Document:

exv10w6

 

Exhibit
10.6

TIM HORTONS INC.

EXECUTIVE ANNUAL PERFORMANCE PLAN

     1. Purpose. The purpose of the Executive Annual Performance Plan (the “Plan”) is to
enhance the ability of Tim Hortons Inc. (the “Company”) and its subsidiaries to attract, motivate,
reward, and retain key employees, to strengthen their commitment to the success of the Company and
to align their interests with those of the Company’s shareholders by providing additional
compensation to designated key employees of the Company based on the achievement of performance
objectives. To this end, the Plan provides a means of rewarding participants based on the
performance of the Company and/or its Operating Units.

     2. Administration. The Plan shall be administered by the Committee and the CEO as
provided herein. The Committee shall have full authority to establish the rules and regulations
relating to the Plan, to interpret the Plan and those rules and regulations, to determine the
Performance Objectives of the Company and/or Operating Units, to decide the facts in any case
arising under the Plan and to make all other determinations and to take all other actions necessary
or appropriate for the proper administration of the Plan, including the delegation of such
authority or power, where appropriate. The Committee’s administration of the Plan, including all
such rules and regulations, interpretations, selections, determinations, approvals, decisions,
delegations, amendments, terminations and other actions, shall be final and binding on the Company,
its stockholders and the Participants and their beneficiaries. The Committee shall have the full
authority to determine whether the CEO shall participate in the Plan for any fiscal year and the
CEO shall have the full authority to determine the Participants in the Plan (other than the CEO).
The Committee with respect to the CEO and the CEO with respect to Participants other than the CEO
shall determine the Award opportunities for Participants, and whether such Award opportunities
shall be based on the Performance Objectives of the Company or based on a combination of
Performance Objectives of the Company and one or more Operating Units.

     3. Eligible Employees. Generally, all Employees are eligible to participate in the
Plan for any fiscal year. However, participation shall be limited to those Employees selected by
the CEO to participate in the Plan for each fiscal year in accordance with Section 4.

     4. Determination of Awards. For each fiscal year, the Committee shall establish the
Performance Objectives of the Company and/or Operating Units. The Committee shall determine
whether the CEO participates in the Plan for any fiscal year and the CEO shall determine the
Employees (other than the CEO) who shall be Participants during each fiscal year. The Committee
with respect to the CEO and the CEO with respect to Participants other than the CEO shall determine
(i) whether Awards shall be based solely upon the achievement of Performance Objectives of the
Company or on a combination of the achievement of Performance Objectives for the Company and for
one or more Operating Units, and (ii) the Award opportunities for each Participant, including the
extent to which Awards will be payable for actual performance between each level of the Performance
Objectives. The CEO shall provide to the Committee a schedule that indicates the Participants
(other than the CEO) selected, their Award opportunities, and whether such Awards will be based on
the Performance Objectives of the Company or a combination of the Company and one or more Operating
Units. The Company

 

 

shall notify each Participant of the applicable Performance Objectives for such Participant
and his or her corresponding Award opportunities for each fiscal year.

     5. Payment of Awards. As soon as practicable after the determination of the Company’s
and, if applicable, the Operating Units’ financial performance for a fiscal year, each Award to the
extent earned shall be paid in a single lump sum cash payment, less applicable withholding taxes.
Notwithstanding the foregoing, a Participant may elect to defer all or a portion of any Award
otherwise payable in accordance with this Section, if permitted pursuant to a deferred compensation
plan adopted by, or an agreement entered into with, the Company or any of its subsidiaries.

     6. Discretionary Bonuses. In addition to any Awards payable under Section 4, the CEO,
after consultation with the Committee, shall have the authority to make additional cash incentive
awards to any Employees (other than the CEO) selected by the CEO in amounts determined by the CEO.

     7. Termination of Employment. No Award for a fiscal year shall be payable to any
Participant unless he or she is employed by the Company or one of its subsidiaries on the payment
date for Awards payable in respect of the fiscal year, unless the Participant’s employment was
terminated because of his or her (i) death, (ii) disability or (iii) retirement after attaining age
55 and the completion of 10 years of continuous service with the Company, in which event the
Participant will be entitled to a pro-rata portion (which shall be 100% if such termination occurs
after the end of the fiscal year and prior to the payment date) of the Award otherwise payable in
respect of that fiscal year, subject to the Committee’s discretion as set forth in Section 2
hereof.

     8. Change in Control. Notwithstanding any provision in the Plan to the contrary, upon
the occurrence of a Change in Control of the Company, the following provisions shall apply:

          (i) The minimum Award payable to each Participant in respect of the fiscal year in which the
Change in Control occurs shall be the greatest of:

               (A) the Award or other annual bonus paid or payable to the Participant in respect of the
fiscal year prior to the year in which the Change in Control occurs;

               (B) the Award amount that would be payable to the Participant assuming that the Company
achieved the target level of the Performance Objectives for such fiscal year; and

               (C) the Award amount that would be payable to the Participant based on the Company’s actual
performance and achievement of applicable Performance Objectives for such fiscal year through the
date of the Change in Control.

          (ii) Notwithstanding anything to the contrary contained herein, in the event that following
the date of a Change in Control and prior to the payment date for Awards payable in respect of the
fiscal year in which the Change in Control occurs a Participant’s employment is

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terminated by the Company and its subsidiaries without Cause or by the Participant for Good
Reason, such Participant shall be entitled to receive the Award otherwise payable pursuant to the
terms of the Plan in respect of that fiscal year as if he or she had remained in the employ of the
Company through the payment date for Awards payable in respect of such fiscal year.

          (iii) If a Participant’s employment is terminated by the Company and its subsidiaries without
Cause prior to the date of a Change in Control but the Participant reasonably demonstrates that the
termination (A) was at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control or (B) otherwise arose in connection with, or
in anticipation of, a Change in Control which has been threatened or proposed, such termination
shall be deemed to have occurred after a Change in Control for purposes of this Agreement provided
a Change in Control shall actually have occurred.

     9. Adjustments. The Committee may, at the time Performance Objectives are determined
for a fiscal year, or at any time prior to the final determination of Awards in respect of such
fiscal year, provide for the manner in which performance will be measured against the Performance
Objectives or may adjust the Performance Objectives to reflect the impact of specified corporate
transactions (such as a stock split or stock dividend), special charges, accounting or tax law
changes and other extraordinary or nonrecurring events.

     10. Designation of Beneficiary. In the event of a Participant’s death prior to full
payment of any Award hereunder, unless such Participant shall have designated a beneficiary or
beneficiaries in accordance with this Section 10, payment of any Award due under the Plan shall be
made to the beneficiary or beneficiaries designated by the Participant under the Company’s basic
life insurance program, or if no beneficiary has been designated under the basic life insurance
program, the Participant’s designated beneficiary dies prior to receiving any payment of an Award
or if such designation shall for any reason be illegal or ineffective, Awards payable under the
Plan shall be paid to the Participant’s estate. A beneficiary designation under this Plan, or
revocation of a prior beneficiary designation, will be effective only if it is made in writing on a
form provided by the Company, signed by the Participant and received by the Benefits Department of
the Company. If a beneficiary has been designated under this Plan and such beneficiary dies prior
to receiving any payment of an Award or if such designation shall for any reason be illegal or
ineffective, Awards payable under the Plan shall be paid to the Participant’s estate.

     11. Amendment or Termination. The Board may amend or terminate the Plan at any time
in its discretion; provided, however, that no amendment or termination of the Plan
may affect any Award made under the Plan prior to that time; and provided further,
however, that the Plan may not be amended or terminated through and including the fiscal
year in which a Change in Control occurs (i) at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control or (ii) otherwise in
connection with, or in anticipation of, a Change in Control which has been threatened or proposed,
in either case provided a Change in Control shall actually have occurred.

- 3 -

 

     12. Miscellaneous Provisions

          (a) Neither the establishment of this Plan, nor any action taken hereunder, shall be construed
as giving any Employee or any Participant any right to be retained in the employ of the Company or
any of its subsidiaries.

          (b) A Participant’s rights and interests under the Plan may not be assigned or transferred,
except as provided in Section 10, and any attempted assignment or transfer shall be null and void
and shall extinguish, in the Company’s sole discretion, the Company’s obligation under the Plan to
pay Awards with respect to the Participant.

          (c) The Plan shall be unfunded. The Company shall not be required to establish any special or
separate fund, or to make any other segregation of assets, to assure payment of Awards.

          (d) The Company shall have the right to deduct from Awards paid any taxes or other amounts
required by law to be withheld.

          (e) Nothing contained in the Plan shall limit or affect in any manner or degree the normal and
usual powers of management, exercised by the officers and the Board or committees thereof, to
change the duties or the character of employment of any employee of the Company or any of its
subsidiaries or to remove the individual from the employment of the Company or any of its
subsidiaries at any time, all of which rights and powers are expressly reserved.

     13. Definitions.

          (a) “Award” shall mean the cash incentive award earned by a Participant under the Plan
for any fiscal year.

          (b) “Base Salary” shall mean the Participant’s annual base salary actually paid by the
Company and/or any of its subsidiaries and received by the Participant during the applicable fiscal
year. Annual base salary does not include (i) Awards under the Plan, (ii) long-term incentive
awards, (iii) signing bonuses or any similar bonuses, (iv) imputed income from such programs as
executive life insurance, or (v) nonrecurring earnings such as moving expenses, and is based on
salary earnings before reductions for such items as contributions under Sections 125 or 401(k) of
the Code or pursuant to any nonqualified deferred compensation plan or agreement or any retirement
savings plans.

          (c) “Board” shall mean the Board of Directors of the Company.

          (d) “Cause” shall mean the termination of a Participant’s employment by reason of the
Board’s good faith determination that the Participant (a) willfully and continually failed to
substantially perform his or her duties with the Company (other than a failure resulting from the
Participant’s incapacity due to physical or mental illness) after a written demand for substantial
performance is delivered to the Participant by the Board which specifically identifies the manner
in which the Board believes that the Participant has not substantially performed his

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or her duties and such failure substantially to perform continues for at least fourteen (14)
days, or (b) has willfully engaged in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise, or (c) has otherwise materially breached the terms of his or her
employment agreement with the Company, if applicable (each, an “Employment Agreement”) (including,
without limitation, a voluntary termination of the Participant’s employment by the Participant
during the term of such Employment Agreement). No act, nor failure to act, on the Participant’s
part, shall be considered “willful” unless he or she has acted, or failed to act, with an absence
of good faith and without a reasonable belief that his or her action or failure to act was in the
best interest of the Company. Notwithstanding the foregoing, the Participant’s employment shall
not be deemed to have been terminated for Cause unless and until (1) there shall have been
delivered to the Participant a copy of a written notice setting forth that the Participant was
guilty of conduct set forth above in clause (a), (b) or (c) of the first sentence of this
definition and specifying the particulars thereof in detail, and (2) the Participant shall have
been provided an opportunity to be heard by the Board (with the assistance of Participant’s
counsel).

