestricted
Global Security or transferred to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Security if the exchange or transfer complies with the
requirements of Section 2.6(b)(2) above and:





          (A) such exchange or transfer is effected pursuant to a Registered Exchange Offer in
accordance with the applicable Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal (or via the
Depositary’s book-entry system) that it is not (i) a broker-dealer, (ii) a Person
participating in the distribution of the Exchange Securities or (iii) a Person who is an
affiliate (as defined in Rule 144) of the Company;




          (B) such transfer is effected pursuant to a Shelf Registration Statement in accordance
with the applicable Registration Rights Agreement;




          (C) such transfer is effected by an Exchanging Dealer pursuant to an Exchange Offer
Registration Statement in accordance with the applicable Registration Rights Agreement; or




          (D) the Registrar receives the following:



37









 






     (i) if the holder of such beneficial interest in a Restricted Global Security
proposes to exchange such beneficial interest for a beneficial interest in an
Unrestricted Global Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(a) thereof; or




     (ii) if the holder of such beneficial interest in a Restricted Global Security
proposes to transfer such beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an Unrestricted Global Security, a
certificate from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;




and, in each such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer is in compliance with the
Securities Act and state “blue sky” laws and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.



     If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an
Unrestricted Global Security has not yet been issued, the Company shall issue and, upon receipt of
a written order in accordance with Section 2.2 hereof, the Trustee shall authenticate one
or more Unrestricted Global Securities in an aggregate principal amount equal to the aggregate
principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.



     Beneficial interests in an Unrestricted Global Security cannot be exchanged for, or
transferred to Persons who take delivery thereof in the form of, a beneficial interest in a
Restricted Global Security.



     (c) Transfer or Exchange of Beneficial Interests for Definitive Securities.



          (1) Beneficial Interests in Restricted Global Securities to Restricted Definitive Securities.
If any holder of a beneficial interest in a Restricted Global Security proposes to exchange such
beneficial interest for a Restricted Definitive Security or to transfer such beneficial interest to
a Person who takes delivery thereof in the form of a Restricted Definitive Security, then, upon
receipt by the Registrar of the following documentation:





          (A) if the holder of such beneficial interest in a Restricted Global Security proposes
to exchange such beneficial interest for a Restricted Definitive Security, a certificate
from such holder in the form of Exhibit C hereto, including the certifications in
item (2)(a) thereof;




          (B) if such beneficial interest is being transferred to a QIB in accordance with Rule
144A, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;



38









 






          (C) if such beneficial interest is being transferred to a non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (2) thereof; or




          (D) if such beneficial interest is being transferred to an Institutional Accredited
Investor that is acquiring such interest for its own account, or for the account of another
Institutional Accredited Investor, for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3) thereof, and a letter from the transferee in the form of
Annex A thereto,


the Registrar shall cause the aggregate principal amount of the applicable Global Security to be
reduced accordingly pursuant to Section 2.6(h) hereof, and the Company shall execute and
the Trustee shall authenticate and deliver to the Person designated in the instructions a
Definitive Security in the appropriate principal amount. Any Definitive Security issued in
exchange for a beneficial interest in a Restricted Global Security pursuant to this Section
2.6(c) shall be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Securities to the Persons in whose names such Securities are so registered.
Any Definitive Security issued in exchange for a beneficial interest in a Restricted Global
Security pursuant to this Section 2.6(c)(1) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein. Notwithstanding Sections
2.6(c)(1)(A) and (C) hereof, a beneficial interest in the Regulation S Global Security
may not be exchanged for a Definitive Security or transferred to a Person who takes delivery
thereof in the form of a Definitive Security prior to the expiration of the Restricted Period,
except in the case of a transfer pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.




          (2) Beneficial Interests in Restricted Global Securities to Unrestricted Definitive
Securities. A holder of a beneficial interest in a Restricted Global Security may exchange such
beneficial interest for an Unrestricted Definitive Security or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security
only if:





          (A) such exchange or transfer is effected pursuant to a Registered Exchange Offer in
accordance with the applicable Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal (or via the Depositary’s
book-entry system) that it is not (i) a broker-dealer, (ii) a Person participating in the
distribution of the Exchange Securities or (iii) a Person who is an affiliate (as defined in
Rule 144) of the Company;




          (B) such transfer is effected pursuant to a Shelf Registration Statement in accordance
with the applicable Registration Rights Agreement;



39









 








               (C) such transfer is effected by an Exchanging Dealer pursuant to an Exchange Offer
Registration Statement in accordance with the applicable Registration Rights Agreement; or




               (D) the Registrar receives the following:




               (i) if the holder of such beneficial interest in a Restricted Global Security
proposes to exchange such beneficial interest for an Unrestricted Definitive
Security, a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or




               (ii) if the holder of such beneficial interest in a Restricted Global Security
proposes to transfer such beneficial interest to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Security, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in item
(4) thereof;




and, in each such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer is in compliance with the
Securities Act and state “blue sky” laws and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.



               (3) Beneficial Interests in Unrestricted Global Securities to Unrestricted Definitive
Securities. If any holder of a beneficial interest in an Unrestricted Global Security proposes to
exchange such beneficial interest for a Definitive Security or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive Security, then, upon
satisfaction of the conditions set forth in Section 2.6(b)(2) hereof, the Registrar shall
cause the aggregate principal amount of the applicable Global Security to be reduced accordingly
pursuant to Section 2.6(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a Definitive Security in the
appropriate principal amount. Any Definitive Security issued in exchange for a beneficial interest
pursuant to this Section 2.6(c)(3) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial interest shall instruct
the Registrar through instructions from the Depositary and the Participant or Indirect Participant.
The Trustee shall deliver such Definitive Securities to the Persons in whose names such Securities
are so registered. Any Definitive Security issued in exchange for a beneficial interest pursuant
to this Section 2.6(c)(3) shall not bear the Private Placement Legend.




     (d) Transfer and Exchange of Definitive Securities for Beneficial Interests.





               (1) Restricted Definitive Securities to Beneficial Interests in Restricted Global Securities.
If any Holder of a Restricted Definitive Security proposes to exchange such Security for a
beneficial interest in a Restricted Global Security or to transfer such Restricted Definitive
Security to a Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Security, then, upon receipt by the Registrar of the following documentation:



40









 






               (A) if the Holder of such Restricted Definitive Security proposes to exchange such
Security for a beneficial interest in a Restricted Global Security, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item (2)(b)
thereof;




               (B) if such Restricted Definitive Security is being transferred to a QIB in accordance
with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof; or




               (C) if such Restricted Definitive Security is being transferred to a non-U.S. Person in
an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (2) thereof; or




               (D) if such Restricted Definitive Security is being transferred to an Institutional
Accredited Investor that is acquiring such Security for its own account, or for the account
of another Institutional Accredited Investor, for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution in violation of the Securities
Act, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3) thereof, and a letter from the transferee in the form of
Annex A thereto,


the Trustee shall cancel the Restricted Definitive Security, the Registrar shall increase or cause
to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate
Restricted Global Security, in the case of clause (B) above, the 144A Global Security, and in the
case of clause (C) above, the Regulation S Global Security.




          (2) Restricted Definitive Securities to Beneficial Interests in Unrestricted Global
Securities. A Holder of a Restricted Definitive Security may exchange such Security for a
beneficial interest in an Unrestricted Global Security or transfer such Restricted Definitive
Security to a Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Security only if:





               (A) such exchange or transfer is effected pursuant to a Registered Exchange Offer in
accordance with applicable Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal (or via the Depositary’s book-entry system) that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the Exchange Securities or
(3) a Person who is an affiliate (as defined in Rule 144) of the Company;




               (B) such transfer is effected pursuant to a Shelf Registration Statement in accordance
with the applicable Registration Rights Agreement;




               (C) such transfer is effected by an Exchanging Dealer pursuant to an Exchange Offer
Registration Statement in accordance with the applicable Registration Rights Agreement; or




               (D) the Registrar receives the following:



41









 








     (i) if the Holder of such Definitive Securities proposes to exchange such
Securities for a beneficial interest in the Unrestricted Global Security, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or




     (ii) if the Holder of such Definitive Securities proposes to transfer such
Securities to a Person who shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Security, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item (4) thereof;




and, in each such case set forth in this subparagraph (D), if the Registrar so requests or
if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer is in compliance with the
Securities Act and state “blue sky” laws and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.



     Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.6(d)(2), the Trustee shall cancel the Definitive Securities and the Registrar shall increase
or cause to be increased the aggregate principal amount of the Unrestricted Global Security.



          (3) Unrestricted Definitive Securities to Beneficial Interests in Unrestricted Global
Securities. A Holder of an Unrestricted Definitive Security may exchange such Security for a
beneficial interest in an Unrestricted Global Security or transfer such Definitive Security to a
Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global
Security at any time. Upon receipt of a request for such an exchange or transfer, the Trustee
shall cancel the applicable Unrestricted Definitive Security and the Registrar shall increase or
cause to be increased the aggregate principal amount of one of the Unrestricted Global Securities.




     If any such exchange or transfer from a Definitive Security to a beneficial interest is
effected pursuant to subparagraph (2)(B), (2)(D) or (3) above at a time when an Unrestricted Global
Security has not yet been issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more
Unrestricted Global Securities in an aggregate principal amount equal to the principal amount of
Definitive Securities so transferred.



     (e) Transfer and Exchange of Definitive Securities for Definitive Securities. Upon request by
a Holder of Definitive Securities and such Holder’s compliance with the provisions of this
Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive
Securities. Prior to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Registrar the Definitive Securities duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder
or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide
any additional certifications, documents and information, as applicable, required pursuant to the
following provisions of this Section 2.6(e).



42









 





          (1) Restricted Definitive Securities to Restricted Definitive Securities. Any Restricted
Definitive Security may be transferred to and registered in the name of Persons who take delivery
thereof in the form of a Restricted Definitive Security if the Registrar receives the following:





               (A) if the transfer will be made pursuant to Rule 144A, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the certifications
in item (1) thereof;




               (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and




               (C) if the transfer will be made pursuant to any other exemption from the registration
requirements of the Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications required by item (3) thereof
and a letter from the transferee in the form of Annex A thereto.



          (2) Restricted Definitive Securities to Unrestricted Definitive Securities. Any Restricted
Definitive Security may be exchanged by the Holder thereof for an Unrestricted Definitive Security
or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Security if:





               (A) such exchange or transfer is effected pursuant to a Registered Exchange Offer in
accordance with the applicable Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal (or via the Depositary’s book-entry system) that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the Exchange Securities or
(3) a Person who is an affiliate (as defined in Rule 144) of the Company;




               (B) any such transfer is effected pursuant to a Shelf Registration Statement in
accordance with the applicable Registration Rights Agreement;




               (C) any such transfer is effected by an Exchanging Dealer pursuant to an Exchange Offer
Registration Statement in accordance with the applicable Registration Rights Agreement; or




               (D) the Registrar receives the following:




               (i) if the Holder of such Restricted Definitive Securities proposes to exchange
such Securities for an Unrestricted Definitive Security, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item
(1)(d) thereof; or




               (ii) if the Holder of such Restricted Definitive Security proposes to transfer
such Securities to a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Security, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;



43









 







and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and state “blue sky” laws and
that the restrictions on transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the Securities Act.



          (3) Unrestricted Definitive Securities to Unrestricted Definitive Securities. A Holder of
Unrestricted Definitive Securities may transfer such Securities to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Security. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted Definitive Security pursuant to the
instructions from the Holder thereof.




     (f) (1) Registered Exchange Offer. Upon the occurrence of a Registered Exchange Offer in
accordance with the applicable Registration Rights Agreement, the Company shall issue and, upon
receipt of a written order in accordance with Section 2.2, the Trustee shall authenticate:




     (A) one or more Unrestricted Global Securities in an aggregate principal amount equal
to the principal amount of the beneficial interests in the Restricted Global Securities
tendered for acceptance by Persons that certify in the applicable Letters of Transmittal (or
via the Depositary’s book-entry system), among other things, that (I) they are not
broker-dealers, (II) they are not participating in a distribution of the Exchange Securities
and (III) they are not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Registered Exchange Offer; and




     (B) Unrestricted Definitive Securities in an aggregate principal amount equal to the
principal amount of any Restricted Definitive Securities accepted for exchange in the
Registered Exchange Offer.



     Concurrently with the issuance of such Securities, the Registrar shall cause the aggregate
principal amount of the applicable Restricted Global Securities to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate, and deliver to the Persons designated by
the Holders of any Definitive Securities so accepted, Unrestricted Definitive Securities in the
appropriate principal amount.




     (2) If upon consummation of a Registered Exchange Offer, any Initial Purchaser holds
Initial Securities acquired by it as part of the initial distribution thereof, the Company,
upon written request of such Initial Purchaser, simultaneously with the delivery of the
Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser and, upon receipt of a written order in accordance with Section
2.2 hereof, the Trustee shall authenticate, one or more Restricted Definitive Securities
representing Private Exchange Securities in a Private Exchange for the Initial Securities
held by such Initial Purchaser, in an aggregate principal amount equal to the Initial
Securities so exchanged by such Initial Purchaser in the Private Exchange.



44









 







     (g) Legends. The following legends shall appear on the face of all Global Securities and
Definitive Securities issued under this Indenture unless specifically stated otherwise in the
applicable provisions of this Indenture.



          (1) Private Placement Legend.





               (A) Except as permitted by subparagraph (B) below or as otherwise agreed between the
Company and the Holder, each Global Security and each Definitive Security (and all
Securities issued in exchange therefor or substitution thereof) shall bear a legend, until
the expiration of the applicable holding period with respect to the Securities set forth in
Rule 144(k), in substantially the following form:




          “ THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.




          THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)), (B) IT
IS A NON-U.S. PURCHASER AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, OR (C) IT IS
AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER
PERIOD AS MAY BE PRESCRIBED BY RULE 144(K) (OR ANY SUCCESSOR
PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR ANY PREDECESSOR OF THIS SECURITY) AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO



45









 








RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PURCHASERS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF
REGULATION S, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN
THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE
SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING ANY STATE OF
THE UNITED STATES, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D),
(E), OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE. ”



          (B) Notwithstanding the foregoing, any Global Security or Definitive Security issued
pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of
this Section 2.6 (and all Securities issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.



46









 





          (2) Global Security Legend. Each Global Security shall bear a legend in substantially the
following form:





     “ THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I)
THE REGISTRAR MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL
SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
SECTION 2.6(a) OF THE INDENTURE AND (III) THIS GLOBAL
SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.10 OF THE INDENTURE.




     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) (“DTC”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. ”



     (h) Cancellation and/or Adjustment of Global Securities. At such time as all beneficial
interests in a particular Global Security have been exchanged for Definitive Securities or a
particular Global Security has been redeemed, repurchased or canceled in whole and not in part,
each such Global Security shall be returned to or retained and canceled by the Trustee in
accordance with Section 2.10 hereof. At any time prior to such cancellation, if any
beneficial



47









 




interest in a Global Security is exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Security or for Definitive
Securities, the principal amount of Securities represented by such Global Security shall be reduced
accordingly and an endorsement shall be made on such Global Security by the Trustee or by the
Securities Custodian at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Security, such other Global Security
shall be increased accordingly and an endorsement shall be made on such Global Security by the
Trustee or by the Securities Custodian at the direction of the Trustee to reflect such increase.




     (i) General Provisions Relating to Transfers and Exchanges.



          (1) To permit registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Global Securities and Definitive Securities upon the Company’s order or
at the Registrar’s request.




          (2) No service charge shall be made to a holder of a beneficial interest in a Global Security
or to a Holder of a Definitive Security for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or similar governmental
charge or other fee required by law and payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.9 , 3.6, 3.7, 4.7 and 4.12 hereof).




          (3) All Global Securities and Definitive Securities issued upon any registration of transfer
or exchange of Global Securities or Definitive Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the
Global Securities or Definitive Securities surrendered upon such registration of transfer or
exchange.




          (4) None of the Company, the Trustee or the Registrar shall be required (A) to issue, to
register the transfer of or to exchange any Securities during a period of 15 days before the day of
any selection of Securities for redemption under Section 3.2 hereof and ending at the close
of business on the day of selection, (B) to register the transfer of or to exchange any Securities
so selected for redemption in whole or in part, except the unredeemed portion of any Security being
redeemed in part or (C) to register the transfer of or to exchange a Security between a record date
and the next succeeding Interest Payment Date.




