sfy_ex41-11252009.htm


    
      
         


      

      
         


        
          

        

      

      
         


        
          EXECUTION
VERSION

        

      

    


    SWIFT
ENERGY COMPANY,

     

    as
Issuer

     

    SWIFT
ENERGY OPERATING, LLC,

     

    as
Subsidiary Guarantor

     

    and

     

    WELLS
FARGO BANK,

     

    NATIONAL
ASSOCIATION

     

    as
Trustee

     

    FIRST
SUPPLEMENTAL INDENTURE

     

    Dated
as of November 25, 2009

     

    To
Indenture Dated as of May 19, 2009

     

    


     

    


     

    Providing
for Issuance of

     

    87⁄8%
Senior Notes due 2020

     


    
      
         


      

      
         


        
          

        

      

      
         


        
          EXECUTION
VERSION

        

      

    


    TABLE
OF CONTENTS

     

    Page

    

      
        	
                SECTION
      1.

              	
                Creation
      of 8 7/8% Notes

              	
                2

              
	
                SECTION
      2.

              	
                Definitions

              	
                3

              
	
                SECTION
      3.

              	
                Amendments
      to Articles II and III of the Original Indenture

              	
                33

              
	
                SECTION
      4.

              	
                Amendments
      to Article IV of the Original Indenture

              	
                35

              
	
                SECTION
      5.

              	
                Amendments
      to Article V of the Original Indenture

              	
                50

              
	
                SECTION
      6.

              	
                Amendments
      to Article VI of the Original Indenture

              	
                50

              
	
                SECTION
      7.

              	
                Amendments
      to Articles VII and VIII of the Original Indenture

              	
                51

              
	
                SECTION
      8.

              	
                Amendments
      to Article IX of the Original Indenture

              	
                51

              
	
                SECTION
      9.

              	
                Amendments
      to Article X of the Original Indenture

              	
                53

              
	
                SECTION
      10.

              	
                Applicability
      of and Amendments to Article XI of the Original Indenture

              	
                54

              
	
                SECTION
      11.

              	
                Inapplicability
      of Article XII of the Original Indenture

              	
                55

              
	
                SECTION
      12.

              	
                Subsidiary
      Guaranties

              	
                56

              
	
                SECTION
      13.

              	
                Governing
      Law

              	
                59

              
	
                SECTION
      14.

              	
                Counterparts

              	
                59

              
	
                SECTION
      15.

              	
                Trustee
      Not Responsible for Recitals or Issuance of Notes

              	
                59

              
	
                SECTION
      16.

              	
                Supplemental
      Indenture Controls

              	
                59

              
	
                Exhibit
      A

              	
                Form
      of the 8 7/8% Notes

              	
                A-1

              
	
                Exhibit
      B

              	
                Form
      of Supplemental Indenture

              	
                B-1

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      



     

    THIS
FIRST SUPPLEMENTAL INDENTURE, dated as of November 25, 2009 (this “First
Supplemental Indenture”), to the Indenture dated as of May 19, 2009 (the
“Original Indenture”) is among SWIFT ENERGY COMPANY, a Texas corporation, as
issuer (the “Company”), SWIFT ENERGY OPERATING, LLC, a Texas limited liability
company (“Opco”), as Subsidiary Guarantor, and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as trustee (the “Trustee”).

     

    WHEREAS,
the Company and the Trustee have heretofore executed and delivered the Original
Indenture to provide for the issuance of its securities to be issued in one or
more registered series;

     

    WHEREAS,
Section 9.01 of the Original Indenture provides, among other things, that the
Company and the Trustee may without the consent of Holders enter into indentures
supplemental to the Original Indenture to, among other things, (a) add to,
change or eliminate any of the provisions of the Original Indenture in respect
of one or more series of Debt Securities; provided, however, that any such
addition, change or elimination not otherwise permitted under Section 9.01 shall
(i) neither (A) apply to any Debt Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such previously issued
Debt Security with respect to such provision or (ii) shall become effective only
when there is no such Debt Security Outstanding, (b) add Guarantees with respect
to the Debt Securities and (c) establish the form or terms of Debt Securities of
any series as permitted by Sections 2.01 and 2.03;

     

    WHEREAS,
the Company desires to provide for the issuance of a new series of Debt
Securities to be designated as the “87⁄8% Senior Notes due 2020” (the “87⁄8%
Notes”), to be guaranteed by Opco, and to set forth the terms that will be
applicable thereto;

     

    WHEREAS,
all action on the part of the Company necessary to authorize the issuance of the
87⁄8% Notes under the Original Indenture and this First Supplemental Indenture
(the Original Indenture, as amended and supplemented by this First Supplemental
Indenture, being hereinafter called the “Indenture”) has been duly taken;
and

     

    WHEREAS,
all acts and things necessary to make the 87⁄8% Notes, when executed by the
Company and authenticated and delivered by the Trustee as provided in the
Original Indenture, the legal, valid and binding obligations of the Company, and
to constitute these presents a valid and binding supplemental indenture
according to its terms binding on the Company and Opco, have been done and
performed, and the execution of this First Supplemental Indenture and the
creation and issuance under the Indenture of the 87⁄8% Notes have in all respects
been duly authorized, and the Company in the exercise of the legal right and
power vested in it, executes this First Supplemental Indenture and proposes to
create, execute, issue and deliver the 87⁄8% Notes.

     

    NOW,
THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

     

    That, in
order to establish the designation, form, terms and provisions of, and to
authorize the authentication and delivery of the 87⁄8% Notes and in consideration
of the acceptance of the

     


    
      
         


      

      
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    87⁄8% Notes
by the Holders thereof and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

     

    SECTION
1.                      Creation of 87⁄8%
Notes.  Pursuant to Sections 2.01 and 2.03 of the Original
Indenture, there is hereby created a new series of Debt Securities designated as
the “87⁄8% Senior Notes due 2020”, limited in aggregate principal amount to
$225,000,000 (which are hereinafter defined as the “87⁄8% Notes” for purposes of
this First Supplemental Indenture).  The Trustee shall authenticate
87⁄8% Notes for original issue in the aggregate principal amount of $225,000,000
(the “Original 87⁄8% Notes”).  The Original 87⁄8% Notes shall be in the
form specified in Exhibit A to this First Supplemental Indenture, shall have the
terms set forth therein and shall be entitled to the benefits of the other
provisions of the Original Indenture as modified by this First Supplemental
Indenture and specified herein.

     

    The Place
of Payment with respect to the 87⁄8% Notes, in addition to the corporate trust
office of the Trustee in Dallas, Texas, shall be its corporate trust office in
New York, New York, which on the Issue Date is located at 45 Broadway, 14th
Floor, New York, New York 10006, the intention of the Company being that the 87⁄8%
Notes shall at all times be payable in New York, New York.

     

    With
respect to any 87⁄8% Notes issued after the Issue Date (except for 87⁄8% Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other 87⁄8% Notes pursuant to Section 2.07, 2.08, 2.09, 2.15,
3.03 or 9.04 of the Original Indenture) (the “Additional 87⁄8% Notes”), there
shall be established in or pursuant to a resolution of the Board of Directors of
the Company:

     

    (a)           that
such Additional 87⁄8% Notes shall be issued as part of the same or a different
series as the Original 87⁄8% Notes;

     

    (b)           the
aggregate principal amount of such Additional 87⁄8% Notes which may be
authenticated and delivered under the Indenture, which, subject to compliance
with Article IV of the Original Indenture, may be in an unlimited aggregate
principal amount or which may be in a limited principal amount (except for
Additional 87⁄8% Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other 87⁄8% Notes pursuant to Section 2.07,
2.08, 2.09, 2.15, 3.03 or 9.04 of the Original Indenture);

     

    (c)           the
issue price and issuance date of such Additional 87⁄8% Notes, including the date
from which interest on such Additional 87⁄8% Notes shall accrue;

     

    (d)           if
applicable, that such Additional 87⁄8% Notes shall be issuable in whole or in part
in the form of one or more Global Securities and, in such case, the respective
Depositaries for such Global Securities, the form of any legend or legends that
shall be borne by any such Global Security in addition to or in lieu of that set
forth in Section 2.15 or Exhibit A and any circumstances in addition to or in
lieu of those set forth in the Indenture in which any such Global Security may
be exchanged in whole or in part for 87⁄8% Notes registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or names
of Persons other than the Depositary for such Global Security or a nominee
thereof; and

     


    
      
         


      

      
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    (e)           if
applicable, that such Additional 87⁄8% Notes shall not be registered under the
Securities Act, but shall be issued pursuant to an exemption from registration
under the Securities Act bearing additional appropriate legends and shall have
the benefit of registration rights.  Except as set forth above, such
Additional 87⁄8% Notes shall have the terms set forth in Exhibit A to this First
Supplemental Indenture and shall be entitled to the benefits of the other
provisions of the Original Indenture as modified by this First Supplemental
Indenture and as specified herein.

     

    SECTION
2.                      Definitions

     

    (a)           Capitalized
terms used herein and not otherwise defined shall have the respective meanings
assigned thereto in the Original Indenture.

     

    (b)           Section
1.01 of the Original Indenture is amended and supplemented by inserting or
restating, as the case may be, in their appropriate alphabetical position, the
following definitions:

     

    “Additional Assets”
means:

     

    (a)           any
Property (other than cash, Permitted Short-Term Investments or securities) used
in the Oil and Gas Business or any business ancillary thereto;

     

    (b)           Investments
in any other Person engaged in the Oil and Gas Business or any business
ancillary thereto (including the acquisition from third parties of Capital Stock
of such Person) as a result of which such other Person becomes a Restricted
Subsidiary in compliance with Section 4.19;

     

    (c)           the
acquisition from third parties of Capital Stock of a Restricted Subsidiary;
or

     

    (d)           Permitted
Business Investments.

     

    “Adjusted Consolidated Net Tangible
Assets” means (without duplication), as of the date of determination, the
remainder of:

     

    (a)           the
sum of:

     

    (1)           discounted
future net revenues from proved oil and gas reserves of the Company and its
Restricted Subsidiaries calculated in accordance with SEC guidelines before any
state, federal or foreign income taxes, as estimated by the Company and
confirmed by a nationally recognized firm of independent petroleum engineers in
a reserve report prepared as of the end of the Company’s most recently completed
fiscal year for which audited financial statements are available, as increased
by, as of the date of determination, the estimated discounted future net
revenues from:

     

    (A)           estimated
proved oil and gas reserves acquired since such year end, which reserves were
not reflected in such year end reserve report, and

     


    
      
         


      

      
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    (B)           estimated
oil and gas reserves attributable to upward revisions of estimates of proved oil
and gas reserves since such year end due to exploration, development or
exploitation activities, in each case 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 estimated discounted future
net revenues from:

     

    (C)           estimated
proved oil and gas reserves produced or disposed of since such year end,
and

     

    (D)           estimated
oil and gas reserves attributable to downward revisions of estimates of proved
oil and gas reserves since such year end due to changes in geological conditions
or other factors that would, in accordance with standard industry practice,
cause such revisions, in each case calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year end reserve report),

     

    provided that, in the case of
each of the determinations made pursuant to clauses (A) through (D), such
increases and decreases shall be as estimated by the Company’s petroleum
engineers, unless there is a Material Change as a result of such acquisitions,
dispositions or revisions, in which event the discounted future net revenues
utilized for purposes of this clause (a)(1) shall be confirmed in writing by a
nationally recognized firm of independent petroleum engineers,

     

    (2)           the
capitalized costs that are attributable to oil and gas properties of the Company
and its Restricted Subsidiaries to which no proved oil and gas reserves are
attributable, 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,

     

    (3)           the
Net Working Capital on a date no earlier than the date of the Company’s latest
annual or quarterly financial statements, and

     

    (4)           the
greater of the net book value or the appraised value as estimated by independent
appraisers of other tangible assets (including, without duplication, Investments
in unconsolidated Restricted Subsidiaries) of the Company and its Restricted
Subsidiaries, as of a date no earlier than the date of the Company’s latest
audited financial statements.  For these purposes, net book value
shall be determined as of a date no earlier than the date of the Company’s
latest annual or quarterly financial statements, and on a date no earlier than
the date of the Company’s latest annual or quarterly financial
statements;

     

    (b)           minus
the sum of:

     

    (1)           minority
interests,

     


    
      
         


      

      
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    (2)           any
net gas balancing liabilities of the Company and its Restricted Subsidiaries
reflected in the Company’s latest audited financial statements,

     

    (3)           to
the extent included in (a)(1) above, the discounted future net revenues,
calculated in accordance with SEC guidelines (utilizing the 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 (determined, if applicable, using the schedules specified
with respect thereto), and

     

    (4)           the
discounted future net revenues, calculated in accordance with SEC guidelines,
attributable to reserves subject to Dollar-Denominated Production Payments that,
based on the estimates of production and price assumptions included in
determining the discounted future net revenues specified in (a)(1) above, would
be necessary to fully satisfy the payment obligations of the Company and its
Restricted Subsidiaries with respect to Dollar-Denominated Production Payments
(determined, if applicable, using 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, “Adjusted
Consolidated Net Tangible Assets” will continue to be calculated as if the
Company were still using the full cost method of accounting.

     

    “Adjusted Treasury Rate”
means, with respect to any redemption date:

     

    (a)           (1)           the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated “H.15(519)” or any successor publication which is published weekly by
the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption “Treasury Constant Maturities,” for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after January 15, 2015, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue shall be determined
and the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month) or

     

    (2)           if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date, in each case calculated on
the third Business Day immediately preceding the redemption date,
plus

     

    (b)           0.50%.

     

    “Affiliate” of any specified
Person means any other Person:

     


    
      
         


      

      
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    (a)           that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person;
or

     

    (b)           that
beneficially owns or holds directly or indirectly 10% or more of any class of
the Voting Stock of such specified Person or of any Subsidiary of such specified
Person.

     

    For the
purposes of this definition, “control,” when used with respect to any specified
Person, means the power to direct the management and policies of such Person
directly or indirectly, whether through the ownership of Voting Stock, by
contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.

     

    “Applicable Premium” means,
with respect to a Note at any redemption date, the greater of:

     

    (a)           1.0%
of the principal amount of such Note and

     

    (b)           the
excess of (1) the present value at such redemption date of (A) the redemption
price of such Note on January 15, 2015 (such redemption price being
described in the first paragraph and accompanying table of Section 3.06,
exclusive of any accrued interest) plus (B) all required remaining scheduled
interest payments due on such Note through January 15, 2015, computed using
a discount rate equal to the Adjusted Treasury Rate, over (2) the principal
amount of such Note on such redemption date.

     

    “Asset Sale” means, with
respect to any Person, any transfer, conveyance, sale, lease or other
disposition (collectively, “dispositions,” and including dispositions pursuant
to any consolidation or merger) by such Person or any of its Restricted
Subsidiaries in any single transaction or series of transactions
of:

     

    (a)           shares
of Capital Stock or other ownership interests of another Person (including
Capital Stock of Restricted Subsidiaries and Unrestricted Subsidiaries);
or

     

    (b)           any
other Property of such Person or any of its Restricted
Subsidiaries;

     

    provided, however, that the
term “Asset Sale” shall not include:

     

    (1)           the
disposition of Permitted Short-Term Investments, inventory, accounts receivable,
surplus or obsolete equipment or other Property (excluding the disposition of
oil and gas in place and other interests in real property unless made in
connection with a Permitted Business Investment) in the ordinary course of
business;

     

    (2)           the
abandonment, assignment, lease, sublease or farm-out of oil and gas properties,
or the forfeiture or other disposition of such properties pursuant to standard
form operating agreements, in each case in the ordinary course of business in a
manner that is customary in the Oil and Gas Business;

     

    (3)           the
disposition of Property received in settlement of debts owing to the Company or
any Restricted Subsidiary as a result of foreclosure, perfection or enforcement
of any Lien or debt, which debts were owing to the Company or any

     


    
      
         


      

      
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    Restricted
Subsidiary in the ordinary course of business of the Company or such Restricted
Subsidiary;

     

    (4)           any
disposition that constitutes a Restricted Payment made in compliance with
Section 4.12;

     

    (5)           when
used with respect to the Company, any disposition of all or substantially all of
the Property of the Company and its Restricted Subsidiaries taken as a whole
permitted pursuant to Article X;

     

    (6)           the
disposition of any Property by the Company or a Restricted Subsidiary to the
Company or a Wholly Owned Subsidiary;

     

    (7)           the
disposition of any Property with a Fair Market Value of less than $5.0 million;
or

     

    (8)           any
Production Payments and Reserve Sales, provided that any such Production
Payments and Reserve Sales, other than 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, shall have been created, Incurred, issued, assumed or
Guaranteed in connection with the financing of, and within 60 days after the
acquisition of, the Property that is subject thereto.

     

    “Average Life” means, with
respect to any Indebtedness, at any date of determination, the quotient obtained
by dividing:

     

    (a)           the
sum of the products of:

     

    (1)           the
number of years (and any portion thereof) from the date of determination to the
date or dates of each successive scheduled principal payment (including any
sinking fund or mandatory redemption payment requirements) of such Indebtedness,
multiplied by

     

    (2)           the
amount of each such principal payment,

     

    (b)           by
the sum of all such principal payments.

     

    “Bank Credit Facilities”
means, with respect to any Person, one or more debt facilities or commercial
paper facilities with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables or inventory financing
(including through the sale of receivables or inventory financing to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables or inventory) or trade or standby letters of credit, in
each case together with any extensions, revisions, refinancings or replacements
thereof by a lender or syndicate of lenders.

     

    “Capital Lease Obligation”
means any obligation that is required to be classified and accounted for as a
capital lease obligation in accordance with GAAP, and the amount of

     


    
      
         


      

      
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    Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment date of rent or any other amount due in
respect of such obligation.

     

    “Capital Stock” means, with
respect to any Person, any shares or other equivalents (however designated) of
any class of corporate stock or partnership interests or any other
participations, rights, warrants, options or other interests in the nature of an
equity interest in such Person, including Preferred Stock, but excluding any
debt security convertible or exchangeable into such equity
interest.