          (e) “CEO” shall mean the Chief Executive Officer of the Company.

          (f) “Change in Control” shall mean the occurrence during the term of the Plan of:

               (i) An acquisition (other than directly from the Company) of any common stock or other voting
securities of the Company entitled to vote generally for the election of directors (the “Voting
Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), immediately after which such
Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of the then outstanding shares of the Company’s common stock
or the combined voting power of the Company’s then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting Securities which
are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall mean an
acquisition by (A) an employee benefit plan (or a trust forming a part thereof) maintained by (1)
the Company or (2) any corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a “Subsidiary”) (B) the Company or its Subsidiaries, or (C) any Person
in connection with a “Non-Control Transaction” (as hereinafter defined);

               (ii) The individuals who, as of the date the Board adopted the Plan, are members of the Board
(the “Incumbent Board”), cease for any reason to constitute at least seventy percent (70%) of the
members of the Board; provided, however, that if the election, or nomination for
election by the Company’s common stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided further, however,
that no individual shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of an actual or threatened solicitation of proxies or

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consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason
of any agreement intended to avoid or settle any Proxy Contest; or

               (iii) The consummation of:

                    (A) A merger, consolidation or reorganization with or into the Company or a Subsidiary, or in
which securities of the Company are issued (a “Merger”), unless such Merger is a “Non-Control
Transaction.” A “Non-Control Transaction” shall mean a Merger if:

                         (1) the stockholders of the Company immediately before such Merger own directly or indirectly
immediately following such Merger at least seventy percent (70%) of the combined voting power of
the outstanding voting securities of the corporation resulting from such Merger (the “Surviving
Corporation”) in substantially the same proportion as their ownership of the Voting Securities
immediately before such Merger,

                         (2) the individuals who were members of the Incumbent Board immediately prior to the execution
of the agreement providing for such Merger constitute at least two-thirds of the members of the
board of directors of the Surviving Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of the Surviving Corporation, and

                         (3) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan
(or any trust forming a part thereof) that immediately prior to such Merger was maintained by the
Company or any Subsidiary, or (iv) any Person who, immediately prior to such Merger had Beneficial
Ownership of thirty percent (30%) or more of the then outstanding Voting Securities or common stock
of the Company, has Beneficial Ownership of thirty percent (30%) or more of the combined voting
power of the Surviving Corporation’s then outstanding voting securities or its common stock.

                    (B) A complete liquidation or dissolution of the Company; or

                    (C) The sale or other disposition of all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).

          Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because
any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount
of the then outstanding common stock or Voting Securities as a result of the acquisition of common
stock or Voting Securities by the Company which, by reducing the number of shares of common stock
or Voting Securities then outstanding, increases the proportional number of shares Beneficially
Owned by the Subject Persons, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of common stock or Voting Securities by
the Company, and after such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional common stock or Voting Securities which increase the percentage
of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change
in Control shall occur.

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          (g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (h) “Committee” shall mean the Board or such other committee of the Board appointed by
the Board from time to time to administer the Plan and to perform the functions set forth herein.
Until such time as the Committee consists of a committee of the Board, the compensation committee
of the board of directors of Wendy’s International, Inc. shall serve in an advisory role to the
Committee and may make recommendations to the Committee relating to administration of the plan as
set forth herein.

          (i) “Employee” shall mean any employee of the Company or any of its subsidiaries.

          (j) “Good Reason” shall mean the occurrence after a Change in Control of any of the
following events or conditions without the Participant’s express written consent:

               (i) a change in the Participant’s status, title, position or responsibilities (including
reporting responsibilities) which, in the Participant’s reasonable judgment, does not represent a
promotion from his or her status, title, position or responsibilities as in effect immediately
prior thereto; the assignment to the Participant of any duties or responsibilities which, in the
Participant’s reasonable judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Participant from or failure to reappoint or reelect him or
her to any of such positions, except in connection with the termination of his or her employment
for disability, for Cause, as a result of his or her death or by the Participant other than for
Good Reason;

               (ii) a reduction by the Company in the Participant’s Base Salary as in effect immediately
prior to the Change in Control or as the same may be increased from time to time, or a failure to
increase Participant’s Base Salary as of his or her established annual salary review date in any
calendar year by a percentage at least as great as the annual increase in the Consumer Price Index
for All Items most recently published by Statistics Canada prior to such salary review date;

               (iii) the Company’s requiring the Participant to be based at any place outside a 50-kilometer
radius from the Participant’s business office location immediately prior to the Change in Control,
except for reasonably required travel on Company business which is not materially greater than such
travel requirements prior to the Change in Control;

               (iv) the failure by the Company to continue to provide the Participant with compensation and
benefits substantially similar (in terms of benefit levels and/or reward opportunities) to those
provided for under the Participant’s Employment Agreement, if applicable, and those provided to him
or her under any of the employee benefit plans in which the Participant becomes a participant, or
the taking of any action by the Company which would directly or indirectly materially reduce any of
such benefits or deprive the Participant of any material fringe benefit enjoyed by him or her at
the time of the Change in Control;

               (v) any material breach by the Company of any provision of the Participant’s Employment
Agreement with the Company, if applicable; and

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               (vi) the failure of the Company to notify the Participant within the 30-day period following
any transfer of business and assets to any other person by merger, consolidation, sale of assets or
otherwise, that the Company has obtained a satisfactory agreement from a successor or assign of the
Company to assume and agree to perform the Participant’s employment agreement with the Company, if
any.

          (k) “Operating Unit”, for any fiscal year, shall mean a division, Company subsidiary,
group, product line or product line grouping for which an income statement reflecting sales and
operating income is produced. 

          (l) “Participant”, for any fiscal year, shall mean an Employee selected by the
Committee to participate in the Plan for such fiscal year.

          (m) “Performance Objectives”, for any fiscal year, shall mean one or more financial
performance objectives of the Company and/or Operating Unit(s) established by the Committee in
accordance with Section 4, which may include threshold Performance Objectives, target Performance
Objectives and maximum Award Performance Objectives. Performance Objectives may be expressed in
terms of earnings per share, earnings (which may be expressed as earnings before specified items),
return on assets, return on invested capital, revenue, operating income, cash flow, total
shareholder return or any combination thereof. Performance Objectives may be expressed as a
combination of Company and/or Operating Unit(s) Performance Objectives and may be absolute or
relative (to prior performance or to the performance of one or more other entities or external
indices) and may be expressed in terms of a progression within a specified range.

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Exhibit
4.1

QUICKSILVER RESOURCES INC.,

THE SUBSIDIARY GUARANTORS PARTIES HERETO

AND

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

as TRUSTEE

 

FIRST SUPPLEMENTAL INDENTURE

Dated as of March __, 2006

 

$[          ]

[     ]% Senior Subordinated Notes due 2016

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE I [__]% SENIOR SUBORDINATED NOTES DUE 2016	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.01
	 	Establishment
	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.02
	 	Definitions
	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.03
	 	Payment of Principal and Interest
	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.04
	 	Denominations
	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.05
	 	Global Securities
	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.06
	 	Transfer
	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.07
	 	Defeasance
	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.08
	 	Redemption at the Option of the Company
	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.09
	 	Paying Agent
	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 1.10
	 	Additional Notes
	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II SUBSIDIARY GUARANTEES	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.01
	 	Guarantee
	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.02
	 	Limitation on Subsidiary Guarantor Liability
	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.03
	 	Releases of Subsidiary Guarantees
	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III PARTICULAR COVENANTS OF THE COMPANY WITH RESPECT TO THE NOTES	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.01
	 	Effectiveness of Covenants
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.02
	 	Limitation on Indebtedness
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.03
	 	Limitation on Layering
	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.04
	 	Limitation on Restricted Payments
	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.05
	 	Limitation on Liens
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.06
	 	Limitation on Restrictions on Distributions from Restricted Subsidiaries
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.07
	 	Limitation on Sales of Assets and Subsidiary Stock
	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.08
	 	Limitation on Affiliate Transactions
	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.09
	 	Limitation on Sale of Capital Stock of Restricted Subsidiaries
	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.10
	 	SEC Reports
	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.11
	 	Merger and Consolidation
	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.12
	 	Future Subsidiary Guarantors
	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.13
	 	Limitation on Lines of Business
	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.14
	 	Payments for Consent
	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 3.15
	 	Offer to Repurchase Upon Change of Control
	 	 	47	 

i

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE IV SUBORDINATION	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.01
	 	Agreement to Subordinate
	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.02
	 	Liquidation; Dissolution; Bankruptcy
	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.03
	 	Default on Senior Indebtedness
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.04
	 	Acceleration of Notes
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.05
	 	When Distribution Must Be Paid Over
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.06
	 	Notice by the Company
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.07
	 	Subrogation
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.08
	 	Relative Rights
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.09
	 	Subordination May Not Be Impaired by the Company
	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.10
	 	Distribution or Notice to Representative
	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.11
	 	Rights of Trustee and Paying Agent
	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.12
	 	Authorization to Effect Subordination
	 	 	52	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.13
	 	Subordination of Subsidiary Guarantees
	 	 	52	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.14
	 	Amendment to the Subordination Provisions of the Indenture
	 	 	52	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V EVENTS OF DEFAULT WITH RESPECT TO THE NOTES	 	 	52	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI MODIFICATION AND WAIVER	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.01
	 	Without Consent of Holders of Notes
	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.02
	 	With Consent of Holders of Notes
	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII MISCELLANEOUS PROVISIONS	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.01
	 	Recitals by the Company
	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.02
	 	Ratification and Incorporation of Original Indenture
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.03
	 	Executed in Counterparts
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.04
	 	New York Law to Govern
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.05
	 	Successors and Assigns
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.06
	 	Separability
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Exhibit A
	 	Form of Global Note
	 	 	A-1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Exhibit B
	 	Form of Supplemental Indenture to be Delivered by Subsequent Guarantors
	 	 	B-1	 

ii

 

 

     THIS FIRST SUPPLEMENTAL INDENTURE is made as of the ___day of March, 2006, by and among
QUICKSILVER RESOURCES INC., a Delaware corporation (the “Company”), the Subsidiary Guarantors (as
herein defined) parties hereto (each, a “Subsidiary Guarantor” and, collectively, the “Subsidiary
Guarantors”) and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association duly
organized and existing under the laws of the United States of America, as trustee (the “Trustee”):

     WHEREAS, the Company and the Trustee executed and delivered an Indenture, dated as of December
22, 2005 (the “Original Indenture”), to provide for the issuance by the Company from time to time
of unsecured debentures, notes, and other evidences of indebtedness (the “Securities”), to be
issued in one or more series as provided in the Original Indenture;

     WHEREAS, the Original Indenture is incorporated herein by this reference and the Original
Indenture, as supplemented by this First Supplemental Indenture, is herein called the “Indenture”;

     WHEREAS, under the Original Indenture, a new series of senior subordinated notes may at any
time be established by the Board of Directors of the Company in accordance with the provisions of
the Original Indenture and the terms of such series may be described by a supplemental indenture
executed by the Company and the Trustee;

     WHEREAS, the Company proposes to create under the Indenture a new series of senior
subordinated notes;

     WHEREAS, additional senior subordinated notes of other series hereafter established, except as
may be limited in the Original Indenture as at the time supplemented and modified, may be issued
from time to time pursuant to the Indenture as at the time supplemented and modified, and all
senior subordinated notes issued by the Company of any one series need not be issued at the same
time and, unless otherwise so provided, may be reopened for issuances of additional senior
subordinated notes of such series; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this First
Supplemental Indenture and make it a valid and binding obligation of the Company and the Subsidiary
Guarantors, in accordance with its terms, have been done or performed.

     NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for
other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:

ARTICLE I

[___]% SENIOR SUBORDINATED NOTES DUE 2016

     Section 1.01 Establishment. There is hereby established a new series of senior
subordinated notes to be issued under the Indenture, to be designated as the Company’s [___]% Senior
Subordinated Notes due 2016 (the “Notes”).

     There are to be authenticated and delivered Notes, initially limited in aggregate principal
amount of $[___] and no further Notes shall be authenticated and delivered except as provided
by the terms of the Original Indenture and the terms of this First Supplemental Indenture;
provided, however, that the aggregate principal amount of the Notes may be increased in the future,
without the consent of the holders of the Notes, on the same terms and with the same CUSIP and ISIN
numbers as the Notes. The Notes shall be issued in fully registered form without coupons.

 

 

     The Notes shall be issued in the form of one or more Global Securities (as defined below) in
substantially the form set out in Exhibit A hereto. The initial Depositary with respect to the
Notes shall be The Depository Trust Company.

     Each Note shall be dated the date of authentication thereof and shall bear interest from the
date of original issuance thereof or from the most recent Interest Payment Date to which interest
has been paid or duly provided for.

     Section 1.02 Definitions. The following defined terms used herein with respect to the
Notes shall, unless the context otherwise requires, have the meanings specified below. Capitalized
terms used herein for which no definition is provided herein shall have the meanings set forth in
the Original Indenture.

     “Acquired Indebtedness” means Indebtedness (i) of a Person or any of its Subsidiaries existing
at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case whether or not Incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have been Incurred, with
respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted
Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation
of such acquisition of assets.

     “Additional Assets” means:

	 	(1)	 	any property or assets (other than Indebtedness and Capital Stock) to be used
by the Company or a Restricted Subsidiary in the Oil and Gas Business;
	 
	 	(2)	 	capital expenditures by the Company or a Restricted Subsidiary in the Oil and
Gas Business;
	 
	 	(3)	 	the Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by the Company or a Restricted
Subsidiary; or
	 
	 	(4)	 	Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary;

provided, however, that, in the case of clauses (3) and (4), such Restricted Subsidiary is
primarily engaged in the Oil and Gas Business.

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

	 	(a)	 	the sum of:

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

	 	(A)	 	estimated proved oil and gas reserves acquired since
such year end, which reserves were not reflected in such year end reserve
report, and
	 
	 	(B)	 	estimated oil and gas reserves attributable to upward
revisions of estimates of proved oil and gas reserves since such year end
due to exploration, development, exploitation or other activities, in each
case calculated in accordance with SEC 

2

 

	 	 	 	guidelines (utilizing the prices
for the fiscal quarter ending prior to the date of determination), and
decreased by, as of the date of determination, the estimated discounted
future net revenues from

	 	(C)	 	estimated proved oil and gas reserves included
therein that shall have been produced or disposed of since such year end,
and
	 
	 	(D)	 	estimated oil and gas reserves included therein that
are subsequently removed from the proved oil and gas reserves of the
Company and its Restricted Subsidiaries as so calculated due to downward
revisions of estimates of proved oil and gas reserves since such year end
due to changes in geological conditions or other factors which would, in
accordance with standard industry practice, cause such revisions, in each
case calculated on a pre-tax basis and substantially in accordance with
SEC guidelines (utilizing the prices for the fiscal quarter ending prior
to the date of determination), in each case as estimated by the Company’s
petroleum engineers or any independent petroleum engineers engaged by the
Company for that purpose;

	 	(ii)	 	the capitalized costs that are attributable to oil and gas
properties of the Company and its Restricted Subsidiaries to which no proved
oil and gas reserves are attributable, based on the Company’s books and
records as of a date no earlier than the date of the Company’s latest
available consolidated annual or quarterly financial statements;
	 
	 	(iii)	 	the Net Working Capital on a date no earlier than the date
of the Company’s latest annual or quarterly consolidated financial statements;
and
	 
	 	(iv)	 	the greater of

	 	(A)	 	the net book value of other tangible assets of the
Company and its Restricted Subsidiaries, as of a date no earlier than the
date of the Company’s latest annual or quarterly consolidated financial
statement, and
	 
	 	(B)	 	the appraised value, as estimated by independent
appraisers, of other tangible assets of the Company and its Restricted
Subsidiaries, as of a date no earlier than the date of the Company’s
latest audited financial statements (provided that the Company shall not
be required to obtain any appraisal of any assets); minus

	 	(b)	 	the sum of:

	 	(i)	 	any amount included in (a)(i) through (a)(iv) above that is
attributable to Minority Interests;
	 
	 	(ii)	 	any net gas balancing liabilities of the Company and its
Restricted Subsidiaries reflected in the Company’s latest audited consolidated
financial statements;
	 
	 	(iii)	 	to the extent included in (a)(i) above, the estimated
discounted future net revenues, calculated in accordance with SEC guidelines
(utilizing the prices utilized in the Company’s year end reserve report),
attributable to reserves which are required to be delivered to third parties
to fully satisfy the obligations of the Company and its Restricted
Subsidiaries with respect to Volumetric Production Payments (determined, if
applicable, using the schedules specified with respect thereto); and
	 
	 	(iv)	 	to the extent included in (a)(i) above, the estimated
discounted future net revenues, calculated in accordance with SEC guidelines,
attributable to reserves subject to

3

 

	 	 	 	Dollar-Denominated Production Payments
which, based on the estimates of production and price assumptions included in
determining the estimated discounted future net revenues specified in (a)(i)
above, would be necessary to fully satisfy the payment obligations of the
Company and its Restricted Subsidiaries with respect to Dollar-Denominated
Production Payments (determined, if applicable, using the schedules specified
with respect thereto).

If the Company changes its method of accounting from the full cost method of accounting to the
successful efforts or a similar method, “Adjusted Consolidated Net Tangible Assets” will continue
to be calculated as if the Company were still using the full cost method of accounting.

     “Affiliate” of any specified Person means any other Person, that directly or indirectly, is in
Control of, is Controlled by, or is under common Control with, such Person.

     “Applicable Premium” means, with respect to a Note at any Redemption Date, the greater of (i)
1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time
of (1) the redemption price of such Note at [___], 2011 (expressed as a percentage of principal
amount) plus (2) all required interest payments due on such Note through [___], 2011, computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the then
outstanding principal amount of such Note.

     “Asset Disposition” means any direct or indirect sale, lease (other than an operating lease
entered into in the ordinary course of the Oil and Gas Business), transfer, issuance or other
disposition, or a series of related sales, leases, transfers, issuances or dispositions that are
part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors’ qualifying
shares), property or other assets (each referred to for the purposes of this definition as a
“disposition”) by the Company or any of its Restricted Subsidiaries, including any disposition by
means of a merger, consolidation or similar transaction.

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

	 	(1)	 	a disposition by a Restricted Subsidiary to the Company or by the Company or
a Restricted Subsidiary to a Wholly-Owned Subsidiary;
	 
	 	(2)	 	the sale of Cash Equivalents in the ordinary course of business;
	 
	 	(3)	 	a disposition of Hydrocarbons or mineral products in the ordinary course of
the Oil and Gas Business;
	 
	 	(4)	 	a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its Restricted
Subsidiaries and that is disposed of in each case in the ordinary course of business;
	 
	 	(5)	 	transactions permitted by Section 3.11 of this First Supplement Indenture;
	 
	 	(6)	 	an issuance of Capital Stock by a Restricted Subsidiary to the Company or to
a Wholly-Owned Subsidiary;
	 
	 	(7)	 	for purposes of Section 3.07 of this First Supplemental Indenture only, the
making of a Permitted Investment or a disposition subject to Section 3.04 of this
First Supplemental Indenture;
	 
	 	(8)	 	an Asset Swap effected in compliance with Section 3.07 of this First
Supplemental Indenture;
	 
	 	(9)	 	dispositions of assets with an aggregate fair market value since the Issue
Date of less than $5 million;

4

 

	 	(10)	 	dispositions in connection with the creation, encumbrance or existence of
Permitted Liens or the exercise of any rights or remedies with respect thereof;
	 
	 	(11)	 	dispositions of receivables in connection with the compromise, settlement or
collection thereof in the ordinary course of business or in bankruptcy or similar
proceedings and exclusive of factoring or similar arrangements;
	 
	 	(12)	 	the licensing or sublicensing of intellectual property or other general
intangibles and licenses, leases or subleases of other property in the ordinary course
of business and which do not materially interfere with the business of the Company and
its Restricted Subsidiaries;
	 
	 	(13)	 	any Production Payments and Reserve Sales, provided that any such Production
Payments and Reserve Sales, other than incentive compensation programs on terms that
are reasonably customary in the Oil and Gas Business for geologists, geophysicists and
other providers of technical services to the Company or a Restricted Subsidiary, shall
have been created, Incurred, issued, assumed or Guaranteed in connection with the
acquisition or financing of, and no later than 60 days after the acquisition of, the
property that is subject thereto;
	 
	 	(14)	 	the sale or transfer (whether or not in the ordinary course of the Oil and
Gas Business) of oil and/or gas properties or direct or indirect interests in real
property; provided, that at the time of such sale or transfer such properties do not
have associated with them any proved reserves capable of being produced in material
economic quantities; and
	 
	 	(15)	 	the abandonment, farm-out, exchange, lease or sublease of developed or
undeveloped oil and/or gas properties or interests therein in the ordinary course of
business or in exchange for oil and/or gas properties or interests therein owned or
held by another Person.