          (5) Prior to the due presentation for registration of transfer of any Security, the Company,
any Guarantor, the Trustee, the Paying Agent or the Registrar may deem and treat the Person in
whose name a Security is registered as the absolute owner of such Security for the purpose of
receiving payment of principal, interest and premium (if any) on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent or the Registrar shall be affected by notice to the contrary.




          (6) The Trustee shall authenticate Global Securities and Definitive Securities in accordance
with the provisions of Section 2.2 hereof.




48









 





          (7) All certifications, certificates and Opinions of Counsel required to be submitted to the
Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may
be submitted by facsimile.




Section 2.7 Replacement Securities




     If any mutilated Security is surrendered to the Registrar or the Company and the Registrar and
the Company receive evidence to their satisfaction of the destruction, loss or theft of any
Security, the Company will issue and the Trustee, upon receipt of a written order of the Company
conforming to Section 2.2 hereof, will authenticate a replacement Security if the
Registrar’s and the Company’s reasonable requirements are met. If required by the Registrar or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the
Registrar, the Trustee and the Company to protect the Company, the Trustee, the Registrar, any
other Agent and any Authenticating Agent from any loss that any of them may suffer if a Security is
replaced.



     Every replacement Security is an additional obligation of the Company and will be entitled to
all of the benefits of this Indenture equally and proportionately with all other Securities duly
issued hereunder.



Section 2.8 Outstanding Securities




     The Securities outstanding at any time are all the Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those reductions in the
interest in a Global Security effected by the Trustee in accordance with the provisions hereof, and
those described in this Section as not outstanding. Except as set forth in Section 11.6
hereof, a Security does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security.



     If a Security is replaced pursuant to Section 2.7 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security is held by a
protected purchaser.



     If the principal amount of any Security is considered paid under Section 4.1 hereof,
it ceases to be outstanding and interest on it ceases to accrue.



     If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof)
holds, on a Redemption Date or maturity date, money sufficient to pay Securities payable on that
date, then on and after that date such Securities will be deemed to be no longer outstanding and
will cease to accrue interest.



Section 2.9 Temporary Securities




     Until Definitive Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be substantially in the form
of Definitive Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate Definitive Securities in exchange for temporary Securities.



49









 




Holders of temporary Securities shall in all respects be entitled to the same benefits under
this Indenture as a holder of Definitive Securities.




Section 2.10 Cancellation




     The Company at any time may deliver Securities to the Trustee or any Registrar for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The Trustee or the
Registrar and no one else shall cancel and destroy (subject to the record retention requirements of
the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment,
replacement or cancellation and deliver a certificate of such destruction to the Company unless the
Company directs the Trustee and the Registrar to deliver canceled Securities to the Company. The
Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to
the Trustee or the Registrar for cancellation.



Section 2.11 Defaulted Interest




     If the Company defaults in a payment of interest (“Defaulted Interest”) on the Securities, the
Company shall pay Defaulted Interest (as provided in Section 4.1) in any lawful manner.
The Company may pay the Defaulted Interest to the Persons who are Holders on a subsequent special
record date. The Company shall fix or cause to be fixed (or upon the Company’s failure to do so
the Trustee shall fix pursuant to a written instruction of Holders of at least a majority in
principal amount of the Securities) any such special record date and payment date to the reasonable
satisfaction of the Trustee which special record date shall not be less than 10 days prior to the
payment date for such Defaulted Interest and the Company, or at the Company’s request, the Trustee,
shall promptly mail or cause to be mailed to each Holder a notice that states the special record
date, the payment date and the amount of Defaulted Interest to be paid. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when so deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as provided in this Section 2.11.



Section 2.12 CUSIP Numbers




     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use) and,
if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or omission of such
numbers.



50









 





ARTICLE III




REDEMPTION




Section 3.1 Notices to Trustee




     If the Company elects to redeem Securities pursuant to Section 3.7 hereof, it shall
notify the Trustee in writing of the Redemption Date and the principal amount of Securities to be
redeemed.



     The Company shall give each notice to the Trustee and the Registrar provided for in this
Section 3.1 at least 60 days before the Redemption Date unless the Trustee consents to a
shorter period. If such redemption is to be effected pursuant to Section 3.7(b), then such
notice shall be accompanied by an Officers’ Certificate to the effect that such redemption will
comply with the conditions therein. If fewer than all the Securities are to be redeemed, the
record date relating to such redemption shall be selected by the Company and set forth in the
related notice given to the Trustee, which record date shall be not less than 15 days after the
date of such notice.



Section 3.2 Selection of Securities to Be Redeemed




     In the case of any partial redemption, selection of the Securities for redemption will be made
by the Trustee in compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed or, if the Securities are not listed, then on a pro rata
basis and in such manner as complies with applicable legal requirements. The Trustee shall make
the selection from outstanding Securities not previously called for redemption. The Trustee may
select for redemption portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed. The Trustee may
rely upon information provided by the Registrar for purposes of this Section 3.2.



Section 3.3 Notice of Redemption




     At least 30 days but not more than 60 days before a date for redemption of Securities, the
Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder’s registered address.



     The notice shall identify the Securities to be redeemed and shall state:



          (1) the Redemption Date;




          (2) the Redemption Price (if then determined and otherwise the basis for its determination);




          (3) the name and address of the Paying Agent where Securities are to be surrendered;




51









 





          (4) that Securities called for redemption must be surrendered to the Paying Agent to collect
the Redemption Price;




          (5) if fewer than all the outstanding Securities are to be redeemed, the identification and
principal amounts of the particular Securities to be redeemed;




          (6) that, unless the Company defaults in making such redemption payment, interest on
Securities (or portion thereof) called for redemption ceases to accrue on and after the Redemption
Date;




          (7) the CUSIP number, if any, printed on the Securities being redeemed; and




          (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if
any, listed in such notice or printed on the Securities.




     At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at the Company’s expense. In such event, the Company shall provide the Trustee with the
information required by this Section 3.3.



Section 3.4 Effect of Notice of Redemption




     Once notice of redemption is mailed to Holders, Securities (or portions thereof) called for
redemption become irrevocably due and payable on the Redemption Date and at the Redemption Price
stated in the notice. A notice of redemption may not be conditional. Upon surrender to the Paying
Agent, such Securities shall be paid at the Redemption Price stated in the notice, plus accrued and
unpaid interest to the Redemption Date; provided that if the Redemption Date is after the taking of
a record of the Holders on a record date and on or prior to the related Interest Payment Date, the
accrued and unpaid interest shall be payable to the Person in whose name the redeemed Securities
are registered on such record date. Failure to give notice or any defect in the notice to any
Holder shall not affect the validity of the notice to any other Holder.



Section 3.5 Deposit of Redemption Price




     No later than 11:00 a.m. (New York City time) on the Redemption Date, the Company shall
deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the Redemption Price of and accrued and unpaid
interest on all Securities to be redeemed on that date. If the Company complies with the
provisions of this paragraph, then on and after the Redemption Date, interest will cease to accrue
on the Securities or the portions of Securities called for redemption.



Section 3.6 Securities Redeemed in Part




     Upon cancellation of a Security that is redeemed in part, the Company shall issue and the
Trustee shall authenticate for the Holder (at the Company’s expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered. The Trustee shall notify
the Registrar of the issuance of such new Security.



52









 







Section 3.7 Optional Redemption




     (a) On or after August 1, 2011, the Company may redeem all or a part of the Securities at any
time or from time to time at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued and unpaid interest on the Securities, if any, to the applicable
Redemption Date, if redeemed during the 12-month period beginning August 1 of the years indicated:



	 	 	 	 	 
	Year	 	Redemption Price
	2011
	 	 	105.125	%
	2012
	 	 	102.563	%
	2013
	 	 	100.000	%






     (b) Prior to August 1, 2010, the Company may on one or more occasions redeem up to an
aggregate amount equal to 35% of the aggregate principal amount of the Securities (including
Additional Securities) originally issued under this Indenture at a Redemption Price of 110.25% of
the principal amount of the Securities, plus accrued and unpaid interest, if any, to the Redemption
Date, with the Net Cash Proceeds of one or more Equity Offerings; provided, that (i) at least 65%
in aggregate principal amount of the Securities (including any Additional Securities) originally
issued remains outstanding immediately after the occurrence of such redemption (excluding
Securities held by the Company or any of its Subsidiaries) and (ii) each such redemption occurs
within 90 days of the date of the closing of the related Equity Offering.



     (c) In addition, at any time prior to August 1, 2011, the Company may redeem all or part of
the Securities at a Redemption Price equal to:




	 	(i)	 	100% of the principal amount thereof, plus
	 
	 	(ii)	 	the Applicable Premium as of, and accrued and unpaid interest,
if any, to, the Redemption Date.





     (d) Any redemption pursuant to this Section 3.7 shall be made pursuant to the
provisions of Sections 3.1 through 3.6 hereof.



ARTICLE IV




COVENANTS




Section 4.1 Payment of Securities




     The Company covenants and agrees for the benefit of the Holders of the Securities that it
shall promptly pay the principal of, premium, if any, and interest on the Securities on the dates
and in the manner provided in the Securities, this Indenture and, in the case of any Additional
Interest, the applicable Registration Rights Agreement. Payments of principal, premium, if any,
and interest on the Securities shall be deemed due for all purposes under this Indenture whether
such payments are due at Stated Maturity, upon redemption, upon required repurchase pursuant to
Sections 4.7 or 4.12 hereof, upon declaration or otherwise. Principal, premium, if
any, and



53









 




interest on the Securities shall be considered paid on the date due if by 11:00 a.m. (New York
City time) on such date the Paying Agent holds in accordance with this Indenture money sufficient
to pay all principal, premium, if any, and interest then due.




     The Company will pay, to the extent lawful, interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any, at the rate then in
effect on the Securities; it will pay, to the extent lawful, interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without
regard to any applicable grace periods), from time to time on demand at the same rate as on overdue
principal.



     All references in this Indenture, the Securities or the Subsidiary Guarantees to interest
shall be deemed to include Additional Interest unless the context otherwise requires. The Company
shall give the Trustee advance written notice of the amount of any Additional Interest that may be
payable with respect to the Securities.



Section 4.2 SEC Reports




     Whether or not required by the SEC, so long as any Securities are outstanding, the Company
will file with the SEC for public availability within the time periods specified in the SEC’s rules
and regulations (unless the SEC will not accept such a filing), and the Company will furnish to the
Trustee within five Business Days of filing, or attempting to file, the same with the SEC:



     (1) all quarterly and annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms,
including a section on “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and, with respect to the annual information only, a report on the annual financial
statements by the Company’s certified independent public accountants; and



     (2) all current reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports.



     If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the
quarterly and annual financial information required by the preceding paragraph shall include a
reasonably detailed presentation, either on the face of the financial statements or in the
footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results
of Operations, of the financial condition and results of operations of the Company and its
Restricted Subsidiaries separate from the financial condition and results of operations of the
Unrestricted Subsidiaries of the Company.



     In addition, the Company agrees that, for so long as any Securities remain outstanding, if at
any time it is not required to file with the SEC the reports required by the preceding paragraphs
of this Section 4.2, it will furnish to Holders of Securities and to prospective investors,
upon request, the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.



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Section 4.3 Incurrence of Indebtedness




     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness
(including Acquired Debt); provided, however, that the Company and any Guarantor may incur
Indebtedness (including Acquired Debt), if the Fixed Charge Coverage Ratio for the Company’s most
recently ended four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred would have been at
least 2.5 to 1, determined on a pro forma basis (including a pro forma application of the Net Cash
Proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such
four-quarter period.



     (b) The foregoing paragraph (a) of this Section 4.3 will not prohibit the incurrence
of any of the following items of Indebtedness (collectively, “Permitted Indebtedness”):



          (1) the incurrence by the Company and any Guarantor of the Indebtedness (including letters of
credit) under the Credit Facilities; provided that the aggregate principal amount of all
Indebtedness of the Company and the Guarantors outstanding at any time under this clause (1) under
all Credit Facilities after giving effect to such incurrence does not exceed an amount equal to the
greater of (A) $150.0 million less the aggregate amount of all permanent principal repayments since
the Issue Date under a Credit Facility that are made under clause (b)(1) of Section 4.7
hereof and (B) 30% of ACNTA as of the date of such incurrence;




          (2) the incurrence by the Company of Existing Indebtedness (other than Indebtedness described
under clause (1), (3) or (6) of this paragraph (b));




          (3) the incurrence by the Company and any Guarantors of Indebtedness represented by (A) the
Initial Securities and the Subsidiary Guarantees, and (B) any Securities issued pursuant to a
Registration Rights Agreement in exchange for other Securities, and any Subsidiary Guarantees
related thereto;




          (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings, or purchase money obligations, in
each case, incurred for the purpose of financing all or any part of the purchase price or cost of
construction, improvement or tenant finish-out of property, plant or equipment used in the business
of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (4), not to exceed $5.0 million at any time outstanding;




          (5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the Net Cash Proceeds of which are used to refund,
refinance or replace, Indebtedness (other than intercompany Indebtedness) that was permitted by
this Indenture to be incurred under paragraph (a) of this Section 4.3 covenant or clause
(2), (3), (4) or this clause (5) of this paragraph (b);




55









 





          (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided,
however, that:





               (A) (i) if the Company is the obligor on such Indebtedness and a Guarantor is not the
obligee thereon, such Indebtedness must be expressly subordinated to the prior payment in
full in cash of all obligations with respect to the Securities, and (ii) if a Guarantor is
the obligor of such Indebtedness and the Company or another Guarantor is not the obligee
thereon, such Indebtedness must be expressly subordinated to the prior payment in full in
cash of all obligations of such Guarantor with respect to its Subsidiary Guarantee, and




               (B) (i) any subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary
thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary thereof, shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary,
as the case may be, that was not permitted by this clause;



          (7) in-kind obligations relating to net natural gas balancing positions arising in the
ordinary course of business;




          (8) the accrual of interest, accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock, in the form of additional shares of the same class of
Disqualified Stock;




          (9) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in
respect of (a) self-insurance obligations or completion, bid, performance, appeal or surety bonds
issued for the account of the Company or any Restricted Subsidiary in the ordinary course of
business, including Guarantees or obligations of the Company or any Restricted Subsidiary with
respect to letters of credit supporting such self-insurance, completion, bid, performance, appeal
or surety obligations (in each case other than for an obligation for money borrowed) or (b)
obligations represented by letters of credit for the account of the Company or any Restricted
Subsidiary, as the case may be, in order to provide security for workers’ compensation claims;




          (10) any obligation (including deferred premiums) under Interest Rate Agreements, Currency
Agreements and Commodity Agreements; provided, however, that such Interest Rate Agreements,
Currency Agreements and Commodity Agreements are related to business transactions of the Company or
its Restricted Subsidiaries and are entered into for bona fide hedging purposes of the Company or
its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior
management of the Company);




          (11) any obligation arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, guarantee, adjustment of purchase price, holdback, contingency
payment obligation based on the performance of the acquired or disposed asset or




56









 




similar obligations, in each case, incurred or assumed in connection with the acquisition or
disposition of any business, asset or Capital Stock of a Restricted Subsidiary;




          (12) Indebtedness of the Company or any of its Restricted Subsidiaries to the extent the Net
Cash Proceeds thereof are promptly deposited to defease or satisfy and discharge all outstanding
Securities in full in accordance with Article VIII hereof;




          (13) any obligation arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument drawn against insufficient funds in the ordinary course of
business, provided, however, that such Indebtedness is extinguished within five Business Days of
incurrence; and




          (14) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in
addition to Indebtedness permitted by clauses (1) through (13) above of this paragraph (b) or
paragraph (a) of this Section 4.3 in an aggregate principal amount (or accrued value, as
applicable) at any time outstanding not to exceed $20.0 million.