     

    “Change of Control” means the
occurrence of any of the following, if followed by a Rating Decline within 90
days thereof:

     

    (a)           any
“person” or “group” (within the meaning of Section 13(d)(3) and 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person will be deemed to have “beneficial ownership”
of all shares that any such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time) of 40 percent or
more of the total voting power of all classes of the Voting Stock of the
Company;

     

    (b)           the
sale, lease, transfer or other disposition, directly or indirectly, of all or
substantially all the Property of the Company and the Restricted Subsidiaries
taken as a whole (other than a disposition of such Property as an entirety or
virtually as an entirety to any Wholly Owned Subsidiary) shall have
occurred;

     

    (c)           the
shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company;

     

    (d)           the
Company consolidates with or merges into another Person or any Person
consolidates with or merges into the Company in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is reclassified
into or exchanged for cash, securities or other Property, other than any such
transaction where the outstanding Voting Stock of the Company is reclassified
into or exchanged for Voting Stock of the surviving Person and the holders of
the Voting Stock of the Company immediately prior to such transaction own,
directly or indirectly, not less than a majority of the Voting Stock of the
surviving Person immediately after such transaction in substantially the same
proportion as before the transaction; or

     

    (e)           during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Company’s Board of Directors (together with any new
directors whose election or appointment by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously approved by

     


    
      
         


      

      
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    such
vote) cease for any reason to constitute a majority of the Company’s Board of
Directors then in office.

     

    “Comparable Treasury Issue”
means the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the remaining term from the redemption date to
January 15, 2015, that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of a maturity most nearly equal to January 15,
2015.

     

    “Comparable Treasury Price”
means, with respect to any redemption date, if clause (a)(2) of the Adjusted
Treasury Rate is applicable, the average of three, or such lesser number as is
obtained by the Trustee, Reference Treasury Dealer Quotations for such
redemption date.

     

    “Consolidated Interest Coverage
Ratio” means, as of the date of the transaction (the “Transaction Date”)
giving rise to the need to calculate the Consolidated Interest Coverage Ratio,
the ratio of:

     

    (a)           the
aggregate amount of EBITDA of the Company and its consolidated Restricted
Subsidiaries for the four full fiscal quarters immediately prior to the
Transaction Date for which financial statements are available; to

     

    (b)           the
aggregate Consolidated Interest Expense of the Company and its Restricted
Subsidiaries that is anticipated to accrue during a period consisting of the
fiscal quarter in which the Transaction Date occurs and the three fiscal
quarters immediately subsequent thereto (based upon the pro forma amount and
maturity of, and interest payments in respect of, Indebtedness of the Company
and its Restricted Subsidiaries expected by the Company to be outstanding on the
Transaction Date), assuming for the purposes of this measurement the
continuation of market interest rates prevailing on the Transaction Date and
base interest rates in respect of floating interest rate obligations equal to
the base interest rates on such obligations in effect as of the Transaction
Date; provided, that if the Company or any of its Restricted Subsidiaries is a
party to any Interest Rate Protection Agreement that would have the effect of
changing the interest rate on any Indebtedness of the Company or any of its
Restricted Subsidiaries for such four quarter period (or a portion thereof), the
resulting rate shall be used for such four quarter period or portion thereof;
provided further that any Consolidated Interest Expense with respect to
Indebtedness Incurred or retired by the Company or any of its Restricted
Subsidiaries during the fiscal quarter in which the Transaction Date occurs
shall be calculated as if such Indebtedness was so Incurred or retired on the
first day of the fiscal quarter in which the Transaction Date
occurs.

     

    In
addition, if at any time since the beginning of the four full fiscal quarter
period preceding the Transaction Date through and including the Transaction
Date:

     

    (a)           the
Company or any of its Restricted Subsidiaries shall have engaged in any Asset
Sale, EBITDA for such period shall be reduced by an amount equal to the EBITDA
(if positive), or increased by an amount equal to the EBITDA (if negative),
directly attributable to the Property that is the subject of such Asset Sale for
such period calculated on a pro forma basis

     


    
      
         


      

      
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    as if
such Asset Sale and any related retirement of Indebtedness had occurred on the
first day of such period; or

     

    (b)           (1)           the
Company or any of its Restricted Subsidiaries shall have acquired or made any
Investment in any material assets, or

     

    (2)           the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio is such an Investment or acquisition.

     

    EBITDA
shall be calculated on a pro forma basis as if such Investments or asset
acquisitions had occurred on the first day of such four fiscal quarter
period.

     

    “Consolidated Interest
Expense” means, with respect to any Person for any period, without
duplication:

     

    (a)           the
sum of:

     

    (1)           the
aggregate amount of cash and noncash interest expense (including capitalized
interest) of such Person and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP in respect of
Indebtedness, including:

     

    (A)           any
amortization of debt discount,

     

    (B)           net
costs associated with Interest Rate Protection Agreements (including any
amortization of discounts),

     

    (C)           the
interest portion of any deferred payment obligation,

     

    (D)           all
accrued interest, and

     

    (E)           all
commissions, discounts, commitment fees, origination fees and other fees and
charges owed with respect to Bank Credit Facilities and other Indebtedness paid
, accrued or scheduled to be paid or accrued during such period,

     

    (2)           Disqualified
Stock Dividends of such Person (and of its Restricted Subsidiaries if paid to a
Person other than such Person or its Restricted Subsidiaries) and Preferred
Stock Dividends of such Person’s Restricted Subsidiaries if paid to a Person
other than such Person or its other Restricted Subsidiaries,

     

    (3)           the
portion of any obligation of such Person or its Restricted Subsidiaries in
respect of any Capital Lease Obligation allocable to interest expense in
accordance with GAAP,

     

    (4)           the
portion of any rental obligation of such Person or its Restricted Subsidiaries
in respect of any Sale and Leaseback Transaction that is
Indebtedness

     


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    allocable
to interest expense (determined as if such obligation were treated as a Capital
Lease Obligation), and

     

    (5)           to
the extent any Indebtedness of any other Person (other than Restricted
Subsidiaries) is Guaranteed by such Person or any of its Restricted
Subsidiaries, the aggregate amount of interest paid, accrued or scheduled to be
paid or accrued by such other Person during such period attributable to any such
Indebtedness;

     

    less

     

    (b)           to
the extent included in (a) above, amortization or write-off of deferred
financing costs (other than debt discounts) of such Person and its Restricted
Subsidiaries during such period;

     

    in the
case of both (a) and (b) above, after elimination of intercompany accounts among
such Person and its Restricted Subsidiaries and as determined in accordance with
GAAP.

     

    “Consolidated Net Income” of
any Person means, for any period, the aggregate net income (or net loss, as the
case may be) 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, without duplication:

     

    (a)           items
classified as extraordinary gains or losses net of tax (less all fees and
expenses relating thereto);

     

    (b)           any
gain or loss net of taxes (less all fees and expenses relating thereto) realized
on the sale or other disposition of Property, including the Capital Stock of any
other Person (but in no event shall this clause (b) apply to any gains or losses
on the sale in the ordinary course of business of oil, gas or other hydrocarbons
produced or manufactured);

     

    (c)           the
net income of any Restricted Subsidiary of such specified Person to the extent
the transfer to that Person of that income is restricted by contract or
otherwise, except for any cash dividends or cash distributions actually paid by
such Restricted Subsidiary to such Person during such period;

     

    (d)           the
net income (or loss) of any other Person in which such specified Person or any
of its Restricted Subsidiaries has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
such specified Person in accordance with GAAP or is an interest in a
consolidated Unrestricted Subsidiary), except to the extent of the amount of
cash dividends or other cash distributions actually paid to such Person or its
consolidated Restricted Subsidiaries by such other Person during such
period;

     

    (e)           any
gain or loss, net of taxes, realized on the termination of any employee pension
benefit plan;

     

    (f)           any
adjustments of a deferred tax liability or asset pursuant to Statement of
Financial Accounting Standards No. 109 that result from changes in enacted tax
laws or rates;

     


    
      
         


      

      
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    (g)           the
cumulative effect of a change in accounting principles;

     

    (h)           any
write-downs of non-current assets, provided that any ceiling limitation
write-downs under SEC guidelines shall be treated as capitalized costs, as if
such write-downs had not occurred; and

     

    (i)           any
non-cash compensation expense realized upon issuance of stock under an employee
stock purchase plan or for grants of performance shares, stock options or stock
awards to officers, directors and employees of the Company or any of its
Restricted Subsidiaries.

     

    In
addition, notwithstanding the preceding, there shall be excluded from
Consolidated Net Income, for purposes of Section 4.12, any nonrecurring charges
relating to any premium or penalty paid or write off of deferred finance costs
or original issue discount in connection with redeeming or otherwise retiring
any Indebtedness prior to its Stated Maturity.

     

    “Default” means any event, act
or condition the occurrence of which is, or after notice or the passage of time
or both would be, an Event of Default.

     

    “Disqualified Stock” means,
with respect to any Person, 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
either case at the option of the holder thereof) or otherwise:

     

    (a)           matures
or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise;

     

    (b)           is
or may become redeemable or repurchasable at the option of the holder thereof,
in whole or in part; or

     

    (c)           is
convertible or exchangeable at the option of the holder thereof for debt or any
other Disqualified Stock;

     

    in each
case on or prior to the first anniversary of the Stated Maturity of the 87⁄8%
Notes.

     

    “Disqualified Stock Dividends”
means all dividends with respect to Disqualified Stock of the Company held by
Persons other than a Wholly Owned Subsidiary.  The amount of any such
dividend shall be equal to the quotient of such dividend divided by the
difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the
Company.

     

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

     

    “EBITDA” means with respect to
any Person for any period, the Consolidated Net Income of such Person for such
period:

     

    (a)           plus
the sum of, to the extent reflected in the consolidated income statement of such
Person and its Restricted Subsidiaries for such period from which

     


    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    Consolidated
Net Income is determined and deducted in the determination of such Consolidated
Net Income, without duplication:

     

    (1)           income
tax expense (but excluding income tax expense relating to sales or other
dispositions of Property, including the Capital Stock of any other Person, the
gains from which are excluded in the determination of such Consolidated Net
Income),

     

    (2)           Consolidated
Interest Expense,

     

    (3)           depreciation
and depletion expense,

     

    (4)           amortization
expense,

     

    (5)           exploration
expense (if applicable to the Company after the Issue Date), and

     

    (6)           any
other noncash charges including unrealized foreign exchange losses (excluding,
however, any such other noncash charge that requires an accrual of or reserve
for cash charges for any future period);

     

    (b)           less
the sum of, to the extent reflected in the consolidated income statement of such
Person and its Restricted Subsidiaries for such period from which Consolidated
Net Income is determined and added in the determination of such Consolidated Net
Income, without duplication:

     

    (1)           income
tax recovery (excluding, however, income tax recovery relating to sales or other
dispositions of Property, including the Capital Stock of any other Person, the
losses from which are excluded in the determination of such Consolidated Net
Income), and

     

    (2)           unrealized
foreign exchange gains.

     

    “Equity Offering” means a bona
fide underwritten sale to the public of common stock of the Company pursuant to
an effective registration statement (other than a Form S-8 or any other form
relating to securities issuable under any employee benefit plan of the Company)
that is filed with the SEC following the Issue Date.

     

    “Exchanged Properties” means
Properties used or useful in the Oil and Gas Business received by the Company or
a Restricted Subsidiary in trade or as a portion of the total consideration for
other such Properties.

     

    “Exchange Rate Contract”
means, with respect to any Person, any currency swap agreements, forward
exchange rate agreements, foreign currency futures or options, exchange rate
collar agreements, exchange rate insurance and other agreements or arrangements,
or any combination thereof, entered into by such Person in the ordinary course
of its business for the purpose of limiting or managing exchange rate risks to
which such Person is subject.

     


    
      
         


      

      
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    “Exempt Foreign Subsidiary”
means any Restricted Subsidiary that is a foreign corporation if more than 50%
of the

     

    (a)           total
combined voting power of all Voting Stock of the Restricted Subsidiary,
or

     

    (b)           the
total value of all Capital Stock of the Restricted Subsidiary is owned or is
considered as owned by United States shareholders on any day during the taxable
year of the foreign corporation,

     

    and,
that, in any case, is so designated by the Company in an Officers’ Certificate
delivered to the Trustee, and which Restricted Subsidiary is not a guarantor of,
and has no Lien (other than a Lien with respect to less than two-thirds of the
Capital Stock of an Exempt Foreign Subsidiary) to secure the Bank Credit
Facilities or any other Indebtedness of the Company or any Restricted Subsidiary
other than an Exempt Foreign Subsidiary.  A United States shareholder,
as used in this definition, means any Person who owns or is considered as owning
10% or more of the total combined voting power of all Voting Stock of the
foreign corporation.  For purposes of this definition, ownership of a
Restricted Subsidiary, Voting Stock or Capital Stock is determined in accordance
with Section 958 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.  The Company may revoke
the designation of any Exempt Foreign Subsidiary by notice to the
Trustee.

     

    “Fair Market Value” means,
with respect to any Property to be transferred pursuant to any Asset Sale or
Sale and Leaseback Transaction or any noncash consideration or Property
transferred or received by any Person, the fair market value of such
consideration or other Property as determined by:

     

    (a)           any
officer of the Company if such fair market value is greater than $2.0 million
but less than $10.0 million; and

     

    (b)           the
Board of Directors of the Company as evidenced by a certified resolution
delivered to the Trustee if such fair market value is equal to or in excess of
$10.0 million.

     

    “GAAP” means United States
generally accepted accounting principles as in effect on the Issue Date, unless
stated otherwise.

     

    “Guarantee” by any Person
means any obligation, contingent or otherwise, of such Person guaranteeing or
having the economic effect of guaranteeing any Indebtedness of any other Person
(a “primary obligor”) in any manner, whether directly or indirectly, and
including any Lien on the assets of such Person securing obligations to pay
Indebtedness of the primary obligor, and any obligation of such
Person:

     

    (a)           to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or any security for the payment of such Indebtedness;

     

    (b)           to
purchase Property, securities or services for the purpose of assuring the holder
of such Indebtedness of the payment of such Indebtedness; or

     


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    (c)           to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness (and “Guaranteed”, “Guaranteeing” and “Guarantor” shall have
meanings correlative to the foregoing);

     

    provided, however, that a
Guarantee by any Person shall not include:

     

    (a)           endorsements
by such Person for collection or deposit, in either case, in the ordinary course
of business; or

     

    (b)           a
contractual commitment by one Person to invest in another Person for so long as
such Investment is reasonably expected to constitute a Permitted Investment
under clause (b) of the definition of Permitted Investments.

     

    “Holder” means the Person in
whose name an 87⁄8% Note is registered on the Debt Security Register.

     

    “Incur” means, with respect to
any Indebtedness or other obligation of any Person, to create, issue, incur (by
conversion, exchange or otherwise), assume, Guarantee or become liable
(including by reason of a merger or consolidation) in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or obligation on the balance sheet of
such Person (and “Incurrence,” “Incurred,” “Incurrable” and “Incurring” shall
have meanings correlative to the foregoing); provided, however, that a change in
GAAP that results in an obligation of such Person that exists at such time, and
is not theretofore classified as Indebtedness, becoming Indebtedness shall not
be deemed an Incurrence of such Indebtedness; provided further, however,
that solely for purposes of determining compliance with Section 4.11
amortization of debt discount shall not be deemed to be the Incurrence of
Indebtedness, provided
that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness shall at all times be the aggregate principal amount at Stated
Maturity.  For purposes of this definition, Indebtedness of the
Company or a Restricted Subsidiary held by a Wholly Owned Subsidiary shall be
deemed to be Incurred by the Company or such Restricted Subsidiary in the event
such Indebtedness is transferred to a Person other than the Company or a Wholly
Owned Subsidiary.

     

    “Indebtedness” means at any
time (without duplication), with respect to any Person, whether recourse is to
all or a portion of the assets of such Person, and whether or not
contingent:

     

    (a)           any
obligation of such Person for borrowed money;

     

    (b)           any
obligation of such Person evidenced by bonds, debentures, notes, Guarantees or
other similar instruments, including any such obligations Incurred in connection
with the acquisition of Property, assets or business;

     

    (c)           any
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such
Person;

     


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    (d)           any
obligation of such Person issued or assumed as the deferred purchase price of
Property or services (other than Trade Accounts Payable);

     

    (e)           any
Capital Lease Obligation of such Person;

     

    (f)           the
maximum fixed redemption or repurchase price of Disqualified Stock of such
Person at the time of determination;

     

    (g)           any
Preferred Stock of any Restricted Subsidiary, provided that such Restricted
Subsidiary is not a Subsidiary Guarantor;

     

    (h)           any
payment obligation of such Person under Exchange Rate Contracts, Interest Rate
Protection Agreements, Oil and Gas Hedging Contracts or under any similar
agreements or instruments;

     

    (i)           any
obligation to pay rent or other payment amounts of such Person with respect to
any Sale and Leaseback Transaction to which such Person is a party;

     

    (j)           any
obligation of the type referred to in clauses (a) through (i) of this definition
of another Person and all dividends of another Person the payment of which, in
either case, such Person has Guaranteed or is responsible or liable, directly or
indirectly, as obligor, Guarantor or otherwise; and

     

    (k)           all
obligations of the type referred to in clauses (a) through (i) of this
definition of another Person secured by any Lien on any Property of such Person
(whether or not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such Property or the
amount of the obligation so secured;

     

    provided, however, that
Indebtedness shall not include Production Payments and Reserve
Sales.  For purposes of this definition, the maximum fixed repurchase
price of any Disqualified Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Stock as
if such Disqualified Stock were repurchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture; provided,
however, that if such Disqualified Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Disqualified
Stock.  The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability at such date in respect of any
contingent obligations described above.

     

    “Interest Rate Protection
Agreement” means, with respect to any Person, any interest rate swap
agreement, forward rate agreement, interest rate cap or collar agreement or
other financial agreement or arrangement entered into by such Person in the
ordinary course of its business for the purpose of limiting or managing interest
rate risks to which such Person is subject.

     

    “Investment” means, with
respect to any Person:

     

    (a)           any
amount paid by such Person, directly or indirectly, to any other Person for
Capital Stock of, or as a capital contribution to, any other Person;
or

     


    
      
         


      

      
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    (b)           any
direct or indirect loan or advance to any other Person (other than accounts
receivable of such Person arising in the ordinary course of
business);

     

    provided, however, that
Investments shall not include:

     

    (1)           in
the case of clause (a) as used in the definition of “Restricted Payments” only,
any such amount paid through the issuance of Capital Stock of the Company (other
than Disqualified Stock); and

     

    (2)           in
the case of clause (a) or (b), extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and any increase in
the equity ownership in any Person resulting from retained earnings of such
Person.

     

    “Investment Grade Rating”
means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P.

     

    “Issue Date” means the date on
which the Original 87⁄8% Notes first were issued under this
Indenture.

     

    “Lien” means, with respect to
any Property, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien (statutory or other), charge,
easement, encumbrance, preference, priority or other security or similar
agreement or preferential arrangement of any kind or nature whatsoever on or
with respect to such Property (including any conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).  For purposes of Section 4.10, a Capital Lease Obligation
shall be deemed to be secured by a Lien on the Property being
leased.