     “Asset Swap” means concurrent purchase and sale or exchange of oil and gas properties or
interests therein or other assets or properties used or useful in the Oil and Gas Business,
including Capital Stock of any Person who holds any such properties, interests or assets, between
the Company or any of its Restricted Subsidiaries and another Person; provided that any cash
received must be applied in accordance with Section 3.07 of this First Supplemental Indenture

     “Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time
of determination, the present value (discounted at the interest rate borne by the Notes, compounded
semi-annually) of the total obligations of the lessee for rental payments during the remaining term
of the lease included in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).

     “Average Life” means, as of the date of determination, with respect to any Indebtedness or
Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of
years from the date of determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (2) the sum of all such payments.

     “Bank Indebtedness” means any and all amounts, whether outstanding on the Issue Date or
Incurred after the Issue Date, payable by the Company under or in respect of a Credit Facility,
including the Senior Secured Credit Agreement, and any related notes, collateral documents, letters
of credit and guarantees and any Interest Rate Agreement entered into in connection with the Credit
Facility, including principal, premium, if any, interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the Company at the rate
specified therein, whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses,
reimbursement obligations, guarantees and all other amounts payable thereunder or in respect
thereof.

5

 

     “Board of Directors” means, as to any Person, the board of directors of such Person or a duly
authorized committee of such board of directors.

     “Capital Lease” means, with respect to any Person, any lease of property (whether real,
personal, or mixed) by such Person or its Subsidiaries as lessee that would be capitalized on a
balance sheet of such Person or its Subsidiaries prepared in conformity with GAAP, other than, in
the case of such Person or its Subsidiaries, any such lease under which such Person or any of its
Subsidiaries is the lessor.

     “Capital Lease Obligations” means, with respect to any Person, the capitalized amount of all
obligations of such Person and its Subsidiaries under Capital Leases, as determined on a
consolidated basis in conformity with GAAP.

     “Capital Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participation or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt securities convertible
into such equity.

     “Cash Equivalents” means:

	 	(1)	 	securities issued or directly and fully guaranteed or insured by the United
States Government or any agency or instrumentality of the United States (provided that
the full faith and credit of the United States is pledged in support thereof), having
a maturity within one year after the date of acquisition thereof;
	 
	 	(2)	 	marketable general 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 after the date of acquisition thereof and, at the
time of such acquisition, having a credit rating of at least “A” or the equivalent
thereof from either Standard & Poor’s Ratings Services or Moody’s Investors Service,
Inc. (or an equivalent rating by another nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of investments);
	 
	 	(3)	 	certificates of deposit, time deposits, eurodollar time deposits, overnight
bank deposits or bankers’ acceptances having maturities of not more than one year
after the date of acquisition thereof issued by any commercial bank the long-term debt
of which is rated at the time of acquisition at least “A” or the equivalent thereof by
Standard & Poor’s Ratings Services, or “A” or the equivalent thereof by Moody’s
Investors Service, Inc. (or an equivalent rating by another nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings of
investments), and having combined capital and surplus in excess of $500 million;
	 
	 	(4)	 	repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (1), (2) and (3) above entered into with
any bank meeting the qualifications specified in clause (3) above;
	 
	 	(5)	 	commercial paper rated at the time of acquisition thereof at least “A-2” or
the equivalent thereof by Standard & Poor’s Ratings Services or “P-2” or the
equivalent thereof by Moody’s Investors Service, Inc. (or an equivalent rating by
another nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments), and in any case maturing within one year
after the date of acquisition thereof; and
	 
	 	(6)	 	interests in any investment company or money market fund which invests 95% or
more of its assets in instruments of the type specified in clauses (1) through (5)
above.

     “Change of Control” means:

6

 

	 	(1)	 	Any “person” or “group” of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted
Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that such person or group shall be deemed to have “beneficial
ownership” of all shares that such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock of the
Company (or its successor by merger, consolidation or purchase of all or substantially
all of its assets) (for the purposes of this clause, such person or group shall be
deemed to beneficially own any Voting Stock of the Company held by a parent entity of
the Company, if such person or group “beneficially owns” (as defined above), directly
or indirectly, more than 50% of the voting power of the Voting Stock of such parent
entity); or
	 
	 	(2)	 	the first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors; or
	 
	 	(3)	 	the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries taken
as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than a Permitted Holder; or
	 
	 	(4)	 	the adoption by the stockholders of the Company of a plan or proposal for the
liquidation or dissolution of the Company.

     “Commodity Agreements” means, in respect of any Person, any futures contract, forward
contract, commodity swap agreement, commodity option agreement or other similar agreement or
arrangement in respect of Hydrocarbons purchased, used, produced, processed or sold by such Person
and designed to protect such Person against fluctuations in Hydrocarbon prices.

     “Common Stock” means with respect to any Person, any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting or nonvoting) of
such Person’s common stock whether or not outstanding on the Issue Date, and includes, without
limitation, all series and classes of such common stock.

     “Consolidated Coverage Ratio” means as of any date of determination, the ratio of (x) the
aggregate amount of Consolidated EBITDA for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for which consolidated financial statements
of the Company are in existence to (y) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that:

	 	(1)	 	if the Company or any Restricted Subsidiary:

	 	(a)	 	has Incurred any Indebtedness since the beginning of such period that
remains outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period (except that in making such computation, the amount of Indebtedness under
any revolving credit facility outstanding on the date of such calculation will be
deemed to be (i) the average daily balance of such Indebtedness during such four
fiscal quarters or such shorter period for which such facility was outstanding or
(ii) if such facility was created after the end of such four fiscal quarters, the
average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation)
and the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise

7

 

	 	 	 	discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period; or
	 
	 	(b)	 	has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of the period that is no longer outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness (in
each case other than Indebtedness Incurred under any revolving credit facility
unless such Indebtedness has been permanently repaid and the related commitment
terminated), Consolidated EBITDA and Consolidated Interest Expense for such period
will be calculated after giving effect on a pro forma basis to such discharge of
such Indebtedness, including with the proceeds of such new Indebtedness, as if
such discharge had occurred on the first day of such period;

	 	(2)	 	if since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition or the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is such an Asset Disposition:

	 	(a)	 	the Consolidated EBITDA for such period will be reduced by an amount
equal to the Consolidated EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Disposition for such period or increased by an
amount equal to the absolute value of the Consolidated EBITDA (if negative)
directly attributable thereto for such period; and
	 
	 	(b)	 	Consolidated Interest Expense for such period will be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such period
(or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale);

	 	(3)	 	if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted
Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or
into the Company) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, which constitutes all or substantially all of a company,
division, operating unit, segment, business, group of related assets or line of
business, Consolidated EBITDA and Consolidated Interest Expense for such period will
be calculated after giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the first day of such
period; and
	 
	 	(4)	 	if since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period shall have Incurred any Indebtedness or
discharged any Indebtedness, made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant to clause (2) or
(3) above if made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma effect thereto as if such Asset Disposition or
Investment or acquisition of assets occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to any calculation under
this definition, the pro forma calculations will be determined in good faith by a responsible
financial or

8

 

 accounting officer of the Company (including pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities Act). If any
Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness will be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term
in excess of 12 months). If any Indebtedness that is being given pro forma effect bears an
interest rate at the option of the Company, the interest rate shall be calculated by applying such
optional rate chosen by the Company.

     “Consolidated EBITDA” for any period means, without duplication, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such Consolidated Net
Income:

	 	(1)	 	Consolidated Interest Expense;
	 
	 	(2)	 	Consolidated Income Taxes;
	 
	 	(3)	 	consolidated depletion, depreciation and amortization expenses;
	 
	 	(4)	 	consolidated impairment charges recorded in connection with the application
of Financial Accounting Standard No. 142 “Goodwill and Other Intangibles;”
	 
	 	(5)	 	consolidated exploration expenses, if applicable;
	 
	 	(6)	 	(a) any write-off of deferred financing costs, (b) any capitalized interest,
and (c) the interest portion of any deferred payment obligations; and
	 
	 	(7)	 	other consolidated non-cash charges reducing Consolidated Net Income
(excluding any such non-cash charge to the extent it represents an accrual of or
reserve for cash charges in any future period or amortization of a prepaid cash
expense that was paid in a prior period not included in the calculation);

less, to the extent included in calculating such Consolidated Net Income and in excess of any costs
or expenses attributable thereto that were deducted in calculating such Consolidated Net Income,
the sum of (x) the amount of deferred revenues that are amortized during such period and are
attributable to reserves that are subject to Volumetric Production Payments, and (y) amounts
recorded in accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments.

Notwithstanding the preceding sentence, the items described in clauses (2) through (6) above
relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income
to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that
the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated
Net Income of such Person and, to the extent the amounts set forth in clauses (2) through (6) above
are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such
Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a
corresponding amount would not be prohibited at the date of determination to be dividended to the
Company by such Restricted Subsidiary pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to
that Restricted Subsidiary or its stockholders, except for restrictions under any Credit Facility.

“Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed
upon such Person or other payments required to be made by such Person by any governmental authority
which taxes or other payments are (x) calculated by reference to the income or profits of such
Person or such Person and its Subsidiaries, or (y) any franchise taxes or equity taxes (in each
case to the extent included in computing Consolidated Net Income for such period), regardless of whether such
taxes or payments are required to be remitted to any governmental authority.