     (c) For purposes of determining compliance with this Section 4.3:



          (1) in the event that an item of proposed Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness described in clauses (1) through (14) of paragraph (b)
above, or is entitled to be incurred pursuant to paragraph (a) of this Section 4.3, the
Company will be permitted to classify such item of Indebtedness (or any portion thereof) on the
date of its incurrence in any manner that complies with this covenant, and only be required to
include the amount and type of such Indebtedness in one of such clauses;




          (2) all Indebtedness outstanding on the date of this Indenture under the Existing Credit
Facility after the application of the Net Cash Proceeds of the sale of the Initial Securities shall
be deemed initially incurred on the Issue Date under clause (1) of paragraph (b) of this
Section 4.3 and not paragraph (a) of this Section 4.3 or clause (2) of paragraph
(b) of this Section 4.3;




          (3) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness
which is otherwise included in the determination of a particular amount of Indebtedness shall not
be included;




          (4) if obligations in respect of letters of credit are incurred pursuant to a Credit Facility
and are being treated as incurred pursuant to paragraph (b)(1) above and the letters of credit
relate to other Indebtedness, then such other Indebtedness shall not be included;




          (5) Indebtedness permitted by this covenant need not be permitted solely by reference to one
provision permitting such Indebtedness but may be permitted in part by one such provision and in
part by one or more other provisions of this covenant permitting such Indebtedness;




          (6) the amount of Indebtedness issued at a price that is less than the principal amount
thereof will be equal to the amount of the liability in respect thereof determined in accordance
with GAAP; and




57









 





          (7) Indebtedness of any Person existing at the time such Person becomes a Restricted
Subsidiary shall be deemed to have been incurred by the Company and the Restricted Subsidiary at
the time such Person becomes a Restricted Subsidiary.




     (d) For purposes of determining compliance with any U.S. dollar-denominated restriction on the
incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated
in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on
the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in
the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to
refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause
the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated
restriction shall be deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced. Notwithstanding any other provision of this covenant, the maximum amount of
Indebtedness that the Company may incur pursuant to this covenant shall not be deemed to be
exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal
amount of any Permitted Refinancing Indebtedness, if incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable
to the currencies in which such Permitted Refinancing Indebtedness is denominated that is in effect
on the date of such refinancing.



Section 4.4 Restricted Payments




     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly:



          (1) declare or pay any dividend or make any other payment or distribution on account of the
Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its
Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the
Company or a Restricted Subsidiary of the Company);




          (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company (other than any such Equity Interests owned
by the Company or any Restricted Subsidiary of the Company);




          (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value, in each case prior to any scheduled repayment, sinking fund payment or final
maturity, any Subordinated Indebtedness of the Company or any Guarantor; or




          (4) make any Investment other than a Permitted Investment (all such payments and other actions
set forth in clauses (1) through (3) above and this clause (4) being collectively referred to as
“Restricted Payments”),




58









 





     (b) unless, at the time of and after giving effect to such Restricted Payment:



          (1) no Default or Event of Default shall have occurred and be continuing or would occur as a
consequence thereof;




          (2) the Company would, at the time of such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.3(a) hereof; and




          (3) such Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding
Restricted Payments permitted by clauses (2), (3), (4), (6), (8) and (10) of the next succeeding
paragraph (c) below, but including Restricted Payments permitted by clauses (1), (5), (7) and (9)
of such paragraph), is less than the sum, without duplication, of





               (A) 50% of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the full fiscal quarter during which the Issue Date
falls to the end of the Company’s most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus




               (B) 100% of the aggregate Net Cash Proceeds and the Fair Market Value of property other
than cash received by the Company since the Issue Date from the issue or sale of Equity
Interests of the Company (other than Disqualified Stock), other than Equity Interests sold
to a Subsidiary of the Company and other than an issuance or sale to an employee stock
ownership plan or to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees, plus




               (C) the amount by which Indebtedness is reduced on the Company’s consolidated balance
sheet upon the conversion or exchange subsequent to the Issue Date of any Indebtedness
convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(plus the amount of any accrued interest then outstanding on such Indebtedness to the extent
the obligation to pay such interest is extinguished less the amount of any cash, or the Fair
Market Value of any property, distributed by the Company upon such conversion or exchange);
plus




               (D) an amount equal to the sum of (i) the net reduction in the Investments (other than
Permitted Investments) made by the Company or any Restricted Subsidiary in any Person
resulting from repurchases, repayments or redemptions of such Investments by such Person,
proceeds realized on the sale of such Investment and proceeds representing the return of
capital (excluding dividends and distributions), in each case received by the Company or any
Restricted Subsidiary, and (ii) to the extent such Person is an Unrestricted Subsidiary, the
portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such



59









 








Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the
case of any such Person or Unrestricted Subsidiary, the amount of Investments (excluding
Permitted Investments) previously made (and treated as a Restricted Payment) by the Company
or any Restricted Subsidiary in such Person or Unrestricted Subsidiary;



     (c) The preceding provisions will not prohibit:



           (1) the payment of any dividend or other distribution, or the consummation of any irrevocable
redemption within 60 days after the date of declaration thereof, or giving of redemption notice, as
the case may be, if at said date of declaration or notice, such payment would have complied with
the provisions of this Indenture;



           (2) the redemption, repurchase, retirement, defeasance or other acquisition of any
Subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the Net Cash Proceeds of the substantially
concurrent sale (if such redemption occurs within 120 days after the sale) (other than to a
Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock);
provided that the amount of any such Net Cash Proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(B) of the
preceding paragraph (b);



           (3) the defeasance, redemption, repurchase, retirement or other acquisition of any
Subordinated Indebtedness of the Company or any Guarantor with the Net Cash Proceeds from an
incurrence of any Permitted Refinancing Indebtedness permitted to be incurred under Section
4.3 hereof;



           (4) the payment of any dividend or other distribution by a Restricted Subsidiary of the
Company to the holders of its Equity Interests on a pro rata basis;



           (5) so long as no Default has occurred and is continuing, the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any employees, former employees, directors or former directors of
the Company or any of its Restricted Subsidiaries (or heirs, estates or other permitted transferees
of such employees or directors) pursuant to any agreements (including employment agreements),
management equity subscription agreements or stock option agreements or plans (or amendments
thereto), approved by the Board of Directors, under which such individuals purchase or sell or are
granted the right to purchase or sell shares of Capital Stock; provided that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0
million in any twelve-month period;



           (6) repurchases or other acquisitions for value of Capital Stock, (i) deemed to occur upon the
exercise or exchange of stock options, warrants or other convertible securities to the extent such
Capital Stock represents a portion of the exercise or exchange price thereof or (ii) made in lieu
of withholding taxes in connection with any such exercise or exchange; provided, however, that the
aggregate amount of such repurchases or other acquisitions made to satisfy federal income tax
obligations shall not exceed $2.0 million in any twelve-month period;



60









 





          (7) so long as no Default has occurred and is continuing, upon the occurrence of a Change of
Control or an Asset Sale and within 60 days after the completion of the offer to repurchase the
Securities under Section 4.12 or Section 4.7 hereof (including the purchase of all
Securities tendered), any purchase or redemption of Subordinated Indebtedness required under the
terms thereof as a result of such Change of Control or Asset Sale at a purchase or redemption price
not to exceed 101% (in the case of a Change of Control) or 100% (in the case of an Asset Sale) of
the outstanding principal amount thereof, plus accrued and unpaid interest thereon, if any,
provided that, in the notice to Holders relating to a Change of Control or Asset Sale hereunder,
the Company shall describe this clause (7);




          (8) so long as no Default has occurred or is continuing, the purchase by the Company of
fractional shares arising out of stock dividends, splits or business combinations;




          (9) payments to dissenting stockholders (i) pursuant to applicable law or (ii) in connection
with the settlement or other satisfaction of legal claims made pursuant to or in connection with a
consolidation, merger or transfer of assets in connection with a transaction that is not prohibited
by this Indenture; or




          (10) so long as no Default has occurred or is continuing, other Restricted Payments in an
aggregate amount since the Issue Date not to exceed $7.5 million.




     (d) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on
the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or
issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The Fair Market Value of any assets or securities that are required to be valued at the
time of such Restricted Payment by this covenant shall be evidenced by an Officers’ Certificate
which shall be delivered to the Trustee not later than five Business Days following the date of the
making of any Restricted Payment. Such Officers’ Certificate shall state that such Restricted
Payment is permitted by this Section 4.4, together with a copy of any related resolution of
the Board of Directors.



     (e) For purposes of determining compliance with this Section 4.4, if a Restricted
Payment meets the criteria of more than one of the types of Restricted Payments described in
clauses (1)-(10) above, the Company, in its sole discretion, may order and classify such Restricted
Payment in any manner in compliance with this covenant.



Section 4.5 Liens




     The Company will not, and will not permit any of its Restricted Subsidiaries to create, incur,
assume or suffer to exist any Lien on any property or asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens, to secure (a) any Indebtedness of the Company unless prior to, or
contemporaneously therewith, the Securities are equally and ratably secured for so long as such
other Indebtedness is so secured, or (b) any Indebtedness of any Guarantor, unless prior to, or
contemporaneously therewith, the Subsidiary Guarantee of such Guarantor is equally and ratably
secured for so long as such other Indebtedness is so secured; provided, however, that if such
Indebtedness is expressly subordinated to the Securities or a Subsidiary Guarantee, the Lien



61









 







securing such Indebtedness will be subordinated and junior to the Lien securing the Securities
or such Subsidiary Guarantee, as the case may be, with the same relative priority as such
Indebtedness has with respect to the Securities or such Subsidiary Guarantee.



Section 4.6 Dividend and Other Payment Restrictions Affecting Subsidiaries




     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create or permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to:



          (1) pay dividends or make any other distributions on its Capital Stock to the Company or any
of the Company’s Restricted Subsidiaries, or pay any Indebtedness owed to the Company or any of the
Company’s Restricted Subsidiaries;




          (2) make loans or advances to the Company or any of the Company’s Restricted Subsidiaries; or




          (3) transfer any of its properties or assets to the Company or any of the Company’s Restricted
Subsidiaries.




     (b) However, the preceding restrictions will not apply to encumbrances or restrictions
existing under or by reason of:



          (1) agreements existing on the Issue Date, including the Existing Credit Facility, as in
effect on the Issue Date;




          (2) the Indenture, the Securities or any Subsidiary Guarantees;




          (3) applicable law, rule, regulation or order;




          (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company
or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so acquired, provided
that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture
to be incurred;




          (5) any agreement for the sale or other disposition of Capital Stock or assets of a Restricted
Subsidiary that restricts distributions by such Restricted Subsidiary pending such sale or other
disposition;




          (6) any amendment, restatement, modification, supplement, extension, renewal, refunding,
replacement or refinancing of Indebtedness referred to in clauses (1) or (4) of this paragraph (b),
provided that the encumbrances or restrictions contained in the agreements governing the foregoing
are not materially more restrictive, taken as a whole, than those contained in the agreements
governing such Indebtedness;




62









 








          (7) restrictions on cash or other deposits by parties under agreements entered into in the
ordinary course of the Oil and Gas Business of the types described in the definition of Permitted
Business Investments; and




          (8) with respect to clause (3) of the preceding paragraph (a) only, any of the following
encumbrances or restrictions:





               (A) customary non-assignment or consent provisions in leases entered into in the
ordinary course of business;




               (B) purchase money obligations for property acquired in the ordinary course of business
that impose restrictions on the property so acquired;




               (C) Permitted Liens or Liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of Section 4.5 hereof that limit the right of the Company
or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien;




               (D) customary restrictions contained in asset sale agreements limiting the transfer of
such assets pending the closing of such sale;




               (E) customary restrictions on the subletting, assignment or transfer of any property or
asset that is subject to a lease, farm-in or farm-out agreement, license, sub-license or
similar contract, or the assignment or transfer of any such lease, license, sub-license or
other contract; and




               (F) customary restrictions on the disposition or distribution of assets or property in
agreements entered into in the ordinary course of the Oil and Gas Business of the types
described in the definition of Permitted Business Investments.



Section 4.7 Asset Sales




     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:



          (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the Equity Interests or
other assets issued or sold or otherwise disposed of; and




          (2) at least 75% of the consideration therefor received by the Company or such Restricted
Subsidiary from all Asset Sales since the Issue Date, in the aggregate, is in the form of cash or
Cash Equivalents, or a combination thereof. For purposes of this provision, each of the following
shall be deemed to be cash:





               (A) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most
recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Securities or any
Subsidiary Guarantee) that are assumed by the transferee of any such



63









 







assets pursuant to a customary novation agreement or similar agreement that releases
the Company or such Restricted Subsidiary from further liability; and




               (B) any securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted within 120 days by the Company
or such Restricted Subsidiary into cash (to the extent of the cash received in that
conversion).



     (b) Within 365 days after the date of receipt of any Net Proceeds from an Asset Sale, the
Company may apply (or enter into a definitive agreement for such application to the acquisition of
Additional Assets within such 365-day period, provided, that such acquisition is closed within 90
days after the end of such 365-day period) such Net Proceeds at its option, in any one or more of
the following:



          (1) to permanently repay, prepay, redeem or repurchase any Senior Debt of the Company or any
Guarantor, and to cause any related loan commitment to be permanently reduced in an amount equal to
the principal amount so repaid, prepaid, redeemed or repurchased; or




          (2) to acquire Additional Assets or to make capital expenditures in the Oil and Gas Business.




     Pending the final application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner not prohibited by
this Indenture.



     (c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in the
preceding paragraph will constitute “Excess Proceeds.” If the aggregate amount of Excess Proceeds
then exceeds $10.0 million, within five days thereof the Company will make an offer (the “Asset
Sale Offer”) to all Holders of Securities and, to the extent required by the terms thereof, all
holders of other Indebtedness that is pari passu with the Securities containing provisions similar
to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds
of sales of assets to purchase the maximum principal amount of Securities and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale
Offer will be equal to 100% of principal amount (or accreted value in the case of any such other
pari passu Indebtedness issued with a significant original issue discount) plus accrued and unpaid
interest, if any, to the date of purchase (the “Asset Sale Payment”), and will be payable in cash.
If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Securities and such other pari passu Indebtedness tendered into such Asset Sale
Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Securities and such other
pari passu Indebtedness to be purchased on a pro rata basis, on the basis of the aggregate
principal amounts (or accreted values) tendered. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.



     (d) When the Company becomes obligated to make an Asset Sale Offer, the Company will mail a
notice to each Holder describing the transaction or transactions that



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constitute the Asset Sale and offering to repurchase Securities on the date (the “Asset Sale
Payment Date”) specified in such notice, which date will be no earlier than 30 days nor later than
60 days from the date such notice is mailed, pursuant to the procedures required by this Indenture
and described in such notice.




     (e) On the Asset Sale Payment Date, the Company will, to the extent lawful:



          (1) accept for payment all Securities or portions thereof properly tendered pursuant to the
Asset Sale Offer, subject to proration based on the amount of Excess Proceeds pursuant to clause
(c) above of this Section 4.7;




          (2) deposit with the Paying Agent an amount equal to the amount of Excess Proceeds that, after
giving effect to proration with holders of pari passu Indebtedness pursuant to clause (c) above of
this Section 4.7, is allocable to the Securities or portions thereof so tendered (or, if
less, the aggregate Asset Sale Payment for all Securities validly tendered and not withdrawn); and




          (3) deliver or cause to be delivered to the Trustee the Securities so accepted together with
an Officers’ Certificate stating the aggregate principal amount of Securities or portions thereof
being purchased by the Company.




     (f) The Paying Agent will promptly mail (or cause to be transferred through the facilities of
the Depositary) to each Holder of Securities so tendered and not withdrawn and accepted for payment
in accordance with this Section 4.7, the Asset Sale Payment for such tendered Securities,
and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Security equal in principal amount to any unpurchased portion of the Securities
surrendered, if any, by such Holder; provided that each such new Security will be in a principal
amount of $1,000 or an integral multiple thereof.



     (g) If the Asset Sale Offer Purchase Date is on or after an interest payment record date and
on or before the related Interest Payment Date, any accrued and unpaid interest will be paid to the
Person in whose name a purchased Security is registered on such record date, and no other interest
will be payable to Holders who tender Securities pursuant to the Asset Sale Offer.



     (h) The Company will comply with the requirements of Rule 14e-l under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section 4.7, the
Company will comply with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this Section 4.7 by virtue of the Company’s compliance
with such securities laws or regulations.



     (i) The Company will publicly announce the results of the Asset Sale Offer on or as soon as
practicable after the date such Asset Sale Offer is completed.



