Document:

Exhibit 4.2

 Exhibit 4.2 
  
 
 
 INDENTURE 
  
 Among

  
 E*TRADE MBSC TRUST 200_-_ 
 as
Issuer, 
  
 [•], 
 as Master
Servicer 
  
 and 
  
 [•], 
 as Indenture Trustee 
  
 Dated as of [•] 
  
 E*TRADE MBSC TRUST 200_-_, 
 MORTGAGE-BACKED NOTES, SERIES 200_-_ 
  
 
 
  

  
 
	 ARTICLE I
 	  	 DEFINITIONS AND INCORPORATION BY REFERENCE
 	  	 2
 
	 
	     SECTION 1.1
 	  	     DEFINITIONS
 	  	 2
 
	     SECTION 1.2
 	  	     INCORPORATION BY REFERENCE OF
TRUST INDENTURE ACT
 	  	 27
 
	     SECTION 1.3
 	  	     RULES OF CONSTRUCTION
 	  	 27
 
	 
	 ARTICLE II 
 	  	 THE NOTES
 	  	 28
 
	 
	     SECTION 2.1
 	  	     FORM
 	  	 28
 
	     SECTION 2.2
 	  	     EXECUTION, AUTHENTICATION, DELIVERY
AND DATING
 	  	 29
 
	     SECTION 2.3
 	  	     REGISTRATION; REGISTRATION OF
TRANSFER AND EXCHANGE
 	  	 29
 
	     SECTION 2.4
 	  	     MUTILATED, DESTROYED, LOST OR
STOLEN NOTES
 	  	 31
 
	     SECTION 2.5
 	  	     PERSONS DEEMED OWNERS
 	  	 31
 
	     SECTION 2.6
 	  	     PAYMENT OF PRINCIPAL AND
INTEREST
 	  	 31
 
	     SECTION 2.7
 	  	     CANCELLATION
 	  	 32
 
	     SECTION 2.8
 	  	     AUTHENTICATION OF NOTES
 	  	 33
 
	     SECTION 2.9
 	  	     BOOK–ENTRY NOTES
 	  	 35
 
	     SECTION 2.10
 	  	     NOTICES TO CLEARING
AGENCY
 	  	 35
 
	     SECTION 2.11
 	  	     DEFINITIVE NOTES
 	  	 36
 
	     SECTION 2.12
 	  	     TAX
 	  	 36
 
	     SECTION 2.13
 	  	     RELEASE OF COLLATERAL
 	  	 36
 
	 
	 ARTICLE III
 	  	 COVENANTS
 	  	 37
 
	 
	     SECTION 3.1
 	  	     PAYMENT OF PRINCIPAL AND
INTEREST
 	  	 37
 
	     SECTION 3.2
 	  	     MAINTENANCE OF OFFICE OR
AGENCY
 	  	 37
 
	     SECTION 3.3
 	  	     MONEY FOR PAYMENTS TO
BE HELD IN TRUST
 	  	 37
 
	     SECTION 3.4
 	  	     EXISTENCE
 	  	 39
 
	     SECTION 3.5
 	  	     PROTECTION OF COLLATERAL
 	  	 39
 
	     SECTION 3.6
 	  	     PERFORMANCE OF OBLIGATIONS
 	  	 40
 
	     SECTION 3.7
 	  	     NEGATIVE COVENANTS
 	  	 41
 
	     SECTION 3.8
 	  	     COVENANTS OF THE
ISSUER
 	  	 42
 
	     SECTION 3.9
 	  	     RESTRICTED PAYMENTS
 	  	 42
 
	     SECTION 3.10
 	  	     TREATMENT OF NOTES AS
DEBT FOR TAX PURPOSES
 	  	 42
 
	     SECTION 3.11
 	  	     NOTICE OF EVENTS OF
DEFAULT
 	  	 42
 
	     SECTION 3.12
 	  	     FURTHER INSTRUMENTS AND
ACTS
 	  	 42
 
	     SECTION 3.13
 	  	     ANNUAL STATEMENT AS TO
COMPLIANCE
 	  	 43
 
	     SECTION 3.14
 	  	     REPRESENTATIONS AND WARRANTIES OF
THE ISSUER
 	  	 43
 
	     SECTION 3.15
 	  	     ANNUAL OPINIONS AS TO
COLLATERAL
 	  	 44
 
	 
	 ARTICLE IV
 	  	 SATISFACTION AND DISCHARGE
 	  	 44
 
	 
	     SECTION 4.1
 	  	     SATISFACTION AND DISCHARGE OF
INDENTURE
 	  	 44
 
	     SECTION 4.2
 	  	     APPLICATION OF TRUST
MONEY
 	  	 45
 
	 
	 ARTICLE V
 	  	 EVENTS OF DEFAULT; REMEDIES
 	  	 45
 
	 
	     SECTION 5.1
 	  	     EVENTS OF DEFAULT
 	  	 45
 
	     SECTION 5.2
 	  	     ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT
 	  	 47
 
	     SECTION 5.3
 	  	     COLLECTION OF INDEBTEDNESS AND
SUITS FOR ENFORCEMENT BY INDENTURE TRUSTEE
 	  	 47
 
	     SECTION 5.4
 	  	     REMEDIES; PRIORITIES
 	  	 49
 
	     SECTION 5.5
 	  	     LIMITATION OF SUITS
 	  	 51
 
	     SECTION 5.6
 	  	     UNCONDITIONAL RIGHTS OF
NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST
 	  	 51
 
	     SECTION 5.7
 	  	     RESTORATION OF RIGHTS AND
REMEDIES
 	  	 51
 
	     SECTION 5.8
 	  	     RIGHTS AND REMEDIES
CUMULATIVE
 	  	 52
 
	     SECTION 5.9
 	  	     DELAY OR OMISSION NOT
A WAIVER
 	  	 52
 
	     SECTION 5.10
 	  	     CONTROL BY NOTEHOLDERS
 	  	 52
 
	     SECTION 5.11
 	  	     WAIVER OF PAST
DEFAULTS
 	  	 52
 
	     SECTION 5.12
 	  	     UNDERTAKING FOR COSTS
 	  	 53
 
	     SECTION 5.13
 	  	     WAIVER OF STAY OR
EXTENSION LAWS
 	  	 53
 

 

 
 i 

  
 TABLE OF CONTENTS 

 
 
	  	  	  	  	 PAGE
 

	     SECTION 5.14
 	  	     ACTION ON NOTES
 	  	 53
 
	     SECTION 5.15
 	  	     OPTIONAL PRESERVATION OF THE
COLLATERAL
 	  	 53
 
	     SECTION 5.16
 	  	     PERFORMANCE AND ENFORCEMENT OF
CERTAIN OBLIGATIONS
 	  	 54
 
	 
	 ARTICLE VI
 	  	 THE INDENTURE TRUSTEE
 	  	 54
 
	 
	     SECTION 6.1
 	  	     DUTIES OF INDENTURE
TRUSTEE
 	  	 54
 
	     SECTION 6.2
 	  	     RIGHTS OF INDENTURE
TRUSTEE
 	  	 56
 
	     SECTION 6.3
 	  	     INDIVIDUAL RIGHTS OF INDENTURE
TRUSTEE
 	  	 57
 
	     SECTION 6.4
 	  	     INDENTURE TRUSTEE’S
DISCLAIMER
 	  	 57
 
	     SECTION 6.5
 	  	     NOTICE OF DEFAULT
 	  	 58
 
	     SECTION 6.6
 	  	     REPORTS BY INDENTURE TRUSTEE
TO HOLDERS
 	  	 58
 
	     SECTION 6.7
 	  	     COMPENSATION AND INDEMNITY
 	  	 58
 
	     SECTION 6.8
 	  	     REPLACEMENT OF INDENTURE
TRUSTEE
 	  	 59
 
	     SECTION 6.9
 	  	     SUCCESSOR INDENTURE TRUSTEE BY
MERGER
 	  	 60
 
	     SECTION 6.10
 	  	     APPOINTMENT OF CO–INDENTURE
TRUSTEE OR SEPARATE INDENTURE TRUSTEE
 	  	 60
 
	     SECTION 6.11
 	  	     ELIGIBILITY
 	  	 61
 
	     SECTION 6.12
 	  	     REPRESENTATIONS AND WARRANTIES

	  	 61
 
	     SECTION 6.13
 	  	     PREFERENTIAL COLLECTION OF CLAIMS
AGAINST ISSUER
 	  	 62
 
	 
	 ARTICLE VII
 	  	 NOTEHOLDERS’ LISTS AND REPORTS
 	  	 62
 
	 
	     SECTION 7.1
 	  	     ISSUER TO FURNISH INDENTURE
TRUSTEE NAMES AND ADDRESSES OF NOTEHOLDERS
 	  	 62
 
	     SECTION  7.2
 	  	     PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS
 	  	 62
 
	     SECTION 7.3
 	  	     REPORTS BY ISSUER
 	  	 63
 
	     SECTION 7.4
 	  	     REPORTS BY INDENTURE
TRUSTEE
 	  	 63
 
	 
	 ARTICLE VIII
 	  	 ACCOUNTS, DISBURSEMENTS AND RELEASES
 	  	 63
 
	 
	     SECTION 8.1
 	  	     COLLECTION OF MONEY
 	  	 63
 
	     SECTION 8.2
 	  	     PAYMENTS ON THE
NOTES
 	  	 64
 
	     SECTION 8.3
 	  	     RELEASE OF COLLATERAL
 	  	 64
 
	 
	 ARTICLE IX
 	  	 ADMINISTRATION OF TRUST FUND
 	  	 65
 
	 
	     SECTION 9.1
 	  	     COLLECTION ACCOUNTS; DISTRIBUTION
ACCOUNT
 	  	 65
 
	     SECTION 9.2
 	  	     PERMITTED WITHDRAWALS FROM THE
DISTRIBUTION ACCOUNT
 	  	 66
 
	     SECTION 9.3
 	  	     ADVANCES BY MASTER
SERVICER
 	  	 66
 
	     SECTION 9.4
 	  	     COMPENSATING INTEREST PAYMENTS

	  	 67
 
	     SECTION 9.5
 	  	     PRE-FUNDING ACCOUNT
 	  	 67
 
	     SECTION 9.6
 	  	     FINANCIAL ASSETS CUSTODIAL
ACCOUNT
 	  	 68
 
	     SECTION 9.7
 	  	     CALCULATION OF LIBOR
 	  	 68
 
	     SECTION 9.8
 	  	     MONTHLY STATEMENTS TO
NOTEHOLDERS
 	  	 70
 
	     SECTION 9.9
 	  	     REPORTS TO THE SECURITIES
AND EXCHANGE COMMISSION
 	  	 71
 
	     SECTION 9.10
 	  	     DISCOVERY OF BREACH; REPURCHASE
AND SUBSTITUTION OF MORTGAGE LOANS
 	  	 72
 
	 
	 ARTICLE X
 	  	 SUPPLEMENTAL INDENTURES
 	  	 74
 
	 
	     SECTION 10.1
 	  	     SUPPLEMENTAL INDENTURES WITHOUT
CONSENT OF NOTEHOLDERS
 	  	 74
 
	     SECTION 10.2
 	  	     SUPPLEMENTAL INDENTURES WITH
CONSENT OF NOTEHOLDERS
 	  	 75
 
	     SECTION 10.3
 	  	     EXECUTION OF SUPPLEMENTAL
INDENTURES
 	  	 77
 
	     SECTION 10.4
 	  	     EFFECT OF SUPPLEMENTAL
INDENTURE
 	  	 77
 
	     SECTION 10.5
 	  	     CONFORMITY WITH TRUST INDENTURE
ACT
 	  	 77
 
	     SECTION 10.6
 	  	     REFERENCE IN NOTES TO
SUPPLEMENTAL INDENTURES
 	  	 77
 
	     SECTION 10.7
 	  	     AMENDMENTS TO TRUST
AGREEMENT
 	  	 77
 
	 
	 ARTICLE XI
 	  	 DISPOSITION OF THE COLLATERAL; REDEMPTION OF THE NOTES
 	  	 78
 
	 
	     SECTION 11.1
 	  	     REDEMPTION OF THE
NOTES
 	  	 78
 
	     SECTION 11.2
 	  	     FORM OF REDEMPTION
NOTICE
 	  	 78
 

 

 
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	  	  	  	  	 PAGE
 

	     SECTION 11.3
 	  	     NOTES PAYABLE ON REDEMPTION
DATE
 	  	 79
 
	 
	 ARTICLE XII
 	  	 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER
 	  	 79
 
	 
	     SECTION 12.1
 	  	     DUTIES OF THE MASTER
SERVICER; ENFORCEMENT OF SERVICERS’ OBLIGATIONS
 	  	 79
 
	     SECTION 12.2
 	  	     COMPENSATION TO THE MASTER
SERVICER
 	  	 81
 
	     SECTION 12.3
 	  	     MERGER OR CONSOLIDATION
 	  	 81
 
	     SECTION 12.4
 	  	     RESIGNATION OF MASTER
SERVICER
 	  	 81
 
	     SECTION 12.5
 	  	     ASSIGNMENT OR DELEGATION OF
DUTIES BY THE MASTER SERVICER
 	  	 82
 
	     SECTION 12.6
 	  	     LIMITATION ON LIABILITY OF
THE MASTER SERVICER
 	  	 82
 
	     SECTION 12.7
 	  	     INDEMNIFICATION; THIRD–PARTY
CLAIMS
 	  	 83
 
	     SECTION 12.8
 	  	     MASTER SERVICER EVENTS OF
DEFAULT
 	  	 83
 
	     SECTION 12.9
 	  	     INDENTURE TRUSTEE TO ACT;
APPOINTMENT OF SUCCESSOR
 	  	 85
 
	     SECTION 12.10
 	  	     NOTIFICATION TO NOTEHOLDERS
 	  	 87
 
	     SECTION 12.11
 	  	     MASTER SERVICER TO ACT
AS SERVICER; APPOINTMENT OF SUCCESSOR
 	  	 87
 
	     SECTION 12.12
 	  	     NOTIFICATION TO NOTEHOLDERS
 	  	 88
 
	     SECTION 12.13
 	  	     RECORDS; CONFIDENTIALITY
 	  	 88
 
	     SECTION 12.14
 	  	     ANNUAL OFFICER’S CERTIFICATE
AS TO COMPLIANCE
 	  	 89
 
	     SECTION 12.15
 	  	     ANNUAL INDEPENDENT
ACCOUNTANT’S SERVICING REPORT
 	  	 89
 
	 
	 ARTICLE XIII
 	  	 MISCELLANEOUS
 	  	 90
 
	 
	     SECTION 13.1
 	  	     COMPLIANCE CERTIFICATES AND
OPINIONS, ETC.
 	  	 90
 
	     SECTION 13.2
 	  	     FORM OF DOCUMENTS DELIVERED
TO INDENTURE TRUSTEE
 	  	 91
 
	     SECTION 13.3
 	  	     ACTS OF NOTEHOLDERS
 	  	 91
 
	     SECTION 13.4
 	  	     NOTICES, ETC. TO INDENTURE
TRUSTEE, THE ISSUER AND RATING AGENCIES
 	  	 92
 
	     SECTION 13.5
 	  	     NOTICES TO NOTEHOLDERS;
WAIVER
 	  	 92
 
	     SECTION 13.6
 	  	     CONFLICT WITH TRUST INDENTURE
ACT
 	  	 93
 
	     SECTION 13.7
 	  	     EFFECT OF HEADINGS AND
TABLE OF CONTENTS
 	  	 93
 
	     SECTION 13.8
 	  	     SUCCESSORS AND ASSIGNS
 	  	 93
 
	     SECTION 13.9
 	  	     SEVERABILITY
 	  	 93
 
	     SECTION 13.10
 	  	     BENEFITS OF INDENTURE AND
CONSENT OF NOTEHOLDERS
 	  	 93
 
	     SECTION 13.11
 	  	     LEGAL HOLIDAYS
 	  	 93
 
	     SECTION 13.12
 	  	     GOVERNING LAW
 	  	 94
 
	     SECTION 13.13
 	  	     COUNTERPARTS
 	  	 94
 
	     SECTION 13.14
 	  	     RECORDING OF INDENTURE
 	  	 94
 
	     SECTION 13.15
 	  	     ISSUER OBLIGATIONS
 	  	 94
 
	     SECTION 13.16
 	  	     NO PETITION.
 	  	 94
 
	     SECTION 13.17
 	  	     INSPECTION
 	  	 94
 
	     SECTION 13.18
 	  	     EXECUTION BY THE
ISSUER
 	  	 95
 

 
  
 SCHEDULES 
  
 
	 
	 Schedule I
 	  	 Mortgage Loan Schedule
 
	 
	 Schedule II
 	  	 Financial Asset Schedule
 
	 
	 Schedule III
 	  	 Form of Monthly Statements to Noteholders
 
	 
	 Schedule IV
 	  	 Purchase Agreements
 
	 
	 Schedule V
 	  	 Servicing Agreements
 

 

 
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	  	  	  	    	 PAGE
 

	  	  	 EXHIBITS
 	    	  
	 
	 EXHIBIT A
 	  	 Form of Note
 	    	  
	 
	 EXHIBIT B
 	  	 Form of Initial Certification of Indenture Trustee
 	    	  
	 
	 EXHIBIT C
 	  	 Form of Final Certification of Indenture Trustee
 	    	  

 

 
 iv 

  
 CROSS REFERENCE TABLE 
  
 Cross-reference sheet showing the location in the Indenture of the provisions inserted pursuant to Sections 310 through 318(a) inclusive of the Trust Indenture Act of
1939.* 
  
 
	 Trust Indenture Act of 1939
 
	  	 Indenture Section
 

	     Section 310
 	  	  
	 (a)(1)
 	  	 6.7
 
	 (a)(2)
 	  	 6.7,6.8
 
	 (a)(3)
 	  	 6.13
 
	 (a)(4)
 	  	 Not Applicable
 
	 (a)(5)
 	  	 6.7
 
	 (b)
 	  	 6.7,6.9
 
	 (c)
 	  	 Not Applicable
 
	     Section 311
 	  	  
	 (a)
 	  	 6.12
 
	 (b)
 	  	 6.12
 
	 (c)
 	  	 Not Applicable
 
	     Section 312
 	  	  
	 (a)
 	  	 7.1,7.2
 
	 (b)
 	  	 7.2
 
	 (c)
 	  	 7.2
 
	     Section 313
 	  	  
	 (a)
 	  	 7.3
 
	 (b)
 	  	 7.3
 
	 (c)
 	  	 13.5
 
	 (d)
 	  	 7.3
 
	     Section 314
 	  	  
	 (a)(1)
 	  	 7.4
 
	 (a)(2)
 	  	 7.4
 
	 (a)(3)
 	  	 7.4
 
	 (a)(4)
 	  	 7.4
 
	 (b)(1)
 	  	 2.11(c), 13.01
 
	 (b)(2)
 	  	 3.6
 
	 (c)(1)
 	  	 2.11(d), 4.1,
 
	  	  	 8.2(d), 13.1
 
	 (c)(2)
 	  	 2.11(c), 4.1,
 
	  	  	 8.2(d), 13.1
 
	 (c)(3)
 	  	 8.2(d)
 
	 (d)(1)
 	  	 13.1
 
	 (d)(2)
 	  	 13.1
 
	 (d)(3)
 	  	 13.1
 

 
 
* This Cross-Reference Table is not part of
the Indenture. 

  
 
	 (e)
 	  	 13.1
 
	     Section 315
 	  	  
	 (a)
 	  	 6.1
 
	 (b)
 	  	 6.2,13.5
 
	 (c)
 	  	 6.1
 
	 (d)(1)
 	  	 6.1
 
	 (d)(2)
 	  	 6.1
 
	 (d)(3)
 	  	 6.1
 
	 (e)
 	  	 5.12
 
	     Section 316
 	  	  
	 (a)
 	  	 1.2
 
	 (b)
 	  	 5.9
 
	 (c)
 	  	 1.2
 
	     Section 317
 	  	  
	 (a)(1)
 	  	 5.3
 
	 (a)(2)
 	  	 5.5
 
	 (b)
 	  	 3.3
 
	     Section 318
 	  	  
	 (a)
 	  	 13.7
 

 
  

 
 vi 

 This INDENTURE dated as of [•], among E*TRADE MBSC Trust 200_-_, a Delaware statutory trust, as Issuer (the
“Issuer”), [•], as Master Servicer (the “Master Servicer”) and [•], as Indenture Trustee (the “Indenture Trustee”), 
  
 PRELIMINARY STATEMENT 
  
 The Issuer has duly
authorized the execution and delivery of this Indenture to provide for its E*TRADE MBSC Trust 200_-_, Mortgage-Backed Notes, Series 2000_-_ (the “Notes”), issuable as provided in this Indenture. All covenants and agreements made by
the Issuer herein are for the benefit and security of the Holders of the Notes and the Note Insurer. The Issuer is entering into this Indenture, and the Indenture Trustee is accepting the trusts created hereby, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged. All things necessary to make this Indenture a valid agreement of the Issuer in accordance with its terms have been done. 
  
 GRANTING CLAUSE 
  
 Subject to the terms of this
Indenture, the Issuer hereby Grants on the Closing Date to the Indenture Trustee, as Indenture Trustee for the benefit of the Holders of the Notes, all of the Issuer’s right, title and interest in and to: 
  
 (i)    the Mortgage Loans listed on Schedule I to this Indenture (including property that secures a Mortgage Loan that
becomes REO Property), including the related Mortgage Loan Files delivered or to be delivered to the Indenture Trustee and all payments of principal and interest received, collected or otherwise recovered in respect of principal and interest after
the Cut-off Date. 
  
 (ii)    the Issuer’s rights and benefits but none of its obligations
under the Sale Agreement (including the Issuer’s right to cause the Depositor to repurchase Mortgage Loans from the Issuer under certain circumstances described therein); 
  
 (iii)    the Issuer’s rights and benefits but none of its obligations under the Servicing Agreements; 
  
 (iv)    the Issuer’s rights and benefits but none of its obligations under the Trust Agreement; 

 
 (v)    the Issuer’s rights and benefits but none of its obligations under the Acknowledgments;

  
 (vi)    the Trust Accounts, all amounts and property in the Trust Accounts from time to time,
and the Security Entitlements (as defined in the UCC) to all Financial Assets credited to the Trust Accounts from time to time; 
  
 (vii)    all other property of the Trust from time to time; 
  
 (viii)    all present and future claims, demands, causes of action and chooses in action in respect of any or all of the foregoing; and 

  
 (ix)    all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (collectively, the “Collateral”). 
  
 The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes and to secure (i) the payment of all amounts due on the Notes in accordance with their
terms, (ii) the payment of all other sums payable under the Indenture with respect to the Notes, and (iii) compliance with the provisions of this Indenture, all as provided in this Indenture. 
  

The Indenture Trustee, as Indenture Trustee on behalf of the holders of the Notes acknowledges such Grant, accepts the trusts hereunder and agrees to perform the
duties required of it in this Indenture in accordance with its terms. 
  
 Each Holder, by acceptance of the Notes and
the Indenture Trustee agree and acknowledge that each item of Collateral that is physically delivered to the Indenture Trustee will be held by the Indenture Trustee (or its custodian) in trust for the benefit of the Noteholders under the terms of
this Agreement. 
  
 ARTICLE I 
  
 DEFINITIONS AND INCORPORATION BY REFERENCE 
  
 SECTION
1.1    Definitions.    Except as otherwise specified herein or as the context may otherwise require, (i) capitalized terms used but not otherwise defined herein shall have the respective meanings set
forth in the Servicing Agreement for all purposes of this Indenture and (ii) the following terms have the respective meanings set forth below for all purposes of this Indenture. 
  
 Act:    The meaning specified in Section 13.3(a). 
  
 Account:    Each of the Collection Account, the Distribution Account (including each sub-account thereof), the Financial Asset Custodial Account and the Escrow Accounts.

  
 Accrual Period:    With respect to any Distribution Date and with respect to the
Notes, the calendar month to immediately preceding the month of such Distribution Date; and with respect to the LIBOR Notes the period commencing on the prior Distribution Date immediately preceding the month in which such Distribution Date occurs
and ending at the close of business on the calendar day immediately preceding the Distribution Date. 
  
 Acknowledgement:    Each of the Assignment, Assumption and Recognition Agreements related to the Servicing Agreements, which are listed on Schedule V hereto, assigning rights under the Purchase
Agreements and the Servicing Agreements from the Seller to the Depositor and from the Depositor to the Indenture Trustee for the benefit of the Noteholders. 

 
 2 

 Additional Collateral:    With respect to any Additional Collateral Mortgage Loan, the
marketable securities and other acceptable collateral pledged as collateral pursuant to the related pledge agreements. 
  
 Additional Collateral Mortgage Loan:    Each Mortgage Loan identified as such in the Mortgage Loan Schedule. 
  
 Adjustable Rate Mortgage Loan:    Any Mortgage Loan in which the related Mortgage Note contains a provision whereby the Mortgage Rate is adjusted from time to time in
accordance with the terms of such Mortgage Note. 
  
 Advance:    Any Monthly Advance or
Servicer Advance. 
  
 Affiliate:    With respect to any specified Person, any other Person
controlling or controlled by or under common control with 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 securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 
  
 Appraised Value:    With respect to any Mortgage Loan, the Appraised Value of the related Mortgaged Property
shall be: (i) with respect to a Mortgage Loan other than a Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged Property based upon the appraisal made at the time of the origination of such Mortgage Loan and (b) the sales price of
the Mortgaged Property at the time of the origination of such Mortgage Loan; and (ii) with respect to a Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the appraisal made at the time of the origination of such Refinancing
Mortgage Loan. 
  
 Assignment of Mortgage:    An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage to the Indenture Trustee, which assignment, notice of transfer
or equivalent instrument may be in the form of one or more blanket assignments covering the Mortgage Loans secured by Mortgaged Properties located in the same jurisdiction, if permitted by law; provided, however, that the Indenture Trustee
shall not be responsible for determining whether any such assignment is in recordable form. 
  
 Authorized
Officer:    With respect to the Trust, any officer of the Owner Trustee who is authorized to act for the Owner Trustee in matters relating to the Trust and who is identified on the list of Authorized Officers delivered by the
Owner Trustee to the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter). 
  
 Available Distribution Amount:    With respect to any Distribution Date, the total amount of all cash received by the Indenture Trustee on the Mortgage Loans from each Servicer or otherwise through
the related Remittance Date for deposit into the Distribution Account in respect of such Distribution Date, including (1) all scheduled installments of interest (net of the related Servicing Fees and the Master Servicing Fees) and principal
collected on the Mortgage Loans and due during the Due Period related to such Distribution Date, together with any 

 
 3 

 Advances in respect thereof, (2) all Insurance Proceeds, Liquidation Proceeds and the proceeds of any Additional Collateral from the Mortgage
Loans, in each case for such Distribution Date, (3) all other amounts received from the Servicer with respect to the sale of any defaulted Mortgage Loans in accordance with the terms of the related Servicing Agreement during the related Prepayment
Period, (4) all partial or full Principal Prepayments, together with any accrued interest thereon, identified as having been received from the Mortgage Loans during the related Prepayment Period, (5) any Compensating Interest Payments paid by the
Master Servicer and/or received from the Servicers in respect of Prepayment Interest Shortfalls with respect to the Mortgage Loans, (6) the aggregate Purchase Price of all Defective Mortgage Loans purchased from the Trust Fund during the related
Prepayment Period and (7) any amounts remaining in the Pre-Funding Account and transferred to the Distribution Account immediately following the termination of the Pre-Funding Period, minus: 
  
 (A)    all related charges and other amounts payable or reimbursable to the Master Servicer, the Securities
Administrator or the Indenture Trustee under this Agreement, up to an aggregate maximum amount of $[Ÿ] annually, or to the
Servicers under the Servicing Agreements; 
  
 (B)    in the case of (2), (3) and (4) above, any
related unreimbursed expenses incurred by the related Servicers in connection with a liquidation or foreclosure and any unreimbursed Advances or Servicing Advances due to the Master Servicer or the related Servicers; 
  
 (C)    any related unreimbursed Non-recoverable Advances due to the Master Servicer or the Servicers; and

  
 (D)    in the case of (1) through (4) above, any related amounts collected which are
determined to be attributable to a subsequent Due Period or Prepayment Period. 
  
 Average Sixty-Day Delinquency
Ratio:    The ratio of the average of the aggregate Principal Balances of Mortgage Loans delinquent 60 days or more for the preceding three Due Periods to the average aggregate Scheduled Principal Balance for the Mortgage
Loans for these periods. 
  
 Average Thirty-Day Delinquency Ratio:    The ratio of the
average of the aggregate Principal Balances of Mortgage Loans delinquent 30 days or more for the preceding three Due Periods to the average aggregate Scheduled Principal Balance for the Mortgage Loans for these periods. 
  
 Bankruptcy Code:    The United States Bankruptcy Code of 1986, as amended, as codified in 11 U.S.C.
§§ 101-1330. 
  
 Bankruptcy Coverage Termination Date:    The date at which the
Bankruptcy Loss Coverage Amount is reduced to zero. 
  
 Bankruptcy Loss:    With respect
to any Mortgage Loan, losses that are incurred as a result of a Deficient Valuation or Debt Service Reduction; provided, however, that a Bankruptcy Loss shall not be deemed a Bankruptcy 

 
 4 

 Loss hereunder so long as the related Servicer has notified the Master Servicer and Indenture Trustee in writing that the related Servicer is
diligently pursuing any remedies that may exist in connection with the related Mortgage Loan and either (A) the related Mortgage Loan is not in default with regard to payments due thereunder or (B) delinquent payments of principal and interest under
the related Mortgage Loan and any related escrow payments in respect of such Mortgage Loan are being advanced on a current basis by the related Servicer, in either case without giving effect to any Debt Service Reduction or Deficient Valuation.

  
 Bankruptcy Loss Coverage Amount:    As of any Determination Date, the Bankruptcy Loss
Coverage Amount shall equal the Initial Bankruptcy Coverage Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated to the Notes since the Cut-off Date and (ii) any permissible reductions in the Bankruptcy Loss Coverage Amount
as evidenced by a letter of each Rating Agency to the Indenture Trustee to the effect that any such reduction will not result in a downgrading of the then current ratings assigned to the Notes rated by it. 
  
 Book-Entry Notes:    A beneficial interest in any Notes, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 2.9. 
  
 Business Day:    Any
day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in the City of New York, New York, or the State of [Ÿ], or the city in which the Corporate Trust Office of the Indenture Trustee is located are authorized or obligated by law or executive order to be closed. 
  
 Certificate of Trust:    The certificate of trust of the Issuer substantially in the form of Exhibit B to the Trust Agreement. 

 
 Clearing Agency:    An organization registered as a “clearing agency” pursuant to Section
17A of the Securities Exchange Act of 1934, as amended. As of the Closing Date, the Clearing Agency shall be The Depository Trust Company. 
  
 Clearing Agency Participant:    A broker, dealer, bank, other financial institution or other Person for which from time to time a Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency. 
  
 Clearstream:    Clearstream Banking,
société anonyme, and any successor thereto. 
  
 Closing
Date:    [Ÿ]. 
  
 Code:    The Internal Revenue Code of 1986, including any successor or amendatory provisions. 
  
 Collateral:    The meaning specified in the Granting Clause of this Indenture. 
  
 Collection Account:    The accounts created and maintained by each Servicer pursuant to its Servicing Agreement with a depository institution in
the name of the related Servicer for the benefit of the Indenture Trustee on behalf of Noteholders and designated
“[                                ] in 

 
 5 

 trust for the registered holders of E*TRADE MBSC Trust 200_-_ Mortgage-Backed Notes, Series 200_-_.” 
  
 Commission:    The Securities and Exchange Commission. 
  

Compensating Interest Payment:    As to any Distribution Date and any Prepayment Interest Shortfall for a Mortgage Loan during the related
Prepayment Period, the lesser of (1) the Servicing Fee for the related Servicer for such date and (2) any Prepayment Interest Shortfall for such date. 
  
 Cooperative Corporation:    The entity that holds title (fee or an acceptable leasehold estate) to the real property and improvements constituting the Cooperative Property
and which governs the Cooperative Property, which Cooperative Corporation must qualify as a Cooperative Housing Corporation under Section 216 of the Code. 
  
 Confidential Information:    All non-public personal information about the Mortgagor under the Mortgage Loan that is supplied to the Master Servicer by or on behalf of the
Mortgagor in connection with this Agreement and the transactions contemplated hereby. Confidential Information shall not include information which (i) is or becomes generally available to the public other than as a result of disclosure by the Master
Servicer or its subsidiaries, affiliates, directors, officers, employees, agents or controlling persons; (ii) was available to the Master Servicer on a non-confidential basis from a Person other than the Mortgagor prior to its disclosure to the
Master Servicer; (iii) is required to be disclosed by a governmental authority or related governmental agencies or as otherwise required by law; or (iv) becomes available to the Master Servicer on a non-confidential basis from a Person other than
the Mortgagor who, to the best knowledge of the Master Servicer, is not otherwise bound by a confidentiality agreement with the Master Servicer and is not otherwise prohibited from transmitting the information to the Master Servicer. 

 
 Cooperative Loan:    Any Mortgage Loan secured by Cooperative Shares and a Proprietary Lease.

  
 Cooperative Property:    The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling units to the holders of the shares of the Cooperative Corporation. 
  
 Cooperative Shares:    Shares issued by a Cooperative Corporation. 
  
 Corporate Trust Office:    The principal office of the Indenture Trustee at which at any particular time its corporate trust business shall be administered, which office at
date of execution of this Agreement is located at [•]; Attention: [•], or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders, and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee at the address designated by such successor Indenture Trustee by notice to the Noteholders and the Issuer. 
  
 Cumulative Realized Losses:    The aggregate Realized Losses incurred in respect of Liquidated Mortgage Loans since the Cut-off Date. 

 
 6 

 Current Interest:    With respect to any Distribution Date and with respect to each class of
Securities, one month’s interest accrued during the related Accrual Period at the applicable Note Interest Rate on Note Principal Amount. 
  
 Current Realized Loss Ratio:    With respect to any Distribution Date, the annualized percentage derived from the fraction, the numerator of which is the sum of the aggregate
Realized Losses in respect of the Assets for the three preceding Prepayment Periods and the denominator of which is the arithmetic average of the Pool Scheduled Principal Balances for such Distribution Date and the preceding two Distribution Dates.

  
 Cut-off Date:    [Ÿ]. 
  
 Cut-off Date
Balance:    As to any Mortgage Loan, the Scheduled Principal Balance thereof as of the close of business on the Cut-off Date. 
  
 Debt Service Reduction:    With respect to any Mortgage Loan, a reduction by a court of competent jurisdiction in a proceeding under the Bankruptcy Code in the Scheduled
Payment for such Mortgage Loan which became final and non-appealable, except such a reduction resulting from a Deficient Valuation or any reduction that results in a permanent forgiveness of principal. 
  
 Default:    Any occurrence that is, or with notice or the lapse of time or both would become, an Event of
Default. 
  
 Deficient Valuation:    With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than the then-outstanding indebtedness under the Mortgage Loan, or any reduction in the amount of principal to be paid in connection with any Scheduled Payment that results
in a permanent forgiveness of principal, which valuation or reduction results from an order of such court which is final and non-appealable in a proceeding under the Bankruptcy Code. 
  
 Definitive Notes:    The meaning specified in Section 2.11. 
  
 Depositor:    E*TRADE Mortgage Backed Securities Corporation, a Delaware corporation, or its successor in interest. 
  
 Depository:    DTC or any other Person designated by the Issuer as Depository in the case of Book-Entry Notes.

  
 Depository Institution:    Any depository institution or trust company, including the
Indenture Trustee, that (a) is incorporated under the laws of the United States of America or any State thereof, (b) is subject to supervision and examination by federal or state banking authorities and (c) has outstanding unsecured commercial paper
or other short-term unsecured debt obligations that are rated in the highest rating category by the Rating Agencies, or is otherwise acceptable to the Rating Agencies. 
  
 Determination Date:    As to any Distribution Date, the [Ÿ]th day of each month or if such [Ÿ]th day is not a Business Day the immediately succeeding Business Day. 

 
 7 

 Distribution Account:    The separate Eligible Account created and maintained by the Indenture
Trustee pursuant to Section 9.1 in the name of the Indenture Trustee for the benefit of the Noteholders and designated “[Ÿ]
in trust for registered holders of E*TRADE MBSC Trust 200    -     Mortgage-Backed Notes, Series 200    -    .” Funds in the
Distribution Account shall be held in trust for the Noteholders for the uses and purposes set forth in this Agreement. 
  
 Distribution Date:    The [Ÿ]th day of each calendar month after the initial issuance of the Notes, or if such [Ÿ]th day is not a
Business Day, the next succeeding Business Day, commencing in [                            ].

  
 Due Date:    With respect to any Distribution Date, the first day of the calendar
month in which such Distribution Date occurs, which represents the date on which a Scheduled Payment is due on each Mortgage Loan under the related Mortgage Note, exclusive of any grace period. 
  

Due Period:    With respect to any Distribution Date, the period commencing on the second day of the month preceding the month in which the
Distribution Date occurs and ending at the close of business on the first day of the month in which the Distribution Date occurs. 
  
 DTC:    The Depository Trust Company. 
  
 Eligible
Account:    Any of (i) an account or accounts maintained with a federal or state chartered depository institution or trust company the short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company) have the highest short-term ratings of each Rating Agency at the time any amounts are held on deposit therein, or (ii)
an account or accounts in a depository institution or trust company in which such accounts are insured by the FDIC (to the limits established by the FDIC) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by
an Opinion of Counsel delivered to the Indenture Trustee and to each Rating Agency, the Noteholders have a claim with respect to the funds in such account or a perfected first priority security interest against any collateral (which shall be limited
to Permitted Investments) securing such funds that is superior to claims of any other depositors or creditors of the depository institution or trust company in which such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution or (b) a trust company, acting in its fiduciary capacity or (iv) any other account acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with the Indenture Trustee. 
  
 ERISA:    The Employee Retirement Income Security Act of 1974, as amended. 
  
 Escrow Account:    With respect to each Servicing Agreement, as “Escrow Account” is defined therein. 
  
 Euroclear:    Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System. 
  
 Event of Default:    As specified in Section 5.1. 

 
 8 

 Excess Cash:    With respect to any Distribution Date, the amount, if any, by which the
Available Distribution Amount for such Distribution Date exceeds the sum of (i) the Note Interest for the related Distribution Date, and (ii) the Monthly Principal for the related Distribution Date. 
  
 Exchange Act:    The Securities Exchange Act of 1934, as amended. 
  
 Executive Officer:    With respect to any corporation, the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, President, Executive Vice President, any Vice President, the Secretary or the Treasurer of such corporation; and with respect to any partnership, any general partner thereof. 
  
 Expense Rate:    As to each Mortgage Loan, the sum of the related Servicing Fee Rate, Master Servicing Fee Rate
and the Indenture Trustee Fee Rate. 
  
 Fannie Mae:    The entity formerly known as the
Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act, or any successor thereto. 
  
 FDIC:    The Federal Deposit Insurance Corporation, or any successor thereto. 
  
 Financial Assets:    Those mortgage-backed securities issued by Fannie Mae, Freddie Mac, Ginnie Mae or one or
more private issuers identified on Schedule II. 
  
 Financial Asset Custodial
Account:    The Eligible Account established and maintained under Section 9.6(b) into which any Financial Assets will be deposited on the Closing Date. 
  
 FIRREA:    The Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended. 
  
 Fitch:    Fitch Ratings, Inc., or any successor in interest. The address for notices to Fitch shall be 1 State
Street Plaza, New York, New York, 10004, Attention: [Ÿ] or such other address as Fitch may hereunder furnish to the Depositor or
the Master Servicer. 
  
 Formula Principal Amount:    As to any Distribution Date, the sum
(a) the principal portion of each Scheduled Payment (without giving effect, prior to the Bankruptcy Coverage Termination Date, to any reductions thereof caused by any Debt Service Reductions or Deficient Valuations) due on each Mortgage Loan on the
related Due Date, (b) the Scheduled Principal Balance of each Mortgage Loan that was repurchased by the Seller or the Servicer pursuant to this Agreement as of such Distribution Date, (c) the Substitution Adjustment Amount in connection with any
Deleted Mortgage Loan received with respect to such Distribution Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received during the calendar
month preceding the month of such Distribution Date, (e) with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during the calendar month preceding the month of such Distribution Date, the amount of the Liquidation Proceeds
allocable to principal received during the calendar month preceding the month of such Distribution Date with respect to such Mortgage Loan and (f) all Principal Prepayments received during the related Prepayment Period. 

 
 9 

 Fraud Loan:    A Liquidated Mortgage Loan as to which a Fraud Loss has occurred. 

 
 Fraud Losses:    Realized Losses on Mortgage Loans as to which a loss is sustained by reason of a
default arising from fraud, dishonesty or misrepresentation in connection with the related Mortgage Loan, including a loss by reason of the denial of coverage under any related PMI Policy because of such fraud, dishonesty or misrepresentation.

  
 Fraud Loss Coverage Amount:    As of the Closing Date, $[Ÿ] subject to reduction from time to time, by the amount of Fraud Losses allocated to the Notess. In addition, on each anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount will be reduced as follows: (a) on the first, second, third and fourth anniversaries of the Cut-off Date, to an amount equal to the lesser of (i) [1]%, in the case of the first anniversary, and [0.5]%, in the case of the
second, third and fourth anniversaries of the then current Pool Scheduled Principal Balance and (ii) the excess of the Fraud Loss Coverage Amount as of the preceding anniversary of the Cut-off Date over the cumulative amount of Fraud Losses
allocated to the Notes since such preceding anniversary; and (b) on the fifth anniversary of the Cut-off Date, to zero. 
  
 Fraud Loss Coverage Termination Date:    The point in time at which the Fraud Loss Coverage Amount is reduced to zero. 
  
 Freddie Mac:    A corporate instrumentality of the United States, formerly known as the Federal Home Loan Mortgage Corporation, created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto. 
  
 Global
Securities:    The meaning specified in Section 2.1. 
  
 Grant:    Mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set
over and confirm pursuant to this Indenture. A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect
thereto. 
  
 Holder or Noteholder:    The registered holder of any Note as recorded
on the books of the Note Registrar except that, solely for the purposes of taking any action or giving any consent pursuant to this Agreement, any Note registered in the name of the Seller, the Indenture Trustee or any Affiliate thereof shall be
deemed not to be outstanding in determining whether the requisite percentage necessary to effect any such consent has been obtained, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such consent, only
Notes which a Responsible Officer of the Indenture Trustee knows to be so held shall be disregarded. The Indenture Trustee may request and conclusively rely on certifications by the Seller in determining whether any Notes are registered to an
Affiliate of the Seller. 

 
 10 

 Indenture Trustee:    [Ÿ] and its permitted successors and assigns and, if a successor Indenture Trustee is appointed hereunder, such successor. 
  
 Independent:    When used with respect to any specified Person, that such Person (a) is in fact independent of
the Issuer, any other obligor on the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Seller
or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, Indenture Trustee,
partner, director or person performing similar functions. 
  
 Independent
Certificate:    A certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 13.1, made by an Independent
appraiser or other expert appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of “Independent” in this
Indenture and that the signer is Independent within the meaning thereof. 
  
 Indirect
Participant:    A broker, dealer, bank or other financial institution or other Person that clears through or maintains a custodial relationship with a Depository Participant. 
  
 Initial Bankruptcy Coverage Amount:    $[Ÿ]. 
  
 Initial Cut-off Date
Pool Principal Balance:    $[Ÿ]. 
  
 Initial Purchase Date:    The Distribution Date following the month in which the Pool Balance is less than [Ÿ]% of the Cut-off Date Balance. 
  
 Insurance Policy:    With respect to any Mortgage Loan included in the Trust Fund, any insurance policy, including all riders and endorsements thereto in effect, including any replacement policy or
policies therefor. 
  
 Insurance Proceeds:    Proceeds paid by an insurer pursuant to any
Insurance Policy (excluding proceeds required to be applied to the restoration and repair of the related Mortgaged Property or released to the Mortgagor), in each case other than any amount included in such Insurance Proceeds in respect of Insured
Expenses. 
  
 Insured Expenses:    Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans. 
  
 Interest Distribution
Amount:    On any Distribution Date, the Current Interest for the Notes, as reduced by Net Prepayment Interest Shortfalls, Relief Act Reductions and the interest portion of Excess Losses. Any such shortfalls and losses shall
be allocated among the Notes proportionately on the basis of the Interest Distribution Amount otherwise payable thereon. 
  
 Issuer:    E*TRADE MBSC Trust 200    -     , or any successor and, for purposes of any provision contained herein and required by the TIA, each other
obligor on the Notes. 

 
 11 

 Issuer Order and Issuer Request:    A written order or request signed in the name of
the Issuer by any one of its Authorized Officers and delivered to the Indenture Trustee. 
  
 Latest Possible
Maturity Date:    The Distribution Date following the third anniversary of the scheduled maturity date of the Mortgage Loan having the latest scheduled maturity date as of the Cut-off Date. 
  
 LIBOR:    The London interbank offered rate for one-month United States dollar deposits established on each
LIBOR Determination Date pursuant to Section 9.7(a). 
  
 LIBOR Business Day:    Any day on
which banks in London, England and the City of New York are open and conducting transactions in foreign currency and exchange. 
  
 LIBOR Determination Date:    The second Business Day immediately preceding the commencement of each Accrual Period for any LIBOR Notes. 
  

Liquidated Mortgage Loan:    With respect to any Distribution Date, a defaulted Mortgage Loan (including any REO Property) which was
liquidated in the calendar month preceding the month of such Distribution Date and as to which the related Servicer has certified (in accordance with its Servicing Agreement) that it has received all amounts it expects to receive in connection with
the liquidation of such Mortgage Loan, including the final disposition of an REO Property. 
  
 Liquidation
Expenses:    With respect to a Mortgage Loan in liquidation, unreimbursed expenses paid or incurred by or for the account of the Master Servicer and not recovered by the Master Servicer under any PMI Policy for reasons
other than the Master Servicer’s failure to ensure the maintenance of or compliance with a PMI Policy, such expenses including (a) property protection expenses, (b) property sales expenses, (c) foreclosure and sale costs, including court costs
and reasonable attorneys’ fees, and (d) similar expenses reasonably paid or incurred in connection with liquidation. 
  
 Liquidation Proceeds:    Amounts, including Insurance Proceeds, received in connection with the partial or complete liquidation of defaulted Mortgage Loans, whether through Indenture Trustee’s sale,
foreclosure sale or otherwise or amounts received in connection with any condemnation or partial release of a Mortgaged Property and any other proceeds received in connection with an REO Property. 
  
 Loan-to-Value Ratio:    With respect to any Mortgage Loan and as to any date of determination, the fraction
(expressed as a percentage) the numerator of which is the principal balance of the related Mortgage Loan at such date of determination and the denominator is the lesser of purchase price or the Appraised Value of the related Mortgaged Property.

  
 Lost Mortgage Note:    Any Mortgage Note the original of which was permanently lost or
destroyed and has not been replaced. 
  
 Majority:    On any date, Holders of the Notes
representing more than 50% of the Note Principal Amount of the Notes then outstanding. 

 
 12 

 Master Servicer:    [Ÿ] and its successors and assigns in its capacity as Master Servicer. 
  
 Master Servicer Event of Default:    As defined in 12.8 hereof. 
  
 Master Servicing Fee:    As to each Mortgage Loan and any Distribution Date, an amount equal to (i) one-twelfth of the Master Servicing Fee Rate multiplied by the Scheduled Principal Balance of such
Mortgage Loan as of the Due Date in the prior calendar month plus (ii) all investment earnings derived from principal and interest collections received on the Mortgage Loans on deposit in the Distribution Account during the period from and
including the Remittance Date to but excluding such Distribution Date. 
  
 Master Servicing Fee
Rate:    With respect to each Mortgage Loan, [Ÿ]% per annum. 
  
 MERS:    Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of
the State of Delaware, or any successor thereto. 
  
 MERS® System:    The system of recording transfers of Mortgages electronically maintained by MERS. 

 
 MIN:    The Mortgage Identification Number for Mortgage Loans registered with MERS on the
MERS® System. 
  
 MOM Loan:    With respect to any Mortgage Loan as to which MERS acts as the mortgagee of such Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and
its successors and assigns, at the origination thereof. 
  
 Monthly Advance:    With
respect to a Mortgage Loan, the payments required to be made by the Master Servicer or the applicable Servicer with respect to any Distribution Date pursuant to this Agreement or the Servicing Agreements, as applicable, the amount of any such
payment being equal to the aggregate of payments of principal and interest (net of the Master Servicing Fee and/or the applicable Servicing Fee and net of any net income in the case of any REO Property) of the Mortgage Loans that were due on the
related Due Date and not received as of the close of business on the related Determination Date, less the aggregate amount of any such delinquent payments that the Master Servicer or the Servicers, as the case may be, have determined would
constitute Non-recoverable Advances if advanced. 
  
 Monthly Statement:    The statement
delivered to the Noteholders pursuant to Section 9.8. 
  
 Moody’s:    Moody’s
Investors Service, Inc., or any successor thereto. The address for notices to Moody’s shall be Moody’s Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention: Residential Pass-Through Monitoring, or such other
address as Moody’s may hereafter furnish to the Depositor or the Master Servicer. 
  
 Mortgage:    The mortgage, deed of trust or other instrument creating a first lien on an estate in fee simple or leasehold interest in real property securing a Mortgage Note. 

 
 13 

 Mortgage File:    The mortgage documents listed in the Sale Agreement pertaining to a
particular Mortgage Loan and any additional documents delivered to the Indenture Trustee to be added to the Mortgage File pursuant to this Agreement. 
  
 Mortgage Loan:    Each of the mortgage loans transferred and assigned to the Indenture Trustee pursuant to the provisions hereof as from time to time are held as a part of
the Trust Fund (including any REO Property), the mortgage loans so held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition of title of the related Mortgaged Property. 
  
 Mortgage Loan Schedule:    The list of Mortgage Loans (as from time to time amended by the Depositor or the
related Servicer to reflect the addition of Substitute Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to the provisions of this Agreement) transferred to the Indenture Trustee as part of the Trust Fund and from time to time
subject to this Agreement, attached hereto as Schedule I, setting forth, among other things, the following information with respect to each Mortgage Loan: 
  
 (i)    the loan number; 
  
 (ii)    the Mortgagor’s name and the street address of the Mortgaged Property, including the zip code; 
  
 (iii)    the maturity date; 
  
 (iv)    the original principal balance; 
  
 (v)    the
Cut-off Date Balance; 
  
 (vi)    the first payment date of the Mortgage Loan; 

 
 (vii)    the Scheduled Payment in effect as of the Cut-off Date; 
  
 (viii)    the Loan-to-Value Ratio at origination; 
  
 (ix)    a code indicating whether the residential dwelling at the time of origination was represented to be owner-occupied; 
  
 (x)    a code indicating whether the residential dwelling is either (a) a detached single family dwelling (b) a
dwelling in a de minimis PUD, (c) a condominium unit or PUD (other than a de minimis PUD), (d) a two- to four-unit residential property or (e) a Cooperative Property; 
  
 (xi)    the Mortgage Rate; 
  
 (xii)    a code indicating whether the Mortgage Loan is a Lender PMI Mortgage Loan and, in the case of any Lender PMI Mortgage Loan, a percentage representing the amount of the related interest premium charged to
the borrower; 

 
 14 

  
 (xiii)    the purpose for the Mortgage Loan;

  
 (xiv)    the type of documentation program pursuant to which the Mortgage
Loan was originated; and 
  
 (xv)    the Servicing Fee for the Mortgage Loan.

  
 Such schedule shall also set forth the total of the amounts described under (iv) and (v) above for all of the
Mortgage Loans. 
  
 Mortgage Note:    The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan, including any riders or addenda thereto. 
  
 Mortgage Rate:    With respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note, net of
any interest premium charged by the mortgagee to obtain or maintain any PMI Policy. 
  
 Mortgaged
Property:    With respect to each Mortgage Loan, the underlying real property servicing payments of the Mortgage Note (or, with respect to a Cooperative Loan, the related Cooperative Shares and Proprietary Lease), plus, in
the case of each Additional Collateral Mortgage Loan, the Additional Collateral. 
  
 Mortgagor:    The obligor(s) on a Mortgage Note. 
  
 Overcollateralization Amount:    As to any Distribution Date, the amount, if any, by which (x) the Aggregate Principal Balance of the Mortgage Loans for such Distribution Date exceeds (y) the Note Principal
Balance for such Distribution Date, after taking into account the Monthly Principal (disregarding any permitted reduction thereof in Monthly Principal due to an Overcollateralization surplus made on such Distribution Date) to be applied in reduction
of the Note Principal Balance on such Distribution Date. If the Aggregate Principal Balance of the Mortgage Loans is less than the Note Principal Balance for such Distribution Date, determined as provided above, the Overcollateralization Amount for
such Distribution Date shall be [Ÿ]. 
  
 Overcollaterization Deficit:    As to any Distribution Date, the amount, if any, by which the Note Principal Balance on such Distribution Date (after taking into account any
payments to be paid on such Distribution Date in reduction of the Note Principal Balance) exceeds the Aggregate Principal Balance of the Mortgage Loans for such Distribution Date. If the Aggregate Principal Balance of the Mortgage Loans as
determined pursuant to the preceding sentence is greater than the Note Principal Balance for such Distribution Date determined as provided above, the Overcollateralization Deficit for such Distribution Date shall be [Ÿ]. 
  
 Overcollateralization Surplus:    As to any Distribution Date, the amount, if any, by which (x) the Overcollateralization Amount on such Distribution Date exceeds (y) the Required Overcollaterlization
Amount on such Distribution Date. 

 
 15 

  
 Net Liquidation Proceeds:    As to any Liquidated
Mortgage Loan, the Liquidation proceeds less the sum of related unreimbursed Liquidation Expenses, Master Servicing Fees, Servicing Advances and Monthly Advances. 
  
 Net Mortgage Rate:    As to each Mortgage Loan, and at any time, the Mortgage Rate less the related Expense Rate. 
  
 Net Prepayment Interest Shortfalls:    As to any Distribution Date, the amount by which the aggregate of
Prepayment Interest Shortfalls during the related Prepayment Period exceeds the Compensating Interest Payments made with respect to such Distribution Date. 
  
 Net WAC:    As to any Distribution Date, a per annum rate equal to the weighted average Net Mortgage Rate of the Mortgage Loans. 
  
 Non-recoverable Advance:    Any portion of an Monthly Advance or Servicer Advance previously made or proposed
to be made by the related Servicer or the Master Servicer that (as certified in an Officer’s Certificate of such party), in the good faith judgment of the such party, will not be ultimately recoverable by such party, from the related Mortgagor,
related Liquidation Proceeds or otherwise. 
  
 Note Depository Agreement:    The agreement
dated [•], among the Issuer, the Indenture Trustee and The Depository Trust Company, as the initial Clearing Agency, relating to the Book-Entry Notes. 
  
 Note Interest Rate:    [Ÿ]% per annum. 

 
 Note Owner:    With respect to a Book-Entry Note, the Person who is the beneficial owner of such
Book-Entry Note, as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with
the rules of such Clearing Agency), and with respect to a Definitive Note, the Person that is the beneficial owner of such Note as reflected in the Note Register. 
  
 Note Principal Amount:    With respect to the any Note at any date, the maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof minus the sum of (i) all distributions of principal previously made with respect hereto and (ii) all Realized Losses allocated thereto. Unless specifically provided
herein to the contrary, Note Principal Amounts shall be determined as of the close of business of the immediately preceding Distribution Date, after giving effect to all distribution made on such date. 
  
 Note Register and Note Registrar:    The respective meanings specified in Section 2.3. 
  
 Officer’s Certificate:    A certificate signed by any Authorized Officer of the Issuer (or by an officer
of the Depositor pursuant to the Administration Agreement), under the circumstances described in, and otherwise complying with, the applicable requirements of Section 13.1, and delivered tos the Indenture Trustee. 

 
 16 

  
 Opinion of Counsel:    One or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be employees of or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee, which opinion or opinions shall be addressed to the Indenture Trustee, as
Indenture Trustee, and shall comply with any applicable requirements of Section 13.1 and shall be in form and substance satisfactory to the Indenture Trustee. 
  
 Optional Termination:    The termination of the trust created hereunder in connection with the purchase of the Mortgage Loans. 
  
 Optional Termination Purchase Price:    With respect to a Optional Termination, a price equal to the sum of (i)
[Ÿ]% of the aggregate outstanding principal balance of the Mortgage Loans plus accrued interest thereon at the applicable
Mortgage Rate, and (b) the fair market value of all other property being purchased. 
  
 OTS:    The Office of Thrift Supervision. 
  
 Outstanding:    With respect to any Note and as of the date of determination, any Note theretofore authenticated and delivered under this Indenture except: 
  
 (i)    Notes theretofore canceled by the Note Registrar or delivered to the Note Registrar for
cancellation; 
  
 (ii)    Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the related Noteholders; and 
  
 (iii)    Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a bona fide purchaser; provided, that in determining whether the Holders of the requisite Outstanding Amount of the Notes have given any request, demand, authorization, direction, notice, consent, or waiver
hereunder or under any other Operative Agreement, Notes owned by the Issuer, any other obligor upon the Notes, the Seller, or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only Notes that a Responsible Officer of the Indenture Trustee knows to be so owned shall be
so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons. 
  
 Outstanding Amount:    The aggregate of the Note Principal Amounts of all Notes Outstanding at the date of determination. 
  
 Paying Agent:    The Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section
6.11 hereof and is authorized by the 

 
 17 

 Issuer to make payments to and distributions from the Distribution Account, including payments of principal of or interest on the Notes on
behalf of the Issuer. 
  
 Penalty Period:    As to any Mortgage Loan, the period of time
during which the borrower will be assessed a Prepayment Premium for any Principal Prepayment during such time. 
  
 Percentage Interest:    As defined in the Trust Agreement. 
  
 Permitted Investments:    At any time, any one or more of the following obligations and securities: 
  
 (i)    obligations of the United States or any agency thereof, provided such obligations are backed by the full faith and credit of the United States; 
  
 (ii)    general obligations of or obligations guaranteed by any state of the United States or the District of Columbia
receiving the highest long-term debt rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Notes by each Rating Agency; 
  
 (iii)    commercial or finance company paper which is then receiving the highest commercial or finance company paper
rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Notes by each Rating Agency; 
  
 (iv)    certificates of deposit, demand or time deposits, or bankers’ acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state banking authorities, provided that the commercial paper and/or long term unsecured debt obligations of such
depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company, but only if Moody’s is not a
Rating Agency) are then rated one of the two highest long-term and the highest short-term ratings of each Rating Agency for such securities, or such lower ratings as will not result in the downgrading or withdrawal of the rating then assigned to the
Notes by either Rating Agency; 
  
 (v)    demand or time deposits or certificates of deposit
issued by any bank or trust company or savings institution to the extent that such deposits are fully insured by the FDIC; 
  
 (vi)    guaranteed reinvestment agreements issued by any bank, insurance company or other corporation containing, at the time of the issuance of such agreements, such terms and conditions as will not result in the
downgrading or withdrawal of the rating then assigned to the Notes by either Rating Agency; 

 
 18 

 (vii)    repurchase obligations with respect to any security described in clauses (i) and (ii) above,
in either case entered into with a depository institution or trust company (acting as principal) described in clause (iv) above; 
  
 (viii)    units of a taxable money-market portfolio having the highest rating assigned by each Rating Agency and restricted to obligations issued or guaranteed by the United States of America or entities whose
obligations are backed by the full faith and credit of the United States of America and repurchase agreements collateralized by such obligations including money-market portfolios for which the Indenture Trustee, the Master Servicer, the Securities
Administrator or any of its Affiliates is investment manager or advisor; and 
  
 (ix)    such
other investments bearing interest or sold at a discount acceptable to each Rating Agency as will not result in the downgrading or withdrawal of the rating then assigned to the Notes by either Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency 
  
 provided, that no such instrument shall be a Permitted Investment if such instrument evidences
the right to receive interest only payments with respect to the obligations underlying such instrument. 
  