9

 

     “Consolidated Interest Expense” means, for any period, the consolidated interest expense of
the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the
extent not included in such interest expense:

	 	(1)	 	interest expense attributable to Capital Lease Obligations and the interest
portion of rent expense associated with Attributable Indebtedness in respect of the
relevant lease giving rise thereto, determined as if such lease were a Capital Lease
in accordance with GAAP and the interest component of any deferred payment
obligations;
	 
	 	(2)	 	amortization of debt discount and debt issuance cost (provided that any
amortization of bond premium will be credited to reduce Consolidated Interest Expense
unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced
Consolidated Interest Expense);
	 
	 	(3)	 	non-cash interest expense;
	 
	 	(4)	 	commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing;
	 
	 	(5)	 	the interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries;
	 
	 	(6)	 	costs associated with Hedging Obligations (including amortization of fees)
provided, however, that if Hedging Obligations result in net benefits rather than
costs, such net benefits shall be credited to reduce Consolidated Interest Expense
unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated
Net Income;
	 
	 	(7)	 	the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period;
	 
	 	(8)	 	the product of (a) all dividends paid or payable, in cash, Cash Equivalents
or Indebtedness or accrued during such period on any series of Disqualified Stock of
such Person or on Preferred Stock of its Restricted Subsidiaries payable to a party
other than the Company or a Wholly-Owned Subsidiary, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then current
combined federal, state, provincial and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance with
GAAP;
	 
	 	(9)	 	Receivables Fees; and
	 
	 	(10)	 	the cash contributions to any employee stock ownership plan or similar trust
to the extent such contributions are used by such plan or trust to pay interest or
fees to any Person (other than the Company) in connection with Indebtedness Incurred
by such plan or trust.

For the purpose of calculating the Consolidated Coverage Ratio in connection with the Incurrence of
any Indebtedness described in the final paragraph of the definition of “Indebtedness,” the
calculation of Consolidated Interest Expense shall include all interest expense (including any
amounts described in clauses (1) through (10) above) relating to any Indebtedness of the Company or
any Restricted Subsidiary described in the final paragraph of the definition of “Indebtedness.”

For purposes of the foregoing, total interest expense will be determined (i) after giving effect to
any net payments made or received by the Company and its Subsidiaries with respect to Interest Rate
Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance
sheet of the Company. Notwithstanding anything to the contrary contained herein, commissions,
discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to
which the Company or its

10

 

 Restricted Subsidiaries may sell, convey or otherwise transfer or grant a
security interest in any accounts receivable or related assets shall be included in Consolidated
Interest Expense.

     “Consolidated Net Income” means, for any period, the net consolidated income (loss) of the
Company and its consolidated Restricted Subsidiaries determined in accordance with GAAP; provided,
however, that there will not be included in such Consolidated Net Income:

	 	(1)	 	any net income (loss) of any Person (other than the Company) if such Person
is not a Restricted Subsidiary, except that:

	 	(a)	 	subject to the limitations contained in clauses (3), (4) and (5)
below, the Company’s equity in the net income of any such Person for such period
will be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case of
a dividend or other distribution to a Restricted Subsidiary, to the limitations
contained in clause (2) below); and
	 
	 	(b)	 	the Company’s equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period will be included in determining such
Consolidated Net Income to the extent such loss has been funded with cash from the
Company or a Restricted Subsidiary;

	 	(2)	 	any net income (but not loss) of any Restricted Subsidiary if such Subsidiary
is subject to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that:

	 	(a)	 	subject to the limitations contained in clauses (3), (4) and (5)
below, the Company’s equity in the net income of any such Restricted Subsidiary
for such period will be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such Restricted
Subsidiary during such period to the Company or another Restricted Subsidiary as a
dividend (subject, in the case of a dividend to another Restricted Subsidiary, to
the limitation contained in this clause); provided, however, that the net income
of a Special Entity that does not Guarantee the Notes will not be included in such
Consolidated Net Income except for the amount of cash actually distributed by such
Special Entity during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitation contained in this
clause); and
	 
	 	(b)	 	the Company’s equity in a net loss of any such Restricted Subsidiary
for such period will be included in determining such Consolidated Net Income;

	 	(3)	 	any after tax gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not sold
or otherwise disposed of in the ordinary course of business and any gain (loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
	 
	 	(4)	 	any after tax extraordinary gain or loss;
	 
	 	(5)	 	the cumulative effect of a change in accounting principles;
	 
	 	(6)	 	any asset impairment writedowns on Oil and Gas Properties under GAAP or SEC
guidelines; and

11

 

	 	(7)	 	any unrealized non-cash gains or losses on charges in respect of Hedging
Obligations (including those resulting from the application of SFAS 133).

     “Continuing Directors” means the individuals who, as of the Issue Date, are directors of the
Company and any individual becoming a director of the Company subsequent to the Issue Date whose
election, nomination for election by the Company’s stockholders or appointment, was approved by a
majority of the then Continuing Directors (either by a specific vote or by approval of the proxy
statement of the Company in which such individual is named as a nominee for election as a director,
without objection to such nomination).

     “Control” of a 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 of the foregoing.

     “Credit Facility” means, with respect to the Company or any Subsidiary Guarantor, one or more
credit facilities (including, without limitation, the Senior Secured Credit Agreement) or
commercial paper facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders against such receivables)
or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time (including successive amendments, restatements,
modifications, renewals, refunds, replacements or refinancings and whether or not with the original
administrative agent and lenders or another administrative agent or agents or other lenders and
whether provided under the original Senior Secured Credit Agreement or any other credit or other
agreement or indenture).

     “Currency Agreement” means in respect of a Person any foreign exchange contract, currency swap
agreement, futures contract, option contract or other similar agreement as to which such Person is
a party or a beneficiary.

     “Default” means any event which, with notice or passage of time or both, would constitute an
Event of Default.

     “Designated Senior Indebtedness” means (1) the Bank Indebtedness (to the extent such Bank
Indebtedness constitutes Senior Indebtedness), including the Senior Secured Credit Agreement, and
(2) any other Senior Indebtedness which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the holders thereof are
committed to lend up to, at least $25 million and is specifically designated in the instrument
evidencing or governing such Senior Indebtedness as “Designated Senior Indebtedness” for purposes
of the Indenture.

     “Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person 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:

	 	(1)	 	matures or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise;
	 
	 	(2)	 	is convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock which is convertible or exchangeable solely at the option of
the Company or a Restricted Subsidiary); or
	 
	 	(3)	 	is redeemable at the option of the holder of the Capital Stock in whole or in
part,

in each case on or prior to the date that is 91 days after the earlier of the date (a) of the
Stated Maturity of the Notes or (b) the first date after the Issue Date on which there are no Notes
outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable,
is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be
deemed to be Disqualified Stock; provided, further that any Capital Stock that would constitute
Disqualified Stock solely

12

 

 because the holders thereof have the right to require the Company to
repurchase such Capital Stock upon the occurrence of a change of control or asset disposition (each
defined in a substantially identical manner to the corresponding definitions in the Indenture)
shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities
into which it is convertible or for which it is ratable or exchangeable) provide that the Company
may not repurchase or redeem any such Capital Stock (and all such securities into which it is
convertible or for which it is ratable or exchangeable) pursuant to such provision prior to
compliance by the Company with Section 3.07 and Section 3.15 of this First Supplemental Indenture
and such repurchase or redemption complies with Section 3.04 of this First Supplement Indenture.

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

     “Domestic Subsidiary” means any Restricted Subsidiary that is organized under the laws of the
United States of America or any state thereof or the District of Columbia.

     “Events of Default” has the meaning set forth in Article V.

     “Foreign Subsidiary” means any Restricted Subsidiary that is not organized under the laws of
the United States of America or any state thereof or the District of Columbia and any Subsidiary of
such Restricted Subsidiary.

     “GAAP” means generally accepted accounting principles in the United States of America as in
effect as of the date of the Indenture, including those 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 or in
such other statements by such other entity as approved by a significant segment of the accounting
profession. All ratios and computations based on GAAP contained in the Indenture will be computed
in conformity with GAAP.

     “Guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or
indirect, contingent or otherwise, of such Person:

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

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

     “Guarantor Senior Indebtedness” means, with respect to a Subsidiary Guarantor, the following
obligations, whether outstanding on the Issue Date or thereafter issued, without duplication:

	 	(1)	 	any Guarantee of the Bank Indebtedness by such Subsidiary Guarantor and all
other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the Company or
Guarantor Senior Indebtedness of any other Subsidiary Guarantor; and
	 
	 	(2)	 	all obligations consisting of principal of and premium, if any, accrued and
unpaid interest on, and fees and other amounts relating to, all other Indebtedness of
the Subsidiary Guarantor. Guarantor Senior Indebtedness includes interest accruing on
or after the filing of any

13

 

	 	 	 	petition in bankruptcy or for reorganization relating to
the Subsidiary Guarantor regardless of whether post-filing interest is allowed in such
proceeding.

Notwithstanding anything to the contrary in the preceding paragraph, Guarantor Senior Indebtedness
will not include:

	 	(1)	 	any Indebtedness Incurred in violation of the Indenture;
	 
	 	(2)	 	any obligations of such Subsidiary Guarantor to the Company or another
Subsidiary;
	 
	 	(3)	 	any liability for federal, state, local, foreign or other taxes owed or owing
by such Subsidiary Guarantor;
	 
	 	(4)	 	any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments evidencing
such liabilities);
	 
	 	(5)	 	any Indebtedness, Guarantee or obligation of such Subsidiary Guarantor that
is expressly subordinate or junior in right of payment to any other Indebtedness,
Guarantee or obligation of such Subsidiary Guarantor, including, without limitation,
any Guarantor Senior Subordinated Indebtedness and Guarantor Subordinated Obligations
of such Subsidiary Guarantor; or
	 
	 	(6)	 	any Capital Stock.

     “Guarantor Senior Subordinated Indebtedness” means, with respect to a Subsidiary Guarantor,
the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and any other
Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that specifically provides that such Indebtedness is to rank equally in right of payment
with the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and is not
expressly subordinated by its terms in right of payment to any Indebtedness of such Subsidiary
Guarantor which is not Guarantor Senior Indebtedness of such Subsidiary Guarantor.

     “Guarantor Subordinated Obligation” means, with respect to a Subsidiary Guarantor, any
Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) which is expressly subordinate in right of payment to the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee pursuant to a written agreement.

     “Hedging Obligations” of any Person means the obligations of such Person pursuant to any
Interest Rate Agreement or Currency Agreement or Commodity Agreement.

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

     “Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, and all products, by-products and all other
substances refined, separated, settled or derived therefrom or the processing thereof, and all
other minerals and substances, including, but not limited to, liquified petroleum gas, natural gas,
kerosene, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide,
helium, and any and all other minerals, ores, or substances of value, and the products and proceeds
therefrom, including, without limitation, all gas resulting from the in-situ combustion of coal or
lignite.