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Section 4.8 Transactions With Affiliates




     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate
(each, an “Affiliate Transaction”), unless:



          (1) such Affiliate Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained at the time of such
transaction in arm’s-length dealings by the Company or such Restricted Subsidiary with a Person who
is not an Affiliate; and





     (2)      (A) with respect to any Affiliate Transaction or series of related Affiliate(s)
Transactions involving aggregate consideration in excess of $5.0 million, a majority of the
disinterested members of the Board of Directors has determined that the criteria set forth
in clause (a)(1) of this Section 4.8 are satisfied with respect to such Affiliate
Transaction(s) and has approved such Affiliate Transaction(s), as evidenced by a Board
Resolution delivered to the Trustee; and




                (B) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $20.0 million, the Company
delivers to the Trustee a written opinion that such Affiliate Transaction(s) are fair, from
a financial point of view, to the Company and its Restricted Subsidiaries, taken as a whole,
or that such Affiliate Transaction(s), are not less favorable to the Company and its
Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an
arm’s-length transaction with a Person who is not an Affiliate, in either such case issued
by an investment banking firm of national standing.



     (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, will
not be subject to the provisions of Section 4.8(a) hereof:



          (1) any employment agreement or other employee compensation plan or arrangement entered into
by the Company or any of its Restricted Subsidiaries in the ordinary course of business;




          (2) transactions between or among the Company and its Restricted Subsidiaries or between or
among two or more Restricted Subsidiaries;




          (3) Restricted Payments that, in each case, are permitted by Section 4.4 hereof;




          (4) sales of Equity Interests (other than Disqualified Stock) to Affiliates of the Company;




          (5) indemnities of officers, directors and employees of the Company or any Restricted
Subsidiary consistent with applicable charter, bylaw or statutory provisions; and




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          (6) the payment of reasonable and customary fees to directors of the Company or any of its
Restricted Subsidiaries who are not employees of the Company or any Subsidiary;




          (7) any transaction with a Person (other than an Unrestricted Subsidiary of the Company) that
would constitute an Affiliate of the Company solely because the Company or a Restricted Subsidiary
owns an Equity Interest in or otherwise controls such Person; and




          (8) any transaction in the ordinary course of the Oil and Gas Business, and consistent with
past practice, with an Affiliate of the Company resulting from such Affiliate’s ownership of an
interest in any oil and gas lease in which the Company or any of its Restricted Subsidiaries also
owns an interest.




Section 4.9 Designation of Restricted and Unrestricted Subsidiaries




     The Board of Directors of the Company may designate any Restricted Subsidiary of the Company
to be an Unrestricted Subsidiary if that designation is in compliance with the next succeeding
sentence and would not otherwise cause a Default. If a Restricted Subsidiary of the Company is
designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary so designated, shall be valued at their Fair Market Value
at the time of such designation for purposes of determining compliance with Section 4.4
hereof. That designation will only be permitted if such Restricted Payment would be so permitted
at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.



     The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to
be a Restricted Subsidiary of the Company; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and the incurrence of any Lien of such Unrestricted
Subsidiary and such designation shall only be permitted if: (1) such Indebtedness is permitted
under Section 4.3 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; (2) such Lien is permitted under
Section 4.5 hereof; and (3) no Default or Event of Default would be in existence following
such designation.



Section 4.10 Future Subsidiary Guarantees




     If the Company or any of its Restricted Subsidiaries acquires or creates a Restricted
Subsidiary (other than Foreign Subsidiaries) on or after the Issue Date or if any Foreign
Subsidiary that is not already a Guarantor guarantees or co-issues any other Indebtedness of the
Company after such date, then in either case the Company shall cause that Subsidiary to become a
Guarantor by executing a supplemental indenture substantially in the form of Exhibit E
hereto and delivering it to the Trustee within 20 Business Days of the date on which it was
acquired or created or guaranteed or co-issued Indebtedness of the Company, as the case may be.



Section 4.11 Business Activities




     The Company will not, and will not permit any Restricted Subsidiary to, engage in any business
other than the Oil and Gas Business, except to such extent as would not be material in



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the opinion of the Board of Directors (which opinion shall be reasonable and made in good
faith) to the Company and its Restricted Subsidiaries taken as a whole.




Section 4.12 Change of Control




     (a) If a Change of Control occurs, each Holder of Securities will have the right to require
the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that
Holder’s Securities pursuant to the offer described below (the “Change of Control Offer”). In the
Change of Control Offer, the Company will offer a payment (the “Change of Control Payment”) in cash
equal to 101% of the aggregate principal amount of Securities to be repurchased plus accrued and
unpaid interest thereon, if any, to the date of purchase; provided, however, that notwithstanding
the occurrence of a Change of Control, the Company will not be obligated to make a Change of
Control Offer if, at any time prior to 30 days following the Change of Control, the Company has
mailed to the Holders an irrevocable notice of its redemption of all (but not less than all) of the
Securities pursuant to Section 3.7 hereof. Within 30 days following any such Change of
Control, unless, at any time previously the Company has mailed such irrevocable notice of
redemption, the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase Securities on the
date (the “Change of Control Payment Date”) specified in such notice, which date will be no earlier
than 30 days nor later than 60 days from the date such notice is mailed, pursuant to the procedures
required by this Indenture and described in such notice.



     (b) On the Change of Control Payment Date, the Company will, to the extent lawful:



          (1) accept for payment all Securities or portions thereof properly tendered pursuant to the
Change of Control Offer;




          (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect
of all Securities or portions thereof so tendered; and




          (3) deliver or cause to be delivered to the Trustee the Securities so accepted together with
an Officers’ Certificate stating the aggregate principal amount of Securities or portions thereof
being purchased by the Company.




     (c) The Paying Agent will promptly mail (or cause to be transferred through the facilities of
the Depositary) to each Holder of Securities so tendered and not withdrawn the Change of Control
Payment for such tendered Securities, and the Trustee will promptly authenticate and mail (or cause
to be transferred by book entry) to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any, by such Holder; provided that each such
new Security will be in a principal amount of $1,000 or an integral multiple thereof. The Trustee
will notify the Registrar of the issuance of the new Security.



     (d) If the Change of Control Payment Date is on or after an interest payment record date and
on or before the related interest payment date, any accrued and unpaid interest will be paid to the
Person in whose name a Security is registered at the close of business on such record



68









 







date, and no other interest will be payable to Holders who tender pursuant to the Change of
Control Offer.



     (e) The Company will publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.



     (f) The provisions described above that require the Company to make a Change of Control Offer
following a Change of Control will be applicable regardless of whether or not any other provisions
of this Indenture are applicable.



     (g) The Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn
under such Change of Control Offer.



     (h) The Company will comply with the requirements of Rule 14e-l under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Securities as a result of a Change of Control.
To the extent that the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.12, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations under this Section
4.12 by virtue of the Company’s compliance with such securities laws or regulations.




			
	Section 4.13	 	Maintenance of Office or Agency for Registration of Transfer, Exchange and Payment of
Securities





     So long as any of the Securities shall remain outstanding, the Company will, in accordance
with Section 2.3 hereof, maintain an office or agency (which may be an office of the
Trustee or an affiliate of the Trustee, or the Registrar) in the continental United States where
the Securities may be surrendered for exchange or registration of transfer as provided in this
Indenture, where notices and demands to or upon the Company in respect to the Securities may be
served, and where the Securities may be presented or surrendered for payment. The Company may also
from time to time designate one or more other offices or agencies in the continental United States
where Securities may be presented or surrendered for any and all such purposes and may from time to
time rescind such designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation under Section 2.3 to maintain an office or
agency in the City of New York, State of New York where any Definitive Securities may be presented
or surrendered for payment. The Company will give to Trustee prompt written notice of the location
of any such office or agency and of any change of location thereof. In case the Company shall fail
to maintain any such office or agency or shall fail to give such notice of the location or of any
change in the location thereof, such surrenders, presentations and demands may be made and notices
may be served at the designated Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee its agent to receive at the aforesaid office all such surrenders,
presentations, notices and demands.



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Section 4.14 Appointment to Fill a Vacancy in the Office of Trustee




     The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 7.8, a Trustee, so that there shall at all times
be a Trustee hereunder.



Section 4.15 Provision as to Paying Agent




     (a) If the Company shall appoint a Paying Agent other than the Trustee, in accordance with the
terms of this Indenture, it will cause such Paying Agent to execute and deliver to the Trustee an
instrument in which such Agent shall undertake, subject to the provisions of this Section
4.15:



          (1) that it will hold all sums held by it as such agent for the payment of the principal of,
premium, if any, or interest on the Securities (whether such sums have been paid to it by the
Company or by any other obligor on the Securities) in trust for the benefit of the Holders of the
Securities and will notify the Trustee of the receipt of sums to be so held;




          (2) that it will give the Trustee notice of any failure by the Company (or by any other
obligor on the Securities) to make any payment of the principal of, premium, if any, or interest on
the Securities when the same shall be due and payable;




          (3) that it will at any time during the continuance of any Event of Default specified in
Section 6.1, upon the written request of the Trustee, deliver to the Trustee all sums so
held in trust by it; and




          (4) that it will acknowledge, accept and agree to comply in all aspects with the provisions of
this Indenture relating to the duties, rights and liabilities of such Paying Agent.




     (b) If the Company shall not act as its own Paying Agent, it will, by 11:00 a.m. (New York
City time) on the due date of the principal of or premium, if any, or interest on any Securities,
deposit with such Paying Agent a sum in same day funds sufficient to pay the principal of, premium,
if any, or interest so becoming due, such sum to be held in trust for the benefit of the Holders of
Securities entitled to such principal of or premium, if any, or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.



     (c) If the Company shall act as its own Paying Agent, it will, by 11:00 a.m., (New York City
time) on each due date of the principal of or premium, if any, or interest on the Securities, set
aside, segregate and hold in trust for the benefit of the Persons entitled thereto, a sum
sufficient to pay such principal or premium or interest so becoming due and will notify the Trustee
of any failure to take such action.



     (d) Anything in this Section 4.15 to the contrary notwithstanding, the Company may, at
any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any
other reason, pay or cause to be paid to the Paying Agent for delivery to the Trustee all sums held
in trust by it, as required by this Section 4.15, such sums to be delivered by the Paying
Agent to the Trustee to be held by the Trustee upon the trusts herein contained.



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     (e) Anything in this Section 4.15 to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section 4.15 is subject to the provisions of
Section 8.4 and Section 8.6.



Section 4.16 Maintenance of Corporate Existence




     So long as any of the Securities shall remain outstanding, the Company will at all times
(except as otherwise provided or permitted in Article V of this Indenture) do or cause to
be done all things necessary to preserve and keep in full force and effect its corporate existence.



Section 4.17 Compliance Certificate




     (a) The Company and the Guarantors shall deliver to the Trustee within 90 days after the end
of each fiscal year of the Company ending after the Issue Date a statement (which need not be an
Officers’ Certificate) signed by the principal executive officer, the principal accounting officer
or the principal financial officer of each of the Company and the Guarantors, stating that a review
of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to determining whether each
of the Company and the Guarantors has performed its obligations under this Indenture, and further
stating whether or not the signers know of any Default or Event of Default that occurred during
such period. If they do, the certificate shall describe such Default or Event of Default, its
status and what action the Company is taking or proposes to take with respect thereto.



     (b) So long as not contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered pursuant to Section
4.2 above shall be accompanied by a written statement of the Company’s independent public
accountants that in making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe that the Company
has violated any provisions of this Article IV or Article V hereof or, if any such
violation has occurred, specifying the nature and period of existence thereof, it being understood
that such accountants shall not be liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.



     (c) So long as any of the Securities are outstanding, the Company will deliver to the Trustee,
forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers’
Certificate specifying such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.



Section 4.18 Taxes




     The Company will pay, and will cause each of its Significant Subsidiaries to pay, prior to
delinquency, all material taxes, assessments, and governmental levies except such as are contested
in good faith and by appropriate proceedings or where the failure to effect such payment would not
have a material adverse effect on the Company and its Restricted Subsidiaries, taken as a whole.



71









 





Section 4.19 Stay, Extension and Usury Laws




     The Company covenants (to the extent that it may lawfully do so) that it will not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every such power as
though no such law has been enacted.



Section 4.20 Payments for Consent




     Neither the Company nor any of its Subsidiaries will, directly or indirectly, pay or cause to
be paid any consideration, whether by way of interest, fees or otherwise, to any Holder of any
Securities (or owner of a beneficial interest therein) for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless
such consideration is offered to be paid or is paid to all Holders of the Securities (or owners of
beneficial interests therein) that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or amendment.



ARTICLE V




SUCCESSOR COMPANY




Section 5.1 Merger, Consolidation or Sale of Assets




     (a) The Company may not: (1) consolidate or merge with or into another Person (whether or not
the Company is the surviving corporation); or (2) sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as whole, in one or more related transactions, to another Person,
unless:



          (1) either:





          (A) the Company is the surviving corporation; or




          (B) the Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia;



          (2) the Person formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company under the Securities
and this Indenture pursuant to a supplemental indenture reasonably satisfactory to the Trustee;




72









 








          (3) immediately after such transaction no Default or Event of Default exists;




          (4) the Company or the Person formed by or surviving any such consolidation or merger (if
other than the Company) shall, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.3(a) hereof; and




          (5) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and such supplemental indenture (if any) comply with this
Indenture.




     (b) For purposes of this covenant, the sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the properties or assets of one or more Subsidiaries of
the Company, which properties or assets, if held by the Company instead of such Subsidiaries, would
constitute all or substantially all of the properties or assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the properties or assets
of the Company.



     (c) Clause (a)(4) of this Section 5.1 will not apply to a transaction between or among
the Company and any of its Restricted Subsidiaries that are Guarantors.



Section 5.2 Successor Substituted




     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole in accordance with Section 5.1 hereof, the
successor formed by such consolidation or into which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and may
exercise every right and power of, the Company under this Indenture with the same effect as if such
successor had been named as the Company herein and shall be substituted for the Company (so that
from and after the date of such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition, the provisions of this Indenture referring to the “Company” shall
refer instead to the successor and not to the predecessor); and thereafter, if the Company is
dissolved following a disposition of all or substantially all of the properties or assets of the
Company and its Restricted Subsidiaries taken as a whole in accordance with this Indenture, except
in the case of such a disposition by way of a lease it shall be discharged and released from all
obligations and covenants under this Indenture and the Securities.



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ARTICLE VI




DEFAULTS AND REMEDIES




Section 6.1 Events of Default




     Each of the following is an “Event of Default”:



          (1) default for 30 days in the payment when due of interest on the Securities;




          (2) default in the payment when due of the principal of, or premium, if any, on the
Securities;




          (3) failure by the Company to comply with Section 5.1 hereof;




          (4) failure by the Company or any of its Restricted Subsidiaries to comply for 30 days after
receipt of written notice specified below with Section 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12 or
4.20 hereof;




          (5) failure by the Company for 60 days after receipt of written notice specified below to
comply with any of its other agreements contained in this Indenture; provided, that the failure by
the Company or any Guarantor to comply with the provisions of Section 314(a) (if applicable) of the
Trust Indenture Act will not in itself be deemed a Default or Event of Default under this
Indenture;




          (6) default under any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its
Restricted Subsidiaries), other than Indebtedness owed to the Company or a Restricted Subsidiary of
the Company, whether such Indebtedness or Guarantee now exists, or is created after the date of
this Indenture, if that default:





               (A) is caused by a failure to pay principal of, or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such Indebtedness (a
“Payment Default”); or




               (B) results in the acceleration of such Indebtedness prior to its Stated Maturity;


and, in each case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more; provided, however, that if any
such Payment Default is cured or waived or any such acceleration rescinded, or such Indebtedness is
repaid, within a period of 30 days from the continuation of such Payment Default beyond the
applicable grace period or the occurrence of such acceleration, as the case may be, such Event of
Default and any consequential acceleration of the Securities shall be automatically rescinded, so
long as such rescission does not conflict with any judgment or decree;




74









 










          (7) failure by the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $10.0 million (net of any amounts covered by insurance), which judgments
are not paid, discharged or stayed for a period of 60 days;




          (8) any Subsidiary Guarantee of a Guarantor shall be held in any judicial proceeding to be
unenforceable or invalid or, except as permitted by this Indenture, shall cease for any reason to
be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee; and





     (9)      (A) the Company or a Significant Subsidiary or a group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:




               (i) commences a voluntary case or proceeding;




               (ii) consents to the entry of an order for relief against it in an involuntary
case or proceeding in which it is a debtor;




               (iii) consents to the appointment of a Custodian of it or for any substantial
part of its property;




               (iv) makes a general assignment for the benefit of its creditors; or




               (v) consents to the institution of a bankruptcy or an insolvency proceeding
against it;




or takes any comparable action under any foreign laws relating to insolvency; or




                (B) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:




               (i) is for relief against the Company or any Significant Subsidiary or a group
of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary in an involuntary case in which it is a debtor;




               (ii) appoints a Custodian of the Company or any Significant Subsidiary or a
group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary or for any substantial part of its property; or




               (iii) orders the winding up or liquidation of the Company or any Significant
Subsidiary or a group of Restricted Subsidiaries that, taken together would
constitute a Significant Subsidiary;




or any similar relief is granted under any foreign laws and the order, decree or relief
remains unstayed and in effect for 60 consecutive days.