     

    “Liquid Securities” means
securities:

     

    (a)           of
an issuer that is not an Affiliate of the Company;

     

    (b)           that
are publicly traded on the New York Stock Exchange, the NYSE Amex Equities
(formerly known as the American Stock Exchange) or the Nasdaq National Market;
and

     

    (c)           as
to which the Company is not subject to any restrictions on sale or transfer
(including any volume restrictions under Rule 144 under the Securities Act or
any other restrictions imposed by the Securities Act) or as to which a
registration statement under the Securities Act covering the resale thereof is
in effect for as long as the securities are held;

     

    provided that securities
meeting the requirements or clauses (a), (b) and (c) above shall be treated as
Liquid Securities from the date of receipt thereof until and only until the
earlier of:

     

    (1)           the
date on which such securities are sold or exchanged for cash or Permitted
Short-Term Investments, and

     


    
      
         


      

      
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    (2)           240
days following the date of receipt of such securities.  If such
securities are not sold or exchanged for cash or Permitted Short-Term
Investments within 240 days of receipt thereof, for purposes of determining
whether the transaction pursuant to which the Company or the Restricted
Subsidiary received the securities was in compliance with Section 4.14 such
securities shall be deemed not to have been Liquid Securities at any
time.

     

    “Material Change” means an
increase or decrease (except to the extent resulting from changes in prices) of
more than 30% during a fiscal quarter in the estimated discounted future net
revenues from proved oil and gas reserves of the Company and its Restricted
Subsidiaries, calculated in accordance with clause (a)(1) of the definition of
Adjusted Consolidated Net Tangible Assets; provided, however, that the
following will be excluded from the calculation of Material Change:

     

    (a)           any
acquisitions during the quarter of oil and gas reserves with respect to which
the Company’s estimate of the discounted future net revenues from proved oil and
gas reserves has been confirmed by independent petroleum engineers;
and

     

    (b)           any
dispositions of Properties during such quarter that were disposed of in
compliance with Section 4.14.

     

    “Moody’s” means Moody’s
Investors Service, Inc. and its successors.

     

    “Net Available Cash” from an
Asset Sale means cash proceeds received therefrom, including:

     

    (a)           any
cash proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and when received;
and

     

    (b)           the
Fair Market Value of Liquid Securities and Permitted Short-Term Investments, and
excluding:

     

    (1)           any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to the Property that is the
subject of such Asset Sale, and

     

    (2)           except
to the extent converted within 240 days after such Asset Sale to cash, Liquid
Securities or Permitted Short-Term Investments, consideration constituting
Exchanged Properties or consideration other than as identified in the
immediately preceding clauses (a) and (b),

     

    in each
case net of:

     

    (a)           all
legal, title and recording expenses, commissions and other fees and expenses
Incurred, and all federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP as a consequence of such Asset
Sale;

     


    
      
         


      

      
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    (b)           all
payments made on any Indebtedness (but specifically excluding Indebtedness of
the Company and its Restricted Subsidiaries assumed in connection with or in
anticipation of such Asset Sale) that is secured by any assets subject to such
Asset Sale, in accordance with the terms of any Lien upon such assets, or that
must by its terms, or in order to obtain a necessary consent to such Asset Sale
or by applicable law, be repaid out of the proceeds from such Asset Sale,
provided that such payments are made in a manner that results in the permanent
reduction in the balance of such Indebtedness and, if applicable, a permanent
reduction in any outstanding commitment for future Incurrences of Indebtedness
thereunder;

     

    (c)           all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Sale;
and

     

    (d)           the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the assets
disposed of in such Asset Sale and retained by the Company or any Restricted
Subsidiary after such Asset Sale;

     

    provided, however, that if
any consideration for an Asset Sale (which would otherwise constitute Net
Available Cash) is required to be held in escrow pending determination of
whether a purchase price adjustment will be made, such consideration (or any
portion thereof) shall become Net Available Cash only at such time as it is
released to such Person or its Restricted Subsidiaries from escrow.

     

    “Net Working Capital”
means:

     

    (a)           all
current assets of the Company and its Restricted Subsidiaries; less

     

    (b)           all
current liabilities of the Company and its Restricted Subsidiaries, except
current liabilities included in Indebtedness,

     

    in each
case as set forth in consolidated financial statements of the Company prepared
in accordance with GAAP.

     

    “Non-recourse Purchase Money
Indebtedness” means Indebtedness (other than Capital Lease Obligations)
of the Company or any Restricted Subsidiary Incurred in connection with the
acquisition by the Company or such Restricted Subsidiary in the ordinary course
of business of fixed assets used in the Oil and Gas Business (including office
buildings and other real property used by the Company or such Restricted
Subsidiary in conducting its operations) with respect to which:

     

    (a)           the
holders of such Indebtedness agree that they will look solely to the fixed
assets so acquired that secure such Indebtedness, and neither the Company nor
any Restricted Subsidiary:

     

    (1)           is
directly or indirectly liable for such Indebtedness, or

     


    
      
         


      

      
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    (2)           provides
credit support, including any undertaking, Guarantee, agreement or instrument
that would constitute Indebtedness (other than the grant of a Lien on such
acquired fixed assets); and

     

    (b)           no
default or event of default with respect to such Indebtedness would cause, or
permit (after notice or passage of time or otherwise), any holder of any other
Indebtedness of the Company or a Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment, repurchase, redemption, defeasance
or other acquisition or retirement for value thereof to be accelerated or
payable prior to any scheduled principal payment, scheduled sinking fund payment
or maturity.

     

    “Oil and Gas Business” means
the business of exploiting, exploring for, developing, acquiring, operating,
producing, processing, gathering, marketing, storing, selling, hedging,
treating, swapping, refining and transporting hydrocarbons and other related
energy businesses.

     

    “Oil and Gas Hedging Contract”
means, with respect to any Person, any agreement or arrangement, or any
combination thereof, relating to oil and gas or other hydrocarbon prices,
transportation or basis costs or differentials or other similar financial
factors, that is customary in the Oil and Gas Business and is entered into by
such Person in the ordinary course of its business for the purpose of limiting
or managing risks associated with fluctuations in such prices, costs,
differentials or similar factors.

     

    “Oil and Gas Liens”
means:

     

    (a)           Liens
on any specific 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 oil and gas producing properties, or any
interest therein, costs incurred for “development” shall 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 which relate to such
properties or interests);

     

    (b)           Liens
on an oil or 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;

     

    (c)           Liens
arising under partnership agreements, oil and gas leases, overriding royalty
agreements, net profits agreements, production payment agreements, royalty trust
agreements, incentive compensation programs for geologists, geophysicists and
other providers of technical services to the Company or a Restricted Subsidiary,
master limited partnership agreements, farm-out agreements, farm-in agreements,
division orders, contracts for the sale, purchase, exchange, transportation,
gathering or processing of oil, 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

     


    
      
         


      

      
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    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, in all instances that such Liens are limited to
the assets that are the subject of the relevant agreement, program, order or
contract;

     

    (d)           Liens
arising in connection with Production Payments and Reserve Sales;
and

     

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

     

    “Permitted Business
Investments” means Investments and expenditures made in the ordinary
course of, and of a nature that is or shall have become customary in, the Oil
and Gas Business as a means of actively engaging therein through agreements,
transactions, interests or arrangements that permit one to share risks or costs,
comply with regulatory requirements regarding local ownership or satisfy other
objectives customarily achieved through the conduct of Oil and Gas Business
jointly with third parties, including:

     

    (a)           ownership
interests in oil and gas properties or gathering, transportation, processing,
storage or related systems; and

     

    (b)           Investments
and expenditures in the form of or pursuant to operating agreements, processing
agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling
arrangements, joint bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or limited) and other
similar agreements (including for limited liability companies) with third
parties, excluding, however, Investments in corporations other than Restricted
Subsidiaries.

     

    “Permitted Hedging Agreements”
means:

     

    (a)           Exchange
Rate Contracts and Oil and Gas Hedging Contracts; and

     

    (b)           Interest
Rate Protection Agreements but only to the extent that the stated aggregate
notional amount thereunder does not exceed 100% of the aggregate principal
amount of the Indebtedness of the Company or a Restricted Subsidiary covered by
such Interest Rate Protection Agreements at the time such agreements were
entered into.

     

    “Permitted Indebtedness” means
any and all of the following:

     

    (a)           Indebtedness
arising under this Indenture with respect to the Original 87⁄8% Notes and any
Subsidiary Guaranties relating thereto;

     

    (b)           Indebtedness
under Bank Credit Facilities, provided that the aggregate principal amount of
all Indebtedness under Bank Credit Facilities, at any one time outstanding does
not exceed the greater of:

     

    (1)           $300.0
million and

     


    
      
         


      

      
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    (2)           an
amount equal to the sum of:

     

    (A)           $150.0
million, and

     

    (B)           25%
of Adjusted Consolidated Net Tangible Assets determined as of the date of
Incurrence of such Indebtedness,

     

    and, in
the case of either (1) or (2), plus all interest and fees and other obligations
thereunder and any Guarantee of such Indebtedness;

     

    (c)           Indebtedness
of the Company owing to and held by any Wholly Owned Subsidiary and Indebtedness
of a Restricted Subsidiary owing to and held by the Company or any Wholly Owned
Subsidiary; provided, however, that any subsequent issue or transfer of Capital
Stock or other event that results in any such Wholly Owned Subsidiary ceasing to
be a Wholly Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer
thereof;

     

    (d)           Indebtedness
in respect of bid, performance, reimbursement or surety obligations issued by or
for the account of the Company or any Restricted Subsidiary in the ordinary
course of business, including Guarantees and letters of credit functioning as or
supporting such bid, performance, reimbursement or surety obligations (in each
case other than for an obligation for money borrowed);

     

    (e)           Indebtedness
under Permitted Hedging Agreements;

     

    (f)           in-kind
obligations relating to oil or gas balancing positions arising in the ordinary
course of business;

     

    (g)           Indebtedness
outstanding on the Issue Date not otherwise permitted in clauses (a) through (f)
above;

     

    (h)           Non-recourse
Purchase Money Indebtedness;

     

    (i)           Indebtedness
not otherwise permitted to be Incurred pursuant to this definition (excluding
any Indebtedness Incurred pursuant to clause (a) of Section 4.11), provided that
the aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i), together with all Indebtedness Incurred pursuant to clause (j) of
this definition in respect of Indebtedness previously Incurred pursuant to this
clause (i), at any one time outstanding does not exceed the greater of (1) $50.0
million and (2) 2.0% of Adjusted Consolidated Net Tangible Assets determined as
of the date of Incurrence of such Indebtedness;

     

    (j)           Indebtedness
Incurred in exchange for, or the proceeds of which are used to
refinance:

     

    (1)           Indebtedness
referred to in clauses (a), (g), (h), (i) and (l) of this definition (including
Indebtedness previously Incurred pursuant to this clause (j)), and

     


    
      
         


      

      
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    (2)           Indebtedness
Incurred pursuant to clause (a) of Section 4.11,

     

    provided that, in the case of
each of the foregoing clauses (1) and (2), such Indebtedness is Permitted
Refinancing Indebtedness;

     

    (k)           Indebtedness
consisting of obligations in respect of purchase price adjustments, indemnities
or Guarantees of the same or similar matters in connection with the acquisition
or disposition of Property; and

     

    (l)           Acquired
Debt Incurred in connection with a transaction meeting either one of the
financial tests set forth in clause (d) of Section 10.01.

     

    “Permitted Investments” means
any and all of the following:

     

    (a)           Permitted
Short-Term Investments;

     

    (b)           Investments
in property, plant and equipment used in the ordinary course of business and
Permitted Business Investments;

     

    (c)           Investments
by any Restricted Subsidiary in the Company;

     

    (d)           Investments
by the Company or any Restricted Subsidiary in any Restricted
Subsidiary;

     

    (e)           Investments
by the Company or any Restricted Subsidiary:

     

    (1)           in
any Person that will, upon the making of such Investment, become a Restricted
Subsidiary, or

     

    (2)           if
as a result of such Investment such Person is merged or consolidated with or
into, or transfers or conveys all or substantially all its Property to, the
Company or a Restricted Subsidiary;

     

    (f)           Investments
in the form of securities received from Asset Sales, provided that such Asset
Sales are made in compliance with Section 4.14;

     

    (g)           Investments
in negotiable instruments held for collection; lease, utility and other similar
deposits; and stock, obligations or other securities received in settlement of
debts (including under any bankruptcy or other similar proceeding) owing to the
Company or any of its Restricted Subsidiaries as a result of foreclosure,
perfection or enforcement of any Liens or Indebtedness, in each of the foregoing
cases in the ordinary course of business of the Company or such Restricted
Subsidiary;

     

    (h)           relocation
allowances for, and advances and loans in compliance with the Sarbanes-Oxley Act
of 2002 to, officers, directors and employees of the Company or any of its
Restricted Subsidiaries made in the ordinary course of business, provided such
items do not exceed in the aggregate $2.0 million at any one time
outstanding;

     


    
      
         


      

      
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    (i)           Investments
intended to promote the Company’s strategic objectives in the Oil and Gas
Business in an amount not to exceed 6.0% of Adjusted Consolidated Net Tangible
Assets (determined as of the date of the making of any such Investment) at any
one time outstanding, which Investments shall be deemed to be no longer
outstanding only to the extent of dividends, repayments of loans or advances or
other transfers of Property or returns of capital received by the Company or any
Restricted Subsidiary from such Persons, provided that, for purposes of Section
4.12 the receiving of such amounts by the Company or its Restricted Subsidiaries
does not increase the amount of Restricted Payments that the Company and its
Restricted Subsidiaries may make pursuant to Section 4.12(c)(5)(A);

     

    (j)           Investments
made pursuant to Permitted Hedging Agreements of the Company and its Restricted
Subsidiaries; and

     

    (k)           Investments
pursuant to any agreement or obligation of the Company or any of its Restricted
Subsidiaries as in effect on the Issue Date (other than Investments described in
clauses (a) through (j) above), provided that Investments made pursuant to this
clause (k) shall be included in the calculation of Restricted
Payments.

     

    “Permitted Liens” means any
and all of the following:

     

    (a)           Liens
on any Property of the Company and any Subsidiary Guarantor securing
Indebtedness and other obligations under Bank Credit Facilities that are
permitted to be Incurred by clause (b) of the definition of Permitted
Indebtedness;

     

    (b)           Liens
existing as of the Issue Date;

     

    (c)           Liens
securing the 87⁄8% Notes, any Subsidiary Guaranties and other obligations arising
under this Indenture;

     

    (d)           any
Lien existing on any Property of a Person at the time such Person is merged or
consolidated with or into the Company or a Restricted Subsidiary or becomes a
Restricted Subsidiary (and not incurred in anticipation of or in connection with
such transaction), provided that such Liens are not extended to other Property
of the Company or the Restricted Subsidiaries;

     

    (e)           any
Lien existing on any Property at the time of the acquisition thereof (and not
incurred in anticipation of or in connection with such transaction), provided
that such Lien is not extended to other Property of the Company or the
Restricted Subsidiaries;

     

    (f)           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:

     

    (1)           easements,
rights of way and similar encumbrances,

     

    (2)           rights
or title of lessors under leases (other than Capital Lease
Obligations),

     


    
      
         


      

      
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    (3)           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,

     

    (4)           Liens
imposed by law, including Liens under workers’ compensation or similar
legislation and mechanics’, carriers’, warehousemen’s, materialmen’s, suppliers’
and vendors’ Liens,

     

    (5)           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

     

    (6)           Oil
and Gas Liens,

     

    in each
case that 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);

     

    (g)           Liens
for taxes, assessments and governmental charges not yet due or the validity of
which is 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;

     

    (h)           Liens
incurred to secure appeal bonds and judgment and attachment Liens, in each case
in connection with litigation or legal proceedings that are being contested in
good faith by appropriate proceedings so long as reserves have been established
to the extent required by GAAP as in effect at such time and so long as such
Liens do not encumber assets by an aggregate amount (together with the amount of
any unstayed judgments against the Company or any Restricted Subsidiary but
excluding any such Liens to the extent securing insured or indemnified judgments
or orders) in excess of $20.0 million;

     

    (i)           Liens
securing Permitted Hedging Agreements of the Company and its Restricted
Subsidiaries;

     

    (j)           Liens
securing Capital Lease Obligations, provided that such Capital Lease Obligations
are permitted under Section 4.11 and the Liens attach only to the Property
acquired with the proceeds of such Capital Lease Obligations;

     

    (k)           Liens
securing Non-recourse Purchase Money Indebtedness granted in connection with the
acquisition by the Company or any Restricted Subsidiary in the ordinary course
of business of fixed assets used in the Oil and Gas Business (including office
buildings and other real property used by the Company or such Subsidiary
Guarantor in conducting its operations), provided that:

     

    (1)           such
Liens attach only to the fixed assets acquired with the proceeds of such
Non-recourse Purchase Money Indebtedness, and

     


    
      
         


      

      
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    (2)           such
Non-recourse Purchase Money Indebtedness is not in excess of the purchase price
of such fixed assets;

     

    (l)           Liens
resulting from the deposit of funds or evidences of Indebtedness in trust for
the purpose of decreasing or legally defeasing Indebtedness of the Company or
any of its Subsidiaries so long as such deposit of funds is permitted under
Section 4.12;

     

    (m)           Liens
resulting from a pledge of Capital Stock of a Person that is not a Restricted
Subsidiary to secure obligations of such Person and any refinancings
thereof;

     

    (n)           Liens
to secure any permitted extension, renewal, refinancing, refunding or exchange
(or successive extensions, renewals, refinancings, refundings or exchanges), in
whole or in part, of or for any Indebtedness secured by Liens referred to in
clauses (a), (b), (c), (d), (i) and (j) above; provided, however,
that:

     

    (1)           such
new Lien shall be limited to all or part of the same Property (including future
improvements thereon and accessions thereto) subject to the original Lien,
and

     

    (2)           the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of:

     

    (A)           the
outstanding principal amount or, if greater, the committed amount of the
Indebtedness secured by such original Lien immediately prior to such extension,
renewal, refinancing, refunding or exchange, and

     

    (B)           an
amount necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension, renewal or replacement;

     

    (o)           Liens
in favor of the Company or a Restricted Subsidiary; and

     

    (p)           Liens
not otherwise permitted by clauses (a) through (o) above incurred in the
ordinary course of business of the Company and its Restricted Subsidiaries and
encumbering Property having an aggregate Fair Market Value not in excess of the
greater of (1) $10.0 million and (2) 0.5% of Adjusted Consolidated Net Tangible
Assets as of the date of Incurrence of any such Lien.