 Person:    Any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government, or any agency or political
subdivision thereof. 
  
 PMI Policy:    Each policy of primary mortgage guaranty insurance
or any replacement policy therefor with respect to any Mortgage Loan. 
  
 Pool Scheduled Principal
Balance:    As to any Distribution Date, the aggregate of the Scheduled Principal Balances of the Mortgage Loans which were Outstanding Mortgage Loans on the Due Date in the month preceding the month of such Distribution
Date. 
  
 Predecessor Note:    With respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.4 in lieu of a mutilated, lost, destroyed or stolen Note shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note. 
  
 Pre-Funding
Account:    The account established and maintained pursuant to Section 9.5. 
  
 Pre-Funded
Amount:    $ [Ÿ]. 
  
 Pre-Funding Period:    The period beginning on the Closing Date and ending on the earlier of (i) the close of business on
                    , (ii) the date on which there is $100,000 or less (exclusive of investment earnings) remaining in the Pre-Funding
Account, or (iii) the date on which an Event of Default occurs. 

 
 19 

  
 Prepayment Interest Shortfall:    With respect to any
full or partial Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full month’s interest at the applicable Mortgage Rate on the outstanding principal balance of such Mortgage Loan immediately prior to such Principal
Prepayment over (ii) the amount of interest actually received from the Mortgagor with respect to such Mortgage Loan in connection with such Principal Prepayment. 
  
 Prepayment Period:    With respect to any Distribution Date, the calendar month preceding the month of such Distribution Date. 
  
 Prepayment Premium:    As to any Mortgage Loan, any payment required to be made in connection with any
Principal Prepayment prior to the expiration or lapse of the applicable Penalty Period. 
  
 Principal Distribution
Amount:    For any Distribution Date will be an amount equal to (A) the aggregate of (i) all scheduled payments of principal received with respect to the Mortgage Loans and due during the related Due Period, and all other
amounts collected, received or otherwise recovered in respect of principal of the Mortgage Loans (including Principal Prepayments, but not including Payments Ahead that are not allocable to principal for the related Due Period) during or in respect
of the related Due Period, and (ii) the aggregate of the amounts allocable to principal deposited in the Distribution Account on the related Remittance Date by the Seller, the Depositor, the related Servicer or the Master Servicer in connection with
a repurchase, substitution or removal of any Mortgage Loan pursuant to the Indenture reduced by (B) the amount of any Overcollateralization Surplus with respect to such Distribution Date. 
  
 Principal Prepayment:    Any Mortgagor payment of principal or other recovery of principal on a Mortgage Loan that is recognized as having been
received or recovered in advance of its scheduled Due Date and applied to reduce the principal balance of the Mortgage Loan[, which is not accompanied by an amount representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment]. 
  
 Principal Prepayment in Full:    Any Principal
Prepayment made by a Mortgagor of the entire principal balance of a Mortgage Loan. 
  
 Proprietary
Lease:    With respect to any Cooperative Property, a lease or occupancy agreement between a Cooperative Corporation and a holder of related Cooperative Shares. 
  
 Prospectus:    The Prospectus Supplement together with the accompanying prospectus dated [Ÿ], relating to the Notes. 
  
 Prospectus Supplement:    The Prospectus Supplement dated [Ÿ], relating to the Notes.

  
 PUD:    Planned Unit Development. 
  
 Purchase Agreement:    Any of the mortgage purchase agreements listed in Schedule IV hereto, as each
such agreement may be amended or supplemented from time to time as permitted hereunder. 

 
 20 

  
 Purchase Price:    With respect to any Mortgage Loan
required to be purchased by the Depositor pursuant to this Agreement, by the Servicers pursuant to the Servicing Agreements, or by the Seller pursuant to the Purchase Agreements, an amount equal to the sum of (i) 100% of the unpaid principal balance
of the Mortgage Loan on the date of such purchase, and (ii) accrued interest thereon at the applicable Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the purchaser is any Servicer or (y) if the purchaser is the Seller and the
Seller is any Servicer) from the date through which interest was last paid by the Mortgagor to the Due Date in the month in which the Purchase Price is to be distributed to Noteholders. 
  
 Qualified Insurer:    A mortgage guaranty insurance company duly qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the insurance policy issued by such insurer, duly authorized and licensed in such states to transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a Fannie Mae-approved mortgage insurer and having a claims paying ability rating of at least “AA” or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage Loan must have at least as high a claims paying ability rating as the insurer it replaces had on the Closing Date. 
  
 Rating:    The rating initially assigned to the Notes by the Rating Agencies, as evidenced by a letter from the Rating Agencies.

  
 Rating Agency:    Means each of S&P, Moody’s and Fitch. If any such
organization or a successor is no longer in existence, “Rating Agency” shall be such nationally recognized statistical rating organization, or other comparable Person, as is designated by the Depositor, notice of which designation shall be
given to the Indenture Trustee. References herein to a given rating category of a Rating Agency shall mean such rating category without giving effect to any modifiers. 
  
 Rating Agency Condition:    With respect to any action to which the Rating Agency Condition applies, that the Rating Agencies shall have been
given [Ÿ] days (or such shorter period acceptable to the Rating Agencies) prior notice of any action to which the Rating Agency
Condition applies and that the Rating Agencies shall have notified the Depositor, the Owner Trustee, the Indenture Trustee, the Master Servicer and the Securities Administrator in writing that such proposed action will not result in a reduction or
withdrawal of the then current rating of the Notes (if any). 
  
 Realized Loss:    With
respect to each Liquidated Mortgage Loan, an amount (not less than zero or more than the Scheduled Principal Balance of the Mortgage Loan) as of the date of such liquidation, equal to (i) the Scheduled Principal Balance of the Liquidated Mortgage
Loan as of the date of such liquidation, plus (ii) interest at the Net Mortgage Rate from the Due Date as to which interest was last paid or advanced (and not reimbursed) to Noteholders up to the Due Date in the month in which Liquidation
Proceeds are required to be distributed on the Scheduled Principal Balance of such Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation Proceeds and the proceeds of any Additional Collateral, if any, received during the
month in which such liquidation occurred, to the extent applied as recoveries of interest at the Net Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to 

 
 21 

 Mortgage Loan which has become the subject of a Deficient Valuation, if the principal amount due under the related Mortgage Note has been
reduced, the difference between the principal balance of the Mortgage Loan outstanding immediately prior to such Deficient Valuation and the principal balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect to each Mortgage
Loan which has become the subject of a Debt Service Reduction and any Distribution Date, the amount, if any, by which the principal portion of the related Scheduled Payment has been reduced. 
  
 Redemption Date:    In the case of a redemption of the Notes pursuant to Section 11.1 hereof, the Distribution Date specified by the Indenture
Trustee pursuant to Section 11.2. 
  
 Redemption Price:    An amount equal to the
sum of (1) 100% of the aggregate Note Principal Amount, and (2) the aggregate Current Interest and interest remaining unpaid from previous Distribution Dates. 
  
 Refinancing Mortgage Loan:    Any Mortgage Loan originated in connection with the refinancing of an existing mortgage loan. 
  
 Registered Holder:    The Person in whose name a Note is registered on the Note Register on the applicable
Record Date. 
  
 Registered Notes:    Those Notes which are in registered form. Each of
the Notes will be registered Notes. 
  
 Relief Act:    The Soldiers’ and
Sailors’ Civil Relief Act of 1940, as amended, and any similar state laws. 
  
 Relief Act
Reductions:    With respect to any Distribution Date and any Mortgage Loan as to which there has been a reduction in the amount of interest collectible thereon for the most recently ended calendar month as a result of the
application of the Relief Act, the amount, if any, by which (i) interest collectible on such Mortgage Loan for the most recently ended calendar month is less than (ii) interest accrued thereon for such month pursuant to the Mortgage Note.

  
 Remittance Date:    With respect to any Distribution Date, the [18th] Business Day of
the month in which the Distribution Date occurs. 
  
 REO Property:    A Mortgaged Property
acquired by the Trust Fund through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan. 
  
 Request for Release:    The Request for Release submitted by the related Servicer to the Indenture Trustee in the form of Exhibit [Ÿ] to the Servicing Agreement. 
  
 Required Insurance Policy:    With respect to any Mortgage Loan, any insurance policy that is required to be maintained from time to time under this Agreement. 
  
 Required Overcollateralization Amount:    [Ÿ]. 

 
 22 

  
 Required Rating:    The Notes have received, on the
Closing Date, the following ratings from the Rating Agencies: 
  
 
	 [Rating Agency]
 
	  	 [Rating Agency]
 

	 [Ÿ]
 	  	 [Ÿ]
 

 
  
 Sale Agreement:    The sale agreement
dated as of [Ÿ], by and between the Seller and the Depositor, pursuant to which the Mortgage Loans are being sold to the
Depositor. 
  
 Scheduled Payment:    The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan which, unless otherwise specified herein, shall give effect to any related Debt Service Reduction and any Deficient Valuation that affects the amount of the monthly payment
due on such Mortgage Loan. 
  
 Scheduled Principal Balance:    As to any Mortgage Loan and
Due Date, the unpaid principal balance of such Mortgage Loan as of such Due Date as defined in the amortization schedule at the time relating thereto (before any adjustment to such amortization schedule by reason of any moratorium or similar waiver
or grace period) after giving effect to any previous partial Principal Prepayments and Liquidation Proceeds allocable to principal (other than with respect to any Liquidated Mortgage Loan) and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor. 
  
 Securities
Act:    The Securities Act of 1933, as amended. 
  
 Securities
Administrator:    [Ÿ], not in its individual capacity but solely as Securities Administrator, or any
successor in interest, or if any successor Securities Administrator shall be appointed as herein provided, then such successor Securities Administrator. 
  
 Seller:    E*TRADE Bank and its successors and assigns, in its capacity as seller of the Mortgage Loans and the Subsequent Mortgage Loans, if any, to the Depositor pursuant
to the Sale Agreement and the Subsequent Sale Agreement, respectively. 
  
 Servicer:    Each of E*TRADE Bank, [Ÿ] and [Ÿ], as servicers of certain Mortgage Loans pursuant to their respective Servicing Agreements and their respective successors and assigns under the Servicing
Agreements. 
  
 Servicing Advances:    As defined in the applicable Servicing
Agreement and will generally include all customary, reasonable and necessary out-of-pocket costs and expenses incurred in the performance by the Servicer of its servicing obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or judicial proceedings, including foreclosures, (c) the management and liquidation of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage, and (d) payments made by the Servicer in respect of any taxes, assessments and other charges which are or may become a lien upon any Mortgaged Property or any insurance premiums that are required to maintain adequate fire and hazard
insurance coverage for any Mortgaged Property. 

 
 23 

  
 Servicing Agreements:    Each of the servicing
agreements identified on Schedule V hereto, as each such agreement may have been modified by an Acknowledgement and as amended or supplemented from time to time as permitted thereby. 
  
 Servicing Fee:    As to each Mortgage Loan and any Distribution Date, an amount equal to the product of (a) one-twelfth of the Servicing Fee Rate
multiplied by (b) the Scheduled Principal Balance of such Mortgage Loan as of the Due Date in the preceding calendar month. 
  
 Servicing Fee Rate:    With respect to each Mortgage Loan and any Distribution Date, the rate specified in the related Servicing Agreement. 
  
 Servicing Officer:    Any officer of a Servicer involved in, or responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to the Indenture Trustee by the related Servicer on the Closing Date pursuant to a Servicing Agreement as such list may from time to time be amended. 

 
 Special Hazard Coverage Termination Date:    The date on which the Special Hazard Loss Coverage
Amount is reduced to zero. 
  
 Special Hazard Loss:    Any Realized Loss suffered by a
Mortgaged Property on account of direct physical loss but not including (i) any loss of a type covered by a hazard insurance policy or a flood insurance policy required to be maintained with respect to such Mortgaged Property in the related
Servicing Agreement to the extent of the amount of such loss covered thereby, or (ii) any loss caused by or resulting from: 
  
 (a)    normal wear and tear; 
  
 (b)    fraud, conversion or other dishonest act on the part of the Indenture Trustee, the Servicer or any of their agents or employees (without regard to any portion of the loss not covered by any errors and
omissions policy); 
  
 (c)    errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or a part thereof ensues and then only for the ensuing loss; 
  
 (d)    nuclear or chemical reaction or nuclear radiation or radioactive or chemical contamination, all whether controlled or uncontrolled, and whether such loss be direct or indirect, proximate or remote or be in
whole or in part caused by, contributed to or aggravated by a peril covered by the definition of the term “Special Hazard Loss;” 
  
 (e)    hostile or warlike action in time of peace and war, including action in hindering, combating or defending against an actual, impending or expected attack: 

 
 1.    by any government or sovereign power, de jure or de facto, or by any authority
maintaining or using military, naval or air forces; or 
  
 2.    by military,
naval or air forces; or 
  
 3.    by an agent of any such government, power,
authority or forces; 

 
 24 

  
 (f)    any weapon of war employing nuclear
fission, fusion or other radioactive force, whether in time of peace or war; or 
  
 (g)    insurrection, rebellion, revolution, civil war, usurped power or action taken by governmental authority in hindering, combating or defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any government or public authority or risks of contraband or illegal transportation or trade. 
  
 Special Hazard Loss Coverage Amount:    With respect to the first Distribution Date, $[Ÿ]. With respect to any Distribution Date after the first Distribution Date, the lesser of (a) the greatest of (i) [1%] of the aggregate of the principal balances of the Mortgage Loans, (ii) twice the
principal balance of the largest Mortgage Loan and (iii) the aggregate of the principal balances of all Mortgage Loans secured by Mortgaged Properties located in the single California postal zip code area having the highest aggregate principal
balance of any such zip code area and (b) the Special Hazard Loss Coverage Amount as of the Closing Date less the amount, if any, of Special Hazard Losses allocated to the Notes since the Closing Date. All principal balances for the purpose of this
definition will be calculated as of the first day of the calendar month preceding the month of such Distribution Date after giving effect to Scheduled Payments on the Mortgage Loans then due, whether or not paid. 
  
 Special Hazard Mortgage Loan:    A Liquidated Mortgage Loan as to which a Special Hazard Loss has occurred.

  
 S&P:    Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. The address for notices to S&P shall be Standard & Poor’s Ratings Services, 55 Water Street, New York, New York 10041, Attention: Mortgage Surveillance Monitoring, or such other address as S&P may hereafter furnish
to the Depositor and the Servicer. 
  
 State:    Any one of the 50 States of the United
States of America or the District of Columbia. 
  
 Subsequent Cut-off Date:    The date as
determined in the related Subsequent Sale Agreement. 
  
 Subsequent Mortgage
Loans:    Each of the Mortgage Loans listed acquired by the trust with amounts in the Pre-Funding Account and on a schedule attached to a Subsequent Sale Agreement. 
  
 Subsequent Sale Agreement:    Each sale agreement, dated as of a Subsequent Sales Date, pursuant to which the Seller sells any Subsequent
Mortgage Loans to the Depositor, which Subsequent Mortgage Loans are sold, transferred and assigned by the Depositor to the Trust. 
  
 Subsequent Sale Date:    The date of each Subsequent Sale Agreement. 
  
 Substitute Mortgage Loan:    A Mortgage Loan substituted by the Seller for a Deleted Mortgage Loan which must, on the date of such substitution (i) have a Scheduled Principal Balance, after deduction of the
principal portion of the Scheduled Payment due in the month of 

 
 25 

 substitution, not in excess of, and not more than 10% less than the Scheduled Principal Balance of the Deleted Mortgage Loan; (ii) be accruing
interest at a rate no lower than and not more than 1% per annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining term to maturity no greater than
(and not more than one year less than that of) the Deleted Mortgage Loan; (v) not be a Cooperative Loan unless the Deleted Mortgage Loan was a Cooperative Loan and (vi) comply with each representation and warranty set forth in Section 3.01(h) of the
Sale Agreement. 
  
 Substitution Adjustment Amount:    The meaning ascribed to such term
pursuant to Section [Ÿ] of the Sale Agreement. 
  
 Trust Indenture Act or TIA:    The Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically provided.

  
 Trust Accounts:    The Distribution Account and the Financial Asset Custodial
Account. 
  
 Indenture Trustee Fee:    As to any Distribution Date, an amount equal to
one-twelfth of the Indenture Trustee Fee Rate multiplied by (i) the Pool Scheduled Principal Balance plus (ii) any amounts remaining in the Pre-Funding Account (excluding any investment earnings thereon) with respect to such Distribution
Date. 
  
 Indenture Trustee Fee Rate:    With respect to each Mortgage Loan, [Ÿ]% per annum. 
  
 United States:    The United States of America. 
  
 UCC:    The Uniform Commercial Code as enacted in the relevant jurisdiction. 
  
 Underwriters:    [Ÿ]. 
  
 Underwriting Agreement:    The Underwriting Agreement, dated [Ÿ], among the Seller, the Depositor and the Underwriters. 
  
 Underwriter’s Exemption:    Prohibited Transaction Exemption                 ,
    Fed. Reg.         (         ), as amended (or any successor thereto), or any substantially similar administrative exemption
granted by the U.S. Department of Labor. 
  
 U.S. Person:    (i) A citizen or resident of
the United States, (ii) a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia, including an entity treated as a corporation for federal income tax purposes (iii) a partnership
(unless Treasury regulations are adopted that provide otherwise) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, including an entity treated as a partnership for federal income tax
purposes, none of the interests in which are owned, directly or indirectly through one or more intermediate entities, by a person that is not a U.S. Person within the meaning this paragraph, (iv) an estate the income of which is includible in gross
income for United States federal income tax purposes, regardless of its source, (v) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States fiduciaries
have the authority to control all substantial 

 
 26 

 decisions of the trust (or to the extent provided in applicable Treasury regulations, certain trusts in existence on August 20, 1996 that are
eligible to be treated as United States persons). 
  
 Unscheduled Distribution
Amount:    As to any Distribution Date, an amount equal to the sum of (i) with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during the calendar month preceding the month of such Distribution Date, the
Liquidation Proceeds allocable to principal received with respect to such Mortgage Loan and (ii) the amount described in clause (f) of the definition of “Formula Principal Amount” for such Distribution Date. 
  
 SECTION 1.2    Incorporation by Reference of Trust Indenture Act. 
  
 (a)    Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: 
  
 “Commission” means the Securities and Exchange Commission 
  
 “indenture
securities” means the Notes. 
  
 “indenture security holder” means a Noteholder.

  
 “indenture to be qualified” means this Indenture. 
  
 “Indenture Trustee” or “institutional Indenture Trustee” means the Indenture Trustee. 

 
 “obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.

  
 (b)    All other TIA terms used in this Indenture that are defined in the TIA, defined by TIA
reference to another statute or defined by rule of the Securities and Exchange Commission have the respective meanings assigned to them by such definitions. 
  
 (c)    Pursuant to Section 316(a) of TIA, all provisions automatically provided for in Section 316(a) are hereby expressly excluded. 
  
 SECTION 1.3    Rules of Construction.    Unless the context otherwise requires:

  
 (i)    a term has the meaning assigned to it; 
  
 (ii)    an accounting term not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles as in effect from time to time; 
  
 (iii)    “or” is not exclusive; 
  
 (iv)    “including” means including without limitation; 
  
 (v)    words in the singular include the plural and words in the plural include the singular; 

 
 27 

  
 (vi)    any agreement, instrument or statute
defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented (as provided in such agreements) and includes (in
the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns; and 
  

(vii)    terms defined in the UCC and not otherwise defined herein shall have the meaning assigned to them in the UCC; and

  
 (viii)    to “U.S. dollars”, “dollars”, or the sign
“$” shall be construed as references to United States dollars which are freely transferable by residents and non-residents of the United States of America and convertible by such persons into any other freely convertible currency unless
such transferability or convertibility is restricted by any law or regulation of general application in which event references to “U.S. dollars”, “dollars”, or the sign “$” shall be construed as references to such coin
or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America, and “cents” shall be construed accordingly. 
  
 ARTICLE II 
  
 THE NOTES 
  
 SECTION 2.1    Form.    The Notes
shall be designated as the “E*TRADE MBSC Trust 200  -     , Mortgage-Backed Notes, Series 200  -     .” Each Note, together with the Indenture
Trustee’s certificate of authentication, shall be in substantially the forms set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution thereof. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. 
  
 The Definitive Notes and the global certificates (“Global Securities”) representing the Book-Entry Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. 
  
 The Notes shall be issued as registered Notes. The Notes, except as otherwise provided by supplement to this Indenture, shall be issued in a denomination of at least $25,000 in principal amount and any larger denomination
that is an integral multiple of $1 approved by the Issuer, such approval to be evidenced by the execution thereof; provided, however, one Note may be issued in an amount less than the minimum denomination. If the Notes are issuable in whole
or in part as Book–Entry Notes, any such Note may provide that it shall represent the aggregate amount of Outstanding Notes from time to time endorsed thereon and may provide that the aggregate amount of Outstanding Notes represented thereby
may from time to time be reduced to 

 
 28 

  
 reflect exchanges or increased to reflect the issuance of an additional principal amount of Notes. Any
endorsement of a Book-Entry Note to reflect the amount, or any increase or decrease in the amount, of Outstanding Notes represented thereby shall be made in such manner and by such Person or Persons, as shall be specified therein or in the Issuer
Order of authentication delivered to the Indenture Trustee. 
  
 The terms of the Notes set forth in Exhibit A
are part of the terms of this Indenture. 
  
 SECTION 2.2    Execution, Authentication,
Delivery and Dating.    The Notes shall be executed on behalf of the Issuer by an Authorized Officer of the Owner Trustee. The signature of any such Authorized Officer on the Notes may be manual or facsimile. 

 
 Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers of the Owner Trustee
shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. 
  
 Subject to the satisfaction of the conditions set forth in Section 2.8 hereof, the Indenture Trustee shall, upon Issuer Order,
authenticate and deliver the Notes for original issue in the aggregate principal amounts as specified below: 
  
 The
aggregate principal amounts of Notes outstanding at any time may not exceed $[Ÿ]. 
  
 The Notes that are authenticated and delivered by the Indenture Trustee to or upon the order of the Issuer on the Closing Date shall be
dated the Closing Date. All other Notes that are authenticated after the Closing Date as a result of transfer or exchange or for any other purpose under the Indenture shall be dated the date of their authentication. 
  
 No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note
a certificate of authentication (substantially in the form provided for in the form of Note at Exhibit A) executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Note shall
be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. 
  
 SECTION 2.3    Registration; Registration of Transfer and Exchange.    The Issuer shall cause to be kept a register (the “Note Register”) in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Notes and the registration of transfers of Notes. The [•] initially shall be the “Note Registrar” for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar. 
  
 If a Person other than the Indenture Trustee or [•] is appointed by the Issuer as Note Registrar, the Issuer will give the Indenture
Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Indenture Trustee shall have the right to inspect the Note Register at all reasonable times
and to obtain copies thereof, and the Indenture Trustee shall have the right to rely upon a certificate 

 
 29 

 executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes. 
  
 Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall be entitled to obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes in any authorized denominations, of a like aggregate principal amount (or notional amount). At the option of the Holder, Notes may be exchanged for other Notes in any authorized
denominations, of a like aggregate principal amount (or notional amount), upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Issuer shall execute, and the Indenture Trustee
shall authenticate and the Noteholder shall be entitled to obtain from the Indenture Trustee, the Notes which the Noteholder making the exchange is entitled to receive. 
  
 All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. 
  
 Any Note
presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder thereof or such
Holder’s attorney duly authorized in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the
Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Exchange Act. 
  
 In addition, each purchaser or proposed transferee of a Note must represent to the Indenture
Trustee either (a) that it is not, and is not purchasing the Notes with assets of, an employee benefit plan subject to Title I of ERISA, or a plan subject to section 4975 of the Code, or a governmental plan or church plan that is subject to any
provisions of applicable federal, state or local law (“Similar Law”) substantially similar to the foregoing provisions of ERISA or the Code, or (b) that its acquisition and holding of the Notes will not constitute or result in a
nonexempt prohibited transaction under ERISA or the Code or Similar Law and will not subject the Issuer, the Indenture Trustee, the Owner Trustee or Master Servicer to any obligation in addition to those undertaken in the Indenture. 

 
 No service charge shall be made to a Noteholder for any registration of transfer or exchange of Notes, but the Issuer or the
Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 2.4 or
Section 10.6 not involving any transfer. 
  
 The preceding provisions of this Section notwithstanding, the
Issuer shall not be required to make and the Note Registrar need not register transfers or exchanges of Notes for a period of [Ÿ] days preceding the Distribution Date for any payment with respect to such Note. 

 
 30 

  
 SECTION 2.4    Mutilated, Destroyed, Lost or Stolen
Notes.    If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the
Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired
by a bona fide purchaser, the Issuer shall execute, and upon its request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within [Ÿ] days
shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment
such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer
or the Indenture Trustee in connection therewith. 
  
 Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Holder of such Note, of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the
Indenture Trustee) connected therewith. 
  
 Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. 
  
 The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. 
  
 SECTION 2.5    Persons Deemed Owners.    Prior to due presentment for registration of
transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall
be affected by notice to the contrary. 
  
 SECTION 2.6    Payment of Principal and
Interest.    The Notes shall accrue interest at the Note Interest Rate, and such interest shall be payable on each Distribution Date, subject to 

 
 31 

  
 Section 3.1. Interest shall be computed on the basis of a 360-day year consisting of twelve
30-day months. Interest shall be computed on LIBOR Notes on the basis of a 360-day year and the actual number of days elapsed in each Accrual Period and in accordance with Section 9.7. All interest payments on the Notes shall be made pro rata
to the Noteholders entitled thereto. Any installment of interest or principal payable on any Note shall be paid on the applicable Distribution Date to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record
Date by check mailed first-class postage prepaid to such Person’s address as it appears on the Note Register on such Record Date or, upon written request made to the Indenture Trustee at least [Ÿ] Business Days prior to the related Record Date, by the Holder of a Note having an initial Note Principal Amount of not less than $2,500,000 by wire transfer in
immediately available funds to an account specified in the request and at the expense of such Noteholder, except that, unless Definitive Notes have been issued pursuant to Section 2.11, with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire transfer in immediately available funds to the account designated by such nominee, except for the final installment of
principal payable with respect to such Note on a Distribution Date or on the applicable Maturity Date for such Notes (and except for the Redemption Price for any Note called for redemption pursuant to Section 11.1), which shall be payable as
provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3. 
  
 (b)    The principal of each Note shall be payable in installments on each Distribution Date as provided in the Servicing Agreement and in the forms of the Notes set forth in Exhibit A hereto.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable, if not previously paid, on the earlier of (i) the applicable Maturity Date, (ii) the applicable Redemption Date or (iii) the date on which an
Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Majority of the Noteholders shall have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 hereof. 

 
 (c)    All principal payments on the Notes shall be made pro rata to the Noteholders entitled thereto. The
Indenture Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Distribution Date on which the Issuer expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to such final Distribution Date and shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place
where such Note may be presented and surrendered for payment of such installment. Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 11.2 hereof. 
  
 SECTION 2.7    Cancellation.    All Notes surrendered for payment, registration of transfer
or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer shall deliver to the Indenture Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Notes may be held or disposed of by the 

 
 32 

  
 Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time
unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided, that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. 
  
 SECTION 2.8    Authentication of Notes. 
  
 (a)    The Notes shall be authenticated by the Indenture Trustee, upon Issuer Request and upon receipt by the Indenture Trustee of the following:

  
 (i)    An Issuer Order authorizing the execution and authentication of such
Notes; 
  
 (ii)    All of the items of Collateral that are to be delivered to the
Indenture Trustee or its designee; 
  
 (iii)    An executed counterpart of the
Trust Agreement, the Indenture, the Administration Agreement, the Assignment and Assumption Agreements and the Servicing Agreement and an executed original of the Certificate of Trust; 
  
 (iv)    Except to the extent provided in subsection (b) below, Opinions of Counsel addressed to the Indenture Trustee to the
effect that: 
  
 (A)    the Issuer has been duly formed and is validly existing
as a business trust under the laws of the State of Delaware, and has power, authority and legal right to execute and deliver this Indenture and the other Operative Agreements to which it is a party; 
  
 (B)    the issuance of the Notes has been duly and validly authorized by the Issuer; 

 
 (C)    the Notes, when executed and authenticated in accordance with the provisions of this
Indenture and delivered against payment therefor, will be the legal, valid and binding obligations of the Issuer pursuant to the terms of this Indenture and will be entitled to the benefits of this Indenture, and will be enforceable in accordance
with their terms, subject to bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent or preferential conveyance and other similar laws of general application affecting the rights of creditors generally and to general principles
of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); 
  
 (D)    all conditions precedent provided for in this Indenture relating to the authentication of the Notes have been complied with; 
  
 (E)    assuming due authorization, execution and delivery thereof by the Indenture Trustee, this Indenture has been duly executed and
delivered by Issuer and constitutes the legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to bankruptcy, insolvency, 

 
 33 

  
 reorganization, arrangement, moratorium, fraudulent or preferential conveyance
and other similar laws of general application affecting the rights of creditors generally and to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); 
  
 (F)    the Issuer is not required to be registered under the Investment Company Act of 1940, as
amended; 
  
 (G)    the Issuer will not be characterized as an association (or
publicly traded partnership) taxable as a corporation; 
  
 (H)    the provisions
of the Indenture are sufficient to create a valid security interest in favor of the Indenture Trustee in the Collateral; and 
  
 (I)    this Indenture has been duly qualified under the Trust Indenture Act. 
  
 (v)    An Officer’s Certificate of the Depositor on behalf of the Issuer complying with the requirements of Section 13.1 and stating that: 

 
 (A)    the Issuer is not in Default under this Indenture and the issuance of the Notes will
not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it is bound, or any order of
any court or administrative agency entered in any proceeding to which the Issuer is a party or by which it may be bound or to which it may be subject; 
  
 (B)    the Issuer is the owner of all of the Mortgage Loans, has not, other than pursuant to this Indenture, assigned any interest or
participation in the Mortgage Loans (or, if any such interest or participation has been assigned, it has been released) and has the right to Grant all of the Mortgage Loans to the Indenture Trustee; 
  
 (C)    the Issuer has Granted to the Indenture Trustee all of its right, title and interest in and to
the Collateral, and has delivered or caused the same to be delivered to the Indenture Trustee; 
  
 (D)    attached thereto are true and correct copies of letters signed by the Rating Agencies to the effect that the Notes has been assigned the Required Rating; and 
  
 (E)    all conditions precedent provided for in this Indenture relating to the authentication and
delivery of the Notes have been complied with. 
  
 (b)    The representations and warranties made
pursuant to the foregoing Officer’s Certificate shall survive the discharge of this Indenture and may not be waived by any party hereto. The Opinions of Counsel to be delivered pursuant to subsection (a)(iv) above may differ

 
 34 

  
 from the Opinions of Counsel described in such subsection so long as such Opinions of Counsel so
delivered are acceptable to the Rating Agencies and the Indenture Trustee, the Indenture Trustee’s authentication and delivery of the Notes and the Rating Agencies’ issuance of their letters pursuant to subsection (a)(D) above and
such acceptable opinions shall be deemed to be the Opinions of Counsel required pursuant to subsection (a)(iv) above. 
  
 SECTION 2.9    Book–Entry Notes.    The Notes will be issued in the form of typewritten Notes or Global Securities representing the Book–Entry Notes, to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Issuer. The Book–Entry Notes shall be registered initially on the Note Register in the name of Cede & Co., the nominee of DTC, and no owner thereof will receive a definitive Note
representing such Note Owner’s interest in such Note, except as provided in Section 2.11. Unless and until definitive, fully registered Notes (the “Definitive Notes”) have been issued to such Note Owners pursuant
to Section 2.11: 
  
 (i)    the provisions of this Section shall be in
full force and effect; 
  
 (ii)    the Note Registrar and the Indenture Trustee
shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of instructions or directions hereunder) as the sole Holder of the Notes, and shall
have no obligation to the Note Owners; 
  
 (iii)    to the extent that the
provisions of this Section conflict with any other provisions of this Indenture, the provisions of this Section shall control; 
  
 (iv)    the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and
the Clearing Agency and/or the Clearing Agency Participants pursuant to the Note Depository Agreement. Unless and until Definitive Notes are issued pursuant to Section 2.11, the initial Clearing Agency will make Book–Entry
transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest on the Notes to such Clearing Agency Participants; and 
  
 (v)    whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the Notes, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee. 
  
 SECTION 2.10    Notices to Clearing Agency.    Whenever a notice or other communication to the Noteholders is required under
this Indenture, unless and until Definitive Notes shall have been issued to such Note Owners pursuant to Section 2.11, the Indenture Trustee shall give all such notices and communications specified herein to be given to Holders of the
Notes to the Clearing Agency, and shall have no obligation to such Note Owners. 

 
 35 

  
 SECTION 2.11    Definitive
Notes.    If (i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Book–Entry Notes and the Indenture
Trustee is unable to locate a qualified successor, (ii) the Issuer at its option advises the Indenture Trustee in writing that it elects to terminate the Book–Entry system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Owners of the Book–Entry Notes representing beneficial interests aggregating at least a majority of the Outstanding Amount of Book–Entry Notes advise the Clearing Agency in writing that the continuation of a Book–Entry system
through the Clearing Agency is no longer in the best interests of such Note Owners, then the Clearing Agency shall notify all Note Owners and the Indenture Trustee of the occurrence of such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the typewritten Notes representing the Book–Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions, and each such party
may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders. 
  
 SECTION 2.12    Tax.    The Issuer has entered into this Indenture, and the Notes will be
issued, with the intention that, for federal, state and local income, single business and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Collateral. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note (and each Note Owner by its acceptance of an interest in the applicable Book–Entry Note), agree to treat the Notes for federal, state and local income, single business and franchise tax purposes as
indebtedness of the Issuer. 
  
 SECTION 2.13    Release of
Collateral.     
  
 (a)    Except as otherwise provided in subsections
(b) and (c) of this Section and the terms of the Operative Agreements, the Indenture Trustee shall release property from the lien of this Indenture only upon receipt by it of an Issuer Request accompanied by (i) an Officer’s Certificate, (ii)
an Opinion of Counsel, (iii) certificates in accordance with TIA Sections 314(c) and (d)(1), and (iv)(A) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or (B) an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the TIA does not require any such Independent Certificates; provided that no such Independent Certificates or Opinion of Counsel in lieu of such Independent Certificates shall be necessary in respect of property
released from the lien of the Indenture in accordance with the provisions hereof if such property consists solely of cash. 
  
 (b)    The Master Servicer or any Servicer, on behalf of the Issuer, shall be entitled to obtain a release from the lien of this Indenture for any Mortgage Loan and the Mortgaged Property at any time (i) after a
payment by the Seller or the Issuer of the Purchase Price of the Mortgage Loan, (ii) after a Substitute Mortgage Loan is substituted for such Mortgage Loan and payment of the Substitution Amount, if any, (iii) after liquidation of the Mortgage Loan
in accordance with the applicable Servicing Agreement and the deposit of all Liquidation Proceeds and Insurance Proceeds in the Collection Account, or (iv) upon the termination of a Mortgage 

 
 36 

 Loan (due to, among other causes, a prepayment in full of the Mortgage Loan and sale or other disposition of the related Mortgaged Property).

  
 ARTICLE III 
  
 COVENANTS 
  
 SECTION 3.1    Payment of Principal and
Interest.    The Issuer will duly and punctually pay (or will cause to be duly and punctually paid) the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, unless the Notes have been declared due and payable pursuant to Section 5.2 and monies collected by the Indenture Trustee are being applied in accordance with Section 5.4(b), subject to and in accordance with Section 8.2, the Issuer will
cause to be paid amounts on deposit in the Distribution Account Account on each Distribution Date to the Holders of the Notes. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest and/or principal shall
be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture. 
  
 The Notes
shall be non-recourse obligations of the Issuer and shall be limited in right of payment to amounts available from the Collateral as provided in this Indenture. The Issuer shall not otherwise be liable for payments of the Notes, and none of the
owners, agents, officers, directors, employees, Indenture Trustees or successors or assigns of the Issuer shall be personally liable for any amounts payable, or performance due, under the Notes or this Indenture. If any other provision of this
Indenture shall be deemed to conflict with the provisions of this Section 3.1, the provisions of this Section 3.1 shall control. 
  
 SECTION 3.2    Maintenance of Office or Agency.    The Issuer will or will cause the Indenture Trustee to maintain in [•], [•], an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served which initially shall be the Corporate Trust Office. The Issuer hereby initially
appoints the Indenture Trustee to serve as its agent for the foregoing purposes and to serve as Paying Agent with respect to the Notes. The Issuer will give prompt written notice to the Indenture Trustee of the appointment of new or additional
paying agents for the Notes, the location, and of any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands. 
  
 SECTION 3.3    Money for Payments To Be Held in Trust.    All payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn from the Accounts shall be made on behalf of the Issuer by the Indenture Trustee or by the Paying Agent. 
  
 On or before the Business Day preceding each Distribution Date and the Redemption Date, the Paying Agent shall deposit or cause to be deposited in the Distribution Account
an aggregate sum sufficient to pay the amounts then becoming due under the Notes, such sum to be 

 
 37 

 held in trust for the benefit of the Persons entitled thereto, and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the
Indenture Trustee of its action or failure so to act. 
  
 Any Paying Agent other than the Indenture Trustee shall be
appointed by Issuer Order with written notice thereof to the Indenture Trustee. Any Paying Agent appointed by the Issuer shall be a Person who would be eligible to be Indenture Trustee hereunder as provided in Section 6.11. The Issuer shall not
appoint any Paying Agent (other than the Indenture Trustee) which is not, at the time of such appointment, a Depository Institution. 
  
 The Issuer will cause each Paying Agent (other than the Indenture Trustee) to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section, that such Paying Agent will: 
  
 (i)    hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; 
  
 (ii)    give the Indenture Trustee notice of any default by the Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the
Notes; 
  
 (iii)    at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; 
  
 (iv)    immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the
standards required to be met by a Paying Agent at the time of its appointment; and 
  
 (v)    comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that with respect to withholding and reporting requirements applicable to original issue discount (if any) on the Notes, the Issuer shall have first provided the calculated
amounts pertaining thereto to the Indenture Trustee. 
  
 The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same
trusts as those upon which the sums were held by such Paying Agent. Upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money. 
  
 Subject to applicable laws with respect to escheat of funds or abandoned property, any money held by the Indenture Trustee or any Paying
Agent in trust for the payment of any amount 

 
 38 

 due with respect to any Note and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all
liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, shall at the
expense and direction of the Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in [•], notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than [•] days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee shall also adopt and employ, at the
expense and direction of the Issuer, any other reasonable means of notification of such repayment (including, but not limited to, mailing notice of such repayment to Holders whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder). 
  
 SECTION 3.4    Existence.     
  
 (a)    The Issuer will keep in full effect its existence, rights and franchises as a business trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes and the Collateral. 
  

(b)    Any successor to the Owner Trustee appointed pursuant to Section 9.02 of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further act to be done on the part of the parties hereto. 
  
 (c)    Upon any consolidation or merger of or other succession to the Owner Trustee, the Person succeeding to the Owner Trustee under the Trust Agreement may exercise every right and power of the Owner Trustee
under this Indenture with the same effect as if such Person had been named as the Owner Trustee herein. 
  
 SECTION
3.5    Protection of Collateral.    The Issuer will from time to time, and upon direction of the Majority of Noteholders, execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance and other instruments, and will take such other action necessary or advisable to: 
  
 (i)    provide further assurance with respect to the Grant of all or any portion of the Collateral; 

 
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 (ii)    maintain or preserve the lien and security interest (and the priority
thereof) of this Indenture or carry out more effectively the purposes hereof; 
  
 (iii)    perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; 
  
 (iv)    enforce any rights with respect to the Collateral; or 
  
 (v)    preserve and defend title to the Collateral and the rights of the Indenture Trustee and the Noteholders in such Collateral
against the claims of all Persons and parties. 
  
 The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or other instrument provided to the Indenture Trustee by the Depositor and required to be executed pursuant to this Section 3.5.  
  
 SECTION 3.6    Performance of Obligations.     
  
 (a)    The Issuer will not take any action and will use its best efforts not to permit any action to be taken by
others that would release any Person from any of such Person’s material covenants or obligations under any instrument or agreement included in the Collateral or that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Indenture, the Servicing Agreement or such other instrument or agreement. 
  
 (b)    The Issuer may contract with or otherwise obtain the assistance of other Persons to assist it in performing its
duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee in an Officer’s Certificate of the Issuer shall be deemed to be action taken by the Issuer. 
  
 (c)    The Issuer will punctually perform and observe all of its obligations and agreements contained in this
Indenture, any other agreements to which it is a party and in the instruments and agreements included in the Collateral, including but not limited to (i) filing or causing to be filed all UCC financing statements and continuation statements required
to be filed by the terms of this Indenture and the Servicing Agreements and (ii) recording or causing to be recorded all Mortgages, Assignments of Mortgage, all intervening Assignments of Mortgage and all assumption and modification agreements
required to be recorded by the terms of the Servicing Agreements, in accordance with and within the time periods provided for in this Indenture and/or the Servicing Agreements, as applicable. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Agreement or any provision thereof without the consent of the Indenture Trustee and the Holders of a majority of the Outstanding Amount of the Notes. 
  
 (d)    If the Issuer shall have knowledge of the occurrence of an Event of Default under the Servicing Agreements, the
Issuer shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall specify in such notice the action, if any, the Issuer is taking with respect to such default. 

 
 40 

 (e)    As promptly as possible after the giving of notice to the Master Servicer of the termination
of the Master Servicer’s rights and powers pursuant to Section 6.01 of the Servicing Agreement, the Indenture Trustee shall proceed in accordance with Section 6.01 of the Servicing Agreement. 
  
 (f)    Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this
Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees that it will not, without the prior written consent of a Majority of the Noteholders (i) amend, modify, waive, supplement, terminate or surrender, or agree to any
amendment, modification, supplement, termination, waiver or surrender of, the terms of any Collateral (except to the extent otherwise provided in the Servicing Agreement) or (ii) waive timely performance or observance by the Seller under the
Servicing Agreement. If any such amendment, modification, supplement or waiver shall be so consented to by the [Indenture Trustee] [such Holders], the Issuer agrees, promptly following a request by the Indenture Trustee, to execute and deliver, in
its own name and at its own expense, such agreements, instruments, consents and other documents as the Indenture Trustee may deem necessary or appropriate in the circumstances. 
  
 SECTION 3.7    Negative Covenants.    So long as any Notes are Outstanding, the Issuer shall not: 
  
 (a)    except as expressly permitted by this Indenture, the Sale Agreement or the Servicing Agreement, sell, transfer,
exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Collateral, unless directed to do so by the Indenture Trustee; 
  
 (b)    claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Collateral; 
  
 (c)    engage in any business or activity other than as permitted by the Trust Agreement or other than in connection with, or relating to, the issuance
of Notes pursuant to this Indenture, or amend the Trust Agreement as in effect on the Closing Date other than in accordance with Section 10.9 thereof; 
  
 (d)    issue debt obligations under any other indenture; 
  
 (e)    incur or assume any indebtedness or guarantee any indebtedness of any Person, except for such indebtedness as may be incurred by the Issuer in connection with the issuance of the Notes pursuant to this
Indenture; 
  
 (f)    dissolve or liquidate in whole or in part or merge or consolidate with any
other Person; or 
  
 (g)    (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes 

 
 41 

 under this Indenture except as may be expressly permitted hereby, (B) permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Collateral or any part thereof or any interest therein or the proceeds thereof (other than any junior liens or tax liens,
mechanics’ liens and other liens that arise by operation of law, in each case on any of the Mortgaged Properties and arising solely as a result of an action or omission of the related Mortgagors), or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such tax, mechanic’s or other lien) security interest in the Collateral. 
  
 SECTION 3.8    Covenants of the Issuer.    All covenants of the Issuer in this Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the Trust Agreement will be, entering into this Indenture solely as Owner Trustee under the Trust Agreement and not in its respective individual capacity, and in no case whatsoever
shall the Owner Trustee or any such successor Owner Trustee be personally liable on, or for any loss in respect of, any of the statements, representations, warranties or obligations of the Issuer hereunder, as to all of which the parties hereto
agree to look solely to the property of the Issuer. 
  
 SECTION 3.9    Restricted
Payments.    The Issuer shall not, directly or indirectly, (i) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with respect to any ownership or equity interest or security in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity
interest or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Issuer may make, or cause to be made, (x) distributions to the Indenture Trustee, the Owner Trustee, the Master
Servicer, any Servicer and the Securityholders as contemplated by, and to the extent funds are available for such purpose under the Indenture, the Servicing Agreement or the Trust Agreement and (y) payments to the Indenture Trustee pursuant to the
Administration Agreement. The Issuer will not, directly or indirectly, make or cause to be made payments to or distributions from the Trust Accounts except in accordance with this Indenture and the Operative Agreements. 
  
 SECTION 3.10    Treatment of Notes as Debt for Tax Purposes.    The Issuer shall, and shall
cause the Indenture Trustee and the Master Servicer shall treat the Notes as indebtedness for all federal, state and local income, single business and franchise tax purposes and treat the Collateral as securing such indebtedness. 

 
 SECTION 3.11    Notice of Events of Default.    The Issuer shall give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of Default hereunder and each default on the part of the Depositor or the Master Servicer under the Servicing Agreement. 
  
 SECTION 3.12    Further Instruments and Acts.    Upon request of the Indenture Trustee, the
Issuer will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. 

 
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 SECTION 3.13    Annual Statement as to
Compliance.    So long as the Notes are outstanding, the Issuer will deliver to the Indenture Trustee, within 120 days after the end of each fiscal year of the Issuer (commencing with the fiscal year
200    ), an Officer’s Certificate stating, as to the Authorized Officer signing such Officer’s Certificate, that: 
  
 (a)    a review of the activities of the Issuer during such year and of its performance under this Indenture has been made under such Authorized Officer’s supervision; and

  
 (b)    to the best of such Authorized Officer’s knowledge, based on such review, the
Issuer has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been a default in its compliance with any such condition or covenant, specifying each such default known to such Authorized Officer and
the nature and status thereof. 
  
 SECTION 3.14    Representations and Warranties of the
Issuer.    The Issuer hereby represents and warrants that: 
  
 (a)    this Agreement creates a valid and continuing security interest (as defined in the UCC) in the Collateral in favor of the Indenture Trustee, which security interest is prior to all other liens, and is
enforceable as such as against creditors of and purchasers from the Issuer; 
  
 (b)    the
Collateral constitutes “instruments” within the meaning of the UCC; 
  
 (c)    the
Issuer owns and has good and marketable title to the Collateral free and clear of any lien, claim or encumbrance of any Person; 
  
 (d)    the Issuer has received all consents and approvals required by the terms of the Collateral to pledge the Collateral hereunder to the Indenture Trustee; 
  

(e)    the Issuer has caused or will have caused, within [•] days from the Closing Date, the filing of all appropriate financing statements in
the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Collateral granted to the Indenture Trustee hereunder; 
  
 (f)    all original executed copies of each Mortgage Note that constitute or evidence the Collateral have been delivered to the Indenture Trustee or the
applicable Custodian on behalf of the Indenture Trustee; 
  
 (g)    the Issuer has received a
written acknowledgment from the applicable Custodian that such Custodian is holding the Mortgage Notes that constitute or evidence the Collateral solely on behalf and for the benefit of the Indenture Trustee; 
  
 (h)    other than the security interest granted to the Indenture Trustee pursuant to this Agreement, the Issuer has
not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral. The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer that include a description of
collateral covering the Collateral other than any financing statement relating to the security interest granted to the Indenture Trustee hereunder or that has been terminated. The Issuer is not aware of any judgment or tax lien filings against the
Issuer; and 

 
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 (i)    none of the Mortgage Notes that constitute or evidence the Collateral has any marks or
notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Secured Party. 
  
 SECTION 3.15    Annual Opinions as to Collateral.    On or before March 15th in each calendar year, beginning in 200    , the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security interest created by this Indenture and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording, filing, rerecording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until March 15th of the following calendar year. 
  
 ARTICLE IV 
  
 SATISFACTION AND DISCHARGE 
  

SECTION 4.1    Satisfaction and Discharge of Indenture.    This Indenture shall be discharged and cease to be of further
effect with respect to the Notes and Collateral securing the Notes when either (i) the Servicing Agreement has been terminated pursuant to Article VII or (ii) all of the following have occurred: 
  
 (a)    either 
  
 (i)    all Notes theretofore authenticated and delivered (other than (A) Notes that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in
Section 2.4 and (B) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.3) have been
delivered to the Indenture Trustee for cancellation; or 
  
 (ii)    all Notes not
theretofore delivered to the Indenture Trustee for cancellation (A) have become due and payable, (B) will become due and payable within one year of the Maturity Date, or (C) are to be called for redemption within one year under arrangements
satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Issuer, and the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes to the Maturity Date of the Notes or the Redemption Date (if Notes are called for redemption pursuant to Section 11.1 hereof), as the case may be; 

 
 44 

 (b)    the later of (i) eighteen months after payment in full of all outstanding obligations under
the Notes and (ii) the date on which the Issuer has paid or caused to be paid all other sums payable hereunder and no other amounts will become due and payable by the Issuer; and 
  
 (c)    the Issuer has delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel (at the Issuer’s expense) and (if
required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 13.1(a) hereof and, subject to Section 13.2 hereof, each stating that all
conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Notes have been satisfied, 
  
 then, upon Issuer Request, this Indenture and the lien, rights, and interests created hereby shall cease to be of further effect with respect to the Notes (except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.7, and 3.8 hereof, (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vi) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Indenture Trustee payable to all or any of them), and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute and deliver proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, and shall pay, or assign or transfer and deliver, to or at the direction of the Issuer, all Collateral held by it after satisfaction of the conditions specified in clauses (b) and (c) above. 

 
 SECTION 4.2    Application of Trust Money.    All moneys deposited with the
Indenture Trustee pursuant to Sections 3.3 and 4.1 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Holders of the Notes for the payment of all sums due and to become due thereon for principal and interest; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing
Agreement or otherwise required by law. 
  
 ARTICLE V 
  
 EVENTS OF DEFAULT; REMEDIES 
  
 SECTION
5.1    Events of Default.     
  
 (a)    “Event of Default,” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 
  
 (i)    a default in the payment of Current Interest or Principal in respect of the Notes when the same becomes due and payable, and the
continuance of such default for a period of [Ÿ] days; or 

 
 45 

 (ii)    a default in the payment of the entire Principal Note Amount of any Note on
the applicable Maturity Date; or 
  
 (iii)    either the Issuer or the pool of
Collateral becomes an “investment company” required to be registered under the Investment Company Act of 1940, as amended; or 
  
 (iv)    default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than a covenant or agreement, a default in the observance
or performance of which is elsewhere in this Section specifically dealt with), or any representation or warranty of the Issuer made in this Indenture, the Servicing Agreement or in any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and such default shall continue or not be cured, or the circumstance or condition in respect of which such representation
or warranty was incorrect shall not have been eliminated or otherwise cured, for a period of [•] days after there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default
hereunder; or 
  
 (v)    the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any substantial part of the Collateral in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing
a receiver, liquidator, assignee, custodian, Indenture Trustee, sequestrator or similar official of the Issuer or for any substantial part of the Collateral, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree or
order shall remain unstayed and in effect for a period of [•] consecutive days; or 
  
 (vi)    the commencement by the Issuer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, Indenture Trustee, sequestrator or similar official of the Issuer or
for any substantial part of the Collateral, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of any action by the
Issuer in furtherance of any of the foregoing. 
  
 (b)    The Issuer shall deliver to a
Responsible Officer of the Indenture Trustee, within [•] days after the occurrence thereof, written notice in the form of an Officer’s Certificate of any event which with the giving of notice and the lapse of time would become an Event of
Default, its status and what action the Issuer is taking or proposes to take with respect thereto. 
  

 
 46 

 SECTION 5.2    Acceleration of Maturity; Rescission and Annulment.    

  
 (a)    If an Event of Default should occur and be continuing of which a Responsible Officer
of the Indenture Trustee has actual knowledge, then and in every such case the Indenture Trustee may, and shall at the direction of the Majority Noteholders, declare all the Notes to be immediately due and payable, by a notice in writing to the
Issuer and the Indenture Trustee, and upon any such declaration the unpaid principal amount of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. 

 
 (b)    At any time after such declaration of acceleration of maturity has been made and before a judgment
or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Noteholders, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its
consequences if the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay: 
  
 (i)    all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or upon such Notes if the Event of Default giving rise to such acceleration had not occurred;
and 
  
 (ii)    all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of [each of] the Indenture Trustee and its agents and counsel; and 
  
 (iii)    all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in
Section 5.11. 
  
 No such rescission shall affect any subsequent default or impair any right consequent thereto.

  
 SECTION 5.3    Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee.     
  
 (a)    The Issuer covenants that if default is made in
the payment of any interest on any Note when the same becomes due and payable, and such default continues for a period of [•] days, the Issuer will, upon demand of the Indenture Trustee or at the direction of a Majority of the Noteholders, pay
to the Indenture Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on such Notes for interest and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel. 
  
 (b)    In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and as Indenture Trustee of an express trust may, and shall, at the direction of a
Majority of the Noteholders, institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon such Notes and
collect in the 

 
 47 

 manner provided by law out of the property of the Issuer or other obligor upon such Notes, wherever situated, the monies adjudged or decreed to
be payable. 
  
 (c)    If an Event of Default occurs and is continuing, the Indenture Trustee
may, in its discretion, and shall, at the direction of a Majority of the Noteholders, as more particularly provided in Section 5.4, proceed to protect and enforce its rights and the rights of the Noteholders, by such appropriate Proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law. 
  
 (d)    In case there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Collateral, Proceedings under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or Indenture Trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Notes, or to the creditors or property of the
Issuer or such other obligor, the Indenture Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have
made any demand pursuant to the provisions of this Section, shall be entitled and empowered, upon the direction of a Majority of the Noteholders, by intervention in such Proceedings or otherwise: 
  

(i)    to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes
and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee (except as a result of negligence or bad faith)) and of
the Noteholders allowed in such Proceedings; 
  
 (ii)    unless prohibited by
applicable law and regulations, to vote on behalf of the Holders of Notes in any election of a Indenture Trustee, a standby Indenture Trustee or Person performing similar functions in any such Proceedings; 
  
 (iii)    to collect and receive any moneys or other property payable or deliverable on any such claims
and to distribute all amounts received with respect to the claims of the Noteholders and the Indenture Trustee on their behalf; 
  
 (iv)    to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders of Notes
allowed in any judicial proceedings relative to the Issuer, its creditors and its property; and any Indenture Trustee, receiver, liquidator, custodian or other similar 

 
 48 

 official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Indenture
Trustee and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Noteholders to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith; 
  
 (v)    nothing herein contained shall be deemed to
authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder 
  
 (vi)    any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of
any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a Indenture Trustee in bankruptcy or similar Person; 
  
 (vii)    all rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any of the
Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Indenture Trustee shall be brought in its own name as Indenture Trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes;
and 
  
 (viii)    in any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings. 
  
 SECTION 5.4    Remedies;
Priorities.     
  
 (a)    If an Event of Default shall have occurred and
be continuing, of which a Responsible Officer of the Indenture Trustee has actual knowledge, the Indenture Trustee may, and at the direction of the Majority of the Noteholders shall, do one or more of the following (subject to Section 5.5):

  
 (i)    institute Proceedings in its own name (as Indenture Trustee) and as
Indenture Trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Issuer and any
other obligor upon such Notes monies adjudged due; 

 
 49 

 (ii)    institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Collateral; 
  
 (iii)    exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee or the Noteholders; and 

 
 (iv)    sell the Collateral or any portion thereof or rights or interest therein in a
commercially reasonable manner, at one or more public or private sales called and conducted in any manner permitted by law; 
  
 provided,
however, that the Indenture Trustee may not sell or otherwise liquidate the Collateral following an Event of Default, unless (A) the Holders of 100% of the Outstanding Amount of the Notes consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then due and unpaid upon the Notes for principal and interest or (C) the Indenture Trustee determines that the Collateral will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared due and payable, and the Indenture Trustee obtains the consent of Holders of 66- 2/3% of the Outstanding Amount of the Notes. In determining such sufficiency or insufficiency with respect to clauses
(B) and (C), the Indenture Trustee shall obtain at the cost of the Issuer and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency
of the Collateral for such purpose. 
  
 (b)    If the Indenture Trustee collects any money
or property pursuant to this Article V, it shall pay out the money or property in the following order: 
  
 first:    to the Indenture Trustee, for any costs or expenses incurred by it in connection with the enforcement of the remedies provided for in this Article V and for any other unpaid amounts due to the
Indenture Trustee hereunder, to the Custodians for any amounts due and owing to them under the Custodial Agreements, and to the Owner Trustee, to the extent of any fees and expenses due and owing to it (including pursuant to Section 7.02 of the
Trust Agreement) and for any other unpaid amounts due to the Owner Trustee hereunder; 
  
 second:    to the Master Servicer and Servicers for any Master Servicing Fees or Servicing Fees then due and unpaid and any unreimbursed Advances and other servicing advances; and 
  
 third:    to the Notes, all accrued and unpaid interest thereon and amounts in respect of principal;
provided, however, that accrued and unpaid interest shall be paid to Noteholders before any payments in respect of principal. 
  
 The Indenture Trustee may fix a record date and Distribution Date for any payment to be made to the Noteholders pursuant to this Section. At least [•] days before such record date, the Indenture Trustee shall mail to
each Noteholder and the Issuer a notice that states the record date, the Distribution Date and the amount to be paid. 

 
 50 

 SECTION 5.5    Limitation of Suits.    No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver or Indenture Trustee, or for any other remedy hereunder, unless: 
  

(a)    such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default; 
  
 (b)    a Majority of the Noteholders have made written request to the Indenture Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Indenture Trustee hereunder; 
  
 (c)    such Holder or Holders have offered to the Indenture Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request; 
  
 (d)    the Indenture Trustee for [Ÿ] days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and 
  
 (e)    no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Majority of the
Noteholders. 
  