     “Incur” means issue, create, assume, Guarantee, incur or otherwise become liable for;
provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such
Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be
deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary;
and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

14

 

     “Indebtedness” means, as applied to any Person, without duplication:

	 	(1)	 	all obligations of such Person for borrowed money;
	 
	 	(2)	 	all obligations of such Person for the deferred purchase price of property or
services (other than property and services purchased, and expense accruals and
deferred compensation items arising, in the ordinary course of business);
	 
	 	(3)	 	all obligations of such Person evidenced by notes, bonds, debentures,
mandatorily redeemable preferred stock or other similar instruments (other than
performance, surety and appeals bonds arising in the ordinary course of business);
	 
	 	(4)	 	all payment obligations created or arising under any conditional sale,
deferred price or other title retention agreement with respect to property acquired by
such Person (unless the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property);
	 
	 	(5)	 	any Capital Lease Obligation of such Person, other than obligations under oil
and gas leases entered into in the ordinary course of business;
	 
	 	(6)	 	all reimbursement, payment or similar obligations, contingent or otherwise,
of such Person under acceptance, letter of credit or similar facilities (other than
letters of credit in support of trade obligations or incurred in connection with
public liability insurance, workers’ compensation, unemployment insurance, old-age
pensions and other social security benefits other than in respect of employee benefit
plans subject to ERISA);
	 
	 	(7)	 	all obligations of such Person, contingent or otherwise, under any guarantee
by such Person of the obligations of another Person of the type referred to in clauses
(1) through (6) above;
	 
	 	(8)	 	the principal component or liquidation preference of all obligations of such
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary that is not a Subsidiary
Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);
	 
	 	(9)	 	to the extent not otherwise included in this definition, net obligations of
such Person under Commodity Agreements, Currency Agreements and Interest Rate
Agreements (the amount of any such obligations to be equal at any time to the
termination value of such agreement or arrangement giving rise to such obligation that
would be payable by such Person at such time); and
	 
	 	(10)	 	all obligations referred to in clauses (1) through (6) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage or security interest in property (including
without limitation accounts, contract rights and general intangibles) owned by such
Person and as to which such Person has not assumed or become liable for the payment of
such obligations other than to the extent of the property subject to such mortgage or
security interest;

except that Indebtedness of the type referred to in clauses (7) and (10) above will be included
within the definition of “Indebtedness” only to the extent of the least of (a) the amount of the
underlying Indebtedness referred to in the applicable clause (1) through (6) above; (b) in the case
of clause (7), the limit on recoveries, if any, from such Person under obligations of the type
referred to in clause (7) above, and (c) in the case of clause (10), the aggregate value (as determined in good faith by the board of directors
or similar governing body of such Person) of the property of such Person subject to such mortgage
or security interest.

     In addition, “Indebtedness” of any Person shall include Indebtedness described in the
preceding paragraph that would not appear as a liability on the balance sheet of such Person if:

15

 

	 	(1)	 	such Indebtedness is the obligation of a partnership or joint venture that is
not a Restricted Subsidiary (a “Joint Venture”);
	 
	 	(2)	 	such Person or a Restricted Subsidiary of such Person is a general partner of
the Joint Venture (a “General Partner”); and
	 
	 	(3)	 	there is recourse, by contract or operation of law, with respect to the
payment of such Indebtedness to property or assets of such Person or a Restricted
Subsidiary of such Person;

in which case, such Indebtedness shall be included in an amount not to exceed:

	 	(a)	 	the lesser of (i) the net assets of the General Partner and (ii) the
amount of such obligations to the extent that there is recourse, by contract or
operation of law, to the property or assets of such Person or a Restricted
Subsidiary of such Person; or
	 
	 	(b)	 	if less than the amount determined pursuant to clause (a) immediately
above, the actual amount of such Indebtedness that is recourse to such Person or a
Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a
writing and is for a determinable amount.

     “Interest Payment Date” means [                    ] and [                    ] of each year, commencing
[                    ], 2006.

     “Interest Rate Agreement” means with respect to any Person any interest rate protection
agreement, interest rate futures contracts, interest rate option agreement, interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge
agreement or other similar agreement or arrangement as to which such Person is party or a
beneficiary.

     “Investment” means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than
advances or extensions of credit to employees, directors or customers in the ordinary course of
business) or other extensions of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other than a time deposit)
or capital contribution to (by means of any transfer of cash or other property or any payment for
property or services), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that none of the
following will be deemed to be an Investment:

	 	(1)	 	Hedging Obligations Incurred in the ordinary course of business and in
compliance with the Indenture;
	 
	 	(2)	 	endorsements of negotiable instruments and documents in the ordinary course
of business; and
	 
	 	(3)	 	an acquisition of assets, Capital Stock or other securities by the Company or
a Subsidiary for consideration to the extent such consideration consists of Common
Stock of the Company.

     For purposes of Section 3.04 of this First Supplemental Indenture,

	 	(1)	 	“Investment” will include the portion (proportionate to the Company’s equity
interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of
the fair market value of the net assets of such Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the
Company will be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if

16

 

	 	 	 	positive) equal to (a) the Company’s “Investment” in such
Subsidiary at the time of such redesignation less (b) the portion (proportionate to
the Company’s equity interest in such Subsidiary) of the fair market value of the net
assets (as conclusively determined by the Board of Directors of the Company in good
faith) of such Subsidiary at the time that such Subsidiary is so re-designated a
Restricted Subsidiary; and
	 
	 	(2)	 	any property transferred to or from an Unrestricted Subsidiary will be valued
at its fair market value at the time of such transfer, in each case as determined in
good faith by the Board of Directors of the Company.

     “Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s Investors Service, Inc. and BBB- (or the equivalent) by Standard & Poor’s Ratings Services
(or an equivalent rating by another nationally recognized rating agency if both of the two named
rating agencies cease publishing ratings of investments), in each case, with a stable or better
outlook.

     “Issue Date” means March [16], 2006.

     “Lien” means any mortgage, pledge, security interest, encumbrance, lien or similar charge of
any kind (including any conditional sale or other title retention agreement or lease in the nature
thereof).

     “Minority Interest” means the percentage interest represented by any shares of stock of any
class of Capital Stock of a Restricted Subsidiary that are not owned by the Company or a Restricted
Subsidiary.

     “Net Available Cash” from an Asset Disposition means cash payments received (including any
cash payments received by way of deferred payment of principal pursuant to a note or installment
receivable or otherwise and net proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset Disposition or received in
any other non-cash form) therefrom, in each case net of:

	 	(1)	 	all legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a liability under GAAP
(after taking into account any available tax credits or deductions and any tax sharing
agreements), as a consequence of such Asset Disposition;
	 
	 	(2)	 	all payments made on any Indebtedness which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any Lien upon such assets,
or which must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such Asset
Disposition;
	 
	 	(3)	 	all distributions and other payments required to be made to Minority Interest
holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and
	 
	 	(4)	 	amounts accrued in accordance with GAAP in respect of liabilities associated
with the assets disposed of in such Asset Disposition and retained by the Company or
any Restricted Subsidiary after such Asset Disposition or liabilities incurred in
connection with such Asset Disposition.

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

17

 

such issuance or sale (after taking into account any available tax credit
or deductions and any tax sharing arrangements).

     “Net Working Capital” means (a) all current assets of the Company and its Restricted
Subsidiaries except current assets under Commodity Agreements, less (b) all current liabilities of
the Company and its Restricted Subsidiaries, except current liabilities included in Indebtedness
and any current liabilities under Commodity Agreements, in each case as set forth in the
consolidated financial statements of the Company prepared in accordance with GAAP.

     “Non-Recourse Debt” means Indebtedness of a Person:

	 	(1)	 	as to which neither the Company nor any Restricted Subsidiary (a) provides
any Guarantee or credit support of any kind (including any undertaking, guarantee,
indemnity, agreement or instrument that would constitute Indebtedness) or (b) is
directly or indirectly liable (as a guarantor or otherwise);
	 
	 	(2)	 	no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any other Indebtedness of
the Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to its
stated maturity; and
	 
	 	(3)	 	the explicit terms of which provide there is no recourse against any of the
assets of the Company or its Restricted Subsidiaries.

     “Oil and Gas Business” means (a) the business of acquiring, exploring, exploiting, developing,
producing, operating and disposing of interests in oil, gas, liquid natural gas and other
hydrocarbon properties, (b) the business of gathering, marketing, treating, processing, storing,
refining, selling and transporting any production from such interests or properties and products
produced therefrom or in association therewith, and (c) any business or activity relating to,
arising from, or necessary, appropriate or incidental to the activities described in the foregoing
clauses (a) and (b) of this definition.

     “Oil and Gas Properties” means all properties, including equity or other ownership interests
therein, owned by such Person which contain or are believed to contain “proved oil and gas
reserves” as defined in Rule 4-10 of Regulation S-X of the Securities Act.

     “Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the
Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

     “Pari Passu Indebtedness” means Indebtedness that ranks equally in right of payment to the
Notes.

     “Permitted Business Investment” means any Investment made in the ordinary course of the
business of the Company or any Restricted Subsidiary or that is of a kind or character that is
customarily made in the conduct of the Oil and Gas Business, including investments or expenditures
for actively exploiting, exploring for, acquiring, developing, producing, processing, refining,
gathering, marketing or transporting Hydrocarbons through agreements, transactions, interests or
arrangements which permit one to share risks or costs, comply with regulatory requirements
regarding local ownership or satisfy other objectives customarily achieved through the conduct of
the Oil and Gas Business jointly with third parties, including:

	 	(1)	 	ownership interests in oil and gas properties, liquid natural gas facilities,
refineries, drilling operations, processing facilities, gathering systems, pipelines
or ancillary real property interests; and

18

 

	 	(2)	 	Investments in the form of or pursuant to oil and gas leases, operating
agreements, gathering agreements, processing agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest agreements, unitization or
pooling designations, declarations, orders and agreements, gas balancing or deferred
production agreements, joint bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or limited), subscription
agreements, stock purchase agreements and other similar agreements (including for
limited liability companies) with third parties.

     “Permitted Holders” means the following:

	 	(1)	 	the Company or any Subsidiary of the Company;
	 
	 	(2)	 	a trustee or other fiduciary holding securities under any employee benefit
plan (or related trust) sponsored or maintained by the Company or any Subsidiary of
the Company; and
	 
	 	(3)	 	Mercury Exploration Company, Quicksilver Energy, L.P., The Discovery Fund,
Pennsylvania Avenue Limited Partnership, Pennsylvania Management Company, the estate
of Frank Darden, Lucy Darden, Anne Darden Self, Glenn Darden or Thomas Darden, and
their respective successors, assigns, designees, heirs, beneficiaries, trusts, estates
or Controlled affiliates.