     

    Notwithstanding
anything in this definition to the contrary, the term “Permitted Liens” does not
include Liens resulting from the creation, incurrence, issuance, assumption or
Guarantee of any Production Payments and Reserve Sales other than:

     

    (a)           any
such Liens existing as of the Issue Date;

     

    (b)           Production
Payments and Reserve Sales in connection with the acquisition of any Property
after the Issue Date, provided that any such Lien created in connection
therewith is created, incurred, issued, assumed or guaranteed in connection with
the financing of, and within 60 days after the acquisition of, such
Property;

     


    
      
         


      

      
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    (c)           Production
Payments and Reserve Sales, other than those described in clauses (a) and (b) of
this sentence, to the extent such Production Payments and Reserve Sales
constitute Asset Sales made pursuant to and in compliance with Section 4.14;
and

     

    (d)           incentive
compensation programs for geologists, geophysicists and other providers of
technical services to the Company or a Restricted Subsidiary;

     

    provided, however, that, in
the case of the immediately foregoing clauses (a), (b), (c) and (d), any Lien
created in connection with any such Production Payments and Reserve Sales shall
be limited to the Property that is the subject of such Product Payments and
Reserve Sales.

     

    “Permitted Refinancing
Indebtedness” means Indebtedness (“New Indebtedness”) Incurred in
exchange for, or proceeds of which are used to refinance, other Indebtedness
(“Old Indebtedness”); provided, however,
that:

     

    (a)           such
New Indebtedness is in an aggregate principal amount not in excess of the sum
of:

     

    (1)           the
aggregate principal amount then outstanding of the Old Indebtedness (or, if such
Old Indebtedness provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination), and

     

    (2)           an
amount necessary to pay any fees and expenses, including premiums, related to
such exchange or refinancing;

     

    (b)           such
New Indebtedness has a Stated Maturity no earlier than the Stated Maturity of
the Old Indebtedness;

     

    (c)           such
New Indebtedness has an Average Life at the time such New Indebtedness is
Incurred that is equal to or greater than the Average Life of the Old
Indebtedness at such time;

     

    (d)           such
New Indebtedness is subordinated in right of payment to the 87⁄8% Notes (or, if
applicable, the Subsidiary Guaranties) to at least the same extent, if any, as
the Old Indebtedness; and

     

    (e)           if
such Old Indebtedness is Non-recourse Purchase Money Indebtedness or
Indebtedness that refinanced Non-recourse Purchase Money Indebtedness, such New
Indebtedness satisfies clauses (a) and (b) of the definition of “Non-recourse
Purchase Money Indebtedness.”

     

    “Permitted Short-Term
Investments” means:

     

    (a)           Investments
in U.S.  Government Obligations maturing within one year of the date
of acquisition thereof;

     


    
      
         


      

      
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    (b)           Investments
in demand accounts, time deposit accounts, certificates of deposit, bankers’
acceptances and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company that is organized under
the laws of the United States of America or any State thereof or the District of
Columbia that is a member of the Federal Reserve System having capital, surplus
and undivided profits aggregating in excess of $500.0 million and whose
long-term Indebtedness is rated “A” (or higher) according to
Moody’s;

     

    (c)           Investments
in deposits available for withdrawal on demand with any commercial bank that is
organized under the laws of any country in which the Company or any Restricted
Subsidiary maintains an office or is engaged in the Oil and Gas Business,
provided that:

     

    (1)           all
such deposits have been made in such accounts in the ordinary course of
business, and

     

    (2)           such
deposits do not at any one time exceed $15.0 million in the
aggregate;

     

    (d)           repurchase
and reverse repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) entered into with a
bank meeting the qualifications described in clause (b);

     

    (e)           Investments
in commercial paper or notes, maturing not more than one year after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
State thereof or the District of Columbia with a short-term rating at the time
as of which any Investment therein is made of “P-1” (or higher) according to
Moody’s or “A-1” (or higher) according to S&P or a long-term rating at the
time as of which any Investment is made of “A3” (or higher) according to Moody’s
or “A-” (or higher) according to S&P;

     

    (f)           Investments
in any money market mutual fund having assets in excess of $250.0 million all of
which consist of other obligations of the types described in clauses (a), (b),
(d) and (e) hereof; and

     

    (g)           Investments
in asset-backed securities maturing within one year of the date of acquisition
thereof with a long-term rating at the time as of which any Investment therein
is made of “A3” (or higher) according to Moody’s or “A-” (or higher) according
to S&P.

     

    “Person” means any individual,
corporation, partnership, joint venture, limited liability company, unlimited
liability company, trust, estate, unincorporated organization or government or
any agency or political subdivision thereof.

     

    “Preferred Stock” of any
Person means Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.

     


    
      
         


      

      
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    “Preferred Stock Dividends”
means all dividends with respect to Preferred Stock of Restricted Subsidiaries
held by Persons other than the Company or a Wholly Owned
Subsidiary.  The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income rate (expressed as a decimal number between 1 and 0)
then applicable to the issuer of such Preferred Stock.

     

    “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,
production payment (whether volumetric or dollar denominated), partnership or
other interest in oil and 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 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 Oil and Gas
Business, including any such grants or transfers pursuant to 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.

     

    “Property” means, with respect
to any Person, any interest of such Person in any kind of property or asset,
whether real, personal, or mixed, or tangible or intangible, including Capital
Stock and other securities issued by any other Person (but excluding Capital
Stock or other securities issued by such first mentioned Person).

     

    “Quotation Agent” means the
Reference Treasury Dealer selected by the Trustee after consultation with the
Company.

     

    “Rating Category”
means:

     

    (1)           with
respect to S&P, any of the following categories:  AAA, AA, A, BBB,
BB, B, CCC, CC, C and D (or equivalent successor categories); and

     

    (2)           with
respect to Moody’s, any of the following categories:  Aaa, Aa, A, Baa,
Ba, B, Caa, Ca, C and D (or equivalent successor categories).

     

    “Rating Decline” means a
decrease in the rating of the 87⁄8% Notes by either Moody’s or S&P by one or
more gradations (including gradations within Rating Categories as well as
between Rating Categories).  In determining whether the rating of the
87⁄8% Notes has decreased by one or more gradations, gradations within Rating
Categories, namely + or – for S&P, and 1, 2, and 3 for Moody’s, will be
taken into account; for example, in the case of S&P, a rating decline either
from BB+ to BB or BB– to B+ will constitute a decrease of one
gradation.

     

    “Reference Date” means April
1, 2004.

     

    “Reference Treasury Dealer”
means J.P.Morgan Securities Inc. and its successors and assigns and two other
nationally recognized investment banking firms selected by the Company, each of
which is a primary U.S. Government securities dealer.

     


    
      
         


      

      
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    “Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue, expressed in each case as a percentage
of its principal amount, quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City Time, on the third Business Day
immediately preceding such redemption date.

     

    “Restricted Payment”
means:

     

    (a)           a
dividend or other distribution declared or paid on the Capital Stock of the
Company or to the Company’s shareholders (other than dividends, distributions or
payments made solely in Capital Stock (other than Disqualified Stock of the
Company) of the Company or in options, warrants or other rights to purchase or
acquire Capital Stock (other than Disqualified Stock)), or declared and paid to
any Person other than the Company or any of its Restricted Subsidiaries (and, if
such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the other
shareholders of such Restricted Subsidiary on a pro rata basis or on a basis
that results in the receipt by the Company or a Restricted Subsidiary of
dividends or distributions of greater value than it would receive on a pro rata
basis) on the Capital Stock of any Restricted Subsidiary;

     

    (b)           a
payment made by the Company or any of its Restricted Subsidiaries (other than to
the Company or any Restricted Subsidiary) to purchase, redeem, acquire or retire
any Capital Stock, or any options, warrants or other rights to acquire Capital
Stock, of the Company or of a Restricted Subsidiary;

     

    (c)           a
payment made by the Company or any of its Restricted Subsidiaries to redeem,
repurchase, legally defease or otherwise acquire or retire for value (including
pursuant to mandatory repurchase covenants), prior to any scheduled maturity,
scheduled sinking fund or scheduled mandatory redemption, any Subordinated
Indebtedness of the Company or a Guarantor, provided that this clause (c) shall
not include any such payment with respect to:

     

    (1)           any
such Subordinated Indebtedness to the extent of Excess Proceeds (as defined in
Section 4.14) remaining after compliance with Section 4.14 and to the extent
required by this Indenture or other agreement or instrument pursuant to which
such Subordinated Indebtedness was issued, or

     

    (2)           the
purchase, repurchase or other acquisition of any such subordinated Indebtedness
purchased in anticipation of satisfying a scheduled maturity, scheduled sinking
fund or scheduled mandatory redemption, in each case due within one year of the
date of acquisition; or

     

    (d)           an
Investment (other than a Permitted Investment) by the Company or a Restricted
Subsidiary in any Person.

     

    “Restricted Subsidiary” means
any Subsidiary of the Company that has not been designated an Unrestricted
Subsidiary pursuant Section 4.19.

     

    “87⁄8% Notes” means the 87⁄8%
Senior Notes due 2020 of the Company.

     


    
      
         


      

      
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    “S&P” means Standard &
Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its
successors.

     

    “Sale and Leaseback
Transaction” means, with respect to any Person, any direct or indirect
arrangement (excluding, however, any such arrangement between such Person and a
Wholly Owned Subsidiary of such Person or between one or more Wholly Owned
Subsidiaries of such Person) pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.

     

    “SEC” means the Securities and
Exchange Commission.

     

    “Senior Indebtedness” when
used with respect to the Company means the obligations of the Company with
respect to Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter Incurred, and any renewal, refunding, refinancing, replacement or
extension thereof, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall be subordinate in
right of payment to the 87⁄8% Notes; provided, however, that Senior Indebtedness
of the Company shall not include:

     

    (a)           Indebtedness
of the Company to a Subsidiary of the Company;

     

    (b)           Indebtedness
Incurred in violation of this Indenture;

     

    (c)           amounts
payable or any other Indebtedness to employees of the Company or any Subsidiary
of the Company;

     

    (d)           any
Indebtedness of the Company that, when Incurred and without regard to any
election under Section 1111(b) of the United States Bankruptcy Code, was without
recourse to the Company;

     

    (e)           Subordinated
Indebtedness of the Company;

     

    (f)           obligations
with respect to any Capital Stock of the Company; and

     

    (g)           in-kind
obligations relating to net oil and gas balancing positions.

     

    “Senior Indebtedness” of any
Subsidiary Guarantor has a correlative meaning.

     

    “Senior Indebtedness Offer”
means an offer by us or a Subsidiary Guarantor to purchase all or a portion of
Senior Indebtedness to the extent required by the indenture or other agreement
or instrument pursuant to which such Senior Indebtedness was
issued.

     

    “Significant Subsidiary”
means, at any date of determination, any Restricted Subsidiary that would be a
“Significant Subsidiary” of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

     


    
      
         


      

      
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    “Stated Maturity” when used
with respect to any security or any installment of principal thereof or interest
thereon, means the date specified in such security as the fixed date on which
the principal of such security or such installment of principal or interest is
due and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency unless such
contingency has occurred).

     

    “Subordinated Indebtedness”
means Indebtedness of the Company (or a Subsidiary Guarantor) that is
subordinated or junior in right of payment to the 87⁄8% Notes (or a Subsidiary
Guaranty, as appropriate) pursuant to a written agreement to that
effect.

     

    “Subsidiary” of a Person
means:

     

    (a)           another
Person that is a corporation a majority of whose Voting Stock is at the time,
directly or indirectly, owned or controlled by:

     

    (1)           the
first Person,

     

    (2)           the
first Person and one or more of its Subsidiaries, or

     

    (3)           one
or more of the first Person’s Subsidiaries; or

     

    (b)           another
Person that is not a corporation (x) at least 50% of the Capital Stock of which,
and (y) the power to elect or direct the election of a majority of the directors
or other governing body of which are controlled by Persons referred to in clause
(1), (2) or (3) above.

     

    “Subsidiary Guarantors” means,
unless released from their Subsidiary Guaranties as permitted by this Indenture,
(i) Swift Energy Operating, LLC, (ii) any Restricted Subsidiary that becomes a
guarantor of the 87⁄8% Notes in compliance with the provisions of this Indenture
and executes a supplemental indenture agreeing to be bound by the terms of this
Indenture, and (iii) their respective successors.

     

    “Subsidiary Guaranty” means an
unconditional senior guaranty of the 87⁄8% Notes given by any Restricted
Subsidiary pursuant to the terms of this Indenture.

     

    “Trade Accounts Payable” means
accounts payable or other obligations of the Company or any Restricted
Subsidiary to trade creditors created or assumed by the Company or such
Restricted Subsidiary in the ordinary course of business in connection with the
obtaining of goods or services.

     

    “Unrestricted Subsidiary”
means:

     

    (a)           each
Subsidiary of the Company that the Company has designated pursuant to Section
4.19 as an Unrestricted Subsidiary; and

     

    (b)           any
Subsidiary of an Unrestricted Subsidiary.

     


    
      
         


      

      
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    “U.S. Government Obligations”
means securities that are:

     

    (a)           direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged; or

     

    (b)           obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America

     

    that, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian, with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the holder of such depository receipt; provided, however, that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment or principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.

     

    “Volumetric Production
Payments” means 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
means Capital Stock of such Person that ordinarily has voting power for the
election of directors (or persons performing similar functions) of such Person
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.

     

    “Wholly Owned Subsidiary”
means, at any time, a Restricted Subsidiary of the Company all the Voting Stock
of which (other than directors’ qualifying shares) is at such time owned,
directly or indirectly, by the Company and its other Wholly Owned
Subsidiaries.

     

    SECTION
3.                      Amendments to Articles II
and III of the Original Indenture

     

    (a)           The
fourth paragraph of Section 2.07(b) of the Original Indenture is hereby amended
to read as follows:

     

    “The
Company shall not be required (a) to issue, register the transfer of or exchange
any Debt Securities for a period beginning at the opening of business 15 days
before any selection of Debt Securities of that series of like tenor to be
redeemed and ending at the closing of business on the day of that selection or
(b) to register the transfer of or exchange any Debt Securities selected called
or being called for redemption.”

     

    (b)           The
second paragraph of Section 3.02 of the Original Indenture is amended by adding
the words “(or, if the redemption price is not then determinable, the manner in
which it will be determined)” immediately after the words “are to be redeemed”
in the second line thereof.

     


    
      
         


      

      
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    (c)           The
fourth paragraph of Section 3.02 of the Original Indenture is amended in its
entirety to read as follows:

     

    “At or
prior to 11:00 a.m., New York City time, on the redemption date for any Debt
Securities, the Company shall deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) an amount of money in the Currency in which such Debt Securities are
denominated (except as provided pursuant to Section 2.03) sufficient to pay the
redemption price of and accrued interest on (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) such Registered Securities or any portions thereof that
are to be redeemed on that date.”

     

    (d)           The
first sentence of the fifth paragraph of Section 3.02 of the Original Indenture
is amended in its entirety with respect to the 87⁄8% Notes to read as
follows:

     

    “If less
than all the 87⁄8% Notes are to be redeemed at any time, selection of 87⁄8% Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the 87⁄8% Notes
are listed, or, if the 87⁄8% Notes are not so listed, on a pro rata
basis.”

     

    (e)           The
first paragraph of Section 3.03 of the Original Indenture is amended in its
entirety to read as follows:

     

    “If
notice of redemption has been given as provided in Section 3.02, the Debt
Securities or portions of Debt Securities of the series with respect to which
such notice has been given shall become due and payable on the date and at the
Place or Places of Payment stated in such notice at the applicable redemption
price, together with any interest accrued to the date fixed for redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date that is on or prior to
the date of redemption), and on and after said date (unless the Company shall
default in the payment of such Debt Securities at the applicable redemption
price, together with any interest accrued to said date) the interest on the Debt
Securities or portions of Debt Securities of any series so called for redemption
shall cease to accrue and any original issue discount in the case of Original
Issue Discount Debt Securities shall cease to accrue.  On presentation
and surrender of such Debt Securities at the Place or Places of Payment in said
notice specified, the said Debt Securities or the specified portions thereof
shall be paid and redeemed by the Company at the applicable redemption price,
together with any interest accrued thereon to the date fixed for
redemption.”

     

    (f)           Article
III of the Original Indenture is amended with respect to the 87⁄8% Notes by adding
Section 3.06 and Section 3.07 as follows:

     

    “SECTION
3.06.  Optional
Redemption.  Except as set forth in this Section 3.06 or in the
final paragraph of Section 4.20, the 87⁄8% Notes will not be

     


    
      
         


      

      
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    redeemable
at the option of the Company prior to their Stated Maturity.  On or
after January 15, 2015, the Company may redeem all or any portion of the
87⁄8% Notes, upon no less than 30 nor more than 60 days’ prior notice, at the
redemption prices set forth below, plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment
date).  The following prices are for 87⁄8% Notes redeemed during the
12-month period commencing on January 15 of the years set forth below, and
are expressed as percentages of principal amount:

     

    
      	
              
                Year

              

            	
              
                Redemption
      Price

              

            
	 
      	
              2015

            	
              104.438%

            
	 
      	
              2016

            	
              102.958%

            
	 
      	
              2017

            	
              101.479%

            
	 
      	
              2018
      and thereafter

            	
              100.000%

            


    

    


     

    The
Company may on any one or more occasions prior to January 15, 2015, redeem
up to 35% of the aggregate principal amount of the 87⁄8% Notes originally issued
with the net proceeds of one or more Equity Offerings at a redemption price of
108.875% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of redemption, subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date, provided that at
least 65% of the aggregate principal amount of the 87⁄8% Notes originally issued
remains Outstanding after the occurrence of such redemption.  Any such
redemption shall occur not later than 90 days after the date of the closing of
any such Equity Offering upon not less than 30 nor more than 60 days’ prior
notice.  The redemption shall be made in accordance with procedures
set forth in this Indenture.

     

    At any
time prior to January 15, 2015, the Company will be entitled, at its
option, to redeem all or any portion of the 87⁄8% Notes at a redemption price
equal to 100% of the principal amount of the 87⁄8% Notes plus the Applicable
Premium as of, and accrued and unpaid interest to, the redemption date (subject
to the right of Holders on the relevant record date to receive interest due on
the relevant interest payment date).  Notice of such redemption must
be mailed by first-class mail to each Holder’s registered address, not less than
30 nor more than 60 days prior to the redemption date.”

     

    SECTION
3.07.  No
Mandatory Sinking Fund.  There will be no mandatory sinking
fund payments for the 87⁄8% Notes.

     

    SECTION
4.                      Amendments to Article IV of
the Original Indenture

     

    (a)           Sections
4.07, 4.08 and 4.09 of the Original Indenture shall not be applicable to the 87⁄8%
Notes.

