Document:

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                                                                     EXHIBIT 4.2

                              SWIFT ENERGY COMPANY,

                                    AS ISSUER

                                       AND

                                  BANK ONE, NA

                                   AS TRUSTEE

                          FIRST SUPPLEMENTAL INDENTURE

                           DATED AS OF APRIL 16, 2002

                     TO INDENTURE DATED AS OF APRIL 16, 2002

                            PROVIDING FOR ISSUANCE OF

                    9 3/8% SENIOR SUBORDINATED NOTES DUE 2012

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                                TABLE OF CONTENTS

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                                                                                                               Page
<S>                   <C>                                                                                      <C>
SECTION 1.            Creation of 9 3/8% Notes....................................................................2
SECTION 2.            Definitions.................................................................................3
SECTION 3.            Amendments to Article III of the Original Indenture........................................32
SECTION 4.            Amendments to Article IV of the Original Indenture.........................................33
SECTION 5.            Amendments to Article V the Original Indenture.............................................47
SECTION 6.            Amendments to Article VI the Original Indenture............................................48
SECTION 7.            Amendments to Article VII of the Original Indenture........................................49
SECTION 8.            Amendments to Article IX of the Original Indenture.........................................49
SECTION 9.            Amendments to Article X of the Original Indenture..........................................50
SECTION 10.           Applicability of and Amendments to Article XI of the Original Indenture....................51
SECTION 11.           Applicability of and Amendments to Article XII of the Original Indenture...................53
SECTION 12.           Subsidiary Guaranties......................................................................54
SECTION 13.           Governing Law..............................................................................61
SECTION 14.           Counterparts...............................................................................61
SECTION 15.           Supplemental Indenture Controls............................................................61

EXHIBIT A.            Form of 9 3/8% Note.......................................................................A-1
EXHIBIT B.            Form of Supplemental Indenture............................................................B-1
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         FIRST SUPPLEMENTAL INDENTURE, dated as of April 16, 2002 (this "First
Supplemental Indenture"), to the Indenture dated as of April 16, 2002 (the
"Original Indenture") between SWIFT ENERGY COMPANY, a Texas corporation, as
issuer (the "Company"), and BANK ONE, NA, 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 and (b) 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 "9 3/8% Senior Subordinated
Notes due 2012" (the "9 3/8% Notes"), 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 9 3/8% 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 9 3/8% 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, have been done and
performed, and the execution of this First Supplemental Indenture and the
creation and issuance under the Indenture of the 9 3/8% 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 9 3/8% 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 9 3/8% Notes and in
consideration of the acceptance of the 9 3/8% 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:

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         SECTION 1. Creation of 9 3/8% 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 "9 3/8% Senior Subordinated Notes due 2012",
limited in aggregate principal amount to $200,000,000 (which are hereinafter
defined as the "9 3/8% Notes" for purposes this First Supplemental Indenture).
The Trustee shall authenticate 9 3/8% Notes for original issue in the aggregate
principal amount of $200,000,000 (the "Original 9 3/8% Notes"). The Original
9 3/8% 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.

         With respect to any 9 3/8% Notes issued after the Issue Date (except
for 9 3/8% Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other 9 3/8% Notes pursuant to Section 2.07,
2.08, 2.09, 2.15 or 3.03) (the "Additional 9 3/8% Notes"), there shall be
established in or pursuant to a resolution of the Board of Directors of the
Company:

                  (a) that such Additional 9 3/8% Notes shall be issued as part
of the same or a different series as the Original 9 3/8% Notes;

                  (b) the aggregate principal amount of such Additional 9 3/8%
Notes which may be authenticated and delivered under the Indenture, which may be
in an unlimited aggregate principal amount or which may be in a limited
principal amount (except for Additional 9 3/8% Notes authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other
9 3/8% Notes pursuant to Section 2.07, 2.08, 2.09, 2.15 or 3.03 and except for
Additional 9 3/8% Notes which, pursuant to Section 2.04, are deemed never to
have been authenticated and delivered hereunder);

                  (c) the issue price and issuance date of such Additional
9 3/8% Notes, including the date from which interest on such Additional 9 3/8%
Notes shall accrue;

                  (d) if applicable, that such Additional 9 3/8% Notes shall be
issuable in whole or in part in the form of one or more Global Securities and,
in such case, the respective depositories 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 9 3/8%
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 depository for
such Global Security or a nominee thereof; and

                  (e) if applicable, that such Additional 9 3/8% 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 9 3/8% 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 the
First Supplemental Indenture and specified herein.

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         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

                                    (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),

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         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,

                           (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

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                  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.

         "Affiliate" of any specified Person means any other Person:

                  (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.

         "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:

                  (a) 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;

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                  (b) 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;

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

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

                  (e) 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;

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

                  (g) the disposition of any Property with a Fair Market Value
of less than $2.0 million; or

                  (h) 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

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from such lenders against such receivables or inventory) or trade letters of
credit, in each case together with any extensions, revisions, refinancings or
replacements thereof by a lender or syndicate of lenders.

         "Capital Lease Obligations" 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 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
events.

                  (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

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

         "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 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.

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         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 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;

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                  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) for the purposes of Section 4.12 only, the net income of
any Person acquired by such specified Person or any of its Restricted
Subsidiaries in a pooling-of-interests transaction for any period prior to the
date of such acquisition;

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

                  (g) 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;

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

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                  (i) 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

                  (j) 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.

         "Consolidated Net Worth" of any Person means the stockholders' equity
of such Person and its Restricted Subsidiaries, as determined on a consolidated
basis in accordance with GAAP, less (to the extent included in stockholders'
equity) amounts attributable to Disqualified Stock of such Person or its
Restricted Subsidiaries.

         "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.

         "Designated Senior Indebtedness" means:

                  (a) the Bank Credit Facilities; and

                  (b) any other Senior Indebtedness of the Company that has, at
the time of determination, an aggregate principal amount outstanding of at least
$10.0 million that is specifically designated in the instrument evidencing such
Senior Indebtedness and is designated in a notice delivered by the Company to
the holders or a Representative of the holders of such Senior Indebtedness and
the Trustee as "Designated Senior Indebtedness" of the Company.

         "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;

         on or prior to, in the case of clause (a), (b) or (c), the first
anniversary of the Stated Maturity of the 9 3/8% 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.

                                       11
<PAGE>

         "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 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 a 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 declared effective by the SEC following the
Issue Date.

                                       12
<PAGE>

         "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.

         "Exempt Foreign Subsidiary" means any Restricted Subsidiary that is a
foreign corporation if more than 50% of the (i) total combined voting power of
all Voting Stock of the corporation or (ii) the total value of all Capital Stock
of the corporation 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. Ownership is determined by applying the attribution rules of
ownership in Internal Revenue Code Section 958. References to Internal Revenue
sections in this definition include such sections as amended or superceded,
including 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
less than $5.0 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 $5.0 million.

         "GAAP" means United States generally accepted accounting principles as
in effect on the date of this Indenture, 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:

                                       13
<PAGE>

                  (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

                  (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 a Note is registered on the
Securities 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;

                                       14
<PAGE>
                  (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;

                  (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 (h) 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 the 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.

                                       15
<PAGE>

         "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

                  (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.

         "Issue Date" means the date on which the Original 9 3/8% Notes first
were issued under the 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 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

                                       16
<PAGE>

                           (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;

                                       17
<PAGE>

                  (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

                                       18
<PAGE>

                           (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

                                       19
<PAGE>

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.

         "Pari Passu Indebtedness" means the 2009 Notes and any other
Indebtedness of the Company (or a Subsidiary Guarantor) that is pari passu in
right of payment to the 9 3/8% Notes (or a Subsidiary Guaranty, as appropriate).

         "Pari Passu Offer" means an offer by the Company or a Subsidiary
Guarantor to purchase all or a portion of Pari Passu Indebtedness to the extent
required by the indenture or other agreement or instrument pursuant to which
such Pari Passu Indebtedness was issued.

         "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:

                                       20
<PAGE>

                  (a) Indebtedness arising under the Indenture with respect to
the Original 9 3/8% 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) $250.0 million, which amount shall be permanently
                  reduced by the amount of Net Available Cash used to
                  permanently repay Indebtedness under Bank Credit Facilities
                  and not subsequently reinvested in Additional Assets or used
                  to permanently reduce other Indebtedness pursuant Section
                  4.14, and

                           (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

                                       21
<PAGE>

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 $30.0 million;

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

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

                           (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; and

                  (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.

         "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

                                       22
<PAGE>

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 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;

                  (i) Investments intended to promote the Company's strategic
objectives in the Oil and Gas Business in an amount not to exceed 5% 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 existing as of the Issue Date;

                  (b) Liens securing the 9 3/8% Notes, any Subsidiary Guaranties
and other obligations arising under this Indenture;

                  (c) 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;

                  (d) 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;

                  (e) 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,

                                       23
<PAGE>

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

                           (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);

                  (f) 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;

                  (g) 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;

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

                  (i) 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;

                  (j) 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:

                                       24
<PAGE>

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

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

                  (k) 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;

                  (l) 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;

                  (m) 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;

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

                  (o) Liens not otherwise permitted by clauses (a) through (n)
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 $5.0 million at any one time.

         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

                                       25
<PAGE>

is created, incurred, issued, assumed or guaranteed in connection with the
financing of, and within 60 days after the acquisition of, such Property;

                  (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;

                  (a) such New Indebtedness is subordinated in right of payment
to the 9 3/8% 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:

                                       26
<PAGE>

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

                  (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

                                       27
<PAGE>

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.

         "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.

         "Principal" of any Indebtedness (including the 9 3/8% Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.

         "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).

         "Representative" means the trustee, agent or representative expressly
authorized to act in such capacity, if any, for an issue of Senior Indebtedness.

         "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

                                       28
<PAGE>

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 Indebtedness of the Company or a Restricted Subsidiary that is
subordinate (whether pursuant to its terms or by operation of law) in right of
payment to the 9 3/8% Notes or the relevant Subsidiary Guaranty, as the case may
be, 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 the 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.

         "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 date of the Indenture 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 not be senior in right of payment to the 9 3/8% Notes;
provided, however, that Senior Indebtedness of the Company shall not include:

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

                                       29
<PAGE>

                  (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) Pari Passu Indebtedness or Subordinated Indebtedness of
the Company;

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

                  (g) Indebtedness evidenced by the 9 3/8% Notes; and

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

          "Senior Indebtedness" of any Subsidiary Guarantor has a correlative
meaning.

         "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.

         "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
9 3/8% 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.

                                       30
<PAGE>

         "Subsidiary Guarantors" means, unless released from their Subsidiary
Guaranties as permitted by the Indenture, any Restricted Subsidiary that becomes
a guarantor of the 9 3/8% Notes in compliance with the provisions of the
Indenture and executes a supplemental indenture agreeing to be bound by the
terms of this Indenture.

         "Subsidiary Guaranty" means an unconditional senior subordinated
guaranty of the 9 3/8% 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.

         "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.

                                       31
<PAGE>

         "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 Article III of the Original Indenture.

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

                  On or prior to 11:00 a.m., New York City time, on the
         redemption date for any Registered 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 that is on or prior to the
         redemption date) such Registered Securities or any portions thereof
         that are to be redeemed on that date.

                  (b) The first sentence of the fifth paragraph of Section 3.02
of the Original Indenture is amended in its entirety with respect to the 9 3/8%
Notes to read as follows:

                  If less than all the 9 3/8% Notes are to be redeemed at any
         time, selection of 9 3/8% 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 9 3/8% Notes are listed, or,
         if the 9 3/8% Notes are not so listed, on a pro rata basis, by lot or
         by such method as the Trustee shall deem fair and appropriate and in
         accordance with methods generally used at the time of selection by
         fiduciaries in similar circumstances.

                  (c) 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

                                       32
<PAGE>

         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.

                  (d) Article III of the Original Indenture is amended with
respect to the 9 3/8% Notes by adding Section 3.06 and Section 3.07 as follows:

                  SECTION 3.06. Optional Redemption. Except as set forth in the
         following paragraph, the 9 3/8% Notes will not be redeemable at the
         option of the Company prior to May 1, 2007. Starting on that date, the
         Company may redeem all or any portion of the 9 3/8% 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 9 3/8% Notes redeemed
         during the 12-month period commencing on May 1 of the years set forth
         below, and are expressed as percentages of principal amount:

<Table>
<Caption>
                                                                 Redemption
                                    Year                           Price
                                    ----                         ----------
<S>                                                              <C>
                                    2007                          104.688%
                                    2008                          103.125%
                                    2009                          101.563%
                                    2010 and thereafter           100.000%
</Table>

                  The Company may on any one or more occasions prior to May 1,
         2005, redeem up to 33 1/3% of the aggregate principal amount of the
         9 3/8% Notes originally issued with the net proceeds of one or more
         Equity Offerings of the Company at a redemption price of 109.375% 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 66 2/3% of the aggregate
         principal amount of the 9 3/8% 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 the Indenture.

                  SECTION 3.07. No Mandatory Sinking Fund. There will be no
         mandatory sinking fund payments for the 9 3/8% 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 9 3/8% Notes.

                  (b) Section 4.10 of the Original Indenture is amended in its
entirety with respect to the 9 3/8% Notes to read as follows:

                                       33
<PAGE>

                  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 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 9 3/8% 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, except that the Company and
         its Restricted Subsidiaries may enter into, create, Incur, assume or
         suffer to exist Liens securing Senior Indebtedness and Permitted Liens.

                  (c) Article IV of the Original Indenture is amended with
respect to the 9 3/8% 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 2.5 to 1.0; or

                           (b) such Indebtedness is Permitted Indebtedness.

                  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

                  (c) the aggregate amount expended or declared for all
         Restricted Payments from the Issue 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 first day of the fiscal
                  quarter during which the Issue Date occurs, 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),

                                       34
<PAGE>

                           (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 Issue 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 Issue 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 Issue 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
                  Senior Indebtedness or convertible Pari Passu 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 Issue 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

                                    (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 Issue Date in any
                  Person resulting from:

                                       35
<PAGE>

                                    (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

                                             (ii) were treated as Restricted
                                    Payments, and the Fair Market Value of the
                                    Company's and its Restricted Subsidiaries'
                                    interest in such Unrestricted Subsidiary,
                                    and

                           (6) $15.0 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) 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 similar rights if
                  such shares represent all or a portion of the exercise price
                  or are surrendered in connection with satisfying Federal
                  income tax obligations; provided, however, that the aggregate
                  amount of such repurchase, redemptions, acquisitions and
                  retirements shall not exceed the sum of:

                                    (1) $5.0 million in any twelve-month period,
                           and

                                       36
<PAGE>

                                    (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 Subordinated Indebtedness in
                  exchange for, or out of the aggregate net cash proceeds of a
                  substantially concurrent Incurrence (other than a sale to a
                  Subsidiary of the Company) of Subordinated Indebtedness so
                  long as such new Indebtedness is Permitted Refinancing
                  Indebtedness;

                           (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 Board of Directors (or
                  by a duly authorized officer), 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

                                       37
<PAGE>

         proceeds from any issuance or sale of Capital Stock or Subordinated
         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. Limitation on Issuance or Sale of Capital Stock
         of Restricted Subsidiaries. The Company will not:

                  (a) permit any Restricted Subsidiary to sell or otherwise
         issue any Capital Stock other than to the Company or one of its Wholly
         Owned Subsidiaries; or

                  (b) sell, hypothecate or otherwise dispose of any shares of
         Capital Stock of any Restricted Subsidiary, or permit any Restricted
         Subsidiary to do so, except, in each case, for:

                           (1) directors' qualifying shares, or

                           (2) a sale of all the Capital Stock of a Restricted
                  Subsidiary owned by the Company or its Subsidiaries effected
                  in accordance with Section 4.14.