     “Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:

	 	(1)	 	a Restricted Subsidiary (other than a Special Entity that does not Guarantee
the Notes) or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary (other than a Special Entity that does not Guarantee the Notes);
provided, however, that the primary business of such Restricted Subsidiary is the Oil
and Gas Business;
	 
	 	(2)	 	another Person if as a result of such Investment such other Person is merged
or consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Restricted Subsidiary; provided, however, that such
Person’s primary business is the Oil and Gas Business;
	 
	 	(3)	 	cash and Cash Equivalents;
	 
	 	(4)	 	receivables owing to the Company or any Restricted Subsidiary created or
acquired in the ordinary course of the Oil and Gas Business and payable or
dischargeable in accordance with customary trade terms; provided, however, that such
trade terms may include such concessionary trade terms as the Company or any such
Restricted Subsidiary deems reasonable under the circumstances;
	 
	 	(5)	 	payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for accounting purposes
and that are made in the ordinary course of business;
	 
	 	(6)	 	loans or advances to employees and directors made in the ordinary course of
business of the Company or such Restricted Subsidiary;
	 
	 	(7)	 	Capital Stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of a debtor;

19

 

	 	(8)	 	Investments made as a result of the receipt of non-cash consideration from an
Asset Disposition that was made pursuant to and in compliance with Section 3.07 of
this First Supplemental Indenture;
	 
	 	(9)	 	Investments in existence on the Issue Date or made pursuant to agreements or
commitments in effect on the Issue Date;
	 
	 	(10)	 	Commodity Agreements, Currency Agreements, Interest Rate Agreements and
related Hedging Obligations, which transactions or obligations are Incurred in
compliance with Section 3.02 of this First Supplemental Indenture;
	 
	 	(11)	 	Investments by the Company or any of its Restricted Subsidiaries, together
with all other Investments pursuant to this clause (11), in an aggregate amount at the
time of such Investment not to exceed $10 million outstanding at any one time (with
the fair market value of such Investment being measured at the time made and without
giving effect to subsequent changes in value);
	 
	 	(12)	 	Guarantees made in accordance with Section 3.02 of this First Supplemental
Indenture;
	 
	 	(13)	 	Investments in a Special Entity that does not Guarantee the Notes in an
aggregate amount not to exceed 10% of Adjusted Consolidated Net Tangible Assets (with
Adjusted Consolidated Net Tangible Assets and the fair market value of such Investment
being measured at the time such Investment is made and without giving effect to
subsequent changes in value);
	 
	 	(14)	 	Permitted Business Investments in an aggregate amount not to exceed 5% of
Adjusted Consolidated Net Tangible Assets (with Adjusted Consolidated Net Tangible
Assets and the fair market value of such Investment being measured at the time such
Investment is made and without giving effect to subsequent changes in value); and
	 
	 	(15)	 	any Asset Swap made in accordance with Section 3.07 of this First
Supplemental Indenture.

In order to be a Permitted Investment, an Investment need not be permitted solely by one subsection
of this definition but may be permitted in part of one such subsection and in part by one or more
other subsections of this definition. In the event an Investment meets the criteria of one or more
of the subsections of this definition, the Company, in its sole discretion, may classify (or
subsequently reclassify) all or any portion of such Investment as being permitted by any one or
more of such subsections.

          “Permitted Liens” means, with respect to any Person:

	 	(1)	 	Liens securing Indebtedness and other obligations under a Credit Facility,
including the Senior Secured Credit Agreement and related Hedging Obligations and
other Senior Indebtedness and liens on assets of Restricted Subsidiaries securing
Guarantees of Indebtedness and other obligations of the Company under a Credit
Facility and other Guarantor Senior Indebtedness permitted to be Incurred under the
Indenture under clause (1) of the second paragraph under Section 3.02 of this First
Supplemental Indenture;
	 
	 	(2)	 	pledges or deposits by such Person under workmen’s compensation laws,
unemployment insurance laws or similar legislation, or earnest money, good faith or
similar deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits to
secure public, regulatory or statutory obligations of such Person or deposits of cash
or Cash Equivalents to secure surety or appeal bonds to which such Person is a party,
or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary
course of business;

20

 

	 	(3)	 	Liens imposed by law, including carriers’, warehousemen’s, suppliers’,
materialmen’s and mechanics’ Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings if appropriate reserves or other
provisions required by GAAP, if any, shall have been made in respect thereof;
	 
	 	(4)	 	Liens for taxes, assessments or other governmental charges not yet subject to
penalties for non-payment or which are being contested in good faith by appropriate
proceedings if appropriate reserves or other provisions required by GAAP shall have
been made in respect thereof;
	 
	 	(5)	 	Liens in favor of issuers of surety or performance bonds or letters of credit
or bankers’ acceptances issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; provided, however, that such letters of
credit do not constitute Indebtedness;
	 
	 	(6)	 	encumbrances, easements or reservations of, or rights of others for,
licenses, rights of way, servitudes, permits, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning, building codes or surface
leases and other similar rights in respect of surface operations or other restrictions
(including, without limitation, minor defects or irregularities in title and similar
encumbrances) as to the use of real properties or liens incidental to the conduct of
the business of such Person or to the ownership of its properties which do not in the
aggregate materially adversely affect the value of said properties or materially
impair their use in the operation of the business of such Person;
	 
	 	(7)	 	Liens securing Hedging Obligations;
	 
	 	(8)	 	leases, licenses, subleases and sublicenses of assets (including, without
limitation, real property and intellectual property rights) which do not materially
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries;
	 
	 	(9)	 	judgment Liens not giving rise to an Event of Default so long as such Lien is
adequately bonded and any appropriate legal proceedings which may have been duly
initiated for the review of such judgment have not been finally terminated or the
period within which such proceedings may be initiated has not expired;
	 
	 	(10)	 	Liens for the purpose of securing the payment of all or a part of the
purchase price of, or Capital Lease Obligations, purchase money obligations or other
payments Incurred to finance the acquisition, improvement or construction of, assets
or property acquired or constructed in the ordinary course of business; provided that:

	 	(a)	 	the aggregate principal amount of Indebtedness secured by such Liens
is otherwise permitted to be Incurred under the Indenture and does not exceed the
cost of the assets or property so acquired or constructed; and
	 
	 	(b)	 	such Liens are created within 180 days of construction or acquisition
of such assets or property and do not encumber any other assets or property of the
Company or any Restricted Subsidiary other than such assets or property and assets
affixed or appurtenant thereto;

	 	(11)	 	Liens arising solely by virtue of any statutory or common law provisions
relating to banker’s Liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a depositary institution; provided
that:

21

 

	 	(a)	 	such deposit account is not a dedicated cash collateral account and
is not subject to restrictions against access by the Company in excess of those
set forth by regulations promulgated by the Federal Reserve Board; and
	 
	 	(b)	 	such deposit account is not intended by the Company or any Restricted
Subsidiary to provide collateral to the depository institution;

	 	(12)	 	Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Company and its Restricted Subsidiaries
in the ordinary course of business;
	 
	 	(13)	 	Liens existing on the Issue Date;
	 
	 	(14)	 	Liens on property or shares of stock of a Person at the time such Person
becomes a Restricted Subsidiary; provided, however, that such Liens are not created,
Incurred or assumed in connection with, or in contemplation of, such other Person
becoming a Restricted Subsidiary; provided further, however, that any such Lien may
not extend to any other property owned by the Company or any Restricted Subsidiary;
	 
	 	(15)	 	Liens on property at the time the Company or a Restricted Subsidiary acquired
the property, including any acquisition by means of a merger or consolidation with or
into the Company or any Restricted Subsidiary; provided, however, that such Liens are
not created, Incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that such Liens may not extend to any other
property owned by the Company or any Restricted Subsidiary;
	 
	 	(16)	 	Liens securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Company or a Wholly-Owned Subsidiary;
	 
	 	(17)	 	Liens securing the Notes and Subsidiary Guarantees;
	 
	 	(18)	 	Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness
that was previously so secured, provided that any such Lien is limited to all or part
of the same property or assets (plus improvements, accessions, proceeds or dividends
or distributions in respect thereof) that secured (or, under the written arrangements
under which the original Lien arose, could secure) the Indebtedness being refinanced
or is in respect of property that is the security for a Permitted Lien hereunder;
	 
	 	(19)	 	any interest or title of a lessor under any Capital Lease Obligation or
operating lease;
	 
	 	(20)	 	Liens in respect of Production Payments and Reserve Sales, which Liens shall
be limited to the oil and gas property or other interest that is subject to such
Production Payments and Reserve Sales;
	 
	 	(21)	 	Liens arising under oil and gas leases, farm-out agreements, farm-in
agreements, division orders, contracts for the sale, purchase, exchange,
transportation, gathering or processing of Hydrocarbons, partnership agreements, joint
venture agreements, unitizations and pooling designations, declarations, orders and
agreements, development agreements, operating agreements, production sales contracts,
area of mutual interest agreements, gas balancing or deferred production agreements,
injection, repressuring and recycling agreements, salt water or other disposal
agreements, seismic or geophysical permits or agreements, and other agreements which
are customary in the Oil and Gas Business; provided, however, in all instances that
such Liens are limited to the assets that are subject to the relevant agreement,
program, order or contract;

22

 

	 	(22)	 	Liens on pipelines or pipeline facilities that arise by operation of law; and
	 
	 	(23)	 	Liens securing Indebtedness (other than Subordinated Obligations and
Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at
any one time not to exceed $10 million.

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

     “Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of
any class or classes (however designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such corporation.

     “Production Payments and Reserve Sales” means the grant or transfer by the Company or a
Restricted Subsidiary to any Person of a royalty, overriding royalty, net profits interest,
production payment (whether volumetric or dollar denominated), partnership or other interest in oil
and gas properties or the right to receive all or a portion of the production or the proceeds from
the sale of production attributable to such properties, where the grantee or transferee thereof has
recourse solely to such production or proceeds of production, subject to the obligation of the
grantor or transferor to operate and maintain, or cause to be operated and maintained, the related
oil and gas properties or other related interests in a reasonably prudent manner or other customary
standard or subject to the obligation of the grantor or transferor to indemnify for environmental,
title or other matters customary in the Oil and Gas Business, including any such grants or
transfers pursuant to incentive compensation programs on terms that are reasonably customary in the
Oil and Gas Business for geologists, geophysicists or other providers of technical services to the
Company or a Restricted Subsidiary.

     “Rating Agency” means Standard & Poor’s Ratings Group, Inc. and Moody’s Investors Service,
Inc. or if Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc. or both shall
not make a rating on the Notes publicly available, a nationally recognized statistical rating
agency or agencies, as the case may be, selected by the Company (as certified by a resolution of
the Board of Directors or a committee thereof) which shall be substituted for Standard & Poor’s
Ratings Group, Inc. or Moody’s Investors Service, Inc. or both, as the case may be.