     


    
      
         


      

      
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    (b)           Section
4.10 of the Original Indenture is amended in its entirety with respect to the
87⁄8% Notes to read as follows:

     

    “SECTION
4.10.  Limitation on
Liens.  The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into, create, Incur,
assume or suffer to exist any Lien, other than Permitted Liens, on or with
respect to any Property of the Company or such Restricted Subsidiary, whether
owned on the Issue Date or acquired after the Issue Date, or any interest
therein or any income or profits therefrom, unless the 87⁄8% Notes or any
Subsidiary Guaranty of such Restricted Subsidiary are secured equally and
ratably with, or prior to, any and all other obligations secured by such
Lien.”

     

    (c)           Article
IV of the Original Indenture is amended with respect to the 87⁄8% Notes by adding
Sections 4.11 through 4.20, inclusive, as follows:

     

    “SECTION
4.11.  Limitation on
Indebtedness.  The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness
unless, after giving pro forma effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds thereof, no Default or Event of
Default would occur as a consequence of, or be continuing following, such
Incurrence and application and either:

     

    (a)           after
giving pro forma effect to such Incurrence and application, the Consolidated
Interest Coverage Ratio would exceed 2.25 to 1.0; or

     

    (b)           such
Indebtedness is Permitted Indebtedness.

     

    For
purposes of determining compliance with this Section 4.11, 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 (a) through (l) of the
definition of Permitted Indebtedness, or is entitled to be Incurred pursuant to
clause (a) of this Section 4.11, the Company will be permitted to classify such
item of Indebtedness on the date of its Incurrence, or later reclassify all or a
portion of such item of Indebtedness, in any manner that complies with this
Section 4.11.

     

    SECTION
4.12.  Limitation on Restricted
Payments.  The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment
if, at the time of and after giving effect to the proposed Restricted
Payment:

     

    (a)           any
Default or Event of Default would have occurred and be continuing;

     

    (b)           the
Company could not Incur at least $1.00 of additional Indebtedness pursuant to
clause (a) of Section 4.11; or

     


    
      
         


      

      
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    (c)           the
aggregate amount expended or declared for all Restricted Payments from the
Reference Date would exceed the sum of (without duplication):

     

    (1)           50%
of the aggregate Consolidated Net Income of the Company accrued during the
period (treated as one accounting period) commencing on the Reference Date and
ending on the last day of the fiscal quarter immediately preceding the date of
such proposed Restricted Payment (or, if such aggregate Consolidated Net Income
shall be a loss, minus 100% of such loss),

     

    (2)           the
aggregate net cash proceeds, or the Fair Market Value of Property other than
cash (provided that, in the case of Property that is Capital Stock, such Capital
Stock falls within the meaning of clause (b) of the definition of “Additional
Assets”), received by the Company from the issuance or sale (other than to a
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees) by the Company of its Capital Stock (other than Disqualified Stock)
after the Reference Date, net of attorneys’ fees, accountants’ fees,
underwriters’ or placement agents’ fees, discounts or commissions and brokerage,
consultant and other fees actually Incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof,

     

    (3)           the
aggregate net cash proceeds, or the Fair Market Value of Property other than
cash, received by the Company as capital contributions to the Company (other
than from a Subsidiary of the Company) on or after the Reference
Date,

     

    (4)           the
aggregate net cash proceeds received by the Company from the issuance or sale
(other than to any Subsidiary of the Company or an employee stock ownership plan
or trust established by the Company or any such Subsidiary for the benefit of
their employees) on or after the Reference Date of convertible Indebtedness that
has been converted into or exchanged for Capital Stock (other than Disqualified
Stock) of the Company, together with the aggregate cash received by the Company
at the time of such conversion or exchange or received by the Company from any
conversion or exchange of convertible Indebtedness issued or sold (other than to
any Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees) prior to the Reference Date, excluding:

     

    (A)           any
such Indebtedness issued or sold to the Company or a Subsidiary of the Company
or an employee stock ownership plan or trust established by the Company or any
such Subsidiary for the benefit of their employees, and

     


    
      
         


      

      
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    (B)           the
aggregate amount of any cash or other Property distributed by the Company or any
Restricted Subsidiary upon any such conversion or exchange,

     

    (5)           to
the extent not otherwise included in the Company’s Consolidated Net Income, an
amount equal to the net reduction in Investments made by the Company and its
Restricted Subsidiaries subsequent to the Reference Date in any Person resulting
from:

     

    (A)           payments
of interest on debt, dividends, repayments of loans or advances or other
transfers or distributions of Property, in each case to the Company or any
Restricted Subsidiary from any Person other than the Company or a Restricted
Subsidiary, and in an amount not to exceed the book value of such Investments
previously made in such Person that were treated as Restricted Payments,
or

     

    (B)           the
designation of any Unrestricted Subsidiary as a Restricted Subsidiary, and in an
amount not to exceed the lesser of:

     

    (i)           the
book value of all Investments previously made in such Unrestricted Subsidiary
that were treated as Restricted Payments, and

     

    (ii)           the
Fair Market Value of the Company’s and its Restricted Subsidiaries’ interest in
such Unrestricted Subsidiary, and

     

    (6)           $30.0
million.

     

    
      	
               
      

            	
              The
      limitations set forth in the preceding paragraph will not prevent the
      Company or any Restricted Subsidiary from making the following Restricted
      Payments so long as, at the time thereof, no Default or Event of Default
      shall have occurred and be
continuing:

            


    

     

    (a)           the
payment of any dividend on Capital Stock of the Company or any Restricted
Subsidiary within 60 days after the declaration thereof, if at such declaration
date such dividend could have been paid in compliance with the preceding
paragraph;

     

    (b)           the
repurchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company or any of its Subsidiaries pursuant to the terms of
agreements (including employment agreements) or plans (including employee stock
ownership plans but excluding other plans to purchase such Capital Stock in open
market transactions, together with, in the case of employee stock ownership
plans, loans to or Investments therein in an amount sufficient to fund such
repurchase, redemption or other acquisition or retirement by such
plan)

     


    
      
         


      

      
        38

        
          

        

      

      
         


      

    


    approved
by the Company’s Board of Directors, including any such repurchase, redemption,
acquisition or retirement of shares of such Capital Stock that is deemed to
occur upon the exercise of stock options or vesting of restricted stock grants
or similar rights if such shares represent all or a portion of the exercise
price or are netted out or surrendered in connection with satisfying Federal
income tax obligations; provided, however, that the aggregate amount of such
repurchase, redemptions, acquisitions and retirements (but disregarding any
transaction that does not result in the payment of cash by the Company or any
Restricted Subsidiary to or on behalf of another Person) shall not exceed the
sum of:

     

    (1)             $7.5
million in any twelve-month period, and

     

    (2)             the
aggregate net proceeds, if any, received by the Company during such twelve-month
period from any issuance of such Capital Stock pursuant to such agreements or
plans;

     

    (c)           the
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Company or any Restricted Subsidiary, in exchange for, or out of
the aggregate net cash proceeds of, a substantially concurrent issuance and sale
(other than to a Subsidiary of the Company or an employee stock ownership plan
or trust established by the Company or any of its Subsidiaries, for the benefit
of their employees) of Capital Stock of the Company (other than Disqualified
Stock);

     

    (d)           the
purchase, redemption, legal defeasance, acquisition or retirement for value of
any Subordinated Indebtedness in exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of the Company or an employee stock ownership plan or trust established by the
Company or any such Subsidiary for the benefit of their employees);

     

    (e)           the
making of any principal payment on or the repurchase, redemption, legal
defeasance or other acquisition or retirement for value of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of a substantially
concurrent Incurrence (other than a sale to a Subsidiary of the Company) of (i)
any other Subordinated Indebtedness so long as such new Indebtedness is
Permitted Refinancing Indebtedness or (ii) with respect only to the Company’s
93⁄8% senior subordinated notes due 2012, Senior Indebtedness, so long as at the
time of and after giving effect to such Incurrence, the Company could Incur at
least $1.00 of Indebtedness pursuant to clause (a) of Section 4.11 of this
Indenture.

     

    (f)           loans,
in an aggregate principal amount at any one time outstanding of not more than
$2.0 million, made to officers, directors or employees of the Company or any
Restricted Subsidiary approved by the

     


    
      
         


      

      
        39

        
          

        

      

      
         


      

    


    Board of
Directors (or by a duly authorized officer) and in compliance with the
Sarbanes-Oxley Act of 2002, the net cash proceeds of which are used
solely:

     

    (1)           to
purchase common stock of the Company in connection with a restricted stock or
employee stock purchase plan, or to exercise stock options received pursuant to
an employee or director stock option plan or other incentive plan, in a
principal amount not to exceed the purchase price of such common stock or the
exercise price of such stock options, or

     

    (2)           to
refinance loans, together with accrued interest thereon, made pursuant to item
(1) of this clause (f).

     

    The
actions described in clauses (a) and (b) of this paragraph shall be included in
the calculation of the amount of Restricted Payments.  The actions
described in clauses (c), (d), (e) and (f) of this paragraph shall be excluded
in the calculation of the amount of Restricted Payments, provided that the net
cash proceeds from any issuance or sale of Capital Stock or Indebtedness of the
Company pursuant to such clause (c), (d) or (e) shall be excluded from any
calculations pursuant to clause (2), (3) or (4) under the immediately preceding
paragraph.

     

    SECTION
4.13.  [This Section is intentionally omitted.]

     

    SECTION
4.14.  Limitation on Asset
Sales.  The Company will not, and will not permit any
Restricted Subsidiary to, consummate any Asset Sale unless:

     

    (a)           the
Company or such 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 Property subject to such Asset Sale; and

     

    (b)           all
of the consideration paid to the Company or such Restricted Subsidiary in
connection with such Asset Sale is in the form of cash, Permitted Short-Term
Investments, Liquid Securities, Exchange Properties or the assumption by the
purchaser of liabilities of the Company (other than liabilities of the Company
that are by their terms subordinated to the 87⁄8% Notes) or liabilities of any
Subsidiary Guarantor that made such Asset Sale (other than liabilities of a
Subsidiary Guarantor that are by their terms subordinated to such Subsidiary
Guarantor’s Subsidiary Guaranty), in each case as a result of which the Company
and its remaining Restricted Subsidiaries are no longer liable for such
liabilities, such consideration being defined as “Permitted Consideration”;
provided, however, that the Company and its Restricted Subsidiaries shall be
permitted to receive Property other than Permitted Consideration, so long as the
aggregate Fair Market Value of all such Property other than Permitted
Consideration received from Asset Sales and held by the

     


    
      
         


      

      
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    Company
or any Restricted Subsidiary at any one time shall not exceed 10.0% of Adjusted
Consolidated Net Tangible Assets.

     

    The Net
Available Cash from Asset Sales by the Company or a Restricted Subsidiary may be
applied by the Company or such Restricted Subsidiary, to the extent the Company
or such Restricted Subsidiary elects (or is required by the terms of any Senior
Indebtedness of the Company or a Subsidiary Guarantor), to:

     

    (a)           prepay,
repay or purchase Senior Indebtedness of the Company or a Subsidiary Guarantor
(in each case excluding Indebtedness owed to the Company or an Affiliate of the
Company);

     

    (b)           to
reinvest in Additional Assets (including by means of an Investment in Additional
Assets by a Restricted Subsidiary with Net Available Cash received by the
Company or another Restricted Subsidiary);

     

    (c)           purchase
87⁄8% Notes or purchase both 87⁄8% Notes and one or more series or issues of other
Senior Indebtedness on a pro rata basis (excluding 87⁄8% Notes and Pari Passu
Indebtedness owed to the Company or any of its Affiliates) in accordance with
the next paragraph; or

     

    (d)           enter
into a bona fide binding contract with a Person other than an Affiliate of the
Company to apply the Net Available Cash pursuant to clause (b) above, provided
that such binding contract shall be treated as a permitted application of the
Net Available Cash from the date of such contract until the earlier
of

     

    (1)             the
date on which such reinvestment is consummated, and

     

    (2)             the
90th day following the expiration of the 365-day period referred to in the next
following sentence.

     

    Any Net
Available Cash from an Asset Sale not applied in accordance with the preceding
paragraph within 365 days from the date of such Asset Sale shall constitute
“Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $25.0
million, the Company will be required to make an offer (a “Prepayment Offer”) to
purchase 87⁄8% Notes having an aggregate principal amount equal to the aggregate
amount of Excess Proceeds at a purchase price equal to 100% of the principal
amount of such 87⁄8% Notes plus accrued and unpaid interest, if any, to the
Purchase Date (as defined) in accordance with the procedures (including
proration in the event of oversubscription) set forth in this Indenture, but, if
the terms of any other Senior Indebtedness require that a Senior Indebtedness
Offer be made contemporaneously with the Prepayment Offer, then the Excess
Proceeds shall be prorated between the Prepayment Offer and such Senior
Indebtedness Offer in accordance with the aggregate Outstanding principal
amounts of the 87⁄8% Notes and such other Senior Indebtedness, and the
aggregate

     


    
      
         


      

      
        41

        
          

        

      

      
         


      

    


    principal
amount of 87⁄8% Notes for which the Prepayment Offer is made shall be reduced
accordingly.  If the aggregate principal amount of 87⁄8% Notes tendered
by Holders thereof exceeds the amount of available Excess Proceeds, then such
Excess Proceeds will be allocated pro rata according to the principal amount of
the 87⁄8% Notes tendered and the Trustee will select the 87⁄8% Notes to be purchased
in accordance with this Indenture.  To the extent that any portion of
the amount of Excess Proceeds remains after compliance with the second sentence
of this paragraph and provided that all Holders of 87⁄8% Notes have been given the
opportunity to tender their 87⁄8% Notes for purchase as described in the following
paragraph in accordance with this Indenture, the Company and its Restricted
Subsidiaries may use such remaining amount for purposes permitted by this
Indenture and the amount of Excess Proceeds will be reset to zero.

     

    Within 30
days after the 365th day following the date of an Asset Sale, the Company shall,
if it is obligated to make an offer to purchase the 87⁄8% Notes pursuant to the
preceding paragraph, send a written Prepayment Offer notice, by first-class
mail, to the Holders of the 87⁄8% Notes (the “Prepayment Offer Notice”),
accompanied by such information regarding the Company and its Subsidiaries as
the Company believes will enable such Holders of the 87⁄8% Notes to make an
informed decision with respect to the Prepayment Offer.  The
Prepayment Offer Notice will state, among other things:

     

    (a)           that
the Company is offering to purchase 87⁄8% Notes pursuant to the provisions of this
Indenture;

     

    (b)           that
any 87⁄8% Note (or any portion thereof) accepted for payment (and duly paid on the
Purchase Date) pursuant to the Prepayment Offer shall cease to accrue interest
on the Purchase Date;

     

    (c)           that
any 87⁄8% Notes (or portions thereof) not properly tendered will continue to
accrue interest;

     

    (d)           the
purchase price and purchase date, which shall be, subject to any contrary
requirements of applicable law, no less than 30 days nor more than 60 days after
the date the Prepayment Offer Notice is mailed (the “Purchase
Date”);

     

    (e)           the
aggregate principal amount of 87⁄8% Notes to be purchased;

     

    (f)           a
description of the procedure that Holders of 87⁄8% Notes must follow in order to
tender their 87⁄8% Notes for payment; and

     

    (g)           all
other instructions and materials necessary to enable Holders to tender 87⁄8% Notes
pursuant to the Prepayment Offer.

     

    The
Company will comply, to the extent applicable, with the requirements of Section
14(e) under the Exchange Act and any other securities laws or

     


    
      
         


      

      
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    regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of 87⁄8% Notes as described above.  To the extent that
the provisions of any securities laws or regulations conflict with the
provisions relating to the Prepayment Offer, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations described above by virtue thereof.

     

    SECTION
4.15.  Covenant
Termination.  If at any time (a) the rating assigned to the 87⁄8%
Notes by each of S&P and Moody’s is an Investment Grade Rating and (b) no
Default has occurred and is continuing, the Company and its Restricted
Subsidiaries will no longer be subject to the covenants set forth in Sections
4.11, 4.12, 4.14, 4.16, 4.17 and 4.18, and clause (d) of Section
10.01.  After these certain covenants have terminated pursuant to this
Section 4.15, the Company may not designate any Subsidiary of the Company as an
Unrestricted Subsidiary.

     

    SECTION
4.16.  Limitation on Transactions
with Affiliates.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, conduct any business
or enter into any transaction or series of transactions (including the sale,
transfer, disposition, purchase, exchange or lease of Property, the making of
any Investment, the giving of any Guarantee or the rendering of any service)
with or for the benefit of any Affiliate of the Company (other than the Company
or a Wholly Owned Subsidiary), unless:

     

    (a)           such
transaction is set forth in writing;

     

    (b)           such
transaction or series of transactions is on terms no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm’s-length transaction with a Person that is not an Affiliate of
the Company or such Restricted Subsidiary; and

     

    (c)           with
respect to a transaction or series of transactions involving aggregate payments
by or to the Company or such Restricted Subsidiary having a Fair Market Value
equal to or in excess of:

     

    (1)             $15.0
million but less than $25.0 million, the Board of Directors of the Company
(including a majority of the disinterested members of such Board of Directors)
approves such transaction or series of transactions and certifies that such
transaction or series of transactions complies with clause (b) of this
paragraph, as evidenced by a certified resolution delivered to the Trustee,
or

     

    (2)             $25.0
million,

     

    (A)           the
Company receives from an independent, nationally recognized investment banking
firm or appraisal firm, in either case specializing or having a specialty in
the

     


    
      
         


      

      
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    type and
subject matter of the transaction (or series of transactions) at issue, a
written opinion that such transaction (or series of transactions) is fair, from
a financial point of view, to the Company or such Restricted Subsidiary,
and

     

    (B)           such
Board of Directors (including a majority of the disinterested members of the
Board of Directors of the Company) approves such transaction or series of
transactions and certifies that such transaction or series of transactions
complies with clause (b) of this paragraph, as evidenced by a certified
resolution delivered to the Trustee.