                  In the event of the consummation of a sale of all the Capital
         Stock of a Restricted Subsidiary pursuant to the foregoing clause (2)
         and the execution and delivery of a supplemental indenture in form
         satisfactory to the Trustee, any such Restricted Subsidiary that is
         also a Subsidiary Guarantor shall be released from all its obligations
         under its Subsidiary Guaranty.

                  For purposes of this covenant, the creation of a Lien on any
         Capital Stock of a Restricted Subsidiary to secure Indebtedness of the
         Company or any of its Restricted Subsidiaries will not be deemed to be
         a violation of this covenant; provided that any sale or disposition by
         the secured party of such Capital Stock following foreclosure of its
         Lien will be subject to this covenant.

                  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 9 3/8% 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

                                       38
<PAGE>

         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 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); or

                  (c) purchase 9 3/8% Notes or purchase both 9 3/8% Notes and
         one or more series or issues of other Pari Passu Indebtedness on a pro
         rata basis (excluding 9 3/8% Notes and Pari Passu Indebtedness owed by
         the Company or an Affiliate of the Company).

                  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 $10.0 million, the Company
         will be required to make an offer (a "Prepayment Offer") to purchase
         9 3/8% 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 9 3/8% 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 the Indenture, but, if the terms of any Pari Passu
         Indebtedness require that a Pari Passu Offer be made contemporaneously
         with the Prepayment Offer, then the Excess Proceeds shall be prorated
         between the Prepayment Offer and such Pari Passu Offer in accordance
         with the aggregate Outstanding principal amounts of the 9 3/8% Notes
         and such Pari Passu Indebtedness, and the aggregate principal amount of
         9 3/8% Notes for which the Prepayment Offer is made shall be reduced
         accordingly. If the aggregate principal amount of 9 3/8% 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 9 3/8% Notes tendered and the Trustee will
         select the 9 3/8% Notes to be purchased in accordance with this
         Indenture. To the extent that any portion of the

                                       39
<PAGE>

         amount of Excess Proceeds remains after compliance with the second
         sentence of this paragraph and provided that all Holders of 9 3/8%
         Notes have been given the opportunity to tender their 9 3/8% Notes for
         purchase as described in the following paragraph in accordance with the
         Indenture, the Company and its Restricted Subsidiaries may use such
         remaining amount for purposes permitted by the 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 9 3/8% Notes pursuant to the preceding paragraph, send a
         written Prepayment Offer notice, by first-class mail, to the Holders of
         the 9 3/8% 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 9 3/8% 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 9 3/8% Notes
         pursuant to the provisions of the Indenture;

                  (b) that any 9 3/8% 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 9 3/8% 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 9 3/8% Notes to be
         purchased;

                  (f) a description of the procedure that Holders of 9 3/8%
         Notes must follow in order to tender their 9 3/8% Notes for payment;
         and

                  (g) all other instructions and materials necessary to enable
         Holders to tender 9 3/8% 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 regulations thereunder to the extent such laws and
         regulations are applicable in connection with the purchase of 9 3/8%
         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.

                                       40
<PAGE>

                  SECTION 4.15. Incurrence of Layered Indebtedness. The
         Indenture provides that:

                  (a) the Company will not Incur any Indebtedness that is
         subordinated or junior in right of payment to any Senior Indebtedness
         of the Company unless such Indebtedness constitutes Indebtedness that
         is junior to, or pari passu with, the 9 3/8% Notes in right of payment;
         and

                  (b) no Subsidiary Guarantor will Incur any Indebtedness that
         is subordinated or junior in right of payment to any Senior
         Indebtedness of such Subsidiary Guarantor unless such Indebtedness
         constitutes Indebtedness that in right of payment is junior to, or pari
         passu with, such Subsidiary Guarantor's Subsidiary Guaranty.

                  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) $1.0 million but less than $5.0 million, an
                  officer of the Company certifies that such transaction or
                  series of transactions complies with clause (b) of this
                  paragraph, as evidenced by an Officers' Certificate delivered
                  to the Trustee,

                           (2) $5.0 million but less than $20.0 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

                           (3) $20.0 million,

                                       41
<PAGE>

                                    (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 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 to:

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

                           (e) advances and loans to officers, directors and
                  employees of the Company or any Subsidiary in the ordinary
                  course of business (including, without limitation, non-cash
                  loans for the purchase of joint

                                       42
<PAGE>

                  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 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 created in anticipation of or in

                                       43
<PAGE>

                           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 9 3/8% Notes than those
                           under or pursuant to the agreement so renewed,
                           refinanced, extended or amended, and,

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

                                    (A) restrictions pursuant to Liens permitted
                           to be Incurred and secured without also securing the
                           9 3/8% 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; 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

                                       44
<PAGE>

         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 redesignated as an Unrestricted
         Subsidiary. The designation of an Unrestricted Subsidiary or removal of
         such designation shall be made by the 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

                                       45
<PAGE>

         certified resolution is delivered to the Trustees. 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.

                  The Company will not, and will not permit any of its
         Unrestricted Subsidiaries to, take any action or enter into any
         transaction or series of transactions that would result in a Person
         becoming a Restricted Subsidiary (whether through an acquisition or
         otherwise) unless, after giving effect to such action, transaction or
         series of transactions, on a pro forma basis:

                           (a) the Company could Incur at least $1.00 of
                  additional Indebtedness pursuant to clause (a) of the first
                  paragraph of Section 4.11 and

                           (b) no Default or Event of Default would occur or be
                  continuing.

                  SECTION 4.20. Change of Control. Upon the occurrence of a
         Change of Control, each Holder of 9 3/8% Notes shall have the right to
         require the Company to repurchase all or any part (equal to $1,000 in
         principal amount or an integral multiple thereof) of such Holder's
         9 3/8% 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 9 3/8% 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 9 3/8% 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 the Indenture and that all 9 3/8% Notes (or
                           portions thereof) properly tendered will be accepted
                           for payment,

                                    (2) the Change of Control Purchase Price 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

                                       46
<PAGE>

                           than 60 days from the date the Company mails such
                           notice (the "Change of Control Payment Date"),

                                    (3) that any 9 3/8% 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 9 3/8% Note (or portions
                           thereof) not properly tendered will continue to
                           accrue interest,

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

                                    (6) the procedures that the Holders of the
                           9 3/8% Notes must follow in order to tender their
                           9 3/8% Notes (or portions thereof) for payment and
                           the procedures that Holders of 9 3/8% Notes must
                           follow in order to withdraw an election to tender
                           9 3/8% Notes (or portions thereof) for payment, and

                                    (7) all other instructions and materials
                           necessary to enable Holders to tender 9 3/8% 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 9 3/8%
         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 described above 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 the Indenture applicable to a Change
         of Control Offer made by the Company and purchases all 9 3/8% Notes
         validly tendered and not withdrawn under such Change of Control Offer.

         SECTION 5. Amendments to Article V the Original Indenture.

                  (a) Section 5.03 of the Original Indenture is amended in its
         entirety with respect to the 9 3/8% 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

                                       47
<PAGE>

         file with the SEC and provide the Trustee and 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.

         SECTION 6. Amendments to Article VI the Original Indenture.

                  (a) Section 6.01(e) of the Original Indenture is amended with
respect to the 9 3/8% Notes by deleting the number "60" and substituting the
number "30" in its place.

                  (b) Section 6.01(f) of the Original Indenture is amended in
its entirety with respect to the 9 3/8% Notes to read as follows: (f) a default
by the Company or any Restricted Subsidiary under any Indebtedness for borrowed
money (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, in an amount greater than $5.0 million if such
Indebtedness is not discharged or such acceleration is not rescinded or annulled
within 10 days after written notice as provided in the Indenture;

                  (c) Sections 6.01(g) and 6.01(h) of the Original Indenture are
amended with respect to the 9 3/8% Notes by deleting each reference to
"Restricted Subsidiary" and "Restricted Subsidiaries" therein and substituting
"Significant Subsidiary" or "Significant Subsidiaries", respectively, in its
place.

                  (d) Section 6.01 of the Original Indenture is amended with
respect to the 9 3/8% Notes by deleting the word "or" from the end of clause (h)
of the first paragraph thereof and 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 $5.0 million and such judgments or
         orders are not discharged, waived, stayed, satisfied or bonded for a
         period of 60 consecutive days; or

                  (k) 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.

                  (e) 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 clauses (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.

                                       48
<PAGE>

                  (f) 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 the 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 Article VII 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.

         SECTION 8. Amendments to Article IX of the Original Indenture.

                  (a) Section 9.01 of the Original Indenture is amended with
respect to the 9 3/8% Notes by (i) deleting the final clause of paragraph (c)
thereof, beginning with the words ", or to make", (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 9 3/8% Notes in addition to
         or in place of certificated 9 3/8% Notes;

                  (m) to make any change that does not adversely affect the
         rights of any Holder of 9 3/8% Notes in any material respect;

                  (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 word "adversely" 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.

                                       49
<PAGE>

                  (c) Section 9.02 of the Original Indenture is amended with
respect to the 9 3/8% Notes by deleting the word "or" from the end of clause
(vii) of the first paragraph thereof, deleting the "." at the end of clause
(viii) of the first paragraph thereof and by adding the following provisions to
the end of the first paragraph thereof:

                   ; (ix) at any time after a Change of Control has occurred,
         change the time at which the Change of Control Offer relating thereto
         must be made or at which the 9 3/8% Notes must be repurchased pursuant
         to such Change of Control Offer or (x) 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 adversely" immediately after the
third occurrence of the word "Indenture" and immediately before the words
"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 the 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.

                  (f) The first sentences of both Section 9.01 and 9.02 of the
Original Indenture are amended with respect to the 9 3/8% 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 9 3/8% 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

                                       50
<PAGE>

                  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 9 3/8% Notes and the
                  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
                  clauses (d) and (e) 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) immediately after giving effect to such
                  transaction, the Successor Company would be able to Incur an
                  additional $1.00 of Indebtedness pursuant to clause (a) of the
                  first paragraph under Section 4.11;

                           (e) immediately after giving effect to such
                  transaction, the Successor Company shall have Consolidated Net
                  Worth in an amount that is not less than the Consolidated Net
                  Worth of the Company immediately prior to such transaction;
                  and

                           (f) 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 the
                  Indenture.

                  (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 the 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 9 3/8% Notes.

                  (b) Section 11.02(b) of the Original Indenture is superseded
with respect to the 9 3/8% Notes by the following provisions:

                                       51
<PAGE>

                  (b) Subject to Sections 11.02(c) and 11.03, the Company at any
         time may terminate (i) all its obligations under the 9 3/8% Notes and
         the Indenture with respect to the 9 3/8% Notes ("legal defeasance
         option") or (ii) its obligations under Sections 4.10, 4.11, 4.12, 4.13,
         4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 10.01(d) and 10.01(e), the
         operation of Sections 6.01(d) (to the extent relating to Sections
         10.01(d) and 10.01(e)), 6.01(e) (to the extent relating to Sections
         4.10, 4.11, 4.12, 4.13, 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 9 3/8% Notes may not be accelerated because of an Event of
         Default. If the Company exercises its covenant defeasance option,
         payment of the 9 3/8% 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 4 and 10 referred to in the immediately
         preceding paragraph) and Sections 6.01(f), 6.01(g) and 6.01(h) (in each
         case to the extent relating to Significant Subsidiaries), 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 9 3/8% 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 9 3/8% 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(3) of the Original Indenture is amended by
deleting each instance of the number "91" and substituting "123" in its place.

                  (e) 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.

                                       52
<PAGE>

         SECTION 11. Applicability of and Amendments to Article XII of the
Original Indenture.

                  (a) Article XII of the Original Indenture shall be applicable
to the 9 3/8% Notes, which shall be subordinated to Senior Indebtedness as
provided therein.

                  (b) Section 12.03 of the Original Indenture is amended in its
entirety to read as follows:

                  SECTION 12.03. Default on Senior Indebtedness. The Company may
         not pay the principal of, or premium, if any, or interest on, the
         Subordinated Debt Securities or make any deposit pursuant to Article XI
         and may not repurchase, redeem or otherwise retire (except, in the case
         of Subordinated Debt Securities that provide for a mandatory sinking
         fund pursuant to Section 3.04, by the delivery of Subordinated Debt
         Securities by the Company to the Trustee pursuant to the first
         paragraph of Section 3.05) any Subordinated Debt Securities
         (collectively, "pay the Subordinated Debt Securities") if (i) any
         principal, premium or interest or other amounts due in respect of
         Senior Indebtedness is not paid within any applicable grace period
         (including at maturity) or (ii) any other default on Senior
         Indebtedness occurs and the maturity of such Senior Indebtedness is
         accelerated in accordance with its terms unless, in either case, (x)
         the default has been cured or waived and any such acceleration has been
         rescinded or (y) such Senior Indebtedness has been paid in full in
         cash; provided, however, that the Company may pay the Subordinated Debt
         Securities without regard to the foregoing if the Company and the
         Trustee receive written notice approving such payment from the
         Representative of each issue of Designated Senior Indebtedness. During
         the continuance of any default (other than a default described in
         clause (i) or (ii) of the preceding sentence) with respect to any
         Designated Senior Indebtedness pursuant to which the maturity thereof
         may be accelerated immediately without further notice (except such
         notice as may be required to effect such acceleration), the Company may
         not pay the Subordinated Debt Securities for a period (a "Payment
         Blockage period") commencing upon the receipt by the Company and the
         Trustee of written notice of such default from the Representative of
         any Designated Senior Indebtedness specifying an election to effect a
         Payment Blockage Period (a "Blockage Notice") and ending 179 days
         thereafter (or earlier if such Payment Blockage Period is terminated
         (i) by written notice to the Trustee and the Company from the Person or
         Persons who gave such Blockage Notice, (ii) by repayment in full in
         cash of such Designated Senior Indebtedness or (iii) because the
         default giving rise to such Blockage Notice is no longer continuing).
         Notwithstanding the provisions described in the immediately preceding
         sentence (but subject to the provisions contained in the first sentence
         of this Section 12.03), unless the holders of such Designated Senior
         Indebtedness or the Representative of such holders shall have
         accelerated the maturity of such Designated Senior Indebtedness and not
         rescinded such acceleration, the Company may resume payments on the
         Subordinated Debt Securities after the end of such Payment Blockage
         Period. Not more than one Blockage Notice may

                                       53
<PAGE>

         be given in any consecutive 360-day period, irrespective of the number
         of defaults with respect to any number of issues of Senior Indebtedness
         during such period.