 It is understood and intended that no one or more Holders of Notes shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes or to obtain or to seek to obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner herein provided. 
  
 In the event the Indenture Trustee shall
receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes pursuant to this Section, each representing less than the Majority of the Noteholders, the Indenture Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provision of this Indenture. 
  
 SECTION
5.6    Unconditional Rights of Noteholders To Receive Principal and Interest.    Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest on, such Note on or after the Maturity Date (or, in the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder. 
  
 SECTION
5.7    Restoration of Rights and Remedies.    If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted.

 
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 SECTION 5.8     Rights and Remedies Cumulative.    No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy. 
  
 SECTION 5.9     Delay or Omission Not a
Waiver.    No delay or omission of the Indenture Trustee or any Holder of any Note to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of
any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by
the Indenture Trustee or by the Noteholders, as the case may be 
  
 SECTION 5.10    Control by
Noteholders. 
  
 The Majority of the Noteholders shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided that: 
  
 (a)    such direction shall not be in conflict with any rule of law or with this Indenture; 
  
 (b)    subject to the express terms of Section 5.4, any direction to the Indenture Trustee to sell or liquidate the Collateral shall be by not less than
100% of the Outstanding Amount of the Notes; and 
  
 (c)    the Indenture Trustee may take any
other action deemed proper by the Indenture Trustee that is not inconsistent with such direction. 
  
 Notwithstanding
the rights of the Noteholders set forth in this Section, subject to Section 6.1, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not
consenting to such action. 
  
 SECTION 5.11    Waiver of Past Defaults. 

 
 Prior to the declaration of the acceleration of the maturity of the Notes as provided in Section 5.2, the Majority of the
Noteholders may waive any past Default or Event of Default and its consequences except a Default (a) in the payment of interest on any of the Notes or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the
consent of the Holder of each Note, as applicable. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively, but no such waiver
shall extend to any subsequent or other Default or impair any right consequent thereto. 
  
 Upon any such waiver,
such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to 

 
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 have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereto. 
  
 SECTION
5.12    Undertaking for Costs.    All parties to this Indenture agree, and each Holder of any Note by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of Noteholders, in each
case holding in the aggregate more than 10% of the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed
in such Note and in this Indenture. 
  
 SECTION 5.13    Waiver of Stay or Extension
Laws.    The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 
  
 SECTION 5.14    Action on Notes.    The Indenture Trustee’s right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture
Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral or upon any of the assets of the Issuer.
Any money or property collected by the Indenture Trustee shall be applied in accordance with Section 5.4(b). 
  
 SECTION 5.15    Optional Preservation of the Collateral.    If the Notes have been declared to be due and payable under Section 5.2 following an Event of Default and such declaration and
its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of the Collateral. It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Collateral. In determining whether to maintain possession of the
Collateral, the Indenture Trustee may, but need not, obtain and rely upon an opinion (at the expense of the Issuer) of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as
to the sufficiency of the Collateral for such purpose. 

 
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 SECTION 5.16    Performance and Enforcement of Certain
Obligations.    Promptly following a request from the Indenture Trustee to do so and at the Issuer’s expense, the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the
performance and observance by the Seller and the Master Servicer, as applicable, of each of their obligations to the Issuer under or in connection with the Mortgage Loan Sale Agreement and the Servicing Agreement, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in connection with the Servicing Agreement to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of
the Seller or the Master Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller or the Master Servicer of each of their obligations under the Servicing Agreement and
the Sale Agreement. 
  
 (b)    If an Event of Default of which a Responsible Officer of the
Indenture Trustee has actual knowledge has occurred and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing or by telephone, confirmed in writing promptly thereafter) of a Majority of the Noteholders
shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Master Servicer under or in connection with the Servicing Agreement or the Seller under or in connection with the Mortgage Loan Sale Agreement, including
the right or power to take any action to compel or secure performance or observance by the Seller or the Master Servicer of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension,
or waiver under the Servicing Agreement or Mortgage Loan Sale Agreement, and any right of the Issuer to take such action shall be suspended. 
  
 ARTICLE VI 
  
 THE INDENTURE TRUSTEE 
  
 SECTION 6.1    Duties of Indenture Trustee. 
  
 (a)    If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. 
  
 (b)    Except during the continuance of an Event of Default: 
  
 (i)    the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, the
Indenture Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee;
and 
  
 (ii)    in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and 

 
 54 

 conforming to the requirements of this Indenture; however, the Indenture Trustee shall examine the certificates
and opinions to determine whether or not they conform to the requirements of this Indenture. 
  
 (c)    The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 
  
 (i)    this paragraph does not limit the effect of paragraph (b) of this Section; 

 
 (ii)    the Indenture Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; 
  
 (iii)    the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with this Agreement or upon a direction received
by it pursuant to Section 5.10 hereof; 
  
 (iv)    the Indenture Trustee shall
not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer; 
  
 (v)    money held in trust by the Indenture Trustee shall be segregated from other funds except to the extent permitted by law or the terms of this Indenture or the Servicing
Agreement; 
  
 (vi)    no provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured to it; 
  
 (vii)    every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section and to the
provisions of the TIA; 
  
 (viii)    the Indenture Trustee shall not be required
to take notice or be deemed to have notice or knowledge of any default or Event of Default (except an Event of Default described in Section 5.01(a)(i)) unless a Responsible Officer of the Indenture Trustee shall have actual knowledge thereof; in the
absence of such actual knowledge, the Indenture Trustee may conclusively assume that there is no default or Event of Default; and 
  
 (ix)    anything in this Agreement to the contrary notwithstanding, in no event shall the Indenture Trustee be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. 

 
 55 

 (d)    The Indenture Trustee shall not have any duty or obligation to manage, make any payment with
respect to, register, record, sell, dispose of, or otherwise deal with the Collateral, or to otherwise take or refrain from taking any action under, or in connection with, any document contemplated hereby to which the Indenture Trustee is a party,
except as expressly provided (i) in accordance with the powers granted to and the authority conferred upon the Indenture Trustee pursuant to this Agreement or any other Operative Agreement, and (ii) in accordance with any document or instruction
delivered to the Indenture Trustee pursuant to the terms of this Agreement; and no implied duties or obligations shall be read into this Agreement or any Operative Agreement against the Indenture Trustee. The Indenture Trustee shall have no
responsibility to prepare or file any Securities and Exchange Commission filing for the Trust or to record this Agreement or any Operative Agreement or to prepare or file any tax return for the Trust. The Indenture Trustee nevertheless agrees that
it will, at its own cost and expense, promptly take all action as may be necessary to discharge any liens on any part of the Collateral that result from actions by, or claims against itself that are not related to the administration of the
Collateral. 
  
 (e)    Every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. 
  
 (f)    The Indenture Trustee shall not refuse or fail to perform any of its duties hereunder solely as a result of nonpayment of its normal fees and expenses; provided, that
nothing in this Section 6.1(f) shall be construed to limit the exercise by the Indenture Trustee of any right or remedy permitted under this Indenture or otherwise in the event of the Issuer’s failure to pay the Indenture Trustee’s fees
and expenses pursuant to Section 6.7. In determining that such repayment or indemnity is not reasonably assured to it, the Indenture Trustee must consider not only the likelihood of repayment or indemnity by or on behalf of the Issuer but also the
likelihood of repayment or indemnity from amounts payable to it from the Collateral pursuant to Section 6.7. 
  
 SECTION 6.2    Rights of Indenture Trustee. 
  
 (a)    The Indenture Trustee may rely on and shall be protected in acting in good faith upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in any such document. 
  
 (b)    Before
the Indenture Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an
Officer’s Certificate or an Opinion of Counsel. 
  
 (c)    The Indenture Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of
such agent, attorney, custodian or nominee appointed by the Indenture Trustee with due care. 

 
 56 

  
 (d)    The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that such action or omission by the Indenture Trustee does not constitute willful misconduct, negligence or
bad faith. 
  
 (e)    The Indenture Trustee may consult with counsel, and the advice or opinion
of counsel or any Opinion of Counsel with respect to legal matters relating to the Operative Agreements shall be full and complete authorization and protection from liability with respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel. The Issuer shall be responsible for the reasonable costs and expenses of any such counsel. 
  
 (f)    The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by the Majority the Noteholders; provided, however, that if the payment within a reasonable time to
the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it
by the terms of this Indenture, the Indenture Trustee may require reasonable indemnity against such cost, expense or liability as a condition to taking any such action. The reasonable expense of every such investigation shall be paid by the Issuer
or, if paid by the Indenture Trustee, shall be repaid by the Issuer upon demand. 
  
 (g)    The
right of the Indenture Trustee to perform any discretionary act enumerated in this Agreement shall not be construed as a duty, and the Indenture Trustee shall not be answerable for other than its negligence or willful misconduct in the performance
of such act. 
  
 (h)    The Indenture Trustee shall not be required to give any bond or surety in
respect of the execution of the powers granted hereunder. 
  
 SECTION 6.3    Individual Rights
of Indenture Trustee. 
  
 The Indenture Trustee in its individual or any other capacity other than as Indenture
Trustee may, and in its capacity as Indenture Trustee may not, become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights. 
  
 SECTION
6.4    Indenture Trustee’s Disclaimer. 
  
 (a)    The Indenture
Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, any other Operative Agreement or the Notes or the Issuer’s use of the proceeds from the Notes, or responsible for any statement
of the Issuer in the Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee’s certificate of authentication. 

 
 57 

  
 (b)    Notwithstanding anything to the contrary in this
Indenture or the other Operative Agreements, the Indenture Trustee shall have no duties, responsibilities or obligations under the Consolidated Agreement or the Existing Trust Agreements (as defined in the Consolidated Agreement). 

 
 SECTION 6.     Notice of Default.    If a Default occurs and is continuing and
if it is known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder notice of the Default within [Ÿ] days after it acquires knowledge of such Default. 
  
 SECTION
6.6    Reports by Indenture Trustee to Holders.    Upon request by a Noteholder, the Master Servicer shall deliver to each Noteholder such information as may be required to enable such holder to prepare
its federal and State income tax returns. 
  
 SECTION 6.7    Compensation and
Indemnity.    As compensation for its services hereunder and under the Servicing Agreement (including in its capacity as Paying Agent and Custodian), the Indenture Trustee shall be entitled to receive an annual fee (which
shall not be limited by any provision of law in regard to the compensation of a Indenture Trustee of an express trust) payable by the Master Servicer. Reimbursement for all reasonable out-of-pocket expenses incurred or made by the Indenture Trustee,
including costs of collection, shall be payable by the Issuer. Such expenses shall include the reasonable compensation and expenses, disbursements and advances, if any, of the Indenture Trustee’s agents, counsel, accountants and experts. The
Issuer shall, or shall cause the Seller to, and the Seller shall, indemnify the Indenture Trustee (including in its capacities as Paying Agent, Custodian and Securities Intermediary) and [•], in its capacity as a Custodian, against any and all
loss, liability or expense (including attorneys’ fees) incurred by the Indenture Trustee (including in its capacities as Paying Agent, Custodian and Securities Intermediary) (or [•], in its capacity as a Custodian) in connection with the
administration of this trust and the performance of its duties under the Operative Agreements. The Indenture Trustee (or a Custodian) shall notify the Issuer and the Seller promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee (or a Custodian) to so notify the Issuer and the Seller shall not relieve the Issuer and the Seller of its obligations hereunder. The Issuer shall or shall cause the Seller to defend any such claim, and the Indenture Trustee, the
Paying Agent, the Custodian and the Securities Intermediary may have separate counsel and the Issuer shall or shall cause the Seller to pay the fees and expenses of such counsel. The Seller need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Indenture Trustee, the Paying Agent, the Custodian or the Securities Intermediary to the extent attributable to such Person’s own willful misconduct, negligence or bad faith. 
  
 The payment and indemnification obligations of the Seller, the Master Servicer and the Issuer, as applicable, to the Indenture Trustee
(including in its capacities as Paying Agent, Custodian and Securities Intermediary) (or [•], in its capacity as a Custodian) pursuant to this Section shall survive the resignation or removal of the Indenture Trustee (or its Custodian) or
discharge of this Indenture. When the Indenture Trustee incurs expenses in connection with the occurrence of a Default specified in Section 5.01(v) or (vi) with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable federal or State bankruptcy, insolvency or similar law. 

 
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 SECTION 6.8    Replacement of Indenture
Trustee.    No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this
Section. The Indenture Trustee may resign at any time by so notifying the Issuer. The Holders of a majority in Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor
Indenture Trustee. The Issuer shall remove the Indenture Trustee if: 
  
 (a)    the Indenture
Trustee fails to comply with Section 6.11; 
  
 (b)    the Indenture Trustee is adjudged a
bankrupt or insolvent; 
  
 (c)    a receiver or other public officer takes charge of the
Indenture Trustee or its property; or 
  
 (d)    the Indenture Trustee otherwise becomes
incapable of acting. 
  
 If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of
Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the “resigning or removed Indenture Trustee”), the Issuer shall promptly appoint a successor Indenture Trustee that satisfies the eligibility
requirements of Section 6.11. 
  
 The resigning or removed Indenture Trustee agrees to cooperate with any successor
Indenture Trustee in effecting the termination of the resigning or removed Indenture Trustee’s responsibilities and rights hereunder and shall promptly provide such successor Indenture Trustee all documents and records reasonably requested by
it to enable it to assume the Indenture Trustee’s functions hereunder. Any successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. 
  
 The resigning or removed Indenture Trustee shall Grant to the successor Indenture Trustee the Collateral, and the Seller, the Issuer and
the resigning or removed Indenture Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor Indenture Trustee all rights, powers,
duties and obligations under this Indenture. 
  
 The successor Indenture Trustee shall deliver a written acceptance
of its appointment to the resigning or removed Indenture Trustee and the Issuer. The successor Indenture Trustee shall mail a notice of its succession to Noteholders. The resigning Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee. 
  
 If a successor Indenture Trustee does not take office
within [Ÿ] days after the retiring Indenture Trustee resigns or is removed, the resigning or removed Indenture Trustee, the
Issuer or the Holders of a majority of the Outstanding Amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee. If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee. 

 
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 Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee. 
  
 SECTION 6.9    Successor Indenture Trustee by Merger.    If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust
business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee; provided, that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11. 
  
 In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor Indenture Trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in
the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of
the Indenture Trustee shall have. 
  
 SECTION 6.10    Appointment of Co-Indenture Trustee or
Separate Indenture Trustee. 
  
 (a)    Notwithstanding any other provisions of this
Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Collateral may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-Indenture Trustee or co-Indenture Trustees, or separate Indenture Trustee or separate Indenture Trustees, of all or any part of the Trust Estate, and to vest in such Person or Persons, in such capacity and
for the benefit of the Noteholders, such title to the Collateral, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or
desirable. No co-Indenture Trustee or separate Indenture Trustee hereunder shall be required to meet the terms of eligibility as a successor Indenture Trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-Indenture
Trustee or separate Indenture Trustee shall be required under this Section 6.10 hereof; 
  
 (b)    Every separate Indenture Trustee and co-Indenture Trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: 
  
 (i)    all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee
shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate Indenture Trustee or co-Indenture Trustee jointly (it being understood that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to 

 
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 be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate Indenture Trustee or co-Indenture Trustee, but solely
at the direction of the Indenture Trustee; 
  
 (ii)    no Indenture Trustee
hereunder shall be personally liable by reason of any act or omission of any other Indenture Trustee hereunder; and 
  
 (iii)    the Indenture Trustee may at any time accept the resignation of or remove any separate Indenture Trustee or co-Indenture Trustee. 
  
 (c)    Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate Indenture
Trustees and co-Indenture Trustees, as effectively as if given to each of them. Every instrument appointing any separate Indenture Trustee or co-Indenture Trustee shall refer to this Indenture and the conditions of this Article VI. Each separate
Indenture Trustee and co-Indenture Trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, jointly with the Indenture Trustee, subject to all the provisions of
this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.

  
 (d)    Any separate Indenture Trustee or co-Indenture Trustee may at any time constitute the
Indenture Trustee its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate Indenture Trustee or
co-Indenture Trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor Indenture Trustee. 
  
 SECTION
6.11    Eligibility.    The Indenture Trustee shall at all times (i) satisfy the requirements of TIA Section 310(a), (ii) have a combined capital and surplus of at least $[50,000,000] as set forth in
its most recently published annual report of condition, (iii) have a long-term debt rating equivalent to “A” or better by the Rating Agencies or be otherwise acceptable to the Rating Agencies [;] [and] (iv) not be an Affiliate of the
Issuer or the Owner Trustee. The Indenture Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there shall be excluded from the operation
of TIA Section 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. 
  

SECTION 6.12    Representations and Warranties.    The Indenture Trustee hereby represents that: 

 
 (a)    the Indenture Trustee is duly organized and validly existing as a [•] in good standing under
the laws of the State of [•] with power and authority to own its properties and to 

 
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 conduct its business as such properties are currently owned and such business is presently conducted; 
  
 (b)    the Indenture Trustee has the power and authority to execute and deliver this Indenture and to carry out its
terms; and the execution, delivery and performance of this Indenture have been duly authorized by the Indenture Trustee by all necessary corporate action; 
  
 (c)    the consummation of the transactions contemplated by this Indenture and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a default under the articles of organization or bylaws of the Indenture Trustee or any agreement or other instrument to which the Indenture Trustee is a party or by which it is
bound; and 
  
 (d)    there are no proceedings or investigations pending or, to the knowledge of
the Indenture Trustee, threatened before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Indenture Trustee or its properties: (i) asserting the invalidity of this Indenture, (ii)
seeking to prevent the consummation of any of the transactions contemplated by this Indenture or (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Indenture Trustee of its obligations under,
or the validity or enforceability of, this Indenture. 
  
 SECTION 6.13    Preferential
Collection of Claims Against Issuer.    The Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). An Indenture Trustee which has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated. 
  
 ARTICLE VII 
  
 NOTEHOLDERS’ LISTS AND REPORTS 
  
 SECTION 7.1    Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.    The Issuer will furnish or cause to be furnished to the
Indenture Trustee not more than [Ÿ] days after each Record Date, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders of Notes as of such Record Date; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished. 

 
 SECTION 7.2    Preservation of Information; Communications to Noteholders. 
  
 (a)    The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and
addresses of the Holders of Notes contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar.
The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished. 
  
 (b)    Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. 

 
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 (c)    The Issuer, the Note Registrar and the Indenture Trustee shall have the protection of TIA
Section 3l2(c). 
  
 SECTION 7.3    Reports by Issuer. 
  
 (a)    The Issuer shall: 
  
 (i)    file with the Indenture Trustee and the Commission in accordance with the rules and regulations prescribed from time to time by
the Commission such information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and 
  
 (ii)    supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all
Noteholders described in TIA Section 313(c)) such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clause (i) of this Section 7.03(a) and by rules and regulations prescribed from time to time by the
Commission. 
  
 (b)    Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year. 
  
 SECTION 7.4    Reports by Indenture
Trustee.    If required by TIA Section 313(a), within 60 days after each March 1, beginning with March 1, 200_, the Indenture Trustee shall mail to each Noteholder as required by TIA Section 313(c) a brief report dated as of
such date that complies with TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b). 
  
 A copy of each report at the time of its mailing to Noteholders shall be filed by the Indenture Trustee with the Commission and each securities exchange, if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any securities exchange. 
  
 ARTICLE VIII 
  
 ACCOUNTS, DISBURSEMENTS AND RELEASES 
  
 SECTION 8.1    Collection of Money. 
  
 (a)    Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Collateral, the Indenture Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without 

 
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 prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

  
 SECTION 8.2    Payments on the Notes. 
  
 (a)    On each Distribution Date, the Paying Agent (or, if the Indenture Trustee acts as Paying Agent, the Indenture
Trustee) shall distribute the Available Distribution Amount as follows. 
  
 first, to the
Noteholders the Interest Distribution Amount for such Distribution Date; 
  
 second, to the Noteholders, the
amount of Principal Distribution for such Distribution Date in reduction of the Note Principal Balance until the Note Principal Balance reducted to zero; 
  
 third, to the Noteholders in reduction of the Note Principal Balance, the amount, if any, equal to the lessor of (A) the Excess Cash with respect to such Distribution Date (after giving effect to
application of Monthly Principal for such Distribution Date) and (2) the amount necessary to reduce the Note Principal Balance to zero (the “Excess Cash Payment”); 
  
 Any Available Distribution Amount remaining after application in the manner specified above will be released to holders of the Trust Certificates, free and clear of the lien of this Indenture.

  
 SECTION 8.3    Release of Collateral. 
  
 (a)    Subject to the payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and when
required by the provisions of this Indenture or the Servicing Agreement shall, execute instruments to release property from the lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture or the Servicing Agreement. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies. 
  
 (b)    The Indenture Trustee shall, at such time as there are no Notes outstanding and all sums due to the Noteholders and all fees and expenses of the Indenture Trustee, the Master Servicer and the Custodians
pursuant to this Indenture have been paid, release any remaining portion of the Collateral that secured the Notes from the lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this Indenture pursuant to this subsection (b) only upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel and (if required by the
TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 13.1 hereof. 

 
 64 

  
 ARTICLE IX 
  
 ADMINISTRATION OF TRUST FUND 
  
 SECTION
9.1    Collection Accounts; Distribution Account. 
  
 (a)    On or
prior to the Closing Date, the Master Servicer shall have caused the Servicers to establish and maintain one or more Collection Accounts, which shall be Eligible Accounts into which all Scheduled Payments and unscheduled payments with respect to the
Mortgage Loans, net of any deductions or reimbursements permitted under the related Servicing Agreement, shall be deposited. On each Remittance Date, the Servicers shall remit to the Indenture Trustee for deposit into the Distribution Account, all
amounts so required to be deposited into such account in accordance with the terms of the related Servicing Agreement. 
  
 (b)    The Indenture Trustee shall establish and maintain an Eligible Account entitled “Distribution Account
of                             , as Indenture Trustee for the benefit of the Holders of the E*TRADE
MBSC Trust 200_ -                 , Mortgage-Backed Notes, Series 200_
-                .” The Indenture Trustee shall, promptly upon receipt from the Servicers on each Remittance Date, deposit into the Distribution Account and
retain on deposit until the related Distribution Date the following amounts: 
  
 (i)    the aggregate of collections with respect to the Mortgage Loans remitted by the Servicers from the related Collection Accounts and the amount of any Monthly Advances, Servicing Advances or Compensating
Interest Payments with respect to the Mortgage Loans; 
  
 (ii)    any amounts
required to be deposited by the Master Servicer with respect to the Mortgage Loans for the related Due Period pursuant to this Agreement, including the amount of any Monthly Advances, Servicing Advances or Compensating Interest Payments with respect
to the Mortgage Loans not paid by the Servicers; and 
  
 (iii)    any other
amounts so required to be deposited in the Distribution Account in the related Due Period pursuant to this Agreement. 
  
 (c)    In the event the Master Servicer or a Servicer has remitted in error to the Distribution Account any amount not required to be remitted in accordance with the definition of Available Distribution Amount, it
may at any time direct the Indenture Trustee to withdraw such amount from the Distribution Account for repayment to the Master Servicer or the related Servicer, as applicable, by delivery of an Officer’s Certificate to Indenture Trustee which
describes the amount deposited in error. 
  
 (d)    On each Distribution Date, the Indenture
Trustee shall distribute the Available Distribution Amount to the Noteholders and any other parties entitled thereto. The Indenture Trustee may from time to time withdraw from the Distribution Account and pay the Master Servicer, the Indenture
Trustee, the Securities Administrator or any Servicer any amounts permitted to be paid or reimbursed to such Person from funds in the Distribution Account pursuant to the clauses (A) through (D) of the definition of Available Distribution Amount.

 
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 (e)    Funds in the Distribution Account may be invested in
Permitted Investments selected by and at the written direction of the Master Servicer, which shall mature not later than one Business Day prior to the Distribution Date (except that if such Permitted Investment is an obligation of the Master
Servicer, then such Permitted Investment shall mature not later than such applicable Distribution Date) and any such Permitted Investment shall not be sold or disposed of prior to its maturity. All such Permitted Investments shall be made in the
name of the Indenture Trustee (in its capacity as such) or its nominee. All income and gain realized from any Permitted Investment shall be for the benefit of the Master Servicer and shall be subject to its withdrawal or order from time to time, and
shall not be part of the Trust Fund. The amount of any losses incurred in respect of any such investments shall be deposited in such Distribution Account by the Master Servicer out of its own funds, without any right of reimbursement therefor,
immediately as realized. 
  
 SECTION 9.2    Permitted Withdrawals from the Distribution
Account.    The Indenture Trustee shall withdraw funds from the Distribution Account for distributions to Noteholders in the manner specified in this Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to withhold hereunder. In addition, the Indenture Trustee may from time to time make withdrawals from the Distribution Account for the following purposes: 
  
 (i)    to pay to itself the Indenture Trustee Fee for the related Distribution Date; 
  
 (ii)    to pay the Master Servicer the Master Servicing Fee for the related Distribution Date;

  
 (iii)    to withdraw and return to the related Servicer any amount deposited
in the Distribution Account and not required to be deposited therein; and 
  
 (iv)    to clear and terminate the Distribution Account upon termination of this Indenture. 
  
 SECTION 9.3    Advances by Master Servicer.    If any Servicer fails to remit any Advance required to be made under the applicable Servicing Agreement, the Master Servicer shall itself
make, or shall cause the successor Servicer to make, such Advance. If the Master Servicer determines that an Advance is required, it shall on the Business Day preceding the Distribution Date immediately following such Determination Date, remit to
the Securities Administrator from its own funds (or funds advanced by the applicable Servicer) for deposit in the Distribution Account immediately available funds in an amount equal to such Advance. The Master Servicer and each Servicer shall be
entitled to be reimbursed for all Advances made by it. Notwithstanding anything to the contrary herein, in the event the Master Servicer determines in its reasonable judgment that an Advance is a Non-recoverable Advance, the Master Servicer shall be
under no obligation to make such Advance. If the Master Servicer determines that an Advance is a Non-recoverable Advance, it shall, on or prior to the related Distribution Date, deliver an Officer’s Certificate to the Indenture Trustee to such
effect; provided, that, with respect to any Mortgage Loan for which the related Servicer provided an Officer Certificate that any Advance would constitute a Non-recoverable Advance, such Officer’s Certificate shall fulfill the Master
Servicer’s obligations under this Section 9.3. 

 
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 SECTION 9.4    Compensating Interest
Payments.    The amount of the aggregate Master Servicing Fees payable to the Master Servicer in respect of any Distribution Date shall be reduced (but not below zero) by the amount of any Compensating Interest Payment for
such Distribution Date, but only to the extent that Prepayment Interest Shortfalls relating to such Distribution Date are required to be paid but not actually paid by the Servicers. Such amount shall not be treated as an Advance and shall not be
reimbursable to the Master Servicer. 
  
 SECTION 9.5    Pre-Funding Account. 

 
 (a)    The Indenture Trustee shall establish and maintain an Eligible Account, to be held in trust for the
benefit of Noteholders, entitled “Pre-Funding Account of [Ÿ], as Indenture Trustee, for the benefit of Holders of the
E*TRADE MBSC Trust 200_-_ Mortgage-Backed Notes.” On the Closing Date, the Depositor will cause to be deposited to the Pre-Funding Account the Pre-Funded Amount. 
  
 (b)    Amounts on deposit in the Pre-Funding Account (exclusive of investment earnings thereon) shall solely be applied to acquire Subsequent Mortgage
Loans. 
  
 (c)    On any Subsequent Sale Date, the Depositor shall instruct the Indenture
Trustee, in writing, to withdraw funds (exclusive of investment earnings) from the Pre-Funding Account (specifying the applicable sub-account, if applicable) in an amount equal to the price for the Subsequent Mortgage Loans to be acquired on such
Subsequent Sale Date, and to pay such amount to the order of the Depositor. In no event shall the Indenture Trustee withdraw from the Pre-Funding Account an amount in excess of the Pre-Funded Amount (or portion thereof) deposited to such Account on
the Closing Date. 
  
 (d)    During the Pre-Funding Period, amounts on deposit in the Pre-Funding
Account may be invested in Permitted Investments by the Indenture Trustee at the direction of the Depositor, or in absence of direction from the Depositor, in money market funds described in paragraph (viii) of the definition of Permitted
Investments in Article I. All such Permitted Investments shall be made in the name of the Indenture Trustee (in it capacity as such) or its nominee. Any investment earnings on such Permitted Investments held in the Pre-Funding Account shall be
immediately transferred to the Distribution Account and constitute part of the Available Distribution Amount for distribution to the related Noteholders on the next succeeding Distribution Date. 
  

(e)    On the last day of the Pre-Funding Period, the Indenture Trustee shall transfer any remaining Pre-Funded Amount on deposit in the
Pre-Funding Account (or sub-account thereof, if applicable) to the Distribution Account, which will be held uninvested, and will be included in the Available Distribution Amount for distribution to the Notes as an additional prepayment of principal
on the immediately following Distribution Date and terminate such Account. 
  
 (f)    The
Indenture Trustee, on behalf of the Trust, shall be the legal owner of the Pre-Funding Account. All amounts earned on deposits in the Pre-Funding Account shall be taxable
to                     . The Indenture Trustee shall release
to                       all investment earnings in the Pre-Funding Account on the Business Day immediately following the end of the
Pre-Funding Period. 

 
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 (g)    On the Subsequent Sales Date, each Subsequent Mortgage
Loan must meet the following conditions: (i) the remaining term to maturity of each Subsequent Mortgage Loan may not exceed 30 years; (ii) the addition of the Subsequent Mortgage Loans will not result in the reduction, qualification or withdrawal of
the then current ratings of the Notes; (iii) no Subsequent Mortgage Loan may have a Loan-to-Value Ratio greater than 100%; (iv) each Subsequent Mortgage Loan will be underwritten in accordance with the underwriting guidelines used for the original
Mortgage Loans; (v) the acquisition of the Subsequent Mortgage Loans will not lower the weighed average annual percentage rate of all of the Mortgage Loans held by the Trust Fund by 100 basis points or more. 
  
 SECTION 9.6    Financial Assets Custodial Account. 
  
 (a)    The Indenture Trustee, shall establish and maintain an Eligible Account, to be held in trust for the benefit of Noteholders, entitled
“Financial Assets Custodial Account of [Ÿ], as Indenture Trustee, for the benefit of the Holders of the E*TRADE MBSC Trust
200_-_ Mortgage-Backed Notes.” On the Closing Date, the Depositor shall cause to be deposited in the Financial Assets Custodial Account the those Financial Assets identified on Schedule II. 
  
 (b)    The Financial Asset Custodial Account is a “securities account” (within the meaning of Section
8-501(a) of the UCC) in respect of which the Indenture Trustee is a “securities intermediary” (within the meaning of Section 8-102(a)(14) of the UCC) and the Indenture Trustee is the “entitlement holder” (within the meaning of
Section 8-102(a)(7) of the UCC). 
  
 (c)    The Indenture Trustee hereby agrees that each item of
property (whether cash, a security, an instrument or any other property whatsoever) credited to any of the Accounts shall be treated as a “financial asset” under Article 8 of the UCC. All securities and other financial assets credited to
the Financial Asset Custodial Account that are in registered form or that are payable to or to order shall be (i) registered in the name of, or payable to or to the order of, the Indenture Trustee, (ii) endorsed to or to the order of the Indenture
Trustee or in blank or (iii) credited to another securities account maintained in the name of the Indenture Trustee. 
  
 (d)    The Indenture Trustee agrees that its “securities intermediary’s jurisdiction” (within the meaning of Section 8-110(e) of the UCC) with respect to the Accounts is the State of [Ÿ]. 
  
 (e)    Any distributions received in respect of the Financial Assets during the related Due Period shall be remitted to the Distribution Account on or prior to the related Distribution Date for Distribution.

  
 SECTION 9.7    Calculation of LIBOR. 
  
 (a)    For each LIBOR Determination Date, the Indenture Trustee will determine the arithmetic mean of the London
Interbank Offered Rate quotations for one-month Eurodollar deposits (“LIBOR”) for the succeeding Accrual Period on the basis of the Reference Banks’ offered LIBOR quotations provided to the Indenture Trustee as of 11:00 a.m.
(London time) for such LIBOR Determination Date. As used herein with respect to a LIBOR Determination Date, 

 
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 “Reference Banks” means leading banks engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business in London, (ii) whose quotations appear on the Designated Telerate Page for the LIBOR Determination Date in question and (iii) which have been designated as such by the
Servicer and are able and willing to provide such quotations to the Servicer for each LIBOR Determination Date. “Designated Telerate Page” means the [BBA Page][the Bloomberg Screen US0001 Index Page]. [“BBA Page”
means the interest settlement rates set by the British Bankers’ Association as currently displayed on the Dow Jones Telerate Service page 3750.] [“Bloomberg Screen US0001M Index Page” means the display designated as page
US0001M on the Bloomberg Financial Markets Commodities News (or such other pages as may replace such page on that service for the purpose of displaying LIBOR quotations of major banks)]. If any Reference Bank should be removed from the Telerate Page
or in any other way fails to meet the qualifications of a Reference Bank, the Indenture Trustee may, in its sole discretion, designate an alternative Reference Bank. 
  
 (b)    For each LIBOR Determination Date, LIBOR for the next succeeding Accrual Period will be established by the Indenture Trustee as follows:

  
 (i)    If, for any LIBOR Determination Date, two or more of the Reference
Banks provide offered LIBOR quotations on the Telerate Page, LIBOR for the next Accrual Period will be the arithmetic mean of such offered quotations (rounding such arithmetic mean if necessary to the nearest five decimal places). 

 
 (ii)    If, for any LIBOR Determination Date, only one or none of the Reference Banks
provides such offered LIBOR quotations for the next applicable Accrual Period, LIBOR for the next Accrual Period will be the higher of (x) LIBOR as determined for the previous LIBOR Determination Date and (y) the Reserve Interest Rate. The
“Reserve Interest Rate” will be the rate per annum that the Indenture Trustee determines to be either (A) the arithmetic mean (rounding such arithmetic mean if necessary to the nearest five decimal places) of the one-month
Eurodollar lending rate that New York City banks selected by the Indenture Trustee are quoting, on the relevant LIBOR Determination Date, to the principal London offices of at least two leading banks in the London Interbank market or (B) in the
event that the Indenture Trustee can determine no such arithmetic mean, the lowest one-month Eurodollar lending rate that the New York City banks selected by the Indenture Trustee are quoting on such LIBOR Determination Date to leading European
banks. 
  
 (iii)    If, for any LIBOR Determination Date, the Indenture Trustee
is required but is unable to determine the Reserve Interest Rate in the manner provided in paragraph (ii) above, LIBOR for the next applicable Accrual Period will be LIBOR as determined for the previous LIBOR Determination Date. 

 
 (c)    Notwithstanding the foregoing, LIBOR for an Accrual Period shall not be based on LIBOR for the
previous Accrual Period for two consecutive LIBOR Determination Dates. If, under the priorities described above, LIBOR for an Accrual Period would be based on LIBOR for the previous LIBOR Determination Date for the second consecutive LIBOR
Determination Date, the Indenture Trustee shall select an alternative index (over which the Indenture Trustee 

 
 69 

 has no control) used for determining one-month Eurodollar lending rates that is calculated and published (or otherwise made available) by an
independent third party. 
  
 (d)    The establishment of LIBOR (or an alternative index) by the
Indenture Trustee for the relevant Accrual Period, in the absence of manifest error, will be final and binding. 
  
 SECTION 9.8    Monthly Statements to Noteholders. 
  
 (a)    Not later than each Distribution Date, the Indenture Trustee shall prepare and make available to each Noteholder, the Master Servicer, the Depositor and each Rating Agency a statement setting forth with
respect to the related distribution: 
  
 (i)    the amount thereof allocable to
principal, separately identifying the aggregate amount of any Principal Prepayments and Liquidation Proceeds included therein; 
  
 (ii)    the amount thereof allocable to interest, any accrued and unpaid Interest Distribution Shortfall Amounts included in such distribution and any remaining unpaid Interest
Distribution Shortfall Amount after giving effect to such distribution; 
  
 (iii)    if the distribution to the Holders of such Notes is less than the full amount that would be distributable to such Holders if there were sufficient funds available therefor, the amount of the shortfall and
the allocation thereof as between principal and interest; 
  
 (iv)    the Note
Principal Amount after giving effect to the distribution of principal on such Distribution Date; 
  
 (v)    the Pool Scheduled Principal Balance for the following Distribution Date; 
  
 (vi)    the amount of the Servicing Fees paid to or retained by each Servicer with respect to such Distribution Date, and the amount of Master Servicing Fees paid to or retained by the Master Servicer
with respect to such Distribution Date; 
  
 (vii)    the amount of Monthly
Advances included in the distribution on such Distribution Date and the aggregate amount of Monthly Advances outstanding as of the close of business on such Distribution Date; 
  
 (viii)    the number and aggregate principal amounts of Mortgage Loans (A) delinquent (exclusive of Mortgage Loans in foreclosure) (1) 1
to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days and (B) in foreclosure and delinquent (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days, as of the close of business on the last day of the calendar
month preceding such Distribution Date; 
  
 (ix)    with respect to any Mortgage
Loan that became an REO Property during the preceding calendar month, the loan number and Scheduled Principal Balance of such Mortgage Loan as of the close of business on the Determination Date preceding such Distribution Date and the date of
acquisition thereof; 

 
 70 

  
 (x)    the total number and principal balance
of any REO Properties (and market value, if available) as of the close of business on the Determination Date preceding such Distribution Date; 
  
 (xi)    the aggregate amount of Realized Losses incurred during the preceding calendar month; 
  
 (xii)    the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage Amount and the Bankruptcy Loss Coverage Amount, in each case
as of the related Determination Date; and 
  
 (xiii)    the Pre-Funded Amount, if
any, in the Pre-Funding Account on the related Distribution Date, the amount of funds, if any, used to purchase Subsequent Mortgage Loans during the Pre-Funding Period and the amount of funds, if any, allocated as a prepayment of principal at the
end of the Pre-Funding Period. 
  
 The Indenture Trustee may make the above information available to Noteholders via
the Indenture Trustee’s website at [Ÿ]. 
  
 (b)    The Indenture Trustee’s responsibility for disseminating the above information to the Noteholders is limited to the availability, timeliness
and accuracy of the information provided by the Servicers and/or the Master Servicer. 
  
 (c)    Within a reasonable period of time after the end of each calendar year, the Indenture Trustee shall cause to be furnished to each Person who at any time during the calendar year was a Noteholder, a
statement containing the information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this Section 9.8 aggregated for such calendar year or applicable portion thereof during which such Person was a Noteholder. Such obligation of the
Indenture Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Indenture Trustee pursuant to any requirements of the Code as from time to time in effect. 

 
 SECTION 9.9    Reports to the Securities and Exchange Commission. 
  
 (a)    Within 15 days after each Distribution Date, the Master Servicer shall, in accordance with industry standards,
file with the Commission via the Electronic Data Gathering and Retrieval System (“EDGAR”), a Form 8-K with a copy of the statement to be furnished by the Securities Administrator to the Noteholders for such Distribution Date as an
exhibit thereto. Prior to [Ÿ], the Master Servicer shall, in accordance with industry standards, file a Form 15 Suspension
Notice with respect to the Trust Fund, if applicable. Prior to [Ÿ] and annually thereafter (if required), the Master Servicer
shall file a Form 10-K, in substance conforming to industry standards, with respect to the Trust Fund. Such Form 10-K shall include, to the extent available, as exhibits (i) each applicable Servicer’s annual statement of compliance described
under the related Servicing Agreement, (ii) each applicable Servicer’s accountants report described under the related Servicing Agreement, (iii) the Master Servicer’s accountant’s report described in Section 12.15, if
applicable, in each case to the extent timely delivered, if applicable, to the Master Servicer, and (iv) a written certification signed by an officer of the 

 
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 Master Servicer that complies with the Sarbanes-Oxley Act of 2002 as in effect on the date of this
Agreement and the August 27, 2002, Statement by the Staff of the Division of Corporation Finance of the Commission Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and 15d-14 as in effect as of the date of this Agreement.
If items (i) and (ii) in the preceding sentence are not timely delivered, the Master Servicer shall file an amended Form 10-K including such documents as exhibits reasonably promptly after they are delivered to the Master Servicer. The Indenture
Trustee hereby grants to the Master Servicer a limited power of attorney to execute and file each Form 8-K and Form 10-K on behalf of the Trust Fund. Such power of attorney shall continue until either the earlier of (i) receipt by the Master
Servicer from the Depositor of written termination of such power of attorney and (ii) the termination of the Trust Fund. The Depositor and the Indenture Trustee each agree to promptly furnish to the Master Servicer, from time to time upon request,
such further information, reports and financial statements within its control related to this Agreement and the Mortgage Loans as the Master Servicer reasonably deems appropriate to prepare and file all necessary reports with the Commission. The
Master Servicer will cooperate with the Depositor in connection with any additional filings with respect to the Trust Fund as the Depositor deems necessary under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Copies of all reports filed by the Master Servicer under the Exchange Act shall be sent to the Depositor. 
  
 (b)    The Master Servicer shall indemnify and hold harmless the Depositor, the Indenture Trustee and their respective officers, directors and Affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and expenses arising out of or based upon a breach of the Master Servicer’s obligations under this Section 9.9 or the Master Servicer’s
negligence, bad faith or willful misconduct in connection therewith. Fees and expenses incurred by the Master Servicer in connection with this Section 9.9 shall not be reimbursable from the Trust Fund. 
  
 SECTION 9.10    Discovery of Breach; Repurchase and Substitution of Mortgage Loans. 
  
 (a)    Pursuant to Section 3.01(h) of the Sale Agreement, the Seller has made certain representations and warranties
as to the characteristics of the Mortgage Loans as of the Closing Date and the conveyance thereof to Owner Trustee, for the benefit of the Owner Trustee, Indenture Trustee and the Noteholders and the Seller has agreed under the terms of the Sale
Agreement to comply with the provisions of this Section SECTION 9.10(a) in respect of a breach of any of such representations and warranties. 
  
 It is understood and agreed that such representations and warranties set forth in Section 3.01(h) of the Sale Agreement shall survive delivery of the Mortgage Files and the Assignment of Mortgage of
each Mortgage Loan to the Owner Trustee and shall continue throughout the term of this Agreement. Upon discovery by the Depositor or receipt of written notice of any materially defective document in, or, following the date of delivery to the
Indenture Trustee of a Final Certification, that a document is missing from, a Mortgage File, or discovery by the Depositor or the Seller of the breach by the Seller of any representation or warranty under the Sale Agreement in respect of any
Mortgage Loan which materially adversely affects the value of that Mortgage Loan or the interest therein of the Noteholders (a “Defective Mortgage Loan”) (each of such parties hereby agreeing to give written notice thereof to the
Indenture 

 
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 Trustee and the other of such parties), the Indenture Trustee, or its designee, shall promptly notify
the Depositor in writing of such defective or missing document or breach and request that the Depositor deliver such missing document or cure or cause the cure of such defect or breach within 90 days from the date that the Depositor discovered or
was notified of such missing document, defect or breach, and if the Depositor does not deliver such missing document or cure such defect or breach in all material respects during such period, the Indenture Trustee shall enforce the Seller’s
obligation under the Sale Agreement and cause the Seller to repurchase that Mortgage Loan from the Trust Fund at the Purchase Price on or prior to the Determination Date following the expiration of such 90-day period; provided, however, that,
in connection with any such breach that could not reasonably have been cured within such 90-day period, if the Seller shall have commenced to cure such breach within such 90-day period, the Seller shall be permitted to proceed thereafter diligently
and expeditiously to cure the same within an additional 90-day period. The Purchase Price for the repurchased Mortgage Loan shall be deposited in the Distribution Account, and the Indenture Trustee, or its designee, upon receipt of written
certification from the Securities Administrator of such deposit, shall release to the Seller the related Mortgage File and shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or
warranties, as either party shall furnish to it and as shall be necessary to vest in such party any Mortgage Loan released pursuant hereto and the Indenture Trustee, or its designee, shall have no further responsibility with regard to such Mortgage
File (it being understood that the Trustee shall have no responsibility for determining the sufficiency of such assignment for its intended purpose). 
  
 In lieu of [repurchasing any such Mortgage Loan as provided above, either party may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a “Deleted Mortgage
Loan”) and substitute one or more Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 9.10(b) below. If the Seller is not a member of MERS at the time when it repurchases a Mortgage Loan and the
Mortgage is registered on the MERS® System, the Seller, at its own expense and without any right of
reimbursement, shall cause MERS to execute and deliver an assignment of the Mortgage in recordable form to transfer the Mortgage from MERS to the Seller and shall cause such Mortgage to be removed from registration on the MERS® System in accordance with MERS’s rules and regulations. It is understood and agreed that the obligation of
the Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole
remedy against the such party respecting such omission, defect or breach available to the Indenture Trustee on behalf of the Noteholders. 
  
 (b)    Any substitution of Substitute Mortgage Loans for Deleted Mortgage Loans made pursuant to Section 9.10(a) above must be effected prior to the last Business Day that is within two years after the
Closing Date. As to any Deleted Mortgage Loan for which the Seller substitutes a Substitute Mortgage Loan or Loans, such substitution shall be effected by delivering to the Indenture Trustee, for such Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Owner Trustee, and such other documents and agreements, with all necessary endorsements thereon, together with an Officers’ Certificate stating that each such Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Adjustment Amount (as described below), if any, in connection with such substitution. The Indenture Trustee shall acknowledge receipt for such Substitute Mortgage Loan and, within 45 

 
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 days thereafter, shall review such Mortgage Files and deliver to the Indenture Trustee and the
Depositor, with respect to such Substitute Mortgage Loans, a certification substantially in the form of a revised Initial Certification, with any exceptions noted thereon. Within one year of the date of substitution, the Custodian shall deliver to
the Indenture Trustee and the Depositor a certification substantially in the form of a revised Final Certification, with respect to such Substitute Mortgage Loans, with any exceptions noted thereon. Scheduled Payments due with respect to Substitute
Mortgage Loans in the month of substitution shall not be included as part of the Trust Fund and shall be retained by the Seller. For the month of substitution, distributions to Noteholders shall reflect the collections and recoveries in respect of
such Deleted Mortgage Loan in the Due Period preceding the month of substitution and the Seller shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Mortgage Loan. Upon such substitution, such
Substitute Mortgage Loan shall constitute part of the Trust Fund and shall be subject in all respects to the terms of this Agreement and the Sale Agreement, including all representations and warranties thereof included in the Sale Agreement, in each
case as of the date of substitution. 
  
 For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the related Servicer shall determine the excess (each, a “Substitution Adjustment Amount”), if any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate Scheduled Principal Balance of the Substitute Mortgage Loans replacing such Deleted Mortgage Loans, together with one month’s interest on such excess amount at the applicable Net Mortgage Rate. On the date of such
substitution, the Seller shall deliver or cause to be delivered to the Servicer for deposit in the related Collection Account an amount equal to the related Substitution Adjustment Amount, if any, and the Indenture Trustee, upon receipt of the
related Substitute Mortgage Loan or Loans and certification by the related Servicer of such deposit, shall release to the Seller the related Mortgage File or Files and shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Seller shall deliver to it and as shall be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto. 
  
 ARTICLE X 
  
 SUPPLEMENTAL INDENTURES 
  
 SECTION 10.1    Supplemental Indentures Without Consent of Noteholders. 
  
 (a)    Without the consent of the Holders of any Notes but with prior written notice to the Rating Agencies and with
the prior written consent of the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes: 
  
 (i)    to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property; 

 
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 (ii)    to evidence the succession, in
compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Notes contained; 
  
 (iii)    to add to the covenants of the Issuer, for the benefit of the Holders of the Notes or to surrender any right or power herein
conferred upon the Issuer; 
  
 (iv)    to (A) cure any ambiguity, (B) correct or
supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provisions herein or in any supplemental indenture or to conform the provisions hereof to those of any Offering Document, (C) obtain a rating
for the Notes from a nationally recognized statistical rating organization, or (D) make any other provisions with respect to matters or questions arising under this Indenture; provided, however, that no such supplemental indenture entered
into pursuant to clause (D) of this subparagraph (iv) shall adversely affect in any material respect the interests of any Holder not consenting thereto; 
  
 (v)    to evidence and provide for the acceptance of the appointment hereunder of a successor Indenture Trustee with respect to the
Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one Indenture Trustee, pursuant to the requirements of Article VI; or 

 
 (vi)    to modify, eliminate or add to the provisions of this Indenture to such extent as
shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA. 

 
 provided, however, that no such supplemental indenture shall be entered into unless the Indenture Trustee shall have received an Opinion of
Counsel stating that entering into such supplemental indenture will not (A) result in a “substantial modification” of the Notes under Treasury Regulation Section 1.1001.3 or adversely affect the status of the Notes as indebtedness for
federal income tax purposes or (B) cause the Trust to be subject to an entity level tax. 
  
 The Indenture Trustee is
hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained. 
  
 (b)    The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any Noteholder and prior notice to the
Rating Agencies, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the
Noteholders under this Indenture; provided, however, that such action shall not, as evidenced by either (i) an Opinion of Counsel or (ii) satisfaction of the Rating Agency Condition, adversely affect in any material respect the
interests of any Noteholder. 
  
 SECTION 10.2    Supplemental Indentures with Consent of
Noteholders.    The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with the prior consent of the Rating Agencies and with the consent of Holders of not less than 66- 2/3% of the 

 
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 Outstanding Amount of Notes, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby: 
  
 (a)    change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the interest rate thereon, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the Collateral to payment of principal of or interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is
payable, or impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date); 
  
 (b)    reduce the percentage of the Outstanding Amount of the Notes, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; 
  
 (c)    modify or alter the provisions of the proviso to the definition of the term “Outstanding”; 
  
 (d)    reduce the percentage of the Outstanding Amount of the Notes required to direct the Indenture Trustee to direct the Issuer to sell or liquidate
the Collateral pursuant to Section 5.4; 
  
 (e)    modify any provision of this Section
except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the Operative Agreements cannot be modified or waived without the consent of the Holder of each Outstanding Note affected
thereby; 
  
 (f)    modify any of the provisions of this Indenture in such manner as to affect
the calculation of the amount of any payment of interest or principal due on any Note on any Distribution Date; or 
  
 (g)    permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Collateral or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Note of the security provided by the lien of this Indenture. 
  
 The Indenture Trustee may rely on an Opinion of Counsel (at the expense of the party requesting the supplemental indenture) regarding whether or not any Notes would be affected by any supplemental
indenture and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereunder. 

 
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 In connection with requesting the consent of the Noteholders pursuant to this
Section, the Issuer shall mail to the Holders of the Notes to which such amendment or supplemental indenture relates and to the Owner Trustee a notice setting forth in general terms the substance of such supplemental indenture. It shall not be
necessary for any Act of Noteholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 
  
 SECTION 10.3    Execution of Supplemental Indentures.    In executing, or permitting the
additional trusts created by, any supplemental indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02,
shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise. 
  
 SECTION 10.4    Effect of Supplemental Indenture.    Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 
  
 SECTION 10.5    Conformity with Trust Indenture Act.    Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the
requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act. 
  
 SECTION 10.6    Reference in Notes to Supplemental Indentures.    Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX
may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes.

  
 SECTION 10.7    Amendments to Trust Agreement.    The Indenture
Trustee shall, upon Issuer Order, consent to any proposed amendment to the Trust Agreement or an amendment to or waiver of any provision of any other document relating to the Trust Agreement, such consent to be given without the necessity of
obtaining the consent of the Holders of any Notes upon satisfaction of the requirements under Section 11.1 of the Trust Agreement. 

 
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 Nothing in this Section shall be construed to require that any Person obtain the
consent of the Indenture Trustee to any amendment or waiver or any provision of any document where the making of such amendment or the giving of such waiver without obtaining the consent of the Indenture Trustee is not prohibited by this Indenture
or by the terms of the document that is the subject of the proposed amendment or waiver. 
  
 ARTICLE XI 

 
 DISPOSITION OF THE COLLATERAL; REDEMPTION OF THE NOTES 
  
 SECTION 11.1    Redemption of the Notes. 
  
 (a)    All the Notes may be redeemed in whole, but not in part, on the Redemption Date at the Redemption Price at the option of the holders of a majority of the percentage interests
of the Certificates provided, however, that funds in an amount equal to the Redemption Price, any unreimbursed Servicing Advances and any unreimbursed amounts due and owing to the Indenture Trustee hereunder, must have been deposited with the
Indenture Trustee prior to the Indenture Trustee’s giving notice of such redemption pursuant to Section 11.2 or the Issuer shall have complied with the requirements for satisfaction and discharge of the Notes specified in Section 4.1.
Notice of the election to redeem the Notes shall be furnished to the Indenture Trustee and each Noteholder not later than thirty (30) days prior to the Distribution Date selected for such redemption, whereupon all such Notes shall be due and payable
on such Distribution Date upon the furnishing of a notice pursuant to Section 11.2 to each Holder of such Notes and the Note Issuer. 
  
 (b)    Upon receipt of the notice from the party exercising its election to redeem the Notes pursuant to Section 11.1(a), the Indenture Trustee shall prepare and deliver to the
Issuer, no later than the related Redemption Date, a Distribution Date Statement stating therein that it has determined that the conditions to redemption at the option of the Issuer have been satisfied and setting forth the amount, if any, to be
withdrawn from the Distribution Account and paid to the Servicer as reimbursement for Servicing Advances and such other information as may be required to accomplish such redemption. 
  
 (c)    The Notes may be redeemed in whole, but not in part, on a Distribution Date specified by the Issuer at any time upon a determination by the
Issuer, based on an Opinion of Counsel addressed to the Issuer, the Indenture Trustee and the Noteholders, that a substantial risk exists that the Notes will not be treated for federal income tax purposes as evidence of indebtedenss. 

 
 SECTION 11.2    Form of Redemption Notice.    Notice of redemption under Section
11.1 hereof shall be given by the Indenture Trustee by first-class mail, postage prepaid, or by facsimile mailed or transmitted not later than 10 days prior to the applicable Redemption Date to each Holder of the Notes to be redeemed, as of
the close of business on the Record Date preceding the applicable Redemption Date, at such Holder’s address or facsimile number appearing in the Note Register. 

 
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 All notices of redemption shall state: 
  
 (a)    the Redemption Date; 
  
 (b)    the Redemption Price; 
  
 (c)    that on a Redemption Date, if the Notes are not to be paid in full, (i) the Redemption Price will become due and payable only with respect to the Notes as shall be specified in such notice and that the
amount payable in respect of the redeemed Notes shall be limited to the Redemption Price therefor and (ii) that interest thereon shall cease to accrue on the date specified on the notice for, and that payment of the Redemption Price will be made to,
the Persons whose names appear as the registered holders thereof on the Note Register as of the Record Date applicable to such Redemption Date and identified in such notice of redemption; 
  
 (d)    that on a Redemption Date, if the Notes are to be paid in full, (i) the fact of such payment in full and that interest thereon shall cease to
accrue on the date specified on the notice and (ii) that the payment of all other amounts described in Section 7.01(a)(ii) of the Servicing Agreement will be made; and 
  
 (e)    the place where such Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.02 hereof). 
  
 Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of [Ÿ]. Failure to give to any Holder of any Note notice of redemption, or
any defect therein, shall not impair or affect the validity of the redemption of any other Note. 
  
 SECTION
11.3    Notes Payable on Redemption Date.    Notes to be redeemed shall, following notice of redemption as required by Section 11.2 hereof (in the case of redemption pursuant to Section
11.1) hereof, on the applicable Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall default in the payment of the Redemption Price) no interest shall accrue thereon for any period after the date to
which accrued interest is calculated for purposes of calculating the Redemption Price. The Issuer may not redeem the Notes unless (i) all outstanding obligations under the Notes have been paid in full and (ii) the Indenture Trustee has been paid all
amounts to which it is entitled hereunder. 
  
 ARTICLE XII 
  
 ADMINISTRATION AND SERVICING 
 OF MORTGAGE LOANS BY THE MASTER SERVICER

  
 SECTION 12.1    Duties of the Master Servicer; Enforcement of Servicers’
Obligations. 
  
 (a)    The Master Servicer, on behalf of the Indenture Trustee, the
Depositor and the Noteholders shall monitor the performance of each Servicer, and shall use its reasonable good faith efforts to cause each Servicer to duly and punctually perform all of its duties and 

 
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 obligations in accordance with the terms of the applicable Servicing Agreement (including the obligation of each Servicer to maintain an errors
and omissions policy and Fidelity Bond). Upon the occurrence of an “Event of Default” (as defined in the applicable Servicing Agreement) of which an Authorized Officer of the Master Servicer has actual knowledge, the Master Servicer shall
promptly notify the Indenture Trustee thereof, and shall specify in such notice the action, if any, the Master Servicer is taking in respect of such default. So long as any such default shall be continuing, the Master Servicer may, and shall if it
determines such action to be in the best interests of Noteholders, (i) terminate all of the rights and powers of such Servicer as provided in the applicable Servicing Agreement; (ii) exercise any rights it may have to enforce the Servicing Agreement
against such Servicer; and/or (iii) waive any such default or take any other action with respect to such default as is permitted thereunder. 
  
 (b)    Upon any termination by the Master Servicer of a Servicer’s rights and powers pursuant to the Servicing Agreement, subject to Section 12.11 the Master Servicer shall
either (i) with the consent of the Indenture Trustee and the Rating Agencies, such consent not to be unreasonably withheld, and in accordance with the applicable provisions of the Servicing Agreement, appoint a successor servicer under the related
Servicing Agreement or (ii) assume the obligations of the terminated Servicer under the related Servicing Agreement; provided, however, that it is understood and agreed by the parties hereto that there will be a period of transition (not to
exceed 90 days) before the actual servicing functions can be fully transferred to a successor servicer (including the Master Servicer). In connection with the appointment of any successor servicer, the Master Servicer may make such arrangements for
the compensation of such successor as it and such successor shall agree, but in no event shall such compensation of any successor servicer (including the Master Servicer) be in excess of that payable to the nominated Servicer. 

 
 (c)    The Master Servicer shall pay the costs of such enforcement (including the termination of any
Servicer, the appointment of a successor servicer or the transfer and assumption of the servicing by the Master Servicer) at its own expense and shall be reimbursed therefor initially (i) by the terminated Servicer, (ii) from a general recovery
resulting from such enforcement only to the extent, if any, that such recovery exceeds all amounts due in respect of the related Mortgage Loans, (iii) from a specific recovery of costs, expenses or attorney’s fees against the party against whom
such enforcement is directed, or (iv) to the extent that such amounts described in (i)-(iii) above are insufficient to reimburse the Master Servicer for such costs of enforcement, from the Trust Fund, as provided in Section 12.2. 

 
 (d)    If the Master Servicer assumes the servicing with respect to any of the Mortgage Loans, it will not
assume liability for the representations and warranties of any Servicer it replaces or for the errors or omissions of such Servicer. 
  
 (i)    Upon any termination of a Servicer’s rights and powers pursuant to its Servicing Agreement, the Master Servicer shall promptly notify the Indenture Trustee and the
Rating Agencies, specifying in such notice that the Master Servicer or any successor servicer, as the case may be, has succeeded the Servicer, which notice shall also specify the name and address of any such successor servicer. 