     

    The
preceding limitations of this Section 4.16 do not apply to:

     

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

     

    (b)           indemnities
of officers and directors of the Company or any Subsidiary consistent with such
Person’s charter, bylaws and applicable statutory provisions;

     

    (c)           any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and employee stock purchase and ownership plans approved by the Board of
Directors of the Company;

     

    (d)           loans
made in compliance with the Sarbanes-Oxley Act of 2002:

     

    (1)             to
officers, directors or employees of the Company or any Restricted Subsidiary
approved by the Board of Directors of the Company, the net proceeds of which are
used solely to purchase common stock of the Company in connection with a
restricted stock or employee stock purchase plan, or to exercise stock options
received pursuant to an employee or director stock option plan or other
incentive plan, in a principal amount not to exceed the purchase price of such
common stock or the exercise price of such stock options, or

     

    (2)             to
refinance loans, together with accrued interest thereon, made pursuant to this
clause (d);

     

    (e)           advances
and loans made in compliance with the Sarbanes-Oxley Act of 2002 to officers,
directors and employees of the Company or any Subsidiary in the ordinary course
of business (including, without

     


    
      
         


      

      
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    limitation,
non-cash loans for the purchase of joint interests in exploratory and
developmental oil and gas prospects or other similar ventures offered by the
Company), provided such loans and advances (excluding loans or advances made
pursuant to the preceding clause (d)) do not exceed $2.0 million at any one time
outstanding;

     

    (f)           any
Restricted Payment permitted to be paid pursuant to Section 4.12;

     

    (g)           any
transaction or series of transactions between the Company and one or more
Restricted Subsidiaries or between two or more Restricted Subsidiaries in the
ordinary course of business, provided that no more than 10% of the total voting
power of the Voting Stock of any such Restricted Subsidiary is owned by an
Affiliate of the Company (other than a Restricted Subsidiary); and

     

    (h)           any
transaction or series of transactions pursuant to any agreement or obligation of
the Company or any of its Restricted Subsidiaries in effect on the Issue
Date.

     

    SECTION
4.17.  Limitation on Restrictions
on Distributions from Restricted Subsidiaries.  The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the legal right of any Restricted
Subsidiary to:

     

    (a)           pay
dividends, in cash or otherwise, or make any other distributions on or in
respect of its Capital Stock, or pay any Indebtedness or other obligation owed,
to the Company or any other Restricted Subsidiary;

     

    (b)           make
loans or advances to the Company or any other Restricted Subsidiary;
or

     

    (c)           transfer
any of its Property to the Company or any other Restricted
Subsidiary.

     

    Such
limitation will not apply:

     

    (1)             with
respect to clauses (a), (b) and (c), to encumbrances and
restrictions:

     

    (A)           in
agreements and instruments (including any Bank Credit Facilities) as in effect
on the Issue Date,

     

    (B)           relating
to Indebtedness of a Restricted Subsidiary and existing at the time it became a
Restricted Subsidiary if such encumbrance or restriction was not

     


    
      
         


      

      
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    created
in anticipation of or in connection with the transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary, or

     

    (C)           that
result from the renewal, refinancing, extension or amendment of an agreement
that is the subject of clause (c)(1)(A) or (B) above or clause (c)(2)(A) or (B)
below, provided that such encumbrance or restriction is not materially less
favorable to the Holders of 87⁄8% Notes than those under or pursuant to the
agreement so renewed, refinanced, extended or amended, as determined in good
faith by the Board of Directors of the Company and,

     

    (2)             with
respect to clause (c) only, to:

     

    (A)           restrictions
pursuant to Liens permitted to be Incurred and secured without also securing the
87⁄8% Notes under Section 4.10 and that limit the right of the debtor to dispose
of the Property subject to such Lien,

     

    (B)           any
encumbrance or restriction applicable to Property at the time it is acquired by
the Company or a Restricted Subsidiary, so long as such encumbrance or
restriction relates solely to the Property so acquired and was not created in
anticipation of or in connection with such acquisition,

     

    (C)           customary
provisions restricting subletting or assignment of leases and customary
provisions in other agreements that restrict assignment of such agreements or
rights thereunder, and

     

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

     

    SECTION
4.18.  Future Subsidiary
Guarantors.  The Company shall cause each Restricted Subsidiary
(except an Exempt Foreign Subsidiary) that:

     

    (a)           Incurs
Indebtedness or issues Preferred Stock following the Issue Date; or

     

    (b)           has
Indebtedness or Preferred Stock outstanding on the date on which such Restricted
Subsidiary becomes a Restricted Subsidiary,

     

    to
execute and deliver to the Trustee a supplemental indenture providing for a
Subsidiary Guaranty pursuant to Section 14.06 at the time such Restricted
Subsidiary Incurs such Indebtedness or becomes a Restricted
Subsidiary;

     


    
      
         


      

      
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    provided,
however, that such Restricted Subsidiary shall not be required to deliver a
supplemental indenture providing for a Subsidiary Guaranty if the aggregate
amount of such Indebtedness or Preferred Stock, together with all other
Indebtedness and Preferred Stock then outstanding among Restricted Subsidiaries
(including Exempt Foreign Subsidiaries) that are not Subsidiary Guarantors, is
less than $10.0 million.

     

    Any
Subsidiary Guarantor that no longer has any outstanding Indebtedness or
Preferred Stock or that again qualifies as an Exempt Foreign Subsidiary shall be
released from and relieved of its obligations under its Subsidiary Guaranty upon
execution and delivery of a supplemental indenture in form satisfactory to the
Trustee.

     

    SECTION
4.19.  Restricted and Unrestricted
Subsidiaries.  Unless defined or designated as an Unrestricted
Subsidiary, any Person that becomes a Subsidiary of the Company or any of its
Restricted Subsidiaries shall be classified as a Restricted Subsidiary subject
to the provisions of the next paragraph.  The Company may designate a
Subsidiary (including a newly formed or newly acquired Subsidiary) of the
Company or any of its Restricted Subsidiaries as an Unrestricted Subsidiary
if:

     

    (a)           such
Subsidiary does not at such time own any Capital Stock or Indebtedness of, or
own or hold any Lien on any Property of, the Company or any other Restricted
Subsidiary;

     

    (b)           such
Subsidiary does not at such time have any Indebtedness or other obligations
that, if in default, would result (with the passage of time or notice or
otherwise) in a default on any Indebtedness of the Company or any Restricted
Subsidiary; and

     

    (c)           (1)           such
designation is effective immediately upon such Subsidiary becoming a Subsidiary
of the Company or of a Restricted Subsidiary,

     

    (2)             the
Subsidiary to be so designated has total assets of $1,000 or less,
or

     

    (3)             if
such Subsidiary has assets greater than $1,000, then such redesignation as an
Unrestricted Subsidiary is deemed to constitute a Restricted Payment in an
amount equal to the Fair Market Value of the Company’s direct and indirect
ownership interest in such Subsidiary, and such Restricted Payment would be
permitted to be made at the time of such designation under Section
4.12.

     

    Except as
provided in the immediately preceding sentence, no Restricted Subsidiary may be
designated as an Unrestricted Subsidiary.  The designation of an
Unrestricted Subsidiary or removal of such designation shall be made by
the

     


    
      
         


      

      
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    Board of
Directors of the Company or a committee thereof pursuant to a certified
resolution delivered to the Trustee and shall be effective as of the date
specified in the applicable certified resolution, which shall not be prior to
the date such certified resolution is delivered to the Trustee.  Any
Subsidiary Guarantor that is designated an Unrestricted Subsidiary in accordance
with the terms of this Section 4.19 shall be released from and relieved of its
obligations under its Subsidiary Guaranty upon execution and delivery of a
supplemental indenture in form satisfactory to the Trustee.

     

    SECTION
4.20.  Change of
Control.  Upon the occurrence of a Change of Control, each
Holder of 87⁄8% Notes shall have the right to require the Company to repurchase
all or any part (equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess thereof) of such Holder’s 87⁄8% Notes pursuant to the offer
described below (the “Change of Control Offer”) at a purchase price in cash (a
“Change of Control Payment”) equal to 101% of the principal amount of the 87⁄8%
Notes repurchased, plus accrued and unpaid interest, if any, to the date of
purchase, subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date.

     

    Within 30
days following any Change of Control, the Company shall:

     

    (a)           cause
a notice of the Change of Control Offer to be sent at least once to the Dow
Jones News Service or similar business news service in the United States;
and

     

    (b)           send,
by first-class mail, with a copy to the Trustee, to each Holder of 87⁄8% Notes, at
such Holder’s address appearing in the Debt Security Register, a notice stating,
among other things:

     

    (1)             that
a Change of Control has occurred and a Change of Control Offer is being made
pursuant to this Indenture and that all 87⁄8% Notes (or portions thereof) properly
tendered will be accepted for payment,

     

    (2)             the
Change of Control Payment and the purchase date, which shall be, subject to any
contrary requirements of applicable law, a business day no earlier than 30 days
nor later than 60 days from the date the Company mails such notice (the “Change
of Control Payment Date”),

     

    (3)             that
any 87⁄8% Note (or portion thereof) accepted for payment (and duly paid on the
Change of Control Payment Date) pursuant to the Change of Control Offer shall
cease to accrue interest on the Change of Control Payment Date,

     

    (4)             that
any 87⁄8% Note (or portions thereof) not properly tendered will continue to accrue
interest,

     


    
      
         


      

      
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    (5)             a
description of the transaction or transactions constituting the Change of
Control,

     

    (6)             the
procedures that the Holders of the 87⁄8% Notes must follow in order to tender
their 87⁄8% Notes (or portions thereof) for payment and the procedures that
Holders of 87⁄8% Notes must follow in order to withdraw an election to tender 87⁄8%
Notes (or portions thereof) for payment, and

     

    (7)             all
other instructions and materials necessary to enable Holders to tender 87⁄8% Notes
pursuant to the Change of Control Offer.

     

    The
Company will comply, to the extent applicable, with the requirements of Section
14(e) 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 purchase of 87⁄8% Notes pursuant to a Change of Control
Offer.  To the extent that the provisions of any securities laws or
regulations conflict with the provisions relating to the Change of Control
Offer, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.20 by virtue of such compliance.

     

    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
Section 4.20 applicable to a Change of Control Offer made by the Company and
purchases all 87⁄8% Notes validly tendered and not withdrawn under such Change of
Control Offer.

     

    The
provisions of this Section 4.20 related to the obligation of the Company to make
an offer to repurchase the Notes as a result of a Change of Control may be
waived or amended, at any time prior to the occurrence of such Change of
Control, with the consent (evidenced as provided in Section 8.01) of the Holders
of a majority in principal amount of the Notes.

     

    In the
event that Holders of not less than 90% of the aggregate principal amount of the
Outstanding 87⁄8% Notes accept a Change of Control Offer and the Company purchases
all of the 87⁄8% Notes held by such Holders, the Company will have the right, upon
not less than 30 nor more than 60 days’ prior notice, given not more than 30
days following the purchase pursuant to the Change of Control Offer referred to
above, to redeem all of the 87⁄8% Notes that remain Outstanding following such
purchase at a redemption price equal to the Change of Control Payment plus, to
the extent not included in the Change of Control Payment, accrued and unpaid
interest on the 87⁄8% Notes that remain Outstanding, to the date of redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).”

     


    
      
         


      

      
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    SECTION
5.                      Amendments to Article V of
the Original Indenture.  Section 5.03 of the Original Indenture
is amended in its entirety with respect to the 87⁄8% Notes to read as
follows:

     

    Notwithstanding
that the Company may not be subject to the reporting requirements of Sections 13
and 15(d) of the Exchange Act, the Company shall file with the SEC and provide
the Trustee and, upon their request, Holders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a United States corporation subject
to such Sections, such information, documents and reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections; provided, however, that the Company shall not
be so obligated to file such information, documents and reports with the SEC if
the SEC does not permit such filings.  To the extent such reports are
available to the public via the SEC’s EDGAR system, they will be deemed as being
provided to the Trustee on the date they become available.

     

    SECTION
6.                      Amendments to Article VI of
the Original Indenture

     

    (a)           Sections
6.01(a) and 6.01(b) of the Original Indenture are amended with respect to the
87⁄8% Notes by deleting in each the phrase “,whether or not such payment may have
been prohibited by Article XII, if applicable;”.

     

    (b)           Section
6.01(e) of the Original Indenture is amended with respect to the 87⁄8% Notes by
deleting the number “60” and substituting the number “30” in its
place.

     

    (c)           Section
6.01(f) of the Original Indenture is amended in its entirety with respect to the
87⁄8% Notes to read as follows: “(f) a default by the Company or any Restricted
Subsidiary under any Indebtedness for borrowed money in an aggregate amount
greater than $25.0 million (other than Non-recourse Purchase Money Indebtedness)
that results in acceleration of the maturity of such Indebtedness, or failure to
pay any such Indebtedness at maturity, if such Indebtedness is not discharged or
such acceleration is not rescinded or annulled within 30 days after written
notice as provided in this Indenture; or”.

     

    (d)           Sections
6.01(g) and 6.01(h) of the Original Indenture are amended with respect to the
87⁄8% Notes by deleting each reference to “Restricted Subsidiary” and “Restricted
Subsidiaries” therein and substituting “Significant Subsidiary” or “Significant
Subsidiaries”, respectively, in its place.

     

    (e)           Section
6.01 of the Original Indenture is amended with respect to the 87⁄8% Notes by
adding the following provisions after clause (i) of the first paragraph
thereof:

     

    “(j)           one
or more final judgments or orders by a court of competent jurisdiction are
entered against the Company or any Restricted Subsidiary in an uninsured or
unindemnified aggregate amount outstanding at any time in excess of $25.0
million and such judgments or orders are not discharged, waived, stayed,
satisfied or bonded for a period of 60 consecutive days; or

     


    
      
         


      

      
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    (k)           a
Subsidiary Guaranty ceases to be in full force and effect (other than in
accordance with the terms of this Indenture and such Subsidiary Guaranty) or a
Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary
Guaranty.”

     

    (f)           Section
6.01 of the Original Indenture is amended by adding the following sentence to
the end of the first paragraph thereof:  “Notwithstanding anything to
the contrary herein, if an Event of Default described under clause (g) or (h) of
this paragraph shall occur, the principal amount of all Debt Securities of any
series then Outstanding will automatically, and without any action by the
Trustee or any Holder, become immediately due and payable.”

     

    (g)           Article
VI of the Original Indenture is amended by adding Section 6.09 as
follows:

     

    “SECTION 6.09.  Waiver of Stay or Extension
Laws.  The Company (to the extent it may lawfully do so) shall
not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension 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 shall not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law had been enacted.”

     

    SECTION
7.                      Amendments to Articles VII
and VIII of the Original Indenture

     

    (a)           Section
7.08 of the Original Indenture is amended by deleting the number “25%” in the
fourth paragraph thereof and substituting “10%” in its place.

     

    (b)           Section
8.01 of the Original Indenture is amended by deleting “or” in the penultimate
line of such Section and adding at the end thereof the following: “or (d) in the
case of Debt Securities evidenced by a Global Security, by any electronic
transmission or other message, whether or not in written format, that complies
with the Depositary’s applicable procedures.”

     

    SECTION
8.                      Amendments to Article IX of
the Original Indenture

     

    (a)           Section
9.01 of the Original Indenture is amended with respect to the 87⁄8% Notes by (i)
adding the words “in any material respect” to the end of the final clause of
paragraph (c) thereof, (ii) deleting the word “and” from the end of clause (j)
of the first paragraph thereof, (iii) substituting a “;” for the “.” at the end
of clause (k) of the first paragraph thereof and (iv) adding the following
provisions to the end of the first paragraph thereof:

     

    “(l)           to
provide for uncertificated 87⁄8% Notes in addition to or in place of certificated
87⁄8% Notes;

     

    (m)           to
make any change that does not adversely affect the rights of any Holder of 87⁄8%
Notes in any material respect;

     


    
      
         


      

      
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    (n)           to
add or remove any Subsidiary Guarantors pursuant to the procedures set forth
herein; and

     

    (o)           to
provide for the issuance pursuant to an exemption from registration under the
Securities Act of additional Debt Securities of a series after the original date
of issuance of such series; provided that such additional Debt Securities bear
appropriate legends and have the benefit of registration rights; provided,
further, that the supplemental indenture pursuant to which such series was
established provides for the issuance of additional Debt Securities of such
series pursuant to an exemption from registration under the Securities
Act.”

     

    (b)           Section
9.01 of the Original Indenture is further amended by adding the words “in the
Trustee’s opinion” immediately after the word “which” and immediately before the
words “affects the Trustee’s own rights” in the first sentence of the second
paragraph of Section 9.01.

     

    (c)           Section
9.02 of the Original Indenture is amended with respect to the 87⁄8% Notes by
(w) changing the word “extend” to “change” in clause (iii) of the
first paragraph thereof, (x) deleting the word “or” from the end of clause
(vii) of the first paragraph thereof, (y) deleting the “.” at the end of
clause (viii) of the first paragraph thereof and (z) by adding the
following provisions to the end of the first paragraph thereof:

     

    “; (ix) reduce the relative ranking of
any 87⁄8% Notes; (x) at any time after a Change of Control has occurred, change
the repurchase price or the time at which the Change of Control Offer relating
thereto must be made or at which the 87⁄8% Notes must be repurchased pursuant to
such Change of Control Offer or (xi) impair the right of any Holder to receive
payment of principal of and interest on such Holder’s Debt Securities on or
after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder’s Debt Securities or any Subsidiary
Guaranty.”

     

    (d)           Section
9.02 of the Original Indenture is further amended by adding the words “in the
Trustee’s opinion” immediately after the third occurrence of the word
“Indenture” and immediately before the words “adversely affects the Trustee’s
own rights” in the first sentence of the third paragraph of Section
9.02.

     

    (e)           Article
IX of the Original Indenture is amended by adding Section 9.05 as
follows:

     

    “SECTION 9.05.  Payment for
Consent.  Neither the Company nor any Affiliate of the Company
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of Debt Securities
of a series for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Indenture or the Debt Securities of such
series unless such consideration is offered to be paid to all Holders of such
series that so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or
agreement.”

     


    
      
         


      

      
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    (f)           The
first sentences of both Section 9.01 and 9.02 of the Original Indenture are
amended with respect to the 87⁄8% Notes by adding the words “any Subsidiary
Guarantors” immediately before the words “and the Trustee.”