                  (c) Section 12.04 of the Original Indenture is amended in its
entirety to read as follows:

                  SECTION 12.04. Acceleration of Payment of Debt Securities. If
         payment of the Subordinated Debt Securities is accelerated when any
         Designated Senior Indebtedness is outstanding, the Company may not pay
         the Subordinated Debt Securities until three Business Days after the
         Representatives of all issues of Designated Senior Indebtedness receive
         notice of such acceleration and, thereafter, may pay the Subordinated
         Debt Securities only if the Indenture otherwise permits payment at that
         time.

         SECTION 12. Subsidiary Guaranties.

                  (a) The Original Indenture is amended with respect to the
9 3/8% Notes by adding Article XIV and Article XV as follows:

                                   ARTICLE XIV

                              Subsidiary Guaranties

                  SECTION 14.01. Subsidiary Guaranties. Each Subsidiary
         Guarantor hereby unconditionally Guaranties, 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 9 3/8%
         Notes when due, whether at maturity, by acceleration, by redemption or
         otherwise, and all other monetary obligations of the Company under the
         Indenture and the 9 3/8% Notes and (b) the full and punctual
         performance within applicable grace periods of all other obligations of
         the Company under the Indenture and the 9 3/8% 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 9 3/8% 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 the Indenture, the 9 3/8% 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 the Indenture, the 9 3/8% Notes or any other
         agreement; (d) the release of any security held by any Holder or the
         Trustee for the Obligations or

                                       54
<PAGE>

         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 herein 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.

                  Each Subsidiary Guaranty is, to the extent and in the manner
         set forth in Article XV, subordinated and subject in right of payment
         to the prior payment in full of all Senior Indebtedness of the
         Subsidiary Guarantor giving such Subsidiary Guaranty and each
         Subsidiary Guarantor and is made subject to such provisions of the
         Indenture.

                  Except as expressly set forth in Sections 4.13, 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 the Indenture, the 9 3/8% 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 herein 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 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

                                       55
<PAGE>

         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 agrees that it shall not be
         entitled to any right of subrogation in respect of any Obligations
         Guaranteed hereby until payment in full in cash of all Obligations and
         all obligations to which the Obligations are subordinated as provided
         in Article XV. 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 herein, notwithstanding any
         stay, injunction or other prohibition preventing such acceleration in
         respect of the Obligations Guaranteed hereby, and (y) in the event of
         any declaration of acceleration of such Obligations as provided in
         Article VI, such Obligations (whether or not due and payable) shall
         forthwith become due and payable by such Subsidiary Guarantor for the
         purposes of this Section.

                  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 (subject to
         Articles XII and XV) 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 the Indenture and in the 9 3/8%
         Notes shall automatically extend to and be vested in such transferee or
         assignee, all subject to the terms and conditions of the 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

                                       56
<PAGE>

         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 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.

                                   ARTICLE XV

                     Subordination of Subsidiary Guaranties

                  SECTION 15.01. Agreement To Subordinate. Each Subsidiary
         Guarantor agrees, and each Holder by accepting a 9 3/8% Note agrees,
         that the Obligations of such Subsidiary Guarantor are subordinated in
         right of payment, to the extent and in the manner provided in this
         Article XV, to the payment when due of all Senior Indebtedness of such
         Subsidiary Guarantor and that the subordination is for the benefit of
         and enforceable by the holders of such Senior Indebtedness. The
         Obligations of a Subsidiary Guarantor shall in all respects rank pari
         passu with any guarantee of the Company's 10.25% senior subordinated
         notes due 2009 (the "2009 Notes") and any future Senior Subordinated
         Indebtedness of such Subsidiary Guarantor and senior to all existing
         and future junior subordinated Indebtedness of such Subsidiary
         Guarantor, and only Senior Indebtedness shall rank senior to the
         Obligations of such Subsidiary Guarantor in accordance with the
         provisions set forth herein.

                                       57
<PAGE>

                  SECTION 15.02. Liquidation, Dissolution, Bankruptcy. Upon any
         payment or distribution of the assets of any Subsidiary Guarantor to
         creditors upon a total or partial liquidation or a total or partial
         dissolution of such Subsidiary Guarantor or in a bankruptcy,
         reorganization, insolvency, receivership or similar proceeding relating
         to such Subsidiary Guarantor or its property:

                           (1) holders of Senior Indebtedness of such Subsidiary
                  Guarantor shall be entitled to receive payment in full of such
                  Senior Indebtedness before holders shall be entitled to
                  receive any payment pursuant to any Obligations of such
                  Subsidiary Guarantor; and (2) until the Senior Indebtedness of
                  any Subsidiary Guarantor is paid in full, any distribution
                  made by or on behalf of such Subsidiary Guarantor to which
                  Holders would be entitled but for this Article XV shall be
                  made to holders of the Senior Debt as their interests may
                  appear, except that all Holders may receive and retain shares
                  of stock and any debt securities of such Subsidiary Guarantor
                  that are subordinated to Senior Indebtedness of such
                  Subsidiary Guarantor to at least the same extent as the
                  Obligations of such Subsidiary Guarantor are subordinated to
                  Senior Indebtedness of such Subsidiary Guarantor.

                  SECTION 15.03. Default on Senior Indebtedness of Subsidiary
         Guarantor. No Subsidiary Guarantor may make any payment pursuant to any
         of its Obligations or repurchase, redeem or otherwise retire or defease
         any 9 3/8% Notes or other Obligations (collectively, "pay its
         Subsidiary Guaranty") if (i) any Senior Indebtedness of such Subsidiary
         Guarantor is not paid within any applicable grace period (including at
         maturity) or (ii) any other default on Senior Indebtedness of such
         Subsidiary Guarantor occurs and the maturity of such Senior
         Indebtedness is accelerated in accordance with its terms unless, in
         either case, (x) the default has been cured or waived and any such
         acceleration has been rescinded or (y) such Senior Indebtedness has
         been paid in full; provided, however, that any Subsidiary Guarantor may
         pay its Subsidiary Guaranty without regard to the foregoing if such
         Subsidiary Guarantor and the Trustee receive written notice approving
         such payment from the Representatives of each issue of Senior
         Indebtedness of such Subsidiary Guarantor. No Subsidiary Guarantor may
         pay its Subsidiary Guaranty during the continuance of any Payment
         Blockage Period after receipt by the Company and the Trustee of a
         Payment Blockage Notice under Section 12.03. Notwithstanding the
         provisions described in the immediately preceding sentence, unless the
         holders of Senior Indebtedness of such Subsidiary Guarantor giving such
         Payment Blockage Notice or the Representative of such holders shall
         have accelerated the maturity of such Senior Indebtedness and not
         rescinded such acceleration, any Subsidiary Guarantor may resume
         (unless otherwise prohibited as described in the first sentence of this
         paragraph) payments pursuant to its Subsidiary Guaranty after such
         Payment Blockage Period.

                  SECTION 15.04. Demand for Payment. If a demand for payment is
         made on a Subsidiary Guarantor pursuant to Article XIV, such Subsidiary
         Guarantor

                                       58
<PAGE>

         may not pay its Subsidiary Guaranty until three Business Days after the
         Representatives of all issues of Senior Indebtedness of such Subsidiary
         Guarantor receive notice of such acceleration and, thereafter, may pay
         its Subsidiary Guaranty only if the Indenture otherwise permits payment
         at that time.

                  SECTION 15.05. When Distribution Must Be Paid Over. If a
         distribution is made to Holders that because of this Article XV should
         not have been made to them, the Holders who receive the distribution
         shall hold it in trust for holders of the relevant Senior Indebtedness
         and pay it over to them or their Representatives as their interests may
         appear.

                  SECTION 15.06. Subrogation. After all Senior Indebtedness of a
         Subsidiary Guarantor is paid in full and until the 9 3/8% Notes are
         paid in full, Holders shall be subrogated to the rights of holders of
         Senior Indebtedness to receive distributions applicable to Senior
         Indebtedness. A distribution made under this Article XV to holders of
         such Senior Indebtedness that otherwise would have been made to Holders
         is not, as between the relevant Subsidiary Guarantor and Holders, a
         payment by such Subsidiary Guarantor on such Senior Indebtedness.

                  SECTION 15.07. Relative Rights. This Article XV defines the
         relative rights of Holders and holders of Senior Indebtedness of a
         Subsidiary Guarantor. Nothing in the Indenture shall:

                           (1) impair, as between a Subsidiary Guarantor and
                  Holders, the obligation of such Subsidiary Guarantor, which is
                  absolute and unconditional, to pay the Obligations to the
                  extent set forth in Article XIV or the relevant Subsidiary
                  Guaranty; or (2) prevent the Trustee or any Holder from
                  exercising its available remedies upon a default by such
                  Subsidiary Guarantor under the Obligations, subject to the
                  rights of holders of Senior Indebtedness of such Subsidiary
                  Guarantor to receive distributions otherwise payable to
                  Holders.

                  SECTION 15.08. Subordination May Not Be Impaired by Subsidiary
         Guarantor. No right of any holder of Senior Indebtedness of any
         Subsidiary Guarantor to enforce the subordination of the Obligation of
         such Subsidiary Guarantor shall be impaired by any act or failure to
         act by such Subsidiary Guarantor or by its failure to comply with the
         Indenture.

                  SECTION 15.09. Rights of Trustee and Paying Agent.
         Notwithstanding Section 15.03, the Trustee or paying agent may continue
         to make payments on any Subsidiary Guaranty and shall not be charged
         with knowledge of the existence of facts that would prohibit the making
         of any such payments unless, not less than two Business Days prior to
         the date of such payment, a responsible trust officer receives written
         notice satisfactory to it that payments may not be made under this
         Article XV. The Company, the relevant Subsidiary Guarantor, the
         Registrar, any paying agent, a Representative or a holder of Senior

                                       59
<PAGE>

         Indebtedness of any Subsidiary Guarantor may give the notice; provided,
         however, that, if an issue of Senior Indebtedness of any Subsidiary
         Guarantor has a Representative, only the Representative may give the
         notice.

                  The Trustee in its individual or any other capacity may hold
         Senior Indebtedness with the same rights it would have if it were not
         Trustee. The Registrar and any paying agent may do the same with like
         rights. The Trustee shall be entitled to all the rights set forth in
         this Article XV with respect to any Senior Indebtedness of any
         Subsidiary Guarantor that may at any time be held by it, to the same
         extent as any other holder of Senior Indebtedness; and nothing in
         Article XV shall deprive the Trustee of any of its rights as such
         holder. Nothing in this Article XV shall apply to claims of, or
         payments to, the Trustee under or pursuant to Section 7.06.

                  SECTION 15.10. Distribution or Notice to Representative.
         Whenever a distribution is to be made or a notice given to holders of
         Senior Indebtedness of any Subsidiary Guarantor, the distribution may
         be made and the notice given to their Representative (if any).

                  SECTION 15.11. Article XV Not To Prevent Events of Default
         Under a Subsidiary Guaranty or Limit Right To Demand Payment. The
         failure to make a payment pursuant to a Subsidiary Guaranty by reason
         of any provision in this Article XV shall not be construed as
         preventing the occurrence of a Default under such Subsidiary Guaranty.
         Nothing in this Article XV shall have any effect on the right of the
         Holders or the Trustee to make a demand for payment on any Subsidiary
         Guarantor pursuant to Article XIV or the relevant Subsidiary Guaranty.

                  SECTION 15.12. Trustee Entitled To Rely. Upon any payment or
         distribution pursuant to this Article XV, the Trustee and the Holders
         shall be entitled to rely (i) upon any order or decree of a court of
         competent jurisdiction in which any proceedings of the nature referred
         to in Section 15.02 are pending, (ii) upon a certificate of the
         liquidating trustee or agent or other Person making such payment or
         distribution to the Trustee or to the Holders or (iii) upon the
         Representatives for the holders of Senior Indebtedness of any
         Subsidiary Guarantor for the purpose of ascertaining the Persons
         entitled to participate in such payment or distribution, the holders of
         Senior Indebtedness and other Indebtedness of such Subsidiary
         Guarantor, the amount thereof or payable thereon, the amount or amounts
         paid or distributed thereon and all other facts pertinent thereto or to
         this Article XV. In the event that the Trustee determines, in good
         faith, that evidence is required with respect to the right of any
         Person as a holder of Senior Indebtedness of any Subsidiary Guarantor
         to participate in any payment or distribution pursuant to this Article
         XV, the Trustee may request such Person to furnish evidence to the
         reasonable satisfaction of the Trustee as to the amount of Senior
         Indebtedness of such Subsidiary Guarantor held by such Person, the
         extent to which such Person is entitled to participate in such payment
         or distribution and other facts pertinent to the rights of such Person
         under this Article

                                       60
<PAGE>

         XV, and, if such evidence is not furnished, the Trustee may defer any
         payment to such Person pending judicial determination as to the right
         of such Person to receive such payment. The provisions of Sections 7.01
         and 7.02 shall be applicable to all actions or omissions of actions by
         the Trustee pursuant to this Article XV.

                  SECTION 15.13. Trustee To Effectuate Subordination. Each
         Holder by accepting a 9 3/8% Note authorizes and directs the Trustee on
         his behalf to take such action as may be necessary or appropriate to
         acknowledge or effectuate the subordination between the Holders and the
         holders of Senior Indebtedness of any Subsidiary Guarantor as provided
         in this Article XV and appoints the Trustee as attorney-in-fact for any
         and all such purposes.

                  SECTION 15.14. Trustee Not Fiduciary for Holders of Senior
         Indebtedness of Subsidiary Guarantor. The Trustee shall not be deemed
         to owe any fiduciary duty to the holders of Senior Indebtedness of any
         Subsidiary Guarantor and shall not be liable to any such holders if it
         shall mistakenly pay over or distribute to Holders or the Company or
         any other Person, money or assets to which any holders of such Senior
         Indebtedness shall be entitled by virtue of this Article XV or
         otherwise.

                  SECTION 15.15. Reliance by Holders of Senior Indebtedness on
         Subordination Provisions. Each Holder by accepting a 9 3/8% Note
         acknowledges and agrees that the foregoing subordination provisions
         are, and are intended to be, an inducement and a consideration to each
         holder of any Senior Indebtedness of any Subsidiary Guarantor, whether
         such Senior Indebtedness was created or acquired before or after the
         issuance of the 9 3/8% Notes, to acquire and continue to hold, or to
         continue to hold, such Senior Indebtedness and such holder of Senior
         Indebtedness shall be deemed conclusively to have relied on such
         subordination provisions in acquiring and continuing to hold, or in
         continuing to hold, such Senior Indebtedness.

         SECTION 13. Governing Law. This First Supplemental Indenture and the
9 3/8% Notes 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 9 3/8% 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.