 
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 (ii)    Neither the Depositor nor the
Indenture Trustee shall consent to the assignment by any Servicer of such Servicer’s rights and obligations under the related Servicing Agreement without the prior written consent of the Master Servicer, which consent shall not be unreasonably
withheld. 
  
 (e)    The Master Servicer is hereby authorized and empowered by the Indenture
Trustee, on behalf of the Noteholders and the Indenture Trustee, in its own name or in the name of any Servicer, when the Master Servicer or the related Servicer, as the case may be, believes it appropriate in its best judgment to register any
Mortgage Loan on the MERS® System, or cause the removal from the registration of any Mortgage Loan on
the MERS® System, to execute and deliver, on behalf of the Indenture Trustee and the Noteholders of
any of them, any and all instruments of assignment and other comparable instrument with respect to such assignment or re-recording of a Mortgage in the name of MERS, solely as nominee for the Indenture Trustee and its successors and assigns. Any
expenses incurred in connection with the actions described in the preceding sentence shall be borne by the Master Servicer, with no right of reimbursement; provided, that if, as a result of MERS discontinuing or becoming unable to continue
operations in connection with the MERS System, it becomes necessary to remove any Mortgage Loan from registration on the MERS System and to arrange for the assignment of the related Mortgages to the Indenture Trustee, then any related expenses shall
be reimbursable to the Master Servicer. 
  
 SECTION 12.2    Compensation to the Master
Servicer.    The Master Servicer shall be entitled to be paid by the Trust Fund, and may either retain or withdraw from the Distribution Account, (i) its Master Servicing Fee with respect to each Distribution Date, (ii)
amounts necessary to reimburse itself for any previously unreimbursed Monthly Advances, Servicer Advances and Non-recoverable Advances in accordance with the definition of “Available Distribution Amount” and (iii) amounts representing
assumption fees, late payment charges or other ancillary income not included in the definition of “Available Distribution Amount” and which are not required to be remitted by the Servicers to the Indenture Trustee or deposited by the
Indenture Trustee into the Distribution Account. The Master Servicer shall be required to pay all expenses incurred by it in connection with its activities hereunder and shall not be entitled to reimbursement therefor except as provided in this
Agreement. 
  
 SECTION 12.3    Merger or Consolidation.    Any Person
into which the Master Servicer may be merged or consolidated, or any Person resulting from any merger, conversion, other change in form or consolidation to which the Master Servicer shall be a party, or any Person succeeding to the business of the
Master Servicer, shall be the successor to the Master Servicer hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or resulting Person to the Master Servicer shall be a Person that shall be qualified and approved to service mortgage loans for Fannie Mae or Freddie Mac and shall have a net worth of not less than $15,000,000.

  
 SECTION 12.4    Resignation of Master Servicer.    Except as
otherwise provided in Sections 12.3 and 12.5 hereof, the Master Servicer shall not resign from the obligations and duties hereby imposed on it unless the Master Servicer’s duties hereunder are no longer permissible under applicable law or are
in material conflict by reason of applicable law with any other activities carried on by it and cannot be cured. Any such determination permitting the 

 
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 resignation of the Master Servicer shall be evidenced by an Opinion of Counsel that shall be Independent to such effect delivered to the
Indenture Trustee. No such resignation shall become effective until the Indenture Trustee shall have assumed, or a successor master servicer shall have been appointed by the Indenture Trustee and until such successor shall have assumed, the Master
Servicer’s responsibilities and obligations under this Agreement. Notice of such resignation shall be given promptly by the Master Servicer and the Depositor to the Indenture Trustee. 
  
 If, at any time, the Master Servicer resigns under this Section, or transfers or assigns its rights and obligations under Section 12.5, then at such time as [Ÿ] also shall resign (and shall be entitled to resign) as Securities Administrator under this Agreement. In such event, the obligations of
each such party shall be assumed by the Indenture Trustee or such successor master servicer appointed by the Indenture Trustee (subject to the provisions of Section 12.2). 
  
 SECTION 12.    Assignment or Delegation of Duties by the Master Servicer.    Except as expressly provided herein, the Master
Servicer shall not assign or transfer any of its rights, benefits or privileges hereunder to any other Person, or delegate to or subcontract with, or authorize or appoint any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder; provided, however, that the Master Servicer shall have the right with the prior written consent of the Indenture Trustee and the Depositor (which consent shall not be unreasonably withheld), and
upon delivery to the Indenture Trustee and the Depositor of a letter from each Rating Agency to the effect that such action shall not result in a downgrading of the Notes, to delegate or assign to or subcontract with or authorize or appoint any
qualified Person to perform and carry out any duties, covenants or obligations to be performed and carried out by the Master Servicer hereunder. Notice of such permitted assignment shall be given promptly by the Master Servicer to the Depositor and
the Indenture Trustee. If, pursuant to any provision hereof, the duties of the Master Servicer are transferred to a successor master servicer, the entire amount of the Master Servicing Fees and other compensation payable to the Master Servicer
pursuant hereto shall thereafter be payable to such successor Master Servicer. Such successor Master Servicer shall also pay the fees of the Indenture Trustee and the Securities Administrator, as provided herein. 
  
 SECTION 12.6    Limitation on Liability of the Master Servicer.    Neither the Master
Servicer nor any of the directors, officers, employees or agents of the Master Servicer shall be under any liability to the Indenture Trustee or the Noteholders for any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Master Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in its performance of its duties or by reason of reckless disregard for its obligations and duties under this Agreement. The Master Servicer and any director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Master Servicer shall be under no obligation to appear in, prosecute or defend any legal action that is
not incidental to its duties to master service the Mortgage Loans in accordance with this Agreement and that in its opinion may involve it in any expenses or liability; provided, however, that the Master Servicer may in its sole discretion
undertake any such action that it may deem necessary or desirable in respect to this Agreement 

 
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 and the rights and duties of the parties hereto and the interests of the Noteholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Trust Fund and the Master Servicer shall be entitled to be reimbursed therefor out of the Distribution Account. 
  
 The Master Servicer shall not be liable for any acts or omissions of any Servicer except to the extent that damages or expenses are
incurred as a result of such act or omissions and such damages and expenses would not have been incurred but for the negligence, willful misfeasance, bad faith or recklessness of the Master Servicer in supervising, monitoring and overseeing the
obligations of the Servicers in this Agreement. 
  
 SECTION 12.7    Indemnification;
Third-Party Claims.    The Master Servicer agrees to indemnify the Depositor, the Securities Administrator and the Indenture Trustee, and hold them harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, liability, fees and expenses that the Depositor, the Securities Administrator or the Indenture Trustee may sustain as a result of the Master Servicer’s willful misfeasance, bad faith
or negligence in the performance of its duties hereunder or by reason of its reckless disregard for its obligations and duties under this Agreement. The Depositor, the Securities Administrator and the Indenture Trustee shall immediately notify the
Master Servicer if a claim is made by a third party with respect to this Agreement or the Mortgage Loans entitling the Depositor, the Securities Administrator or the Indenture Trustee to indemnification under this Section 12.7, whereupon the
Master Servicer shall assume the defense of any such claim and pay all expenses in connection therewith, including counsel fees, and promptly pay, discharge and satisfy any judgment or decree which may be entered against it or them in respect of
such claim. 
  
 SECTION 12.8    Master Servicer Events of
Default.    “Master Servicer Event of Default,” wherever used herein, means any one of the following events: 
  
 (i)    any failure by the Master Servicer to remit to the Indenture Trustee for distribution to the Noteholders any payment required to be made under the terms of the Notes and this
Agreement which continues unremedied for a period of one Business Day after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to the Master Servicer by the Depositor or the Indenture
Trustee, or to the Master Servicer, the Depositor and the Indenture Trustee by the Holders of Notes entitled to at least 25% of the Voting Rights; or 
  
 (ii)    any failure on the part of the Master Servicer duly to observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this Agreement, which continues unremedied for a period of 30 days after the earlier of (i) the date on which written notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Depositor or the Indenture Trustee, or to the Master Servicer, the Depositor and the Indenture Trustee by the Holders of Notes entitled to at least 25% of the Voting Rights and (ii) actual knowledge of such
failure by a Servicing Officer of the Master Servicer; or 

 
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 (iii)    a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding, or for the winding-up or liquidation of its affairs, shall have been entered against the Master Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of
90 days; or 
  
 (iv)    the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to it or of or relating to all or substantially all of its property; or 

 
 (v)    the Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; or 
  
 (vi)    The Master Servicer shall be dissolved, or shall dispose of all or substantially all of its
assets, or consolidate with or merge into another entity or shall permit another entity to consolidate or merge into it, such that the resulting entity does not meet the criteria for a successor Servicer as specified in Section 12.3 hereof; or

  
 (vii)    If a representation or warranty of the Master Servicer shall prove
to be incorrect as of the time made in any respect that materially and adversely affects the interests of the Noteholders, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been
eliminated or cured within 30 days after the date on which written notice of such incorrect representation or warranty shall have been given to the Master Servicer by the Indenture Trustee or the Securities Administrator, or to the Master Servicer,
the Securities Administrator and the Indenture Trustee by the Holders of Notes entitled to at least 25% of the Voting Rights; or 
  
 (viii)    A sale or pledge of any of the rights of the Master Servicer hereunder or an assignment of this Agreement by the Master Servicer or a delegation of the rights or duties of
the Master Servicer hereunder shall have occurred in any manner not otherwise permitted hereunder and without the prior written consent of the Indenture Trustee and Holders of Notes entitled to at least 25% of the Voting Rights; or 

 
 (ix)    After receipt of notice from the Indenture Trustee, any failure of the Master
Servicer to make any Advances required to be made hereunder. 
  
 If a Master Servicer Event of Default described in
clauses (i) through (ix) of this Section shall occur, then, and in each and every such case, so long as such Master Servicer Event of Default shall not have been remedied, the Depositor or the Indenture Trustee may, and at the written direction of
the Holders of Notes entitled to at least 51% of Voting Rights, the Indenture Trustee shall, by notice in writing to the Master Servicer (and to the Depositor if given by the 

 
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 Indenture Trustee or to the Indenture Trustee if given by the Depositor), terminate all of the rights and obligations of the Master Servicer in
its capacity as Master Servicer under this Agreement, to the extent permitted by law, and in and to the Mortgage Loans and the proceeds thereof. Any such notice to the Master Servicer shall also be given to each Rating Agency and the Depositor. On
or after the receipt by the Master Servicer of such written notice, all authority and power of the Master Servicer under this Agreement, whether with respect to the Notes (other than as a Holder of any Note) or the Mortgage Loans or otherwise, shall
pass to and be vested in the Indenture Trustee (or if another successor Master Servicer shall at such time have already been appointed in accordance with Section 12.9, in such successor Master Servicer) pursuant to and under this Section
(subject to Section 12.9), and, without limitation, the Indenture Trustee (or such other successor Master Servicer appointed in accordance with Section 12.9) is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver, on behalf of and at the expense of the Master Servicer, any and all documents and other instruments and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage Loans and related documents, or otherwise. The Master Servicer agrees promptly (and in any event no later than ten Business Days subsequent to such notice) to provide the
Indenture Trustee (or such other successor Master Servicer appointed in accordance with Section 12.9) with all documents and records in the Master Servicer’s possession requested by the Indenture Trustee (or such other successor Master
Servicer appointed in accordance with Section 12.9) to enable the Indenture Trustee (or such other successor Master Servicer appointed in accordance with Section 12.9) to assume the Master Servicer’s functions under this
Agreement, and to cooperate with the Indenture Trustee (or such other successor Master Servicer appointed in accordance with Section 12.9) in effecting the termination of the Master Servicer’s responsibilities and rights under this
Agreement, including, without limitation, the transfer within one Business Day to the Indenture Trustee (or such other successor Master Servicer appointed in accordance with Section 12.9) for administration by it of all cash amounts which at
the time shall be or should have been credited by the Master Servicer to the Collection Account held by or on behalf of the Master Servicer, or thereafter be received with respect to the Mortgage Loans or any REO Property serviced by the Master
Servicer (provided, however, that the Master Servicer shall continue to be entitled to receive all amounts accrued or owing to it under this Agreement on or prior to the date of such termination, and shall continue to be entitled to the
benefits of Section 12.6, notwithstanding any such termination, with respect to events occurring prior to such termination). For purposes of this Section 12.8, the Indenture Trustee shall not be deemed to have knowledge of a Master
Servicer Event of Default unless a Responsible Officer of the Indenture Trustee assigned to and working in the Indenture Trustee’s Corporate Trust Office has actual knowledge thereof or unless written notice of any event which is in fact such a
Master Servicer Event of Default is received by the Indenture Trustee and such notice references the Notes, the Trust Fund or this Agreement. 
  
 SECTION 12.9    Indenture Trustee to Act; Appointment of Successor. 
  
 (a)    On and after the time the Master Servicer receives a notice of termination, the Indenture Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions set forth or provided for herein, and all the responsibilities, duties and liabilities relating thereto and arising thereafter shall be assumed by the Indenture Trustee (except
for any representations or warranties of the Master 

 
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 Servicer under this Agreement, the responsibilities, duties and liabilities contained in Section 12.1 and the obligation to deposit
amounts in respect of losses pursuant to Section 12.1) by the terms and provisions hereof; provided, however, that any failure to perform such duties or responsibilities during the period following the termination of the Master
Servicer reasonably necessary for the Indenture Trustee as successor to the Master Servicer hereunder to assume the duties and responsibilities of the Master Servicer or caused by the Master Servicer’s failure to provide information, documents
or funds (or any other items reasonably requested by the Indenture Trustee in order to succeed to the Master Servicer’s responsibilities, duties and liabilities hereunder) required by Section 12.8 shall not be considered a default by the
Indenture Trustee as successor to the Master Servicer hereunder and shall not result in any liability to the Indenture Trustee. As compensation therefor, the Indenture Trustee shall be entitled to the Master Servicing Fee and all funds relating to
the Mortgage Loans to which the Master Servicer would have been entitled if it had continued to act hereunder. Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so act or if it is
prohibited by law from making advances regarding delinquent mortgage loans or if the Holders of Notes entitled to at least 51% of the Voting Rights so request in writing to the Indenture Trustee, promptly appoint, or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution acceptable to each Rating Agency and having a net worth of not less than $50,000,000, as the successor to the Master Servicer under this Agreement in the assumption of all
or any part of the responsibilities, duties or liabilities of the Master Servicer under this Agreement. 
  
 The
appointment of a successor Master Servicer shall not affect any liability of the predecessor Master Servicer which may have arisen under this Agreement prior to its termination as Master Servicer to indemnify the Indenture Trustee pursuant to
Section 12.7, nor shall any successor Master Servicer be liable for any acts or omissions of the predecessor Master Servicer or for any breach by such Master Servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Indenture Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. All costs and expenses associated with the transfer of the
master servicing responsibilities shall be paid by the terminated Master Servicer upon presentation of reasonable documentation of such costs. 
  
 (b)    No appointment of a successor to the Master Servicer under this Agreement shall be effective until the assumption by the successor of all of the Master Servicer’s
responsibilities, duties and liabilities hereunder. In connection with such appointment and assumption described herein, the Indenture Trustee may make such arrangements for the compensation of such successor out of payments on Mortgage Loans as it
and such successor shall agree; provided, however, that no such compensation shall be in excess of that permitted the Master Servicer as such hereunder. The Depositor, the Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such succession. Pending appointment of a successor to the Master Servicer under this Agreement, the Indenture Trustee shall act in such capacity as hereinabove provided.

  
 (c)    In connection with the termination or resignation of the Master Servicer hereunder,
either (i) the successor Master Servicer, including the Indenture Trustee if the Indenture Trustee is acting as successor Master Servicer, shall represent and warrant that it is a 

 
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 member of MERS in good standing and shall agree to comply in all material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, in which case the predecessor Master Servicer shall cooperate with the successor Master Servicer in causing MERS to revise its records to reflect the transfer of servicing to the
successor Master Servicer as necessary under MERS’ rules and regulations, or (ii) the predecessor Master Servicer shall cooperate with the successor Master Servicer in causing MERS to execute and deliver an assignment of Mortgage in recordable
form to transfer the Mortgage from MERS to the Indenture Trustee and to execute and deliver such other notices, documents and other instruments as may be necessary or desirable to effect a transfer of such Mortgage Loan or servicing of such Mortgage
Loan on the MERS® System to the successor Master Servicer. The predecessor Master Servicer shall file
or cause to be filed any such assignment in the appropriate recording office. The predecessor Master Servicer shall bear any and all fees of MERS, costs of preparing any assignments of Mortgage, and fees and costs of filing any assignments of
Mortgage that may be required under this subsection (c). The successor Master Servicer shall cause such assignment to be delivered to the Indenture Trustee or the Custodian promptly upon receipt of the original with evidence of recording thereon or
a copy certified by the public recording office in which such assignment was recorded. 
  
 SECTION
12.10    Notification to Noteholders. 
  
 (a)    Upon any termination
of the Master Servicer pursuant to Section 12.8 above or any appointment of a successor to the Master Servicer pursuant to Section 12.9 above, the Indenture Trustee shall give prompt written notice thereof to the Noteholders at their
respective addresses appearing in the Note Register. 
  
 (b)    Not later than the later of (i)
60 days after the occurrence of any event, which constitutes or which, with notice or lapse of time or both, would constitute a Master Servicer Event of Default and (ii) five days after a Responsible Officer of the Indenture Trustee becomes aware of
the occurrence of such an event, the Indenture Trustee shall transmit by mail to all Holders of Notes notice of each such occurrence, unless such default or Master Servicer Event of Default shall have been cured or waived. 
  
 SECTION 12.11    Master Servicer to Act as Servicer; Appointment of Successor.    On and
after the time any Servicer resigns or is terminated pursuant to the terms of the applicable Servicing Agreement, the Master Servicer either shall appoint a successor servicer pursuant to the related Servicing Agreement or shall assume the
obligations of such Servicer in its capacity as Servicer under the related Servicing Agreement and the transactions set forth or provided for herein and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on
such Servicer by the terms and provisions of the applicable Servicing Agreement and applicable law. As compensation therefor, the Master Servicer shall be entitled to all funds relating to the Mortgage Loans that the Servicer would have been
entitled to charge to the related Collection Account if the Servicer had continued to act hereunder. Notwithstanding the foregoing, if the Master Servicer has become the successor to a Servicer, the Master Servicer may, if it shall be unwilling to
so act, or if it is otherwise unable to so act, appoint, or petition a court of competent jurisdiction to appoint, any established mortgage loan servicing institution the appointment of which does not adversely affect the then current rating of the
Notes by each Rating Agency as the successor to the related Servicer pursuant to the applicable Servicing 

 
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 Agreement in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer thereunder. Any successor to any
Servicer shall be an institution which is a Fannie Mae and Freddie Mac approved seller/servicer in good standing, which has a net worth of at least $15,000,000, and which is willing to service the Mortgage Loans and executes and delivers to the
Depositor and the Master Servicer, an agreement accepting such delegation and assignment, which contains an assumption by such Person of the rights, powers, duties, responsibilities, obligations and liabilities of such Servicer), with like effect as
if originally named as a party to the related Servicing Agreement; and provided further that each Rating Agency acknowledges that its rating of the Notes in effect immediately prior to such assignment and delegation shall not be
qualified or reduced as a result of such assignment and delegation. Pending appointment of a successor to the terminated Servicer, the Master Servicer shall act in such capacity as hereinabove provided. In connection with such appointment and
assumption, the Master Servicer may make such arrangements for the compensation of such successor out of payments on Mortgage Loans as it and such successor shall agree; provided, however, that no such compensation shall be in excess
of the Servicing Fee permitted to the related Servicer pursuant to the Servicing Agreement. The Master Servicer and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Master Servicer nor any other successor Servicer shall be deemed to be in default hereunder by reason of any failure to make, or any delay in making, any distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case caused by the failure of any Servicer to deliver or provide, or any delay in delivering or providing, any cash, information, documents or records to it. 

 
 Any successor to any of the Servicers as Servicer shall give notice to the Mortgagors of such change of servicer and shall,
during the term of its service as Servicer maintain in force the policy or policies that such Servicer is required to maintain pursuant to its Servicing Agreement. 
  
 SECTION 12.12    Notification to Noteholders. 
  
 (a)    Upon any termination of or appointment of a successor to the Servicer, the Master Servicer or the Indenture Trustee, as applicable, shall give prompt written notice thereof
to Noteholders and to each Rating Agency. 
  
 (b)    Within sixty (60) days after the occurrence
of any Master Servicer Event of Default, the Master Servicer or the Indenture Trustee, as applicable, shall transmit by mail to all Noteholders notice of each such Master Servicer Event of Default hereunder known to the Master Servicer or the
Indenture Trustee, as applicable, unless such Master Servicer Event of Default shall have been cured or waived. 
  
 SECTION 12.13    Records; Confidentiality. 
  
 (a)    The Master Servicer shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection and copying by the
Depositor (at the Depositor’s expense) upon reasonable prior notice during normal business hours. 

 
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 (b)    The Master Servicer hereby covenants to hold and treat all Confidential Information in
confidence in accordance with this Section 9.13(b). The Master Servicer, including its subsidiaries, affiliates, directors, officers, employees, agents or controlling persons, agrees that it (i) shall comply with any applicable laws and regulations
regarding the privacy and security of Confidential Information; (ii) shall not use Confidential Information in any manner inconsistent with any applicable laws and regulations regarding the privacy and security of such Confidential Information;
(iii) shall not disclose Confidential Information to third parties without the prior written consent of the Mortgagor other than for the purpose of taking permitted action under this Agreement or any other agreement; (iv) shall maintain adequate
physical, technical and administrative safeguards to protect Confidential Information from unauthorized access; and (v) shall promptly notify the Mortgagor if it has sufficient reason to believe that there has been any breach of the confidentiality
requirements contained in this Section 9.13(b). Disclosure of any Confidential Information by the Master Servicer at the request of its outside auditors or governmental regulatory authorities in connection with an examination of the Master Servicer
by any such authority shall not constitute a breach of its obligations under this Section 9.13(b) and shall not require the prior consent of the Mortgagor so long as such disclosure is not in violation of the Right to Financial Privacy Act of 1978,
as amended, the Gramm-Leach-Bliley Act of 1999 or other applicable law. 
  
 SECTION
12.14    Annual Officer’s Certificate as to Compliance. 
  
 (a)    The Master Servicer shall deliver to the Indenture Trustee and the Rating Agencies on or before May 31 of each year, commencing on May 31, [Ÿ], an Officer’s Certificate signed by a Servicing Officer, certifying that with respect to the period ending December 31 of the prior year: (i) such Servicing
Officer has reviewed the activities of such Master Servicer during the preceding calendar year or portion thereof and its performance under this Agreement, (ii) to the best of such Servicing Officer’s knowledge, based on such review, such
Master Servicer has performed and fulfilled its duties, responsibilities and obligations under this Agreement in all material respects throughout such year, or, if there has been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and the nature and status thereof, (iii) nothing has come to the attention of such Servicing Officer to lead such Servicing Officer to believe that any Servicer has failed to
perform any of its duties, responsibilities and obligations under its Servicing Agreement in all material respects throughout such year, or, if there has been a material default in the performance or fulfillment of any such duties, responsibilities
or obligations, specifying each such default known to such Servicing Officer and the nature and status thereof. 
  
 (b)    Copies of such statements shall be provided to any Noteholder upon request, by the Master Servicer or by the Indenture Trustee at the Master Servicer’s expense if the Master Servicer failed to provide
such copies (unless (i) the Master Servicer shall have failed to provide the Indenture Trustee with such statement or (ii) the Indenture Trustee shall be unaware of the Master Servicer’s failure to provide such statement). 

 
 SECTION 12.15    Annual Independent Accountant’s Servicing Report.    If
the Master Servicer has, during the course of any fiscal year, directly serviced any of the Mortgage Loans, then the Master Servicer at its expense shall cause a nationally recognized firm of independent certificate public accountants to furnish a
statement to the Indenture Trustee, the Rating 

 
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 Agencies and the Seller on or before May 31 of each year, commencing on May 31,
            to the effect that, with respect to the most recently ended fiscal year, such firm has examined certain records and documents relating to the Master Servicer’s
performance of its servicing obligations under this Agreement and that, on the basis of such examination conducted substantially in compliance with the audit program for mortgages serviced for Freddie Mac or the Uniform Single Attestation Program
for Mortgage Bankers, such firm is of the opinion that the Master Servicer’s activities have been conducted in compliance with this Agreement, or that such examination has disclosed no material items of noncompliance except for (i) such
exceptions as such firm believes to be immaterial, (ii) such other exceptions as are set forth in such statement and (iii) such exceptions that the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for Mortgages Serviced
by Freddie Mac requires it to report. Copies of such statements shall be provided to any Noteholder upon request by the Master Servicer, or by the Indenture Trustee at the expense of the Master Servicer if the Master Servicer shall fail to provide
such copies. If such report discloses exceptions that are material, the Master Servicer shall advise the Indenture Trustee whether such exceptions have been or are susceptible of cure, and will take prompt action to do so. 
  
 ARTICLE XIII 
  
 MISCELLANEOUS 
  
 SECTION 13.1    Compliance Certificates and Opinions,
etc.    Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (a) an Officer’s Certificate
stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (b) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, and (c) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section, except that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for
in this Indenture shall include: 
  
 (a)    a statement that each signatory of such certificate
or opinion has read such covenant or condition and the definitions herein relating thereto; 
  
 (b)    a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 
  
 (c)    a statement that, in the opinion of each such signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
  
 (d)    a statement as to whether or not, in the opinion of each such signatory, such condition or covenant has been complied with. 

 
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 SECTION 13.2    Form of Documents Delivered to Indenture
Trustee.    In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents. 
  
 Any certificate or opinion of an
Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which such officer’s certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Seller, stating that the information with respect to such factual matters is in the possession of the Seller, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. 
  
 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not,
be consolidated and form one instrument. 
  
 Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the
right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any
statement or opinion contained in any such document as provided in Article VI. 
  
 SECTION
13.3    Acts of Noteholders. 
  
 (a)    Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in
person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this
Section. 

 
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 (b)    The fact and date of the execution by any person of
any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient. 
  
 (c)    The ownership of Notes shall be proved by the Note Register. 
  
 (d)    Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note. 
  
 SECTION 13.4    Notices, etc. to Indenture Trustee, the Issuer and Rating Agencies.    Any
request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents provided or permitted by this Indenture shall be in writing and if such request, demand, authorization, direction, notice, consent, waiver or
act of Noteholders is to be made upon, given or furnished to or filed with: 
  
 (a)    the
Indenture Trustee by any Noteholder or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office, or 
  
 (b)    the Issuer by the Indenture Trustee or by any Noteholder shall be sufficient for every purpose hereunder if in
writing and mailed first-class, postage prepaid to the Issuer addressed to: E*TRADE MBSC Trust 200_- , in care of [•], or at any other address previously furnished in writing to the Indenture Trustee by the Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Indenture Trustee. 
  
 (c)    Any
notice required to be given to the Seller or [•] pursuant to Section 6.07 shall be sufficient for every purpose hereunder if in writing and delivered by first-class mail, postage prepaid, overnight courier or facsimile to such parties addressed
to the Seller at [•]; or to [•] at [•]. 
  
 Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing, personally delivered or mailed by certified mail, return receipt requested by overnight courier or facsimile. Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations created hereunder and shall not constitute a Default or Event of Default. 
  
 SECTION 13.5    Notices to Noteholders; Waiver.    Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and delivered by first-class mail, postage prepaid, overnight courier or facsimile to each Noteholder affected by such event, at his address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to
any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. 

 
 92 

 Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to
receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver. 
  
 In case, by reason of the suspension of regular mail
service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. 
  
 SECTION 13.6    Conflict with Trust Indenture Act.    If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this
Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. 
  
 The
provisions of TIA Sections 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein. 
  
 SECTION 13.7    Effect of Headings and Table of
Contents.    The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 
  
 SECTION 13.8    Successors and Assigns.    All covenants and agreements in this Indenture and the Notes by the Issuer shall
bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors, co-Indenture Trustees and agents. 
  
 SECTION 13.9    Severability.    In case any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 
  
 SECTION 13.10    Benefits of Indenture and Consent of Noteholders.    Nothing in this Indenture or in the Notes, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, and the Noteholders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Collateral, any benefit or any legal or equitable
right, remedy or claim under this Indenture. Each Noteholder and Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, consents to and agrees to be bound by the terms and conditions of this Indenture.

  
 SECTION 13.11    Legal Holidays.    In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect
as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date. 

 
 93 

  
 SECTION 13.12    Governing
Law.    THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND TO THE EXTENT PERMITTED BY LAW, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 
  
 SECTION
13.13    Counterparts.    This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument. 
  
 SECTION 13.14    Recording of
Indenture.    If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel at its expense (which
may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. 
  
 SECTION
13.15    Issuer Obligations.    No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under this
Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of
any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in
their individual capacity) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment
or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article
VI, VII and VIII of the Trust Agreement. 
  
 SECTION 13.16    No
Petition.    The Indenture Trustee, by entering into this Indenture, and each Noteholder, by its acceptance of a Note, hereby covenant and agree that they will not at any time institute against the Seller, the Depositor or
the Issuer or join in any institution against the Seller, the Depositor or the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this Indenture or any of the other Operative Agreements. 
  
 SECTION 13.17    Inspection.    The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee during the Issuer’s normal business
hours, to examine all the books of account, records, reports and other papers of the Issuer, to make 

 
 94 

 copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer’s
affairs, finances and accounts with the Issuer’s officers, employees, and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may
reasonably determine that such disclosure is consistent with its obligations hereunder. 
  
 SECTION
13.18    Execution by the Issuer.    It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by [•], not individually or personally but solely
as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in its as Indenture Trustee, (b) each of the representations, undertaking and agreements herein made on the part of the Issuer is made and intended not
as personal representations, undertakings and agreements by [•] but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on [•], individually or
personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties and by any person claiming by, through or under the parties hereto and (d) under no circumstances
shall [•] be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representations, warranty or covenant made or undertaken by the Issuer under this Indenture
or any other document. 
  
 [REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK] 
  

 
 95 

  
 IN WITNESS WHEREOF, the Issuer, the Master Indenture Trustee and the Indenture
Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized and duly attested, all as of the day and year first above written. 
  
 
	 E*TRADE MSBC TRUST 200  -  , as Issuer
 
	 
	 By:
 	 	 [•],         
 
	  	 	 not in its individual capacity but solely as
 Owner Trustee
 

 
  
 
	 
	 By:
 	 	  
 

	  	 	 Name:
 Title:
 

 
  
 
	 [•], 
 as Master
Servicer
 
	 
	  	 	  
	  	 	  

 
  
 
	 
	 By:
 	 	  
 

	  	 	 Name:
 Title:
 

 
  
 
	 [•], 
 as Indenture
Trustee
 
	 
	  	 	  
	  	 	  

 
  
 
	 
	 By:
 	 	  
 

	  	 	 Name:
 Title:
 

 
  

	

  

 
 [Indenture] 

  
 EXHIBIT A-1 
  
 FORM OF NOTE 
  
 UNLESS THIS NOTE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN 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 INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
  
 THIS NOTE DOES NOT EVIDENCE AN OBLIGATION OF OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER. 
  
 THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. 
  
 EACH PURCHASER OR PROPOSED TRANSFEREE OF A NOTE MUST REPRESENT TO THE INDENTURE TRUSTEE EITHER (A) THAT IT IS NOT, AND IS NOT PURCHASING THE NOTES WITH ASSETS OF, AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR A PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR A GOVERNMENTAL PLAN OR CHURCH PLAN THAT IS SUBJECT TO ANY
PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW (“SIMILAR LAW”) SUBSTANTIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE, OR (B) THAT ITS ACQUISITION AND HOLDING OF THE NOTES WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT
PROHIBITED TRANSACTION UNDER ERISA OR THE CODE OR SIMILAR LAW AND WILL NOT SUBJECT THE ISSUER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR MASTER SERVICER TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE INDENTURE. 
  

 
 Ex. A–1 

 
E*TRADE MBSC
TRUST 200_-_, 
MORTGAGE-BACKED NOTES 
 

	  Aggregate Original Principal Amount of the
  Notes:
                                        
                
	     	  Original Principal Amount of this Note:
                                        
            

	  	     	  
	  INTEREST RATE: Adjustable
	     	  CUSIP:
                                        
                

 
Number
                                        
                             
 
E*TRADE MBSC Trust 200  -  , a statutory business trust organized and
existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum
of                                       
          DOLLARS AND NO/100 ($                    ) payable on each Distribution Date in an
amount equal to the result obtained by multiplying (A) a fraction the numerator of which is
$                                     and the denominator of
which is the aggregate original principal amount of all Notes issued on the Closing Date, by (B) the aggregate amount, if any, payable from the Distribution Account in respect of principal on the Notes pursuant to Section
[    ] of the Indenture, dated as of [•], between the Issuer and [•], a [•] as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Distribution Date occurring in [•] (the “Maturity Date”) or as otherwise specified in the Indenture. Capitalized terms used but not defined herein are defined in the Indenture, which also
contains rules as to construction that shall be applicable herein. 
 
The Issuer will pay interest on this Note at a per annum rate equal to the Note Interest Rate, on the principal amount of this Note outstanding on the immediately preceding Distribution Date (after giving effect to all
payments of principal made on such preceding Distribution Date) on each Distribution Date until the principal of this Note is paid or made available for payment in full. 
 
Interest on this Note will accrue for each Distribution Date during the period beginning on the immediately
preceding Distribution Date (or [•], in the case of the first Accrual Period) and ending on the day immediately preceding the related Distribution Date (each, an “Accrual Period”). Interest will be computed on the basis of a 360-day
year and the actual number of days elapsed during the related Accrual Period. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. 
 
The principal of and interest on this Note are payable in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the
unpaid principal of this Note. 
 
Reference is made
to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. 
 

Ex. A-1-2 

 
Unless the
certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose. 
 
 

A–1–3 

 
IN WITNESS
WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below. 
 

	  E*TRADE MBSC TRUST 200_-     

	
	  By:
	  	  [•],         

	  	  	  not in its individual capacity but solely as Owner Trustee under the Trust Agreement

 

	
	  By:
	  	   

	  	  	  Authorized Signatory

 

	   
  Dated:  [•]

 
INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION 
 
This is one of the Notes designated above and referred to in the within-mentioned Indenture. 
 

	  [•], 
        not in its individual capacity but solely a
        Indenture Trustee,
   

	
	  By:
	  	   

	  	  	  Authorized Signatory

 

	  Dated:  [•]

 
 

Ex. A-1-4 

 
E*TRADE MBSC
TRUST 200_-_ 
 
This Note is one of a duly
authorized issue of Notes of the Issuer, all issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Notes. To the extent that any provision of this Note contradicts or is inconsistent with the provisions of the Indenture, the provisions of the Indenture shall control and supersede such contradictory or
inconsistent provision herein. This Note is subject to all terms of the Indenture. 
 
Principal of this Note will be payable on each Distribution Date in an amount described on the face hereof. “Distribution Date” means the [Ÿ] day of each month or, if any such date is not a Business Day, the next succeeding Business Day, commencing in [Ÿ]. 
 
Payments of interest on this Note due and payable on each Distribution Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by check
mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, or, upon written request made to the Indenture Trustee at least
five Business Days prior to the related Record Date by the Holder of a Note having an initial Note Principal Amount of not less than $[2,500,000], by wire transfer in immediately available funds to an account specified in the request and at the
expense of such Noteholder, except that, unless Definitive Notes have been issued pursuant to Section [        ] of the Indenture, with respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire transfer in immediately available funds to the account designated by such nominee, except for the final installment of principal payable with
respect to this Note on the Maturity Date, which shall be payable as provided in the Indenture. Checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment. Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future
Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date, then the Person who was the Registered Holder hereof as of the Record Date preceding such Distribution Date shall be notified by the Indenture Trustee, in the name of
and on behalf of the Issuer. Such notice shall be mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture
Trustee’s principal Corporate Trust Office. 
 
As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder’s attorney duly authorized
in writing, with such signature guaranteed by an “eligible guarantor institution” meeting the 
 

Ex. A-1-5 

requirements of the Note Registrar, which requirements include membership or participation in the
Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange.

 
Each Noteholder and Note Owner, by acceptance of
a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. 
 
Each Noteholder and Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not at any time institute against the Seller, the Depositor or the Issuer, or join in any institution against the Seller, the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the other Operative
Agreements. 
 
Each Noteholder and Note Owner, by
acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, consents to and agrees to be bound by the terms and conditions of the Indenture. 
 
The Issuer has entered into the Indenture and this Note is issued with the intention that, for federal, state
and local income, single business and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Collateral. Each Noteholder, by acceptance of a Note (and each Note Owner by acceptance of a beneficial interest in a
Note), agrees to treat the Notes for all federal, state and local income tax purposes as indebtedness of the Issuer. 
 
Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or
the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this 
 

A-1-6 

Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by
notice to the contrary. 
 
The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer with the consent of the
Holders of Notes representing a majority of the Outstanding Amount of all Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of not less than 66-2/3% of the Outstanding Amount of Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the amendment thereof, in certain limited circumstances, or the waiver of certain terms and conditions set forth in the Indenture, without the consent of Holders of the Notes issued thereunder. 
 
The term “Issuer” as used in this Note includes any
successor to the Issuer under the Indenture. 
 
The
Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. 
 
THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND, CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 
 
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed. 
 
Anything herein to the contrary notwithstanding, except as
expressly provided in the Operative Agreements, none of the Issuer in its individual capacity, the Owner Trustee in its individual capacity, the Indenture Trustee in its individual capacity, any owner of a beneficial interest in the Issuer, or any
of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture. The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Operative Agreements, in the
case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement 
 

A-1-7 

against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note. 
 

A-1-8 

 
ASSIGNMENT

 
Social Security or taxpayer I.D. or other
identifying number of
assignee:                                      
                                     
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto: 
 
                                     
                                        
                                        
                                        
                                        
                                        
                     
(name and address of assignee) 
 
the within Note
and all rights thereunder, and hereby irrevocably constitutes and
appoints                                      
               , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. 
 
Dated:
                                        
                                        
            */ 
 
Signature Guaranteed: 
 
                                     
                                        
                           */ 
 
*/ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the
face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended. 
 

A-1-9<Page>

                                                                     Exhibit 4.1
================================================================================

                          ABRAXAS PETROLEUM CORPORATION

                                   as Issuer,

                     THE SUBSIDIARY GUARANTORS PARTY HERETO

                                       and

                                U.S. BANK, N.A.,

                                                                      as Trustee

                                    INDENTURE

                          Dated as of January 23, 2003

                         11-1/2% Secured Notes due 2007

================================================================================

<Page>

                              CROSS-REFERENCE TABLE

<Table>
<Caption>
 TIA                                                                   Indenture
Section                                                                 Section
-------                                                                ---------
<S>                                                                        <C>
310(a)(1)...................................................................7.10
    (a)(2)..................................................................7.10
    (a)(3)..................................................................N.A.
    (a)(4)..................................................................N.A.
    (a)(5)..................................................................7.08; 7.10,
    ........................................................................7.11
    (b).....................................................................7.08; 7.10,
    .......................................................................10.02
    (c).....................................................................N.A.
311(a)......................................................................7.11
    (b).....................................................................7.11
    (c).....................................................................N.A.
312(a)......................................................................2.05
    (b)....................................................................10.03
    (c)....................................................................10.03
313(a)......................................................................7.06
    (b)(1)..................................................................N.A.
    (b)(2)..................................................................7.06
    (c).....................................................................7.06; 10.02
    (d).....................................................................7.06
314(a)......................................................................4.06; 4.08;
    .......................................................................11.02
    (b)....................................................................12.02
    (c)(1)..................................................................7.02, 10.04
    (c)(2)..................................................................7.02, 10.04
    (c)(3)..................................................................N.A.
    (d)....................................................................12.03
    (e)....................................................................10.05
    (f).....................................................................N.A.
315(a)......................................................................7.01(b)
    (b).....................................................................7.05; 10.02
    (c).....................................................................7.01(a)
    (d).....................................................................7.01(c)
    (e).....................................................................6.11
316(a)(last sentence).......................................................2.09
    (a)(1)(A)...............................................................6.05
    (a)(1)(B)...............................................................6.04
    (a)(2)..................................................................N.A.
    (b).....................................................................6.07
    (c).....................................................................9.04
317(a)(1)...................................................................6.08
</Table>

<Page>

<Table>
<S>                                                                        <C>
    (a)(2)..................................................................6.09
    (b).....................................................................2.04
318(a).....................................................................10.01
    (c)....................................................................10.01
</Table>

----------
N.A. means Not Applicable

NOTE: This Cross-Reference Table is not and shall not, for any purpose, be
deemed to be a part of the Indenture.

<Page>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>                                                                      <C>
                                                                                                        ARTICLE ONE
                                                                         DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.  DEFINITIONS........................................................................................1
SECTION 1.02.  INCORPORATION BY REFERENCE OF TIA.................................................................20
SECTION 1.03.  RULES OF CONSTRUCTION.............................................................................20

                                                                                                        ARTICLE TWO
                                                                                                          THE NOTES

SECTION 2.01.  PRINCIPAL AMOUNT; FORM AND DATING.................................................................21
SECTION 2.02.  EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT..........................................22
SECTION 2.03.  REGISTRAR AND PAYING AGENT........................................................................22
SECTION 2.04.  PAYING AGENT TO HOLD ASSETS IN TRUST..............................................................23
SECTION 2.05.  HOLDER LISTS......................................................................................23
SECTION 2.06.  TRANSFER AND EXCHANGE.............................................................................23
SECTION 2.07.  REPLACEMENT NOTES.................................................................................24
SECTION 2.08.  OUTSTANDING NOTES.................................................................................24
SECTION 2.09.  TREASURY NOTES....................................................................................24
SECTION 2.10.  TEMPORARY NOTES...................................................................................24
SECTION 2.11.  CANCELLATION......................................................................................24
SECTION 2.12.  DEFAULTED INTEREST................................................................................25
SECTION 2.13.  CUSIP NUMBER......................................................................................25
SECTION 2.14.  DEPOSIT OF MONIES.................................................................................25
SECTION 2.15.  RESTRICTIVE LEGENDS...............................................................................26
SECTION 2.16.  BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.........................................................27
SECTION 2.17.  SPECIAL TRANSFER PROVISIONS.......................................................................28

                                                                                                      ARTICLE THREE
                                                                                                         REDEMPTION

SECTION 3.01.  NOTICES TO TRUSTEE................................................................................30
SECTION 3.02.  SELECTION OF NOTES TO BE REDEEMED.................................................................30
SECTION 3.03.  OPTIONAL REDEMPTION...............................................................................30
SECTION 3.04.  NOTICE OF REDEMPTION..............................................................................31
SECTION 3.05.  EFFECT OF NOTICE OF REDEMPTION....................................................................31
SECTION 3.06.  DEPOSIT OF REDEMPTION PRICE.......................................................................31
SECTION 3.07.  NOTES REDEEMED IN PART............................................................................32

                                                                                                       ARTICLE FOUR
                                                                                                          COVENANTS
</Table>

                                        i
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<Table>
<S>                                                                                           <C>
SECTION 4.01.  PAYMENT OF NOTES..................................................................................32
SECTION 4.02.  MAINTENANCE OF OFFICE OR AGENCY...................................................................32
SECTION 4.03.  CORPORATE EXISTENCE...............................................................................32
SECTION 4.04.  PAYMENT OF TAXES AND OTHER CLAIMS.................................................................32
SECTION 4.05.  MAINTENANCE OF PROPERTIES AND INSURANCE...........................................................33
SECTION 4.06.  COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.........................................................33
SECTION 4.07.  COMPLIANCE WITH LAWS..............................................................................33
SECTION 4.08.  REPORTS TO HOLDERS................................................................................34
SECTION 4.09.  WAIVER OF STAY, EXTENSION OR USURY LAWS...........................................................34
SECTION 4.10.  LIMITATION ON RESTRICTED PAYMENTS.................................................................34
SECTION 4.11.  LIMITATION ON TRANSACTIONS WITH AFFILIATES........................................................35
SECTION 4.12.  LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS...............................................35
SECTION 4.13.  LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES......................36
SECTION 4.14.  LEVERAGE..........................................................................................36
SECTION 4.15.  CHANGE OF CONTROL.................................................................................36
SECTION 4.16.  LIMITATION ON ASSET SALES.........................................................................37
SECTION 4.17.  LIMITATIONS WITH RESPECT TO CAPITAL STOCK OF SUBSIDIARIES.........................................38
SECTION 4.18.  LIMITATION ON LIENS...............................................................................38
SECTION 4.19.  LIMITATION ON CONDUCT OF BUSINESS.................................................................39
SECTION 4.20.  ADDITIONAL SUBSIDIARY GUARANTEES..................................................................39
SECTION 4.21.  LIMITATION ON ABRAXAS WAMSUTTER, LTD..............................................................39
SECTION 4.22.  IMPAIRMENT OF SECURITY INTEREST...................................................................39
SECTION 4.23.  ACCOUNTING........................................................................................39
SECTION 4.24.  MAINTENANCE OF LIEN; ADDITIONAL COLLATERAL........................................................39
SECTION 4.25.  EXCESS CASH FLOW AND EXCESS CASH..................................................................40
SECTION 4.26.  LIMITATION ON EXPENDITURES FOR SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.......................40
SECTION 4.27.  LIMITATIONS ON CAPITAL EXPENDITURES...............................................................41
SECTION 4.28.  LIMITATION ON TAX SHARING ARRANGEMENTS............................................................42
SECTION 4.29.  LIMITATION ON USES OF CASH........................................................................42
SECTION 4.30.  PROCEEDS FROM ISSUANCES OF EQUITY AND SUBORDINATED DEBT...........................................43
SECTION 4.31.  FARMOUTS..........................................................................................44
SECTION 4.32.  CEO NOTE OPTIONS..................................................................................44
SECTION 4.33.  CONDUCT OF BUSINESS IN THE INTERIM PERIOD.........................................................45
SECTION 4.34.  CALCULATION OF ORIGINAL ISSUE DISCOUNT............................................................45

                                                                                                       ARTICLE FIVE
                                                                                              SUCCESSOR CORPORATION

SECTION 5.01.  MERGER, CONSOLIDATION AND SALE OF ASSETS..........................................................45
SECTION 5.02.  SUCCESSOR CORPORATION SUBSTITUTED.................................................................46

                                                                                                        ARTICLE SIX
                                                                                                           REMEDIES

SECTION 6.01.  EVENTS OF DEFAULT.................................................................................46
SECTION 6.02.  ACCELERATION......................................................................................47
</Table>

                                       ii
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<Table>
<S>                                                                              <C>
SECTION 6.03.  OTHER REMEDIES....................................................................................48
SECTION 6.04.  WAIVER OF PAST DEFAULTS...........................................................................48
SECTION 6.05.  CONTROL BY MAJORITY...............................................................................48
SECTION 6.06.  LIMITATION ON SUITS...............................................................................49
SECTION 6.07.  RIGHT OF HOLDERS TO RECEIVE PAYMENT...............................................................49
SECTION 6.08.  COLLECTION SUIT BY TRUSTEE........................................................................49
SECTION 6.09.  TRUSTEE MAY FILE PROOFS OF CLAIM..................................................................49
SECTION 6.10.  PRIORITIES........................................................................................49
SECTION 6.11.  UNDERTAKING FOR COSTS.............................................................................50
SECTION 6.12.  RESTORATION OF RIGHTS AND REMEDIES................................................................50

                                                                                                      ARTICLE SEVEN
                                                                                                            TRUSTEE

SECTION 7.01.  DUTIES OF TRUSTEE.................................................................................50
SECTION 7.02.  RIGHTS OF TRUSTEE.................................................................................51
SECTION 7.03.  INDIVIDUAL RIGHTS OF TRUSTEE......................................................................52
SECTION 7.04.  TRUSTEE'S DISCLAIMER..............................................................................52
SECTION 7.05.  NOTICE OF DEFAULT.................................................................................52
SECTION 7.06.  REPORTS BY TRUSTEE TO HOLDERS.....................................................................53
SECTION 7.07.  COMPENSATION AND INDEMNITY........................................................................53
SECTION 7.08.  REPLACEMENT OF TRUSTEE............................................................................53
SECTION 7.09.  SUCCESSOR TRUSTEE BY MERGER, Etc..................................................................54
SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION.....................................................................54
SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER..................................................54
SECTION 7.12.  OTHER CAPACITIES..................................................................................54

                                                                                                      ARTICLE EIGHT
                                                                                 DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.01.  TERMINATION OF ISSUER'S OBLIGATIONS...............................................................55
SECTION 8.02.  APPLICATION OF TRUST MONEY........................................................................56
SECTION 8.03.  REPAYMENT TO THE ISSUER...........................................................................56
SECTION 8.04.  REINSTATEMENT.....................................................................................57
SECTION 8.05.  ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE............................................................57

                                                                                                       ARTICLE NINE
                                                                                          MODIFICATION OF INDENTURE

SECTION 9.01.  WITHOUT CONSENT OF HOLDERS........................................................................57
SECTION 9.02.  WITH CONSENT OF HOLDERS...........................................................................57
SECTION 9.03.  COMPLIANCE WITH TIA...............................................................................58
SECTION 9.04.  REVOCATION AND EFFECT OF CONSENTS.................................................................58
SECTION 9.05.  NOTATION ON OR EXCHANGE OF NOTES..................................................................58
SECTION 9.06.  TRUSTEE TO SIGN AMENDMENTS, Etc...................................................................58
SECTION 9.07.  EVIDENCE OF AMENDMENTS, SUPPLEMENTS, WAIVERS......................................................59
</Table>

                                       iii
<Page>

<Table>
<S>                                                                                                              <C>
SECTION 9.08.  AMENDMENT OF INTERCREDITOR AGREEMENT..............................................................59
</Table>

                                       iv
<Page>

<Table>
<S>                                                                                              <C>
                                                                                                        ARTICLE TEN
                                                                                                      MISCELLANEOUS

SECTION 10.01.  TIA CONTROLS.....................................................................................59
SECTION 10.02.  NOTICES..........................................................................................59
SECTION 10.03.  COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.....................................................60
SECTION 10.04.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT...............................................60
SECTION 10.05.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION....................................................60
SECTION 10.06.  RULES BY TRUSTEE, PAYING AGENT, REGISTRAR........................................................60
SECTION 10.07.  LEGAL HOLIDAYS...................................................................................61
SECTION 10.08.  GOVERNING LAW....................................................................................61
SECTION 10.09.  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS....................................................61
SECTION 10.10.  NO PERSONAL LIABILITY............................................................................61
SECTION 10.11.  SUCCESSORS.......................................................................................61
SECTION 10.12.  DUPLICATE ORIGINALS..............................................................................61
SECTION 10.13.  SEVERABILITY.....................................................................................61
SECTION 10.14.  INDEPENDENCE OF COVENANTS........................................................................61
SECTION 10.15.  CURRENCY INDEMNITY...............................................................................62

                                                                                                     ARTICLE ELEVEN
                                                                                                 GUARANTEE OF NOTES

SECTION 11.01.  UNCONDITIONAL GUARANTEE..........................................................................62
SECTION 11.02.  LIMITATIONS ON GUARANTEES........................................................................63
SECTION 11.03.  EXECUTION AND DELIVERY OF GUARANTEE..............................................................63
SECTION 11.04.  RELEASE OF A SUBSIDIARY GUARANTOR................................................................63
SECTION 11.05.  WAIVER OF SUBROGATION............................................................................64
SECTION 11.06.  IMMEDIATE PAYMENT................................................................................64
SECTION 11.07.  NO SET-OFF.......................................................................................64
SECTION 11.08.  OBLIGATIONS ABSOLUTE.............................................................................64
SECTION 11.09.  OBLIGATIONS CONTINUING...........................................................................65
SECTION 11.10.  OBLIGATIONS NOT REDUCED..........................................................................65
SECTION 11.11.  OBLIGATIONS REINSTATED...........................................................................65
SECTION 11.12.  OBLIGATIONS NOT AFFECTED.........................................................................65
SECTION 11.13.  WAIVER...........................................................................................66
SECTION 11.14.  NO OBLIGATION TO TAKE ACTION AGAINST THE ISSUER..................................................66
SECTION 11.15.  DEALING WITH THE ISSUER AND OTHERS...............................................................66
SECTION 11.16.  DEFAULT AND ENFORCEMENT..........................................................................67
SECTION 11.17.  ACKNOWLEDGMENT...................................................................................67
SECTION 11.18.  COSTS AND EXPENSES...............................................................................67
SECTION 11.19.  NO MERGER OR WAIVER; CUMULATIVE REMEDIES.........................................................67
SECTION 11.20.  GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.......................................................67
</Table>

                                        v
<Page>

<Table>
<S>                                                                                                  <C>
                                                                                                     ARTICLE TWELVE
                                                                                                           SECURITY

SECTION 12.01.  GRANT OF SECURITY INTEREST; REMEDIES.............................................................68
SECTION 12.02.  RECORDING AND OPINIONS...........................................................................68
SECTION 12.03.  RELEASE OF COLLATERAL............................................................................69
SECTION 12.04.  SPECIFIED RELEASES OF COLLATERAL.................................................................69
SECTION 12.05.  RIGHTS OF PURCHASERS; FORM AND SUFFICIENCY OF RELEASE............................................71
SECTION 12.06.  AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE SECURITY DOCUMENTS.................71
SECTION 12.07.  AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE SECURITY DOCUMENTS....................72
SECTION 12.08.  USE OF TRUST MONEYS..............................................................................72
</Table>

                                       vi
<Page>

<Table>
<S>                                                                                                              <C>
Exhibit A-1 - Form of Initial Note...............................................................................A-1
Exhibit A-2 - Form of Exchange Note..............................................................................A-2
Exhibit B - Form of Additional Provisions in Form of Assignment
 for Restricted Securities.......................................................................................B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to
 Non-QIB   Accredited Investors..................................................................................C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers
 Pursuant to Regulation S .......................................................................................D-1
Exhibit E - Guarantee............................................................................................E-1
Exhibit F - Form of Supplemental Indenture.......................................................................F-1
</Table>

Note: This Table of Contents is not, and shall not, for any purpose, be deemed
to be part of the Indenture.

                                       vii
<Page>

         THIS INDENTURE, dated as of January 23, 2003, is among Abraxas
Petroleum Corporation, a Nevada corporation (the "ISSUER"), Sandia Oil & Gas
Corporation, a Texas corporation and wholly-owned subsidiary of the Issuer
("SANDIA"), Wamsutter Holdings, Inc., a Wyoming corporation and wholly-owned
subsidiary of the Issuer ("WAMSUTTER"), Sandia Operating Corp., a Texas
corporation and wholly-owned subsidiary of Sandia ("SANDIA OPERATING"), Western
Associated Energy Corporation, a Texas corporation and wholly-owned subsidiary
of the Issuer ("WESTERN ASSOCIATED"), Eastside Coal Company, Inc., a Colorado
corporation and wholly-owned subsidiary of Western Associated ("EASTSIDE COAL"),
Grey Wolf Exploration Inc., an Alberta corporation and wholly-owned subsidiary
of the Issuer ("NEWCO CANADA") and U.S. Bank, N.A., as Trustee (the "TRUSTEE").

         The Issuer has duly authorized the creation of its (i) 11-1/2% Secured
Notes due 2007, Series A (the "INITIAL NOTES"), (ii) 11-1/2% Secured Notes due
2007, Series B (the "EXCHANGE NOTES") to be issued in exchange for the Initial
Notes, or PIK Notes (as defined herein) issued in relation to the Initial Notes,
pursuant to the Registration Rights Agreement (as defined herein) and (iii) PIK
Notes (as defined herein) issuable from time to time in lieu of the payment of
cash interest on the Initial Notes, the Exchange Notes or other PIK Notes in
accordance with Section 2.14, and, to provide therefor, the Issuer has duly
authorized the execution and delivery of this Indenture. The Notes (as defined
herein) will be guaranteed by Sandia, Wamsutter, Sandia Operating, Western
Associated, Eastside Coal, Newco Canada and each of the Issuer's future
Subsidiaries (as defined herein) each of which shall become Subsidiary
Guarantors as required in this Indenture. All things necessary to make the
Notes, when duly issued and executed by the Issuer, and authenticated and
delivered hereunder, the valid obligations of the Issuer, and to make this
Indenture a valid and binding agreement of the Issuer, have been done.

         Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.

                                   ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

         SECTION 1.01. DEFINITIONS.

         "2003 CAPEX AMOUNT" equals the lesser of $15 million and the 2003 CapEx
Annual Budget.

         "2003 CAPEX ANNUAL BUDGET" equals the 2003 Closing CapEx Ratio
multiplied by Total Assets at December 31, 2003.

         "2003 CLOSING CAPEX RATIO" equals, for calendar year 2003, (a) $15
million or such lower amount budgeted prior to the Issue Date by the Issuer for
Capital Expenditures for such calendar period, divided by (b) Total Assets at
the end of the calendar quarter in which the Issue Date occurs.

         "2004-PLUS CAPEX ANNUAL AMOUNT" equals for any annual calendar period,
the lesser of $10 million and the 2004-Plus CapEx Annual Budget.

         "2004-PLUS CAPEX ANNUAL BUDGET" equals, for any annual calendar period,
2004-Plus Closing CapEx Ratio multiplied by the Total Assets at the start of
such calendar period.

         "2004-PLUS CAPEX QUARTERLY AMOUNT" equals, the lesser of $2.5 million
and one quarter of the 2004-Plus CapEx Annual Amount.

         "2004-PLUS CLOSING CAPEX RATIO" equals, for any annual calendar period
starting January 1, 2004, (a) $10 million or such lower amount budgeted prior to
the Issue Date by the Issuer for Capital Expenditures for such calendar period,
divided by (b) the Total Assets at the end of the calendar quarter in which the
Issue Date occurs.

         "ACCREDITED INVESTOR" shall have the meaning specified in Rule 501
promulgated under the Securities Act.

         "ACQUIRED INDEBTEDNESS" means Subordinated Indebtedness of a Person or
any of its Subsidiaries the incurrence of which does not violate this Indenture:
(a) existing at the time such Person becomes a Subsidiary of the Issuer or at
the

                                        1
<Page>

time it merges or consolidates with the Issuer or any of its Subsidiaries, or
(b) which becomes Indebtedness of the Issuer or any of its Subsidiaries in
connection with the acquisition of assets from such Person, in each case not
incurred in connection with, or in anticipation or contemplation of, such Person
becoming a Subsidiary of the Issuer or such acquisition, merger or
consolidation.