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     However, a default under clauses (4) and (5) of this Section 6.1 will not constitute
an Event of Default until the Trustee or the Holders of 25% in principal amount of the outstanding
Securities notify the Company of the default and the Company does not cure such default within the
time specified in clauses (4) and (5) of this Section 6.1 after receipt of such notice.
Such notice must specify the Default, demand that it be remedied and state that such notice is a
“Notice of Default.”



     Whether or not a group of Restricted Subsidiaries would constitute, when taken together, a
Significant Subsidiary will be determined, for purposes of this Section 6.1, on the basis
of the latest available consolidated financial statements of the Company and its Restricted
Subsidiaries.



     In the case of any Event of Default occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with intention of avoiding payment of the
premium that the Company would have had to pay if the Company then had elected to redeem the
Securities prior to their Stated Maturity (other than by using the Net Cash Proceeds of an Equity
Offering), an equivalent premium will also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Securities.



Section 6.2 Acceleration of Maturity; Rescission and Annulment




     If an Event of Default (other than an Event of Default described in clause (9) of Section
6.1) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least
25% in principal amount of the outstanding Securities by notice to the Company and the Trustee, may
declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the
Securities to be due and payable. Upon such a declaration, such principal, premium and accrued and
unpaid interest will be due and payable immediately. If an Event of Default described in clause
(9) of Section 6.1 above occurs and is continuing, the principal of, premium, if any, and
accrued and unpaid interest on all the Securities will become and be immediately due and payable
without any further action or notice on the part of the Trustee or any Holders. The Holders of a
majority in outstanding principal amount of the Securities by notice to the Trustee may on behalf
of the Holders of all the Securities rescind any such acceleration with respect to the Securities
and its consequences if (1) rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the
principal of, premium, if any, and interest on the Securities that have become due solely by such
declaration of acceleration, have been cured or waived.



Section 6.3 Other Remedies




     If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal of, premium (if any) or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.



     The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is



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exclusive of any other remedy. All available remedies are cumulative to the extent permitted
by law.




Section 6.4 Waiver of Past Defaults




     The Holders of a majority in outstanding principal amount of the Securities, by notice to the
Trustee may on behalf of the Holders of all the Securities waive an existing Default or Event of
Default and its consequences hereunder except (i) a Default or Event of Default in the payment of
the principal of, premium, if any, or interest on a Security or (ii) a Default or Event of Default
in respect of a provision that under Section 9.2 hereof cannot be amended without the
consent of each Holder affected. When a Default or Event of Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or Event of Default or impair
any consequent right.



Section 6.5 Control by Majority




     The Holders of a majority in outstanding principal amount of the Securities have the right to
direct the time, method and place of conducting any proceeding for exercising any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or, subject to
Section 7.1 hereof, that the Trustee determines is unduly prejudicial to the rights of
other Holders or would involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such
direction. Subject to Section 7.1, prior to taking any action hereunder, the Trustee shall
be entitled to indemnification reasonably satisfactory to it against all loss, liability and
expense caused by taking or not taking such action.



Section 6.6 Limitation on Suits




     Except to enforce the right to receive payment of principal, premium (if any) or interest when
due, a Holder may not pursue any remedy with respect to this Indenture, the Securities or the
Subsidiary Guarantees unless:



     (1) the Holder has previously given the Trustee written notice stating that an Event of
Default is continuing;



     (2) Holders of at least 25% in outstanding principal amount of the Securities have made a
written request to the Trustee to pursue the remedy;



     (3) such Holder or Holders have furnished the Trustee reasonable security or indemnity against
any loss, liability or expense;



     (4) the Trustee has not complied with the Holders’ request within 60 days after receipt of the
request and the furnishing of security or indemnity; and



     (5) the Holders of a majority in outstanding principal amount of the Securities have not given
the Trustee a direction that, in the opinion of the Trustee, is inconsistent with the request
during such 60-day period.



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     A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over another Holder.



Section 6.7 Rights of Holders to Receive Payment




     Notwithstanding any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium, if any, and interest on the Securities held by such Holder, on or
after the respective due dates expressed in the Securities, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or affected without the
consent of such Holder.



Section 6.8 Collection Suit by Trustee




     If an Event of Default specified in Section 6.1(1) or Section 6.1(2) hereof
occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an
express trust against the Company or any Guarantor for the whole amount then due and owing
(together with interest on any unpaid interest to the extent lawful) and the amounts provided for
in Section 7.7 hereof to cover the costs and expenses of collection, including the
reasonable compensation, disbursement and advances of the Trustee, its agents and counsel.



Section 6.9 Trustee May File Proofs of Claim




     The Trustee may file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in any judicial
proceedings relative to the Company or any Guarantor or their respective creditors or properties
and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any
election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian
in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 7.7 hereof.



Section 6.10 Priorities




     If the Trustee collects any money or property pursuant to this Article VI, it shall
pay out the money or property in the following order:




     First: costs and expenses of collection, including all sums paid or advanced by the
Trustee hereunder and the compensation, expenses and disbursements of the Trustee, its
agents, and counsel and all other amounts due to the Trustee under Section 7.7
hereof;




     Second: to Holders for amounts due and unpaid on the Securities for principal and
interest and premium, if any, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Securities for principal and interest and premium, if
any, respectively; and




     Third: to the Company.



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     The Trustee may fix a record date and payment date for any payment to Holders pursuant to this
Section 6.10. At least 15 days before such record date, the Trustee shall mail to each
Holder and the Company a notice that states the record date, the payment date and amount to be
paid.



Section 6.11 Undertaking for Costs




     In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 6.7 hereof or a suit by Holders of
more than 10% in outstanding principal amount of the Securities.



ARTICLE VII




TRUSTEE




Section 7.1 Duties of Trustee




     (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in the conduct of such
person’s own affairs.



     (b) Except during the continuance of an Event of Default: (i) the Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.



     (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:



          (1) this paragraph does not limit the effect of Section 7.1(b) hereof;




          (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust
Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and




          (3) the Trustee shall not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to Section 6.5 hereof.




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     (d) Every provision of this Indenture that in any way relates to the Trustee is subject to
Sections 7.1(a), 7.1(b) and 7.1(c) hereof.



     (e) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company.



     (f) Money held in trust by the Trustee need not be segregated from other funds except to the
extent required by law.



     (g) Subject to Section 7.1(a) hereof, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.



Section 7.2 Rights of Trustee.




     (a) The Trustee may rely on any document believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not investigate any fact or matter stated in
the document.



     (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.



     (c) The Trustee may act through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.



     (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers conferred upon it by this
Indenture; provided, however, that the Trustee’s conduct does not constitute willful misconduct or
negligence.



     (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to
legal matters relating to this Indenture and the Securities shall be full and complete
authorization and protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such counsel.



     (f) Except for (i) a default under Section 6.1(1) or Section 6.1(2) hereof, or
(ii) any other event of which the Trustee has actual knowledge and which event, with the giving of
notice or the passage of time or both, would constitute an Event of Default under this Indenture,
the Trustee shall not be deemed to have notice of any default or event unless specifically notified
in writing of such event by the Company or any Holder of the Securities.



     (g) The Trustee shall have no obligation to ascertain whether or not the Company is obligated
at any time to offer to purchase the Securities pursuant to Section 4.7 or 4.11
hereof, and at all times the Trustee may conclusively presume, in the absence of written notice to
the



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contrary from the Company or an order from a court of competent jurisdiction, that no such
obligation exists.




Section 7.3 Individual Rights of Trustee




     The Trustee in its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. However, in the event that the Trustee acquires any conflicting
interest (as defined in the TIA) after a Default has occurred and is continuing, it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as Trustee or resign.
The Trustee is also subject to Sections 7.10 and 7.11 hereof.



Section 7.4 Trustee’s Disclaimer




     The Trustee shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of
the proceeds from the Securities, it shall not be responsible for the use or application of any
money received by any Paying Agent (other than itself as Paying Agent), and it shall not be
responsible for any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the Trustee’s
certificate of authentication.



Section 7.5 Notice of Defaults




     If a Default or Event of Default occurs and is continuing and if a Trust Officer has actual
knowledge thereof, the Trustee shall mail to each Holder notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of Default relating to
payment of principal of, premium, if any, or interest on, any Security (including payments pursuant
to the redemption or required repurchase provisions of such Security), the Trustee may withhold the
notice if and so long as its board of directors, the Executive Committee of its board of directors
or a committee of its Trust Officers in good faith determines that withholding the notice is in the
interests of Holders.



Section 7.6 Reports by Trustee to Holders




     (a) Within 60 days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to each Holder a brief report that complies with Trust Indenture
Act Section 313(a) (but if no event described in Trust Indenture Act §313(a) has occurred within
the 12 months preceding the reporting date, no report need be transmitted). The Trustee also shall
comply with Trust Indenture Act Section 313(b). The Trustee shall also transmit by mail all
reports required by Trust Indenture Act Section 313(c).



     (b) A copy of each report at the time of its mailing to Holders shall be mailed to the Company
and filed with the SEC and each stock exchange (if any) on which the Securities are listed. The
Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock
exchange and of any delisting thereof.



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Section 7.7 Compensation and Indemnity




     (a) The Company shall pay to the Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation for its services, which may be set forth in a separate fee agreement
between the Trustee and the Company. The Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, costs of preparing and reviewing reports, certificates and other documents, costs of
preparation and mailing of notices to Holders and reasonable costs of counsel retained by the
Trustee in connection with the delivery of an Opinion of Counsel or otherwise, in addition to the
compensation for its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee’s agents and counsel. The Company shall
indemnify and hold harmless the Trustee (in its individual and trustee capacities) and its
officers, directors and agents against any and all loss, liability, claims, action, suit, cost or
expense (including reasonable attorneys’ fees) of any kind and nature whatsoever incurred by it in
connection with the administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this Section 7.7)
and of defending itself against any claims (whether asserted by any Holder, the Company or
otherwise). The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the fees and expenses of such counsel. The Company is not
required to reimburse any expense or indemnify against any loss, liability, claim, suit, cost or
expense incurred by the Trustee through the Trustee’s own willful misconduct or negligence.



     (b) To secure the Company’s payment obligations in this Section 7.7, the Trustee shall
have a lien prior to the Securities on all money or property held or collected by the Trustee other
than money or property held in trust to pay principal of, premium (if any) and interest on
particular Securities.



     (c) The Company’s payment obligations pursuant to this Section 7.7 shall survive the
discharge of this Indenture and the resignation or removal of the Trustee. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(9) hereof with respect
to the Company, the expenses are intended to constitute expenses of administration under any
Bankruptcy Law.



Section 7.8 Replacement of Trustee




     (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become
effective only upon the successor Trustee’s acceptance of appointment as provided in this
Section 7.8.



     (b) The Trustee may resign at any time by so notifying the Company. The Holders of a majority
in outstanding principal amount of the Securities may remove the Trustee by so notifying the
Trustee and the Company and may appoint a successor Trustee. The Company may remove the Trustee
if: (i) the Trustee fails to comply with Section 7.10 hereof; (ii) the



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Trustee is adjudged bankrupt or insolvent; (iii) a Custodian or other public officer takes
charge of the Trustee or its property; or (iv) the Trustee otherwise becomes incapable of acting.




     (c) If the Trustee resigns or is removed by the Company or by the Holders of a majority in
outstanding principal amount of the Securities and such Holders do not reasonably promptly appoint
a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in
such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.



     (d) A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to the
Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.7 hereof.



     (e) If a successor Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee or the Holders of 10% in outstanding principal amount
of the Securities may petition any court of competent jurisdiction for the appointment of a
successor Trustee.



     (f) If the Trustee fails to comply with Section 7.10 hereof after written notice
thereto, the Holders of at least 10% in principal amount of the then outstanding Securities may
petition any court of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.



     (g) Notwithstanding the replacement of the Trustee pursuant to this Section 7.8, the
Company’s obligations under Section 7.7 hereof shall continue for the benefit of the
retiring Trustee.



Section 7.9 Successor Trustee by Merger




     (a) If the Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking association without any
further act shall be the successor Trustee.



     (b) If at the time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor Trustee, and deliver such Securities so authenticated; and if
at that time any of the Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.



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Section 7.10 Eligibility; Disqualification




     The Trustee shall at all times satisfy the requirements of Trust Indenture Act Section 310(a).
There shall at all times be a Trustee hereunder that is a corporation organized and doing business
under the laws of the United States of America or of any state thereof that is authorized under
such laws to exercise corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at least $50 million as
set forth in its most recent published annual report of condition. The Trustee shall comply with
Trust Indenture Act Section 310(b).



Section 7.11 Preferential Collection of Claims Against Company




     The Trustee shall comply with Trust Indenture Act Section 311(a), excluding any creditor
relationship listed in Trust Indenture Act Section 311(b). A Trustee who has resigned or been
removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated.



ARTICLE VIII




DISCHARGE OF INDENTURE; DEFEASANCE




Section 8.1 Discharge of Liability on Securities; Defeasance




     (a) Subject to Section 8.1(c) hereof, when (i)(x) the Company delivers to the Trustee
all outstanding Securities (other than Securities replaced pursuant to Section 2.7 hereof)
for cancellation or (y) all outstanding Securities not theretofore delivered for cancellation have
become due and payable at their scheduled maturity or (z) all outstanding Securities not
theretofore delivered for cancellation have become scheduled for redemption under arrangements
satisfactory to the Trustee as a result of the giving of notice of redemption by the Trustee in the
name and at the expense of the Company in accordance with Article III hereof, (ii) the
Company irrevocably deposits or causes to be deposited with the Trustee as trust funds in trust
solely for the benefit of the Holders money in U.S. dollars, Government Securities, or a
combination thereof, in such amounts as will be sufficient without consideration of any
reinvestment of interest to pay and discharge the entire Indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued
interest to the date of Stated Maturity or redemption, (iii) no Default or Event of Default shall
have occurred and be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which the Company is a party or by which the Company is bound, (iv)
the Company has paid or caused to be paid all sums then payable by it under this Indenture and the
Securities and (v) the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of such Securities at Stated Maturity or
the Redemption Date, as the case may be, then the Trustee shall acknowledge satisfaction and
discharge of this Indenture and the obligations of the Company and any Guarantors under the
Securities and the Subsidiary Guarantees, on demand of the Company (accompanied by an Officers’
Certificate and an Opinion of Counsel stating that all conditions precedent specified herein
relating to the satisfaction and discharge of this Indenture have been complied with) and at the
cost and expense of the Company.



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     (b) Subject to Section 8.2 hereof, the Company at its option at any time may terminate
(i) all its obligations, subject to Section 8.1(c) hereof, under the Securities and this
Indenture and all obligations of the Guarantors with respect to their Subsidiary Guarantees (“legal
defeasance option”), and after giving effect to such legal defeasance, any omission to comply with
such obligations shall no longer constitute a Default or Event of Default or (ii) its obligations
under Section 4.2, Section 4.3, Section 4.4, Section 4.5,
Section 4.6, Section 4.7, Section 4.8, Section 4.9, Section
4.10, Section 4.11, Section 4.12, Section 4.18 and Section 4.20
hereof, except to the extent such obligations are imposed by Section 318(c) of the Trust Indenture
Act, and clause (a)(4) of Section 5.1 hereof and the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other provision herein or in any
other document and such omission to comply with such covenants shall no longer constitute a Default
or an Event of Default under Section 6.1(3) (solely as it relates to clause (a)(4) of
Section 5.1) and Section 6.1(4) hereof and the operation of Section 6.1(5),
Section 6.1(6), Section 6.1(7) and Section 6.1(8) hereof and (with respect
only to Significant Subsidiaries) Section 6.1(9) hereof, and the events specified in such
Sections shall no longer constitute an Event of Default (clause (ii) being referred to as the
“covenant defeasance option”), but except as specified above, the remainder of this Indenture and
the Securities shall be unaffected thereby. The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option or its covenant defeasance option, each Guarantor shall be released from
its obligations with respect to its Subsidiary Guarantee.