         SECTION 15. 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.

                                       61
<PAGE>

         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:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       BANK ONE, NA, as Trustee

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       62
<PAGE>

                                                                       Exhibit A

                       [FORM OF THE FACE OF 9 3/8% 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 DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

                              SWIFT ENERGY COMPANY

                    9 3/8% SENIOR SUBORDINATED NOTE DUE 2012

REGISTERED                                                 CUSIP No. 870738 AD 3

No. ___                                                             $200,000,000

         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 Million United States Dollars ($200,000,000) on May
1, 2012.

         Interest Payment Dates: May 1, and November 1, commencing November 1,
2002.

         Regular Record Dates:  April 15 and October 15.

                                      A-1
<PAGE>

         Reference is hereby made to the further provisions of this 9 3/8% 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.

         IN WITNESS WHEREOF, the Company has caused this 9 3/8% Note to be
signed manually or by facsimile by its duly authorized officers under its
corporate seal.

Date:                                  SWIFT ENERGY COMPANY

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

Attest:

----------------------------------

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                       BANK ONE, NA,
                                       as Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

                                      A-2
<PAGE>

                      [FORM OF THE REVERSE OF 9 3/8% NOTES]

                              SWIFT ENERGY COMPANY

                    9 3/8% SENIOR SUBORDINATED NOTE DUE 2012

         1. Indenture; Limitations.

         The Company issued the 9 3/8% Notes under an Indenture dated as of
April 16, 2002 (the "Original Indenture") and a First Supplemental Indenture
dated as of April 16, 2002 (the "Supplemental Indenture") (the Original
Indenture, as supplemented by the Supplemental Indenture being hereinafter
referred to as the "Indenture"), between the Company and Bank One, NA, as
trustee (the "Trustee") . Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. The terms of the 9 3/8% Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The 9 3/8% 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 9 3/8% Note and the terms
of the Indenture, the terms of the Indenture shall control.

         The 9 3/8% Notes are unsecured senior subordinated obligations of the
Company and the aggregate principal amount of the 9 3/8% 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 9 3/8% Notes under the Indenture in either
a limited or an unlimited aggregate principal amount. This 9 3/8% Note is one of
the Original 9 3/8% Notes referred to in the Indenture issued in an aggregate
principal amount of $200,000,000. The Additional 9 3/8% Notes may be issued as
part of the same or a different series of Debt Securities as the Original 9 3/8%
Notes. The 9 3/8% Notes include the Original Notes and any Additional 9 3/8%
Notes that may be issued under the Indenture as part of the same series.

         2. Principal and Interest.

         The Company will pay the principal of this 9 3/8% Note on May 1, 2012.

         The Company promises to pay interest on the principal amount of this
9 3/8% Note on each May 1 and November 1 (each an "Interest Payment Date"), as
set forth below, at the rate per annum shown above.

                                      A-3
<PAGE>

         Interest will be payable semiannually (to the holders of record of the
9 3/8% Notes at the close of business on the April 15 or October 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
November 1, 2002.

         Interest on the 9 3/8% Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from April 16,
2002, provided that, if there is no existing Default in the payment of interest
and this 9 3/8% 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 9 3/8% 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 9 3/8%
Notes.

         3. Method of Payment.

         The Company will pay interest (except defaulted interest) on the
principal amount of the 9 3/8% 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 April 15 and October 15 immediately preceding
the relevant Interest Payment Date), in each case, even if the 9 3/8% 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 9 3/8% Note to a paying agent on or
after May 1, 2012.

         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 9 3/8% 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

                                      A-4
<PAGE>

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 in the following paragraph, the 9 3/8% Notes will
not be redeemable at the option of the Company prior to May 1, 2007. Starting on
that date, the Company may redeem all or any portion of the 9 3/8% 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 9 3/8% Notes redeemed during the 12-month period commencing on
May 1 of the years set forth below, and are expressed as percentages of
principal amount:

<Table>
<Caption>
                          YEAR                                        REDEMPTION PRICE
                          ----                                        ----------------
<S>                                                                   <C>
2007                                                                      104.688%
2008                                                                      103.125%
2009                                                                      101.563%
2010 and thereafter                                                       100.000%
</Table>

         The Company may on any one or more occasions prior to May 1, 2005,
redeem up to 33 1/3% of the aggregate principal amount of the 9 3/8% Notes
originally issued with the net proceeds of one or more Equity Offerings of the
Company at a redemption price of 109.375% 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 66 2/3% of the
aggregate principal amount of the 9 3/8% 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.

         If less than all the 9 3/8% Notes are to be redeemed at any time,
selection of 9 3/8% 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 9 3/8% Notes are listed, or, if the 9 3/8% Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate.

         6. Sinking Fund

         The 9 3/8% Notes are not subject to any sinking fund.

                                      A-5
<PAGE>

         7. Subordination

         The 9 3/8% Notes are subordinated to Senior Indebtedness of the
Company. To the extent provided in the Indenture, Senior Indebtedness of the
Company must be paid before the 9 3/8% Notes may be paid. The Company and each
Subsidiary Guarantor agree, and each Holder by accepting a 9 3/8% Note agrees,
to the subordination provisions contained in the Indenture and authorize the
Trustee to give it effect and appoint the Trustee as attorney-in-fact for such
purpose.

         8. Repurchase upon a Change of Control.

         Upon the occurrence of a Change of Control, each Holder of 9 3/8% Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 in principal amount or an integral multiple thereof) of such Holder's
9 3/8% 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 9 3/8% 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 9 3/8% Notes are in registered form without coupons in
denominations of $1,000 of principal amount and multiples of $1,000 in excess
thereof. A Holder may register the transfer or exchange of 9 3/8% 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 9 3/8% Notes selected or
called for redemption (except in the case of a 9 3/8% Note redeemed in part, the
portion of the 9 3/8% Note not to be redeemed). Also, it need not register the
transfer or exchange of any 9 3/8% Notes for a period of 15 days before the day
of the mailing of a notice of redemption of 9 3/8% Notes selected for
redemption.

         10. Persons Deemed Owners.

         A Holder shall be treated as the owner of a 9 3/8% 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

                                      A-6
<PAGE>

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 9 3/8% 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 9 3/8% Notes, except in certain circumstances for certain
sections thereof.

         13. Amendment; Supplement; Waiver.

         Subject to certain exceptions, the Indenture or the 9 3/8% Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the 9 3/8% 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 9 3/8% Notes then
Outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the 9 3/8% 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.

         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, issue Capital Stock of Restricted Subsidiaries,
engage in transactions with Affiliates, suffer to exist or incur Liens, Incur
layered Indebtedness or merge, consolidate or transfer substantially all of
their assets. Within 120 days 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 or Event of Default under such restrictive
covenants.

         15. Successor Persons.

         Subject to certain exceptions, when a successor Person assumes all the
obligations of its predecessor under the 9 3/8% Notes and the Indenture, the
predecessor Person will be released from those obligations.

                                      A-7
<PAGE>

         16. Defaults and Remedies.

         The following are summaries of Events of Default under the Indenture
with respect to the 9 3/8% Notes:

                  (a) failure to pay any interest on the 9 3/8% Notes when due,
                  continued for 30 days;

                  (b) failure to pay principal of (or premium, if any, on) the
                  9 3/8% Notes when due;

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

                  (d) failure to perform any other covenant of the Company or
                  any Subsidiary Guarantor 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 9 3/8% Notes;

                  (e) a default by the Company or any Restricted Subsidiary
                  under any Indebtedness for borrowed money in an aggregate
                  amount greater than $5.0 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 10 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 $5.0
                  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 9 3/8% 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 9 3/8%
Notes by notice as provided in the Indenture may declare the principal amount of
the 9 3/8% Notes to be due and payable immediately. If an

                                      A-8
<PAGE>

Event of Default described in clause (g) above with respect to the 9 3/8% Notes
at the time Outstanding shall occur, the principal amount of all the 9 3/8%
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 9 3/8% Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal (or other specified amount),
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 of 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
9 3/8% 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 9 3/8% 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
9 3/8% Notes.

         No Holder of 9 3/8% 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 9 3/8% Notes;

         (b) the Holders of at least 25% in aggregate principal amount of the
Outstanding 9 3/8% Notes have made written request, and such Holder or Holders
have offered reasonable indemnity, to the Trustees 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 9 3/8% 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
9 3/8% Notes for the enforcement of payment of the principal of or any premium
or interest on such 9 3/8% Notes on or after the applicable due date specified
in such 9 3/8% Notes.

         17. Trustee Dealings with the Company or the 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

                                      A-9
<PAGE>

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.

         18. 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 9 3/8% 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 9 3/8% 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 9 3/8% Notes.

         19. Authentication.

         This 9 3/8% Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this 9 3/8%
Note.

         20. 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).

         21. Governing Law.

         THIS 9 3/8% NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

         22. 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 9 3/8% 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 9 3/8% 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
<PAGE>

                                 ASSIGNMENT FORM

To assign this 9 3/8% Note, fill in the form below:

I or we assign and transfer this 9 3/8% 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 9 3/8%
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 9 3/8% 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
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you wish to have this 9 3/8% Note purchased by the Company pursuant
to Section 4.14 (Asset Sale) or Section 4.20 (Change of Control) of the
Indenture, check the Box:

         [ ]      Section 4.14                        [ ]      Section 4.20

         If you wish to have a portion of this 9 3/8% 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 9 3/8% 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
<PAGE>

                                                                       Exhibit B

                         FORM OF SUPPLEMENTAL INDENTURE

         SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
_______________, ____, among [GUARANTOR] (the "New Subsidiary Guarantor"), a
subsidiary of Swift Energy Company (or its successor), a Texas corporation (the
"Company"), SWIFT ENERGY COMPANY[, on behalf of itself and the Subsidiary
Guarantors (the "Existing Subsidiary Guarantors") under the indenture referred
to below,] and BANK ONE, NA, a national banking association, as trustee under
the indenture referred to below (the "Trustee")

                                   WITNESSETH

         WHEREAS the Company [and the Existing Subsidiary Guarantors] has
heretofore executed and delivered to the Trustee an Indenture dated as of April
16, 2002 (such Indenture, as amended or supplemented to date, including by the
First Supplemental Indenture dated as of April 16, 2002, between the Company and
the Trustee, is hereinafter called the "Indenture"), providing for the initial
issuance of an aggregate principal amount of up to $200,000,000 of 9 3/8% Senior
Subordinated Notes due 2012 (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

                                      B-1
<PAGE>

forth in Article XIV of the Indenture and to be bound by all other applicable
provisions of the Indenture.

         2. Ratification of Indenture; Supplemental Indentures 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.

         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:

[EXISTING SUBSIDIARY GUARANTORS],

By:
   --------------------------
Name:
Title:

                                      B-2
<PAGE>

BANK ONE, NA, as Trustee,

By:
   --------------------------
Name:
Title:

                                      B-3<PAGE>
                                                                   EXHIBIT 10.29

                            [LINKLATERS LETTERHEAD]

                             Dated 15 September 1999

                          PROLOGIS MANAGEMENT S.A.R.L.
             FOR AND ON BEHALF OF PROLOGIS EUROPEAN PROPERTIES FUND

                                       and

                         PROLOGIS DEVELOPMENTS S.A.R.L.

                                       and

                        PROLOGIS FRANCE DEVELOPMENTS INC

                                       and

                             KINGSPARK HOLDINGS S.A.

                                       and

                                 PROLOGIS TRUST

                   STABILISED PROPERTY CONTRIBUTION AGREEMENT

<PAGE>

THIS AGREEMENT is made the 15th day of September 1999

BETWEEN: -

(1)      PROLOGIS MANAGEMENT S.A.R.L. whose registered office is at 25B
         Boulevard Royal L-2449 Luxembourg ("THE MANAGEMENT COMPANY") for and on
         behalf of PROLOGIS EUROPEAN PROPERTIES FUND (the "FUND" which
         expression shall include any direct or indirect wholly owned
         subsidiaries of ProLogis European Properties Fund) and

(2)      PROLOGIS DEVELOPMENTS S.A.R.L. whose registered office is at 69 Route
         D'Esch L-1470 Luxembourg ("PLDD")

(3)      PROLOGIS FRANCE DEVELOPMENTS INC ("PLDF") whose registered office is at
         1013 Centre Road, Wilmington, Delaware, 19805, County of New Castle and

(4)      KINGSPARK HOLDINGS S.A. ("KINGSPARK") whose registered office is at 69
         Route D'Esch L-1470 Luxembourg

(5)      PROLOGIS TRUST ("PROLOGIS") whose principal place of business is at
         14100 East 35th Place, Aurora, CO80011

It is HEREBY AGREED as follows:

1        DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS:

         Unless the context otherwise requires the words and phrases set out in
         this clause shall have the following meanings: -

         APPRAISAL means an appraisal and valuation of a Property by the
         Independent Appraiser including an assessment of the OMV of the
         relevant Property.

         CLASS B2 UNITS means Class B2 Units issued by the Fund as described in
         Article 9 of the Management Regulations.

         CLOSING means the first date determined by the Management Company on or
         prior to which subscription forms in relation to the first issuance of
         Class A(1) Units and/or Class C(1) Units have been received and
         accepted by the Management Company for and on behalf of the Fund which
         date is 15 September 1999.

         CONDITION means in relation to any Property that the Management Company
         on behalf of the Fund has confirmed on the basis, inter alia, of the
         Appraisal, that the Property satisfies the Investment and Operating
         Criteria at the Relevant Transfer Date.

         CONTRIBUTION AMOUNT means:

                  (a)      If a Property is acquired directly from a PLD Party:
                           the sum equivalent to 95% of the OMV of the relevant
                           Property (which the parties acknowledge is the agreed
                           market value taking account of the terms of this
                           Agreement) PROVIDED THAT if such Property is to be
                           transferred subject to any financial charges or other
                           indebtedness then (a) the amount of all liabilities
                           secured by such charge or other indebtedness as at
                           the Relevant Transfer Date shall be deducted from the
                           Contribution Amount and (b) all such liabilities
                           shall be assigned novated or otherwise transferred to
                           the Management Company on behalf of the Fund; OR

<PAGE>

                  (b)      if the Management Company on behalf of the Fund
                           acquires shares in a Property Owner rather than a
                           Property: the NAV of the shares in such Property
                           Owner computed in accordance with the policies
                           referred to in clause 5.6 and subject to
                           recalculation pursuant to clause 5.9;

         and in each case such Contribution Amount shall be approved by the
         Management Company on behalf of the Fund in accordance with clause 5
         and taking account of the Appraisal.

         DUE DILIGENCE means the PLD Party's investigation of the title and
         other matters relating to any Property as summarised in the document at
         Appendix 1 to this Agreement.

         ENCUMBRANCE means any claim, charge, mortgage, security, lien, option,
         equity, power of sale or hypothecation.

         FUND'S PORTFOLIO means the properties from time to time owned by the
         Management Company on behalf of the Fund or its wholly owned direct or
         indirect subsidiaries.