         "ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" means (without
duplication), as of the date of determination: (1) the sum of: (A) discounted
future net revenues from the proved oil and gas reserves of the Issuer and its
Subsidiaries, calculated in accordance with Commission guidelines (before any
state or federal income tax), as estimated by a nationally recognized firm of
independent petroleum engineers as of a date no earlier than the date of the
Issuer's latest annual consolidated financial statements, as increased by, as of
the date of determination, the estimated discounted future net revenues from (i)
estimated proved oil and gas reserves acquired since the date of the Issuer's
year-end reserve report and (ii) estimated oil and gas reserves attributable to
upward revisions of estimates of proved oil and gas reserves since the date of
such year-end reserve report due to exploration, development or exploitation
activities, in each case calculated in accordance with Commission guidelines
(utilizing the prices utilized in such year-end reserve report), and decreased
by, as of the date of determination, the estimated discounted future net
revenues from (iii) estimated proved oil and gas reserves produced or disposed
of since the date of such year-end reserve report and (iv) estimated oil and gas
reserves attributable to downward revisions of estimates of proved oil and gas
reserves since the date of such year-end reserve report due to changes in
geological conditions or other factors which would, in accordance with standard
industry practice, cause such revisions, in each case calculated in accordance
with Commission guidelines (utilizing the prices utilized in such year-end
reserve report); PROVIDED, HOWEVER, that, in the case of each of the
determinations made pursuant to clauses (i) through (iv), such increases and
decreases shall be as estimated by the Issuer's petroleum engineers, unless in
the event that there is a Material Change as a result of such acquisitions,
dispositions or revisions, then the discounted future net revenues utilized for
purposes of this clause (1)(A) shall be confirmed in writing, by a nationally
recognized firm of independent petroleum engineers (which may be the Issuer's
independent petroleum engineers who prepare the Issuer's annual reserve report),
PLUS (B) the capitalized costs that are attributable to oil and gas properties
of the Issuer and its Subsidiaries to which no proved oil and gas reserves are
attributable, based on the books and records of the Issuer and its Subsidiaries
as of a date no earlier than the date of the Issuer's latest annual or quarterly
financial statements, PLUS (C) the Net Working Capital plus cash of the Issuer
and its Subsidiaries on a date no earlier than the date of the Issuer's latest
consolidated annual or quarterly financial statements, PLUS (D) with respect to
each other tangible asset of the Issuer and its Subsidiaries specifically
including, but not to the exclusion of any other qualifying tangible assets, the
Issuer's or its Subsidiaries' gas producing facilities and unproved oil and gas
properties (less any remaining deferred income taxes which have been allocated
to such gas processing facilities in connection with the acquisition thereof),
land, equipment, leasehold improvements, investments carried on the equity
method, restricted cash and the carrying value of marketable securities, the
greater of (i) the net book value of such other tangible assets on a date no
earlier than the date of the Issuer's latest consolidated annual or quarterly
financial statements or (ii) the appraised value, as estimated by a qualified
Independent Advisor, of such other tangible assets of the Issuer and its
Subsidiaries, as of a date no earlier than the date of the Issuer's latest
audited financial statements MINUS (2) the sum of minority interests and, to the
extent not otherwise taken into account in determining Adjusted Consolidated Net
Tangible Assets, any gas balancing liabilities of the Issuer and its
Subsidiaries reflected in the Issuer's latest audited financial statements.

         In addition to, but without duplication of, the foregoing, for purposes
of this definition, "ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" shall be
calculated after giving effect, on a pro forma basis, to: (1) any Investment not
prohibited by this Indenture, to and including the date of the transaction
giving rise to the need to calculate Adjusted Consolidated Net Tangible Assets
(the "ASSETS TRANSACTION DATE"), in any other Person that, as a result of such
Investment, becomes a Subsidiary of the Issuer, (2) the acquisition, to and
including the Assets Transaction Date (by merger, consolidation or purchase of
stock or assets), of any business or assets, including, without limitation,
Permitted Industry Investments, and (3) any sales or other dispositions of
assets permitted by this Indenture (other than sales of Hydrocarbons or other
mineral products in the ordinary course of business) occurring on or prior to
the Assets Transaction Date.

         "ADJUSTED ISSUE PRICE" means an amount for the most recent accrual
period equal to the initial issue price of the Notes increased by the amount of
original issue discount previously includable in the gross income of a Holder,
reduced by the amount of any payment previously made on the Notes other than a
payment of qualified stated interest on the Notes.

         "AFFILIATE" means, with respect to any specified Person, (a) any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or under common control with, such specified Person, and
(b) any Related Person of such Person. For purposes of this definition, the term
"control" means the possession, directly or

                                        2
<Page>

indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.

         "AFFILIATE TRANSACTION" has the meaning provided in Section 4.11.

         "AGENT" means any Registrar, Paying Agent, co-Registrar, authenticating
agent or securities custodian.

         "AGENT MEMBERS" has the meaning provided in Section 2.16.

         "ASSET ACQUISITION" means: (a) an Investment by the Issuer or any
Subsidiary in any other Person pursuant to which such Person shall become a
Subsidiary, or shall be merged with or into the Issuer or any Subsidiary, or (b)
the acquisition by the Issuer or any Subsidiary of the assets of any Person
(other than a Subsidiary) which constitute all or substantially all of the
assets of such Person or comprise any division or line of business of such
Person or any other properties or assets of such Person other than in the
ordinary course of business.

         "ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, exchange, lease (other than operating leases entered into in the
ordinary course of business consistent with past practices), assignment or other
transfer for value by the Issuer or any Subsidiary (including any Sale and
Leaseback Transaction) to any Person other than the Issuer or any Subsidiary of:
(a) any Capital Stock of any Subsidiary, or (b) any other property or assets
(including any interests therein) of the Issuer or any Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction;
PROVIDED, HOWEVER, that the following will not be deemed to be an Asset Sale:
(i) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Issuer in a transaction which is made in
compliance with Article Five, (ii) disposals or replacements of obsolete
equipment in the ordinary course of business, (iii) the sale, lease, conveyance,
disposition or other transfer of assets or property to the Issuer or one or more
Wholly Owned Subsidiaries, (iv) any disposition of Hydrocarbons or other mineral
products for value in the ordinary course of business, (v) the abandonment,
surrender, termination, cancellation, release, lease or sublease of undeveloped
oil and gas properties in the ordinary course of business or oil and gas
properties which are not capable of production in economic quantities, (vi) the
sale, lease, conveyance, disposition or other transfer by the Issuer or any
Subsidiary of assets or property in the ordinary course of business; PROVIDED,
HOWEVER, that the aggregate amount (valued at the fair market value of such
assets or property at the time of such sale, lease, conveyance, disposition or
transfer) of all such assets and property so sold, leased, conveyed, disposed or
transferred since the Issue Date pursuant to this clause (vi) shall not exceed
$200,000.00 in any one year.

         "AUTHENTICATING AGENT" has the meaning provided in Section 2.02.

         "AVAILABLE PROCEEDS AMOUNT" means (a) the sum of all Collateral
Proceeds and all Non-Collateral Proceeds remaining after application to repay
any Indebtedness secured by the assets that are the subject of the Asset Sale
giving rise to such Non-Collateral Proceeds; and (b) for purposes of determining
whether the Issuer must Pay Down Debt in connection with an Asset Sale and for
determining the amount the Issuer must use to Pay Down Debt, an amount equal to
the amount set forth under clause (a) above minus the aggregate amount of all
such Asset Sale proceeds previously spent in compliance with the terms of
Section 12.08.

         "BANK PRODUCTS AGREEMENT" means any agreement for any service or
facility extended to the Issuer or any of its Subsidiaries by the Senior Credit
Facility Representative or any Senior Credit Facility Lender or any Affiliate of
the Senior Credit Facility Representative or any such lender including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) cash management or related services (including the Automated Clearing
House processing of electronic funds transfers through the direct Federal
Reserve Fedline system), (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedge Agreements.

         "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.

         "BOARD OF DIRECTORS" means, as for any Person, the board of directors
of such Person or any duly authorized committee thereof.

                                        3
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         "BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

         "BUSINESS DAY" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of New York are required or
authorized by law or other governmental action to be closed.

         "CAPEX DEFICIT AMOUNT" equals, in any calendar quarter, the amount by
which the Capital Expenditures in any such calendar quarter (excluding the
amount of Capital Expenditures due to any Rollover Decrease because of a prior
quarter's CapEx Excess Amount) is less than the applicable CapEx Quarterly
Amount.

         "CAPEX EXCESS AMOUNT" equals, in any calendar quarter, the amount by
which Capital Expenditures in any such quarter (excluding the amount of Capital
Expenditures due to any Rollover Increase because of a prior quarter's CapEx
Deficit Amount) exceed the applicable CapEx Quarterly Amount.

         "CAPEX QUARTERLY AMOUNT" means the Q1-2003 CapEx Amount, the
Q2,3,4-2003 CapEx Amount or the 2004-Plus CapEx Quarterly Amount, as applicable.

         "CAPITAL EXPENDITURES" means, for any period, any direct or indirect
expenditure made in such period, in each case, whether expensed or capitalized,
in respect of the use of assets, including all Drilling Expenditures, and shall
include all investments and cash expenses and other cash outflows of the Issuer
and its Subsidiaries related to any Permitted Investments including but not
limited to those relating to joint ventures, royalty arrangements, off-balance
sheet financing, and farmout expenditures made by the Issuer or its
Subsidiaries, and expenditures made in such period in any Investment other than
Investments in cash equivalents or government backed securities, but excluding
from the definition of "Capital Expenditures" any expenditures by the Issuer or
any of its Subsidiaries to the extent the source of funds for which expenditures
was the proceeds of an equity offering by the Issuer consummated after the Issue
Date or the proceeds of any Subordinated Indebtedness incurred by the Issuer or
any of its Subsidiaries after the Issue Date in compliance with the terms of
this Indenture, and further excluding from the definition of "Capital
Expenditures" any expenditures by the Issuer or any of its Subsidiaries to the
extent such expenditures constitute SG&A not prohibited by the terms of this
Indenture, and further excluding from the definition of "Capital Expenditures"
any expenditures by the Issuer or any of its Subsidiaries for Qualified Lease
Operating Costs.

         "CAPITALIZED LEASE OBLIGATION" means, as to any Person, the discounted
present value of the rental obligations of such Person under a lease of (or
other agreement conveying the right to use) any property (whether real, personal
or mixed) that is required to be classified and accounted for as a capital lease
obligation at such date, determined in accordance with GAAP.

         "CAPITAL STOCK" means: (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and including any
warrants, options or rights to acquire any of the foregoing and instruments
convertible into any of the foregoing, and (b) with respect to any Person that
is not a corporation, any and all partnership or other equity interests of such
Person.

         "CASH COUPON" means 11 1/2% or such higher coupon payable in cash to
the holders of the Notes pursuant to this Indenture.

         "CASH EQUIVALENTS" means: (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's; (c) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (d)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000; (e)
repurchase obligations with a term of not more than seven days for underlying

                                        4
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securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above; and (f) money market
mutual or similar funds having assets in excess of $100,000,000.

         "CEO NOTE OPTIONS" has the meaning set forth in Section 4.32.

         "CHANGE OF CONTROL" means the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Issuer to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "GROUP") (whether or not otherwise in
compliance with the provisions of this Indenture); (b) the adoption by the
holders of Capital Stock of the Issuer of any plan or proposal for the
liquidation or dissolution of the Issuer (whether or not otherwise in compliance
with the provisions of this Indenture); (c) any Person or Group shall become the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 35% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock of the Issuer; or (d) the replacement of a
majority of the Board of Directors of the Issuer over a two-year period from the
directors who constituted the Board of Directors of the Issuer at the beginning
of such period with directors whose replacement shall not have been approved (by
recommendation, nomination or election, as the case may be) by a vote of at
least a majority of the Board of Directors of the Issuer then still in office
who either were members of such Board of Directors at the beginning of such
period or whose election as a member of such Board of Directors was previously
so approved.

         "CHANGE OF CONTROL OFFER" has the meaning provided in Section 4.15.

         "CHANGE OF CONTROL PAYMENT DATE" has the meaning provided in Section
4.15.

         "CLOSING SG&A RATIO" means, for any applicable calendar period, (a) $5
million or such lower amount budgeted prior to the Issue Date by the Issuer for
SG&A for such calendar period divided by (b) the Total Assets at the end of the
calendar quarter in which the Issue Date occurs.

         "COLLATERAL" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
to, or purported to be subject to, the Lien of this Indenture or any of the
Security Documents.

         "COLLATERAL ACCOUNT" shall have the meaning provided in Section 12.08.

         "COLLATERAL PROCEEDS" means any Net Cash Proceeds received from an
Asset Sale involving Collateral.

         "COMMISSION" means the Securities and Exchange Commission.

         "COMMON STOCK" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

         "CONSOLIDATED EBITDA" means, for any period, the sum (without
duplication) of: (a) Consolidated Net Income, and (b) to the extent Consolidated
Net Income has been reduced thereby, (i) all income taxes of the ISSUER or any
Subsidiary paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions outside the ordinary
course of business), (ii) Consolidated Interest Expense, (iii) the amount of any
Preferred Stock dividends paid by the Issuer, and (iv) Consolidated Non-cash
Charges, less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for the Issuer and its
Subsidiaries in accordance with GAAP.

         "CONSOLIDATED EBITDA COVERAGE RATIO" means, with respect to the Issuer,
the ratio of: (a) Consolidated EBITDA of the Issuer during the four full fiscal
quarters for which financial information in respect thereof is available (the
"FOUR QUARTER PERIOD") ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated EBITDA Coverage Ratio (the
"TRANSACTION DATE") to (b) Consolidated Fixed Charges of the Issuer for the Four
Quarter Period.

                                        5
<Page>

For purposes of this definition, "CONSOLIDATED EBITDA" and "CONSOLIDATED FIXED
CHARGES" shall be calculated after giving effect (without duplication) on a pro
forma basis for the period of such calculation to: (a) the incurrence or
repayment of any Indebtedness of the Issuer or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period, and (b) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of the Issuer or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness, and also including, without limitation, any Consolidated EBITDA
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If the
Issuer or any Subsidiary directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Issuer or such Subsidiary, as the case may be,
had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "CONSOLIDATED FIXED CHARGES" for purposes of
determining the denominator (but not the numerator) of this "CONSOLIDATED EBITDA
COVERAGE RATIO": (i) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (ii) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; (iii) notwithstanding clauses (i)
and (ii) above, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.

         "CONSOLIDATED EBITDA TO CASH INTEREST EXPENSE RATIO" means, with
respect to the last day of a particular fiscal quarter of the Issuer, the ratio
of: (1) Consolidated EBITDA during such fiscal quarter to; (2) Consolidated
Interest Expense paid in cash for such fiscal quarter.

For purposes of this definition, "Consolidated EBITDA" and "Consolidated
Interest Expense" will be calculated after giving effect, without duplication,
on a pro forma basis for the calculation period to: (1) the incurrence or
repayment of Indebtedness, other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the relevant fiscal
quarter as if such incurrence or repayment, as the case may be, occurred on the
first day of the relevant fiscal quarter, and (2) any Asset Sales or Asset
Acquisitions occurring during the relevant fiscal quarter as if such Asset Sale
or Asset Acquisition occurred on the first day of the relevant fiscal quarter.
If the Issuer or any Subsidiary guarantees Indebtedness of a third Person, the
preceding sentence will give effect to the incurrence of such guaranteed
Indebtedness as if the Issuer or such Subsidiary had directly incurred or
otherwise assumed such guaranteed Indebtedness.

In addition, in calculating "Consolidated Interest Expense" for purposes of
determining the denominator (but not the numerator) of the Consolidated EBITDA
to Cash Interest Expense Ratio: (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the last day of the relevant fiscal
quarter of the Issuer and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate equal to the rate of interest on
such Indebtedness in effect on such day; (2) if interest on any Indebtedness
actually incurred on the last day of the relevant fiscal quarter of the Issuer
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on such day will be deemed to have been in effect during
the relevant fiscal quarter; and (3) notwithstanding clauses (1) and (2) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap Obligations, will be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.

         "CONSOLIDATED FIXED CHARGES" means, with respect to the Issuer for any
period, the sum, without duplication, of: (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring

                                        6
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Indebtedness of the Issuer and its Subsidiaries prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness), PLUS (b) the
product of (i) the amount of all dividend payments on any series of Preferred
Stock of the Issuer (other than dividends paid in Qualified Capital Stock) paid,
accrued or scheduled to be paid or accrued during such period times (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local income
tax rate of such Person, expressed as a decimal.

         "CONSOLIDATED INTEREST EXPENSE" means, with respect to the Issuer for
any period, the sum of, without duplication: (a) the aggregate of the interest
expense of the Issuer and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (i)
any amortization of original issue discount, (ii) the net costs under Interest
Swap Obligations, (iii) all capitalized interest and (iv) the interest portion
of any deferred payment obligation; and (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Issuer and its Subsidiaries during such period, as determined on
a consolidated basis in accordance with GAAP.

         "CONSOLIDATED NET INCOME" means, with respect to the Issuer for any
period, the aggregate net income (or loss) of the Issuer and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
PROVIDED, HOWEVER, that there shall be excluded therefrom: (a) after-tax gains
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified in accordance with GAAP as extraordinary or nonrecurring gains,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary or is merged or
consolidated with the Issuer or any Subsidiary, (d) the net income of any
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by charter,
contract, operation of law or otherwise, (e) the net income of any Person in
which the Issuer or any Subsidiary has an interest, other than a Subsidiary,
except to the extent of cash dividends or distributions actually paid to the
Issuer or to a Subsidiary by such Person, (f) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (g) in the case of a successor to the Issuer by consolidation
or merger or as a transferee of the Issuer's assets, any net income of the
successor corporation prior to such consolidation, merger or transfer of assets.

         "CONSOLIDATED NET WORTH" of any Person as of any date means the
consolidated stockholders' equity of such Person, determined on a consolidated
basis in accordance with GAAP, less (without duplication) amounts attributable
to Disqualified Capital Stock of such Person.

         "CONSOLIDATED NON-CASH CHARGES" means, with respect to the Issuer, for
any period, the aggregate depreciation, depletion, amortization and other
non-cash expenses of the Issuer and its Subsidiaries reducing Consolidated Net
Income of the Issuer for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).

         "CONSOLIDATION" or "CONSOLIDATION" means, with respect to any Person,
the consolidation of the accounts of the Subsidiaries of such Person with those
of such Person, all in accordance with GAAP. The term "consolidated" has a
correlative meaning to the foregoing.

         "CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 180 East Fifth Street, Saint Paul, Minnesota 55101.

         "COVENANT DEFEASANCE" has the meaning set forth in Section 8.01.

         "CRUDE OIL AND NATURAL GAS BUSINESS" means (i) the acquisition,
exploration, development, operation and disposition of interests in oil, gas and
other hydrocarbon properties located in North America, and (ii) the gathering,
marketing, treating, processing, storage, selling and transporting of any
production from such interests or properties of the Issuer or of others.

         "CRUDE OIL AND NATURAL GAS HEDGE AGREEMENTS" means, with respect to any
Person, any oil and gas agreements and other agreements or arrangements or any
combination thereof entered into by such Person in the ordinary course of
business and that is designed to provide protection against oil and natural gas
price fluctuations.

                                        7
<Page>

         "CRUDE OIL AND NATURAL GAS PROPERTIES" means all Properties, including
equity or other ownership interests therein, owned by any Person which have been
assigned "proved oil and gas reserves" as defined in Rule 4-10 of Regulation S-X
of the Securities Act as in effect on the Issue Date.

         "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Issuer or any Subsidiary of the Issuer against fluctuations in currency values.

         "CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

         "DEFAULT" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.

         "DEFAULT INTEREST PAYMENT DATE" has the meaning set forth in Section
2.12.

         "DEPOSITORY" means The Depository Trust Company, its nominees and
successors.

         "DISQUALIFIED CAPITAL STOCK" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is mandatorily redeemable at the sole option of the
holder thereof, in whole or in part, in either case, on or prior to the final
maturity of the Notes.

         "DRILLING EXPENDITURES" means any direct or indirect expenditure, in
each case, whether expensed or capitalized, in respect of drilling.

         "EASTSIDE COAL" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.

         "EXCESS CASH FLOW" means, for any period, Consolidated EBITDA of the
Issuer and its Subsidiaries for such period, minus any increase in the Net
Working Capital of the Issuer and its Subsidiaries from the beginning of such
period to the end of a such period or plus any decrease in the Net Working
Capital of the Issuer and its Subsidiaries from the beginning of such period to
the end of a such period (as the case may be), minus Capital Expenditures made
by the Issuer and its Subsidiaries during that period to the extent such Capital
Expenditures did not reduce Consolidated EBITDA, minus any cash interest paid by
the Issuer and its Subsidiaries during that period, minus any cash taxes paid by
the Issuer and its Subsidiaries during that period, minus any amount applied by
the Issuer and its Subsidiaries to Pay Down Debt during that period, minus (to
the extent included in Consolidated EBITDA) any proceeds received during that
period from any equity offering by the Issuer or from any Subordinated
Indebtedness of the Issuer or any of its Subsidiaries.

         "EQUITY OFFERING" means an offering of Qualified Capital Stock of the
Issuer.

         "EVENT OF DEFAULT" has the meaning provided in Section 6.01.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.

         "EXCHANGE NOTES" has the meaning set forth in the second paragraph of
this Indenture.

         "FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Issuer acting reasonably and in good faith and shall be evidenced by a Board
Resolution of the Issuer delivered to the Trustee; PROVIDED, HOWEVER, that if
the aggregate non-cash consideration to be received by the Issuer or any
Subsidiary from any Asset Sale shall reasonably be expected to exceed
$5,000,000, then fair market value shall be determined by an Independent
Advisor.

                                        8
<Page>

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board as of any date of determination.

         "GLOBAL NOTES" has the meaning provided in Section 2.01.

         "GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part) (but if in part, only to the extent thereof); PROVIDED,
HOWEVER, that the term "GUARANTEE" shall not include (A) endorsements for
collection or deposit in the ordinary course of business and (B) guarantees
(other than guarantees of Indebtedness) by the Issuer in respect of assisting
one or more Subsidiaries in the ordinary course of their respective businesses,
including without limitation guarantees of trade obligations and operating
leases, on ordinary business terms. The term "GUARANTEE" used as a verb has a
corresponding meaning.

         "GUARANTEES" has the meaning set forth in Section 11.01.

         "HEDGE AGREEMENTS" means any and all transactions, agreements, or
documents now existing or hereafter entered into between the Issuer or any of
its Subsidiaries and the Senior Credit Facility Representative or any Affiliate
of the Senior Credit Facility Representative, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Issuer's or any of its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.

         "HOLDER" means any Person holding a Note of record.

         "HYDROCARBONS" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all constituents, elements or compounds thereof and products processed
therefrom.

         "INCUR" means, with respect to any Indebtedness, to create, incur,
assume, guarantee, acquire, become liable, contingently or otherwise, with
respect to such Indebtedness, or otherwise become responsible for the payment
thereof.

         "INDEBTEDNESS" means with respect to any Person, without duplication:
(a) all Obligations of such Person for borrowed money, (b) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all Capitalized Lease Obligations of such Person, (d) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable), (e) all Obligations for the
reimbursement of any obligor on a letter of credit, banker's acceptance or
similar credit transaction, (f) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (a) through (e) above and clause
(h) below, (g) all Obligations of any other Person of the type referred to in
clauses (a) through (f) above which are secured by any Lien on any property or
asset of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount of the
Obligation so secured, (h) all Obligations under Currency Agreements and
Interest Swap Obligations, (i) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed redemption price or repurchase price, and (j)
all Obligations in respect of production payments and forward sales.

For purposes hereof, the "MAXIMUM FIXED REPURCHASE PRICE" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified

                                        9
<Page>

Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the Issuer.

The "AMOUNT" or "PRINCIPAL AMOUNT" of Indebtedness at any time of determination
as used herein represented by: (1) any Indebtedness issued at a price that is
less than the principal amount at maturity thereof shall be the face amount of
the liability in respect thereof, (2) any Capitalized Lease Obligation shall be
the amount determined in accordance with the definition thereof, (3) any
Interest Swap Obligations included in the definition of Permitted Indebtedness
shall be zero, (4) all other unconditional obligations shall be the amount of
the liability thereof determined in accordance with GAAP, and (5) all other
contingent obligations shall be the maximum liability at such date of such
Person.

         "INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.

         "INDEPENDENT ADVISOR" means a reputable accounting, appraisal or
nationally recognized investment banking, engineering or consulting firm which:
(a) does not, and whose directors, officers and employees or Affiliates do not,
have a direct or indirect material financial interest in the Issuer, and (b) in
the judgment of the Board of Directors of the Issuer, is otherwise
disinterested, independent and qualified to perform the task for which it is to
be engaged.

         "INITIAL NOTES" has the meaning set forth in the second paragraph of
this Indenture.

         "INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.

         "INTERCREDITOR AGREEMENT" means the Intercreditor and Subordination
Agreement to be dated on or about the Issue Date entered into by and between the
Senior Credit Facility Representative and the Trustee and also acknowledged by
the Issuer and certain Subsidiaries of the Issuer, or any successor or
replacement agreement, as such agreement has been or may be amended (including
any amendment and restatement thereof), supplemented, replaced, restated or
otherwise modified from time to time.

         "INTEREST" when used with respect to any Note means the amount of all
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Liquidated Damages pursuant to the Registration
Rights Agreement.

         "INTEREST PAYMENT DATE" means the stated maturity of an installment of
interest on the Notes.

         "INTEREST SWAP OBLIGATION" means the obligations of any Person pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.

         "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.

         "INVESTMENT" means, with respect to any Person, any direct or indirect:
(a) loan, advance or other extension of credit (including, without limitation, a
guarantee) or capital contribution (by means of any transfer of cash or other
property (valued at the fair market value thereof as of the date of transfer) to
others or any payment for property or services for the account or use of
others), (b) purchase or acquisition by such Person of any Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by any
other Person (whether by merger, consolidation, amalgamation or otherwise and
whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness), (c) guarantee or assumption of the Indebtedness of
any other Person (other than the guarantee or assumption of Indebtedness of such
Person or a Subsidiary of such Person which guarantee or assumption is made in
compliance with Section 4.12), and (d) other items that would be classified as
investments on a balance sheet of such Person prepared in accordance with GAAP.
Notwithstanding the foregoing, "INVESTMENT" shall exclude extensions of trade
credit by the Issuer and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Issuer or such Subsidiary, as the
case may be. The amount of any Investment shall not be adjusted for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment. If the Issuer or

                                       10
<Page>

any Subsidiary sells or otherwise disposes of any Capital Stock of any
Subsidiary such that, after giving effect to any such sale or disposition, it
ceases to be a Subsidiary of the Issuer, the Issuer shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Capital Stock of such Subsidiary not sold or disposed of.

         "ISSUE DATE" means the date of original issuance of the Notes.

         "ISSUER" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to this Indenture and
thereafter such successor.

         "ISSUER PROPERTIES" means all Properties, and equity, partnership or
other ownership interests therein, that are related or incidental to, or used or
useful in connection with, the conduct or operation of any business activities
of the Issuer or any of its Subsidiaries, which business activities are not
prohibited by the terms of this Indenture.

         "ISSUER'S CEO" has the meaning set forth in Section 4.32.

         "LEGAL DEFEASANCE" has the meaning set forth in Section 8.01.

         "LEGAL HOLIDAY" has the meaning provided in Section 10.07.

         "LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, floating or other charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest).

         "LIQUIDATED DAMAGES" shall have the meaning assigned to such term in
the Registration Rights Agreement.

         "MATERIAL CHANGE" means an increase or decrease of more than 10% during
a fiscal quarter in the discounted future net cash flows (excluding changes that
result solely from changes in prices) from proved oil and gas reserves of the
Issuer and its Subsidiaries (before any state or federal income tax); PROVIDED,
HOWEVER, that the following will be excluded from the Material Change
calculation: (i) any acquisitions during such fiscal quarter of oil and gas
reserves that have been estimated by independent petroleum engineers and on
which a report or reports exist, (ii) any disposition of properties existing at
the beginning of such fiscal quarter that have been disposed of as provided in
Section 4.16, and (iii) any reserves added during such fiscal quarter
attributable to the drilling or recompletion of wells not included in previous
reserve estimates, but which will be included in future quarters.

         "MATURITY DATE" means May 1, 2007.

         "MOODY'S" means Moody's Investors Service, Inc. and its successors.

         "MORTGAGE" means any mortgage, deed of trust, assignment of production,
security agreement, fixture filing, guarantee of debts and liabilities, general
security agreement, financing statement or other instrument executed and
delivered by the Issuer or any Subsidiary and granting a Lien in favor of the
Trustee for the benefit of the Trustee and the Holders, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
thereof and of this Indenture.

         "NET CASH PROCEEDS" means, with respect to any Asset Sale, sale,
transfer or other disposition, the proceeds in the form of cash or Cash
Equivalents including payments in respect of deferred payment obligations when
received in the form of cash or Cash Equivalents received by the Issuer or any
Subsidiary from such Asset Sale, sale, transfer or other disposition net of: (a)
reasonable out-of-pocket expenses and fees relating to such Asset Sale, sale,
transfer or other disposition (including, without limitation, legal, accounting
and investment banking fees and sales commissions), (b) taxes paid or payable
after taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
appropriate amounts (determined by the Chief Financial Officer of the Issuer) to
be provided by the Issuer or any Subsidiary, as the case may be, as a reserve,
in accordance with GAAP, against any post closing adjustments or liabilities
associated with such Asset Sale, sale, transfer or other disposition and
retained by the Issuer or any Subsidiary, as the case may be, after such Asset
Sale, sale, transfer or other disposition including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, sale, transfer or other

                                       11
<Page>

disposition (but excluding any payments which, by the terms of the indemnities
will not, be made during the term of the Notes), and (d) the aggregate amount of
cash and Cash Equivalents so received which is used to retire any then existing
Indebtedness (other than Indebtedness under the Senior Credit Agreement,
Qualified Senior Affiliate Indebtedness or the Notes) of the Issuer or such
Subsidiary which is secured by a Lien on the property subject of the Asset Sale,
sale, transfer or other disposition.

         "NET WORKING CAPITAL" means: (a) all current assets of the Issuer and
its consolidated Subsidiaries, MINUS (b) all current liabilities of the Issuer
and its consolidated Subsidiaries, except current liabilities included in
Indebtedness, MINUS (c) all cash of the Issuer and its Subsidiaries, in each
case as set forth in financial statements of the Issuer prepared in accordance
with GAAP.

         "NEWCO CANADA" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.

         "NON-COLLATERAL PROCEEDS" means any Net Cash Proceeds received from an
Asset Sale, to the extent such Asset Sale did not involve the sale, transfer, or
disposition of Collateral.

         "NON-U.S. PERSON" means a Person who is not a U.S. person, as defined
in Regulation S.

         "NOTES" means the Initial Notes, the Exchange Notes and the PIK Notes,
as amended or supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture.

         "OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.

         "OFFER TO EXCHANGE" means the confidential Offer to Exchange dated
December 9, 2002 of the Issuer relating to the offering of the Notes, as amended
or supplemented.

         "OFFICER" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.

         "OFFICERS' CERTIFICATE" means a certificate signed by two Officers of
the Issuer complying with the requirements of Sections 10.04 and 10.05, as they
relate to the giving of an Officers' Certificate.

         "OIL AND GAS ASSETS" means the Crude Oil and Natural Gas Properties and
natural gas processing facilities of the Issuer and/or any of its Subsidiaries.

         "OPINION OF COUNSEL" means a written opinion addressed to the Trustee
from legal counsel who is reasonably acceptable to the Trustee complying with
the requirements of Sections 10.04 and 10.05, as they relate to the giving of an
Opinion of Counsel.

         "PAY DOWN DEBT" means: (a) first, making a payment under the Senior
Credit Agreement with a permanent reduction of the indebtedness outstanding
under the Senior Credit Agreement to the extent making a payment on the Senior
Credit Agreement with a permanent reduction of the indebtedness outstanding
under the Senior Credit Agreement is required under the terms of the Senior
Credit Agreement and/or the Intercreditor Agreement; (b) second, making a
payment of principal and/or accrued interest on, or redeeming, exchanging,
discharging, defeasing, or purchasing and retiring, Notes in whole or in part,
to the extent permitted by the Senior Credit Agreement and the Intercreditor
Agreement; (c) third, (i) first, making scheduled or mandatory paydowns on
Indebtedness under the Senior Credit Agreement and paying down any term loans
under the Senior Credit Agreement to the extent permitted by the Senior Credit
Agreement, whether or not then due and payable ("Term Loan Paydowns"), and if
all Term Loan Paydowns are made (the "Term Loan Amounts") so that such
outstanding amounts under the Senior Credit Agreement have been paid down
completely, then (ii) second, any amount remaining after payment of the Term
Loan Amounts will be applied to outstanding amounts under any revolving credit
tranche under the Senior Credit Agreement for permanent reduction of the
commitment under the revolving credit tranche, and if no amounts are outstanding
under any such revolving credit tranche, then at that time the Issuer will
terminate that credit facility, and (d) fourth, making a payment of principal
and/or

                                       12
<Page>

accrued interest on, or redeeming, exchanging, discharging, defeasing, or
purchasing and retiring, Notes in whole or in part.

         "PAYING AGENT" has the meaning provided in Section 2.03, and includes
any additional Paying Agent.

         "PAYMENT RESTRICTION" shall have the meaning set forth in Section 4.13.

         "PERMITTED FARMOUT AGREEMENTS" shall have the meaning set forth in
Section 4.31.

         "PERMITTED INDEBTEDNESS" means, without duplication, each of the
following: (a) Indebtedness under the Notes, this Indenture, the Guarantees and
the Security Documents; (b) Obligations under Interest Swap Obligations of the
Issuer or a Subsidiary covering Indebtedness of the Issuer or any of its
Subsidiaries; PROVIDED that such Interest Swap Obligations are entered into to
protect the Issuer and its Subsidiaries against fluctuations in interest rates
on Indebtedness incurred in accordance with this Indenture to the extent the
notional principal amount of such Interest Swap Obligations does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates; (c) Indebtedness of a Subsidiary to the Issuer or to a Wholly Owned
Subsidiary for so long as such Indebtedness is held by the Issuer or a Wholly
Owned Subsidiary, in each case subject to no Lien held by a Person other than
the Issuer or a Wholly Owned Subsidiary; PROVIDED, HOWEVER, that if as of any
date any Person other than the Issuer or a Wholly Owned Subsidiary owns or holds
any such Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness; (d) Indebtedness of the Issuer
to a Wholly Owned Subsidiary for so long as such Indebtedness is held by a
Wholly Owned Subsidiary, in each case subject to no Lien; PROVIDED, HOWEVER,
that (i) any Indebtedness of the Issuer to any Wholly Owned Subsidiary that is
not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written
agreement, to the Issuer's Obligations under this Indenture and the Notes and
(ii) if as of any date any Person other than a Wholly Owned Subsidiary owns or
holds any such Indebtedness or holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Issuer; (e) Indebtedness arising from the honoring
by a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that
such Indebtedness is extinguished within two Business Days of incurrence; (f)
Indebtedness of the Issuer or any of its Subsidiaries represented by letters of
credit for the account of the Issuer or any of its Subsidiaries, as the case may
be, in order to provide security for workers' compensation claims, payment
obligations in connection with self-insurance or similar requirements in the
ordinary course of business; (g) Capitalized Lease Obligations and Purchase
Money Indebtedness of the Issuer or any of its Subsidiaries not to exceed
$2,000,000 at any one time outstanding; (h) Permitted Operating Obligations in
an aggregate amount at any time outstanding not to exceed $750,000; (i)
Obligations arising in connection with Crude Oil and Natural Gas Hedge
Agreements with financial institutions (excluding forward sales and production
payments); (j) Indebtedness under Currency Agreements with financial
institutions; PROVIDED, HOWEVER, that in the case of Currency Agreements which
relate to Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Issuer and its Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder; (k) additional Indebtedness of
the Issuer or any of its Subsidiaries in an aggregate principal amount at any
time outstanding not to exceed $500,000; (l) Indebtedness outstanding on the
Issue Date (to the extent the Indebtedness thereunder is not taken up by the
Notes); (m) Indebtedness under the Senior Credit Agreement (including (i) any
fees and expenses incurred by the Issuer or any of its Subsidiaries incurred in
connection with the Senior Credit Agreement (including, but not limited to,
those owed to any Person not affiliated to the Issuer or any of its
Subsidiaries) in connection with any amendment (including any amendment and
restatement thereof), supplement, replacement, restatement or other modification
from time to time, including any agreements (and related instruments and
documents) extending the maturity of, refinancing, replacement or other
restructuring of all or any portion of the Indebtedness under such Senior Credit
Agreement (and related instruments and documents) or any successor or
replacement agreements (and related instruments and documents) and (ii) any
capitalized interest, fees, or other expenses incurred by the Issuer or any of
its Subsidiaries whether or not charged to a loan account or any similar account
created under the Senior Credit Agreement (clauses (i) and (ii), the "Related
Indebtedness")); provided, that the principal amount of the Indebtedness under
the Senior Credit Agreement (excluding the Related Indebtedness and excluding
any Qualified Senior Affiliate Indebtedness) shall not at any time exceed the
sum of (1) $50 million less the aggregate amount applied from time to time by
the Issuer or any of its Subsidiaries to repay the Senior Credit Agreement
Indebtedness which is accompanied by a corresponding permanent reduction of the
Revolver Commitment (as defined in the Senior Credit Agreement) plus (2) (x) $15
million, if the then applicable Revolver Commitment under the Senior Credit
Agreement is $25 million or greater, (y) $10 million, if the then applicable
Revolver Commitment under the Senior Credit Agreement is less than $25 million
and greater than or equal to $15

                                       13
<Page>

million or (z) $5 million, if the then applicable Revolver Commitment under the
Senior Credit Agreement is less than $15 million ("Indebtedness under the Senior
Credit Agreement"); provided further that, the aggregate amount that has been
applied by the Issuer or any of its Subsidiaries to repay the Indebtedness under
the Senior Credit Agreement which was accompanied by a corresponding permanent
commitment reduction can be established by the Issuer at any time by providing
the Trustee with an Officers' Certificate stating such amount; (n) Qualified
Senior Affiliate Indebtedness; and (o) Permitted Subordinated Indebtedness.

         "PERMITTED INDUSTRY INVESTMENTS" means: (a) capital expenditures,
including, without limitation, acquisitions of Issuer Properties and interests
therein; (b) (i) entry into operating agreements, joint ventures, working
interests, royalty interests, mineral leases, unitization agreements, pooling
arrangements or other similar or customary agreements, transactions, properties,
interests or arrangements, and Investments and expenditures in connection
therewith or pursuant thereto, in each case made or entered into in the ordinary
course of the oil and gas business, and (ii) exchanges of Issuer Properties for
other Issuer Properties of at least equivalent value as determined in good faith
by the Board of Directors of the Issuer; and (c) Investments of operating funds
on behalf of co-owners of Crude Oil and Natural Gas Properties of the Issuer or
the Subsidiaries pursuant to joint operating agreements.

         "PERMITTED INVESTMENTS" means: (a) Investments by the Issuer or any
Subsidiary in any Person that (i) is or will become immediately after such
Investment a Subsidiary or that will merge or consolidate into the Issuer or a
Subsidiary, and (ii) is not subject to any Payment Restriction; (b) Investments
in the Issuer by any Subsidiary; PROVIDED, HOWEVER, that any Indebtedness
evidencing any such Investment held by a Subsidiary that is not a Subsidiary
Guarantor is unsecured and subordinated, pursuant to a written agreement, to the
Issuer's Obligations under the Notes and this Indenture; (c) investments in cash
and Cash Equivalents; (d) Investments made by the Issuer or its Subsidiaries as
a result of consideration received in connection with an Asset Sale made in
compliance with Section 4.16; (e) Permitted Industry Investments; and (f)
Investments in any Person so long as such Investments are made on an
arm's-length basis.

         "PERMITTED LIENS" means each of the following types of Liens: (a) Liens
arising under this Indenture or the Security Documents; (b) Liens securing the
Notes and the Guarantees ; (c) Liens for taxes, assessments or governmental
charges or claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Issuer or a Subsidiary, as the case
may be, shall have set aside on its books such reserves as may be required
pursuant to GAAP; (d) statutory and contractual Liens of landlords to secure
rent arising in the ordinary course of business to the extent such Liens relate
only to the tangible property of the lessee which is located on such property
and Liens of carriers, warehousemen, mechanics, builders, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof; (e) Liens incurred on deposits
made in the ordinary course of business: (i) in connection with workers'
compensation, unemployment insurance and other types of social security,
including any Lien securing letters of credit issued in the ordinary course of
business consistent with past practice in connection therewith, or (ii) to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money); (f) easements, rights-of-way, zoning restrictions, restrictive
covenants, minor imperfections in title and other similar charges or
encumbrances in respect of real property not interfering in any material respect
with the ordinary conduct of the business of the Issuer or any of its
Subsidiaries; (g) any interest or title of a lessor under any Capitalized Lease
Obligation not prohibited by the terms of this Indenture; PROVIDED that such
Liens do not extend to any Property which is not leased Property subject to such
Capitalized Lease Obligation; (h) Liens securing reimbursement obligations, not
to exceed $100,000 in the aggregate at any time outstanding, with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof; (i) Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Issuer or any of its
Subsidiaries, including rights of offset and set-off; (j) Liens securing
Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness
that is otherwise permitted under this Indenture and Liens securing Crude Oil
and Natural Gas Hedge Agreements; (k) statutory Liens on pipeline or pipeline
facilities, Hydrocarbons or Properties of the Issuer and its Subsidiaries which
arise out of operation of law; (l) royalties, overriding royalties, net profit
interests, reversionary interests, operating agreements and other similar
interests, properties, arrangements and agreements, all as ordinarily exist with
respect to Properties of the Issuer and its Subsidiaries or otherwise as are
customary in the oil and gas business and all as relate to mineral leases and
mineral interests of the Issuer and its Subsidiaries; (m) Liens arising under
Permitted Farmout Agreements; ; (n) any (i) interest or title of a lessor or
sublessor under any lease, (ii) restriction or encumbrance that the interest or
title of such lessor or sublessor may be subject to (including, without
limitation, ground leases or other prior leases of the demised premises,
mortgages, mechanics' Liens, builders' Liens, tax Liens, and

                                       14
<Page>

easements), or (iii) subordination of the interest of the lessee or sublessee
under such lease to any restrictions or encumbrance referred to in the preceding
clause (ii); (o) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or instruments of
the Issuer or any Subsidiary on deposit with or in possession of such bank; (p)
judgment and attachment Liens not giving rise to an Event of Default; (q) Liens
securing Acquired Indebtedness incurred in accordance with Section 4.12;
PROVIDED, HOWEVER, that (i) such Liens secured such Acquired Indebtedness at the
time of and prior to the incurrence of such Acquired Indebtedness by the Issuer
or a Subsidiary and were not granted in connection with, or in anticipation of,
the incurrence of such Acquired Indebtedness by the Issuer or a Subsidiary and
(ii) such Liens do not extend to or cover any property or assets of the Issuer
or of any of its Subsidiaries other than the property or assets that secured the
Acquired Indebtedness (and the proceeds of such property and assets) prior to
the time such Indebtedness became Acquired Indebtedness of the Issuer or a
Subsidiary and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by
the Issuer or a Subsidiary; (r) Liens existing on the Issue Date; (s) Liens
securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness permitted under this Indenture and which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; PROVIDED, HOWEVER, that such Liens (i) are no
less favorable to the Holders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced and (ii) do not extend to or cover any Property of the Issuer or any
of its Subsidiaries that would not have secured the Indebtedness so Refinanced
under the terms of the documents governing the Liens securing the Indebtedness
being Refinanced; (t) Liens securing Indebtedness of the Issuer or any
Subsidiary in an aggregate principal amount at any time outstanding not to
exceed the sum of $500,000; and (u) Liens arising under the Senior Credit
Agreement or the guarantees and security documents entered into in connection
with the Senior Credit Agreement, and Liens securing Qualified Senior Affiliate
Indebtedness.

         "PERMITTED OPERATING OBLIGATIONS" means Indebtedness of the Issuer or
any Subsidiary in respect of one or more standby letters of credit, bid,
performance or surety bonds, or other reimbursement obligations, issued for the
account of, or entered into by, the Issuer or any Subsidiary in the ordinary
course of business consistent with past practices (excluding obligations related
to the purchase by the Issuer or any Subsidiary of Hydrocarbons for which the
Issuer or such Subsidiary has contracts to sell), or in lieu of any thereof or
in addition to any thereto, guarantees and letters of credit supporting any such
obligations and Indebtedness (in each case, other than for an obligation for
borrowed money, other than borrowed money represented by any such letter of
credit, bid, performance or surety bond, or reimbursement obligation itself, or
any guarantee and letter of credit related thereto).

         "PERMITTED SUBORDINATED INDEBTEDNESS" has the meaning provided in
Section 4.30.

         "PERSON" means an individual, partnership, corporation, unincorporated
organization, limited liability company, trust, estate, or joint venture, or a
governmental agency or political subdivision thereof.

         "PHYSICAL NOTES" has the meaning provided in Section 2.01.

         "PIK NOTES" has the meaning provided in Section 2.14.

         "PREFERRED STOCK" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.

         "PRINCIPAL" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.

         "PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Notes constituting Restricted Securities in the form set forth in the initial
paragraph of Section 2.15.

         "PRO FORMA" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Issuer in consultation with its independent public
accountants.

         "PROPERTY" or "PROPERTY" means, with respect to any Person, any
interests of such Person in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
Capital Stock, partnership interests and other equity or ownership interests in
any other Person.

                                       15
<Page>

         "PURCHASE MONEY INDEBTEDNESS" means Indebtedness the net proceeds of
which are used to finance the cost (including the cost of construction) of
property or assets acquired in the normal course of business by the Person
incurring such Indebtedness.

         "Q1-2003 BUDGET" equals the Q1-2003 Closing Budget Ratio multiplied by
the Total Assets at March 31, 2003.

         "Q1-2003 CAPEX AMOUNT" equals the lesser of $8 million and the Q1-2003
Budget.

         "Q1-2003 CLOSING BUDGET RATIO" equals (a) $8 million or such lower
amount budgeted prior to the Issue Date by the Issuer for Capital Expenditures
for the first calendar quarter of 2003 divided by (b) Total Assets at the end of
the calendar quarter in which the Issue Date occurs.

         "Q2,3,4-2003 BUDGET" equals, for each of the last three calendar
quarters of 2003, the applicable Q2,3,4-2003 Closing Budget Ratio multiplied by
the Total Assets at the start of the applicable calendar quarter in 2003.

         "Q2,3,4-2003 CAPEX AMOUNT" equals, for each of the last three calendar
quarters of 2003, the lesser of $2.5 million and the Q2,3,4-2003 Budget.

         "Q2,3,4-2003 CLOSING BUDGET RATIO" equals, for each of the last three
calendar quarters of 2003, (a) $2.5 million or such lower amount budgeted prior
to the Issue Date by the Issuer for Capital Expenditures for such calendar
quarter divided by (b) Total Assets at the end of the calendar quarter in which
the Issue Date occurs.

         "QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.

         "QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.

         "QUALIFIED LEASE OPERATING COSTS" means lease operating costs
reasonably incurred in the ordinary course of business consistent with past
practices and industry standards pursuant to a budget approved by the Board of
Directors of the Issuer and relating to proved developed oil and gas properties.

         "QUALIFIED SENIOR AFFILIATE INDEBTEDNESS" means Indebtedness of the
Issuer to the Senior Credit Facility Representative, any Senior Credit Facility
Lender or any Affiliate of the Senior Credit Facility Representative or any such
lender in connection with (x) hedging activities (i.e., Indebtedness under Hedge
Agreements) or (y) cash management services entered into in the ordinary course
of business with any such Person (i.e., Indebtedness under Bank Products
Agreements).

         "RECORD DATE" means the record dates specified in the Notes.

         "REDEMPTION DATE," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.

         "REDEMPTION PRICE," when used with respect to any Note to be redeemed,
means the price fixed for such redemption, including principal and premium, if
any, pursuant to this Indenture and the Notes.

         "REFINANCE" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "REFINANCED" and "REFINANCING"
shall have correlative meanings.

         "REFINANCING INDEBTEDNESS" means any Indebtedness that is the result of
Refinancing by the Issuer or any Subsidiary of Indebtedness incurred in
accordance with Section 4.12 (other than pursuant to clause (a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l) or (o) of the definition of Permitted
Indebtedness), in each case that does not: (1) result in an increase in the
aggregate principal amount of Indebtedness of the Issuer or such Subsidiary as
of the date of such proposed Refinancing (other than increases from any premium
required to be paid under the terms of the instrument governing such
Indebtedness, capitalized interest, and the amount of reasonable expenses
incurred by the Issuer or such Subsidiary in connection with such Refinancing,
all of which are included in the term "Refinancing Indebtedness"), or (2) create
Indebtedness with (A) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness

                                       16
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being Refinanced; PROVIDED, HOWEVER, that (a) if such Indebtedness being
Refinanced is Indebtedness solely of the Issuer or a Subsidiary Guarantor or is
Indebtedness of the Issuer and any Subsidiary Guarantor or Subsidiary
Guarantors, then such Refinancing Indebtedness shall be Indebtedness solely of
the Issuer or such Subsidiary Guarantor or of the Issuer and such Subsidiary
Guarantor or Subsidiary Guarantors, as the case may be, and (b) if such
Indebtedness being Refinanced is subordinate or junior to the Notes or a
Guarantee, then such Refinancing Indebtedness shall be subordinate to the Notes
or such Guarantee, as the case may be, at least to the same extent and in the
same manner as the Indebtedness being Refinanced.

         "REGISTRAR" has the meaning provided in Section 2.03.

         "REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement, entered into effective January 23, 2003, by and among Jefferies &
Company, Inc. as the dealer manager, the Issuer and the Subsidiary Guarantors.

         "REGULATION S" means Regulation S under the Securities Act.

         "RELATED PERSON" of any Person means any other Person directly or
indirectly owning 10% or more of the outstanding voting Common Stock of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person).

         "RELEASED INTERESTS" has the meaning provided in Section 12.04.

         "RESTRICTED PAYMENT" shall have the meaning set forth in Section 4.10.

         "RESTRICTED SECURITY" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; PROVIDED, HOWEVER, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.

         "RESTRICTED CASH" means, at any time, the lesser of (i) $5 million and
(ii) the minimum amount of cash required to be maintained at that time by the
Issuer pursuant to the terms of the Senior Credit Agreement.

         "ROLLOVER DECREASE" means, for a particular calendar quarter, the
amount of reduced availability of SG&A or Capital Expenditures, as the case may
be, due to any a prior quarter's SG&A Excess Amount or CapEx Excess Amount.

         "ROLLOVER INCREASE" means, for a particular calendar quarter, the
amount of increased availability of SG&A or Capital Expenditures, as the case
may be, due to any a prior quarter's SG&A Deficit Amount or CapEx Deficit
Amount.

         "RULE 144A" means Rule 144A under the Securities Act.

         "S&P" means Standard & Poor's Rating Services, a division of The McGraw
Hill Companies, Inc., and its successors.

         "SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Issuer or any Subsidiary of any Property, whether owned
by the Issuer or any Subsidiary at the Issue Date or later acquired which has
been or is to be sold or transferred by the Issuer or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced by
such Person on the security of such Property.

         "SANDIA" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.

         "SANDIA OPERATING" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.

         "SEC" means the Securities and Exchange Commission

                                       17
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         "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

         "SECURITY DOCUMENTS" means, collectively, the Mortgages and all
security agreements, mortgages, deeds of trust, collateral assignments or other
instruments evidencing or creating any security interests in favor of the
Trustee in all or any portion of the Collateral, in each case as amended,
supplemented or modified from time to time in accordance with their terms and
the terms of this Indenture.

         "SENIOR CREDIT AGREEMENT" means the Loan and Security Agreement, dated
as of January 22, 2003, entered into by the Issuer, each Subsidiary of the
Issuer signatory thereto, and the lenders named therein, or any successor or
replacement agreements, whether with the same or any other lender, group of
lenders, trustee, agent, note holder or group of note holders, together with the
related documents thereto (including, without limitation, any promissory notes,
guarantee agreements, security documents), in each case as such agreements,
instruments and documents have been or may be amended (including any amendment
and restatement thereof), supplemented, replaced, restated or otherwise modified
from time to time, including any agreements (and related instruments and
documents) extending the maturity of, refinancing, replacing or otherwise
restructuring all or any portion of the Indebtedness under such agreements (and
related instruments and documents) or any successor or replacement agreements
(and related instruments and documents).

         "SENIOR CREDIT FACILITY LENDERS" means any holders of any Indebtedness
under the Senior Credit Agreement.

         "SENIOR CREDIT FACILITY REPRESENTATIVE" means the Person designated in
the Intercreditor Agreement as the Senior Credit Facility Representative with
respect to the Senior Credit Agreement or any other Person designated to the
Trustee in a Senior Credit Facility Representative Change Notice.

         "SENIOR CREDIT FACILITY REPRESENTATIVE CHANGE NOTICE" means a written
notice of a change in the identity and/or address of the Senior Credit Facility
Representative which certifies to the Trustee (a) with respect to such a notice
that gives notice of a new Senior Credit Facility Representative, that the
Persons executing such notice constitute the holders of at least 51% in
aggregate principal amount of Indebtedness under the Senior Credit Agreement, or
(b) with respect to such a notice that only gives notice of a new address for
the Senior Credit Facility Representative, that the Person executing such notice
is the then current Senior Credit Facility Representative, and which sets forth
the new identity (by name, and by jurisdiction of organization as applicable)
and/or the new address of the Senior Credit Facility Representative.

         "SG&A" means, for any period, amounts expended by the Issuer and its
Subsidiaries on selling, general and administrative expenses (as determined in
accordance with GAAP consistent with past practices), but excluding (without
duplication with respect to such exclusions): (a) costs and expenses of the
Issuer incurred in connection with (i) issuing the Notes and shares of common
stock contemporaneously issued by the Issuer, (ii) obtaining the loan evidenced
by the Senior Credit Agreement, and (iii) the sale to PrimeWest Energy Inc. of
all of the outstanding capital stock of Canadian Abraxas Petroleum Limited and
Grey Wolf Exploration, Inc. held by the Issuer; (b) legal and accounting fees
not to exceed $40,000 in any calendar year incurred by the Issuer in connection
with preparing and filing the reports, information and documents required to be
delivered to the Trustee as described in Section 4.08; (c) bonuses paid to
officers and employees of the Issuer to the extent not in violation of Section
4.11; (d) expenditures with respect to any non-cash compensation to officers and
employees of the Issuer and its Subsidiaries; (e) amounts expended by the Issuer
and its Subsidiaries on selling, general and administrative expenses for
Canadian Abraxas Petroleum Limited and Grey Wolf Exploration, Inc.; and (f) the
Stark Fees.

         "SG&A ANNUAL AMOUNT" equals, for any annual calendar period, the lesser
of $5 million and the SG&A Budget.

         "SG&A BUDGET" means, for any annual or quarter calendar period, as the
case may be, Closing SG&A Ratio multiplied by the Total Assets at the start of
such calendar period.

         "SG&A DEFICIT AMOUNT" means, for any calendar quarter, the amount by
which the SG&A in any such quarter (excluding the amount of SG&A due to any
Rollover Decrease because of a prior quarter's SG&A Excess Amount) is less than
the applicable SG&A Quarterly Amount.

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         "SG&A EXCESS AMOUNT" means, for any calendar quarter, the amount by
which SG&A in any such quarter (excluding the amount of SG&A due to any Rollover
Increase because of a prior quarter's SG&A Deficit Amount) exceeds the
applicable SG&A Quarterly Amount.

         "SG&A QUARTERLY AMOUNT" means, for any calendar quarter, the lesser of
(a) $1.5 million and (b) one quarter of the SG&A Budget.

         "STARK FEES" shall have the meaning set forth in Section 4.31.

         "SUBORDINATED INDEBTEDNESS" means Indebtedness of the Issuer or a
Subsidiary Guarantor that is subordinated or junior in right of payment to the
Notes, the relevant Guarantee and the Security Documents, as applicable,
pursuant to a written agreement to that effect.

         "SUBSIDIARY," with respect to any Person, means: (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person, or (b) any
other Person of which at least a majority of the voting interests under ordinary
circumstances is at the time, directly or indirectly, owned by such Person; or
(c) any other Person required to be consolidated with such Person for financial
reporting purposes under GAAP. Unless otherwise specified, the term "Subsidiary"
shall mean a Subsidiary of the Issuer.

         "SUBSIDIARY GUARANTOR" means Sandia, Wamsutter, Sandia Operating,
Western Associated, Eastside Coal, and Newco Canada and each of the Issuer's
Subsidiaries that in the future executes a supplemental indenture in which such
Subsidiary agrees to be bound by the terms of this Indenture as a Subsidiary
Guarantor; PROVIDED, HOWEVER, that any Person constituting a Subsidiary
Guarantor as described above shall cease to constitute a Subsidiary Guarantor
when its Guarantee is released in accordance with the terms of this Indenture.

         "SURVIVING ENTITY" shall have the meaning set forth in Section 5.01.

         "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, except as otherwise provided in Section 9.03.

         "TOTAL ASSETS" means, as of any date, total assets of the Issuer and
its Subsidiaries as reflected on the Issuer's consolidated balance sheet as of
such date prepared in accordance with GAAP.

         "TRUST OFFICER" means any officer or assistant officer within the
Corporate Trust Office of the Trustee (or any successor group of the Trustee)
assigned by the Trustee or successor Trustee to administer this Indenture, or in
the case of a successor trustee, an officer assigned to the department, division
or group performing the corporation trust work of such successor and assigned to
administer this Indenture.

         "TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of Article Seven of this
Indenture and thereafter means such successor.

         "TRUST MONEYS" means all cash or Cash Equivalents received by the
Trustee: (a) upon the release of Collateral from the Lien of this Indenture and
the Security Documents, including investment earnings thereon; or (b) pursuant
to the provisions of any Mortgage; or (c) as proceeds of any other sale or other
disposition of all or any part of the Collateral by or on behalf of the Trustee
or any collection, recovery, receipt, appropriation or other realization of or
from all or any part of the Collateral pursuant to this Indenture or any of the
Security Documents or otherwise; or (d) for application under this Indenture as
provided for in this Indenture or the Security Documents, or whose disposition
is not elsewhere specifically provided for in this Indenture or in the Security
Documents; PROVIDED, HOWEVER, that Trust Moneys shall not include any property
deposited with the Trustee pursuant to any Change of Control Offer, a payment to
Pay Down Debt, or redemption or defeasance of any Notes.

         "U.S. GOVERNMENT OBLIGATIONS" mean direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.

         "U.S. LEGAL TENDER" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.

                                       19
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         "VALUATION DATE" has the meaning provided in Section 12.04.

         "WAMSUTTER" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.

         "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying: (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

         "WESTERN ASSOCIATED" means the party named as such in the first
paragraph of this Indenture until a successor replaces it pursuant to this
Indenture and thereafter means such successor.

         "WHOLLY OWNED SUBSIDIARY" means any Subsidiary of which all the
outstanding voting securities normally entitled to vote in the election of
directors are owned by the Issuer or another Wholly Owned Subsidiary.

         SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.

         Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:

         "INDENTURE SECURITIES" means the Notes.