     If the Company exercises its legal defeasance option, payment of the Securities may not be
accelerated because of an Event of Default. If the Company exercises its covenant defeasance
option, payment of the Securities may not be accelerated because of an Event of Default specified
in Section 6.1(4), Section 6.1(5), Section 6.1(6), Section 6.1(7),
Section 6.1(8), and (with respect only to Significant Subsidiaries) Section 6.1(9)
hereof or the failure of the Company to comply with clause (a)(4) of Section 5.1 hereof.



     Upon satisfaction of the conditions set forth herein and upon request of the Company, the
Trustee shall acknowledge in writing the discharge of those obligations that the Company
terminates.



     (c) Notwithstanding the provisions of Section 8.1(a) and Section 8.1(b)
hereof, the obligations of the Company in Section 2.3, Section 2.4,
Section 2.5, Section 2.6, Section 2.7, Section 2.9, Section
7.7, Section 7.8 hereof, and in this Article VIII shall survive until the
Securities have been paid in full. Thereafter, the obligations of the Company in Section
7.7, Section 8.4 and Section 8.5 hereof shall survive.



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Section 8.2 Conditions to Defeasance




     The Company may exercise its legal defeasance option or its covenant defeasance option only
if:



          (1) the Company shall have irrevocably deposited with the Trustee, in trust, for the benefit
of the Holders of the Securities, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of, premium, if any, and
interest on the outstanding Securities on the Stated Maturity or on the applicable Redemption Date,
as the case may be, and the Company must specify whether the Securities are being defeased to
Stated Maturity or to a particular Redemption Date;




          (2) in the case of the legal defeasance option, the Company shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company
has received from, or there has been published by, the Internal Revenue Service a ruling or (b)
since the Issue Date, there has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders
of the outstanding Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such legal defeasance option and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been the case if such
legal defeasance option had not occurred;




          (3) in the case of the covenant defeasance option, the Company shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Securities will not recognize income, gain or loss for federal income tax purposes
as a result of such covenant defeasance option and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the case if such covenant
defeasance option had not occurred;




          (4) no Default shall have occurred and be continuing on the date of such deposit (other than a
Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events
of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on
the 91st day after the date of deposit;




          (5) such legal defeasance option or covenant defeasance option will not result in a breach or
violation of, or constitute a default under any material agreement or instrument (other than this
Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the
Company or any of its Restricted Subsidiaries is bound;




          (6) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of Securities over
the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and




          (7) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, stating that all conditions precedent relating to the legal defeasance option or the
covenant defeasance option have been complied with.




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Section 8.3 Delivery and Application of Trust Money




     The Trustee shall hold in trust money or Government Securities deposited with it pursuant to
this Article VIII. It shall apply the deposited money and the money from Government
Securities and in accordance with this Indenture to the payment of principal, premium, if any, of
and interest on the Securities.



Section 8.4 Repayment to Company




     The Trustee and each Paying Agent shall promptly turn over to the Company upon request any
excess money or securities held by them upon payment of all the obligations under this Indenture.



     Subject to any applicable abandoned property law, the Trustee and each Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal of, or premium, if
any, or interest on the Securities that remains unclaimed for two years (or any such money then
held by the Company or any Subsidiary shall be discharged from any trust hereunder), and,
thereafter, Holders entitled to the money must look to the Company for payment as unsecured general
creditors; provided, however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and
that, after a date specified therein, which will not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining will be repaid to
the Company.



Section 8.5 Indemnity for Government Securities




     The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited Government Securities or the principal and interest
received on such Government Securities.



Section 8.6 Reinstatement




     If the Trustee or any Paying Agent is unable to apply any money or Government Securities in
accordance with this Article VIII by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the obligations of the Company under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred pursuant to this
Article VIII until such time as the Trustee or such Paying Agent is permitted to apply all
such money or Government Securities in accordance with this Article VIII; provided,
however, that, if the Company has made any payment in respect of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or Government Securities held by the Trustee
or any Paying Agent.



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ARTICLE IX




AMENDMENTS




Section 9.1 Without Consent of Holders




     The Company, any Guarantors and the Trustee may amend or supplement this Indenture, the
Securities or any Subsidiary Guarantees without notice to or consent of any Holder:



          (1) to cure any ambiguity, defect or inconsistency;




          (2) to provide for uncertificated Securities in addition to or in place of certificated
Securities;




          (3) to provide for the assumption of the Company’s or a Guarantor’s obligations to Holders of
the Securities in the case of a merger or consolidation or sale of all or substantially all of the
Company’s or a Guarantor’s properties or assets in compliance with this Indenture;




          (4) to add or release Guarantors in compliance with this Indenture;




          (5) to make any change that would provide any additional rights or benefits to the Holders or
that does not materially adversely affect the legal rights hereunder of any Holder; provided,
however, that any change to this Indenture to conform it to the description of the Initial
Securities in the offering circular of the Company dated July 26, 2007 shall not be deemed to
materially adversely affect such legal rights;




          (6) to secure the Securities, including pursuant to the requirements of Section 4.5;




          (7) to comply with the requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the Trust Indenture Act;




          (8) to provide for the issuance of the Exchange Securities, which will have terms
substantially identical in all respects to the Initial Securities (except that the transfer
restrictions contained in the Initial Securities will be modified or eliminated, as appropriate),
and which will be treated, together with any outstanding Initial Securities and Additional
Securities, as a single issue of securities; or




          (9) to provide for the issuance of Additional Securities in accordance with this Indenture.




Section 9.2 With Consent of Holders




     The Company, the Guarantors and the Trustee may amend or supplement this Indenture, the
Securities or the Subsidiary Guarantees with the consent of the Holders of at least a majority in
outstanding principal amount of the Securities (including consents obtained in connection with the
purchase of, or tender offer or exchange offer for, Securities). Subject to the following



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sentence, any existing Default or compliance with any provision of this Indenture, the
Securities or the Subsidiary Guarantees may be waived with the consent of the Holders of at least a
majority in outstanding principal amount of Securities (including consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities). However, without the
consent of each Holder, an amendment, supplement or waiver may not (with respect to any Securities
held by a non-consenting Holder):




          (1) reduce the principal amount of Securities whose Holders must consent to an amendment,
supplement or waiver;




          (2) reduce the principal of or change the fixed maturity of any Security or alter the
provisions with respect to the redemption or repurchase of the Securities (other than provisions
relating to Section 4.7 or 4.12);




          (3) reduce the rate of or change the time for payment of interest on any Security;




          (4) waive a Default or Event of Default in the payment of principal of or premium, if any, or
interest on the Securities (except a rescission of acceleration of the Securities by the Holders of
at least a majority in outstanding principal amount of the Securities and a waiver of the
consequences of such acceleration) or a Default or Event of Default in respect of a provision that
cannot be amended or supplemented without the consent of each Holder affected;




          (5) make any Security payable in a currency other than that stated in the Securities;




          (6) make any change in the provisions of this Indenture relating to waivers of past Defaults
or the rights of Holders of Securities to receive payments of principal of or premium, if any, or
interest on the Securities (except as permitted by clause (7) below);




          (7) waive a redemption or repurchase payment with respect to any Security (other than a
payment required by Section 4.7 or 4.12);




          (8) modify any Subsidiary Guarantee in any manner adverse to the Holders of the Securities or
release any Guarantor from its obligations under its Subsidiary Guarantee except in accordance with
the terms of this Indenture;




          (9) make any change in the ranking of the Securities or the Subsidiary Guarantees in a manner
materially adverse to the Holders of the Securities or the Subsidiary Guarantees; or




          (10) make any change in the preceding amendment, supplement and waiver provisions of this
Section 9.2.




     The consent of the Holders is not necessary under this Section 9.2 to approve the
particular form of any proposed amendment or waiver. It is sufficient if the consent approves the
substance of the proposed amendment or waiver.



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     After an amendment, supplement or waiver under this Section 9.2 becomes effective, the
Company shall mail to each Holder of Securities affected thereby a notice briefly describing such
amendment. The failure to give such notice to any or all Holders, or any defect therein, shall not
impair or affect the validity of any amendment, supplement or waiver under this Section
9.2.



Section 9.3 Compliance with Trust Indenture Act




     Every amendment to this Indenture, the Securities or the Subsidiary Guarantees shall comply
with the Trust Indenture Act as then in effect.



Section 9.4 Revocation and Effect of Consents and Waivers




     A consent to an amendment, supplement or waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security that evidences the
same debt as the consenting Holder’s Security (or any Holder of a Security issued upon the
registration of transfer or exchange thereof or in lieu thereof), even if notation of the
amendment, supplement or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent as to such Holder’s Security or portion of the Security if
the Trustee receives the written notice of revocation before the date the amendment, supplement or
waiver becomes effective. After an amendment, supplement or waiver becomes effective in accordance
with its terms, it shall bind every Holder.



     The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action described above or
required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were Holders at the close of
business on such record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date, and for this purpose the
Securities then outstanding shall be computed as of such record date. No such consent shall become
valid or effective more than 120 days after such record date.



Section 9.5 Notation on or Exchange of Securities




     If an amendment or supplement changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation
on the Security regarding the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms, but the failure to make
the appropriate notation or to issue a new Security shall not affect the validity and effect of
such amendment or supplement.



Section 9.6 Trustee to Sign Amendments




     The Trustee shall sign any amendment or supplement authorized pursuant to this Article
IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment or supplement the Trustee shall be entitled to receive, and (subject to Section
7.1



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hereof) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of
Counsel stating that the execution of such amendment or supplement is authorized or permitted by
this Indenture.




ARTICLE X




SUBSIDIARY GUARANTEE




Section 10.1 Subsidiary Guarantee




     Each Guarantor which becomes a party hereto by executing and delivering a supplement to this
Indenture pursuant to Section 4.10 hereof, jointly and severally, unconditionally
Guarantees to each Holder and to the Trustee and its successors and assigns the full and punctual
payment of principal of, premium (if any) and interest on the Securities when due, whether at
Stated Maturity, or upon redemption, required repurchase pursuant to Section 4.7 or
Section 4.12 hereof, acceleration or otherwise, and all other monetary obligations owing by
the Company under this Indenture (including obligations owing to the Trustee) and the Securities
(all the foregoing being hereinafter collectively called the “Obligations”). The Guarantors
further agree that the Obligations may be extended or renewed, in whole or in part, without notice
or further assent from the Guarantors, and that the Guarantors will remain bound under this
Article X notwithstanding any extension or renewal of any Obligation.



     The Guarantors waive presentation to, demand of payment from and protest to the Company of any
of the Obligations and also waive notice of protest for nonpayment. The Guarantors waive notice of
any Default under the Securities or the Obligations. The obligations of the Guarantors hereunder
shall not be affected by: (i) the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any right or remedy against the Company or any other Person under this
Indenture, the Securities or any other agreement or otherwise; (ii) any extension or renewal of any
Obligation; (iii) any rescission, waiver, amendment, modification or supplement of any of the terms
or provisions of this Indenture (other than this Article X), the Securities or any other
agreement; (iv) the release of security, if any, held by any Holder or the Trustee for the
Obligations or any of them; (v) the failure of any Holder or the Trustee to exercise any right or
remedy against any other guarantor of the Obligations; (vi) any change in the ownership of the
Company; or (vii) any other act or thing or omission or delay to do any other act or thing which
may or might in any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law or equity, except for payment of the
Securities in full.



     The Guarantors, jointly and severally, further agree that their Subsidiary Guarantees herein
constitute a guarantee of payment when due (and not a guarantee of collection) and waive any right
to require that any resort be had by any Holder or the Trustee to security, if any, held for
payment of the Obligations.



     The obligations of the Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (except to the extent provided in Section 10.2
hereof), including any claim of waiver, release, surrender, alteration or compromise, and



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shall not be subject to any defense, setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise.




     The Guarantors, jointly and severally, further agree that their Subsidiary Guarantees herein
shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.



     In furtherance of the foregoing and not in limitation of any other right which any Holder or
the Trustee has at law or in equity against the Guarantors by virtue hereof, upon the failure of
the Company to pay any Obligation when and as the same shall become due, whether at Stated
Maturity, upon redemption, required repurchase, acceleration or otherwise, the Guarantors hereby
promise to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal
amount of such Obligations, (ii) accrued and unpaid interest on such Obligations (but only to the
extent not prohibited by law) and (iii) all other monetary Obligations of the Company to the
Holders and the Trustee.



     The Guarantors, jointly and severally, agree that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article VI for the purposes of the Subsidiary
Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such Obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the Guarantors for the
purposes of this Section 10.1.



     The Guarantors, jointly and severally, also agree to pay any and all costs and expenses
(including reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing any
rights under this Section 10.1.



Section 10.2 Limitation on Liability




     Each Guarantor, and by its acceptance of Securities, each Holder, hereby confirm that it is
the intention of all such parties that the Subsidiary Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the
Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor will be
limited to the maximum amount that will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this
Article X, result in the obligations of such Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.



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Section 10.3 Execution and Delivery of Subsidiary Guarantee




     To evidence its Subsidiary Guarantee set forth in Section 10.1, each Guarantor hereby
agrees that a notation of such Subsidiary Guarantee substantially in the form attached as
Exhibit D hereto will be endorsed by manual or facsimile signature by an Officer of such
Guarantor on each Security authenticated and delivered by the Trustee and that this Indenture will
be executed on behalf of such Guarantor by one of its Officers by execution of a supplemental
indenture substantially in form of Exhibit E hereof.



     Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 10.1
will remain in full force and effect notwithstanding any failure to endorse on each Security a
notation of such Subsidiary Guarantee. If an Officer whose facsimile signature is on the
Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Security
on which the Subsidiary Guarantee is endorsed, the Subsidiary Guarantee will be valid nevertheless.



     The delivery of any Security by the Trustee, after the authentication thereof hereunder, will
constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the
Guarantors.



     In the event that the Company or any of its Restricted Subsidiaries acquires or creates
another Restricted Subsidiary (other than Foreign Subsidiaries) after the Issue Date, the Company
will comply with the provisions of Section 4.10 hereof.



Section 10.4 Successors and Assigns




     Except as otherwise provided in Section 10.9 hereof, this Article X shall be
binding upon the Guarantors and their successors and assigns and shall inure to the benefit of the
successors and assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights in accordance with the terms of this Indenture by any Holder or the Trustee,
the rights and privileges conferred upon that party in this Indenture and in the Securities shall
automatically extend to and be vested in such transferee or assignee, all subject to the terms and
conditions of this Indenture, the Securities and the Subsidiary Guarantees.



Section 10.5 No Waiver




     Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising
any right, power or privilege under this Article X shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein
expressly specified are cumulative and not exclusive of any other rights, remedies or benefits
which either may have under this Article X at law, in equity, by statute or otherwise.



Section 10.6 Right of Contribution




     Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder who has not paid its
proportionate share of such payment. Each Guarantor’s right of contribution shall be subject




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to the terms and conditions of this Article X. The provisions of this Section
10.6 shall in no respect limit the obligations and liabilities of any Guarantor to the Trustee
and the Holders and each Guarantor shall remain liable to the Trustee and the Holders for the full
amount guaranteed by such Guarantor hereunder.




Section 10.7 No Subrogation




     Notwithstanding any payment or payments made by any of the Guarantors hereunder, no Guarantor
shall be entitled to exercise any rights of subrogation it may have to any of the rights of the
Trustee or any Holder against the Company or any other Guarantor or any collateral security or
guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the
Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Trustee and the Holders by the Company on account of the Obligations are paid
in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any
time when all of the Obligations shall not have been paid in full, such amount shall be held by
such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in
the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if
required), to be applied against the Obligations.



Section 10.8 Modification




     No modification, amendment or waiver of any provision of this Article X, nor the
consent to any departure by the Guarantors therefrom, shall in any event be effective unless the
same shall be made in accordance with Article IX hereof. No notice to or demand on the
Guarantors in any case shall entitle the Guarantors to any other or further notice or demand in the
same, similar or other circumstances.