         GAAP means generally accepted accounting principles in the United
         States.

         INDEPENDENT APPRAISER means Jones Lang LaSalle or such other
         independent real estate appraisal and valuation professionals who are
         members of the appropriate professional body and/or appropriately
         licensed by the appropriate authority to operate in the jurisdiction
         where the relevant Property is located, such persons to be proposed by
         the Management Company and approved by the UAC.

         INVESTMENT AND OPERATING CRITERIA means (in relation to any Property)
         at the Relevant Transfer Date the Investment and Operating Criteria
         defined in the Private Placement Memorandum.

         MANAGEMENT REGULATIONS means the Management Regulations dated 10
         September 1999 in relation to ProLogis European Properties Fund.

         NAV means the value of all assets owned by the relevant Property Owner
         after deducting all liabilities but ignoring any deferred tax
         liabilities and in determining such value the value of the relevant
         Property shall be included at 95% (and not 100%) of its OMV.

         OMV has the meaning ascribed to that term in the Private Placement
         Memorandum.

         PLD PARTY means any of PLDD, PLDF and Kingspark and obligations which
         are expressed to be undertaken by "THE PLD PARTY" shall be obligations
         of the relevant one of PLDD or PLDF or Kingspark which owns an interest
         in the relevant Property or Property Owner.

         PRIVATE PLACEMENT MEMORANDUM means the Private Placement Memorandum
         dated 10 September 1999 in respect of ProLogis European Properties
         Fund.

         PROLOGIS RELATED PARTY means (a) ProLogis (b) an entity that directly
         or indirectly is controlled by ProLogis or (c) an entity at least 35
         per cent of whose economic interest is owned directly or indirectly by
         ProLogis; and the term "control" means the power to direct the
         management of such entity through voting rights, ownership or
         contractual obligations.

         PROPERTY means one or more of the warehouse and distribution properties
         which are owned (freehold or leasehold) from time to time by any PLD
         Party or its wholly owned direct or indirect subsidiaries

<PAGE>

         PROPERTY OWNER means a special purpose company which directly or
         indirectly owns one or more Stabilised Properties

         RELEVANT TRANSFER DATE means a date specified by the PLD Party which is

                  (a)      not earlier than twenty-five Working Days after the
                           date of service of the notice by the PLD Party under
                           Clause 5.1 in relation to any Property or Property
                           Owner; and

                  (c)      not later than six months and twenty-four Working
                           Days after the date of such notice

         STABILISATION DATE means the date on which the Management Company on
         behalf of the Fund informs the PLD Party of its agreement that the
         Condition has been satisfied in relation to any Property.

         STABILISED PROPERTY means a Property in respect of which the Management
         Company on behalf of the Fund has agreed that the Condition is
         satisfied.

         TARGET MARKETS means the markets identified as such in the Private
         Placement Memorandum.

         UAC means the Unitholders Advisory Committee set up in accordance with
         the Management Regulations.

         VAT means Value Added Tax pursuant to the 6th Council Directive
         77/388/EEC and any similar tax on turnover in any other jurisdiction.

         WARRANTIES means the warranties and representations set out in Schedule
         1 of this Agreement

         WORKING DAY means a day on which banks are open for business in
         Luxembourg (excluding Saturdays, Sundays and public holidays).

1.2      In this Agreement the headings shall not affect its interpretation.

2        AGREEMENT TO CONTRIBUTE

2.1      Subject to clause 2.2 on each Relevant Transfer Date with respect to
         any Property the Management Company on behalf of the Fund shall acquire
         and the PLD Party shall contribute (or procure the contribution of)
         such Stabilised Property to the Management Company on behalf of the
         Fund PROVIDED THAT such a contribution may be effected at the option of
         the PLD Party either:

         2.1.1    by a transfer of the relevant Stabilised Property; or

         2.1.2    by a transfer of the shares in the Property Owner of such
                  Stabilised Property provided that such entity owns no
                  properties other than one or more Stabilised Properties

         in each case in exchange for the Contribution Amount applicable to the
         relevant Properties, such Contribution Amount being satisfied as set
         out in Clause 5.13.

2.2      Kingspark may elect as to whether it wishes to transfer a Stabilised
         Property direct to the Management Company on behalf of the Fund in
         accordance with this Agreement or whether it wishes to transfer such
         Stabilised Property to PLDD in which case:-

         2.2.1    Kingspark will continue to perform the obligations of the PLD
                  Party in relation to such Property until the date of transfer
                  to PLDD where upon PLDD shall become responsible for them and
                  the obligations on the part of PLDD in relation to such

<PAGE>

                  Stabilised Property shall be as set out in this Agreement in
                  relation to Stabilised Properties generally; and

         2.2.2    Kingspark shall transfer to PLDD such Stabilised Property no
                  later than the Relevant Transfer Date. Such transfer may be
                  effected by a transfer of the Property itself or a transfer of
                  the shares in the Property Owner and Kingspark shall notify
                  the Management Company of the date of such transfer.

3        REPORTING OBLIGATIONS

         The PLD Party shall each provide the Management Company on behalf of
         the Fund with a report no less frequently than once every three months
         such report to include full details of:

3.1      The Properties then owned by the PLD Party;

3.2      The proposed development programme for such Properties;

3.3      The Properties then in the course of development with details of the
         anticipated date of practical completion of the base building
         construction;

3.4      The current position with regard to the letting of the Properties and
         the proposed future letting programme;

3.5      Analysis of the letting market for such Properties and anticipated
         rental levels;

3.6      The Properties ("THE POTENTIAL PROPERTIES") in respect of which the
         Condition is (in the reasonable opinion of the PLD Party) expected to
         be satisfied during the next twelve months.

3.7      Such other information as the Management Company on behalf of the Fund
         reasonably requires for the purpose of determining the adequacy of the
         financial resources of the Fund in relation to the likely availability
         of Stabilised Properties.

4        COPY LEASE DOCUMENTATION

4.1      In relation to each Potential Property the PLD Party shall promptly
         provide to the Management Company on behalf of the Fund a copy of all
         executed agreements for lease and leases.

5        PROCEDURE FOR CONTRIBUTION/TIMING

5.1      The PLD Party shall notify the Management Company on behalf of the Fund
         as soon as it believes that any Property (including any which are to be
         transferred from Kingspark to PLDD pursuant to clause 2.2) has
         satisfied the Investment and Operating Criteria. The PLD Party shall at
         the same time notify the Management Company;

         5.1.1    whether it wishes to contribute such Property or whether it
                  wishes to contribute the shares in the relevant Property Owner
                  (which option shall be available to the PLD Party only in
                  cases when the Property Owner owns no properties other than
                  Stabilised Properties nor any other material assets); and

         5.1.2    when it wishes the Relevant Transfer Date to be for such
                  Property; and

         5.1.3    any disclosures subject to which the warranties set out in
                  Schedule 1 are to be given in relation to such Property;

         5.1.4    (if the Property itself is to be transferred to the Management
                  Company on behalf of the Fund) particulars of the contracts,
                  warranties, and guarantees relating to the design,

<PAGE>

                  development and construction of the Property to be transferred
                  pursuant to clause 5.16.1; and

         5.1.5    (if the PLD Party is Kingspark) whether it intends to transfer
                  the Property or Property Owner to PLDD.

5.2      The Management Company on behalf of the Fund shall at its own expense
         promptly upon receiving the notification referred to in clause 5.1
         instruct the Independent Appraiser to carry out an Appraisal of the OMV
         of such Property (having regard to any material disclosures under
         clause 5.1.3) as at the Relevant Transfer Date proposed pursuant to
         clause 5.1 or as near thereto as practicable and the Management Company
         shall promptly provide the PLD Party with a copy of such Appraisal.

5.3      The Management Company on behalf of the Fund shall respond within
         fifteen Working Days of notification as referred to in clause 5.1
         stating;

         5.3.1    whether it agrees that such Condition is satisfied. Until it
                  indicates that the Condition has been satisfied the relevant
                  Property shall not become a Stabilised Property; and

         5.3.2    whether the Management Company on behalf of the Fund with the
                  approval of the UAC determines that it will not accept such
                  Property on account of the material disclosures referred to in
                  clause 5.1.3. If the Management Company on behalf of the Fund
                  with the approval of the UAC does so determine then the
                  relevant Property or Property Owner shall not be contributed
                  to the Management Company on behalf of the Fund and the
                  Management Company on behalf of the Fund shall have no
                  obligation to make any payment or issue any Class B2 Units in
                  relation to such Property and the PLD Party shall be free to
                  sell such Property in the open market without any obligation
                  ever to offer such Property to the Fund again.

5.4      If the PLD Party notifies the Management Company on behalf of the Fund
         that it intends to contribute the relevant Property Owner (and not the
         Stabilised Property direct) then the PLD Party may effect such
         contribution by transferring or procuring the transfer of the shares in

         (a) the Property Owner or

         (b) in any other company which directly or indirectly wholly owns the
         shares in the Property Owner provided that such other company has no
         other material assets or liabilities and references in this Agreement
         to the transfer of a Property Owner shall be deemed to include
         references to the transfer of such a company as referred to in this
         paragraph (b) in which case the balance sheets referred to in clause
         5.6 and clause 5.9 and paragraph 2 of Part III of Schedule 1 shall be
         considered.

5.5      Within five Working Days after the Stabilisation Date the PLD Party
         shall notify the Management Company on behalf of the Fund of the actual
         Relevant Transfer Date which shall be not less than ten Working Days
         after such notification.

5.6      Not less than ten Working Days prior to the Relevant Transfer Date for
         the transfer of shares in any Property Owner the PLD Party shall
         provide the Management Company on behalf of the Fund with a proforma
         balance sheet in respect of the Property Owner drawn up under GAAP
         reflecting the PLD Party's best estimate of the financial condition of
         the Property Owner as at the Relevant Transfer Date on the basis that
         (i) only 95% of the OMV of the Property shall be taken into account,
         such OMV having been established in the Appraisal; and (ii) any
         deferred

<PAGE>

         tax liabilities shall not be taken into account. The Contribution
         Amount shall be estimated by the PLD Party acting reasonably and
         properly on the basis of such balance sheet.

5.7      In the case of any transfer of a Stabilised Property the Contribution
         Amount shall be calculated by the PLD Party in accordance with clause
         1.1 and notified to the Management Company on behalf of the Fund in
         sufficient time to enable the Management Company on behalf of the Fund
         to approve it not less than ten Working Days prior to the Relevant
         Transfer Date.

5.8      The decision of the Management Company on behalf of the Fund in
         relation to the matters referred to in Clause 5.7 shall in the absence
         of manifest error be final and binding on the parties for all purposes.

5.9      In the case of a transfer of a Property Owner, within forty Working
         Days after the Relevant Transfer Date the PLD Party shall submit to the
         Management Company on behalf of the Fund a definitive balance sheet
         ("THE BALANCE SHEET") on the basis of which the Contribution Amount as
         referred to in Clause 5.6 shall be re-calculated.

         5.9.1    If such recalculation results in a higher Contribution Amount
                  than had been calculated at the Relevant Transfer Date then
                  the Fund shall either

                           (a)      subject to Clause 5.18, issue to the PLD
                                    Party Class B2 Units effective as at the
                                    Relevant Transfer Date in addition to those
                                    Class B2 Units requested under clause 5.10;
                                    and/or (at the option of the PLD Party such
                                    option to be notified at the same time as
                                    the submission of the Balance Sheet)

                           (b)      pay to the PLD Party cash

                  in an aggregate amount equivalent to the amount of such
                  difference in the Contribution Amount.

         5.9.2    If such recalculation results in a lower Contribution Amount
                  than had been calculated at the Relevant Transfer Date then
                  the PLD Party shall either

                           (a)      pay cash to the Management Company on behalf
                                    of the Fund; and/or (at the option of the
                                    PLD Party such option to be notified at the
                                    same time as the submission of the Balance
                                    Sheet)

                           (b)      take fewer Class B2 Units

                  in an aggregate amount equivalent to the amount of such
                  difference in the Contribution Amount.

5.10     Not less than ten Working Days prior to the Relevant Transfer Date the
         PLD Party shall inform the Management Company on behalf of the Fund of

         (a)      the amount (in Euros) (being part of the estimated
                  Contribution Amount as, in the case of the transfer of a
                  Property Owner, determined from the balance sheet referred to
                  in Clause 5.6) which it wishes to receive in respect of the
                  relevant Stabilised Property; and

         (b)      the amount (being the balance of such estimated Contribution
                  Amount) which it wishes to receive as Class B2 Units

         subject always to the provisions of Clauses 5.12, 5.13 and 5.18.

<PAGE>

         At the same time the PLD Party shall inform the Management Company on
         behalf of the Fund of the amount of the liabilities which shall be
         required to be repaid by the Management Company on behalf of the Fund
         pursuant to Clause 5.13.3.

5.11     If the Management Company on behalf of the Fund determines that it will
         be unable to (a) pay the cash portion of any estimated Contribution
         Amount calculated under clause 5.6 or (b) comply with its obligation
         under Clause 5.13.3 in relation to any Stabilised Property then the
         Management Company on behalf of the Fund shall so notify the PLD Party
         not more than five Working Days after the notice given by the PLD Party
         in Clause 5.10. Upon such notification being given to the PLD Party the
         relevant Stabilised Property or Property Owner shall not be contributed
         to the Management Company on behalf of the Fund and the Management
         Company on behalf of the Fund shall have no obligation to pay any
         Contribution Amount relevant to such Property or Property Owner. The
         PLD Party shall thereupon be entitled to dispose of such Property or
         Property Owner to any third party or the PLD Party may elect to keep
         such Property for its own purposes and if so the PLD Party shall be
         under no obligation ever to offer such Property to the Fund again.

5.12     The PLD Party may require the issue to it of Class B2 Units
         representing such proportion of the Contribution Amount as the PLD
         Party shall in its absolute discretion (but subject to the provisions
         of clause 5.14 below) determine PROVIDED THAT in respect of every
         Property which is contributed (directly or through a contribution of
         the shares in the Property Owner) the PLD Party shall request and
         ensure that there is sufficient equity in the Property Owner or the
         Property to allow the PLD Party to receive Class B2 Units to a value at
         least equivalent to:

         10% x (95% of the OMV of the relevant Property)

5.13     The Management Company on behalf of the Fund shall on the Relevant
         Transfer Date:

         5.13.1   Issue Class B2 Units to the PLD Party in respect of the amount
                  notified pursuant to clause 5.10 except that, in relation to
                  the transfer of a Property Owner, no Units shall be issued
                  until the Contribution in Kind report referred to in clause
                  5.18 has been prepared, but when issued the Units shall be
                  issued as at the Relevant Transfer Date; and

         5.13.2   Pay to the PLD Party cash equivalent to the balance of the (as
                  estimated under clause 5.6 of the case of a transfer of a
                  Property Owner) Contribution Amount (if any) which shall be
                  paid on the Relevant Transfer Date by the Fund to the PLD
                  Party in cleared funds in Euros on the Relevant Transfer Date
                  to an account designated by the PLD Party and notified to the
                  Management Company on behalf of the Fund not less than three
                  Working Days before the Relevant Transfer Date; and

         5.13.3   Unless otherwise agreed by the parties repay all financial
                  indebtedness secured on or otherwise related to any Stabilised
                  Property transferred to the Management Company on behalf of
                  the Fund (directly or through the transfer of a Property
                  Owner) on such Relevant Transfer Date and the PLD Party shall
                  provide the Management Company on behalf of the Fund with full
                  account and other details for the relevant repayments to be
                  made.