         "INDENTURE SECURITY HOLDER" means a Holder.

         "INDENTURE TO BE QUALIFIED" means this Indenture.

         "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.

         "OBLIGOR" on the indenture securities means the Issuer, any Subsidiary
Guarantor or any other obligor on the Notes.

         All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.

         SECTION 1.03. RULES OF CONSTRUCTION.

         Unless the context otherwise requires:

               (1)  a term has the meaning assigned to it;

               (2)  an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP of any date of determination;

               (3)  "or" is not exclusive;

               (4)  words in the singular include the plural, and words in the
         plural include the singular;

               (5)  "herein," "hereof" and other words of similar import refer
         to this Indenture as a whole and not to any particular Article, Section
         or other subdivision; and

               (6)  any reference to a statute, law or regulation means that
         statute, law or regulation as amended and in effect from time to time
         and includes any successor statute, law or regulation; PROVIDED,
         HOWEVER, that any reference to the Bankruptcy Law shall mean the
         Bankruptcy Law as applicable to the relevant case.

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                                   ARTICLE TWO

                                    THE NOTES

         SECTION 2.01. PRINCIPAL AMOUNT; FORM AND DATING.

         (a)   PRINCIPAL AMOUNT.

         The aggregate principal amount of Notes which may be originally issued,
executed and authenticated under this Indenture is $118,250,000.00, plus such
additional principal amounts as may be necessary with respect to the issuance of
PIK Notes for the payment of interest as provided in Section 2.14 hereof.

         (b)   FORM AND DATING.

         The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of EXHIBIT A-1 hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of EXHIBIT A-2 hereto. The PIK Notes and the
Trustee's certificate of authentication relating thereto shall be substantially
in the form of EXHIBIT A-1 hereto if the PIK Notes are Restricted Securities
when issued, and the PIK Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of EXHIBIT A-2 hereto if the
PIK Notes are not Restricted Securities when issued. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Issuer and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance and shall show the date of its authentication.
Each Note shall have an executed Guarantee endorsed thereon substantially in the
form of EXHIBIT E hereto.

         The terms and provisions contained in the Notes, annexed hereto as
EXHIBITS A-1 AND A-2, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Issuer and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. The rights of the Holders under this
Indenture, the Notes and the Security Documents shall be subject to the terms of
the Intercreditor Agreement.

         Initial Notes offered and originally issued on the Issue Date to
Qualified Institutional Buyers and Initial Notes offered and originally issued
on the Issue Date to Accredited Investors shall each be issued in the form of
one or more permanent global Notes in registered form, substantially in the form
set forth in EXHIBIT A-1 (the "GLOBAL NOTES"), deposited with the Trustee, as
custodian for the Depository, duly executed by the Issuer (and having an
executed Guarantee endorsed thereon) and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in the second paragraph
of Section 2.15. The aggregate principal amount of the Global Notes may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided. Notes issued
in exchange for interests in a Global Note pursuant to Section 2.16 may be
issued in the form of permanent certificated Notes in registered form in
substantially the form set forth in EXHIBIT A-1 (the "PHYSICAL NOTES").

         Initial Notes offered and originally issued on the Issue Date to
Persons who are not QIBs or Accredited Investors, and Initial Notes issued upon
the exercise of the CEO Note Options, shall be issued in the form of one or more
Physical Notes, substantially in the form set forth in EXHIBIT A-1, duly
executed by the Issuer (and having an executed Guarantee endorsed thereon) and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in the initial paragraph of Section 2.15.

         PIK Notes issued in lieu of cash interest payments with respect to any
Physical Notes shall be issued in the form of Physical Notes. PIK Notes issued
in lieu of cash interest payments with respect to Global Notes shall be issued
in the form of Global Notes.

         The Initial Notes, the Exchange Notes and the PIK Notes shall be
treated as a single class or series of Notes for purposes of determining whether
Holders of the requisite principal amount of Notes have given any notice,
consent or waiver or taken any other action permitted hereunder.

                                       21
<Page>

         SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT.

         Two Officers, or an Officer and an Assistant Secretary of each Issuer
and each Subsidiary Guarantor, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) shall attest to, the Notes
for the Issuer and the Guarantees for the Subsidiary Guarantors by manual or
facsimile signature.

         If an Officer or Assistant Secretary whose signature is on a Note or a
Guarantee was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.

         A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.

         The Trustee shall authenticate (i) Initial Notes for original issue on
the Issue Date or afterwards upon exercise of the CEO Note Options in the
aggregate principal amount not to exceed $118,250,000.00, (ii) Exchange Notes
from time to time for issue only in exchange for a like principal amount of
Initial Notes or PIK Notes issued in relation to the Initial Notes and (iii) PIK
Notes from time to time for issue as provided in Section 2.14 hereof, in each
case upon the Trustee's receipt of a written order of the Issuer in the form of
an Officers' Certificate. Each such written order shall specify the amount of
Notes to be authenticated and the date on which the Notes are to be
authenticated, and whether the Notes are to be issued as Initial Notes, Exchange
Notes or PIK Notes and whether the Notes are to be issued in the form of
Physical Notes or Global Notes or such other information as the Trustee may
reasonably request. In addition, with respect to authentication pursuant to
clause (ii) of the first sentence of this paragraph, such written order from the
Issuer shall be accompanied by and Opinion of Counsel of the Issuer in a form
reasonably satisfactory to the Trustee stating that the issuance of the Exchange
Notes does not give rise to an Event of Default, complies with this Indenture
and has been duly authorized by the Issuer. The aggregate principal amount of
Notes outstanding at any time may not exceed $118,250,000.00, except as provided
in Sections 2.07 and 2.08, plus such principal amounts as may be necessary with
respect to the issuance of PIK Notes for the payment of interest as provided in
Section 2.14 hereof.

         The Trustee may appoint an authenticating agent (the "AUTHENTICATING
AGENT") reasonably acceptable to the Issuer to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Issuer or with any Affiliate of the Issuer.

         The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1.00 and any integral multiple thereof.

         SECTION 2.03. REGISTRAR AND PAYING AGENT.

         The Issuer shall maintain an office or agency where (a) Notes may be
presented or surrendered for registration of transfer or for exchange
("REGISTRAR") which shall initially be the Corporate Trust Office, (b) Notes may
be presented or surrendered for payment ("PAYING AGENT") which shall initially
be the agency of the Trustee located in the Borough of Manhattan in the City of
New York, State of New York, and (c) notices and demands to or upon the Issuer
in respect of the Notes and this Indenture or to or upon the Subsidiary
Guarantors in respect of their Guarantee and this Indenture may be served which
shall initially be the office of the Paying Agent or the Corporate Trust Office.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Issuer, upon prior written notice to the Trustee, may have one or
more co-Registrars and one or more additional Paying Agents reasonably
acceptable to the Trustee. The Issuer may act as its own Paying Agent, except
that for the purposes of payments on the Notes pursuant to Section 4.15 ,
neither the Issuer nor any Affiliate of the Issuer may act as Paying Agent;
provided that any such co-Registrar or Paying Agent shall deliver a certificate
to the Trustee certifying that it agrees to perform its duties in accordance
with the procedures established by the Trustee and with the terms of this
Indenture.

         The Issuer shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such

                                       22
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Agent. The Issuer shall notify the Trustee, in advance, of the name and address
of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent,
or fails to give the foregoing notice, the Trustee shall act as such.

         The Issuer and the Subsidiary Guarantors initially appoint the Trustee
as Registrar, Paying Agent and agent for service of demands and notices in
connection with the Notes and the Guarantees, until such time as the Trustee has
resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent or any other agent may resign upon 30 days' notice to the Issuer. The
Issuer may change the Paying Agent, Registrar and the agent for service of
demands and notices in connection with the Notes and the Guarantees without
notice to the Holders.

         SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.

         The Issuer shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Issuer or any other obligor on the Notes),
and the Issuer and the Paying Agent shall notify the Trustee of any Default by
the Issuer (or any other obligor on the Notes) in making any such payment. The
Issuer at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuer to the Paying
Agent, the Paying Agent shall have no further liability for such assets.

         SECTION 2.05. HOLDER LISTS.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Issuer shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.

         SECTION 2.06. TRANSFER AND EXCHANGE.

         When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes or other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; PROVIDED, HOWEVER, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Issuer, the Trustee and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registration of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Notes and the Subsidiary Guarantors shall execute
Guarantees thereon at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Issuer may require payment of a sum sufficient to cover any transfer tax, fee or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.04, 4.15 or 9.05, in which event the
Issuer shall be responsible for the payment of such taxes).

         The Registrar or co-Registrar shall not be required to register the
transfer or exchange of any Note (i) during a period beginning at the opening of
15 Business Days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.

         Any holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Note may be effected only through a book entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.

                                       23
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         SECTION 2.07. REPLACEMENT NOTES.

         If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken and
submits evidence thereof satisfactory to the Trustee, the Issuer shall issue and
the Trustee, upon receipt of a written order in the form of an Officers'
Certificate, shall authenticate a replacement Note and the Subsidiary Guarantors
shall execute a Guarantee thereon if the Trustee's requirements are met. If
required by the Trustee or the Issuer, such Holder must provide an indemnity
bond or other indemnity of reasonable tenor, sufficient in the reasonable
judgment of the Issuer, the Subsidiary Guarantors and the Trustee, to protect
the Issuer, the Subsidiary Guarantors, the Trustee or any Agent from any loss
which any of them may suffer if a Note is replaced. Every replacement Note shall
constitute an additional obligation of the Issuer and the Subsidiary Guarantors.

         SECTION 2.08. OUTSTANDING NOTES.

         Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Issuer or any of its Affiliates holds the Note.

         If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.

         If on a Redemption Date or the Maturity Date, the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes shall be
deemed not to be outstanding and interest on them shall cease to accrue.

         SECTION 2.09. TREASURY NOTES.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Issuer or an Affiliate of the Issuer shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so considered. The Issuer shall notify the Trustee, in writing, when it or, to
its knowledge, any of its Affiliates repurchases or otherwise acquires Notes, of
the aggregate principal amount of such Notes so repurchased or otherwise
acquired and such other information as the Trustee may reasonably request and
the Trustee shall be entitled to rely thereon.

         SECTION 2.10. TEMPORARY NOTES.

         Until definitive Notes are ready for delivery, the Issuer may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Issuer in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Issuer considers appropriate for temporary Notes and so indicate in the
Officers' Certificate. Without unreasonable delay, the Issuer shall prepare, the
Trustee shall authenticate and the Subsidiary Guarantors shall execute
Guarantees on, upon receipt of a written order of the Issuer pursuant to Section
2.02, definitive Notes in exchange for temporary Notes.

         SECTION 2.11. CANCELLATION.

         The Issuer at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Issuer, shall dispose,
in its customary manner, of all Notes surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Issuer may not issue new
Notes to replace Notes that have been paid or delivered to the Trustee for
cancellation. If the Issuer shall acquire any of the Notes, such acquisition
shall not operate as

                                       24
<Page>

a redemption or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.

         SECTION 2.12. DEFAULTED INTEREST.

         The Issuer will pay interest on overdue principal from time to time on
demand at the rate of interest of 16.5% per annum, unless the Registration
Rights Agreement provides for a higher rate of interest. The Issuer shall, to
the extent lawful, pay interest on overdue installments of interest from time to
time on demand at the rate of interest of 16.5% per annum, unless the
Registration Rights Agreement provides for a higher rate of interest. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.

         If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay the defaulted interest, plus (to the extent lawful) any
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuer for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Issuer shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "DEFAULT INTEREST PAYMENT DATE"), and at the same time the Issuer shall
deposit with the Trustee an amount of money, or (if cash payment of interest is
prohibited by the terms of the Senior Credit Agreement or the Intercreditor
Agreement) PIK Notes in an amount, equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment, such money or PIK Notes when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; PROVIDED, HOWEVER, that in no event shall the Issuer deposit
monies or PIK Notes proposed to be paid in respect of defaulted interest later
than 11:00 a.m. New York City time of the proposed Default Interest Payment
Date. At least 15 days before the subsequent special record date, the Issuer
shall mail (or cause to be mailed) to each Holder, as of a recent date selected
by the Issuer, with a copy to the Trustee, a notice that states the subsequent
special record date, the Default Interest Payment Date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid. Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(a) shall be paid to
Holders as of the regular record date for the Interest Payment Date for which
interest has not been paid. Notwithstanding the foregoing, the Issuer may make
payment of any defaulted interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange.

         SECTION 2.13. CUSIP NUMBER.

         The Issuer in issuing the Notes may use one or more "CUSIP" numbers,
and, if so, the Trustee shall use the appropriate CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED, HOWEVER, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of a CUSIP number contained in notice or on the Notes, and that
reliance may be placed only on the other identification numbers contained on the
Notes. The Issuer shall promptly notify the Trustee in writing of any change in
a CUSIP number.

         SECTION 2.14. DEPOSIT OF MONIES; PIK NOTES.

         Prior to 11:00 a.m. New York City time on each Interest Payment Date
(to the extent a cash payment for interest is not prohibited by the terms of the
Senior Credit Agreement or the Intercreditor Agreement), Maturity Date,
Redemption Date and Change of Control Payment Date, the Issuer shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date (to the extent
a cash payment for interest is not prohibited by the terms of the Senior Credit
Agreement or the Intercreditor Agreement), Maturity Date, Redemption Date and
Change of Control Payment Date, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Maturity Date, Redemption Date and Change of Control Payment Date,
as the case may be.

         If on a particular Interest Payment Date the payment of interest in the
form of cash is prohibited by the terms of the Senior Credit Agreement or the
Intercreditor Agreement, that interest will be paid at the time stated above
with respect to such Interest Payment Date in the form of Notes (the "PIK
Notes") in a principal amount equal to the amount of accrued and unpaid interest
on the Notes plus an additional 1% per annum accrued interest for the applicable
period.

                                       25
<Page>

         SECTION 2.15. RESTRICTIVE LEGENDS.

         Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "PRIVATE PLACEMENT LEGEND") on the
face thereof, and the assignment form that is part of such Note shall include
the additional provisions set forth in EXHIBIT B, until after the second
anniversary of the later of the Issue Date and the last date on which the Issuer
or any Affiliate of Issuer was the owner of such Note (or any predecessor
security) (or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder or such longer period of
time as may be required under the Securities Act or applicable state securities
laws in the opinion of counsel for the Issuer), unless otherwise agreed by the
Issuer and the Holder thereof:

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
         1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
         OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
         BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
         HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
         INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
         OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) UNDER
         THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
         PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
         COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (D) IF IT IS NOT
         AN ACCREDITED INVESTOR, IT WAS NEVERTHELESS PERMITTED TO PARTICIPATE IN
         THE EXCHANGE OFFER DESCRIBED IN THE OFFER TO EXCHANGE, (2) AGREES THAT
         IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
         SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AN
         ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
         TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
         THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
         INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
         ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
         CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
         RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
         BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED
         STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
         SECURITIES ACT (PROVIDED THAT ANY SUCH SALE OR TRANSFER IN CANADA OR TO
         OR FOR THE BENEFIT OF A CANADIAN RESIDENT MUST BE EFFECTED PURSUANT TO
         AN EXEMPTION FROM THE PROSPECTUS AND REGISTRATION REQUIREMENTS UNDER
         APPLICABLE CANADIAN SECURITIES LAWS), (E) PURSUANT TO THE EXEMPTION
         FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
         AVAILABLE), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
         THE SECURITIES ACT OR (G) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
         THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES
         THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
         NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
         ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL
         ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFER IS PURSUANT TO
         SUBCLAUSE (C), (D), (E) OR (G) OF THIS CLAUSE (2), THE HOLDER MUST,
         PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
         CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS ANY OF THEM MAY
         REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
         TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
         TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
         THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

         Each Global Note shall bear the following legend on the face thereof:

         UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
         DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE

                                       26
<Page>

         BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY
         OR ANY SUCH NOMINEE OF THE DEPOSITORY TO ANOTHER NOMINEE OF THE
         DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF THE DEPOSITORY TO A
         SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS
         THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR
         ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
         CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN.

         TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
         TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION
         2.17 OF THE INDENTURE.

         Each Note shall bear the following legends on the face thereof:

         THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE
         PRIOR PAYMENT IN FULL OF THE SENIOR INDEBTEDNESS (AS DEFINED IN THE
         INTERCREDITOR AND SUBORDINATION AGREEMENT HEREINAFTER REFERRED TO)
         PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THE INTERCREDITOR AND
         SUBORDINATION AGREEMENT, DATED AS OF JANUARY 23, 2003, AMONG FOOTHILL
         CAPITAL CORPORATION, IN ITS CAPACITY AS AGENT FOR THE LENDERS FROM TIME
         TO TIME PARTY TO THE LOAN AND SECURITY AGREEMENT DATED JANUARY 22,
         2003, AND U.S. BANK, N.A., AS TRUSTEE TO THE HOLDERS OF ISSUER'S
         11-1/2% SECURED NOTES DUE 2007.

         THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER
         INTERNAL REVENUE CODE SECTIONS 1273, 1274 AND 1275. INFORMATION
         REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, AND
         THE YIELD TO MATURITY OF THIS SECURITY MAY BE OBTAINED BY SENDING A
         REQUEST IN WRITING NO EARLIER THAN TEN DAYS AFTER THE ISSUE DATE
         ADDRESSED TO THE CHIEF FINANCIAL OFFICER OF ABRAXAS PETROLEUM
         CORPORATION AT 500 NORTH LOOP 1604, SUITE 100, SAN ANTONIO, TEXAS
         78232.

         SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.

         (a)   The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
the second paragraph of Section 2.15.

         Members of, or participants in, the Depository ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Notes, and the Depository may be treated by the Issuer, the Trustee and
any Agent of the Issuer or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuer, the Trustee or any Agent of the Issuer or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.

         (b)   Transfers of a Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in a Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange for their beneficial
interests in a Global

                                       27
<Page>

Note if (i) the Depository notifies the Issuer that it is unwilling or unable to
continue as Depository for the Global Notes and a successor depositary is not
appointed by the Issuer within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a written
request from the Depository to issue Physical Notes.

         (c)   In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Issuer shall execute, the
Subsidiary Guarantors shall execute Guarantees on, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.

         (d)   In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), such Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuer shall execute,
the Subsidiary Guarantors shall execute Guarantees on and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.

         (e)   Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.

         (f)   The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.

         SECTION 2.17. SPECIAL TRANSFER PROVISIONS.

         (a)   TRANSFERS TO NON-QIB ACCREDITED INVESTORS AND NON-U.S. PERSONS.
The following provisions shall apply with respect to the registration of any
proposed transfer of a Note constituting a Restricted Security to any Accredited
Investor which is not a QIB or to any Non-U.S. Person:

               (i)  the Registrar shall register the transfer of any Note
         constituting a Restricted Security, whether or not such Note bears the
         Private Placement Legend, if (x) the requested transfer is after the
         second anniversary of the Issue Date (PROVIDED, HOWEVER, that neither
         the Issuer nor any Affiliate of the Issuer has held any beneficial
         interest in such Note, or portion thereof, at any time on or prior to
         the second anniversary of the Issue Date) or (y) (1) in the case of a
         transfer prior to such second anniversary to an Accredited Investor
         which is not a QIB (excluding Non-U.S. Persons), the proposed
         transferee has delivered to the Registrar a certificate substantially
         in the form of EXHIBIT C hereto or (2) in the case of a transfer prior
         to such second anniversary to a Non-U.S. Person, the proposed
         transferor has delivered to the Registrar a certificate substantially
         in the form of EXHIBIT D hereto, together with in any case described in
         this clause (y), if the Issuer or the Trustee shall so request, an
         opinion of counsel addressed to it confirming the availability of an
         exemption from the registration requirements of the Securities Act; and

               (ii) if the proposed transferor is an Agent Member holding a
         beneficial interest in a Global Note, upon receipt by the Registrar of
         (x) the certificate, if any, required by paragraph (i) above and (y)
         written instructions given in accordance with the Depository's and the
         Registrar's procedures,

whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuer shall execute, the Subsidiary Guarantors shall
execute the Guarantees on and the Trustee shall authenticate and deliver one or
more Physical Notes of like tenor and amount.

                                       28
<Page>

         (b)   TRANSFERS TO QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):

                 (i)  the Registrar shall register the transfer if such transfer
         is being made by a proposed transferor who has checked the box provided
         for on the form of assignment in EXHIBIT B hereto stating, or has
         otherwise advised the Issuer and the Registrar in writing, that the
         sale has been made in compliance with the provisions of Rule 144A to a
         transferee who has signed the certification provided for on the form of
         assignment in EXHIBIT B hereto stating, or has otherwise advised the
         Issuer and the Registrar in writing, that it is purchasing the Note for
         its own account or an account with respect to which it exercises sole
         investment discretion and that it and any such account is a QIB within
         the meaning of Rule 144A, and is aware that the sale to it is being
         made in reliance on Rule 144A and acknowledges that it has received
         such information regarding the Issuer as it has requested pursuant to
         Rule 144A or has determined not to request such information and that it
         is aware that the transferor is relying upon its foregoing
         representations in order to claim the exemption from registration
         provided by Rule 144A; and

                 (ii) if the proposed transferee is an Agent Member, and the
         Notes to be transferred consist of Physical Notes which after transfer
         are to be evidenced by an interest in a Global Note, upon receipt by
         the Registrar of written instructions given in accordance with the
         Depository's and the Registrar's procedures, the Registrar shall
         reflect on its books and records the date and an increase in the
         principal amount of such Global Note in an amount equal to the
         principal amount of the Physical Notes to be transferred, and the
         Trustee shall cancel the Physical Notes so transferred.

         (c)   PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the second anniversary of the Issue
Date (PROVIDED, HOWEVER, that neither the Issuer nor any Affiliate of the Issuer
has held any beneficial interest in such Note, or portion thereof, at any time
prior to or on the second anniversary of the Issue Date), or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuer and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.

         (d)   GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will not transfer such Note unless such transfer is
made in strict compliance with the provisions restricting the transfer of the
Notes as provided in this Indenture.

         The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Issuer shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.

         (e)   TRANSFERS OF NOTES HELD BY AFFILIATES. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of the Issuer within
two years after the Issue Date, as evidenced by a notation on the assignment
form for such transfer or in the representation letter delivered in respect
thereof or (ii) evidencing a Note that has been acquired from an Affiliate
(other than by an Affiliate) in a transaction or a chain of transactions not
involving any public offering, shall, until two years after the last date on
which the Issuer or any Affiliate of the Issuer was an owner of such Note, in
each case, bear a legend in substantially the form set forth in the initial
paragraph of Section 2.15 hereof, unless otherwise agreed by the Issuer (with
written notice thereof to the Trustee).

                                       29
<Page>

                                  ARTICLE THREE

                                   REDEMPTION

         SECTION 3.01. NOTICES TO TRUSTEE.

         If the Issuer elects to redeem Notes pursuant to Section 3.03, it shall
notify the Trustee and the Paying Agent in writing of the Redemption Date and
the principal amount of the Notes to be redeemed.

         The Issuer shall give each notice provided for in this Section 3.01 not
less than 5, but not more than 30, days (unless a shorter notice period shall be
satisfactory to the Trustee, as evidenced in a writing signed on behalf of the
Trustee) before the intended mailing date of the Notice of Redemption relating
thereto, together with an Officers' Certificate stating that such redemption
shall comply with the conditions contained herein and in the Notes.

         SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.

         In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes, or portions thereof, for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a PRO RATA basis, by lot
or by such other method as the Trustee shall deem fair and appropriate;
PROVIDED, HOWEVER, that if a partial redemption is made with the proceeds of an
Equity Offering, selection of the Notes or portions thereof for redemption shall
be made by the Trustee only on a PRO RATA basis or on as nearly a PRO RATA basis
as is practicable (subject to the procedures of the Depository), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail in accordance with the provisions of Section 3.04. If any Note
is to be redeemed in part only, the notice of redemption that relates to such
Note shall state the portion of the principal amount thereof to be redeemed. A
new Note in a principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original Note.
On and after the applicable Redemption Date, interest will cease to accrue on
Notes or portions thereof called for redemption as long as the Issuer has
deposited with the Paying Agent for the Notes funds in satisfaction of the
applicable Redemption Price plus accrued and unpaid interest, if any, thereon to
the Redemption Date.

         SECTION 3.03. OPTIONAL REDEMPTION.

         The Notes will be redeemable, at the Issuer's option, in whole at any
time or in part from time to time, at the Redemption Prices (expressed as
percentages of the principal amount thereof) set forth below. If the Issuer
redeems all or any Notes, the Issuer must also pay all interest accrued and
unpaid to the applicable Redemption Date. The Redemption Prices for the Notes
during the indicated time periods are as follows:

<Table>
<Caption>
     PERIOD                                                                            PERCENTAGE
     ------                                                                            ----------
     <S>                                                                               <C>
     On the Issue Date.................................................................100.0000%
     On the next Business Day after the Issue Date......................................78.6266%
     From the next Business Day after the Issue Date to 6 months after the Issue Date...80.0429%
     From 6 months after the Issue Date to 12 months after the Issue Date...............91.4592%
     From 12 months after the Issue Date to 18 months after the Issue Date..............97.1674%
     From 18 months after the Issue Date to 24 months after the Issue Date..............98.5837%
     Thereafter   .....................................................................100.0000%
</Table>

Notwithstanding the foregoing, the Redemption Price for Notes to be redeemed
will in no event be less than the then current Adjusted Issue Price.

         The Issuer can call Notes for redemption on the Issue Date without
giving any notice of redemption to the Holders, and Notes called for redemption
on the Issue Date will be deemed not to have accrued interest. The Issuer shall
deliver notice to the Trustee and any Paying Agent on or before 11 a.m., New
York City time, on the Issue Date if it elects to redeem the Notes on the Issue
Date.

                                       30
<Page>

         SECTION 3.04. NOTICE OF REDEMPTION.

         With the exception of Notes being redeemed on the Issue Date, as
provided above, at least 30 days but not more than 60 days before a Redemption
Date, the Issuer shall mail or cause to be mailed a notice of redemption by
first class mail to each Holder of Notes to be redeemed at its registered
address, with a copy to the Trustee and any Paying Agent. At the Issuer's
request, the Trustee shall give the notice of redemption in the Issuer's name
and at the Issuer's expense.

         Each notice of redemption shall identify (including the CUSIP number)
the Notes to be redeemed and shall state:

               (1)    the Redemption Date;

               (2)    the Redemption Price and the amount of accrued interest,
         if any, to be paid;

               (3)    the name and address of the Paying Agent;

               (4)    that Notes called for redemption must be surrendered to
         the Paying Agent to collect the Redemption Price plus accrued interest,
         if any;

               (5)    that, unless the Issuer defaults in making the redemption
         payment, interest on Notes or applicable portions thereof called for
         redemption ceases to accrue on and after the Redemption Date, and the
         only remaining right of the Holders of such Notes is to receive payment
         of the Redemption Price plus accrued interest as of the Redemption
         Date, if any, upon surrender to the Paying Agent of the Notes redeemed;

               (6)    if any Note is being redeemed in part, the portion of the
         principal amount of such Note to be redeemed and that, after the
         Redemption Date, and upon surrender of such Note, a new Note or Notes
         in the aggregate principal amount equal to the unredeemed portion
         thereof will be issued; and

               (7)    if fewer than all the Notes are to be redeemed, the
         identification of the particular Notes (or portion thereof) to be
         redeemed, as well as the aggregate principal amount of Notes to be
         redeemed and the aggregate principal amount of Notes to be outstanding
         after such partial redemption.

         The Issuer will comply with the requirements of Rule 14e-1 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 Notes.

         SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION.

         Once notice of redemption is mailed in accordance with Section 3.04,
such notice of redemption shall be irrevocable and Notes called for redemption
become due and payable on the Redemption Date at the Redemption Price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Notes called for redemption shall be paid at the Redemption
Price plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant record
dates referred to in the Notes. Interest shall accrue on or after the Redemption
Date and shall be payable only if the Issuer defaults in payment of the
Redemption Price plus any accrued and unpaid interest as of the Redemption Date.

         SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.

         On or before the Redemption Date and in accordance with Section 2.14,
the Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the Redemption Price plus accrued interest, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Issuer any
U.S. Legal Tender so deposited which is not required for that purpose, except
with respect to monies owed as obligations to the Trustee pursuant to Article
Seven.

         Unless the Issuer fails to comply with the preceding paragraph and
default in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.

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         SECTION 3.07. NOTES REDEEMED IN PART.

         Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.

                                  ARTICLE FOUR

                                    COVENANTS

         SECTION 4.01. PAYMENT OF NOTES.

         (a)   The Issuer shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture. If the payment of such interest in cash is prohibited by the
terms of the Senior Credit Agreement or the Intercreditor Agreement, then the
Issuer shall pay such interest in the form of PIK Notes as provided in Section
2.14 hereof.

         (b)   An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
an Issuer or any of its Affiliates) holds, prior to 11:00 a.m. New York City
time on that date, U.S. Legal Tender (or PIK Notes for certain installments of
interest, in accordance with Section 2.14 of this Indenture) designated for and
sufficient to pay the installment in full and is not prohibited from paying such
money to the Holders pursuant to the terms of this Indenture or the Notes.

         (c)   Notwithstanding anything to the contrary contained in this
Indenture, the Issuer may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.

         SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.

         The Issuer shall maintain the office or agency required under Section
2.03. The Issuer shall give prior written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the
Issuer shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 10.02.

         SECTION 4.03. CORPORATE EXISTENCE.

         Except as otherwise permitted by Article Five, the Issuer shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries in accordance with the respective
organizational documents of each such Subsidiary and the material rights
(charter and statutory) and franchises of the Issuer and each such Subsidiary;
PROVIDED, HOWEVER, that the Issuer shall not be required to preserve, with
respect to itself, any material right or franchise and, with respect to any of
its Subsidiaries, any such existence, material right or franchise, if the Board
of Directors of the Issuer shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Issuer and
its Subsidiaries, taken as a whole.

         SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS.

         The Issuer shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
its properties or any of its Subsidiaries' properties and (ii) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon the property of the Issuer or any of its Subsidiaries;
PROVIDED, HOWEVER, that the Issuer shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate negotiations or proceedings properly instituted and diligently
conducted for which adequate reserves, to the extent required under GAAP, have
been taken.

                                       32
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         SECTION 4.05. MAINTENANCE OF PROPERTIES AND INSURANCE.

         (a)   The Issuer shall, and shall cause its Subsidiaries to, maintain
all properties used or useful in the conduct of its business in good working
order and condition (subject to ordinary wear and tear) and make all necessary
repairs, renewals, replacements, additions, betterments and improvements thereto
and actively conduct and carry on its business; PROVIDED, HOWEVER, that nothing
in this Section 4.05 shall prevent the Issuer or any of its Subsidiaries from
discontinuing the operation and maintenance of any of its properties, if such
discontinuance is (i) in the ordinary course of business pursuant to customary
business terms or (ii) in the good faith judgment of the respective Boards of
Directors or other governing body of the Issuer or Subsidiary, as the case may
be, desirable in the conduct of their respective businesses and is not
disadvantageous in any material respect to the Holders.

         (b)   The Issuer shall provide or cause to be provided, for itself and
each of the Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Issuer, is adequate and appropriate for the conduct of the business of the
Issuer and its Subsidiaries in a prudent manner, with reputable insurers or with
the government of the United States of America, Canada or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the good faith judgment of the Issuer, for
companies similarly situated in the industry.

         SECTION 4.06. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.

         (a)   The Issuer shall deliver to the Trustee, within 105 days after
the end of each of its fiscal quarters, an Officers' Certificate (PROVIDED,
HOWEVER, that one of the signatories to such Officers' Certificate shall be the
Issuer's principal executive officer, principal financial officer or principal
accounting officer), as to such Officers' knowledge, without independent
investigation, of the Issuer's compliance with all conditions and covenants
under this Indenture (without regard to any period of grace or requirement of
notice provided hereunder) and in the event any Default exists, such Officers
shall specify the nature of such Default. Each such Officers' Certificate shall
also notify the Trustee should the Issuer elect to change the manner in which it
fixes its fiscal year end.

         (b)   So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Issuer's independent certified public accountants (who shall be a
firm of established national reputation) stating (A) that their audit
examination has included a review of the terms of this Indenture and the form of
the Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default has come to their
attention and if such a Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; PROVIDED, HOWEVER, that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.

         (c)   (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Issuer shall
deliver to the Trustee, at its address set forth in Section 10.02 hereof, by
registered or certified mail or by facsimile transmission followed by hard copy
by registered or certified mail an Officers' Certificate specifying such event,
notice or other action within 10 days of its becoming aware of such occurrence.

         SECTION 4.07. COMPLIANCE WITH LAWS.

         The Issuer shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as could not singly or in the
aggregate reasonably be expected to have a material adverse effect on the
financial condition, business, prospects or results of operations of the Issuer
and its Subsidiaries taken as a whole.

                                       33
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         SECTION 4.08. REPORTS TO HOLDERS.

         The Issuer will deliver to the Trustee within 15 days after filing the
same with the Commission, copies of the quarterly and annual reports and of the
information, documents and other reports, if any, which the Issuer is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Issuer may not be subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, the Issuer will file with the
Commission, to the extent permitted, and provide the Trustee and Holders with
such annual reports and such information, documents and other reports specified
in Sections 13 and 15(d) of the Exchange Act. The Issuer will also comply with
the other provisions of Section 314(a) of the TIA.

         The reports and information delivered pursuant to the preceding
paragraph shall include quarterly financial statements, including details
regarding sources and uses of cash or of any assets of the Issuer and its
Subsidiaries. Such financial statements will provide details on both a
consolidated and unconsolidated basis.

         SECTION 4.09. WAIVER OF STAY, EXTENSION OR USURY LAWS.

         The Issuer and each Subsidiary Guarantor covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Issuer or such Subsidiary Guarantor from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
the Issuer and each Subsidiary Guarantor hereby expressly waive all benefit or
advantage of any such law, and covenant that they will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.

         SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.

         The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly,

         (a)   declare or pay any dividend or make any distribution (other than
               dividends or distributions payable solely in Qualified Capital
               Stock of the Issuer) on or in respect of shares of the Issuer's
               Capital Stock to holders of such Capital Stock,

         (b)   purchase, redeem or otherwise acquire or retire for value any
               Capital Stock of the Issuer or any warrants, rights or options to
               purchase or acquire shares of any class of such Capital Stock
               other than through the exchange therefor solely of Qualified
               Capital Stock of the Issuer or warrants, rights or options to
               purchase or acquire shares of Qualified Capital Stock of the
               Issuer,

         (c)   make any principal payment on, purchase, defease, redeem, prepay,
               decrease or otherwise acquire or retire for value, prior to any
               scheduled final maturity, scheduled repayment or scheduled
               sinking fund payment, any Subordinated Indebtedness of the Issuer
               or a Subsidiary Guarantor, or

         (d)   make any Investment (other than a Permitted Investment).

(each of the foregoing actions set forth in clauses (a) through (d) being
referred to as a "RESTRICTED PAYMENT").

         Notwithstanding the foregoing, the Issuer may take the following
actions:

         (1)   if no Default or Event of Default shall have occurred and be
               continuing, the acquisition of any shares of Capital Stock of the
               Issuer, solely in exchange for shares of Qualified Capital Stock
               of the Issuer, and

         (2)   if no Default or Event of Default shall have occurred and be
               continuing, the acquisition of any Indebtedness of the Issuer or
               a Subsidiary Guarantor that is subordinate or junior in right of
               payment to the Notes or such Subsidiary Guarantor's Guarantee, as
               the case may be, the incurrence of which was not in violation of
               the terms of this Indenture, solely in exchange for shares of
               Qualified Capital Stock of the Issuer.

                                       34
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         SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.

         (a)   The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, enter into, amend or permit or suffer
to exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property, the
guaranteeing of any Indebtedness or the rendering of any service) with, or for
the benefit of, any of their respective Affiliates (each an "AFFILIATE
TRANSACTION"), other than (i) Affiliate Transactions permitted under Section
4.11(b) and (ii) Affiliate Transactions not otherwise prohibited by the terms of
this Indenture that are on terms that are fair and reasonable to the Issuer or
the applicable Subsidiary and are no less favorable to the Issuer or the
applicable Subsidiary than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Issuer or such Subsidiary. All Affiliate Transactions
(and each series of related Affiliate Transactions which are similar or part of
a common plan) involving aggregate payments or other property with a fair market
value in excess of $250,000 shall be approved by the Board of Directors of the
Issuer, such approval to be evidenced by a Board Resolution stating that the
Board of Directors has determined that such transaction complies with the
foregoing provisions. If the Issuer or any Subsidiary enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $2,000,000, the
Issuer shall, prior to the consummation thereof, obtain a favorable opinion as
to the fairness of such transaction or series of related transactions to the
Issuer or the relevant Subsidiary, as the case may be, from a financial point of
view, from an Independent Advisor and file the same with the Trustee.

         (b)   The restrictions set forth in Section 4.11(a) shall not apply to
(i) reasonable fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of the Issuer or any
Subsidiary as determined in good faith by the Board of Directors or senior
management of the Issuer or such Subsidiary, as the case may be; (ii)
transactions exclusively between or among the Issuer and any of its Subsidiaries
or exclusively between or among such Subsidiaries; PROVIDED, HOWEVER, that such
transactions are not otherwise prohibited by this Indenture; and (iii)
Restricted Payments permitted by this Indenture, or any guarantee or assumption
by the Issuer or any of its Subsidiaries of Indebtedness of the Issuer or any of
its Subsidiaries if the incurrence of such Indebtedness was not prohibited by
this Indenture.

         SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.

         Other than Permitted Indebtedness, the Issuer will not, and will not
cause or permit any of its Subsidiaries to, directly or indirectly, incur any
Indebtedness.

         Indebtedness of a Person existing at the time such Person becomes a
Subsidiary (whether by merger, consolidation, acquisition of Capital Stock or
otherwise) or is merged with or into the Issuer or any Subsidiary or which is
secured by a Lien on an asset acquired by the Issuer or a Subsidiary (whether or
not such Indebtedness is assumed by the acquiring Person) shall be deemed
incurred at the time the Person becomes a Subsidiary or at the time of the asset
acquisition, as the case may be.

         The Issuer will not, and will not permit any Subsidiary Guarantor to,
incur any Indebtedness which by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness (other than to Indebtedness under the Senior Credit Agreement and
Qualified Senior Affiliate Indebtedness) of the Issuer or such Subsidiary
Guarantor unless such Indebtedness is also by its terms (or by the terms of any
agreement governing such Indebtedness) made expressly subordinate in right of
payment to the Notes or the Guarantee of such Subsidiary Guarantor, as the case
may be, pursuant to subordination provisions that are substantively identical to
the subordination provisions of such Indebtedness (or such agreement) that are
most favorable to the holders of any other Indebtedness (other than to
Indebtedness under the Senior Credit Agreement and Qualified Senior Affiliate
Indebtedness) of the Issuer or such Subsidiary Guarantor, as the case may be.
The Issuer will not, and will not permit any Subsidiary to, incur or suffer to
exist Indebtedness that is senior in right of payment to the Notes or any
Guarantee, as the case may be, and expressly contractually subordinate in right
of payment to any other Indebtedness of the Issuer or such Subsidiary, as the
case may be. Notwithstanding the foregoing, the provisions of this paragraph do
not prohibit tranches of Indebtedness under the Senior Credit Agreement being
subordinated to other tranches of Indebtedness under the Senior Credit
Agreement.

                                       35
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         SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.

         The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to:

         (a)   pay dividends or make any other distributions on or in respect of
               its Capital Stock,

         (b)   make loans or advances to, or pay any Indebtedness or other
               obligation owed to, the Issuer or any other Subsidiary,

         (c)   guarantee any Indebtedness or any other obligation of the Issuer
               or any Subsidiary, or

         (d)   transfer any of its property or assets to the Issuer or any other
               Subsidiary (each such encumbrance or restriction, a "PAYMENT
               RESTRICTION").

         The preceding will not apply, however, to encumbrances or restrictions
existing under or by reason of the following (which are excluded from the term
"Payment Restriction"): (i) applicable law, (ii) this Indenture, the Senior
Credit Agreement, any security document or any of the security documents entered
into in connection with the Senior Credit Agreement, and any document or
instrument evidencing, governing or securing any of the Qualified Senior
Affiliate Indebtedness, (iii) customary non-assignment provisions of any
contract or any lease governing a leasehold interest of any Subsidiary, (iv) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to such Subsidiary, or the properties or assets of such
Subsidiary, other than the Person or the properties or assets of the Person so
acquired, (v) agreements existing on the Issue Date to the extent and in the
manner such agreements were in effect on the Issue Date, (vi) customary
restrictions with respect to a Subsidiary of the Issuer pursuant to an agreement
that has been entered into for the sale or disposition of Capital Stock or
assets of such Subsidiary to be consummated in accordance with the terms of this
Indenture solely in respect of the assets or Capital Stock to be sold or
disposed of, (vii) any instrument governing a Permitted Lien, to the extent and
only to the extent such instrument restricts the transfer or other disposition
of assets subject to such Permitted Lien, or (viii) an agreement governing
Refinancing Indebtedness incurred to Refinance the Indebtedness issued, assumed
or incurred pursuant to an agreement referred to in clause (ii), (iv) or (v)
above; PROVIDED, HOWEVER, that the provisions relating to such encumbrance or
restriction contained in any such Refinancing Indebtedness are no less favorable
to the Holders in any material respect as determined by the Board of Directors
of the Issuer in its reasonable and good faith judgment than the provisions
relating to such encumbrance or restriction contained in the applicable
agreement referred to in such clause (ii), (iv) or (v).

         SECTION 4.14. LEVERAGE.

         The Issuer's Consolidated EBITDA to Cash Interest Expense Ratio, as of
the last day of any calendar quarter after the Issue Date, shall not be less
than 3.0:1, except on the last day of the first calendar quarter of 2003, at
which time this ratio must not be less than 2.0:1.

         SECTION 4.15. CHANGE OF CONTROL.

         (a)   Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Issuer repurchase all or a portion of such
Holder's Notes pursuant to the offer described below (the "CHANGE OF CONTROL
OFFER"), at a purchase price equal to the percentage of the principal amount
thereof then applicable to optional redemptions by the Issuer, plus all accrued
and unpaid interest thereon to the date of purchase.

         (b)   Within 30 days following the date upon which the Change of
Control occurred, the Issuer must send, by first class mail, a notice to each
Holder at such Holder's last registered address, with a copy to the Trustee,
which notice shall govern the terms of the Change of Control Offer. The notice
to the Holders shall contain all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Change of Control Offer. Such
notice shall state:

               (i)    that the Change of Control Offer is being made pursuant to
         this Section 4.15, that all Notes tendered and not withdrawn will be
         accepted for payment and that the Change of Control Offer shall remain
         open for a period of 20 Business Days or such longer period as may be
         required by law;

                                       36
<Page>

               (ii)   the purchase price (including the amount of accrued
         interest) and the purchase date (which shall be no earlier than 30 days
         nor later than 45 days from the date such notice is mailed, other than
         as may be required by law) (the "CHANGE OF CONTROL PAYMENT DATE");

               (iii)  that any Note not tendered will continue to accrue
         interest;

               (iv)   that, unless the Issuer defaults in making payment
         therefor, any Note accepted for payment pursuant to the Change of
         Control Offer shall cease to accrue interest after the Change of
         Control Payment Date;

               (v)    that Holders electing to have a Note purchased pursuant to
         a Change of Control Offer will be required to surrender the Note, with
         the form entitled "Option of Holder to Elect Purchase" on the reverse
         of the Note completed, to the Paying Agent at the address specified in
         the notice prior to the close of business on the third Business Day
         prior to the Change of Control Payment Date;

               (vi)   that Holders will be entitled to withdraw their election
         if the Paying Agent receives, not later than the second Business Day
         prior to the Change of Control Payment Date, a telegram, telex,
         facsimile transmission or letter setting forth the name of the Holder,
         the principal amount of the Notes the Holder delivered for purchase and
         a statement that such Holder is withdrawing his election to have such
         Notes purchased;

               (vii)  that Holders whose Notes are purchased only in part will
         be issued new Notes in a principal amount equal to the unpurchased
         portion of the Notes surrendered; and

               (viii) the circumstances and relevant facts regarding such Change
         of Control.

         On or before the Change of Control Payment Date, the Issuer shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent in accordance with Section
2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes so tendered and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Issuer. Upon receipt by the Paying Agent
of the monies specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be
promptly mailed by the Issuer to the Holder thereof. For purposes of this
Section 4.15, the Trustee shall act as the Paying Agent.

         The Issuer shall 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 at the
Change of Control Purchase Price, at the same times and otherwise in compliance
with the requirements applicable to a Change of Control Offer made by the Issuer
and purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.

         Neither the Board of Directors of the Issuer nor the Trustee may waive
the provisions of this Section 4.15 relating to the Issuer's obligation to make
a Change of Control Offer.

         The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.15, the Issuer shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the provisions of this Section 4.15 by virtue thereof.

         SECTION 4.16. LIMITATION ON ASSET SALES.

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

                                       37
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               (i)    the Issuer or the applicable Subsidiary, as the case may
         be, receives consideration at least equal to the fair market value of
         the assets sold or otherwise disposed of (as determined in good faith
         by the Issuer's Board of Directors or senior management of the Issuer);
         and

               (ii)   at least 95% of the consideration received by the Issuer
         or the Subsidiary, as the case may be, from such Asset Sale shall be in
         the form of cash or Cash Equivalents and is received at the time of
         such disposition.

         (b)   The Issuer must apply the Net Cash Proceeds received from any
Asset Sale to Pay Down Debt.

         If at any time any consideration (other than cash or Cash Equivalents)
received by the Issuer or any Subsidiary of the Issuer, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash, then such conversion or disposition shall be deemed to constitute
an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in
accordance with this Section 4.16.

         The Issuer may defer the action to Pay Down Debt until there is an
aggregate Available Proceeds Amount equal to or in excess of $500,000.00
resulting from one or more Asset Sales (at which time the entire unutilized
Available Proceeds Amount, and not just the amount in excess of $500,000.00,
shall be applied as required pursuant to this Section 4.16).

         All Collateral Proceeds delivered to the Trustee shall constitute Trust
Moneys and all Collateral Proceeds shall be delivered by the Issuer (A) so long
as any Indebtedness under the Senior Credit Agreement or any Qualified Senior
Affiliate Indebtedness remains outstanding, to the Senior Credit Facility
Representative, and (B) otherwise to the Trustee, and all Collateral Proceeds
delivered to the Trustee shall be deposited in the Collateral Account in
accordance with this Indenture. Collateral Proceeds so deposited may be
withdrawn from the Collateral Account for application by the Issuer as set forth
above or otherwise pursuant to this Indenture in accordance with Section 12.08.

         In the event of the transfer of substantially all (but not all) of the
consolidated assets of the Issuer as an entirety to a Person in a transaction
permitted under Section 5.01, the successor corporation shall be deemed to have
sold the consolidated assets of the Issuer not so transferred for purposes of
this covenant, and shall comply with the provisions of this Section 4.16 with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
market value of such consolidated assets of the Issuer deemed to be sold shall
be deemed to be Net Cash Proceeds for purposes of this Section 4.16.

         The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes as a result of an action to Pay Down Debt.

         SECTION 4.17. LIMITATIONS WITH RESPECT TO CAPITAL STOCK OF
SUBSIDIARIES.

         The Issuer will not cause or permit any of its Subsidiaries to issue
any Preferred Stock (other than to the Issuer or to a Wholly Owned Subsidiary)
or permit any Person (other than the Issuer or a Wholly Owned Subsidiary) to own
any Preferred Stock of any Subsidiary. The Issuer will not, and will not cause
or permit any of its Subsidiaries to, sell or otherwise dispose of any shares of
Capital Stock of any Subsidiary, and shall not permit any of its Subsidiaries,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except: (a) to the Issuer or a Wholly Owned Subsidiary of the
Issuer, or (b) if all shares of Capital Stock of such Subsidiary owned by the
Issuer and its Subsidiary are sold or otherwise disposed of. In connection with
any sale or disposition of Capital Stock of any Subsidiary of the Issuer under
clause (b), the Issuer will be required to comply with Section 4.16 and the
Guarantee given by such Subsidiary, if any, as well as all Collateral owned by
such Person shall be released.

         SECTION 4.18. LIMITATION ON LIENS.

         The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist or remain in effect any Liens upon any Properties of the Issuer
or of any of its Subsidiaries, whether owned on the Issue Date or acquired after
the Issue Date, or on any income or profits therefrom, or assign or otherwise
convey any right to receive income or profits thereon, other than Permitted
Liens..

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         SECTION 4.19. LIMITATION ON CONDUCT OF BUSINESS.

         The Issuer will not, and will not permit any of its Subsidiaries to,
engage in the conduct of any business other than the Crude Oil and Natural Gas
Business.

         SECTION 4.20. ADDITIONAL SUBSIDIARY GUARANTEES.

         All Subsidiaries of the Issuer shall be Subsidiary Guarantors. If any
Subsidiary of the Issuer is formed after the Issue Date, or if a Person
otherwise becomes a Subsidiary of the Issuer after the Issue Date, the Issuer
shall cause such Subsidiary to (a) execute and deliver to the Trustee a
supplement to this Indenture substantially in the form of EXHIBIT F, pursuant to
which such Subsidiary shall unconditionally guarantee all of the Issuer's
obligations under the Notes and this Indenture on the terms set forth in this
Indenture; (b) grant to the Trustee a second priority Lien (subject to certain
Permitted Liens) on all of the current and future Oil and Gas Assets of such
Subsidiary, and substantially all of its other current and future assets using
applicable Security Documents substantially in the same form as those executed
and delivered on the Issue Date; and (c) deliver to the Trustee an Opinion of
Counsel and an Officers' Certificate, stating that no Event of Default shall
occur as a result of such supplemental indenture or Security Documents, that
each such instrument complies with the terms of this Indenture and that each
such instrument has been duly authorized, executed and delivered by such
Subsidiary and constitutes a legal, valid, binding and enforceable obligation of
such Subsidiary. Thereafter, such Subsidiary shall be a Subsidiary Guarantor for
all purposes of this Indenture.

         SECTION 4.21. LIMITATION ON ABRAXAS WAMSUTTER, LTD..

         So long as the Issuer continues to have a partnership interest in
Abraxas Wamsutter, Ltd., the Issuer will not permit Abraxas Wamsutter, Ltd. to
be an operating entity.

         SECTION 4.22. IMPAIRMENT OF SECURITY INTEREST.

         Neither the Issuer nor any of its Subsidiaries will take or omit to
take any action which action or omission would have the result of adversely
affecting or impairing the security interest in favor of the Trustee, for its
benefit and the benefit of the Holders, with respect to the Collateral, and
neither the Issuer nor any of its Subsidiaries shall grant to any Person, or
suffer any Person (other than the Issuer and its Subsidiaries) to have (other
than to the Trustee on behalf of the Trustee and the Holders) any interest
whatsoever in the Collateral other than Permitted Liens. Neither the Issuer nor
any of its Subsidiaries will enter into any agreement or instrument that by its
terms requires the proceeds received from any sale of Collateral to be applied
to repay, redeem, defease or otherwise acquire or retire any Indebtedness, other
than Indebtedness under Senior Credit Agreement, Qualified Senior Affiliate
Indebtedness, and the security documents entered into in connection therewith,
and other than pursuant to this Indenture and the Security Documents. This
Section shall not, however, be construed as requiring the Issuer or any of its
Subsidiaries to interfere with the enforcement of rights and remedies with
respect to the Collateral pursuant to the Senior Credit Agreement.

         SECTION 4.23. ACCOUNTING.

         The Issuer shall keep its financial accounts in accordance with GAAP
and (except as GAAP may require) consistent with past practices.

         SECTION 4.24. MAINTENANCE OF LIEN; ADDITIONAL COLLATERAL.

         (a)   If, after the Issue Date, the Issuer or any of its Subsidiaries
shall (i) acquire any material assets or (ii) engage in successful drilling and
exploration activities resulting in the creation of new Crude Oil and Natural
Gas Properties, then the Issuer shall, and shall cause each of its Subsidiaries
to, execute and file in the appropriate filing offices mortgages, deeds of
trust, security agreements, financing statements and other instruments granting
to the Trustee for the benefit of the Holders a second priority Lien, subject
only to Permitted Liens, as is necessary or appropriate to ensure that the Lien
of this Indenture and the Security Documents covers all of the Oil and Gas
Assets of the Issuer and its Subsidiaries and substantially all other assets of
the Issuer and its Subsidiaries (other than assets securing Acquired
Indebtedness to the extent granting additional Liens would be prohibited by the
terms of the instruments relating to such Acquired Indebtedness).

                                       39
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         (b)   In connection with any Security Documents executed and filed
under clause (a) of this Section 4.24, the Issuer shall also comply with the
terms of Section 12.02 to the extent applicable.

         (c)   On March 15th in each year, beginning with March 15, 2003, the
Issuer shall review its and its Subsidiaries' assets to ascertain whether or not
all of the Oil and Gas Assets of the Issuer and its Subsidiaries and
substantially all other assets of the Issuer and its Subsidiaries are then
subject to the Lien of this Indenture and the Security Documents. If such is not
the case, then the Issuer shall, and shall cause its Subsidiaries, to execute
and file in the appropriate filing offices mortgages, deeds of trust, security
agreements, financing statements and other instruments granting to the Trustee
for the benefit of the Holders a second priority Lien, subject only to Permitted
Liens, as is necessary or appropriate to accomplish such objective.

         SECTION 4.25. EXCESS CASH FLOW AND EXCESS CASH.

         (a)   Without duplication with respect to the requirement to Pay Down
Debt set forth in clause (b) of this Section 4.25, within 30 days after the last
day of each calendar quarter ending after the Issue Date, the Issuer must apply
an amount to Pay Down Debt equal to 90% of the Excess Cash Flow of the Issuer
for such calendar quarter.

         (b)   Without duplication with respect to the requirement to Pay Down
Debt set forth in clause (a) of this Section 4.25, with respect to each calendar
quarter ending after the Issue Date and on the same date that the Issuer applies
an amount to Pay Down Debt pursuant to clause (a) of this Section 4.25 with
respect to such calendar quarter, and on a date that is 7 days after the Issue
Date, the Issuer must apply an amount to Pay Down Debt equal to all cash of the
Issuer and its Subsidiaries as of such date (each such date a "CASH SWEEP
PAYMENT DATE"), after the application of an amount to Pay Down Debt pursuant to
clause (a) of this Section 4.25, on that date (provided that if there is no
Excess Cash Flow with respect to such calendar quarter, the Cash Sweep Payment
Date with respect to such calendar quarter shall be the first Business Day that
is 30 days after the last day of such calendar quarter), minus

               (i)    $2.5 million,

               (ii)   Restricted Cash as of such Cash Sweep Payment Date,

               (iii)  the amount of Capital Expenditures the Issuer is permitted
                      to make pursuant to the terms of this Indenture during the
                      next calendar quarter (or, with respect to the Cash Sweep
                      Payment Date that is 7 days after the Issue Date, during
                      the first calendar quarter of 2003) pursuant to Section
                      4.27, minus amounts available for making Capital
                      Expenditures under any revolving credit facility under the
                      Senior Credit Agreement as of such Cash Sweep Payment
                      Date,

               (iv)   cash of the Issuer as of such Cash Sweep Payment Date
                      otherwise applied or required to be applied to Pay Down
                      Debt, and

               (v)    without duplication with respect to clause (iv) of this
                      Subsection 4.25(b), any cash of the Issuer and its
                      Subsidiaries as of the Cash Sweep Payment Date
                      constituting proceeds of any equity offering by the Issuer
                      or proceeds of any Subordinated Indebtedness of the Issuer
                      or any of its Subsidiaries complying with Section 4.30 of
                      this Indenture.

         (c)   The Issuer will manage the cash of the Issuer and its
Subsidiaries in the ordinary course of business consistent with past practices
and in compliance with the terms of the Senior Credit Agreement.

         SECTION 4.26. LIMITATION ON EXPENDITURES FOR SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.

         With respect to expenditures by the Issuer and its Subsidiaries on
SG&A:

         (a)   The amount expended by the Issuer and its Subsidiaries on SG&A in
any calendar quarter ending after the Issue Date shall not exceed the applicable
SG&A Quarterly Amount, subject, however, to the following carryforward and
carryback provisions:

               (i)    to the extent the SG&A in any one quarter (excluding the
         amount of SG&A due to any Rollover Increase because of a prior
         quarter's SG&A Deficit Amount) exceeds the applicable SG&A Quarterly
         Amount, the SG&A Quarterly

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         Amount, for the two succeeding quarters shall be reduced in the
         aggregate by an amount equal to the applicable SG&A Excess Amount, and

               (ii)   to the extent the SG&A in any one quarter (excluding the
         amount of SG&A due to any Rollover Decrease because of a prior
         quarter's SG&A Excess Amount) is less than the applicable SG&A
         Quarterly Amount the SG&A Quarterly Amount for the two succeeding
         quarters shall be increased in the aggregate by an amount equal to the
         applicable SG&A Deficit Amount,

         (b)   In no event shall the amount expended by the Issuer and its
Subsidiaries on SG&A in any calendar year ending after the Issue Date exceed the
SG&A Annual Amount.

         SECTION 4.27. LIMITATIONS ON CAPITAL EXPENDITURES.

         With respect to Capital Expenditures by the Issuer and its
Subsidiaries:

         (a)   For the first calendar quarter in 2003, Capital Expenditures of
the Issuer and its Subsidiaries shall not exceed the Q1-2003 CapEx Amount, and
for each other calendar quarter in 2003, Capital Expenditures of the Issuer and
its Subsidiaries shall not exceed the Q2,3,4-2003 CapEx Amount, subject,
however, to the following carryforward and carryback provisions:

               (i)    to the extent Capital Expenditures in the first calendar
         quarter of 2003 (excluding the amount of Capital Expenditures due to
         any Rollover Increase because of a prior quarter's CapEx Deficit
         Amount) exceed the Q1-2003 CapEx Amount or to the extent Capital
         Expenditures in any other calendar quarter of 2003 (excluding the
         amount of Capital Expenditures due to any Rollover Increase because of
         a prior quarter's CapEx Deficit Amount) exceed the Q2,3,4-2003 CapEx
         Amount, as applicable, the CapEx Quarterly Amount for the two
         succeeding quarters shall be decreased in the aggregate by an amount
         equal to the applicable CapEx Excess Amount, and

               (ii)   to the extent Capital Expenditures in the first calendar
          quarter of 2003 (excluding the amount of Capital Expenditures due to
          any Rollover Decrease because of a prior quarter's CapEx Excess
          Amount) fall below the Q1-2003 CapEx Amount or to the extent Capital
          Expenditures in any other calendar quarter of 2003 (excluding the
          amount of Capital Expenditures due to any Rollover Decrease because of
          a prior quarter's CapEx Excess Amount) fall below the Q2,3,4-2003
          CapEx Amount, as applicable, the CapEx Quarterly Amount for the two
          succeeding quarters shall be increased in the aggregate by an amount
          equal to the applicable CapEx Deficit Amount.