     

    SECTION
9.                      Amendments to Article X of
the Original Indenture

     

    (a)           Section
10.01 of the Original Indenture is amended in its entirety with respect to the
87⁄8% Notes to read as follows:

     

    “SECTION
10.01.  Consolidations and Mergers
of the Company.  The Company shall not consolidate with or
merge with or into any Person, or sell, transfer, lease or otherwise dispose of,
in one transaction or series of transactions, all or substantially all of the
Property of the Company and the Restricted Subsidiaries taken as whole,
unless:

     

    (a)           the
resulting, surviving or transferee Person (the “Successor Company”) shall be a
Person organized or existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor Company (if not the
Company) shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the 87⁄8% Notes and this Indenture;

     

    (b)           in
the case of a disposition of all or substantially all the Property of the
Company and the Restricted Subsidiaries taken as a whole, such Property shall
have been so disposed of, as an entirety or virtually as an entirety to one
Person;

     

    (c)           immediately
after giving effect to such transaction (and treating, for purposes of this
clause (c) and clause (d) below, any Indebtedness that becomes or is anticipated
to become an obligation of the Successor Company or any Restricted Subsidiary as
a result of such transaction as having been Incurred by such Successor Company
or such Restricted Subsidiary at the time of such transaction), no Default or
Event of Default shall have occurred and be continuing;

     

    (d)           either:

     

    (1)           the
Successor Company will, 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 Consolidated
Interest Coverage Ratio test set forth in clause (a) of Section 4.11;
or

     

    (2)           immediately
after giving effect to such transaction on a pro forma basis and any related
financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, the

     


    
      
         


      

      
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    Consolidated
Interest Coverage Ratio of the Successor Company will be equal to or greater
than the Consolidated Interest Coverage Ratio of the Company immediately before
such transaction; and

     

    (e)           the
Company shall have delivered to the Trustee an Officers’ Certificate and an
opinion of counsel, each stating that such consolidation, merger or disposition
and such supplemental indenture (if any) comply with this
Indenture;

     

    provided, however, that
clause (d) will not be applicable to (1) a Restricted Subsidiary consolidating
with, merging with or into or selling, transferring, leasing or otherwise
disposing of all or substantially all its Property to the Company or a
Subsidiary Guarantor that is a Wholly Owned Subsidiary or (2) the Company
merging with or into an Affiliate of the Company solely for the purpose and with
the sole effect of reincorporating the Company in another
jurisdiction.”

     

    (b)           Section
10.02 of the Original Indenture is amended by deleting the period at the end of
the first sentence of the first paragraph thereof and by substituting the
following in its place:

     

    “; provided, however, that in the case
of a lease of all or substantially all of the Company’s Property, the Company
shall not be released from any of the obligations or covenants under this
Indenture, including the obligation to pay the principal of and interest on the
Debt Securities.”

     

    SECTION
10.                                Applicability of and
Amendments to Article XI of the Original Indenture

     

    (a)           Article
XI of the Original Indenture shall be applicable to the 87⁄8% Notes.

     

    (b)           Section
11.02(b) of the Original Indenture is superseded with respect to the 87⁄8% Notes
by the following provisions:

     

    “(b)
Subject to Sections 11.02(c) and 11.03, the Company at any time may terminate
(i) all its obligations under the 87⁄8% Notes and this Indenture with respect to
the 87⁄8% Notes (“legal defeasance option”) or (ii) its obligations under Sections
4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20 and 10.01(d), the
operation of Sections 6.01(d) (to the extent relating to Section 10.01(d)),
6.01(e) (to the extent relating to Sections 4.10, 4.11, 4.12, 4.14, 4.15, 4.16,
4.17, 4.18, 4.19 and 4.20), 6.01(f), 6.01(g) (to the extent relating to
Significant Subsidiaries), 6.01(h) (to the extent relating to Significant
Subsidiaries), 6.01(j) and 6.01(k) (“covenant defeasance
option”).  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, payment of the 87⁄8% Notes may not
be accelerated because of an Event of Default.  If the Company
exercises its covenant defeasance option, payment of the 87⁄8% Notes may not be
accelerated because of an Event of Default specified in Sections 6.01(d) and
6.01(e) (with respect to the provisions of Articles IV and X referred to in
the

     


    
      
         


      

      
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    immediately
preceding paragraph), Section 6.01(f), Sections 6.01(g) and 6.01(h) (in
each case to the extent relating to Significant Subsidiaries), and
Sections 6.01(j) and 6.01(k).  If the Company exercises its legal
defeasance option or its covenant defeasance option, each Subsidiary Guarantor,
if any, shall be released from all its obligations under its Subsidiary
Guaranty.

     

    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)           Section
11.02(c) of the Original Indenture is amended in its entirety with respect to
the 87⁄8% Notes to read as follows:

     

    “(c)           Notwithstanding
clauses (a) and (b) above, the Company’s obligations in Sections 2.07, 2.09,
4.02, 4.04, 5.01, 7.06, 7.08, 7.10, 11.05, 11.06 and 11.07 shall survive until
the 87⁄8% Notes have been paid in full.  Thereafter, the Company’s
obligations in Sections 7.06, 11.05 and 11.06 shall survive.”

     

    (d)           Section
11.03(a) of the Original Indenture is amended in its entirety with respect to
the 87⁄8% Notes to read as follows:

     

    “(a) the
Company irrevocably deposits in trust with the Trustee for the benefit of the
Holders of the Debt Securities of such series, money or U.S. Government
Obligations, or a combination thereof, that, through the payment of principal,
premium, if any, and interest in respect thereof in accordance with their terms,
will provide money in an amount sufficient to pay the principal of and any
premium and interest on the Debt Securities of such series at the Stated
Maturity thereof or on earlier redemption in accordance with the terms of the
Indentures and the Debt Securities of such series;”

     

    (e)           Section
11.03(c) of the Original Indenture is amended by deleting each instance of the
number “91” and substituting “123” in its place.

     

    (f)           Section
11.03(g)(ii) of the Original Indenture is amended by deleting the words “date of
this Indenture” and substituting the words “Issue Date” in their
place.

     

    (g)           Section
11.07 of the Original Indenture is amended by deleting the “.” at the end
thereof and by substituting the following in its place:

     

    “;
provided, however, that, if the Company has made any payment of interest on or
principal of any Debt Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Debt Securities to receive such payment from the money or
U.S.  Government Obligations held by the Trustee or paying
agent.”

     

    SECTION
11.                                Inapplicability of Article
XII of the Original Indenture

     


    
      
         


      

      
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    Article
XII of the Original Indenture shall not be applicable to the 87⁄8%
Notes.  The Notes shall be Senior Indebtedness of the Company, and the
Subsidiary Guaranties shall be Senior Indebtedness of each Subsidiary
Guarantor.

     

    SECTION
12.                                Subsidiary
Guaranties

     

    (a)           The
Original Indenture is amended with respect to the 87⁄8% Notes by deleting the
proviso to Section 2.03(20) and adding Article XIV as follows:

     

    “ARTICLE XIV

     

    Subsidiary Guaranties

     

    SECTION
14.01.  Subsidiary
Guaranties.  Each Subsidiary Guarantor hereby unconditionally
Guarantees, jointly and severally, to each Holder and to the Trustee and its
successors and assigns (a) the full and punctual payment of principal of and
interest on the 87⁄8% Notes when due, whether at Stated Maturity, by acceleration,
by redemption or otherwise, and all other monetary obligations of the Company
under this Indenture and the 87⁄8% Notes and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Company under
this Indenture and the 87⁄8% Notes (all the foregoing being hereinafter
collectively called the “Obligations”).  Each Subsidiary Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from such Subsidiary Guarantor, and that
such Subsidiary Guarantor will remain bound under this Article XIV
notwithstanding any extension or renewal of any Obligation.

     

    Each
Subsidiary Guarantor waives presentation to, demand of, payment from and protest
to the Company of any of the Obligations and also waives notice of protest for
nonpayment.  Each Subsidiary Guarantor waives notice of any Default
under the 87⁄8% Notes or the Obligations.  The obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) 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 87⁄8%
Notes or any other agreement or otherwise; (b) any extension or renewal of any
thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the 87⁄8% Notes or any other agreement; (d)
the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other Guarantor of the Obligations; or
(f) any change in the ownership of such Subsidiary Guarantor.

     

    Each
Subsidiary Guarantor further agrees that its Subsidiary Guaranty constitutes a
Guarantee of payment, performance and compliance when due (and not a Guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the
Obligations.

     


    
      
         


      

      
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    Upon the
sale or other disposition of all of the Capital Stock of a Subsidiary Guarantor
(other than to the Company or an Affiliate thereof) in compliance with Section
4.14, such Subsidiary Guarantor shall be released from all obligations under its
Subsidiary Guaranty.  Except as expressly set forth in this Section
14.01 and Sections 4.18, 4.19 and 11.02, the obligations of each Subsidiary
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise.  Without limiting the generality of the
foregoing, the obligations of each Subsidiary Guarantor herein shall not be
discharged or impaired or otherwise affected by the failure of any Holder or the
Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the 87⁄8% Notes or any other agreement, by any waiver or modification
of any thereof, by any Default, failure or delay, willful or otherwise, in the
performance of the obligations, or by 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 such Subsidiary Guarantor or would otherwise operate as
a discharge of such Subsidiary Guarantor as a matter of law or
equity.

     

    Each
Subsidiary Guarantor further agrees that its Subsidiary Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on 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 any Subsidiary Guarantor
by virtue hereof, upon the failure of the Company to pay the principal of or
interest on any Obligation when and as the same shall become due, whether at
Stated Maturity, by acceleration, by redemption or otherwise, or to perform or
comply with any other Obligation, each Subsidiary Guarantor hereby promises 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 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.  Each Subsidiary Guarantor further agrees that, as between
it, 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 such Subsidiary Guarantor’s Subsidiary Guaranty,
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 such Subsidiary Guarantor for the purposes of this
Section.

     


    
      
         


      

      
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    Each
Subsidiary Guarantor also agrees 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 14.01.

     

    SECTION
14.02.  Contribution.  Each
of the Company and any Subsidiary Guarantor (a “Contributing Party”) agrees
that, in the event a payment shall be made by any other Subsidiary Guarantor
under any Subsidiary Guaranty (the “Claiming Guarantor”), the Contributing Party
shall indemnify the Claiming Guarantor in an amount equal to the amount of such
payment multiplied by a fraction, the numerator of which shall be the net worth
of the Contributing Party on the date hereof and the denominator of which shall
be the aggregate net worth of the Company and all the Subsidiary Guarantors on
the date hereof (or, in the case of any Subsidiary Guarantor becoming a party
hereto pursuant to Section 9.01(n), the determination of indemnification amounts
shall be based upon net worth on the date of the supplemental indenture executed
and delivered by such Subsidiary Guarantor.)

     

    SECTION
14.03.  Successors and
Assigns.  This Article XIV shall be binding upon each
Subsidiary Guarantor and its 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 by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the 87⁄8%
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this
Indenture.

     

    SECTION
14.04.  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 XIV 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
XIV at law, in equity, by statute or otherwise.

     

    SECTION
14.05.  Modification.  No
modification, amendment or waiver of any provision of this Article XIV, nor the
consent to any departure by any Subsidiary Guarantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.  No notice to or demand
on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.

     

    SECTION
14.06.  Execution of Supplemental
Indenture for Future Subsidiary Guarantors.  Each Subsidiary
which is required to become a Subsidiary Guarantor pursuant to Section 4.18
shall promptly execute and deliver to the Trustee a supplemental indenture in
the form of Exhibit B hereto pursuant

     


    
      
         


      

      
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    to which
such Subsidiary shall become a Subsidiary Guarantor under this Article XIV and
shall Guarantee the Obligations.  Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized, executed and delivered by such Subsidiary and that,
subject to the application of bankruptcy, insolvency, moratorium, fraudulent
conveyance or transfer and other similar laws relating to creditors’ rights
generally and to the principles of equity, whether considered in a proceeding at
law or in equity, the Subsidiary Guaranty of such Subsidiary Guarantor is a
legal, valid and binding obligation of such Subsidiary Guarantor, enforceable
against such Subsidiary Guarantor in accordance with its terms.”

     

    (b)           Opco
shall guarantee the 87⁄8% Notes in accordance with the provisions of Article XIV
of the Original Indenture.

     

    SECTION
13.                                Governing
Law.  This First Supplemental Indenture shall be governed by
and construed in accordance with the laws of the State of New
York.  The Trustee, the Company and each of the Subsidiary Guarantors
agree to submit to the non-exclusive jurisdiction of the competent courts of the
State of New York sitting in New York City in any action or proceeding arising
out of or relating to the Indenture or the 87⁄8% Notes.

     

    SECTION
14.                                Counterparts.  This
First Supplemental Indenture may be executed in any number of counterparts, each
of which shall be an original but such counterparts shall together constitute
but one and the same instrument.  This First Supplemental Indenture
may be executed by facsimile or other electronic transmission.

     

    SECTION
15.                                Trustee Not Responsible for
Recitals or Issuance of Notes.  The recitals contained herein
and in the 87⁄8% Notes, except the Trustee’s certificate of authentication, shall
be taken as the statements of the Company and Opco, and the Trustee assumes no
responsibility for their correctness.  The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture or of the 87⁄8% Notes.  The Trustee shall not be accountable
for the use or application by the Company of the 87⁄8% Notes or the proceeds
thereof.

     

    SECTION
16.                                Supplemental Indenture
Controls.  In the event there is any conflict or inconsistency
between the Original Indenture and this First Supplemental Indenture, the
provisions of this First Supplemental Indenture shall control.

     


    
      
         


      

      
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    IN
WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first above
written.

     

    SWIFT
ENERGY COMPANY

     

    


     

    By: 
/s/ Bruce H.
Vincent                                                           

     

        Bruce H.
Vincent

        President and
Secretary

    


     

    By:   /s/
Alton D. Heckaman,
Jr.                                                             

     

        Alton D.
Heckaman, Jr.

        Executive
Vice President and Chief Financial Officer

    


    


    SWIFT
ENERGY OPERATING, LLC

     

    


     

    By: 
/s/ Bruce H.
Vincent                                                               

     

        Bruce H.
Vincent

        President and
Secretary

    


     

    By:  /s/
Alton  D. Heckaman,
Jr.                                                          

     

        Alton D.
Heckaman, Jr.

        Executive
Vice President and Chief Financial Officer

    


     

    


     

    WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee

     

    


     

    By:  /s/
John C.
Stohlmann                                                              

     

        John C.
Stohlmann   

        Vice
President


    
      
         


      

      
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    EXHIBIT
A

     

    Form
of the 87⁄8% Notes

     

    Unless this certificate is presented by
an authorized representative of The Depository Trust Company, a New York
corporation, (“DTC”), to the issuer 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 is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is 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 since the registered owner hereof, Cede & Co., has an interest
herein.

     

    THIS SECURITY IS A GLOBAL SECURITY AS
REFERRED TO IN THE INDENTURE HEREINAFTER REFERENCED. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY,
THIS GLOBAL 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.

     

    SWIFT
ENERGY COMPANY

     

    87⁄8% Senior Note due
2020

     

    REGISTERED CUSIP
No. 870738 AG 6

     

    No.
__                                                                                                                              $225,000,000.00

     

    Swift
Energy Company, a Texas corporation (the “Company,” which term includes any
successor under the Indenture hereinafter referred to), for value received,
promises to pay to Cede & Co., or its registered assigns, the principal sum
of two hundred twenty-five million United States Dollars ($225,000,000.00) on
January 15, 2020.

     

    Interest
Payment Dates:  January 15, and July 15, commencing January 15,
2010.

     

    Regular
Record Dates:  January 1 and July 1.

     

    Reference
is hereby made to the further provisions of this 87⁄8% Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

     


    
      
         


      

      
        A-1

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the Company has caused this 87⁄8% Note to be signed manually or
by facsimile by its duly authorized officers.

     

    Date:

     

    SWIFT
ENERGY COMPANY

    


    


    By:           

    Name:

    Title:

    


    


    By:           

    Name:

    Title:

    


    


     

    Trustee’s
Certificate of Authentication

     

    This is
one of the Debt Securities of the series designated therein referred to in the
within-mentioned Indenture.

     

    WELLS
FARGO BANK, NATIONAL ASSOCIATION,

    as
Trustee

    


    By:           

    Authorized
Signatory


    
      
         


      

      
        A-2

        
          

        

      

      
         


      

    


    


     

    [REVERSE
OF 87⁄8% NOTES]

     

    SWIFT
ENERGY COMPANY

     

    87⁄8%
Senior Note due 2020

     

    1.      Indenture;
Limitations.

     

    The
Company issued the 87⁄8% Notes under an Indenture dated as of May 19, 2009 (the
“Original Indenture”), between the Company and Wells Fargo Bank, National
Association, as trustee (the “Trustee”), and a First Supplemental Indenture
dated as of November 25, 2009 (the “Supplemental Indenture”) (the Original
Indenture, as amended and supplemented by the Supplemental Indenture being
hereinafter referred to as the “Indenture”), among the Company, Swift Energy
Operating, LLC, as guarantor (the “Guarantor”) and the
Trustee.  Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. The terms of the 87⁄8% Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act. The 87⁄8% Notes are subject to all such terms, and Holders
are referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this 87⁄8% Note and the terms of the Indenture,
the terms of the Indenture shall control.

     

    The 87⁄8%
Notes are senior unsecured obligations of the Company and unconditionally
guaranteed by the Guarantor.  The aggregate principal amount of the
87⁄8% Notes which may be issued, executed, authenticated, delivered and
outstanding is unlimited (subject to Section 1 of the Supplemental
Indenture). The Company may, subject to Article IV of the Indenture, issue
Additional 87⁄8% Notes under the Indenture in either a limited or an unlimited
aggregate principal amount. This 87⁄8% Note is one of the Original 87⁄8% Notes
referred to in the Indenture issued in an aggregate principal amount of
$225,000,000. The Additional 87⁄8% Notes may be issued as part of the same or a
different series of Debt Securities as the Original 87⁄8% Notes. The 87⁄8% Notes
include the Original 87⁄8% Notes and any Additional 87⁄8% Notes that may be issued
under the Indenture as part of the same series.

     

    2.      Principal
and Interest.

     

    The
principal of this 87⁄8% Note will mature on January 15, 2020.

     

    The
Company promises to pay interest on the principal amount of this 87⁄8% Note on
each January 15 and July 15 (each an “Interest Payment Date”), as set
forth below, at the rate per annum shown above.

     

    Interest
will be payable semiannually (to the holders of record of the 87⁄8% Notes at the
close of business on the January 1 or July 1 immediately preceding the
Interest Payment Date) on each Interest Payment Date, commencing
January 15, 2010.

     

    Interest
on the 87⁄8% Notes will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from November 25, 2009,
provided that, if there is no

     


    
      
         


      

      
        A-3

        
          

        

      

      
         


      

    


    existing
Default in the payment of interest and this 87⁄8% Note is authenticated between a
Regular Record Date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such Interest Payment Date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

     

    The
Company shall pay interest on overdue principal at the rate borne by the 87⁄8%
Notes plus 1% per annum, and it shall pay interest on overdue installments of
interest, to the extent lawful, at the rate borne by the 87⁄8% Notes.

     

    3.      Method
of Payment.

     

    The
Company will pay interest (except defaulted interest) on the principal amount of
the 87⁄8% Notes as provided above on each Interest Payment Date to the persons who
are Holders (as reflected in the Debt Security Register at the close of business
on the January 1 and July 1 immediately preceding the relevant
Interest Payment Date), in each case, even if the 87⁄8% Note is canceled on
registration of transfer, registration of exchange, redemption or repurchase
after such record date and on or before the Interest Payment Date, provided
that, with respect to the payment of principal, the Company will make payment to
the Holder that surrenders this 87⁄8% Note to a paying agent on or after the
maturity thereof.