5.14     Notwithstanding the provisions of Clause 5.10 any issue of Class B2
         Units to the PLD Party in excess of the figure produced by the
         calculation set out in Clause 5.12 shall be subject to the approval of
         the UAC if immediately after the issue of such Class B2 Units the
         aggregate amount paid to all the PLD Parties in the form of Class B2
         Units under this Agreement in the

<PAGE>

         twelve month period immediately preceding the date of such issue would
         exceed 50% of the product of the following calculation:

                           95% x OMV of all Properties contributed (directly or
                           via direct or indirect transfers of shares in
                           Property Owners) to the Management Company on behalf
                           of the Fund during such twelve month period

         Provided that if

                           (a)      such consent of the UAC is not granted; and

                           (b)      the PLD Party requires (as determined in its
                                    absolute discretion) to receive Class B2
                                    Units in excess of such 50% maximum for
                                    purposes relating to the recognition of
                                    gains to ProLogis Trust under certain
                                    provisions of US tax law and regulations and
                                    not relating to any interest of the PLD
                                    Party in owning a greater number of B2 Units
                                    in the Fund;

         then the PLD Party shall be at liberty to sell the relevant Property or
         Property Owner to any other party including ProLogis Affiliates at any
         price or to retain it without any obligation to offer it again to the
         Fund;

         And Provided Further that if the PLD Party opts to receive additional
         Class B2 Units pursuant to clause 5.9.1(a) then such additional Class
         B2 Units shall be issued notwithstanding that their issue might breach
         such 50% maximum but such additional Class B2 Units shall be taken into
         account for the purposes of the calculation set out in this clause 5.14
         on all subsequent contributions of Properties and/or Property Owners

5.15     On the Relevant Transfer Date the parties shall enter into a transfer
         of the relevant Property or a transfer of the shares in the Property
         Owner (as the case may be) which shall achieve the transfer of the
         entire freehold or leasehold (as the case may be) ownership of such
         Property or the full legal and beneficial ownership of shares in the
         relevant jurisdiction. Notwithstanding the foregoing the Management
         Company on behalf of the Fund agrees to co-operate with the PLD Parties
         in achieving a tax efficient method of structuring the transfer of
         Properties and/or Property Owners to the Management Company on behalf
         of the Fund including and if appropriate the separate transfers of the
         legal and beneficial ownership of a Property subject to:

         5.15.1   the PLD Party bearing all additional legal costs incurred by
                  the Management Company on behalf of the Fund in relation to
                  any particular tax-efficient structure (other than any costs
                  incurred by the Management Company and/or the Fund in respect
                  of actions taken by either or both of them without the consent
                  of the PLD Parties); and

         5.15.2   the PLD Party indemnifying the Management Company on behalf of
                  the Fund for all liability which it might incur as a result of
                  it owning directly or indirectly the legal title to any
                  property at a time when the beneficial title to such property
                  is still vested directly or indirectly in the PLD Party; and

         5.15.3   the structuring not being prejudicial to the Fund other than
                  in immaterial respects.

         and in such case the warranty in paragraph 2.1 of Part I of Schedule 1
         shall be varied so as to (a) allow for the legal and beneficial
         ownership to be vested in two separate companies and (b) allow for the
         possibility that the Management Company on behalf of the Fund might
         itself already own the legal title as envisaged in clause 5.15.2 above.

<PAGE>

5.16     If the Property itself is to be transferred to the Management Company
         on behalf of the Fund the following additional provisions shall apply:-

         5.16.1   the parties shall use their best efforts (but without
                  incurring any financial obligation) to ensure that there are
                  on the Relevant Transfer Date transferred to the Management
                  Company on behalf of the Fund (or held on trust for the
                  Management Company on behalf of the Fund) the benefit of all
                  contracts, warranties, claims, guarantees and other such
                  matters relating to the Property (including without limitation
                  its design, development, construction and title); and

         5.16.2   unless otherwise agreed by the parties, the Property shall be
                  transferred subject to financial charges, mortgages and liens
                  provided that the liability to which the same relate is fully
                  taken into account when calculating the Contribution Amount
                  for such Property and such liabilities are assigned, novated
                  or otherwise transferred to the Management Company on behalf
                  of the Fund; and

         5.16.3   if any adjoining property is retained by the relevant PLD
                  Party the transfer shall include such provision as to (i) the
                  grant and reservation of easements or rights for access and
                  the running of services over the Property and the retained
                  property and (ii) the maintenance and cost of any common areas
                  and common facilities as shall be appropriate and agreed
                  between the relevant PLD Party and the Management Company on
                  behalf of the Fund each acting reasonably.

5.17     The Fund and the Management Company shall act reasonably and promptly
         in giving or withholding confirmation that a Property has become
         Stabilised.

5.18     The obligation on the Management Company to issue Class B2 Units under
         this Clause 5 in respect of a Property Owner shall be subject to the
         requirement under Luxembourg law and regulatory practice for a
         contribution in kind report to be prepared in relation to such issue.
         The Management Company and the relevant PLD Party shall procure that
         such a report is prepared at the same time as each Balance Sheet under
         Clause 5.9 provided always to the extent that as a result the relevant
         PLD Party cannot be issued a certain number of B2 Units, the PLD Party
         shall be entitled to receive cash in lieu.

5.19     All costs associated with the Fund's financing of its acquisition of a
         Property or Property Owner shall be borne by the Fund.

5.20     On the Relevant Transfer Date the PLD Party shall deliver or make
         available to the Management Company the following:

         5.20.1   Title documents (or copies thereof if the same are held by a
                  third party chargee) in respect of the relevant Property; and

         5.20.2   (In the case of a transfer of a Property Owner) the
                  Certificate of Incorporation, corporate seal (if any), cheque
                  book (if any) and co-ordinated articles of incorporation of
                  the relevant Property Owner.

6        TRANSFER OF PROPERTIES WHEN THE CONDITION IS NOT SATISFIED

         PLDD and PLDF and Kingspark each hereby grant to the Management Company
         on behalf of the Fund the right of first refusal contained in Schedule
         2 hereto (without prejudice to clause 7).

<PAGE>

7        DEVELOPMENT

         PLDD and PLDF and Kingspark shall each exercise commercially reasonable
         efforts to ensure that any Property which any PLD Party develops
         acquires or improves shall satisfy the Condition.

8        PLD PARTIES' BUSINESS

8.1      Each PLD Party may notwithstanding any other provision of this
         Agreement and without any obligation to offer the relevant property to
         the Management Company on behalf of the Fund engage in the business of
         development and/or ownership and/or operation of warehouse and/or
         distribution facilities or properties:-

         8.1.1    in circumstances where the PLD Party has no legal, equitable
                  or beneficial interest in or ownership of such properties to
                  the intent that the PLD Party may carry out build-to-suit
                  developments and project management developments where the PLD
                  Party receives a fee for its services; and/or

         8.1.2    in circumstances where Properties or Property Owners have been
                  offered to the Fund but the Management Company on behalf of
                  the Fund has been unable to pay for them or has declined to
                  acquire them; and/or

         8.1.3    in circumstances where the PLD Party has acquired a Property
                  or a Property Owner from the Management Company on behalf of
                  the Fund following a decision by the Management Company on
                  behalf of the Fund to dispose of such Property or Property
                  Owner; and/or

         8.1.4    in respect of any warehouse and/or distribution facilities or
                  properties which the Management Company on behalf of the Fund
                  is not permitted to acquire under the terms of Articles 6, 7
                  or 8 of the Management Regulations.

8.2      The PLD Parties each agree that they shall not, except with the consent
         of the UAC (which shall not be unreasonably withheld), enter into any
         arrangements such as development joint ventures which would in the
         opinion of the PLD Parties be beneficial or neutral to the Fund but
         could result in the Management Company on behalf of the Fund owning
         less than 100% of either a Property or a Property Owner at the time
         when the relevant Property (or a partial interest therein) would be
         available for contribution to the Management Company on behalf of the
         Fund. If at any time the PLD Party wishes to dispose of any Property
         (with or without the interest of any joint venture partner), which is
         the subject of any such joint venture then it shall first offer the
         Property or its interest in it to the Management Company on behalf of
         the Fund in accordance with Schedule 2.

9        BALANCE SHEET AUDIT

         The Management Company on behalf of the Fund shall have the right to
         approve (such approval not to be unreasonably withheld) the Balance
         Sheet referred to in clause 5.9 and as part of such approval it may at
         the expense of the Fund carry out an audit of such Balance Sheet and
         the PLD Party shall co-operate in the provision of documentation and
         information reasonably required to facilitate the carrying out of such
         audit.

10       WARRANTIES

10.1     The PLD Party warrants (subject to clause 10.4) that the Warranties set
         out in Schedule 1 will be fulfilled and will be true and accurate in
         all respects and not misleading in any respect at the

<PAGE>

         Transfer Date for any Stabilised Property or relevant Property Owner
         which is then to be transferred to the Management Company on behalf of
         the Fund. The warranties set out in Part III of Schedule 1 apply only
         if the transfer is to be a transfer of the Property Owner.

10.2     The PLD Party acknowledges that the Management Company on behalf of the
         Fund will acquire the Stabilised Properties or relevant Property Owner
         in reliance upon, amongst other things, the Warranties.

10.3     The Warranties are given by the relevant PLD Party only in relation to
         Properties or Property Owners which are to be contributed by that PLD
         Party.

10.4     The PLD Party's warranty in clause 10.1 above is subject to:

         10.4.1   any matter which is fairly and fully disclosed to the
                  Management Company on behalf of the Fund prior to the Relevant
                  Transfer Date and to which the Management Company has not
                  objected pursuant to clause 5.3.2; and

         10.4.2   any matter or thing hereafter done or omitted to be done
                  pursuant to this Agreement or otherwise at the request of or
                  with the approval of the Management Company on behalf of the
                  Fund.

10.5     The Warranties and all other provisions of this Agreement in so far as
         the same shall not have been performed by the transfer of each relevant
         Property or Property Owner shall not be extinguished or affected by
         such transfer or by any other event or matter whatsoever, except by a
         specific written waiver or release by the Management Company on behalf
         of the Fund.

10.6     LIMITATION OF LIABILITY:

         Notwithstanding the provisions of Clause 10.1, the PLD Party shall not
         be liable under this Agreement:

         10.6.1   TIME LIMITS: In respect of any warranty claim unless notice of
                  such claim is given in writing by the Management Company on
                  behalf of the Fund to the PLD Party setting out reasonable
                  details of the specific matter in respect of which the claim
                  is made including if practicable an estimate of the amount of
                  such claim, within one year after the Relevant Transfer Date
                  when such warranty (upon which the claim is based) was given;

         10.6.2   MINIMUM CLAIMS: In respect of any claim arising from any
                  single circumstance if the amount of the claim does not exceed
                  one per cent of the OMV of the relevant Property (save that
                  claims relating to a series of connected matters shall be
                  aggregated for this purpose) but if the PLD Party shall be
                  liable for a claim in excess of that amount in respect of the
                  relevant Property then the entire claim shall accrue against
                  and be recoverable from the PLD Party;

         10.6.3   MAXIMUM CLAIMS: In respect of any claim to the extent that the
                  liability of the PLD Party for all claims in aggregate made
                  under this Agreement in relation to any Property would exceed
                  95% of the OMV of the relevant Property;

         10.6.4   CONTINGENT LIABILITIES: in respect of any liability which is
                  contingent unless and until such contingent liability becomes
                  an actual liability and is due and payable;

         10.6.5   PROVISIONS: In respect of any claim if and to the extent that
                  proper provision or reserve is made for, or is taken account
                  of, the matter giving rise to the claim in the

<PAGE>

                  accounts on the basis of which the NAV for the relevant
                  Property Owner was calculated (and not subsequently released)
                  or in the relevant Appraisal Provided That if it transpires
                  that any provision or reserve was excessive an appropriate
                  balancing payment will be made by the Management Company on
                  behalf of the Fund to the PLD Party;

         10.6.6   DEFERRED TAX: For any claim in relation to deferred tax
                  liability;

         10.6.7   VOLUNTARY ACTS ETC: In respect of any matter, act, omission or
                  circumstance (or any combination thereof) (including, for the
                  avoidance of doubt, the aggravation of a matter or
                  circumstance) to the extent that the same would not have
                  occurred but for:

                  (i)      any voluntary act, omission or transaction of the
                           Fund or the Management Company, or its directors,
                           employees or agents, after the Relevant Transfer Date
                           in the ordinary course of its business;

                  (ii)     the passing of, or any change in, after the date of
                           this Agreement, any law, rule, regulation or
                           administrative practice of any government,
                           governmental department, agency or regulatory body
                           including (without prejudice to the generality of the
                           foregoing) any increase in the rates of taxation or
                           any imposition of taxation or any withdrawal of
                           relief from taxation not actually (or prospectively)
                           in effect at the date of this Agreement;

                  (iii)    any change in accounting or taxation policy, bases or
                           practice of the Management Company on behalf of the
                           Fund introduced or having effect after the Relevant
                           Transfer Date;

         10.6.8   SAVINGS BY THE FUND in any respect of any claim for any losses
                  suffered by the Management Company on behalf of the Fund to
                  the extent of any corresponding savings by or net benefit to
                  the Fund arising therefrom;

         10.6.9   INSURANCE: In respect of any claim to the extent that any
                  losses arising from such claim are covered by a policy of
                  insurance in force on the Relevant Transfer Date.

10.7     MITIGATION OF LOSS: The Management Company on behalf of the Fund shall
         procure that all reasonable steps are taken and all reasonable
         assistance is given to avoid or mitigate any losses which in the
         absence of mitigation might give rise to a liability in respect of any
         claim under this Agreement.

10.8     CONDUCT OF CLAIMS:

         10.8.1   If the Management Company on behalf of the Fund becomes aware
                  of any matter that may give rise to a claim against the PLD
                  Party under this Agreement notice of that fact shall be given
                  as soon as possible to the relevant PLD Party.

         10.8.2   Without prejudice to the validity of the claim or alleged
                  claim in question, the Management Company on behalf of the
                  Fund shall allow, the PLD Party and its accountants and
                  professional advisers to investigate the matter or
                  circumstance alleged to give rise to such claim and whether
                  and to what extent any amount is payable in respect of such
                  claim and for such purpose the Management Company on behalf of
                  the Fund shall give, subject to it being paid all reasonable
                  costs and expenses, all such information and assistance,
                  including access to premises and personnel, and the right to
                  examine and copy or photograph any Property, assets,

<PAGE>

                  accounts, documents and records, as the PLD Party or its
                  accountants or professional advisers may reasonably request.