         (b)   In no event shall the Capital Expenditures of the Issuer and its
Subsidiaries for calendar year 2003 exceed the 2003 CapEx Amount.

         (c)   For each calendar quarter in calendar year 2004 and each calendar
quarter in any following calendar year, Capital Expenditures of the Issuer and
its Subsidiaries shall not exceed the applicable 2004-Plus CapEx Quarterly
Amount, subject, however, to the following carryforward and carryback
provisions:

               (i)    to the extent Capital Expenditures in any such quarter
         (excluding the amount of Capital Expenditures due to any Rollover
         Increase because of a prior quarter's CapEx Deficit Amount) exceed the
         applicable 2004-Plus CapEx Quarterly Amount, the 2004-Plus CapEx
         Quarterly Amount for the two succeeding quarters shall be decreased in
         the aggregate by an amount equal to the applicable CapEx Excess Amount,
         and

               (ii)   to the extent the Capital Expenditures in any such
          quarter (excluding the amount of Capital Expenditures due to any
          Rollover Decrease because of a prior quarter's CapEx Excess Amount)
          fall below the applicable 2004-Plus CapEx Quarterly Amount, the
          2004-Plus CapEx Quarterly Amount for the two succeeding quarters shall
          be increased in the aggregate by an amount equal to the applicable
          CapEx Deficit Amount.

         (d)   In no event shall the Capital Expenditures of the Issuer and its
Subsidiaries for calendar year 2004 or any following calendar year exceed the
2004-Plus CapEx Annual Amount.

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         With respect to the limitations on Capital Expenditures set forth
above, the Issuer may reallocate capacity for making up to an aggregate of $3
million of Capital Expenditures which are to be used for satisfying capital
calls with respect to non-operating mineral interests of the Issuer and its
Subsidiaries for development expenses with respect to such non-operating mineral
interests as follows:

         (1)   any such reallocation will increase the annual permissible
               Capital Expenditures by the amount of such reallocation for the
               calendar year to which such reallocation was made, and will
               decrease the annual permissible Capital Expenditures by the
               amount of such reallocation for the calendar year from which such
               reallocation was made;

         (2)   the amount reallocated to a calendar year must be allocated by
               the Issuer to the calendar quarters within that calendar year to
               increase the permissible Capital Expenditures for such calendar
               quarters, and the amount reallocated from a calendar year must be
               allocated by the Issuer to the calendar quarters within that
               calendar year to decrease the permissible Capital Expenditures
               for such calendar quarters; and

         (3)   any amount reallocated to a particular period (i.e., to a
               particular calendar year or a particular calendar quarter) can be
               used only for Capital Expenditures to satisfy capital calls with
               respect to non-operating mineral interests of the Issuer and its
               Subsidiaries for development expenses with respect to such
               non-operating mineral interests.

         SECTION 4.28. LIMITATION ON TAX SHARING ARRANGEMENTS.

         Neither the Issuer nor any of its Subsidiaries may enter into any
agreement, arrangement or understanding with respect to liability for payment or
sharing of any other Person's taxes, including any tax sharing or similar
arrangement, except to the extent of any covenant pursuant to which funds or
money actually paid or transferred to or from the Issuer or its Subsidiary, as
the case may be, are thereupon actually used to pay the applicable taxes.

         SECTION 4.29. LIMITATION ON USES OF CASH.

         The Issuer and its Subsidiaries will make cash expenditures only for
the following and only to the extent not otherwise prohibited by the terms of
this Indenture:

         (a)   Qualified Lease Operating Costs, SG&A costs, taxes (e.g., income,
               severance, ad valorem, franchise) in each case not prohibited by
               the terms of this Indenture;

         (b)   cash interest requirements;

         (c)   Capital Expenditures not prohibited by the terms of this
               Indenture;

         (d)   any oil and gas hedge settlements requiring a cash payment from
               the Issuer pursuant to oil and gas hedge agreements entered into
               (i) pursuant to approval by the Board of Directors of the Issuer,
               (ii) in the ordinary course of business, and (iii) to provide
               protection against oil and gas price fluctuations with respect to
               reasonably anticipated oil and gas production of the Issuer and
               its Subsidiaries and not for the purpose of speculating;

         (e)   any payment to reduce debt to the extent such payment is not
               prohibited by the terms of this Indenture, provided that the
               average days outstanding for payables paid shall not be less than
               the greater of (i) 45 days and (ii) the industry standard
               therefor, subject to adjustment by the Board of Directors of the
               Issuer;

         (f)   payments due to the settling of a natural gas balancing
               deficiency not to exceed $45,000 in the aggregate in any calendar
               year unless a higher amount is approved by the Board of Directors
               of the Issuer;

         (g)   payment of judgments rendered by a court of law;

                                       42
<Page>

         (h)   assessments issued by any governmental entity;

         (i)   additional cash expenditures not to exceed $2 million in the
               aggregate in any calendar year; provided, however, that the
               Issuer and its Subsidiaries may make aggregate cash expenditures
               in excess of $2 million in any calendar year under this
               Subsection 4.29(i) if the Board of Directors of the Issuer
               approves such expenditures;

         (j)   obligations under the Senior Credit Agreement and Qualified
               Senior Affiliate Indebtedness including, but not limited to, fees
               and expenses incurred in connection therewith and fees related to
               any amendment, waiver, consent or similar actions taken by the
               agent and lenders related thereto (the payment of which
               obligations will not be prohibited by the terms of this
               Indenture); and

         (k)   payment of any Stark Fees.

         SECTION 4.30. PROCEEDS FROM ISSUANCES OF EQUITY AND SUBORDINATED DEBT.

         (a)   The Issuer may issue common equity, or preferred equity with no
maturity or required or allowed cash dividend, at any time and may use the net
proceeds from any such issuance in any manner consistent with other provisions
of this Indenture. Such net proceeds will not be included in the calculation of
Excess Cash Flow.

         (b)   The Issuer may also issue preferred equity with a maturity or
required or allowed cash dividends if such issuance complies with the following
requirements:

               (i)    no portion of any such equity may be redeemed or
         repurchased or, except as permitted under clause (iii) below, have any
         other cash distribution or dividend until the Notes are completely
         repaid,

               (ii)   at least 50% of the proceeds of such issuance must
         immediately be used to Pay Down Debt, and

               (iii)  no cash dividends can be paid on such equity unless:

                      (A)  at least 75% of such proceeds are used to Pay Down
               Debt,

                      (B)  the cash dividend payable to the holders of such
               equity does not exceed the Cash Coupon on the Notes, and

                      (C)  the holders of the Notes receive in cash (in full)
               current interest payments due and payable.

         (c)   The Issuer and its Subsidiaries may also incur Subordinated
Indebtedness that complies with the following requirements (such Indebtedness is
referred to as "Permitted Subordinated Indebtedness"):

               (i)    no portion of any principal of any such Subordinated
         Indebtedness may be repaid, or refinanced if such refinancing results
         in a shorter Weighted Average Life to Maturity or in the terms of such
         Subordinated Indebtedness being less favorable to the holders of the
         Notes, until the Notes are completely repaid,

               (ii)   at least 50% of the proceeds of such issuance must
         immediately be used to Pay Down Debt, and

               (iii)  no cash interest can be paid on such Subordinated
         Indebtedness unless:

                      (A)  at least 75% of such proceeds are used to Pay Down
         Debt,

                      (B)  the cash portion of any interest payable to the
         holders of such Subordinated Indebtedness does not exceed the Cash
         Coupon on the Notes, and

                                       43
<Page>

                      (C)  the holders of the Notes receive in cash (in full)
         current interest payments due and payable.

         SECTION 4.31. FARMOUTS.

         (a)   The Issuer and its Subsidiaries may enter into and perform with
respect to farmouts covering any of their undeveloped wells and properties,
provided that the Issuer must, prior to any properties being transferred
pursuant to such farmout, obtain written confirmation from F. John Stark, III
stating that such farmout is in the best interests of the Holders of the Notes,
and file the same with the Trustee, further provided that such written
confirmation will not be required for any farmout with a farmout value (as
determined as provided below) of less than $100,000, but the total aggregate
farmout value of farmouts so exempted from the written confirmation requirement
cannot exceed $500,000 in any twelve calendar month period. For the purposes of
this Section 4.31, the value of a farmout will be the portion of the capital
commitments made by the farmee(s) under the farmout relating to the interests of
the Issuer or its Subsidiaries being farmed out. The Issuer anticipates entering
into a retainer arrangement with F. John Stark, III in connection with his
services with respect to such written confirmations, with such retainer
arrangement calling for the payment to him of fees for his services with respect
to such written confirmations (the "STARK FEES"), with the Stark Fees being
excluded from the calculation of SG&A.

         (b)   In addition, the Issuer and its Subsidiaries may enter into and
perform farmouts not complying with Section 4.31(a) if consent to such farmout
is obtained from the Holders of not less than a majority of the principal amount
of the then outstanding Notes issued under this Indenture.

         (c)   The farmouts referenced in the Purchase and Sale Agreement dated
November 21, 2002 between the Issuer, as seller, and PrimeWest Gas Inc., as
purchaser, (the "FARMOUT AGREEMENT") and included as Schedule P in such
agreement, are permitted farmouts under this Indenture.

         (d)   Farmouts permitted by the preceding three paragraphs are referred
to as "PERMITTED FARMOUT AGREEMENTS." The following shall apply to each
Permitted Farmout Agreement:

               (i)    the applicable portions of Liens of the Security
         Documents securing the Notes will be released with respect to the
         undeveloped wells and/or properties that are subject to such Permitted
         Farmout Agreement, provided that all retained interests of the Issuer
         and the Subsidiaries in such wells and/or properties will remain
         subject to such Liens;

               (ii)   such Permitted Farmout Agreement will be deemed not to
         be an Asset Sale, including, but not limited to, the purchase options
         in the Farmout Agreement referenced in Section 4.31(c) above;

               (iii)  obligations of the Issuer and its Subsidiaries under
         such Permitted Farmout Agreement that constitute Indebtedness will be
         Permitted Indebtedness so long as any such Indebtedness is non-recourse
         with respect to the Issuer and its Subsidiaries and their properties
         and assets other than the wells and/or properties that are the subject
         of such Permitted Farmout Agreement; and

               (iv)   to the extent such Permitted Farmout Agreement would
         constitute an Investment by the Issuer or any of its Subsidiaries, such
         Investment will be a Permitted Investment.

         SECTION 4.32. CEO NOTE OPTIONS.

         The Issuer may issue to its Chief Executive Officer (the "ISSUER'S
CEO") options to purchase Notes ("CEO NOTE OPTIONS") as follows:

         (a)   Issuance to the Issuer's CEO on the Issue Date of options to
               purchase $750,000 principal amount of Notes for the market price
               therefor at the Issue Date;

         (b)   Issuance to the Issuer's CEO of options to purchase $250,000
               principal amount of Notes for the market price therefor at the
               Issue Date if the Notes trade for greater than 70% of the face
               amount thereof for 60 consecutive trading days, with the first of
               such consecutive 60 days being in January of 2003;

                                       44
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         (c)   Issuance to the Issuer's CEO of options to purchase $500,000
               principal amount of Notes for the market price therefor at the
               Issue Date if the Notes trade for greater than 70% of the face
               amount thereof for any 60 consecutive trading days during the
               first 365 calendar days after the Issue Date; and

         (d)   Issuance to the Issuer's CEO of options to purchase $250,000
               principal amount of Notes for the market price therefor at the
               Issue Date if the Notes trade for greater than 90% of the face
               amount thereof for any 60 consecutive trading days during the 365
               calendar day period commencing on the 366th day after the Issue
               Date, provided that if the condition set forth in clause (c)
               immediately above is not achieved, the amount applicable for this
               clause (d) shall be increased from $250,000 to $750,000.

         For determining consecutive trading days with respect to the Notes, a
trading day will be a day on which there are at least $500,000 in aggregate
principal amount of Notes traded and either Jefferies and Company, Inc., or its
successor, or Imperial Capital, LLC, or its successor, (as long as they did not
execute the trade) confirms to the Issuer that the trade was in the context of
the market.

         SECTION 4.33. CONDUCT OF BUSINESS IN THE INTERIM PERIOD.

         The Issuer shall have, and shall have caused its Subsidiaries to,
conduct business consistent with past practices during the interim period
between the date that the Offer to Exchange was made and the Issue Date.

         SECTION 4.34. CALCULATION OF ORIGINAL ISSUE DISCOUNT.

         The Issuer shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount accrued on the outstanding Notes as of the end of such year and (ii)
such other specific information relating to such original issue discount as may
then be relevant under the Internal Revenue Code or applicable U.S. Treasury
regulation.

                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

         SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS.

         The Issuer will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all
or substantially all of the assets owned directly or indirectly by the Issuer
(determined on a consolidated basis for the Issuer and its Subsidiaries),
whether as an entirety or substantially as an entirety to any Person unless: (a)
either (i) the Issuer shall be the surviving or continuing corporation or (ii)
the Person (if other than the Issuer) formed by such consolidation or into which
the Issuer is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the assets of the Issuer and its
Subsidiaries substantially as an entirety (the "SURVIVING ENTITY") (x) shall be
a corporation organized and validly existing under the laws of the United States
or any state thereof or the District of Columbia; and (y) shall expressly
assume, by supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual payment of
the principal of, premium, if any, and interest on all of the Notes and the
performance of every covenant of the Notes, this Indenture and the Security
Documents on the part of the Issuer to be performed or observed; (b) immediately
after giving effect to such transaction and the assumption contemplated by
clause (a)(ii)(y) above (including giving effect to any Indebtedness incurred or
anticipated to be incurred and any Lien granted in connection with or in respect
of such transaction), the Issuer or such Surviving Entity, as the case may be,
(i) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Issuer immediately prior to such transaction, and
(ii) both (x) the Issuer's or such Surviving Entity's (calculated as if such
Surviving Entity was the Issuer) as the case may be, Consolidated EBITDA
Coverage Ratio is at least equal to 2.5 to 1.0; and (y) the Issuer's or such
Surviving Entity's (calculated as if such Surviving Entity was the Issuer), as
the case may be, Adjusted Consolidated Net Tangible Assets are equal to or
greater than 150% of the aggregate consolidated Indebtedness of the Issuer and
its Subsidiaries; (c) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (a)(ii)(y) above
(including, without limitation, giving effect to any Indebtedness incurred or
anticipated to be incurred and any Lien

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granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and (d) the Issuer or the
Surviving Entity, as the case may be, shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
hereof and that all conditions precedent in this Indenture relating to such
transaction have been satisfied; PROVIDED, HOWEVER, that such counsel may rely,
as to matters of fact, on a certificate or certificates of officers of the
Issuer.

         For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the assets of one or more Subsidiaries the Capital Stock of
which constitutes all or substantially all of the assets of the Issuer, shall be
deemed to be the transfer of all or substantially all of the assets of the
Issuer.

         Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of this Indenture described under this Section 5.01) will not, and the Issuer
will not cause or permit any Subsidiary Guarantor to, consolidate with or merge
with or into any Person other than the Issuer or another Subsidiary Guarantor
that is a Wholly Owned Subsidiary unless: (a) the entity formed by or surviving
any such consolidation or merger (if other than the Subsidiary Guarantor) is a
Person organized and existing under the laws of the United States or any state
thereof or the District of Columbia (or if such Subsidiary Guarantor was formed
under the laws of Canada or any province or territory thereof, such Surviving
Entity shall be a Person organized and validly existing under the laws of Canada
or any province or territory thereof); (b) such entity assumes by execution of a
supplemental indenture all of the obligations of the Subsidiary Guarantor under
its Guarantee; (c) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and (d)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a PRO FORMA basis, the Issuer could satisfy the provisions
of clause (b) of the first paragraph of this Section 5.01. Any merger or
consolidation of a Subsidiary Guarantor with and into the Issuer (with the
Issuer being the Surviving Entity) need only comply with clause (d) of the first
paragraph of this Section 5.01.

         SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.

         Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Issuer in accordance with the foregoing,
in which the Issuer is not the Surviving Entity, the Surviving Entity formed by
such consolidation or into which the Issuer is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under this Indenture and the Notes with the same effect
as if such Surviving Entity had been named as such, and thereafter (except in
the case of a lease), the predecessor corporation will be relieved of all
further obligations and covenants under this Indenture and the Notes.

                                   ARTICLE SIX

                                    REMEDIES

         SECTION 6.01. EVENTS OF DEFAULT.

         An "EVENT OF DEFAULT" means any of the following events:

               (a)    the failure to pay interest on any Notes when the same
         becomes due and payable;

               (b)    the failure to pay the principal of any Notes when such
         principal becomes due and payable, at the Maturity Date, upon
         redemption or otherwise (including the failure to make a payment to
         purchase Notes tendered pursuant to a Change of Control Offer or to Pay
         Down Debt in connection with an Asset Sale);

               (c)    a default in the observance or performance of any other
         covenant or agreement contained in this Indenture which default
         continues for a period of 30 days after Issuer or any Subsidiary
         Guarantor receives written notice specifying the default (and demanding
         that such default be remedied) from the Trustee or the Holders of at
         least 25% of the outstanding principal amount of the Notes (except in
         the case of a default with

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         respect to observance or performance of any of the terms or provisions
         of Section 4.15, 4.16 or 5.01 which will constitute an Event of
         Default with such notice requirement but without such passage of time
         requirement);

               (d)    a default under any mortgage, indenture or instrument
         under which there may be issued or by which there may be secured or
         evidenced any Indebtedness of the Issuer or any Subsidiary (or the
         payment of which is guaranteed by the Issuer or any Subsidiary),
         whether such Indebtedness now exists, or is created after the Issue
         Date, which default (i) is caused by a failure to pay principal of or
         premium, if any, or interest on such Indebtedness after any applicable
         grace period provided in such Indebtedness (a "PAYMENT DEFAULT") or
         (ii) results in the acceleration of such Indebtedness prior to its
         express maturity and, in each case, the principal amount of any such
         Indebtedness, together with the principal amount of any other such
         Indebtedness under which there has been a payment default or the
         maturity of which has been so accelerated, aggregates $2,000,000.00 or
         more;

               (e)    one or more judgments in an aggregate amount in excess of
         $2,000,000.00 (unless covered by insurance by a reputable insurer as to
         which the insurer has acknowledged coverage) shall have been rendered
         against the Issuer or any of its Subsidiaries and such judgments remain
         undischarged, unvacated, unpaid or unstayed for a period of 60 days
         after such judgment or judgments become final and non-appealable;

               (f)    the Issuer or any of its Subsidiaries pursuant to or under
         or within the meaning of any Bankruptcy Law:

                      (i)    commences a voluntary case or proceeding;

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

                      (iii)  consents to the appointment of a Custodian of it or
               for all or substantially all of its property;

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

                      (v)    shall generally not pay its debts when such debts
               become due or shall admit in writing its inability to pay its
               debts generally;

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

                      (i)    is for relief against the Issuer or any Subsidiary
               of the Issuer in an involuntary case or proceeding,

                      (ii)   appoints a Custodian of the Issuer or any
               Subsidiary of the Issuer for all or substantially all of its
               Properties, or

                      (iii)  orders the liquidation of the Issuer or any
               Subsidiary of the Issuer,

         and in each case the order or decree remains unstayed and in effect for
60 days; or

               (h)    any of the Guarantees or any of the Security Documents
         ceases to be in full force and effect or any of the Guarantees or the
         Security Documents is declared to be null and void or invalid and
         unenforceable or any of the Subsidiary Guarantors denies or disaffirms
         its liability under its Guarantee (other than by reason of release of a
         Subsidiary Guarantor in accordance with the terms of this Indenture) or
         any obligor or any Related Person denies or disaffirms its liability
         under any Security Document to which it is party.

         SECTION 6.02. ACCELERATION.

         Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, or the Holders of at least 25% in aggregate principal amount of
outstanding Notes may, declare the principal of, premium, if any, and accrued
and unpaid interest on all the Notes to be due and payable by notice in writing
to the Issuer and the Trustee specifying the

                                       47
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respective Event of Default and that it is a "notice of acceleration" and the
same shall become immediately due and payable. If an Event of Default of the
type described in clause (f) or (g) above occurs and is continuing, then such
amount will IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

         At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Issuer and the Trustee may rescind and cancel such declaration and its
consequences (a) if the rescission would not conflict with any judgment or
decree, (b) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration, (c) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal, which have become due
otherwise than by such declaration of acceleration, has been paid, (d) if the
Issuer has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances, and (e) in the event of
the cure or waiver of an Event of Default of the type described in clause (f) or
(g) of the description of Events of Default above, the Trustee shall have
received an Officers' Certificate and an Opinion of Counsel that such Event of
Default has been cured or waived; PROVIDED, HOWEVER, that such counsel may rely,
as to matters of fact, on a certificate or certificates of officers of the
Issuer. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.

         SECTION 6.03. OTHER REMEDIES.

         Subject to the terms of the Intercreditor Agreement, if an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of the principal of,
premium, if any, or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

         All rights of action and claims under this Indenture or the Notes may
be enforced by the Trustee even if it does not possess any of the Notes or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by law.

         SECTION 6.04. WAIVER OF PAST DEFAULTS.

         Prior to the declaration of acceleration of the Notes, the Holders of
not less than a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may, on behalf of the Holders of
all the Notes, waive any existing Default or Event of Default and its
consequences under this Indenture, except a Default or Event of Default
specified in Section 6.01(a) or (b) or in respect of any provision hereof which
cannot be modified or amended without the consent of the Holder so affected
pursuant to Section 9.02. When a Default or Event of Default is so waived, it
shall be deemed to be cured and shall cease to exist. This Section 6.04 shall be
in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the
TIA is hereby expressly excluded from this Indenture and the Notes, as permitted
by the TIA.

         SECTION 6.05. CONTROL BY MAJORITY.

         Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Article Six and under the TIA. Subject to the terms of the
Intercreditor Agreement, the Holders of not less than a majority in aggregate
principal amount of the outstanding Notes shall 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;
PROVIDED, HOWEVER, that the Trustee may refuse to follow any direction (a) that
conflicts with any rule of law or this Indenture, (b) that the Trustee
determines may be unduly prejudicial to the rights of another Holder, or (c)
that may expose the Trustee to personal liability for which reasonable security
and indemnity provided to the Trustee against such liability shall be
inadequate; PROVIDED, FURTHER, HOWEVER, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such direction
or this Indenture. This Section 6.05 shall be in lieu of Section 316(a)(1)(A) of
the TIA, and such Section 316(a)(1)(A) of the TIA is hereby expressly excluded
from this Indenture and the Notes, as permitted by the TIA.

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         SECTION 6.06. LIMITATION ON SUITS.

         No Holder of any Notes shall have any right to institute any proceeding
with respect to this Indenture, the Notes, any Guarantee or any Security
Document or any remedy hereunder or thereunder, unless the Holders of at least
25% in aggregate principal amount of the outstanding Notes have made written
request, and offered reasonable security and indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and this Indenture, the
institution of such proceeding is consistent with the terms of the Intercreditor
Agreement, the Trustee has failed to institute such proceeding within 60 days
after receipt of such notice, request and offer of security and indemnity and
the Trustee, within such 60-day period, has not received directions inconsistent
with such written request by Holders of not less than a majority in aggregate
principal amount of the outstanding Notes.

         Subject to the terms of the Intercreditor Agreement, the foregoing
limitations shall not apply to a suit instituted by a Holder of a Note for the
enforcement of the payment of the principal of, premium, if any, or interest on,
such Note on or after the respective due dates expressed or provided for in such
Note.

         A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.

         SECTION 6.07. RIGHT OF HOLDERS TO RECEIVE PAYMENT.

         Subject to the terms of the Intercreditor Agreement (to which this
provision is subject), the right of any Holder of a Note to receive payment of
the principal of, premium, if any, and interest on such Note, on or after the
respective due dates expressed or provided for in such Note, or to bring suit
for the enforcement of any such payment on or after the respective due dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.

         SECTION 6.08. COLLECTION SUIT BY TRUSTEE.

         If an Event of Default specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Trustee may, subject to the terms of the
Intercreditor Agreement, recover judgment in its own name and as trustee of an
express trust against the Issuer, or any other obligor on the Notes for the
whole amount of the principal of, premium, if any, and accrued interest
remaining unpaid, together with interest on overdue principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate per annum provided for by the Notes and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, fees, expenses, disbursements
and advances of the Trustee, its agents and counsel.

         SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.

         The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, fees, expenses,
disbursements and advances of the Trustee, its agents, counsel, accountants and
experts) and the Holders allowed in any judicial proceedings relative to the
Issuer, any Subsidiary Guarantor or Subsidiary (or any other obligor upon the
Notes), their creditors or their property and shall be entitled and empowered to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, fees, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.

         SECTION 6.10. PRIORITIES.

         If the Trustee collects any money pursuant to this Article Six it
shall, subject to the terms of the Intercreditor Agreement, pay out such money
in the following order:

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               First: to the Trustee (including any predecessor Trustee) for
         amounts due under Section 7.07;

               Second: to Holders for interest accrued on the Notes, ratably,
         without preference or priority of any kind, according to the amounts
         due and payable on the Notes for interest;

               Third: to Holders for the principal amounts (including any
         premium) owing under the Notes, ratably, without preference or
         priority of any kind, according to the amounts due and payable on the
         Notes for the principal (including any premium); and

               Fourth: the balance, if any, to the Issuer.

         The Trustee, upon prior written notice to the Issuer, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.

         SECTION 6.11. UNDERTAKING FOR COSTS.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may in its discretion require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to any suit by the Trustee, any suit by a
Holder pursuant to Section 6.06, or a suit by a Holder or Holders of more than
10% in aggregate principal amount of the outstanding Notes.

         SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.

         If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture, any Guarantee or any Note and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuer, the Subsidiary Guarantors, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

                                  ARTICLE SEVEN

                                     TRUSTEE

         SECTION 7.01. DUTIES OF TRUSTEE.

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

         (b)   Except during the continuance of an Event of Default:

               (1)    The Trustee need perform only those duties as are
         specifically set forth in this Indenture and no covenants or
         obligations shall be implied in this Indenture that are adverse to the
         Trustee.

               (2)    In the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, in the case of any such certificates or
         opinions that by any provision hereof are specifically required to be
         furnished to the Trustee, the Trustee shall examine the certificates
         and opinions to determine whether or not they conform to the
         requirements of this Indenture.

         (c)   Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

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               (1)    This paragraph does not limit the effect of paragraph (b)
         of this Section 7.01.

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

               (3)    The Trustee shall not be liable with respect to any action
         it takes or omits to take in good faith in accordance with a direction
         received by it pursuant to Section 6.02, 6.04 or 6.05.

         (d)   No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate security and indemnity against such risk or
liability is not reasonably assured to it.

         (e)   Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.

         (f)   The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Issuer. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.

         SECTION 7.02. RIGHTS OF TRUSTEE.

         Subject to Section 7.01:

               (a)    The Trustee may rely and shall be fully protected in
         acting or refraining from acting upon any document believed by it to be
         genuine and to have been signed or presented by the proper Person. The
         Trustee need not investigate any fact or matter stated in the document,
         but the Trustee, in its discretion, may make such further inquiry or
         investigation into such facts or matters as it may see fit, and if the
         Trustee shall determine to make such further inquiry or investigation,
         it shall be entitled to examine the books, records and premises of the
         Issuer, personally or by agent or attorney.

               (b)    Before the Trustee acts or refrains from acting, it may
         consult with counsel of its selection and may require an Officers'
         Certificate or an Opinion of Counsel, which shall conform to Sections
         10.04 and 10.05. The Trustee shall not be liable for any action it
         takes or omits to take in good faith in reliance on such Officers'
         Certificate or Opinion of Counsel.

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

               (d)    The Trustee shall not be liable for any action that it
         takes or omits to take in good faith which it reasonably believes to be
         authorized or within the discretion, rights or powers conferred upon it
         by this Indenture.

               (e)    The Trustee shall not be bound to make any investigation
         into the facts or matters stated in any resolution, certificate,
         statement, instrument, opinion, notice, request, direction, consent,
         order, bond, debenture, or other paper or document, but the Trustee, in
         its discretion, may make such further inquiry or investigation into
         such facts or matters as it may see fit, and, if the Trustee shall
         determine to make such further inquiry or investigation, it shall be
         entitled, upon reasonable notice to the Issuer, to examine the books,
         records, and premises of the Issuer, personally or by agent or attorney
         and to consult with the officers and representatives of the Issuer,
         including the Issuer's accountants and attorneys.

               (f)    The Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Indenture at the request,
         order or direction of any of the Holders pursuant to the provisions of
         this Indenture, unless such Holders shall have offered, and if
         requested, provided to the Trustee security and indemnity satisfactory
         to the Trustee against the costs, expenses and liabilities which may be
         incurred by it in compliance with such request, order, direction or
         exercise.

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               (g)    The Trustee shall not be required to give any bond or
         surety in respect of the performance of its powers and duties
         hereunder.

               (h)    Delivery of reports, information and documents to the
         Trustee under Section 4.08 is for informational purposes only and the
         Trustee's receipt of the foregoing shall not constitute constructive
         notice of any information contained therein or determinable from
         information contained therein, including the Issuer's and any
         Subsidiary Guarantor's compliance with any of their covenants hereunder
         (as to which the Trustee is entitled to rely exclusively on Officers'
         Certificates).

               (i)    No permissive right of the Trustee to act hereunder shall
         be construed as a duty.

               (j)    Whenever in the administration of this Indenture the
         Trustee shall deem it desirable that a matter be proved or established
         prior to taking, suffering or omitting any action hereunder, the
         Trustee (unless other evidence be herein specifically prescribed) may,
         in the absence of bad faith on its part, rely upon an Officers'
         Certificate, a written Opinion of Counsel, or both.

               (k)    Except with respect to Section 4.01 hereof, the Trustee
         shall have no duty to inquire as to the performance of the Issuer's
         covenants in Article Four hereof. In addition, the Trustee shall not be
         deemed to have knowledge of any Default or Event of Default except (i)
         any Event of Default occurring pursuant to Sections 6.01(a) and 6.01(b)
         hereof or (ii) any Default or Event of Default of which the Trustee
         shall have received written notification or obtained actual knowledge.

               (l)    The Trustee shall not be deemed to have notice or
         knowledge of any matter unless a Trust Officer has actual knowledge
         thereof or unless written notice thereof is received by the Trustee at
         the Corporate Trust Office of the Trustee and such notice references
         the Notes generally, the Issuer or this Indenture.

               (m)    The Trustee shall be authorized to exercise its rights and
         remedies under this Indenture and the Security Documents through one or
         more agents.

         SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuer, any of its
Subsidiaries, or its Affiliates with the same rights it would have if it were
not Trustee. Any Agent may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.

         SECTION 7.04. TRUSTEE'S DISCLAIMER.

         The Trustee makes no representation as to the validity or adequacy of
this Indenture, the Guarantees or the Notes, and it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in this Indenture or the Notes other than the
Trustee's certificate of authentication.

         SECTION 7.05. NOTICE OF DEFAULT.

         If a Default or an Event of Default occurs and is continuing and if (i)
the Trustee receives written notice thereof or (ii) such default is an Event of
Default under Section 6.01(a) or (b), the Trustee shall mail to each Holder and
to the Senior Credit Facility Representative notice of the uncured Default or
Event of Default within 90 days after obtaining knowledge thereof. Except in the
case of a Default or an Event of Default in payment of principal of, or interest
on, any Note, including an accelerated payment, a Default in payment on the
Change of Control Payment Date pursuant to a Change of Control Offer, a Default
in any requirement under this Indenture to Pay Down Debt, and a Default in
compliance with Article Five hereof, the Trustee may withhold the notice if and
so long as its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or Trust Officers in good faith
determines that withholding the notice is in the interest of the Holders. The
foregoing sentence of this Section 7.05 shall be in lieu of the proviso to
Section 315(b) of the TIA and such proviso to Section 315(b) of the TIA is
hereby expressly excluded from this Indenture and the Notes, as permitted by the
TIA.

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         SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.

         Within 60 days after May 15 of each year beginning with 2003, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d).

         A copy of each report at the time of its mailing to Holders shall be
mailed to the Issuer and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.

         The Issuer shall promptly notify the Trustee if the Notes become listed
on any stock exchange and the Trustee shall comply with TIA Section 313(d).

         SECTION 7.07. COMPENSATION AND INDEMNITY.

         The Issuer shall pay to the Trustee from time to time such compensation
for its services as has been agreed to by the Issuer and the Trustee. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee upon request
for all reasonable out-of-pocket expenses incurred or made by it in connection
with the performance of its duties under this Indenture. Such expenses shall
include the reasonable fees and expenses of the Trustee's agents, counsel,
accountants and experts.

         The Issuer and the Subsidiary Guarantors shall jointly and severally
indemnify each of the Trustee (or any predecessor Trustee) and its agents,
employees, stockholders, Affiliates and directors and officers for, and hold
them each harmless against, any and all loss, liability, damage, claim or
expense (including reasonable fees and expenses of counsel), including taxes
(other than taxes based on the income of the Trustee) incurred by them except
for such actions to the extent caused by any negligence, bad faith or willful
misconduct on their part, relating to or arising out of or in connection with
(i) the acceptance or administration of this trust including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder, or (ii) the validity, invalidity, adequacy or inadequacy of
this Indenture, the Subsidiary Guarantees, the Notes, the Security Documents and
the Offer to Exchange. The Trustee shall notify the Issuer promptly of any claim
asserted against the Trustee for which it intends to seek indemnity. At the
Trustee's sole discretion, the Issuer shall defend the claim and the Trustee
shall cooperate and may participate in the defense; PROVIDED, HOWEVER, that any
settlement of a claim shall be approved in writing by the Trustee if such
settlement would result in an admission of liability by the Trustee or if such
settlement would not be accompanied by a full release of the Trustee for all
liability arising out of the events giving rise to such claim. Alternatively,
the Trustee may at its option have separate counsel of its own choosing and the
Issuer shall pay the reasonable fees and expenses of such counsel.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.

         The provisions of this Section 7.07 shall survive the termination of
this Indenture.

         SECTION 7.08. REPLACEMENT OF TRUSTEE.

         The Trustee may resign at any time by so notifying the Issuer. The
Holders of a majority in aggregate principal amount of the outstanding Notes may
remove the Trustee and appoint a successor Trustee with the Issuer's consent, by
so notifying the Issuer and the Trustee. The Issuer may remove the Trustee if:

         (1)   the Trustee fails to comply with Section 7.10;

         (2)   the Trustee is adjudged bankrupt or insolvent;

         (3)   a receiver or other public officer takes charge of the Trustee or
its property; or

         (4)   the Trustee becomes incapable of acting.

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         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuer.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The Issuer shall mail notice of
such successor Trustee's appointment to each Holder.

         If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

         If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

         Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Issuer's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.

         SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.

         If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; PROVIDED, HOWEVER, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.

         SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.

         This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case
of a Trustee that is a corporation included in a bank holding company system,
the related bank holding company) shall have a combined capital and surplus of
at least $100 million as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Issuer are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Issuer and the Subsidiary Guarantors, as obligors
of the Notes.

         SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.

         The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Issuer and the
Subsidiary Guarantors, as obligors on the Notes.

         SECTION 7.12. OTHER CAPACITIES.

         All references in this Indenture to the Trustee shall be deemed to
refer to the Trustee in its capacity as Trustee and in its capacities as any
Agent, to the extent acting in such capacities, and every provision of this
Indenture relating to the conduct or affecting the liability or offering
protection, immunity or indemnity to the Trustee shall be deemed to apply with
the same force and effect to the Trustee acting in its capacities as any Agent.

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                                  ARTICLE EIGHT

                       DISCHARGE OF INDENTURE; DEFEASANCE

         SECTION 8.01. TERMINATION OF ISSUER'S OBLIGATIONS.

         This Indenture, the Guarantees and the Security Documents will be
discharged and will cease to be of further effect (except as to surviving rights
of registration of transfer or exchange of the Notes, as expressly provided for
in this Indenture) as to all outstanding Notes when (a) either (i) all Notes,
theretofore authenticated and delivered (except lost, stolen or destroyed Notes
which have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust by the Issuer or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or discharged from such
trust) have been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable, or are to become due and payable within 180 days, and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable written instructions in the form of an Officers' Certificate from
the Issuer directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; (b) the Issuer has paid all other
sums payable under this Indenture by the Issuer; and (c) the Issuer has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent under this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with; PROVIDED,
HOWEVER, that such counsel may rely, as to matters of fact, on a certificate or
certificates of officers of the Issuer.

         The Issuer may, at its option and at any time, elect to have its
obligations and the corresponding obligations of the Subsidiary Guarantors
discharged with respect to the outstanding Notes ("LEGAL DEFEASANCE"). Such
Legal Defeasance means that the Issuer and the Subsidiary Guarantors shall be
deemed to have paid and discharged the entire indebtedness represented by the
outstanding Notes, and satisfied all of their obligations with respect to the
Notes, except for (a) the rights of Holders to receive payments from the trust
referred to below in respect of the principal of, premium, if any, and interest
on the Notes when such payments are due, (b) the Issuer's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
replacement of mutilated, destroyed, lost or stolen Notes and the maintenance of
an office or agency for payments, (c) the rights, powers, trust, duties and
immunities of the Trustee and the Issuer's obligations in connection therewith
and (d) the Legal Defeasance provisions of this Section 8.01. In addition, the
Issuer may, at its option and at any time, elect to have the obligations of the
Issuer and the Subsidiary Guarantors, if any, released with respect to covenants
contained in Sections 4.04, 4.05, 4.06(b), 4.07, 4.08 and 4.10 through 4.21,
4.23 and 4.25 through 4.33 and Articles Five and Twelve ("COVENANT DEFEASANCE")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the Notes. In the event of
Covenant Defeasance, those events described under Section 6.01 (except those
events described in Section 6.01(a), (b), (f), (g) and (h) as it relates to the
Guarantees) will no longer constitute an Event of Default with respect to the
Notes.

         In order to exercise either Legal Defeasance or Covenant Defeasance:

               (a)    the Issuer must irrevocably deposit with the Trustee, in
         trust, for the benefit of the Holders U.S. Legal Tender, non-callable
         U.S. Government Obligations, or a combination thereof, in such amounts
         as will be sufficient, in the opinion of a nationally recognized firm
         of independent public accountants, to pay the principal of, premium, if
         any, and interest on the Notes on the stated date for payment thereof
         or on the applicable Redemption Date, as the case may be;

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

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               (c)    in the case of Covenant Defeasance, the Issuer shall have
         delivered to the Trustee an Opinion of Counsel in the United States
         reasonably acceptable to the Trustee confirming that the Holders will
         not recognize income, gain or loss for federal income tax purposes as a
         result of such Covenant Defeasance and will be subject to federal
         income tax on the same amounts, in the same manner and at the same
         times as would have been the case if such Covenant Defeasance had not
         occurred;

               (d)    no Default or Event of Default shall have occurred and be
         continuing on the date of such deposit or insofar as Events of Default
         under Section 6.01(f) or (g) from bankruptcy or insolvency events are
         concerned, at any time in the period ending on the 91st day after the
         date of deposit;

               (e)    such Legal Defeasance or Covenant Defeasance shall not
         result in a breach or violation of, or constitute a default under this
         Indenture or any other agreement or instrument to which the Issuer or
         any of its Subsidiaries is a party or by which the Issuer or any of its
         Subsidiaries is bound;

               (f)    the Issuer shall have delivered to the Trustee an
         Officers' Certificate stating that the deposit was not made by the
         Issuer with the intent of preferring the Holders over any other
         creditors of the Issuer or with the intent of defeating, hindering,
         delaying or defrauding any other creditors of the Issuer or others;

               (g)    the Issuer shall have delivered to the Trustee an
         Officers' Certificate and an Opinion of Counsel, each stating that all
         conditions precedent provided for or relating to the Legal Defeasance
         or the Covenant Defeasance, as the case may be, have been complied
         with; PROVIDED, HOWEVER, that such counsel may rely, as to matters of
         fact, on a certificate or certificates of officers of the Issuer; and

               (h)    the Issuer shall have delivered to the Trustee an Opinion
         of Counsel to the effect that after the 91st day following the deposit,
         the trust funds will not be subject to the effect of any applicable
         bankruptcy, insolvency, reorganization or similar laws affecting
         creditors' rights generally.

         SECTION 8.02. APPLICATION OF TRUST MONEY.

         The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree in
writing with the Issuer.

         The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Legal Tender or U.S. Government
Obligations deposited pursuant to Section 8.01 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes. The provisions of
this Section 8.02 shall survive the termination of this Indenture.

         SECTION 8.03. REPAYMENT TO THE ISSUER.

         Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Issuer upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Issuer upon receipt of a written order in the form of an
Officers' Certificate requesting any money held by them for the payment of
principal or interest that remains unclaimed for one year; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any
payment, may at the expense of the Issuer cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Issuer. After payment to the Issuer, Holders entitled to such
money must look to the Issuer for payment as general creditors unless an
applicable law designates another Person.

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         SECTION 8.04. REINSTATEMENT.

         If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.02 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuer's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.02; PROVIDED, HOWEVER, that if the Issuer has made any payment of
interest on or principal of any Notes because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of such
Notes to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.

         SECTION 8.05. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.

         After (i) the conditions of Section 8.01 have been satisfied, (ii) the
Issuer has paid or caused to be paid all other sums payable hereunder by the
Issuer and (iii) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request of the Issuer in the form of an Officers' Certificate shall acknowledge
in writing the discharge of the Issuer's obligations under this Indenture except
for those surviving obligations specified in Sections 7.07 and 8.02.

                                  ARTICLE NINE

                            MODIFICATION OF INDENTURE

         SECTION 9.01. WITHOUT CONSENT OF HOLDERS.

         Subject to the terms of the Intercreditor Agreement, the Issuer, the
Subsidiary Guarantors and the Trustee may amend, waive or supplement this
Indenture, the Notes, the Guarantees, the Intercreditor Agreement or any
Security Document without notice to or consent of any Holder: (a) to cure any
ambiguity, defect or inconsistency; (b) to comply with Section 4.20 or 5.01 of
this Indenture; (c) to provide for uncertificated Notes in addition to
certificated Notes; (d) to comply with any requirements of the Commission in
order to effect or maintain the qualification of this Indenture under the TIA;
or (e) to make any change that would provide any additional benefit or rights to
the Holders or that does not adversely affect the rights of any Holder.
Notwithstanding the foregoing, subject to Section 9.02, the Trustee and the
Issuer may not make any change that adversely affects the rights of any Holder
under this Indenture, the Intercreditor Agreement or any Security Document
without the consent of such Holder. In formulating its opinion on such matters,
the Trustee will be entitled to rely on such evidence as it deems appropriate,
including, without limitation, solely on an Opinion of Counsel; PROVIDED,
HOWEVER, that in delivering such Opinion of Counsel, such counsel may rely as to
matters of fact, on a certificate or certificates of officers of the Issuer.

         SECTION 9.02. WITH CONSENT OF HOLDERS.

         Subject to the terms of the Intercreditor Agreement, all other
amendments, supplements or waivers of this Indenture, the Notes, the Guarantees,
the Intercreditor Agreement or any Security Document may be made with the
consent of the Holders of not less than a majority of the then outstanding
principal amount of the then outstanding Notes, except that, without the consent
of each Holder of the Notes affected thereby, no amendment, supplement or waiver
may, directly or indirectly: (i) reduce the amount of Notes whose Holders must
consent to any amendment; (ii) reduce the rate of or change or have the effect
of changing the time for payment of interest, including defaulted interest, on
any Notes or reduce the amount of Liquidated Damages payable under the
Registration Rights Agreement; (iii) reduce the principal of or change the fixed
maturity of any Notes, or change the date on which any Notes may be subject to
redemption or repurchase, or reduce the redemption or repurchase price therefor;
(iv) make any Notes payable in currency other than that stated in the Notes; (v)
make any change in provisions of this Indenture, the Notes, the Guarantees, the
Intercreditor Agreement or any Security Document protecting the right of each
Holder of a Note to receive payment of principal of and interest on such Note on
or after the due date thereof or to bring suit to enforce such payment or
permitting Holders of a majority in aggregate principal amount of the then
outstanding Notes to waive Defaults or Events of Default; (vi) amend, change or
modify in any material respect the obligation of the Issuer to make and
consummate a Change of Control Offer in the event of a Change of Control or to
Pay Down Debt with respect to any Asset Sale that has been consummated or

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modify any of the provisions or definitions with respect thereto; (vii) modify
or change any provision of this Indenture, the Notes, the Guarantees, the
Intercreditor Agreement, any Security Document or Section 1.01 affecting the
ranking of the Notes or any Guarantee in a manner which adversely affects the
Holders; or (viii) release any Subsidiary Guarantor from any of its obligations
under its Guarantee or this Indenture otherwise than in accordance with the
terms of this Indenture.

         Notwithstanding anything to the contrary in this Section 9.02, the
Issuer and its Subsidiaries may enter into and perform farmouts not complying
with Section 4.31(a) of this Indenture if consent to such farmout is obtained
from the Holders of not less than a majority of the then outstanding principal
amount of the then outstanding Notes.

         SECTION 9.03. COMPLIANCE WITH TIA.

         Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect; PROVIDED, HOWEVER, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.

         SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.

         Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Issuer received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.

         The Issuer may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which Record Date shall be at least 30 days prior to the
first solicitation of such consent. If a Record Date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such Record Date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date unless consents from Holders of the requisite percentage
in principal amount of outstanding Notes required hereunder for the
effectiveness of such consents shall have also been given and not revoked within
such 90 day period.

         SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.

         If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Issuer or the Trustee so
determines, the Issuer in exchange for the Note shall issue and the Trustee upon
receipt of a written order in the form of an Officers' Certificate shall
authenticate a new Note that reflects the changed terms.

         SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, Etc.

         The Trustee shall execute any amendment, supplement or waiver approved
by the Board of Directors of the Issuer and authorized pursuant to this Article
Nine; PROVIDED, HOWEVER, that the Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. In executing such amendment,
supplement or waiver the Trustee shall be entitled to receive security and
indemnity satisfactory to it, and shall be fully protected in relying upon an
Opinion of Counsel and an Officers' Certificate of the Issuer, each stating that
(a) no Event of Default shall occur as a result of such amendment, supplement or
waiver, (b) such amendment, supplement or waiver has been approved by the Board
of Directors of the Issuer and (c) the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by

                                       58
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this Indenture, PROVIDED the legal counsel delivering such Opinion of Counsel
may rely as to matters of fact on one or more Officers' Certificates of the
Issuer. Such Opinion of Counsel shall not be an expense of the Trustee.

         SECTION 9.07. EVIDENCE OF AMENDMENTS, SUPPLEMENTS, WAIVERS.

         This Indenture, the Notes, the Guarantees, the Intercreditor Agreement
and the Security Documents may only be amended, supplemented or waived by a
written instrument duly signed as contemplated in Section 9.01 or 9.02.

         SECTION 9.08. AMENDMENT OF INTERCREDITOR AGREEMENT.

         The provisions of the Intercreditor Agreement and the provisions of
this Indenture cannot be amended in a manner adverse to the Senior Credit
Facility Representative or the Senior Credit Facility Lenders without the
written consent of the Senior Credit Facility Representative.

                                   ARTICLE TEN

                                  MISCELLANEOUS

         SECTION 10.01. TIA CONTROLS.

         If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control; PROVIDED, HOWEVER, that this Section 10.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.

         SECTION 10.02. NOTICES.

         Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:

               if to the Issuer or any Subsidiary Guarantor:

                        c/o Abraxas Petroleum Corporation
                        500 North Loop 1604 East
                        Suite 100
                        San Antonio, Texas 78232
                        Telecopier Number: (210) 490-8816

                        Attn:  Chief Executive Officer

               if to the Trustee:

                        U.S. Bank, N.A.
                        180 East Fifth Street
                        Saint Paul, Minnesota 55101
                        Attn:  Corporate Trust Department
                        Telecopier Number: (651) 229-6415

               if to the Senior Credit Facility Representative, as specified in
the Intercreditor Agreement.

         Each of the Issuer, the Subsidiary Guarantors and the Trustee by
written notice to the others may designate additional or different addresses for
notices to such Person. A different identity and/or address for the Senior
Credit

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Facility Representative may be designated by the Trustee being given a Senior
Credit Facility Representative Change Notice setting forth such different
identity and/or address. Any notice or communication to the Issuer, the
Subsidiary Guarantors, the Trustee or the Senior Credit Facility Representative
shall be deemed to have been given or made as of the date so delivered if hand
delivered; when receipt is acknowledged, if faxed; and five (5) calendar days
after mailing if sent by registered or certified mail, postage prepaid (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).

         Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar ten (10) days prior to such mailing and
shall be sufficiently given to him if so mailed within the time prescribed.

         Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it, except for notices or communications
to the Trustee which shall be effective only upon actual receipt thereof.

         SECTION 10.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.

         Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Issuer, the Subsidiary Guarantors, the Trustee, the Registrar and any other
Person shall have the protection of TIA Section 312(c).

         SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

         Upon any request or application by the Issuer to the Trustee to take
any action under this Indenture, the Issuer shall furnish to the Trustee:

               (1)    an Officers' Certificate, in form and substance
         satisfactory to the Trustee, stating that, in the opinion of the
         signers, all conditions precedent to be performed by the Issuer, if
         any, provided for in this Indenture relating to the proposed action
         have been complied with; and

               (2)    an Opinion of Counsel stating that, in the opinion of such
         counsel, all such conditions precedent to be performed by the Issuer,
         if any, provided for in this Indenture relating to the proposed action
         have been complied with (which counsel, as to factual matters, may rely
         on an Officers' Certificate).

         SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:

               (1)    a statement that the Person making such certificate or
         opinion has read such covenant or condition;

               (2)    a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

               (3)    a statement that, in the opinion of such Person, he has
         made such examination or investigation as is reasonably necessary to
         enable him to express an informed opinion as to whether or not such
         covenant or condition has been complied with; and

               (4)    a statement as to whether or not, in the opinion of each
         such Person, such condition or covenant has been complied with.

         SECTION 10.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.

         The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.

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         SECTION 10.07. LEGAL HOLIDAYS.

         A "LEGAL HOLIDAY" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.

         SECTION 10.08. GOVERNING LAW.

         THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Each of the
parties hereto agrees to submit to the non-exclusive jurisdiction of the
competent courts of the State of New York sitting in the City of New York in any
action or proceeding arising out of or relating to this Indenture.

         SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

         This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Issuer, any Subsidiary Guarantor or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.

         SECTION 10.10. NO PERSONAL LIABILITY.

         No director, officer, employee or stockholder, as such, of the Issuer
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Issuer or any Subsidiary Guarantor under the Notes, this
Indenture, the Security Documents or the Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.

         SECTION 10.11. SUCCESSORS.

         All agreements of the Issuer and the Subsidiary Guarantors in this
Indenture, the Intercreditor Agreement, the Notes and the Guarantees shall bind
their successors. Except as permitted under Article Five, neither the Issuer nor
any Subsidiary Guarantor may assign any or all of its rights hereunder. All
agreements of the Trustee in this Indenture and the Intercreditor Agreement
shall bind its successors.

         SECTION 10.12. DUPLICATE ORIGINALS.

         All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.

         SECTION 10.13. SEVERABILITY.

         In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.

         SECTION 10.14. INDEPENDENCE OF COVENANTS.

         All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.

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         SECTION 10.15. CURRENCY INDEMNITY.

         This is an international loan transaction in which the specification of
U.S. Legal Tender is of the essence, and the stipulated currency shall in each
instance be the currency of account and payment in all instances. A payment
obligation in U.S. Legal Tender hereunder or under the Notes or Guarantees (the
"ORIGINAL CURRENCY") shall not be discharged by an amount paid in another
currency (the "OTHER CURRENCY"), whether pursuant to any judgment expressed in
or converted into any Other Currency or in another place except to the extent
that such tender or recovery results in the effective receipt by the Holders of
the full amount of the Original Currency payable to it under this Indenture or
the Notes or Guarantees. If for the purpose of obtaining judgment in any court
it is necessary to convert a sum due hereunder in the Original Currency into the
Other Currency, the rate of exchange that shall be applied shall be that at
which in accordance with normal banking procedures the Trustee could purchase
Original Currency at its principal office with the Other Currency on the
Business Day next preceding the day on which such judgment is rendered. The
obligation of the Issuer and the Subsidiary Guarantors in respect of any such
sum due from them to the Trustee or any Holder hereunder or under any other
document (in this Section 10.15 called an "ENTITLED PERSON") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
Other Currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer the Original Currency to New York with the
amount of the judgment currency so adjudged to be due; and the Issuer and the
Subsidiary Guarantors each hereby, as a separate obligation and notwithstanding
any such judgment, agrees jointly and severally to indemnify such Entitled
Person against, and to pay such Entitled Person on demand, in the Original
Currency, the amount (if any) by which the sum originally due to such Entitled
Person in the Original Currency hereunder exceeds the amount of the Original
Currency so purchased and transferred.

                                 ARTICLE ELEVEN

                               GUARANTEE OF NOTES

         SECTION 11.01. UNCONDITIONAL GUARANTEE.

         Subject to the provisions of this Article Eleven, each Subsidiary
Guarantor, if any, hereby, jointly and severally, unconditionally and
irrevocably guarantees, on a senior basis, except as provided in the
Intercreditor Agreement (such guarantee to be referred to herein as a
"GUARANTEE") to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes, the Security Documents or the
obligations of the Issuer or any Subsidiary Guarantor to the Holders or the
Trustee hereunder or thereunder, that: (a) the principal of, premium, if any,
and interest on the Notes shall be duly and punctually paid in full when due,
whether at the Maturity Date, upon repurchase at the option of Holders pursuant
to any provisions of the Notes relating thereto, by acceleration or otherwise,
and interest on the overdue principal and (to the extent permitted by law)
interest, if any, on the Notes and all other obligations of the Issuer or the
Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 7.07 hereof) and all other
obligations shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, the same shall
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, or failing performance of
any other obligation of the Issuer to the Holders under this Indenture or under
the Notes, for whatever reason, each Subsidiary Guarantor shall be obligated
jointly or severally to pay or to perform, or cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall entitle
the Holders of Notes to accelerate the obligations of the Subsidiary Guarantors
hereunder in the same manner and to the same extent as the obligations of the
Issuer.

         Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, the Security Documents or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, any release of
any other Subsidiary Guarantor, the recovery of any judgment against the Issuer,
any action to enforce the same, whether or not a Guarantee is affixed to any
particular Note, or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each of the Subsidiary
Guarantors hereby waives the benefit of diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuer, any right to require a proceeding first against the Issuer,

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protest, notice and all demands whatsoever and covenants that its Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes, this Indenture and this Guarantee. This Guarantee is a
guarantee of payment and not of collection. If any Holder or the Trustee is
required by any court or otherwise to return to the Issuer or to any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Issuer or such Subsidiary Guarantor, any amount paid
by the Issuer or such Subsidiary Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor further agrees that, as between it,
on the one hand, and the Holders of Notes and the Trustee, on the other hand,
(a) subject to this Article Eleven, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six hereof for the purposes of
this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (b) in the event of any acceleration of such obligations as provided in
Article Six hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Guarantee.

         No stockholder, officer, director, employee or incorporator, past,
present or future, or any Subsidiary Guarantor, as such, shall have any personal
liability under this Guarantee solely by reason of his, her or its status as
such stockholder, officer, director, employee or incorporator.

         Each Subsidiary Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a prorata amount based on the net assets of such Subsidiary
Guarantor, determined in accordance with GAAP.

         SECTION 11.02. LIMITATIONS ON GUARANTEES.

         The obligations of each Subsidiary Guarantor in the United States under
its Guarantee will be limited to the maximum amount which, after giving effect
to all other contingent and fixed liabilities of such Subsidiary Guarantor and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Guarantee or pursuant to its contribution
obligations under this Indenture, will result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.

         SECTION 11.03. EXECUTION AND DELIVERY OF GUARANTEE.

         To further evidence the Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form of EXHIBIT E herein, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Guarantee shall be executed on
behalf of each Subsidiary Guarantor by either manual or facsimile signature of
an Officer of each Subsidiary Guarantor, who, in each case, shall have been duly
authorized to so execute by all requisite corporate action. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Note.

         Each of the Subsidiary Guarantors hereby agrees that its Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.

         If an Officer of a Subsidiary Guarantor whose signature is on this
Indenture or a Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed or at any time
thereafter, such Subsidiary Guarantor's Guarantee of such Note shall be valid
nevertheless.

         The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of each Subsidiary Guarantor.

         SECTION 11.04. RELEASE OF A SUBSIDIARY GUARANTOR.

         (a)   If no Default exists or would exist under this Indenture, upon
the sale or disposition of all of the Capital Stock of a Subsidiary Guarantor by
the Issuer or a Subsidiary of the Issuer in a transaction constituting an Asset
Sale, the Net Cash Proceeds of which are applied in accordance with Section
4.16, such Subsidiary Guarantor and each Subsidiary of such Subsidiary Guarantor
that is also a Subsidiary Guarantor shall be deemed released from all
obligations under this Article Eleven without any further action required on the
part of the Trustee or any Holder and all Collateral owned by such Person shall
be released to the extent set forth in Section 12.04; PROVIDED, HOWEVER, that
each such Subsidiary

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Guarantor is sold or disposed of in accordance with this Indenture. Any
Subsidiary Guarantor not so released shall remain or be liable under its
Guarantee as provided in this Article Eleven.

         (b)   The Trustee shall deliver to the Issuer an appropriate instrument
evidencing the release of a Subsidiary Guarantor under its Guarantee endorsed on
the Notes and under this Article Eleven upon receipt of a written request by the
Issuer or such Subsidiary Guarantor accompanied by an Officers' Certificate and
an Opinion of Counsel certifying as to the compliance with this Section 11.04,
PROVIDED the legal counsel delivering such Opinion of Counsel may rely as to
matters of fact on one or more Officers' Certificates of the Issuer.

         Except as set forth in Articles Four and Five and this Section 11.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Issuer or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Issuer or another Subsidiary Guarantor.

         SECTION 11.05. WAIVER OF SUBROGATION.

         Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Issuer that arise from the existence, payment, performance or
enforcement of the ISSUER'S obligations under the Notes or this Indenture and
such Subsidiary Guarantor's obligations under its Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders against the Issuer, whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuer, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Subsidiary Guarantor in violation of the
preceding sentence and any amounts owing to the Trustee or the Holders of Notes
under or in connection with the Notes, this Indenture, or any other document or
instrument delivered under or in connection with such agreements or instruments,
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Subsidiary Guarantor for the benefit of, and held in trust for
the benefit of, the Trustee or the Holders and shall forthwith be paid to the
Trustee for the benefit of itself or such Holders to be credited and applied to
the obligations in favor of the Trustee or the Holders, as the case may be,
whether matured or unmatured, in accordance with the terms of this Indenture.
Each Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 11.05 is knowingly made in contemplation of
such benefits.

         SECTION 11.06. IMMEDIATE PAYMENT.

         Each Subsidiary Guarantor agrees to make immediate payment to the
Trustee on behalf of the Holders of all Obligations owing or payable to the
respective Holders upon receipt of a demand for payment therefor by the Trustee
to such Subsidiary Guarantor in writing.