     

    The
Company will pay principal, premium, if any, and as provided above, interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company, at its option, may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder’s registered address (as reflected in
the Debt Security Register). Payments in respect of 87⁄8% Notes represented by a
Global Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. If a payment date is a date other than a Business Day
at a place of payment, payment may be made at that place on the next succeeding
day that is a Business Day and no interest shall accrue for the intervening
period.

     

    4.      Paying
Agent and Registrar.

     

    Initially,
the Trustee will act as authenticating agent, paying agent and Registrar. The
Company may change any authenticating agent, paying agent or Registrar without
notice. The Company, any Subsidiary or any Affiliate of any of them may act as
paying agent, Registrar or co-Registrar.

     

    5.      Optional
Redemption.

     

    Except as
set forth below, the 87⁄8% Notes will not be redeemable at the option of the
Company prior to their Stated Maturity.  Starting on January 15,
2015, the Company may redeem all or any portion of the 87⁄8% Notes upon not less
than 30 nor more than 60 days’ prior notice, at the redemption prices set forth
below, plus accrued and unpaid interest, if any, to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant Interest Payment Date). The following prices are
for 87⁄8% Notes redeemed during the 12-month period commencing on January 15
of the years set forth below, and are expressed as percentages of principal
amount:

     

    

      
        
           


        

        
          A-4

          
            

          

        

        
           


        

      

    

     

    
      	
              
                Year

              

            	
              
                Redemption
      Price

              

            
	
              2015

            	
              104.438%

            
	
              2016

            	
              102.958%

            
	
              2017

            	
              101.479%

            
	
              2018
      and thereafter

            	
              100.000%

            
	 
      	 
      


    

    


     

    The
Company may on any one or more occasions prior to January 15, 2013, redeem
up to 35% of the aggregate principal amount of the 87⁄8% Notes originally issued
with the net proceeds of one or more Equity Offerings at a redemption price of
108.875% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of redemption (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant Interest Payment
Date), provided that at least 65% of the aggregate principal amount of the 87⁄8%
Notes originally issued remains Outstanding after the occurrence of such
redemption. Any such redemption shall occur not later than 90 days after the
date of the closing of any such Equity Offering upon not less than 30 or more
than 60 days’ prior notice. The redemption shall be made in accordance with
procedures set forth in the Indenture.

     

    At any
time prior to January 15, 2015, the Company will be entitled, at its
option, to redeem all or any portion of the 87⁄8% Notes at a redemption price
equal to 100% of the principal amount of the 87⁄8% Notes plus the Applicable
Premium as of, and accrued and unpaid interest to, the redemption date (subject
to the right of Holders on the relevant record date to receive interest due on
the relevant interest payment date).  Notice of such redemption must
be mailed by first-class mail to each Holder’s registered address, not less than
30 nor more than 60 days prior to the redemption date.

     

    In the
event that Holders of not less than 90% of the aggregate principal amount of the
Outstanding 87⁄8% Notes accept a Change of Control Offer and the Company purchases
all of the 87⁄8% Notes held by such Holders, the Company will have the right, upon
not less than 30 nor more than 60 days’ prior notice, given not more than 30
days following the purchase pursuant to the Change of Control Offer referred to
below, to redeem all of the 87⁄8% Notes that remain Outstanding following such
purchase at a redemption price equal to the Change of Control Payment plus, to
the extent not included in the Change of Control Payment, accrued and unpaid
interest on the 87⁄8% Notes that remain Outstanding, to the date of redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).

     

    If less
than all the 87⁄8% Notes are to be redeemed at any time, selection of 87⁄8% Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the 87⁄8% Notes
are listed, or, if the 87⁄8% Notes are not so listed, on a pro rata
basis.

     

    6.      Sinking
Fund.

     

    The 87⁄8%
Notes are not subject to any sinking fund.

     


    
      
         


      

      
        A-5

        
          

        

      

      
         


      

    


    7.           Ranking.

     

    The 87⁄8% Notes are Senior Indebtedness
of the Company, and the Subsidiary Guaranty is Senior Indebtedness of the
Guarantor.

     

    8.      Repurchase
upon a Change of Control.

     

    Upon the occurrence of a Change of
Control, each Holder of 87⁄8% Notes shall have the right to require the Company to
repurchase all or any part (equal to $2,000 in principal amount or an integral
multiple of $1,000 in excess thereof) of such Holder’s 87⁄8% Notes pursuant to the
Change of Control Offer as provided in, and subject to the terms of, the
Indenture at a purchase price in cash equal to 101% of the principal amount of
the 87⁄8% Notes repurchased, plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant Interest Payment
Date).

     

    9.      Denominations;
Transfer; Exchange.

     

    The 87⁄8% Notes are in registered form
without coupons in minimum denominations of $2,000 of principal amount and
multiples of $1,000 in excess thereof. A Holder may register the transfer or
exchange of 87⁄8% Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer or exchange of any
87⁄8% Notes selected or called for redemption (except in the case of a 87⁄8% Note
redeemed in part, the portion of the 87⁄8% Note not to be redeemed). Also, it need
not register the transfer or exchange of any 87⁄8% Notes for a period beginning at
the opening of business 15 days before any selection of 87⁄8% Notes to be redeemed
and ending at the close of business on the day of that selection.

     

    10.      Persons
Deemed Owners.

     

    A Holder shall be treated as the owner
of a 87⁄8% Note for all purposes.

     

    11.      Unclaimed
Money.

     

    If money for the payment of principal,
premium, if any, or interest remains unclaimed for two years, the Trustee and
the paying agent will pay the money back to the Company at its written request.
After that, Holders entitled to the money must look to the Company for payment,
unless an abandoned property law designates another Person, and all liability of
the Trustee and such paying agent with respect to such money shall
cease.

     

    12.      Discharge
Prior to Redemption or Maturity.

     

    Subject to certain conditions, if the
Company deposits with the Trustee money or U.S. Government Obligations
sufficient to pay the then outstanding principal of, premium, if any, and
accrued interest on the 87⁄8% Notes to redemption or maturity, as applicable, the
Company and the Subsidiary Guarantors, if any, may terminate some of or all of
their obligations under the Indenture and the 87⁄8% Notes, except in certain
circumstances for certain sections thereof.

     


    
      
         


      

      
        A-6

        
          

        

      

      
         


      

    


    13.           Amendment;
Supplement; Waiver.

     

    Subject to certain exceptions, the
Indenture or the 87⁄8% Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the 87⁄8% Notes then
Outstanding, and any existing Default or compliance with any provision may be
waived with the consent of the Holders of at least a majority in principal
amount of the 87⁄8% Notes then Outstanding. Without notice to or the consent of
any Holder, the parties thereto may amend or supplement the Indenture or the 87⁄8%
Notes to, among other things, cure any ambiguity, defect or inconsistency and
make any change that does not adversely affect the interests of any Holder in
any material respect.

     

    14.      Restrictive
Covenants.

     

    The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries, among
other things, to Incur additional Indebtedness, make Restricted Payments, use
the proceeds from Asset Sales, suffer to exist restrictions on the ability of
Restricted Subsidiaries to make certain payments to the Company, engage in
transactions with Affiliates, suffer to exist or incur Liens or merge,
consolidate or transfer substantially all of their assets. Certain restrictive
covenants will be terminated when the 87⁄8% Notes have an Investment Grade Rating
from both Moody’s and S&P and no Default has occurred and is
continuing.  Within four months after the end of each fiscal year, the
Company shall deliver to the Trustee an Officers’ Certificate stating whether or
not the signers know of any Default and specifying what action the Company is
taking or proposes to take with respect thereto.

     

    15.      Successor
Persons.

     

    Subject to certain exceptions, when a
successor Person assumes all the obligations of its predecessor under the 87⁄8%
Notes and the Indenture, the predecessor Person will be released from those
obligations.

     

    16.      Defaults
and Remedies.

     

    The following are summaries of Events
of Default under the Indenture with respect to the 87⁄8% Notes:

     

    (a)      failure
to pay any interest on the 87⁄8% Notes when due, continued for 30
days;

     

    (b)      failure
to pay principal of (or premium, if any, on) the 87⁄8% Notes when
due;

     

    (c)      failure
to comply with Article X of the Indenture;

     

    (d)      failure
to perform any other covenant of the Company in the Indenture, continued for 30
days after written notice to the Company from the Trustee or the Holders of at
least 25% in aggregate principal amount of the Outstanding 87⁄8%
Notes;

     

    (e)      a
default by the Company or any Restricted Subsidiary under any Indebtedness for
borrowed money in an aggregate amount greater than $25.0 million (other than
Non-recourse Purchase Money Indebtedness) that results in acceleration
of

     


    
      
         


      

      
        A-7

        
          

        

      

      
         


      

    


    the
maturity of such Indebtedness, or failure to pay any such Indebtedness at
maturity, if such Indebtedness is not discharged or such acceleration is not
rescinded or annulled within 30 days after written notice as provided in the
Indenture;

     

    (f)      one
or more final judgments or orders by a court of competent jurisdiction are
entered against the Company or any Restricted Subsidiary in an uninsured or
unindemnified aggregate amount outstanding at any time in excess of $25.0
million and such judgments or orders are not discharged, waived, stayed,
satisfied or bonded for a period of 60 consecutive days;

     

    (g)      certain
events of bankruptcy, insolvency or reorganization with respect to the Company
or any Significant Subsidiary; or

     

    (h)      a
Subsidiary Guaranty ceases to be in full force and effect (other than in
accordance with the terms of the Indenture and such Subsidiary Guaranty) or a
Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary
Guaranty.

     

    The
Indenture provides that if an Event of Default (other than an Event of Default
described in clause (g) above) with respect to the 87⁄8% Notes at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding 87⁄8% Notes by
notice as provided in the Indenture may declare the principal amount of the 87⁄8%
Notes to be due and payable immediately. If an Event of Default described in
clause (g) above with respect to the 87⁄8% Notes at the time Outstanding shall
occur, the principal amount of all the 87⁄8% Notes will automatically, and without
any action by the Trustee or any Holder, become immediately due and payable.
After any such acceleration, but before a judgment or decree based on
acceleration, the Holders of at least a majority in aggregate principal amount
of the Outstanding 87⁄8% Notes may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the nonpayment of
accelerated principal or interest, have been cured or waived as provided in the
Indenture.

     

    Subject
to the provisions of the Indenture relating to the duties of the Trustee in case
an Event of Default shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders of the 87⁄8% Notes, unless such Holders
shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the Holders of at least a
majority in aggregate principal amount of the Outstanding 87⁄8% Notes will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee with respect to the 87⁄8% Notes.

     

    No Holder
of 87⁄8% Notes will have any right to institute any proceeding with respect to the
Indenture, or for the appointment of a receiver or a trustee, or for any other
remedy thereunder, unless:

     

    (a)           such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the 87⁄8% Notes;

     


    
      
         


      

      
        A-8

        
          

        

      

      
         


      

    


    (b)           the
Holders of at least 25% in aggregate principal amount of the Outstanding 87⁄8%
Notes have made written request, and such Holder or Holders have offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee;
and

     

    (c)           the
Trustee has failed to institute such proceeding and has not received from the
Holders of at least a majority in aggregate principal amount of the Outstanding
87⁄8% Notes a direction inconsistent with such request, within 60 days after such
notice, request and offer.

     

    However, such limitations do not apply
to a suit instituted by a Holder of 87⁄8% Notes for the enforcement of payment of
the principal of or any premium or interest on such 87⁄8% Notes on or after the
applicable due date specified in such 87⁄8% Notes.

     

    17.      Initial
Subsidiary Guarantor.

     

    The Guarantor has fully and
unconditionally guaranteed the 87⁄8% Notes as provided in Article XIV of the
Indenture.  Such Subsidiary Guaranty is subject to release in certain
circumstances set forth in the Indenture.

     

    18.      Trustee
Dealings with the Company or the Subsidiary Guarantors.

     

    The Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Subsidiary Guarantors, if any, or the Company or their
Affiliates and may otherwise deal with the Subsidiary Guarantors, if any, or the
Company or their Affiliates as if it were not the Trustee.

     

    19.      No
Recourse Against Others.

     

    No incorporator or any past, present or
future partner, shareholder, other equity holder, officer, director, employee or
controlling Person as such, of the Company or the Subsidiary Guarantors or of
any successor Person shall have any liability for any obligations of the Company
or the Subsidiary Guarantors under the 87⁄8% Notes or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder by accepting a 87⁄8% Note expressly waives and releases all
such liability. The waiver and release are a condition of, and part of the
consideration for the issuance of the 87⁄8% Notes.

     

    20.      Authentication.

     

    This 87⁄8% Note shall not be valid until
the Trustee or authenticating agent signs the certificate of authentication on
the other side of this 87⁄8% Note.

     

    21.      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).

     


    
      
         


      

      
        A-9

        
          

        

      

      
         


      

    


    22.           Governing
Law.

     

    THIS 87⁄8% NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     

    23.      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 87⁄8% Notes and has directed
the Trustee to 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 87⁄8% Notes 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. Requests may be
made to Swift Energy Company, 16825 Northchase Drive, Suite 400, Houston, Texas
77060, Attention: Chief Financial Officer.

     


    
      
         


      

      
        A-10

        
          

        

      

      
         


      

    


    ASSIGNMENT
FORM

     

    


     

    To assign
this 87⁄8% Note, fill in the form below:

     

    I or we
assign and transfer this 87⁄8% Note
to                                                                                                                                          

     

    


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

     

    


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

     

    and
irrevocably
appoint                                                                           
agent to transfer this 87⁄8% Note 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 other side of this 87⁄8% Note)

     

    Signature
Guarantee:

    (Signature
must be guaranteed by a financial institution that is a member of the Securities
Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program
(“SEMP”), the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”)
or such other signature guarantee program as may be determined by the Registrar
in addition to, or in substitution for, STAMP, SEMP, or MSP, all in accordance
with the Securities Exchange Act of 1934, as amended.)


    
      
         


      

      
        A-11

        
          

        

      

      
         


      

    


    OPTION OF
HOLDER TO ELECT PURCHASE

     

    If you
wish to have this 87⁄8% Note purchased by the Company pursuant to
Section 4.14 (Asset Sale) or Section 4.20 (Change of Control) of the
Indenture, check the appropriate box:

     

    o           Section
4.14                                                      o           Section
4.20

     

    If you
wish to have a portion of this 87⁄8% Note purchased by the Company pursuant to
Section 4.14 or Section 4.20 of the Indenture, state the amount:

     

    $                      

     

    Date:                                           

     

    Your
Signature:                                                                                                                                          

    (Sign
exactly as your name appears on the other side of this 87⁄8% Note)

     

    Signature
Guarantee:

    (Signature
must be guaranteed by a financial institution that is a member of the Securities
Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program
(“SEMP”), the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”)
or such other signature guarantee program as may be determined by the Registrar
in addition to, or in substitution for, STAMP, SEMP, or MSP, all in accordance
with the Securities Exchange Act of 1934, as amended.)


    
      
         


      

      
        A-12

        
          

        

      

      
         


      

    


                                                                                                                                              EXHIBIT
B

     

    


     

    FORM
OF SUPPLEMENTAL INDENTURE

     

    THIS SUPPLEMENTAL INDENTURE (this
“Supplemental Indenture”) dated as of _______________, ____, is among
[GUARANTOR] (the “New Subsidiary Guarantor”), a subsidiary of Swift Energy
Company (or its successor), a Texas corporation (the “Company”), the Company, on
behalf of itself and the Subsidiary Guarantors (the “Existing Subsidiary
Guarantors”) under the Indenture referred to below, and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, as trustee under the
Indenture referred to below (the “Trustee”).

     

    WITNESSETH

     

    WHEREAS
the Company and the Existing Subsidiary Guarantors are parties to an Indenture
dated as of May 19, 2009 (such Indenture, as amended or supplemented to date,
including by the First Supplemental Indenture dated as of November 25,
2009, among the Company, Swift Energy Operating, LLC and the Trustee, is
hereinafter called the “Indenture”), providing for the initial issuance of an
aggregate principal amount of up to $225,000,000 of 87⁄8% Senior Notes due 2020
(the “Securities”);

     

    WHEREAS
Section 4.18 of the Indenture provides that under certain circumstances the
Company is required to cause the New Subsidiary Guarantor to execute and deliver
to the Trustee a supplemental indenture pursuant to which the New Subsidiary
Guarantor shall unconditionally Guarantee all the Company’s obligations under
the Securities pursuant to a Subsidiary Guaranty on the terms and conditions set
forth herein; and

     

    WHEREAS
pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the
Existing Subsidiary Guarantors are authorized to execute and deliver this
Supplemental Indenture;

     

    NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the New Subsidiary
Guarantor, the Company, the Existing Subsidiary Guarantors and the Trustee
mutually covenant and agree for the equal and ratable benefit of the holders of
the Securities as follows:

     

    1.           Agreement to Guarantee. The
New Subsidiary Guarantor hereby agrees, jointly and severally with all other
Subsidiary Guarantors, to unconditionally Guarantee the Company’s obligations
under the Securities on the terms and subject to the conditions set forth in
Article XIV of the Indenture and to be bound by all other applicable provisions
of the Indenture.

     

    2.           Ratification of Indenture;
Supplemental Indenture Part of Indenture. Except as expressly amended
hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect.
This Supplemental Indenture shall form a part of the Indenture for all purposes,
and every holder of Securities heretofore or hereafter authenticated and
delivered shall be bound hereby.

     


    
      
         


      

      
        B-1

        
          

        

      

      
         


      

    


    3.           Governing Law. THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

     

    4.           Trustee Makes No
Representation. The Trustee makes no representation as to the validity or
sufficiency of 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.

     

    6.           Effect of Headings. The
Section headings herein are for convenience only and shall not effect the
construction thereof.

     

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

     

    


    
      	
               
      

            	
              [NEW
      SUBSIDIARY GUARANTOR],

            


    

    


    


    
      	
              By:

            	 	 


    

    
      	
               
      

            	
              Name:

            


    

    
      	
               
      

            	
              Title:

            


    

    


    


    
      	
               
      

            	
              SWIFT
      ENERGY COMPANY, on behalf of

            


    

    
      	
               
      

            	
              itself
      and the Existing Subsidiary
Guarantors,

            


    

    


    


    
      	
              By:

            	 	 


    

    
      	
               
      

            	
              Name:

            


    

    
      	
               
      

            	
              Title:

            


    

    


    


    
      	
               
      

            	
              WELLS
      FARGO BANK, NATIONAL ASSOCIATION,

            


    

    
      	
               
      

            	
              as
      Trustee

            


    

    


    


    
      	
              By:

            	 	 


    

    
      	
               
      

            	
              Authorized
      Signatory

            


    

    


     


    
      
         


      

      
        B-2