         10.8.3   If the claim in question is a result of or in connection with
                  a claim by or liability to a third party then:

                  (i)      no admission of liability shall be made by or on
                           behalf of the Fund and the claim shall not be
                           compromised, disposed of or settled without the
                           consent of the PLD Party (which shall not be
                           unreasonably withheld or delayed);

                  (ii)     the PLD Party shall in consultation with the
                           Management Company be entitled at its own expense in
                           its reasonable discretion to take such action as it
                           shall deem necessary to avoid, dispute, deny, defend,
                           resist, appeal, compromise or contest such claim or
                           liability (including, without limitation, making
                           counterclaims or other claims against third parties)
                           in the name of and on behalf of the Fund and to have
                           the conduct of any related proceedings, negotiations
                           or appeals;

                  (iii)    the Management Company on behalf of the Fund will
                           give and procure that the relevant Property Owner
                           gives, subject to their being paid all reasonable
                           costs and expenses, all such information and
                           assistance, including access to Properties and
                           personnel, and the right to examine and copy or
                           photograph any assets, accounts, documents and
                           records, for the purpose of avoiding, disputing,
                           denying, defending, resisting, appealing,
                           compromising or contesting any such claim or
                           liability as the PLD Party or its professional
                           advisers reasonably request. The PLD Party agrees to
                           keep all such information confidential and only to
                           use it for such purpose.

10.9     PRIOR RECEIPT: If the PLD Party pays an amount in discharge of any
         claim under this Agreement and the Management Company on behalf of the
         Fund or any Property Owner subsequently recovers (whether by payment,
         discount, credit, relief or otherwise) from a third party a sum which
         is referable to the subject matter of the claim and which would not
         otherwise have been received by the Management Company on behalf of the
         Fund, the Management Company on behalf of the Fund shall pay, or shall
         procure that the relevant Property Owner pays, to the PLD Party an
         amount equal to (i) the sum recovered from the third party less any
         reasonable costs and expenses incurred in obtaining such recovery or
         (ii) if less, the amount previously paid by the PLD Party to the
         Management Company on behalf of the Fund.

10.10    DOUBLE CLAIMS: The Management Company on behalf of the Fund shall not
         be entitled to recover from the PLD Party under this Agreement more
         than once in respect of the same damage suffered.

10.11    The PLD Parties agree that any claim which could otherwise be made by
         the Management Company on behalf of the Fund under any Warranty shall
         not be precluded or debarred on the grounds that the Management Company
         has actual or constructive knowledge or deemed knowledge of the matter
         to which such claim relates or on the grounds that reliance was not
         placed by the Management Company on such Warranty, and there shall be
         no reduction in the compensation payable as a result of the breach of
         such Warranty by reason of the grounds set out above.

<PAGE>

11       GENERAL PROVISIONS

11.1     This Agreement contains the whole agreement between the parties
         relating to the subject matter of this Agreement at the date hereof to
         the exclusion of any terms implied by law which may be excluded by
         contract. The Management Company on behalf of the Fund acknowledges
         that it has not been induced to enter into this Agreement by, and so
         far as is permitted by law and except in the case of fraud, hereby
         waives any remedy in respect of, any warranties, representations and
         undertakings not incorporated into this Agreement.

11.2     So far as is permitted by law and except in the case of fraud, the
         parties agree and acknowledge that the only right and remedy which
         shall be available to the Management Company on behalf of the Fund in
         connection with or arising out of or related to any of the statements
         contained in the Warranties shall be damages in contract for breach of
         this Agreement and not rescission of this Agreement.

11.3     Each PLD Party and the Management Company on behalf of the Fund
         confirms it has received independent legal advice relating to all the
         matters provided for in this Agreement, including the provisions of
         this Clause, and agrees having considered the terms of this Clause and
         the Agreement as a whole, that the provisions of this Clause are fair
         and reasonable.

11.4     This Agreement is personal to the parties to it. Accordingly neither
         the Management Company on behalf of the Fund nor any PLD Party may
         without the prior written consent of the other assign the benefit or
         all or any of the other's obligations under this Agreement nor any
         benefit arising under or out of this Agreement. PROVIDED THAT
         notwithstanding the foregoing any PLD Party or the PLD Parties jointly
         may assign the benefit of this Agreement to a ProLogis Affiliate.

11.5     No variation of this Agreement shall be effective unless in writing and
         signed by or on behalf of each of the parties to this Agreement.

11.6     Any time, date or period referred to in any provision of this Agreement
         may be extended by mutual agreement between the parties but as regards
         any time, date or period originally fixed or any time, date or period
         so extended time shall be of the essence.

11.7     At any time after the date of this Agreement each PLD Party shall and
         shall use its reasonable endeavours to procure that any necessary third
         party shall at the cost of the Fund execute such documents and do such
         acts and things as the Management Company on behalf of the Fund may
         reasonably require for the purpose of giving to the Fund the full
         benefit of all the provisions of this Agreement.

11.8     The PLD Party shall bear all legal, accountancy and other costs and
         expenses (excluding fees payable in relation to the Appraisal) incurred
         by it and by each PLD Party in connection with this Agreement, and the
         contribution of the Properties and/or Property Owners including all
         transfer taxes unless:

                  (a)      there is in any country in which a Stabilised
                           Property is situated an adverse change in legislation
                           regarding the level of transfer taxes and/or the
                           circumstances in which they are payable

                                 and

                  (b)      the PLD Party gives notice to the Management Company
                           on behalf of the Fund referring to this clause

         in which case:

<PAGE>

                  (i)      the Management Company on behalf of the Fund shall
                           with effect from the date of such notice pay all such
                           transfer taxes payable in the relevant country in
                           respect of transfers pursuant to this Agreement; and

                  (ii)     the definition of OMV shall (in relation to
                           Stabilised Properties situated in the relevant
                           country) be amended so that an appropriate allowance
                           shall be made in relation to transfer taxes.

11.9     If the PLD Party or the Management Company on behalf of the Fund
         default in the payment when due of any sum payable under this Agreement
         (whether determined by agreement or pursuant to an order of a court or
         otherwise) the liability of PLD Party or the Management Company on
         behalf of the Fund (as the case may be) shall be increased to include
         interest on such sum from the date when such payment is due until the
         date of actual payment (as well after as before judgement) at a rate
         per annum of 3 per cent above three month EURIBOR. Such interest shall
         accrue from day to day.

11.10

         11.10.1  Any notice or other communication requiring to be given or
                  served under or in connection with this Agreement shall be in
                  writing and shall be sufficiently given or served if delivered
                  or sent:

                  In the case of any PLD Party at:

                  14100 East 35th Place
                  Aurora
                  Co 80011

                  Attention: Legal

                  In the case of the Management Company on behalf of the Fund
                  at:

                  25b Boulevard Royal L-2449
                  Luxembourg

                  Fax: (352) 2650 5744

                  Attention: Jean David Van Haele

                  with a copy to
                  ProLogis BV
                  Capronilaan 25-27
                  1119 NP Schiphol - Rijk
                  Amsterdam
                  The Netherlands

                  Fax: (31) 20655 6600

                  Attention: Jamie Lyon

         11.10.2  Any such notice or other communication shall be delivered by
                  hand or sent by courier, fax or prepaid first class post. If
                  sent by courier or fax such notice or communication shall
                  conclusively be deemed to have been given or served at the
                  time of despatch, in

<PAGE>

                  case of service in Luxembourg, or on the following Day in the
                  case of international service. If sent by post such notice or
                  communication shall conclusively be deemed to have been
                  received two Working Days from the time of posting, in the
                  case of inland mail in Luxembourg or three Working Days from
                  the time of posting in the case of international mail.

11.11    If any term or provision in this Agreement is be held to be illegal or
         unenforceable, in whole or in part, under any enactment or rule of law,
         such term or provision or part shall to that extent be deemed not to
         form part of this Agreement but the enforceability of the remainder of
         this Agreement shall not be affected.

11.12    This Agreement may be executed in as many counterparts as there are
         parties to this Agreement.

11.13    The Management Company on behalf of the Fund and the PLD Parties agree
         to co-operate with each other in good faith in order to give effect to
         the purpose of this Agreement.

11.14    This Agreement and the documents to be entered into pursuant to it,
         SAVE AS EXPRESSLY REFERRED TO THEREIN, shall be governed by and
         construed in accordance with the law of Luxembourg and all the parties
         irrevocably agree that the courts of Luxembourg are to have
         jurisdiction to settle any disputes which may arise out of or in
         connection with this Agreement and such documents.

12       DURATION OF THIS AGREEMENT

12.1     This Agreement shall continue for a period of 20 years. Save as
         provided in clause 12.2, the parties may not elect unilaterally to
         terminate this Agreement prior to the end of such period.
         Notwithstanding the foregoing, the Management Company may, after a
         decision to liquidate the Fund has been adopted in compliance with the
         Management Regulations and Private Placement Memorandum, terminate this
         Agreement, by giving notice in writing with immediate effect to the
         other parties.

12.2     The PLD Parties may in their sole discretion terminate this Agreement
         on giving notice in writing with immediate effect to the Management
         Company if (a) during any period of six months and twenty-five Working
         Days the PLD Parties offer one or more Properties that meet the
         Investment and Operating Criteria to the Management Company on behalf
         of the Fund and, except as permitted under Clause 5.3, the Management
         Company on behalf of the Fund fails to acquire at least one of such
         Properties and (b) the Management Company on behalf of the Fund cannot
         establish to the reasonable satisfaction of the PLD Parties at the end
         of such period that it has sufficient funds available and committed to
         purchase the next Stabilised Property which the PLD Parties will offer
         to the Management Company on behalf of the Fund pursuant to this
         Agreement.

13       VAT

         All sums payable under this Agreement by any party to any other party
         shall be deemed to be exclusive of any Value Added Tax (or its
         equivalent in any jurisdiction outside the European Union) which is
         chargeable on the supply made by such other party for which such sums
         are the consideration for Value Added Tax purposes.

<PAGE>

14       CONDITION

         The provisions of Clauses 1-13 (inclusive) and 15-17 (inclusive) of
         this Agreement are conditional upon Closing.

15       EXCLUDED PROPERTIES

         It is agreed that this Agreement (including the provisions of Schedule
         2 hereof) shall not apply in any way to the Properties referred to in
         Schedule 3 and such Properties may be freely sold in the open market
         without being offered to the Management Company on behalf of the Fund.

16       ESTATE COMMON PARTS

         If appropriate, the PLD Party may, at the same time as a Property or
         Property Owner is contributed to the Management Company on behalf of
         the Fund, contribute (at nil cost) any related estate common areas
         (such as estate roads) or the shares in any management company in which
         such areas are vested.

17       PROLOGIS TRUST COVENANT

         ProLogis Trust shall procure that any subsidiary which owns any
         property which satisfies the Investment and Operating Criteria shall
         offer such property (or the company which owns it), to the Management
         Company on behalf of the Fund as if such subsidiary had been identified
         in the Agreement as a PLD Party.

<Table>
<S>                                                                     <C>
       Signed by ProLogis Management S.a.r.l. for
       and on behalf of ProLogis European Property Fund
       in the presence of: ZUBAIR MIR                                   /s/ JEFFREY SCHWARTZ

       Signed by ProLogis Development S.a.r.l.
       in the presence of: ZUBAIR MIR                                   /s/ JEFFREY SCHWARTZ

       Signed by ProLogis France Developments Inc
       in the presence of: ZUBAIR MIR                                   /s/ JEFFREY SCHWARTZ

       Signed by Kingspark Holdings S.A.
       in the presence of: ZUBAIR MIR                                   /s/ JEFFREY SCHWARTZ

       Signed by ProLogis Trust acting by                               /s/ EDWARD S. NEKRITZ
</Table>

<PAGE>

                                   SCHEDULE 1

PART I

(PROPERTY WARRANTIES)

18       The PLD Party completed Due Diligence in respect of the relevant
         Property prior to the PLD Party's acquisition of the Property or the
         shares in a company directly or indirectly owning the Property. The Due
         Diligence was carried out on the basis that the PLD Party would be the
         absolute owner of the Property or the shares in such company and the
         results of such Due Diligence were in the opinion of the PLD Party
         satisfactory or any issues arising were resolved as part of the
         relevant acquisition in a manner satisfactory to the PLD Party.

2        TITLE

         In relation to each Property:

18.1     The Property Owner ("the OWNER") of the Property is the legal owner of
         and beneficially entitled to the whole of the Property.

18.2     To the extent necessary all registration formalities in relation to the
         Owner's title to the Property have been completed.

18.3     The PLD Party has not received written notice that

         18.3.1   The Property is subject to any adverse estate, right,
                  interest, covenant, restriction, option or right of
                  pre-emption in favour of any third party (whether in the
                  nature of a public or private right or obligation), nor is
                  there any agreement to give or create any of the foregoing,
                  other than of a minor nature;

         18.3.2   Where the Property is subject to any of the arrangements
                  referred to in paragraph 2.3.1 PLD has not received written
                  notice that any breach has occurred of any of the terms
                  thereof other than of a minor nature.

18.4

         18.4.1   The Property has access to and egress from public roads or the
                  Property has the benefit of all necessary rights over private
                  land on terms which do not entitle any person to terminate or
                  curtail the same.

         18.4.2   The Property drains into a public sewer and is served by
                  water, electricity and gas utilities. Either the pipes,
                  sewers, wires, cables, conduits and telecommunications
                  conducting media serving the Property connect directly to a
                  public supply without passing through land in the occupation
                  or ownership of a third party or, if they do not, the rights
                  necessary for the present use of such services by the Property
                  are available on terms which do not entitle any person to
                  terminate or curtail the same.

18.5     There are no outstanding disputes between the Owner and any third party
         affecting the Property, other than of a minor nature.

19       PLANNING/PERMITS/ZONING

         So far as the PLD Party is aware in relation to each Property:

<PAGE>

19.1     No development at the Property which has been carried out by the PLD
         Party or ProLogis Affiliates or any use of the Property has been
         undertaken in breach of the relevant regulations, laws, orders,
         consents or permissions regulating the development.

19.2     There is no resolution, proposal, scheme or order, whether formally
         adopted or not, by any governmental or other relevant authority for the
         compulsory acquisition of the whole or any part of the Property.

20       LEASEHOLD PROPERTIES

         Where the interest of the Owner in any Property is leasehold:

20.1     Any consent necessary for the grant of the lease under which the Owner
         holds its interest in the Property (the "GROUND LEASE") was duly
         obtained and a copy of the consent is with the documents of title.

20.2     So far as the PLD Party is aware there is no subsisting breach, nor any
         non-observance of any covenant, condition or agreement contained in the
         Ground Lease on the part of either the relevant landlord or the Owner,
         other than of a minor nature.

20.3     There are no restrictions in the Ground Lease which prevent the
         Property being used now or during the remaining term of the Ground
         Lease for the present use.