         SECTION 11.07. NO SET-OFF.

         Each payment to be made by a Subsidiary Guarantor hereunder in respect
of the Obligations guaranteed by it shall be payable in the currency or
currencies in which such Obligations are denominated, and shall be made without
set-off, counterclaim, reduction or diminution of any kind or nature.

         SECTION 11.08. OBLIGATIONS ABSOLUTE.

         The obligations of each Subsidiary Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owing or
payable by each Subsidiary Guarantor hereunder which may not be recoverable from
such Subsidiary Guarantor on the basis of a Guarantee shall be recoverable from
such Subsidiary Guarantor as a primary obligor and principal debtor in respect
thereof.

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         SECTION 11.09. OBLIGATIONS CONTINUING.

         The obligations of each Subsidiary Guarantor hereunder shall be
continuing and shall remain in full force and effect until all the Obligations
of the Issuer under this Indenture and the Notes have been paid and satisfied in
full. Each Subsidiary Guarantor agrees with the Trustee that it will from time
to time deliver to the Trustee suitable written acknowledgments of its continued
liability hereunder and under any other instrument or instruments in such form
as counsel to the Trustee may advise and as will prevent any action brought
against it in respect of any default hereunder being barred by any statute of
limitations now or hereafter in force and, in the event of the failure of a
Subsidiary Guarantor so to do, it hereby irrevocably appoints the Trustee the
attorney and agent of such Subsidiary Guarantor to make, execute and deliver
such written acknowledgment or acknowledgments or other instruments as may from
time to time become necessary or advisable, in the judgment of the Trustee, on
the advice of counsel, to fully maintain and keep in force the liability of such
Subsidiary Guarantor hereunder; PROVIDED, HOWEVER, that notwithstanding anything
herein to the contrary, nothing in this Section 11.09 shall be construed to
obligate the Trustee to take any action not otherwise allowed by this Indenture
or the TIA, and under no circumstances shall Trustee be required to take any
actions in compliance with this Section 11.09 which would incur any liability
whatsoever under the terms of this Indenture or otherwise except to the extent
that it is provided with security or indemnity satisfactory to it, nor shall
Trustee's actions hereunder be deemed to be a breach of any other provision of
this Indenture.

         SECTION 11.10. OBLIGATIONS NOT REDUCED.

         The obligations of each Subsidiary Guarantor hereunder shall not be
satisfied, reduced or discharged solely by the payment of such principal,
premium, if any, interest, fees and other monies or amounts as may at any time
prior to discharge of this Indenture pursuant to Article Eight be or become
owing or payable under or by virtue of or otherwise in connection with the Notes
or this Indenture.

         SECTION 11.11. OBLIGATIONS REINSTATED.

         The obligations of each Subsidiary Guarantor hereunder shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of any Subsidiary
Guarantor hereunder (whether such payment shall have been made by or on behalf
of the Issuer or by or on behalf of a Subsidiary Guarantor) is rescinded or
reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation
or reorganization of the Issuer or any Subsidiary Guarantor or otherwise, all as
though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Issuer is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Issuer, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Subsidiary Guarantor as provided herein.

         SECTION 11.12. OBLIGATIONS NOT AFFECTED.

         The obligations of each Subsidiary Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known or consented to by any Subsidiary Guarantor
or any of the Holders) which, but for this provision, might constitute a whole
or partial defense to a claim against any Subsidiary Guarantor hereunder or
might operate to release or otherwise exonerate any Subsidiary Guarantor from
any of its obligations hereunder or otherwise affect such obligations, whether
occasioned by default of any of the Holders or otherwise, including, without
limitation:

               (a)    any limitation of status or power, disability, incapacity
         or other circumstance relating to the Issuer or any other Person,
         including any insolvency, bankruptcy, liquidation, reorganization,
         readjustment, composition, dissolution, winding-up or other proceeding
         involving or affecting the Issuer or any other Person;

               (b)    any irregularity, defect, unenforceability or invalidity
         in respect of any indebtedness or other obligation of the Issuer or any
         other Person under this Indenture, the Notes or any other document or
         instrument;

               (c)    any failure of the Issuer, whether or not without fault on
         its part, to perform or comply with any of the provisions of this
         Indenture, any Security Document or the Notes, or to give notice
         thereof to a Subsidiary Guarantor;

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               (d)    the taking or enforcing or exercising or the refusal or
         neglect to take or enforce or exercise any right or remedy from or
         against the Issuer or any other Person or their respective assets or
         the release or discharge of any such right or remedy;

               (e)    the granting of time, renewals, extensions, compromises,
         concessions, waivers, releases, discharges and other indulgences to the
         Issuer or any other Person;

               (f)    any change in the time, manner or place of payment of, or
         in any other term of, any of the Notes, or any other amendment,
         variation, supplement, replacement or waiver of, or any consent to
         departure from, any of the Notes, the Intercreditor Agreement, any
         Security Document or this Indenture, including, without limitation, any
         increase or decrease in the principal amount of or premium, if any, or
         interest on any of the Notes;

               (g)    any change in the ownership, control, name, objects,
         businesses, assets, capital structure or constitution of the Issuer or
         a Subsidiary Guarantor;

               (h)    any merger or consolidation of the Issuer or a Subsidiary
         Guarantor with any Person or Persons, except as provided in Section
         11.04;

               (i)    the occurrence of any change in the laws, rules,
         regulations or ordinances of any jurisdiction by any present or future
         action of any governmental authority or court amending, varying,
         reducing or otherwise affecting, or purporting to amend, vary, reduce
         or otherwise affect, any of the Obligations of the Issuer under this
         Indenture or the Notes or the obligations of a Subsidiary Guarantor
         under its Guarantee; and

               (j)    any other circumstance, other than the release of the
         Subsidiary Guarantor pursuant to Section 11.04 or irrevocable payment
         of such Obligations, that might otherwise constitute a legal or
         equitable discharge or defense of the Issuer under this Indenture or
         the Notes or of a Subsidiary Guarantor in respect of its Guarantee
         hereunder.

         SECTION 11.13. WAIVER.

         Without in any way limiting the provisions of Section 11.01 hereof,
each Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of
any liability of any Subsidiary Guarantor hereunder, notice or proof of reliance
by the Holders upon the obligations of any Subsidiary Guarantor hereunder, and
diligence, presentment, demand for payment on the Issuer, protest, notice of
dishonor or non-payment of any of the Obligations of the Issuer under this
Indenture or the Notes, or other notice or formalities to the Issuer or any
Subsidiary Guarantor of any kind whatsoever.

         SECTION 11.14. NO OBLIGATION TO TAKE ACTION AGAINST THE ISSUER.

         Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations of the ISSUER under this Indenture or the Notes or
against the ISSUER or any other Person or any Property of the ISSUER or any
other Person before the Trustee is entitled to demand payment and performance by
any or all Subsidiary Guarantors of their liabilities and obligations under
their Guarantees or under this Indenture.

         SECTION 11.15. DEALING WITH THE ISSUER AND OTHERS.

         The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Subsidiary
Guarantor hereunder and without the consent of or notice to any Subsidiary
Guarantor, may

               (a)    grant time, renewals, extensions, compromises,
         concessions, waivers, releases, discharges and other indulgences to the
         ISSUER or any other Person;

               (b)    take or abstain from taking security or collateral from
         the ISSUER or any other Person or from perfecting security or
         collateral of the ISSUER or any other Person;

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               (c)    release, discharge, compromise, realize, enforce or
         otherwise deal with or do any act or thing in respect of (with or
         without consideration) any and all collateral, mortgages or other
         security given by the ISSUER or any third party with respect to the
         obligations or matters contemplated by this Indenture or the Notes;

               (d)    accept compromises or arrangements from the ISSUER;

               (e)    apply all monies at any time received from the ISSUER or
         from any security upon such part of the Obligations of the ISSUER under
         this Indenture and the Notes as the Holders may see fit or change any
         such application in whole or in part from time to time as the Holders
         may see fit; and

               (f)    otherwise deal with, or waive or modify their right to
         deal with, the ISSUER and all other Persons and any security as the
         Holders or the Trustee may see fit.

         SECTION 11.16. DEFAULT AND ENFORCEMENT.

         Subject to the terms of the Intercreditor Agreement, if any Subsidiary
Guarantor fails to pay in accordance with Section 11.06 hereof, the Trustee may
proceed in its name as trustee hereunder in the enforcement of the Guarantee of
any such Subsidiary Guarantor and such Subsidiary Guarantor's obligations
thereunder and hereunder by any remedy provided by law, whether by legal
proceedings or otherwise, and to recover from such Subsidiary Guarantor the
obligations.

         SECTION 11.17. ACKNOWLEDGMENT.

         Each Subsidiary Guarantor hereby acknowledges communication of the
terms of this Indenture, the Intercreditor Agreement and the Notes and consents
to and approves of the same.

         SECTION 11.18. COSTS AND EXPENSES.

         Each Subsidiary Guarantor shall pay on demand by the Trustee any and
all costs, fees and expenses (including, without limitation, legal fees on a
solicitor and client basis) incurred by the Trustee, its agents, advisors and
counsel or any of the Holders in enforcing any of their rights under any
Guarantee.

         SECTION 11.19. NO MERGER OR WAIVER; CUMULATIVE REMEDIES.

         No Guarantee shall operate by way of merger of any of the obligations
of a Subsidiary Guarantor under any other agreement, including, without
limitation, this Indenture. No failure to exercise and no delay in exercising,
on the part of the Trustee or the Holders, any right, remedy, power or privilege
hereunder or under this Indenture or the Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or under this Indenture or the Notes preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Guarantee and
under this Indenture, the Notes and any other document or instrument between a
Subsidiary Guarantor and/or the Issuer and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.

         SECTION 11.20. GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.

         The obligations of each Subsidiary Guarantor under its Guarantee and
this Indenture are in addition to and not in substitution for any other
obligations to the Trustee or to any of the Holders in relation to this
Indenture or the Notes and any guarantees or security at any time held by or for
the benefit of any of them.

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                                 ARTICLE TWELVE

                                    SECURITY

         SECTION 12.01. GRANT OF SECURITY INTEREST; REMEDIES.

         (a)   In order to secure the obligations of the Issuer hereunder and
the Guarantees, the Issuer hereby covenants to, and to cause each Subsidiary
Guarantor to, execute and deliver on or before the Issue Date, and from time to
time thereafter as appropriate, one or more Mortgages and other Security
Documents, as reasonably determined by the Trustee to obtain a Lien, but subject
to certain Permitted Liens, on all of the current and future Oil and Gas Assets
of the Issuer and its Subsidiaries, and substantially all other current and
future assets of the Issuer and the Subsidiary Guarantors. Subject to the
Intercreditor Agreement, each such Security Document, when executed and
delivered, shall be deemed hereby incorporated by reference herein to the same
extent and as fully as if set forth in their entirety at this place, and
reference is made hereby to each such Security Document for a more complete
description of the terms and provisions thereof. Each Holder, by accepting a
Note, agrees to all of the terms and provisions of each Security Document and
the Trustee agrees to all of the terms and provisions of each Security Document.

         (b)   If (i) the Notes become due and payable prior to the Maturity
Date or are not paid in full at the Maturity Date or (ii) an Event of Default
has occurred and is continuing, the Trustee may take all actions it deems
necessary or appropriate, including, but not limited to, foreclosing upon the
Collateral in accordance with the Security Documents and applicable law,
subject, however, to the terms of the Intercreditor Agreement. Subject to the
terms of the Intercreditor Agreement, the proceeds received from the sale of any
Collateral that is the subject of a foreclosure or collection suit shall be
applied in accordance with the priorities set forth in Section 6.10. Subject to
the terms of the Intercreditor Agreement, the Trustee has the power to institute
and maintain such suits and proceedings as it may deem expedient to prevent
impairment of, or to preserve or protect its and the Holders' interest in, the
Collateral in the manner set forth in this Indenture.

         (c)   Unless an Event of Default shall have occurred and be continuing,
the Issuer and the Subsidiary Guarantors will have the right to remain in
possession and retain exclusive control of the Collateral securing the Notes
(other than any cash, securities, obligations and Cash Equivalents constituting
part of the Collateral and deposited with the Trustee in the Collateral Account
or with the Senior Credit Facility Representative and other than as set forth in
the Security Documents), to freely operate the Collateral and to collect, invest
and dispose of any income thereon or therefrom.

         SECTION 12.02. RECORDING AND OPINIONS.

         (a)   The Issuer shall take or cause to be taken all action required to
perfect, maintain, preserve and protect the Lien in the Collateral granted by
the Security Documents, including, without limitation, the filing of financing
statements, continuation statements and any instruments of further assurance, in
such manner and in such places as may be required by law fully to preserve and
protect the rights of the Holders and the Trustee under this Indenture and the
Security Documents to all property comprising the Collateral. The Issuer shall
from time to time promptly pay all financing and continuation statement
recording and/or filing fees, charges and taxes relating to this Indenture, the
Security Documents, any amendments thereto and any other instruments of further
assurance required pursuant to the Security Documents.

         (b)   The Issuer shall, to the extent required by the TIA, furnish to
the Trustee, at closing and at such other time as required by Section 314(b) of
the TIA, Opinion(s) of Counsel either (i) substantially to the effect that, in
the opinion of such counsel, this Indenture and the grant of a Lien in the
Collateral intended to be made by the Security Documents and all other
instruments of further assurance, including, without limitation, financing
statements, have been properly recorded and filed to the extent necessary to
perfect the Lien in the Collateral created by the Security Documents (other than
as stated in such opinion) and reciting the details of such action, and stating
that as to the Lien created pursuant to the Security Documents, such recordings
and filings are the only recordings and filings necessary to give notice thereof
and that no re-recordings or refilings are necessary to maintain such notice
(other than as stated in such opinion), or (ii) to the effect that, in the
opinion of such counsel, no such action is necessary to perfect such Lien. In
rendering such opinions, legal counsel may rely on certificates of officers of
the Issuer and/or the Subsidiaries with respect to factual matters.

                                       68
<Page>

         (c)   The Issuer shall furnish to the Trustee on March 15th in each
year, beginning with March 15, 2003, an Opinion of Counsel, dated as of such
date, either (i)(A) stating that, in the opinion of such counsel, all required
action has been taken with respect to the recording, filing, re-recording and
refiling of all supplemental indentures, financing statements, continuation
statements and other documents as is necessary to maintain the Lien of this
Indenture and the Security Documents (other than as stated in such opinion) and
reciting with respect to the Lien in the Collateral the details of such action
or referring to prior Opinions of Counsel in which such details are given, and
(B) stating that, based on relevant laws as in effect on the date of such
Opinion of Counsel, all financing statements, continuation statements and other
documents have been executed and filed that are necessary as of such date and
during the succeeding 24 months fully to maintain the Lien of the Holders and
the Trustee hereunder and under the Security Documents with respect to the
Collateral (other than as stated in such opinion), or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien. In
rendering such opinions, legal counsel may rely on certificates of officers of
the ISSUER and/or the Subsidiaries with respect to factual matters.

         SECTION 12.03. RELEASE OF COLLATERAL.

         (a)   The Trustee, in its capacity as secured party under the Security
Documents, shall not at any time release Collateral from the Lien created by
this Indenture and the Security Documents unless such release is in accordance
with the provisions of this Indenture and the Security Documents or required by
the terms of the Intercreditor Agreement.

         (b)   Except as provided in the Intercreditor Agreement, at any time
when an Event of Default shall have occurred and be continuing, the Trustee
shall not release any Liens granted for the benefit of the Holders and no
release of Collateral given at such time pursuant to the provisions of this
Indenture and the Security Documents shall be effective as against the Holders
of the Notes.

         (c)   The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Security Documents. To the extent
applicable, the Issuer shall cause TIA Section 314(d) relating to the release of
property from the Lien of the Security Documents and relating to the
substitution therefor of any property to be subjected to the Lien of the
Security Documents to be complied with. Any certificate or opinion required by
TIA Section 314(d) may be made by an Officer of the Issuer, except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee. A Person is "independent" if
such Person (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in Issuer, any of its
Subsidiaries or in any Affiliate of the Issuer and (c) is not an officer,
employee, promoter, underwriter, trustee, partner or director or Person
performing similar functions to any of the foregoing for the Issuer or any of
its Subsidiaries. The Trustee shall be entitled to receive and rely upon a
certificate provided by any such Person confirming that such Person is
independent within the foregoing definition.

         SECTION 12.04. SPECIFIED RELEASES OF COLLATERAL.

         (a)   The Issuer and the Subsidiary Guarantors shall be entitled to
obtain a full release of all of the Collateral from the Lien of this Indenture
and of the Security Documents or an assignment of such Lien to a Person
designated by the Issuer upon compliance with the conditions precedent set forth
in Section 8.01 for satisfaction and discharge of this Indenture or for Legal
Defeasance or Covenant Defeasance pursuant to Section 8.01. Upon delivery by the
Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel,
each to the effect that such conditions precedent have been complied with (and
which may be the same Officers' Certificate and Opinion of Counsel required by
Article Eight), the Trustee shall forthwith take all necessary action (at the
request of and the expense of the Issuer) to release and reconvey to the
relevant Person all of the Collateral, and shall deliver such Collateral in its
possession to the Issuer, including, without limitation, the execution and
delivery of releases and satisfactions wherever required.

         (b)   Upon compliance by the Issuer with the conditions set forth below
in respect of any sale, transfer or other disposition, the Trustee shall release
the Released Interests from the Lien of this Indenture and the Security
Documents and reconvey the Released Interests to the Issuer or the grantor of
the Lien on such property. The ISSUER will have the right to obtain a release of
items of Collateral (the "RELEASED INTERESTS") subject to any sale, transfer or
other disposition, or owned by a Subsidiary the Capital Stock of which is sold
in compliance with the terms of this

                                       69
<Page>

Indenture such that it ceases to be a Subsidiary, or that is the subject of a
farmout allowed by the terms of Section 4.31, upon compliance with the condition
that the Issuer deliver to the Trustee the following:

         (i)   a written notice in the form of an Officers' Certificate
               requesting the release of Released Interests:

               (A)    describing the proposed Released Interests,

               (B)    specifying the value of such Released Interests or such
Capital Stock, as the case may be, on a date within 60 days of the Issuer notice
(the "VALUATION DATE"),

               (C)    stating that the consideration to be received is at least
equal to the fair market value of the Released Interests, provided that this
clause (C) is not applicable with respect to a release to be given in connection
with a farmout permitted pursuant to Section 4.31,

               (D)    stating that the release of such Released Interests will
not interfere with the Trustee's ability to realize the value of the remaining
Collateral and will not impair the maintenance and operation of the remaining
Collateral,

               (E)    confirming the sale or exchange of, or an agreement to
sell or exchange, such Released Interests or such Capital Stock, as the case may
be, is a bona fide sale to or exchange with a Person that is not an Affiliate of
the ISSUER or, in the event that such sale or exchange is to or with a Person
that is an Affiliate, confirming that such sale or exchange is made in
compliance with the provisions set forth in Section 4.11, provided that this
clause (E) is not applicable with respect to a release to be given in connection
with a farmout permitted pursuant to Section 4.31,

               (F)    in the event there is to be a contemporaneous substitution
of property for the Collateral subject to the sale, transfer or other
disposition, specifying the property intended to be substituted for the
Collateral to be disposed of, and

               (G)    with respect to a release to be given in connection with a
farmout permitted pursuant to Section 4.31, stating that the farmout to which
the Released Interests are (or are to be) subject complies with Section 4.31 of
this Indenture,

         (ii)  an Officers' Certificate stating that:

               (A)    such sale, transfer or other disposition complies with the
terms and conditions of this Indenture, including the provisions set forth in
Sections 4.10, 4.11, 4.14, 4.16 and 4.31, to the extent any of the foregoing are
applicable,

               (B)    all Net Cash Proceeds from the sale, transfer or other
disposition of any of the Released Interests or such Capital Stock, as the case
may be, will be applied pursuant to the provisions of this Indenture in respect
of the deposit of proceeds into the Collateral Account as contemplated by this
Indenture and in respect of Asset Sales, to the extent applicable, provided that
this clause (B) is not applicable with respect to a release to be given in
connection with a farmout permitted pursuant to Section 4.31,

               (C)    there is no Default or Event of Default in effect or
continuing on the date thereof or the date of such sale, transfer or other
disposition,

               (D)    the release of the Collateral will not result in a Default
or Event of Default under this Indenture,

               (E)    upon the delivery of such Officers' Certificate, all
conditions precedent in this Indenture relating to the release in question will
have been complied with,

               (F)    such sale, transfer or other disposition is not between
the Issuer and any of its Subsidiaries or between Subsidiaries, provided that
this clause (F) is not applicable with respect to a release to be given in
connection with a farmout permitted pursuant to Section 4.31, and

                                       70
<Page>

               (G)    such sale, transfer or other disposition is not a sale,
transfer or other disposition that is excluded from the definition of "Asset
Sale" because it was a sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of the Issuer in a transaction which was
made in compliance with the provisions of Section 5.01, provided that this
clause (G) is not applicable with respect to a release to be given in connection
with a farmout permitted pursuant to Section 4.31, and

         (iii) all documentation required by the TIA, if any, prior to the
               release of Collateral by the Trustee and, in the event there is
               to be a contemporaneous substitution of property for the
               Collateral subject to such sale, transfer or other disposition,
               all documentation necessary to effect the substitution of such
               new Collateral.

         (c)   Notwithstanding the provisions of Section 12.04(b), so long as no
Event of Default shall have occurred and be continuing, the ISSUER may, without
satisfaction of the conditions set forth in Section 12.04(b) above, all to the
extent consistent with Sections 4.03, 4.05, and 4.07: (i) sell or otherwise
dispose of any equipment or inventory subject to the Lien of this Indenture and
the Security Documents, which may have become worn out or obsolete, (ii)
abandon, terminate, cancel, release or make alterations in or substitutions of
any leases or contracts subject to the Lien of this Indenture or any of the
Security Documents, (iii) surrender or modify any franchise, license or permit
subject to the Lien of this Indenture or any of the Security Documents which it
may own or under which it may be operating, (iv) alter, repair, replace, change
the location or position of and add to its structures, machinery, systems,
equipment, fixtures and appurtenances, (v) demolish, dismantle, tear down or
scrap any obsolete Collateral or abandon any portion thereof, (vi) grant leases
or sub-leases in respect of real property to the extent the foregoing does not
constitute an Asset Sale, and (vii) dispose of Hydrocarbons or other mineral
products for value in the ordinary course of business all in accordance with the
terms of the TIA.

         SECTION 12.05. RIGHTS OF PURCHASERS; FORM AND SUFFICIENCY OF RELEASE.

         No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Trustee to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Issuer or any Subsidiary be under any obligation to
ascertain or inquire into the authority of the Issuer or such Subsidiary to make
such sale or other disposition. In the event that any Person has sold,
exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral that may be sold, exchanged or
otherwise disposed of, and the Issuer or any Subsidiary makes written request to
the Trustee to furnish a written disclaimer, release or quit-claim of any
interest in such property or rights under this Indenture and the Security
Documents, the Trustee, in its capacity as secured party under the Security
Documents, shall execute, acknowledge and deliver to the Issuer or such
Subsidiary (in proper form) such an instrument promptly after satisfaction of
the conditions set forth herein for delivery of any such release.
Notwithstanding the preceding sentence, all purchasers and grantees of any
property or rights purporting to be released herefrom shall be entitled to rely
upon any release executed by the Trustee hereunder as sufficient for the purpose
of this Indenture and the Security Documents and as constituting a good and
valid release of the property therein described from the Lien of this Indenture
or of the Security Documents.

         SECTION 12.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE SECURITY DOCUMENTS.

         Subject to the provisions of the applicable Security Document and to
the terms of the Intercreditor Agreement, (a) the Trustee may, in its sole
discretion and without the consent of the Holders, take all actions it deems
necessary or appropriate in order to (i) enforce any of the terms of the
Security Documents and (ii) collect and receive any and all amounts payable in
respect of the Obligations of the Issuer hereunder and (b) the Trustee shall
have power to institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any act that may
be unlawful or in violation of the Security Documents or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral
(including the power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest thereunder or be prejudicial to the interests of
the Holders or of the Trustee).

                                       71
<Page>

         SECTION 12.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
THE SECURITY DOCUMENTS.

         The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions of
Section 6.10 and the other provisions of this Indenture.

         SECTION 12.08. USE OF TRUST MONEYS.

         The Net Cash Proceeds associated with any Asset Sale and any Net Cash
Proceeds associated with any sale, transfer or other disposition of Collateral,
to the extent such sale, transfer or other disposition is not an "Asset Sale" by
virtue of clause (vi) of the definition thereof, insurance proceeds and
condemnation (or similar) proceeds with respect to any Collateral shall be
deposited (A) so long as any Indebtedness under the Senior Credit Agreement or
Qualified Senior Affiliate Indebtedness remains outstanding, with the Senior
Credit Facility Representative in accordance with the terms of the Intercreditor
Agreement, and (B) otherwise into a securities account maintained by the Trustee
at its Corporate Trust Office or at any securities intermediary selected by the
Trustee having a combined capital and surplus of at least $250,000,000 and
having a long-term debt rating of at least "A3" by Moody's and at least "A-" by
S&P styled the "Abraxas Collateral Account" (such account being the "COLLATERAL
ACCOUNT") which shall be under the control (as such term is defined in Article 9
of the Uniform Commercial Code in effect in the State of New York) of the Senior
Credit Facility Representative so long as any Indebtedness under the Senior
Credit Agreement or Qualified Senior Affiliate Indebtedness remains outstanding,
and thereafter, under the exclusive dominion and control of the Trustee. All
amounts on deposit in the Collateral Account shall be treated as financial
assets and cash funds on deposit in the Collateral Account may be invested by
the Trustee, at the written direction of the Issuer, in Cash Equivalents;
PROVIDED, HOWEVER, in no event shall the Issuer have the right to withdraw funds
or assets from the Collateral Account except in compliance with the terms of
this Indenture, and all assets credited to the Collateral Account shall be
subject to a Lien in favor of the Trustee and the Holders.

     Any such funds deposited with the Trustee may be released to the Issuer by
Issuer delivering to the Trustee an Officers' Certificate stating:

         (1) no Event of Default has occurred and is continuing as of the date
     of the proposed release; and

         (2) (A) if such Trust Moneys represent Collateral Proceeds in respect
     of an Asset Sale, that such funds are otherwise being applied in accordance
     with Section 4.16, or (B) if such Trust Moneys represent proceeds in
     respect of a casualty, expropriation or taking, that such funds will be
     applied to repair or replace property subject of a casualty or condemnation
     or reimburse the Issuer for amounts spent to repair or replace such
     property and that attached thereto are invoices or other evidence
     reflecting the amounts spent or to be spent, or (C) if such Trust Moneys
     represent proceeds derived from any other manner, that such amounts are
     being utilized in connection with business of the Issuer and its
     Subsidiaries in compliance with the terms of this Indenture; and

         (3) all conditions precedent in this Indenture relating to the release
     in question have been complied with; and

         (4) all documentation required by the TIA, if any, prior to the release
     of such Trust Moneys by the Trustee has been delivered to the Trustee.

     Notwithstanding the foregoing, (A) if the maturity of the Notes has been
accelerated, which acceleration has not been rescinded as permitted by this
Indenture, the Trustee shall apply the Trust Moneys credited to the Collateral
Account in the manner specified in Section 6.10 to the extent of such Trust
Moneys, (B) if the Issuer so elects, by giving written notice to the Trustee,
the Trustee shall apply Trust Moneys credited to the Collateral Account to the
payment of interest due on any interest payment date, and (C) if the Issuer so
elects, by giving written notice to the Trustee, the Trustee shall apply Trust
Moneys credited to Pay Down Debt.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       72
<Page>

                                   SIGNATURES

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

                                      ABRAXAS PETROLEUM CORPORATION, as Issuer

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Executive Vice President

                                      SANDIA OIL & GAS CORPORATION, as a
                                      Subsidiary Guarantor

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Vice President

                                      WAMSUTTER HOLDINGS, INC., as a Subsidiary
                                      Guarantor

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Vice President

                                      SANDIA OPERATING CORP., as a Subsidiary
                                      Guarantor

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Vice President

                                      WESTERN ASSOCIATED ENERGY CORPORATION, as
                                      a Subsidiary Guarantor

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Vice President

                                      EASTSIDE COAL COMPANY, INC., as a
                                      Subsidiary Guarantor

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Vice President

                                      GREY WOLF EXPLORATION INC., as a
                                      Subsidiary Guarantor

                                      /s/  Robert W. Carington, Jr.
                                           ------------------------
                                           Vice President

                                       73
<Page>

                                      U.S. BANK, N.A., as Trustee

                                      /s/  Frank Leslie, III
                                           -----------------
                                           Vice President

                                       74
<Page>

                                                                     EXHIBIT A-1

                                                                 CUSIP No.: [  ]

                          ABRAXAS PETROLEUM CORPORATION
                     11-1/2% SECURED NOTE DUE 2007, SERIES A

No. [  ]                                                                  $[   ]

         ABRAXAS PETROLEUM CORPORATION, a Nevada corporation (the "ISSUER",
which term includes any successor entities), for value received, promises to pay
to [     ] or registered assigns the principal sum of [      ] Dollars on May 1,
2007.

         Interest Payment Dates:  May 1 and November 1, commencing May 1, 2003

         Record Dates: April 15 and October 15

         Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.

         IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.

                                      ABRAXAS PETROLEUM CORPORATION
ATTEST:

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

Certificate of Authentication

         This is one of the 11-1/2% Secured Notes due 2007, Series A, referred
to in the within-mentioned Indenture.

                                      U.S. BANK, N.A.,
                                      as Trustee

                                      By:
                                         ---------------------------------------
                                              Authorized Signatory
Date of Authentication:

                              (REVERSE OF SECURITY)

                     11-1/2% Secured Note due 2007, Series A

         1.    INTEREST. ABRAXAS PETROLEUM CORPORATION, a Nevada corporation
(the "ISSUER") promises to pay interest on the principal amount of this Note at
the rate per annum shown above, except to the extent a different rate of
interest is applicable as provided below. Interest on the Indebtedness evidenced
by the Notes will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Issue Date of the Note. The
Issuer will pay interest semi-annually in arrears on each Interest Payment Date,
commencing May 1, 2003. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.

         Upon and during the continuation of an Event of Default, interest on
the Notes will accrue at the rate of 16.5% per annum, unless the terms of the
Registration Rights Agreement referred to below apply and provide for a higher
rate of interest.

                                      A1-1
<Page>

         The Issuer shall pay interest on overdue principal and to the extent
lawful on overdue installments of interest from time to time on demand at the
rate of 16.5% per annum, unless the Registration Rights Agreement provides for a
higher rate of interest.

         2.    METHOD OF PAYMENT. The Issuer shall pay interest on the Notes
(except defaulted interest pursuant to which Section 2.12 of the Indenture shall
apply) to the Persons who are the registered Holders at the close of business on
the Record Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration of exchange
(including pursuant to a Series B Exchange Offer (as defined in the Registration
Rights Agreement)) after such Record Date. Holders must surrender Notes to a
Paying Agent to collect principal payments. The Issuer shall pay principal and,
to the extent not prohibited by the terms of the Senior Credit Agreement or the
Intercreditor Agreement, interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. LEGAL
TENDER"). However, and subject to the same limitation, the Issuer may pay
principal and interest by check payable in such U.S. Legal Tender. The Issuer
may deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address. If the payment of interest in the form of cash is
prohibited by the terms of the Senior Credit Agreement or the Intercreditor
Agreement, that interest will be paid in the form of PIK Notes in a principal
amount equal to the amount of accrued and unpaid interest on the Notes plus an
additional 1% per annum accrued interest for the applicable period.

         3.    PAYING AGENT AND REGISTRAR. Initially, U.S. Bank, N. A. (the
"TRUSTEE") will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders.

         4.    INDENTURE AND INTERCREDITOR AGREEMENT. The Issuer issued the
Notes under an Indenture, dated as of January 23, 2003 (the "INDENTURE"), among
the Issuer, the Subsidiary Guarantors and the Trustee. This Note is one of a
duly authorized issue of Notes of the Issuer designated as its 11-1/2% Secured
Notes due 2007, Series A (the "INITIAL NOTES"). The Notes are limited in
aggregate principal amount to $118,250,000.00, plus such additional principal
amounts as may be necessary with respect to the issuance of PIK Notes for the
payment of interest. The Notes include the Initial Notes, the PIK Notes and the
11-1/2% Secured Notes due 2007, Series B (the "EXCHANGE NOTES"), issued in
exchange for the Initial Notes and any PIK Notes issued in lieu of payment of
interest on the Initial Notes pursuant to the Registration Rights Agreement. The
Initial Notes, the PIK Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and said Act for
a statement of them. The Notes are general obligations of the Issuer secured by
a second lien on the Collateral, subject, however, to the Permitted Liens.
Payment of the Notes and the Liens securing the Notes are subordinate to the
Indebtedness under the Senior Credit Agreement and the Liens securing such
Indebtedness pursuant to the terms of the Intercreditor Agreement.

         5.    HOLDERS BOUND TO TERMS OF THE INDENTURE. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time in accordance with its
terms.

         6.    REDEMPTION. The Notes will be redeemable, at the Issuer's option,
in whole at any time or in part from time to time, upon not less than 30 nor
more than 60 days' notice, at the Redemption Prices (expressed as percentages of
the principal amount thereof) set forth below. If the Issuer redeems all or any
Notes, the Issuer must also pay all interest accrued and unpaid to the
applicable Redemption Date. The Redemption Prices for the Notes during the
indicated time periods are as follows:

<Table>
<Caption>
     PERIOD                                                                            PERCENTAGE
     ------                                                                            ----------
     <S>                                                                               <C>
     On the Issue Date.................................................................100.0000%
     On the next Business Day after the Issue Date......................................78.6266%
     From the next Business Day after the Issue Date to 6 months after the Issue Date...80.0429%
     From 6 months after the Issue Date to 12 months after the Issue Date...............91.4592%
     From 12 months after the Issue Date to 18 months after the Issue Date..............97.1674%
</Table>

                                      A1-2
<Page>

<Table>
     <S>                                                                               <C>
     From 18 months after the Issue Date to 24 months after the Issue Date..............98.5837%
     Thereafter   .....................................................................100.0000%
</Table>

         Notwithstanding the foregoing, the Redemption Price for Notes to be
redeemed will in no event be less than the then current Adjusted Issue Price.
The Issuer can call Notes for redemption on the Issue Date without giving any
notice of redemption to the Holders, and Notes called for redemption on the
Issue Date will be deemed not to have accrued interest.

         7.    NOTICE OF REDEMPTION. With the exception of Notes being redeemed
on the Issue Date, as provided above, notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address.

         Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuer defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.

         8.    OFFER TO PURCHASE. Section 4.15 of the Indenture provides that,
upon the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Issuer will make an offer
to purchase the Notes in accordance with the procedures set forth in the
Indenture.

         9.    REGISTRATION RIGHTS. Pursuant to the Registration Rights
Agreement, the Issuer and the Subsidiary Guarantors will be obligated to
initiate and consummate an exchange offer pursuant to which the Holders of the
Initial Notes issued on the Issue Date and any PIK Notes issued in payment on
interest thereon shall have the right to exchange such Notes for the Exchange
Notes, which have been registered under the Securities Act, in like principal
amount and having terms identical in all material respects as such Notes. The
Holders of such Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.

         10.   DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, and in denominations of $1.00 and integral multiples of
$1.00. A Holder shall register the transfer or exchange of 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 certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer or
exchange of any Notes or portions thereof selected for redemption.

         11.   PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.

         12.   UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.

         13.   DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Issuer at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Issuer will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, its obligation to pay the principal of and interest on the Notes
but without affecting the rights of the Holders to receive such amounts from
such deposits).

         14.   AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the

                                      A1-3
<Page>

Security Documents or the Notes may be amended or supplemented with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, and any past Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
Security Documents or the Notes to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes, comply with any requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the TIA or
comply with Article Five of the Indenture or make any other change that does not
adversely affect the rights of any Holder of a Note.

         15.   RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of each of the Issuer and the Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur Liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, issue Preferred Stock of its Subsidiaries,
and on the ability of the Issuer and its Subsidiaries to merge or consolidate
with any other Person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the Issuer's and its Subsidiaries'
assets. Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Issuer must annually
report to the Trustee on compliance with such limitations.

         16.   SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.

         17.   DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received security and indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest when due, for any
reason, a Default in payment with respect to a Change in Control Offer, a
Default in any requirement under the Indenture to Pay Down Debt, or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in the interest of the Holders. Foreclosure under the Security
Documents is subject to the terms of the Intercreditor Agreement.

         18.   TRUSTEE DEALINGS WITH ISSUER. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuer, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.

         19.   NO RECOURSE AGAINST OTHERS. No partner, director, officer,
employee or stockholder, as such, of the Issuer or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Issuer or any
Subsidiary Guarantor under the Notes, the Indenture, the Security Documents or
the Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or its creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

         20.   GUARANTEES AND COLLATERAL. This Note will be entitled to the
benefits of certain Guarantees, if any, made for the benefit of the Holders and
of Security Documents given to secure Obligations under the Notes and the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Subsidiary Guarantors, the Trustee and the Holders.

         21.   AUTHENTICATION. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of
authentication on this Note.

                                      A1-4
<Page>

         22.   GOVERNING LAW. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties to the Indenture agrees to submit to the non-exclusive jurisdiction of
the competent courts of the State of New York sitting in the City of New York in
any action or proceeding arising out of or relating to this Note.

         23.   ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note 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).

         24.   CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.

         The Issuer will furnish to any Holder of a Note upon written request
and without charge a copy of each of the Indenture, which has the text of this
Note, the Intercreditor Agreement, and the Registration Rights Agreement.
Requests may be made to: Abraxas Petroleum Corporation, 500 North Loop 1604
East, Suite 100, San Antonio, Texas 78232.

                                      A1-5
<Page>

                                 ASSIGNMENT FORM

         If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint ______________, agent to transfer this Note on the books
of the Issuer. The agent may substitute another to act for him.

Dated:            Signed:
      -----------        -------------------------------------------------------
                                    (Sign exactly as your name appears
                                      on the other side of this Note)

Signature Guarantee:
                    ------------------------------------------------------------

                                      A1-6
<Page>

                      [OPTION OF HOLDER TO ELECT PURCHASE]

         If you want to elect to have this Note purchased by the Issuer pursuant
to Section 4.15 of the Indenture, check the appropriate box:

                  Section 4.15 [  ]

         If you want to elect to have only part of this Note purchased by the
Issuer pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased:

$___________

Dated:
      ----------------  --------------------------------------------------------
                                  NOTICE: The signature on this
                                  assignment must correspond with
                                  the name as it appears upon the
                                  face of the within Note in
                                  every particular without alteration
                                  or enlargement or any change
                                  whatsoever and be guaranteed.

Signature Guarantee:
                    ------------------------------------------------------------

                                      A1-7
<Page>

                                                                     EXHIBIT A-2

                                                                 CUSIP No.: [  ]

                          ABRAXAS PETROLEUM CORPORATION
                     11-1/2% SECURED NOTE DUE 2007, SERIES B

No. [   ]                                                                 $[   ]

         ABRAXAS PETROLEUM CORPORATION, a Nevada corporation (the "ISSUER",
which term includes any successor entities), for value received, promises to pay
to [     ] or registered assigns the principal sum of [     ] Dollars on May 1,
2007.

         Interest Payment Dates:  May 1 and November 1, commencing May 1, 2003

         Record Dates: April 15 and October 15

         Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.

         IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.

                                      ABRAXAS PETROLEUM CORPORATION
ATTEST:

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

Certificate of Authentication

         This is one of the 11-1/2% Secured Notes due 2007, Series B, referred
to in the within-mentioned Indenture.

                                      U.S. BANK, N.A.,
                                      as Trustee

                                      By:
                                         ---------------------------------------
                                              Authorized Signatory
Date of Authentication:

                              (REVERSE OF SECURITY)

                     11-1/2% Secured Note due 2007, Series B

         1.    INTEREST. ABRAXAS PETROLEUM CORPORATION, a Nevada corporation
(the "ISSUER") promises to pay interest on the principal amount of this Note at
the rate per annum shown above, except to the extent a different rate of
interest is applicable as provided below. Interest on the Indebtedness evidenced
by the Notes will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Issue Date of the Note. The
Issuer will pay interest semi-annually in arrears on each Interest Payment Date,
commencing May 1, 2003. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.

         Upon and during the continuation of an Event of Default, interest on
the Notes will accrue at the rate of 16.5% per annum.

                                      A2-1
<Page>

         The Issuer shall pay interest on overdue principal and to the extent
lawful on overdue installments of interest from time to time on demand at the
rate of 16.5% per annum.

         2.    METHOD OF PAYMENT. The Issuer shall pay interest on the Notes
(except defaulted interest pursuant to which Section 2.12 of the Indenture shall
apply) to the Persons who are the registered Holders at the close of business on
the Record Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Issuer shall pay principal and, to the extent
not prohibited by the terms of the Senior Credit Agreement or the Intercreditor
Agreement, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts ("U.S. LEGAL TENDER").
However, and subject to the same limitation, the Issuer may pay principal and
interest by check payable in such U.S. Legal Tender. The Issuer may deliver any
such interest payment to the Paying Agent or to a Holder at the Holder's
registered address. If the payment of interest in the form of cash is prohibited
by the terms of the Senior Credit Agreement or the Intercreditor Agreement, that
interest will be paid in the form of PIK Notes in a principal amount equal to
the amount of accrued and unpaid interest on the Notes plus an additional 1% per
annum accrued interest for the applicable period.

         3.    PAYING AGENT AND REGISTRAR. Initially, U.S. Bank, N. A. (the
"TRUSTEE") will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders.

         4.    INDENTURE AND INTERCREDITOR AGREEMENT. The Issuer issued the
Notes under an Indenture, dated as of January 23, 2003 (the "INDENTURE"), among
the Issuer, the Subsidiary Guarantors and the Trustee. This Note is one of a
duly authorized issue of Exchange Notes of the Issuer designated as its 11-1/2%
Secured Notes due 2007, Series B (the "EXCHANGE NOTES"). The Notes are limited
in aggregate principal amount to $118,250,000.00, plus such additional principal
amounts as may be necessary with respect to the issuance of PIK Notes for the
payment of interest. The Notes include the 11-1/2% Notes due 2007, Series A (the
"INITIAL Notes"), the PIK Notes and the Exchange Notes, issued in exchange for
the Initial Notes and any PIK Notes issued in lieu of payment of interest on the
Initial Notes pursuant to the Registration Rights Agreement. The Initial Notes,
the PIK Notes and the Exchange Notes are treated as a single class of securities
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and said Act for a statement of them. The Notes are
general obligations of the Issuer secured by a second lien on the Collateral,
subject, however, to the Permitted Liens. Payment of the Notes and the Liens
securing the Notes are subordinate to the Indebtedness under the Senior Credit
Agreement and the Liens securing such Indebtedness pursuant to the terms of the
Intercreditor Agreement.

         5.    HOLDERS BOUND TO TERMS OF THE INDENTURE. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time in accordance with its
terms.

         6.    REDEMPTION. The Notes will be redeemable, at the Issuer's option,
in whole at any time or in part from time to time, upon not less than 30 nor
more than 60 days' notice, at the Redemption Prices (expressed as percentages of
the principal amount thereof) set forth below. If the Issuer redeems all or any
Notes, the Issuer must also pay all interest accrued and unpaid to the
applicable Redemption Date. The Redemption Prices for the Notes during the
indicated time periods are as follows:

<Table>
<Caption>
     PERIOD                                                                            PERCENTAGE
     ------                                                                            ----------
     <S>                                                                               <C>
     On the Issue Date.................................................................100.0000%
     On the next Business Day after the Issue Date......................................78.6266%
     From the next Business Day after the Issue Date to 6 months after the Issue Date...80.0429%
     From 6 months after the Issue Date to 12 months after the Issue Date...............91.4592%
     From 12 months after the Issue Date to 18 months after the Issue Date..............97.1674%
     From 18 months after the Issue Date to 24 months after the Issue Date..............98.5837%
     Thereafter   .....................................................................100.0000%
</Table>

                                      A2-2
<Page>

         Notwithstanding the foregoing, the Redemption Price for Notes to be
redeemed will in no event be less than the then current Adjusted Issue Price.
The Issuer can call Notes for redemption on the Issue Date without giving any
notice of redemption to the Holders, and Notes called for redemption on the
Issue Date will be deemed not to have accrued interest.

         7.    NOTICE OF REDEMPTION. With the exception of Notes being redeemed
on the Issue Date, as provided above, notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address.

         Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuer defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.

         8.    OFFER TO PURCHASE. Section 4.15 of the Indenture provides that,
upon the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Issuer will make an offer
to purchase the Notes in accordance with the procedures set forth in the
Indenture.

         9.    REGISTRATION RIGHTS. Holders of Exchange Notes shall be entitled
to receive certain additional interest payments upon certain conditions pursuant
to and in accordance with the terms of the Registration Rights Agreement.

         10.   DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, and in denominations of $1.00 and integral multiples of
$1.00. A Holder shall register the transfer or exchange of 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 certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer or
exchange of any Notes or portions thereof selected for redemption.

         11.   PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.

         12.   UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.

         13.   DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Issuer at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Issuer will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, its obligation to pay the principal of and interest on the Notes
but without affecting the rights of the Holders to receive such amounts from
such deposits).

         14.   AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
Security Documents or the Notes may be amended or supplemented with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, and any past Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
Security Documents or the Notes to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes, comply with any

                                      A2-3
<Page>

requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA or comply with Article Five of the Indenture or
make any other change that does not adversely affect the rights of any Holder of
a Note.

         15.   RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of each of the Issuer and the Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur Liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, issue Preferred Stock of its Subsidiaries,
and on the ability of the Issuer and its Subsidiaries to merge or consolidate
with any other Person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the Issuer's and its Subsidiaries'
assets. Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Issuer must annually
report to the Trustee on compliance with such limitations.

         16.   SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.

         17.   DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received security and indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest when due, for any
reason, a Default in payment with respect to a Change in Control Offer, a
Default in any requirement under the Indenture to Pay Down Debt, or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in the interest of the Holders. Foreclosure under the Security
Documents is subject to the terms of the Intercreditor Agreement.

         18.   TRUSTEE DEALINGS WITH ISSUER. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuer, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.

         19.   NO RECOURSE AGAINST OTHERS. No partner, director, officer,
employee or stockholder, as such, of the Issuer or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Issuer or any
Subsidiary Guarantor under the Notes, the Indenture, the Security Documents or
the Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or its creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

         20.   GUARANTEES AND COLLATERAL. This Note will be entitled to the
benefits of certain Guarantees, if any, made for the benefit of the Holders and
of Security Documents given to secure Obligations under the Notes and the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Subsidiary Guarantors, the Trustee and the Holders.

         21.   AUTHENTICATION. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.

         22.   GOVERNING LAW. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties to the Indenture agrees to submit to the non-exclusive jurisdiction of
the competent courts of the State of New York sitting in the City of New York in
any action or proceeding arising out of or relating to this Note.

         23.   ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint

                                      A2-4
<Page>

tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

         24.   CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.

         The Issuer will furnish to any Holder of a Note upon written request
and without charge a copy of each of the Indenture, which has the text of this
Note and the Intercreditor Agreement. Requests may be made to: Abraxas Petroleum
Corporation, 500 North Loop 1604 East, Suite 100, San Antonio, Texas 78232.

                                      A2-5
<Page>

                                 ASSIGNMENT FORM

         If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint ______________, agent to transfer this Note on the books
of the Issuer. The agent may substitute another to act for him.

Dated:            Signed:
      -----------        -------------------------------------------------------
                                    (Sign exactly as your name appears
                                      on the other side of this Note)

Signature Guarantee:
                    ------------------------------------------------------------

                                      A2-6
<Page>

                      [OPTION OF HOLDER TO ELECT PURCHASE]

         If you want to elect to have this Note purchased by the Issuer pursuant
to Section 4.15 of the Indenture, check the appropriate box:

                  Section 4.15 [  ]

         If you want to elect to have only part of this Note purchased by the
Issuer pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased:

$___________

Dated:
      ----------------  --------------------------------------------------------
                                  NOTICE: The signature on this
                                  assignment must correspond with
                                  the name as it appears upon the
                                  face of the within Note in
                                  every particular without alteration
                                  or enlargement or any change
                                  whatsoever and be guaranteed.

Signature Guarantee:
                    ------------------------------------------------------------

                                      A2-7
<Page>

                                                                       EXHIBIT B

                Form of Additional Provisions In Assignment Form
                            For Restricted Securities

         So long as this Note is a Restricted Security, in connection with any
transfer the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer:

                                   [CHECK ONE]

(1)      / /   to an Issuer or a Subsidiary thereof; or

(2)      / /   pursuant to and in compliance with Rule 144A under the Securities
               Act of 1933, as amended; or

(3)      / /   to an "accredited investor" (as defined in Rule 501 under the
               Securities Act of 1933, as amended) that has furnished to the
               Trustee a signed letter containing certain representations and
               agreements (the form of which letter can be obtained from the
               Trustee); or

(4)      / /   outside the United States to a "foreign person" in compliance
               with Rule 904 of Regulation S under the Securities Act of 1933,
               as amended; or

(5)      / /   pursuant to the exemption from registration provided by Rule 144
               under the Securities Act of 1933, as amended; or

(6)      / /   pursuant to an effective registration statement under the
               Securities Act of 1933, as amended; or

(7)      / /   pursuant to another available exemption from the registration
               requirements of the Securities Act of 1933, as amended.

and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Issuer as defined in Rule 144
under the Securities Act of 1933, as amended (an "AFFILIATE"):

         / /   The transferee is an Affiliate of the Issuer.

Unless one of the items is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than the
registered Holder thereof; PROVIDED, HOWEVER, that if item (3), (4), (5) or (7)
is checked, the Issuer or the Trustee may require, prior to registering any such
transfer of the Notes, in its sole discretion, such written legal opinions,
certifications (including an investment letter in the case of box (3)) and other
information as the Trustee or the Issuer has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended.

                                       B-1
<Page>

If none of the foregoing items are checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.

Dated:            Signed:
      -----------        -------------------------------------------------------
                                         (Sign exactly as name
                                         appears on the other side
                                         of this Note)

Signature Guarantee:

              TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

         The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
ISSUER as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Dated:
      -----------                 ----------------------------------------------
                                  NOTICE: To be executed by
                                          an executive officer

                                       B-2
<Page>

                                                                       EXHIBIT C

                            FORM OF CERTIFICATE TO BE
                          DELIVERED IN CONNECTION WITH
                    TRANSFERS TO NON-QIB ACCREDITED INVESTORS

                                                                    [    ], [  ]

[       ]
[       ]
[       ]

Ladies and Gentlemen:

         In connection with our proposed purchase of 11-1/2% Secured Notes due
2007 (the "NOTES") of Abraxas Petroleum Corporation (the "ISSUER"), we confirm
that:

               1.     We understand that any subsequent transfer of the Notes is
         subject to certain restrictions and conditions set forth in the
         Indenture relating to the Notes (the "INDENTURE") and the undersigned
         agrees to be bound by, and not to resell, pledge or otherwise transfer
         the Notes except in compliance with, such restrictions and conditions
         and the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
         all applicable State securities laws.

               2.     We understand that the offer and sale of the Notes to us
         or our predecessors have not been registered under the Securities Act,
         and that the Notes may not be offered or sold within the United States
         or to, or for the account or benefit of, U.S. Persons except as
         permitted in the following sentence. We agree, on our own behalf and on
         behalf of any accounts for which we are acting as hereinafter stated,
         that if we should sell any Notes, we will do so only (i) to the Issuer,
         or any subsidiary thereof, (ii) inside the United States in accordance
         with Rule 144A under the Securities Act to a "qualified institutional
         buyer" (as defined in Rule 144A promulgated under the Securities Act)
         that, prior to such transfer, furnishes (or has furnished on its behalf
         by a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a
         signed letter containing certain representations and agreements
         relating to the restrictions on transfer of the Notes (the form of
         which letter can be obtained from the Trustee), (iii) outside the
         United States in accordance with Rule 904 of Regulation S promulgated
         under the Securities Act (provided that any such sale or transfer in
         Canada or to or for the benefit of a Canadian resident must be effected
         pursuant to an exemption from the prospectus and registration
         requirements under applicable Canadian securities laws), (iv) pursuant
         to the exemption from registration provided by Rule 144 under the
         Securities Act (if available), or (v) pursuant to an effective
         registration statement under the Securities Act, and we further agree
         to provide to any Person purchasing any of the Notes from us a notice
         advising such purchaser that resales of the Notes are restricted as
         stated herein.

               3.     We understand that, on any proposed resale of any Notes,
         we will be required to furnish to the Trustee and the Issuer such
         certification, legal opinions and other information as the Trustee or
         the Issuer may reasonably require to confirm that the proposed sale
         complies with the foregoing restrictions. We further understand that
         the Notes purchased by us will bear a legend to the foregoing effect.

               4.     We are an "accredited investor" (as defined in Rule 501 of
         Regulation D under the Securities Act) and have such knowledge and
         experience in financial and business matters as to be capable of
         evaluating the merits and risks of our investment in the Notes, and we
         and any accounts for

                                       C-1
<Page>

         which we are acting are each able to bear the economic risk of our or
         its investment, as the case may be.

               5.     We are acquiring the Notes purchased by us for our account
         or for one or more accounts (each of which is an "accredited investor")
         as to each of which we exercise sole investment discretion.

         You, the Issuer, the Trustee and others are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.

                                      Very truly yours,

                                      [Name of Transferee]

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

                                       C-2
<Page>

                                                                       EXHIBIT D

                       FORM OF CERTIFICATE TO BE DELIVERED
                          IN CONNECTION WITH TRANSFERS
                            PURSUANT TO REGULATION S

                                                                    [    ], [  ]

[       ]
[       ]
[       ]
[       ]

         Re:   Abraxas Petroleum Corporation (the "ISSUER")
               11-1/2% Secured Notes due 2007 (the "NOTES")

                                   ----------

Ladies and Gentlemen:

         In connection with our proposed sale of $[ ] aggregate principal amount
of the Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the U.S. Securities Act of 1933, as amended
(the "SECURITIES ACT"), and, accordingly, we represent that:

               (1)    the offer of the Notes was not made to a Person in the
         United States;

               (2)    either (a) at the time the buy offer was originated, the
         transferee was outside the United States or we and any Person acting on
         our behalf reasonably believed that the transferee was outside the
         United States, or (b) the transaction was executed in, on or through
         the facilities of a designated off-shore securities market and neither
         we nor any Person acting on our behalf knows that the transaction has
         been pre-arranged with a buyer in the United States;

               (3)    no directed selling efforts have been made in the United
         States in contravention of the requirements of Rule 903(b) or Rule
         904(b) of Regulation S, as applicable;

               (4)    the transaction is not part of a plan or scheme to evade
         the registration requirements of the Securities Act; and

               (5)    we have advised the transferee of the transfer
         restrictions applicable to the Notes.

               You, the Issuer and counsel for the Issuer are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.

                                      Very truly yours,

                                      [Name of Transferor]

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

                                       D-1
<Page>

                                                                       EXHIBIT E

                                    GUARANTEE

         For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Note the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Note in the amounts and at the times when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Issuer
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Eleven of the Indenture and this Guarantee. This Guarantee will become
effective in accordance with Article Eleven of the Indenture and its terms shall
be evidenced therein. The validity and enforceability of any Guarantee shall not
be affected by the fact that it is not affixed to any particular Note.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Indenture dated as of January 23, 2003, among Abraxas Petroleum
Corporation, a Nevada corporation, as issuer (the "ISSUER"), the Subsidiary
Guarantors party thereto, and U.S. Bank, N. A., as trustee (the "TRUSTEE"), as
amended or supplemented (the "INDENTURE").

         The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.

         THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. Each Subsidiary Guarantor hereby agrees to
submit to the non-exclusive jurisdiction of the competent courts of the State of
New York sitting in the City of New York in any action or proceeding arising out
of or relating to this Guarantee.

         This Guarantee is subject to release upon the terms set forth in the
Indenture.

                                       E-1
<Page>

         IN WITNESS WHEREOF, each Subsidiary Guarantor has caused its Guarantee
to be duly executed.

Date:
     -----------------

                                      SANDIA OIL & GAS CORPORATION, as Guarantor

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

                                      WAMSUTTER HOLDINGS, INC., as Guarantor

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

                                      SANDIA OPERATING CORP., as Guarantor

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

                                      WESTERN ASSOCIATED ENERGY CORPORATION, as
                                      Guarantor

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

                                      EASTSIDE COAL COMPANY, INC., as Guarantor

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

                                      GREY WOLF EXPLORATION INC., as Guarantor

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

                                       E-2
<Page>

                                                                       EXHIBIT F

                         FORM OF SUPPLEMENTAL INDENTURE

         SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE") is dated as of,
among [SUBSIDIARY GUARANTOR] (the "NEW SUBSIDIARY GUARANTOR"), a subsidiary of
Abraxas Petroleum Corporation, a Nevada corporation (the "ISSUER"), the Issuer
and U.S. Bank, N.A., as trustee under the Indenture referred to below (the
"TRUSTEE").

                                    RECITALS:

         WHEREAS the Issuer, Sandia Oil & Gas Corporation, a Texas corporation
("SANDIA"), Wamsutter Holdings, Inc., a Wyoming corporation ("WAMSUTTER"),
Sandia Operating Corp., a Texas corporation ("SANDIA OPERATING"), Western
Associated Energy Corporation, a Texas corporation ("WESTERN ASSOCIATED"),
Eastside Coal Company, Inc., a Colorado corporation ("EASTSIDE COAL") and Grey
Wolf Exploration Inc., an Alberta corporation ("NEWCO CANADA" and together with
Sandia, Wamsutter, Sandia Operating, Western Associated and Eastside Coal, the
"SUBSIDIARY GUARANTORS") have heretofore executed and delivered to the Trustee
an Indenture (the "INDENTURE") dated as of January 23, 2003, providing for the
issuance of the Issuer's 11-1/2% Secured Notes due 2007 (the "NOTES"); and

         WHEREAS Section 4.20 of the Indenture provides that under certain
circumstances the Issuer 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 ISSUER'S
obligations under the Notes and the Indenture pursuant to a Guarantee on the
terms and conditions set forth herein;

         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 Issuer and the Trustee mutually covenant and agree for
the equal and ratable benefit of the Holders as follows:

         1. AGREEMENT TO GUARANTEE. The New Subsidiary Guarantor hereby agrees
to unconditionally guarantee the ISSUER'S obligations under the Notes and the
Indenture on the terms and subject to the conditions set forth in Article XI of
the Indenture and to be bound by all other applicable provisions of the
Indenture.

         2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURE PART OF INDENTURE.
The Indenture, as supplemented hereby, 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 Notes 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.

                                       F-1
<Page>

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

                                      [NEW SUBSIDIARY GUARANTOR]

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

                                      ABRAXAS PETROLEUM CORPORATION

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

                                      U.S. BANK, N. A.,
                                      as Trustee

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

                                        F-2

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