Section 10.9 Merger, Consolidation or Sale of Assets of a Guarantor; Release of a Guarantor




     (a) The Company shall not permit a Guarantor to sell or otherwise dispose of all or
substantially all of its properties or assets, or consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person), another Person (other than the Company or another
Guarantor) unless:



          (1) immediately after giving effect to that transaction, no Default or Event of Default shall
have occurred and be continuing; and




          (2) either:





               (A) the Person acquiring the properties or assets in any such sale or disposition or
the Person formed by or surviving any such consolidation or merger (if other than the
Guarantor) assumes all the obligations of that Guarantor under its Subsidiary Guarantee
pursuant to a supplemental indenture satisfactory to the Trustee; or




               (B) an amount equal to the Net Proceeds of such sale or other disposition is applied in
accordance with Section 4.7 hereof.



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     (b) The Subsidiary Guarantee of a Guarantor shall be automatically and unconditionally
released:



          (1) in connection with any sale or other disposition of all or substantially all of the assets
of that Guarantor (including by way of merger or consolidation), other than to the Company or
another Guarantor, if the Company applies the Net Proceeds of that sale or other disposition in
accordance with Section 4.7 hereof;




          (2) in connection with any sale or other disposition of all of the Capital Stock of a
Guarantor (including by way of merger or consolidation) other than to the Company or another
Guarantor, if the Company applies the Net Proceeds of that sale or other disposition in accordance
with Section 4.7 hereof;




          (3) if the Company designates any Restricted Subsidiary that is a Guarantor as an Unrestricted
Subsidiary in accordance with the provisions of this Indenture;




          (4) if the Company exercises either its legal defeasance option or its covenant defeasance
option in accordance with Section 8.1(b) hereof; or




          (5) if the Guarantor is a Foreign Subsidiary, when such Guarantor is no longer a guarantor of,
or otherwise an obligor with respect to, any Indebtedness of the Company other than the Securities.




     (c) Upon delivery by the Company to the Trustee of an Officers’ Certificate to the effect that
any of the conditions described in clauses 
(1) – (5) of Section 10.9(b) has occurred, the
Trustee shall execute any supplemental indenture or other documents reasonably requested by the
Company in order to evidence the release of any Guarantor from its obligations under its Subsidiary
Guarantee and this Indenture.



ARTICLE XI




MISCELLANEOUS




Section 11.1 Trust Indenture Act Controls




     If any provision of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the Trust Indenture Act (or in any other indenture
qualified thereunder), the provision required by the Trust Indenture Act shall control.



Section 11.2 Notices




     Any notice or communication shall be in writing in the English language and delivered in
person or mailed by first-class mail, telecopier or overnight air courier guaranteeing next day
delivery, addressed as follows (unless the Company and the Trustee agree to another method of
delivery):



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     if to the Company or any Guarantors:


Parallel Petroleum Corporation

1004 N. Big Spring, Suite 400

Midland, Texas 79701

Attention: Chief Financial Officer

Facsimile: (432) 684-3905




     with a copy to each of:


Haynes and Boone, LLP

901 Main Street, Suite 3100

Dallas, Texas 75202

Attention: W. Scott Wallace

Facsimile: (214) 200-0674




     and


Lynch, Chappell & Alsup, P.C.

300 N. Marienfeld, Suite 700

Midland, Texas 79701

Attention: Thomas W. Ortloff

Facsimile: (432) 683-8346




     if to the Trustee:


Wells Fargo Bank, National Association

201 Main Street, 3rd Floor

Fort Worth, Texas 76102-5489

Attention: Corporate Trust Services

Facsimile: (817) 885-8650




     The Company or any Guarantors, by notice to the Trustee, or the Trustee by notice to the
Company and any Guarantors, may designate additional or different addresses for subsequent notices
or communications.



     Any notice or communication to a Holder shall be delivered to the Holder at the Holder’s
address as it appears on the registration books of the Registrar by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar.



     All notices and communications shall be deemed to have been duly given; at the time delivered
by hand, if personally delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; (other than those sent to Holders) when answered back, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.



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     Failure to deliver a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders. If a notice or communication is delivered in the
manner provided above, it is duly given, whether or not the addressee receives it.



Section 11.3 Communication by Holders with other Holders




     Holders may communicate pursuant to the Trust Indenture Act Section 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the
Registrar and anyone else shall have the protection of the Trust Indenture Act Section 312(c).



Section 11.4 Certificate and Opinion as to Conditions Precedent




     Upon any request or application by the Company to the Trustee to take or refrain from taking
any action under this Indenture, the Company shall, if requested, furnish to the Trustee: (i) an
Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in
the opinion of the signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and (ii) an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.



Section 11.5 Statements Required in Certificate or Opinion




     Each certificate or opinion with respect to compliance with a covenant or condition provided
for in this Indenture shall include: (i) a statement that the individual making such certificate or
opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions contained in such
certificate or opinion are based; (iii) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been complied with; and (iv) a statement as to
whether or not, in the opinion of such individual, such covenant or condition has been complied
with.



Section 11.6 When Securities Disregarded




     In determining whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect common control with
the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such direction, waiver or
consent, only Securities which the Trustee actually knows are so owned shall be so disregarded.
Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any
such determination.



Section 11.7 Legal Holidays




     A “Legal Holiday” is a day that is not a Business Day. Notwithstanding any other provisions
of this Indenture, the Securities or the Subsidiary Guarantees, if a payment date is a



97









 







Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a record date is a Legal Holiday, the
record date shall not be affected.



Section 11.8 Governing Law




     THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE AND ENFORCE THIS
INDENTURE, THE SECURITIES AND ANY SUBSIDIARY GUARANTEES.



Section 11.9 No Personal Liability of Directors, Officers, Employees and Shareholders




     No director, officer, employee, incorporator, member, partner or stockholder of the Company or
any Guarantor, as such, shall have any liability for any obligations of the Company or any
Guarantors under the Securities, this Indenture, any Subsidiary Guarantees, any Registration Rights
Agreement or for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder waives and releases all such liability. The waiver
and release shall be part of the consideration for the issue of the Securities.



Section 11.10 Successors




     All agreements of the Company and (except as otherwise provided in Section 10.9
hereof) any Guarantors in this Indenture, the Securities and the Subsidiary Guarantees shall bind
their respective successors. All agreements of the Trustee in this Indenture shall bind its
successors.



Section 11.11 Multiple Originals; Counterparts




     The parties may sign any number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One signed copy is enough to
prove this Indenture. This Indenture may be executed in multiple counterparts which, when taken
together, shall constitute one instrument.



Section 11.12 Severability




     In case any provision in this Indenture or in the Securities or the Subsidiary Guarantees is
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.



Section 11.13 Table of Contents; Headings




     The table of contents, cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended to be considered a
part hereof and shall not modify or restrict any of the terms or provisions hereof.



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Section 11.14 No Adverse Interpretation of Other Agreements




     This Indenture may not be used to interpret any other indenture, loan or debt agreement of the
Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.



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     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date
first written above.



	 	 	 	 	 	 	 
	 	 	Parallel Petroleum Corporation, a	 	 
	 

	 	 	 	Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Larry C. Oldham	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Larry C. Oldham

President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Wells Fargo Bank,	 	 
	 

	 	 	 	National Association,

as Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John C. Stohlmann	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John C. Stohlmann	 	 
	 

	 	 	 	Vice President	 	 







100









 








EXHIBIT A




[FACE OF SECURITY]




PARALLEL PETROLEUM CORPORATION




10 1/4% SENIOR NOTE DUE 2014




CUSIP NO. [699157 AA1] 1

[U69916 AA9] 2

[699157 AB9] 3

[699157 AC7] 4




			
	 	 	 
	No. ___
	 	Principal Amount $                    






     PARALLEL PETROLEUM CORPORATION, a Delaware corporation, promises to pay to ___, or
registered assigns, the principal sum of                                          dollars on August 1,
2014.



     Interest Payment Dates: February 1 and August 1, commencing February 1, 2008.



     Record Dates: January 15 and July 15.



     Dated:                      ___, 20___



	 	 	 	 	 	 	 
	 	 	Parallel Petroleum Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:

Title:	 	 






Wells Fargo Bank, National Association,

as Trustee, certifies that this is one of the

Securities referred to in the Indenture.




	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 








 




			
	1	 	For Securities sold in reliance on Rule 144A.
	 
	2	 	For Securities sold in reliance on Regulation S.
	 
	3	 	For Securities sold to Institutional Accredited Investors in reliance on Regulation D.
	 
	4	 	For Unrestricted Securities.





A-1









 








[BACK OF SECURITY]




PARALLEL PETROLEUM CORPORATION




10 1/4% SENIOR NOTE DUE 2014




     [Insert the Global Security Legend, if applicable pursuant to the provisions of the Indenture]



     [Insert the Private Placement Legend, if applicable pursuant to the provisions of the
Indenture]



     Capitalized terms used herein have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.



     1. Interest. Parallel Petroleum Corporation, a Delaware corporation (the “Company”), promises
to pay interest on the principal amount of this Security at 10.25% per annum from July 31, 2007
until maturity. The Company will pay interest semi-annually in arrears on February 1 and August 1
of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each,
an “Interest Payment Date”). Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of issuance; provided
that if there is no existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be February 1, 2008. The Company will pay, to
the extent lawful, interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, at the rate then in effect; it will pay,
to the extent lawful, interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate as on overdue principal. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.



     2. Method of Payment. The Company will pay interest on the Securities (except Defaulted
Interest) to the Persons who are registered Holders of Securities at the close of business on the
January 15 or July 15 next preceding the Interest Payment Date, even if such Securities are
canceled after such record date and on or before such Interest Payment Date, except as provided in
Section 2.11 of the Indenture with respect to Defaulted Interest. The Securities will be
payable as to principal, premium, if any, and interest at the office or agency of the Paying Agent
maintained for such purpose within the City and State of New York, or, at the option of the
Company, payment of interest may be made by check mailed by such Paying Agent to the Holders at
their addresses set forth in the register of Holders; provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and interest, and
premium, if any, on all Global Securities and all other Securities, the Holders of which hold at
least $5,000,000 aggregate principal amount of the Securities and have provided wire transfer
instructions to the Company and the Paying Agent. Such payment will be in such coin or currency of
the United States of America as at the time of payment is legal tender for



A-2









 







payment of public and private debts. Holders must surrender their Securities to the Paying
Agent to collect payments of principal and premium, if any.



     3. Paying Agent and Registrar. Initially, Wells Fargo Bank, National Association will act as
Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar
without notice to any Holder, and the Company or any of its Subsidiaries may act as Paying Agent or
Registrar, all in accordance with the Indenture.



     4. Indenture. The Company issued the Securities under an Indenture, dated as of July 31, 2007
(the “Indenture”), between the Company and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture
Act. The Securities are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Security conflicts
with the express provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling (to the extent permitted by law). The Securities are unsecured obligations of the
Company. The Company initially has issued $150,000,000 aggregate principal amount of Securities.
The Company may issue Additional Securities under the Indenture subsequent to July 31, 2007,
subject to Section 4.3 of the Indenture; provided, however, that no Additional Securities
may be issued at a price that would cause such Additional Securities to have “original issue
discount” within the meaning of Section 1273 of the Code; and provided, further, that in no event
may the Company issue any Additional Securities if, as a result of any such issuance, the aggregate
principal amount of Securities outstanding would exceed the maximum aggregate principal amount of
Securities permitted under the Existing Credit Facilities or any other Credit Facilities, in each
case as in effect on the date of such issuance.



     5. Redemption.



          (a) On or after August 1, 2011, the Company may redeem all or a part of the Securities at any
time or from time to time at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued and unpaid interest on the Securities, if any, to the applicable
Redemption Date, if redeemed during the 12-month period beginning August 1 of the years indicated:




	 	 	 	 	 
	Year	 	Percentage
	2011
	 	 	105.125	%
	2012
	 	 	102.563	%
	2013
	 	 	100.000	%






          (b) Prior to August 1, 2010, the Company may on one or more occasions redeem up to an
aggregate amount equal to 35% of the aggregate principal amount of the Securities (including any
Additional Securities) originally issued under the Indenture at a Redemption Price of 110.25% of
the principal amount of the Securities, plus accrued and unpaid interest, if any, to the Redemption
Date, with the Net Cash Proceeds of one or more Equity Offerings; provided that (i) at least 65% in
aggregate principal amount of the Securities (including any Additional Securities) originally
issued remains outstanding immediately after the occurrence of such redemption (excluding
Securities held by the Company or any of its




A-3









 







Subsidiaries) and (ii) each such redemption occurs within 90 days of the date of the closing
of the related Equity Offering.




          (c) In addition, at any time prior to August 1, 2011, the Company may redeem all or part of
the Securities at a Redemption Price equal to




          (i) 100% of the principal amount thereof, plus




          (ii) the Applicable Premium as of, and accrued and unpaid interest, if any, to, the
Redemption Date.




     6. Denominations, Transfer, Exchange. The Securities are in registered form without coupons
in denominations of $1,000 and integral multiples of $1,000. The transfer of Securities may be
registered and Securities may be exchanged as provided in the Indenture. The Registrar or the
Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any transfer tax or similar governmental
charge or other fee required by law and payable in connection therewith. The Company need not
exchange or register the transfer of any Security or portion of a Security selected for redemption,
except for the unredeemed portion of any Security being redeemed in part. Also, the Company need
not exchange or register the transfer of any Securities for a period of 15 days before the day of
any selection of Securities to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.



     If this is a Global Security, this Security represents the aggregate principal amount of
outstanding Securities from time to time endorsed hereon, and the aggregate principal amount of
outstanding Securities represented by this Security may from time to time be reduced or increased,
as appropriate, to reflect exchanges and redemptions in accordance with the Indenture.



     7. Persons Deemed Owners. The registered Holder of a Security may be treated as its owner for
all purposes.



     8. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture and the
Securities may be amended or supplemented with the written consent of the Holders of at least a
majority in outstanding principal amount of the Securities, and any existing Default or compliance
with any provision of the Indenture or the Securities may be waived with the written consent of the
Holders of at least a majority in outstanding principal amount of the Securities. Without the
consent of any Holder of a Security, the Indenture or the Securities may be amended or supplemented
(i) to cure any ambiguity, defect or inconsistency, (ii) to provide for uncertificated Securities
in addition to or in place of certificated Securities, (iii) to provide for the assumption of the
Company’s or a Guarantor’s obligations under the Indenture and the Securities, (iv) to add or
release Guarantors in compliance with the Indenture, (v) to secure the Securities, (vi) to make any
change that would provide any additional rights or benefits to the Holders, (vii) to make any
change that does not materially adversely affect the legal rights of any Holder, subject to the
proviso to Section 9.1(5) of the Indenture, (viii) to comply with any requirement of the
SEC in connection with qualifying the Indenture under the Trust Indenture Act or maintaining such
qualification, (ix) to provide for the issuance of the Exchange Securities and (x) to provide for
the issuance of Additional Securities in accordance with the Indenture.



A-4









 





     9. Defaults. If an Event of Default shall occur and be continuing, the principal of all the
Securities may be declared due and payable in the manner and with the effect provided in the
Indenture.



     10. Defeasance. The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Company on this Security and (ii) certain restrictive covenants and the related
Events of Default, subject to compliance by the Company with certain conditions set forth in the
Indenture, which provisions apply to this Security.



     11. Authentication. This Security will not be valid until authenticated by the manual
signature of the Trustee or an Authenticating Agent.



     12. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).



     13. [Additional Rights of Holders of Restricted Global Securities and Restricted Definitive
Securities. In addition to the rights provided to Holders of Securities under the Indenture,
Holders of Restricted Global Securities and Restricted Definitive Securities will have all the
rights set forth in the Registration Rights Agreement, dated as of July 31, 2007, among the Company
and the other parties named on the signature pages thereof.]*



     14. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the
Securities and the Trustee may use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as printed on the
Securities or as contained in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.



     The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture [and/or the Registration Rights Agreement].* Requests may be made to:


Parallel Petroleum Corporation

1004 N. Big Spring, Suite 400

Midland, Texas 79701

Attention: Chief Financial Officer






 




			
	*	 	Delete for Exchange Security




A-5









 










ASSIGNMENT FORM




     To assign this Security, fill in the form below:



	 	 	 
	(I) or (we) assign and transfer this Security to:
	 	 
	 

	 	 
	 

	 	(Insert assignee’s legal name)






 




(Insert assignee’s soc. sec. or tax I.D. no.)