20.4     The Ground Lease is not expressed to be subject to any rights of
         re-entry, forfeiture or termination on the liquidation of the tenant
         (whether compulsory or voluntary) or on any other ground except
         non-payment of rent or breach of covenant by the tenant under the
         Ground Lease.

20.5     There is no right for the landlord to terminate the Ground Lease before
         the expiry of the contractual term other than by forfeiture.

20.6     The tenant under the Ground Lease can assign or underlet the whole of
         the Property subject only to obtaining the landlord's consent (such
         consent not to be unreasonably withheld).

20.7     The Ground Lease is for a term of years with not less than 40 years
         unexpired as at the Relevant Transfer Date.

21       OCCUPATIONAL LEASES AND LICENCES

21.1     There is no material subsisting breach or material non-observance of
         any covenant, condition or agreement contained in any occupational
         lease.

21.2     No legal proceedings have been instituted by the Owner against the
         tenant under the occupational lease.

21.3     All consents necessary for the grant of any occupational lease by the
         landlord were obtained.

The warranties contained in paragraphs 2 to 5 are given (i) in respect of
matters arising prior to the acquisition by the PLD Party of the Property or the
shares in a company directly or indirectly owning the Property, to the best of
the knowledge, information and belief of the PLD Party on the basis of the Due
Diligence referred to in paragraph 3.1 above and any written notice received by
the PLD Party subsequently; and (ii) in respect of all matters arising on or
since the PLD Party acquired the Property or the shares in a company directly or
indirectly owning the Property.

<PAGE>

References to any English legal term or concept in the warranties contained in
paragraphs 2 to 5 shall in respect of any Property located in a jurisdiction
other than England be construed as references to the term or concept which most
nearly corresponds to it in that jurisdiction.

PART II

(DEVELOPMENT WARRANTIES)

The PLD Party has procured the construction of the Property

1        in a good and workmanlike manner according to good building practice
         generally accepted at the date of construction;

2        according to the standards of good design practice for properties
         intended for use as distribution facilities;

2        using good quality materials goods and equipment;

3        in material compliance with:-

3.1      all relevant third party permits, consents and approvals;

3.2      all relevant legislation (which shall include any instrument or order
         regulation code of practice or other subordinate legislation deriving
         validity from any such legislation);

3.3      all mandatory rules and regulations as govern site and works safety and
         are applicable to the buildings constructed on the Property;

3.4      all relevant codes of practice and regulations (taking account of any
         changes which have already been announced or which will be implemented
         prior to the Stabilisation Date);

4        on normal commercial terms and in accordance with normal practice for
         the jurisdiction in which the Property is situated.

PART III

(CORPORATE WARRANTIES)

1        AUTHORITY AND CAPACITY

1.1      The PLD Party and the Property Owner are companies duly incorporated
         and validly existing under their respective laws of incorporation.

1.2      Each PLD Party has the legal right and full power and authority to
         enter into and perform this Agreement and any other documents to be
         executed to any PLD Party pursuant to or in connection with this
         Agreement which, when executed, will constitute valid and binding
         obligations on each PLD Party in accordance with their respective
         terms, except as such enforceability may be limited by applicable
         bankruptcy, insolvency, moratorium, reorganisation or similar laws in
         effect which affect the enforcement of creditors' rights generally and
         by equitable limitations on the availability of specific remedies.

1.3      The execution and delivery of and the performance by each PLD Party of
         their obligations under, this Agreement and any other documents to be
         executed by each PLD Party pursuant to or in connection with this
         Agreement will not:

<PAGE>

         1.3.1    result in breach of any provision of the memorandum or
                  articles of association of each PLD Party; or

         1.3.2    result in a breach of or give any third party a right to
                  terminate or modify, or result in the creation of any
                  Encumbrance under any agreement, licence or other instrument
                  or result in a breach of any order, judgement or decree of any
                  Court, governmental agency or regulatory body to which a PLD
                  Party is a party or by which any PLD Party or any of their
                  assets is bound.

1.4      Each PLD Party is entitled to contribute and transfer to the Fund the
         full legal and beneficial ownership of the shares in the Property Owner
         under the terms of this Agreement without the consent of any third
         party. Such shares comprise the whole of the allotted and issued share
         capital of the Property Owner, have been properly and validly allotted
         and issued and are each fully paid.

1.5      No person other than the Fund has the right (whether exercisable now or
         in the future and whether contingent or not) to call for the allotment,
         conversion, issue, sale or transfer of any share or loan capital or any
         other security giving rise to a right over the capital of any Property
         Owner under any option or other agreement (including conversion rights
         and rights of pre-emption) and there are no Encumbrances or the shares
         in the Property Owner or any arrangements or obligations to create any
         Encumbrances.

2        ACCOUNTS AND RECORDS

         The Balance Sheet required pursuant to Clause 5.9 will be prepared in
         accordance with applicable law and in accordance with GAAP and, subject
         thereto, so as to give a true and fair view of the assets, liabilities
         and state of affairs of the Property Owner as at the Relevant Transfer
         Date

         PROVIDED THAT;

(A)      No provision shall be made for deferred tax liabilities;

(B)      No warranty shall be given in relation to the value of any Property.

3        ACCOUNTING AND OTHER RECORDS

         The statutory books, books of account and other records of whatsoever
         kind of each Property Owner will by the Relevant Transfer Date be
         up-to-date and maintained in accordance with all applicable legal
         requirements on a proper and consistent basis and will contain complete
         and accurate records of all mattes required to be dealt within such
         books and all such books and records and all other documents (including
         documents of title and copies of all subsisting agreements to which the
         Property Owner is a party) which are the property of each Property
         Owner or ought to be in its possession will be in its possession (or
         under its control). All accounts, documents and returns required by law
         to be delivered or made to any company registrar in any relevant
         jurisdiction or any other authority will be duly and correctly
         delivered or made.

<PAGE>

                                   SCHEDULE 2
                                  (PRE-EMPTION)

         Without prejudice to the PLD Parties' obligation in clause 7 of this
         Agreement the PLD Party agrees with the Fund that:

1        IF during the term of this Agreement the PLD Party shall desire to
         dispose of (other than to any other PLD Party or its direct or indirect
         wholly owned subsidiaries) any warehouse or distribution property or
         the shares in the company which owns such property which is not then a
         Stabilised Property (but excluding any land which is undeveloped) THEN
         it shall first give written notice (the "OFFER NOTICE") to the Fund in
         terms which if accepted by the Fund would constitute a legally
         enforceable agreement for the contribution of such warehouse
         distribution Property or shares (as the case may be) subject to any
         liabilities specified in the Offer Notice for the sum stated in the
         Offer Notice (which sum may be received by the PLD Party as cash or
         Class B2 Units at the discretion of the PLD Party) and otherwise on the
         terms of this Agreement (mutatis mutandis) for the transfer of
         Stabilised Properties or Property Owners (as the case may be) but
         subject to the provisions of paragraph 5 of this Schedule 2.

2        The Fund shall be entitled within fifteen Working Days of service on it
         of an Offer Notice to serve on the PLD Party a written notice
         ("Acceptance") accepting the offer contained in the Offer Notice.

3        Subject to paragraph 4 where an Acceptance has been duly served the PLD
         Party shall contribute and the Fund shall acquire the Property or the
         relevant Property Owner on the terms referred to in paragraph 1 of this
         Schedule.

4        When the PLD Party has served an Offer Notice on the Fund and EITHER

4.1      the Fund serves on the PLD Party a written notice that it does not
         intend to serve an Acceptance; OR

4.2      No Acceptance is served within the period prescribed for its service;

         THEN the PLD Party shall be at liberty to complete a transfer of the
         relevant Property or Property Owner during the period of Twelve months
         after the date of the Offer Notice at a price equal to or greater than,
         and on terms no more favourable than those set out in the Offer Notice
         but if the relevant Property is not located in a Target Market then: -

                  (A)      the PLD Party may dispose of such Property at any
                           time and at any price; or

                  (B)      the PLD Party may hold such Property as an investment
                           for its own account

         (in either case) without any obligation to offer it to the Fund at any
         future date.

4.3      The PLD Party shall, in relation to any Property in relation to which a
         notice is served under paragraph 1 of this Schedule, provide the
         Management Company with sufficient information about such Property
         within a timescale which is in the reasonable opinion of the PLD Party
         sufficient to enable the UAC to make an informed investment decision
         about such Property.

4.4      The parties hereto agree that the Fund shall not acquire any Properties
         which are not Stabilised Properties ("NON-STABILISED PROPERTIES") or
         Properties which are outside the Target Markets from any PLD Party or
         any third party if such acquisition would result in the Fund owning
         non-Stabilised Properties and Properties outside the Target Markets of
         a value (valued in accordance with the Management Regulations) which is
         in excess of 15% of the total gross

<PAGE>

         asset value of the Portfolio as at the most recent Valuation Date (as
         defined in the Management Regulations).

5        Any Offer Notice in relation to a Property which satisfies all the
         Investment and Operating Criteria except that it is located outside the
         Target Market but within Europe shall constitute an offer to sell such
         Property for the Contribution Amount for such Property calculated in
         accordance with this Agreement.

<PAGE>

                                   SCHEDULE 3

1        The whole of the properties at Segensworth Fareham, UK, Ashby Business
         Park, Ashby-de-la-Zouch, Leicestershire, UK and Unit 3, Cardinal West,
         Royston Road, Godmanchester, Cambridgeshire UK and the Properties in
         course of development for Post Office Property Holdings at Greenford,
         Hounslow, Middlesex;

2        Any assets comprising the cold storage operating business of ProLogis
         or its affiliates including, without limitation, any assets owned by
         Frigoscandia;

3        Existing joint ventures of Kingspark Holdings SA and its subsidiaries;

4        Any properties developed and sold as part of a build-to-suit
         transaction for an owner-user;

5        Undeveloped land.

<PAGE>

APPENDIX 1

DUE DILIGENCE CHECK LIST - SITE ACQUISITION AND DEVELOPMENT

1        LEGAL MATTERS

1.1      Investigate title.

1.2      Check Conveyance plan against survey/OS mapping/physical boundaries

1.3      Raise enquiries and consider replies.

1.4      Undertake searches (eg local search, commons search, index map search,
         coal authority search and any relevant specialist searches eg
         Railtrack, BWB etc).

1.5      Undertake utility searches/enquiries.

1.6      Review restrictions on use.

1.7      Inspect the site.

1.8      Negotiate contract.

1.9      Agree form of Transfer.

1.10     Ensure availability of vacant possession.

1.11     Check or obtain title indemnity insurance if relevant.

2        PLANNING MATTERS

2.1      Consider/review/understand any local Acts.

2.2      Check whether the site being sold matches the site with any planning
         permissions.

2.3      Check whether the site is included in the Local Plan for B1, B2, B8
         development (and whether there is any restriction B8 use).

2.4      Check whether the site has outline planning permission.

2.5      Check whether the site has any detailed planning permission.

2.6      Consider any section 106 Agreement to which any planning permission is
         subject.

2.7      Check planning applications and relevant permissions.

2.8      Review whether any conditions contained in a planning permission
         restrict/prevent/make development more expensive.

2.9      Investigate the "flexibility" of any existing consents, conditions or
         agreements with the planning authority to better suit ProLogis'
         approach to the development.

2.10     Consider whether visibility splays are required? If so, consider
         whether any third party land is required.

2.11     Check the proposed local plans and their current status.

2.12     Consider English Heritage/archaeology requirements.

2.13     Review any environmental assessment/impact statement/planning history.

<PAGE>

2.14     Ascertain the make up of councillors and identity of the chairman of
         the planning committee.

2.15     Obtain information regarding local politics.

2.16     Check whether the site abuts a conservation area or area of outstanding
         natural beauty.

2.17     Consider development in relation to trees, plants, wild life and
         hedgerows.

2.18     Consider development in relation to the site's proximity to the
         railway; whether there is any risk of underground interference with
         computers.

3        SERVICES

3.1      Check whether the site has (or if they are available on a adjoining
         land):-

         Gas

         Electricity

         Water

         Mains drainage

         Surface water drainage

         Fibre optic cable

         Telephone

3.2      Check whether all those services are adopted and whether they have
         capacity to service the proposed development.

3.3      Consider whether section 104 Agreements are required.

3.4      Check whether any sub-station, gas governor or fire mains is required
         on site.

3.5      Consider the likely requirements/implications of other nearby
         developments.

4        HIGHWAYS AND TRANSPORTATION

4.1      Check whether the site abuts an adopted highway.

4.2      Consider whether highway improvements are required. If so check whether
         the land required is owned by ProLogis, the highway authority or a
         third party.

4.3      If the highway is not adopted check what access rights will be granted
         and any relevant maintenance liabilities.

4.4      Check whether any section 278 or section 38 Agreements will be required
         or already exist.

4.5      Review whether the local authority will require a Traffic Impact
         Assessment and part of the detailed planning application.

4.6      Check whether the Highways Agency will be involved.

4.7      Consider whether public transport is an issue and if so, whether
         contributions will be expected from ProLogis.

4.8      Review whether there are likely to be car parking restrictions.

4.9      Consider whether any rail access is involved.

<PAGE>

4.10     Consider whether any Railway Works Agreements will be required.

4.11     Consider whether any Transport and Works Act orders will be required.

4.12     Consider whether any cycleways and footways will be required.

4.13     Check whether there are any bridges involved and, if so whether any
         technical approvals will be required.

4.14     Check whether safety audits will be required.

4.15     Review future road plans.

5        SITE CONSTRAINTS

         Check whether the site is subject to any of the following:-

5.1      Overhead power lines.

5.2      Underground/overground easements (including airports/flightpaths etc).

5.3      Tree preservation orders.

5.4      Flooding during the last 100 years.

5.5      Presence of minerals/geotechnical faults/any other problem disclosed by
         the Desktop Study.

5.6      Water courses.

5.7      Environmental issues (eg newts, stream diversions, landscaping,
         designation as a site of special scientific interest or an area of
         outstanding natural beauty).

5.8      Public/private footpaths.

5.9      Third party occupancies.

6        GROUND ANALYSIS

6.1      Review the results of:-

         6.1.1    Desktop study.

         6.1.2    Site survey as to boundaries and levels.

         6.1.3    Ground investigation report.

6.2      Obtain confirmation from engineer that the ground investigation is
         satisfactory.

6.3      Obtain confirmation that the ground will accept normal foundation
         techniques.

6.4      Consider any archaeological requirements.

6.5      Ensure that ProLogis has the benefit of any relevant reports
         commissioned by others.

6.6      Consider the need for environmental insurance.

6.7      If contamination is present:-

         6.7.1    Obtain a remediation specification (taking account of cost and
                  availability of warranties.

         6.7.2    Establish the necessary level of remediation having regard to
                  the proposed use of the site.

<PAGE>

         6.7.3    Allocate responsibility for remediation and future liability.

7        OTHER

7.1      Any other appropriate due diligence for the relevant property.

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