 





 





 





 




(Print or type assignee’s name, address and zip code)




	 	 	 
	and irrevocably appoint
	 	 
	 

	 	 





to transfer this Security on the books of the Company. The agent may substitute another to act for
him.




Date:                                         




	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on
the face of this Security)






Signature Guarantee:*                                                           
 






 




			
	*	 	Participant in a recognized Signature
Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).




A-6









 










Option of Holder to Elect Purchase




     If you want to elect to have this Security purchased by the Company pursuant to Section
4.7 or Section 4.12 of the Indenture, check the appropriate box below:



o Section 4.7      o Section 4.12




     If you want to elect to have only part of the Security purchased by the Company pursuant to
Section 4.7 or Section 4.12 of the Indenture, state the amount you elect to have
purchased:



$                    




Date:                                         




	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on
the face of this Security)
	 
	 	 	 	 
	 	 	Tax Identification No.:                                         






Signature Guarantee:*                                                           
 






 




			
	*	 	Participant in a recognized Signature
Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).




A-7









 













[TO BE ATTACHED TO GLOBAL SECURITIES]




SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY




The following increases or decreases in this Global Security have been made:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal Amount of	 	 	Signature of	 
	 	 	Amount of Decrease	 	 	Amount of Increase in	 	 	this Global Security	 	 	Authorized Officer of	 
	 	 	in Principal Amount	 	 	Principal Amount of	 	 	Following such	 	 	Trustee or Securities	 
	Date of Exchange	 	of this Global Security	 	 	this Global Security	 	 	Decrease or Increase	 	 	Custodian	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





A-8









 






EXHIBIT B




FORM OF CERTIFICATE OF TRANSFER




Parallel Petroleum Corporation

1004 N. Big Spring, Suite 400

Midland, Texas 79701




Wells Fargo Bank, National Association,

as Trustee

201 Main Street, 3rd Floor

Fort Worth, Texas 76102-5489

Attention: Corporate Trust Services




     RE: Parallel Petroleum Corporation 10 1/4% Senior Notes due 2014



	 	 	 
	CUSIP

	 	[699157 AA1] 1
	 
	 	[U69916 AA9] 2
	 
	 	[699157 AB9] 3






     Reference is hereby made to the Indenture, dated as of July 31, 2007 (the “Indenture”),
between Parallel Petroleum Corporation, as issuer (the “Company”), and Wells Fargo Bank, National
Association, as trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.



                                              (the “Transferor”) owns and proposes to transfer the Security[ies] or
beneficial interest in such Security[ies] in the principal amount of $                     (the “Transfer”),
to                                         (the “Transferee”). In connection with the Transfer, the
Transferor hereby certifies that:



[CHECK ALL THAT APPLY]




     1. o Check if Transferee will take delivery of a beneficial interest in the 144A
Global Security or a Restricted Definitive Security pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Security is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Security for its own
account, or for one or more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a “qualified institutional buyer” within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the United





 




			
	1	 	For Securities sold in reliance on Rule 144A.
	 
	2	 	For Securities sold in reliance on Regulation S.
	 
	3	 	For Securities sold to Institutional Accredited Investors in reliance on Regulation D.





B-1









 








     States. Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Security will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global
Security and/or the Restricted Definitive Security and in the Indenture and the Securities Act.



     2. o Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Security or a Restricted Definitive Security pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a Person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the Transfer is being made prior to the expiration
of the Restricted Period, the Transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest or Definitive
Security will be subject to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Regulation S Global Security and/or the Restricted Definitive Security and in the
Indenture and the Securities Act.



     3. o Check and deliver to the Trustee a letter in the form of annex A hereto, if
Transferee will take delivery of a beneficial interest in a Restricted Global Security or a
Restricted Definitive Security pursuant to any provision of the Securities Act other than Rule 144A
or Regulation S. The Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Securities and Restricted Definitive
Securities and pursuant to and in accordance with the Securities Act (other than Rule 144A or
Regulation S) and any applicable blue sky securities laws of any state of the United States.



     4. o Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Security or of an Unrestricted Definitive Security.



     (a) o Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the
transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Securities, on Restricted Definitive Securities and in the Indenture.



B-2









 





     (b) o Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Security will no longer be
subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Securities, on Restricted Definitive Securities and in the Indenture.



     (c) o Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being
effected pursuant to and in compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Securities or
Restricted Definitive Securities and in the Indenture.



B-3









 







     This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Insert Name of Transferor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






     Dated:                                         




B-4









 








ANNEX A




FORM OF ACCREDITED INVESTOR LETTER




Wells Fargo Bank, National Association, as Trustee

201 Main Street, 3rd Floor

Fort Worth, Texas 76102-5489

Attention: Corporate Trust Services




Ladies and Gentlemen:




     We are delivering this letter in connection with our purchase of 10 1/4% Senior Notes due 2014
(the “Notes”) of Parallel Petroleum Corporation (the “Company”). We hereby confirm that:




     1. We are an institutional “accredited investor” within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”);




     2. Any purchase of Notes by us will be for our own account or the account of one or
more other accredited investors as to which we exercise sole investment discretion;




     3. We have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of purchasing the Notes, and we and any accounts
for which we are acting are able to bear the economic risks of an entire loss of our or
their investment in the Notes;




     4. We are not acquiring Notes with a view to any distribution thereof in a transaction
that would violate the Securities Act or the securities laws of any state of the United
States or any other applicable jurisdiction; provided that the disposition of our property
and the property of any accounts for which we are acting as fiduciary shall remain at all
times within our and their control; and




     5. We acknowledge that the Notes have not been registered under the Securities Act and
that the Notes may not be offered or sold within the United States or to, or for the benefit
of, U.S. persons except as set forth below.



     We agree, on our own behalf and on behalf of each account for which we acquire any Notes that,
for a period of two years after the later of the date of (x) original issuance of the Notes and (y)
the last date on which the Notes or any part thereof were owned by the Company or an affiliate of
the Company, such Notes may be offered, resold, pledged or otherwise transferred only (i) to the
Company or its subsidiaries; (ii) inside the United States to a person that we reasonably believe
to be a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) in
compliance with Rule 144A; (iii) inside the United States to a person we reasonably believe to be
an institutional accredited investor that, prior to such transfer, furnishes to the trustee under
the indenture relating to the Notes a signed letter containing certain representations and
agreements (a form of which can be obtained from the trustee); (iv) outside



A-1









 







the United States to persons other than U.S. persons in offshore transactions meeting the
requirements of Rule 904 under Regulation S under the Securities Act; (v) pursuant to the exemption
from registration provided by Rule 144 under the Securities Act (if available); or (vi) pursuant to
an effective registration statement under the Securities Act, and in each case, in accordance with
any applicable laws of any state of the United States or any other applicable jurisdiction.




     We understand that you, as trustee, will not be required to accept for registration for
transfer any Notes acquired by us, except upon presentation of evidence satisfactory to the Company
and you that the foregoing restrictions on transfer have been complied with. We further understand
that the Notes purchased by us will bear a legend reflecting the substance of this paragraph. We
further agree to provide to any person acquiring any of the Notes from us a notice advising such
person that resales of the Notes are restricted as stated herein and that certificates representing
the Notes will bear a legend to that effect.



     We acknowledge that you, the Company and others will rely upon our acknowledgements,
representations and agreements set forth herein, and we agree to notify you promptly in writing if
any of our acknowledgements, representations and agreements herein ceases to be accurate and
complete.



     We represent to you that we have full power to make the foregoing acknowledgements,
representations and agreements on our own behalf or on behalf of any investor account for which we
are acting as a fiduciary or agent.



A-2









 







     As used herein, the terms “offshore transaction,” “United States” and “U.S. person” have the
respective meanings given to them in Regulation S under the Securities Act.



     THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Insert name of Transferee]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	Address:	 	 
	 
	 	 	 	 	 	 
	 

	 	Dated:	 	 	 
	 

	 	 	 	 	 	 






A-3









 










EXHIBIT C




FORM OF CERTIFICATE OF EXCHANGE




Parallel Petroleum Corporation

1004 N. Big Spring, Suite 400

Midland, Texas 79701




Wells Fargo Bank, National Association,
  as
Trustee

201 Main Street, 3rd Floor

Fort Worth, Texas 76102-5489

Attention: Corporate Trust Services




     Re: Parallel Petroleum Corporation 10 1/4% Senior Notes due 2014



	 	 	 
	CUSIP
	 	[699157 AA1] 1
	 
	 	[U69916 AA9] 2
	 
	 	[699157 AB9] 3






     Reference is hereby made to the Indenture, dated as of July 31, 2007 (the “Indenture”),
between Parallel Petroleum Corporation, as issuer (the “Company”), and Wells Fargo Bank, National
Association, as trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.



                                              (the “Owner”) owns and proposes to exchange the Security[ies] or
beneficial interest in such Security[ies] specified herein, in the principal amount of
$                     (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:



     1. Exchange of Restricted Definitive Securities or Beneficial Interests in a Restricted
Global Security for Unrestricted Definitive Securities or Beneficial Interests in an Unrestricted
Global Security



     (a) o Check if Exchange is from beneficial interest in a Restricted Global Security to
beneficial interest in an Unrestricted Global Security. In connection with the Exchange of the
Owner’s beneficial interest in a Restricted Global Security for a beneficial interest in an
Unrestricted Global Security in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to the Global
Securities and pursuant to and in accordance with the Securities Act of





 




			
	1	 	For Securities sold in reliance on Rule 144A.
	 
	2	 	For Securities sold in reliance on Regulation S.
	 
	3	 	For Securities sold to Institutional Accredited Investors in reliance on Regulation D.





C-1









 







1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the beneficial interest in an Unrestricted Global Security is being
acquired in compliance with any applicable blue sky securities laws of any state of the United
States.




     (b) o Check if Exchange is from beneficial interest in a Restricted Global Security to
Unrestricted Definitive Security. In connection with the Exchange of the Owner’s beneficial
interest in a Restricted Global Security for an Unrestricted Definitive Security, the Owner hereby
certifies (i) the Definitive Security is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Securities and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act and (iv)
the Definitive Security is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.



     (c) o Check if Exchange is from Restricted Definitive Security to beneficial interest
in an Unrestricted Global Security. In connection with the Owner’s Exchange of a Restricted
Definitive Security for a beneficial interest in an Unrestricted Global Security, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Securities and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act and (iv)
the beneficial interest is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.



     (d) o Check if Exchange is from Restricted Definitive Security to Unrestricted
Definitive Security. In connection with the Owner’s Exchange of a Restricted Definitive Security
for an Unrestricted Definitive Security, the Owner hereby certifies (i) the Unrestricted Definitive
Security is being acquired for the Owner’s own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to Restricted Definitive
Securities and pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Security is being
acquired in compliance with any applicable blue sky securities laws of any state of the United
States.



     2. Exchange of Restricted Definitive Securities or Beneficial Interests in Restricted
Global Securities for Restricted Definitive Securities or Beneficial Interests in Restricted Global
Securities



     (a) o Check if Exchange is from beneficial interest in a Restricted Global Security to
Restricted Definitive Security. In connection with the Exchange of the Owner’s beneficial interest
in a Restricted Global Security for a Restricted Definitive Security with an equal principal
amount, the Owner hereby certifies that the Restricted Definitive Security is



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being acquired for the Owner’s own account without transfer. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Security
issued will continue to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Security and in the Indenture and the
Securities Act.



     (b) o Check if Exchange is from Restricted Definitive Security to beneficial interest
in a Restricted Global Security. In connection with the Exchange of the Owner’s Restricted
Definitive Security for a beneficial interest in the [CHECK ONE] o 144A Global Security,
o Regulation S Global Security with an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner’s own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions applicable to the
Restricted Global Securities and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Security and in the Indenture and the Securities
Act.



     This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Insert Name of Transferor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:

Title:	 	 






Dated:                                         





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EXHIBIT D




FORM OF NOTATION OF SUBSIDIARY GUARANTEE




     For value received, the undersigned Guarantor (which term includes any successor to such
Guarantor under the Indenture) has, jointly and severally, with each other Guarantor,
unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions
in the Indenture dated as of July 31, 2007 (the “Indenture”) among Parallel Petroleum Corporation
(the “Company”), each Guarantor party thereto and Wells Fargo Bank, National Association, as
trustee (the “Trustee”), the full and punctual payment of the principal of, premium, if any, and
interest on the Securities (as defined in the Indenture) when due, whether at Stated Maturity, or
upon redemption, required repurchase pursuant to Section 4.7 or Section 4.12 of the
Indenture, acceleration or otherwise, and all other monetary obligations owing by the Company under
the Indenture (including obligations owing to the Trustee) and the Securities, all as more fully
provided in Article X of the Indenture. The obligations of the undersigned Guarantor to
the Holders of Securities and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture
are expressly set forth in Article X of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a Security, by
accepting the same, (a) agrees to and shall be bound by such provisions and (b) appoints the
Trustee attorney-in-fact of such Holder for such purpose; provided, however, that each Subsidiary
Guarantee is subject to release in accordance with the provisions of the Indenture.



	 	 	 	 	 	 	 
	 	 	[Name of Guarantor(s)]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:

Title:	 	 






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EXHIBIT E




FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY FUTURE GUARANTORS




     Supplemental Indenture  (this “Supplemental Indenture”), dated as of
___, 20___, among [Name of Future Guarantor(s)] (the “New Guarantor”), a subsidiary of
Parallel Petroleum Corporation, a Delaware corporation [or its permitted successor] (the
“Company”), [the existing Guarantors (as defined in the Indenture referred to herein)] and Wells
Fargo Bank, National Association, as trustee under the Indenture referred to herein (the
“Trustee”). [The New Guarantor and the existing Guarantors are sometimes referred to collectively
herein as the “Guarantors”, or individually as a “Guarantor.”]



W I T N E S S E T H




     WHEREAS, the Company [and the existing Guarantors] have heretofore executed and delivered to
the Trustee an indenture (the “Indenture”), dated as of July 31, 2007, relating to the 10 1/4%
Senior Notes due 2014 (the “Securities”) of the Company;



     WHEREAS, Section 4.10 of the Indenture provides that if the Company or any of its
Restricted Subsidiaries acquires or creates another Restricted Subsidiary (other than Foreign
Subsidiaries) on or after the Issue Date or if any Foreign Subsidiary that is not already a
guarantor guarantees or co-issues any other Indebtedness of the Company after such date, then in
either case the Company shall cause that Subsidiary to become a Guarantor by executing a
supplemental indenture; and



     WHEREAS, pursuant to Section 9.1 of the Indenture, the Company, the Guarantors and the
Trustee are authorized to execute and deliver this Supplemental Indenture to amend or supplement
the Indenture without the consent of any Holder;



     NOW THEREFORE, to comply with the provisions of the Indenture and in consideration of the
foregoing and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the New Guarantor, [the other Guarantors,] the Company and the Trustee mutually
covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows:



     1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.



     2. Agreement to Guarantee. The New Guarantor hereby agrees, jointly and severally,
[with all other Guarantors,] to unconditionally Guarantee to each Holder and to the Trustee the
Obligations, to the extent set forth in the Indenture and subject to the provisions in the
Indenture. The obligations of the Guarantors to the Holders of Securities and to the Trustee
pursuant to the Subsidiary Guarantees and the Indenture are expressly set forth in Article
X of the Indenture and reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantees.



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     3. Execution and Delivery. The New Guarantor agrees that its Subsidiary
Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each
Security a notation of such Subsidiary Guarantee.



     4. NEW YORK LAW TO GOVERN . THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE AND ENFORCE THIS SUPPLEMENTAL INDENTURE.



     5. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement. This Supplemental Indenture may be executed in multiple counterparts which, when taken
together, shall constitute one instrument.



     6. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.



     7. The Trustee. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by
reason of this Supplemental Indenture. This Supplemental Indenture is executed and accepted by the
Trustee subject to all the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made applicable to the
Trustee with respect hereto.



[Remainder of Page Intentionally Left Blank.




Signature Page Follows.]




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     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.



     Dated:                     , 20___



	 	 	 	 	 	 	 
	 	 	[NEW GUARANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	[OTHER GUARANTORS]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Parallel Petroleum Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Wells Fargo Bank, National Association,	 	 
	 
	 	 	 	 	 	 
	 	 	as Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Authorized Signatory	 	 







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