     “Receivables” means a right to receive payment arising from a sale or lease of goods or the
performance of services by a Person pursuant to an arrangement with another Person pursuant to
which such other Person is obligated to pay for goods or services under terms that permit the
purchase of such goods and services on credit and shall include, in any event, any items of
property that would be classified as an “account,” “chattel paper,” “payment intangible” or
“instrument” under the Uniform Commercial Code as in effect in the State of New York and any
“supporting obligations” as so defined.

     “Receivables Fees” means any fees or interest paid to purchasers or lenders providing the
financing in connection with a factoring agreement or other similar agreement, including any such
amounts paid by discounting the face amount of Receivables or participations therein transferred in
connection with a factoring agreement or other similar arrangement, regardless of whether any such
transaction is structured as on-balance sheet or off-balance sheet or through a Restricted
Subsidiary or an Unrestricted Subsidiary.

     “Refinancing Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace,
exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism)
(collectively, “refinance,” “refinances,” and “refinanced” shall have a correlative meaning) any
Indebtedness existing on the Issue Date or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however,
that:

23

 

	 	(1)	 	(a) if the Stated Maturity of the Indebtedness being refinanced is earlier
than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated
Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or
(b) if the Stated Maturity of the Indebtedness being refinanced is later than the
Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity at
least 91 days later than the Stated Maturity of the Notes;
	 
	 	(2)	 	the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of the
Indebtedness being refinanced;
	 
	 	(3)	 	such Refinancing Indebtedness is Incurred in an aggregate principal amount
(or if issued with original issue discount, an aggregate issue price) that is equal to
or less than the sum of the aggregate principal amount (or if issued with original
issue discount, the aggregate accreted value) then outstanding of the Indebtedness
being refinanced (plus, without duplication, any additional Indebtedness Incurred to
pay interest or premiums required by the instruments governing such existing
Indebtedness and fees and expenses Incurred in connection therewith); and
	 
	 	(4)	 	if the Indebtedness being refinanced is subordinated in right of payment to
the Notes or the Subsidiary Guarantee, such Refinancing Indebtedness is subordinated
in right of payment to the Notes or the Subsidiary Guarantee on terms at least as
favorable to the holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

     “Regular Record Date” means, with respect to each Interest Payment Date, the close of business
on the immediately preceding [                    ] or [                    ], as the case may be.

     “Representative” means any trustee, agent or representative (if any) of an issue of Senior
Indebtedness; provided that when used in connection with the Senior Secured Credit Agreement, the
term “Representative” shall refer to the administrative agent under the Senior Secured Credit
Agreement.

     “Restricted Investment” means any Investment other than a Permitted Investment.

     “Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted
Subsidiary.

     “Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter
acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the
Company or a Restricted Subsidiary leases it from such Person.

     “Second Lien Mortgage Notes” means the Company’s Senior Subordinated Second Lien Mortgage
Notes due December 31, 2006.

     “Senior Indebtedness” means, whether outstanding on the Issue Date or thereafter issued,
created, Incurred or assumed, the Bank Indebtedness and all amounts payable by the Company under or
in respect of all other Indebtedness of the Company, including premiums and accrued and unpaid
interest (including interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company at the rate specified in the documentation with respect
thereto whether or not a claim for post-filing interest is allowed in such proceeding) and fees
relating thereto; provided, however, that Senior Indebtedness will not include:

	 	(1)	 	any Indebtedness Incurred in violation of the Indenture;
	 
	 	(2)	 	any obligation of the Company to any Subsidiary;

24

 

	 	(3)	 	any liability for Federal, state, foreign, local or other taxes owed or owing
by the Company;
	 
	 	(4)	 	any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments evidencing
such liabilities);
	 
	 	(5)	 	any Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee or
obligation of the Company, including, without limitation, any Senior Subordinated
Indebtedness and any Subordinated Obligations; or
	 
	 	(6)	 	any Capital Stock.

     “Senior Secured Credit Agreement” means (1) the Credit Agreement, dated as of July 28, 2004,
among Quicksilver Resources Inc., as Borrower, JP Morgan Chase Bank, N.A. (successor by merger to
Bank One, NA), Global Administrative Agent, and the other agents and financial institutions from
time to time party thereto, as amended; (2) the Credit Agreement, dated as of July 28, 2004, among
MGV Energy, Inc., as Borrower, JP Morgan Chase Bank, N.A., Toronto Branch (successor by merger to
Bank One, NA, Canada Branch), Canadian Administrative Agent, Bank One, NA, Global Administrative
Agent, and the financial institutions from time to time party thereto, as amended; and (3) each
such agreement as the same may be amended, supplemented or otherwise modified from time to time.

     “Senior Subordinated Indebtedness” means the Notes, the Second Lien Mortgage Notes and any
other Indebtedness of the Company that specifically provides that such Indebtedness is to rank
equally with the Notes in right of payment and is not subordinated by its terms in right of payment
to any Indebtedness or other obligation of the Company which is not Senior Indebtedness.

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

     “Special Entity” means any Restricted Subsidiary that is not a Wholly-Owned Subsidiary that
(i) is classified as a pass-through entity for U.S. federal, state, local and foreign income tax
purposes and (ii) has no Indebtedness; provided, however, that neither Saginaw Bay Lateral Limited
Partnership nor Terra Hayes Pipeline Company shall be a Special Entity.

     “Stated Maturity” means, with respect to any security, the date specified in such security as
the fixed date on which the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision, but shall not include any contingent obligations to
repay, redeem or repurchase any such principal prior to the date originally scheduled for the
payment thereof.

     “Subordinated Obligation” means any Indebtedness of the Company (whether outstanding on the
Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes
pursuant to a written agreement.

     “Subsidiary” of any Person means (a) any corporation, association or other business entity
(other than a partnership, joint venture, limited liability company or similar entity) of which
more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture
limited liability company or similar entity of which more than 50% of the capital accounts,
distribution rights, total equity and voting interests or general or limited partnership interests,
as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person, or (3)
one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a
Subsidiary will refer to a Subsidiary of the Company.

25

 

     “Subsidiary Guarantee” means, individually, any Guarantee of payment of the Notes by a
Subsidiary Guarantor pursuant to the terms of the Indenture and any supplemental indenture thereto,
and, collectively, all such Guarantees. Each such Subsidiary Guarantee will be in the form
prescribed by the Indenture.

     “Subsidiary Guarantor” means (i) Mercury Michigan Inc., Terra Energy Ltd., GTG Pipeline
Corporation, Cowtown Pipeline Funding, Inc., Cowtown Pipeline Management, Inc., Terra Pipeline
Company, Beaver Creek Pipeline, L.L.C., Cowtown Pipeline LP and Cowtown Gas Processing L.P., and
(ii) any Restricted Subsidiary (other than a Foreign Subsidiary and, except to the extent it
Guarantees the Notes, a Special Entity) created or acquired by the Company or one or more of its
Restricted Subsidiaries after the Issue Date.

     “Treasury Rate” means the yield to maturity at the time of computation of United States
Treasury securities with a constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15 (519) which has become publicly available at least two business
days prior to the Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the period from the
Redemption Date to [                    ], 2011; provided, however, that if the period from the Redemption Date
to [                    ], 2011 is not equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the period from the Redemption
Date to [                    ], 2011 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be used.

     “Unrestricted Subsidiary” means

	 	(1)	 	Saginaw Bay Lateral Limited Partnership;
	 
	 	(2)	 	any Subsidiary of the Company that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors of the Company in the
manner provided below; and
	 
	 	(3)	 	any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of the Company may designate any Subsidiary of the Company (including any
newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or
consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

	 	(1)	 	such Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any property of,
any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be
so designated or otherwise an Unrestricted Subsidiary;
	 
	 	(2)	 	all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the
date of designation and at all times thereafter, consist of Non-Recourse Debt;
	 
	 	(3)	 	such designation and the Investment of the Company in such Subsidiary
complies with Section 3.04 of this First Supplemental Indenture;
	 
	 	(4)	 	such Subsidiary, either alone or in the aggregate with all other Unrestricted
Subsidiaries, does not operate, directly or indirectly, all or substantially all of
the business of the Company and its Subsidiaries;
	 
	 	(5)	 	such Subsidiary is a Person with respect to which neither the Company nor any
of its Restricted Subsidiaries has any direct or indirect obligation:

26

 

	 	(a)	 	to subscribe for additional Capital Stock of such Person; or
	 
	 	(b)	 	to maintain or preserve such Person’s financial condition or to cause
such Person to achieve any specified levels of operating results; and

	 	(6)	 	on the date such Subsidiary is designated an Unrestricted Subsidiary, such
Subsidiary is not a party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary with terms materially less favorable to
the Company than those that might have been reasonably obtained from Persons that are
not Affiliates of the Company.

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by
filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such
designation and an Officers’ Certificate certifying that such designation complies with the
foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to
be Incurred as of such date.

The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that immediately after giving effect to such designation, no Default or Event
of Default shall have occurred and be continuing or would occur as a consequence thereof and the
Company could Incur at least $1.00 of additional Indebtedness under the first paragraph of Section
3.02 of this First Supplemental Indenture on a pro forma basis taking into account such
designation.

     “U.S. Government Obligations” means securities that are (a) direct obligations of the United
States of America for the timely payment of which its full faith and credit is pledged or (b)
obligations of a Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation of the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also include a depositary
receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such U.S. Government Obligations or a specific payment of principal of or interest
on any such U.S. Government Obligations held by such custodian for the account of the holder of
such depositary receipt; provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such depositary receipt from any
amount received by the custodian in respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary
receipt.

     “Underwriters” means J.P. Morgan Securities Inc., Credit Suisse Securities (USA) LLC, Banc of
America Securities LLC, BNP Paribas Securities Corp. and Goldman, Sachs & Co.

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

     “Voting Stock” of a corporation means all classes of Capital Stock of such corporation then
outstanding and normally entitled to vote in the election of directors.

     “Wholly-Owned Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which
(other than directors’ qualifying shares) is owned by the Company or another Wholly-Owned
Subsidiary.

     Section 1.03 Payment of Principal and Interest. The principal of the Notes shall be
due at Stated Maturity (unless earlier redeemed). The unpaid principal amount of the Notes shall
bear interest at the rate of [___]% per year until paid or duly provided for, such interest to
accrue from March [16], 2006 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for. Interest shall be paid semi-annually in arrears on each Interest
Payment Date, commencing [___], 2006, to the Person or Persons in whose name a Note is
registered at the close of business on the Regular Record Date for such Interest Payment Date,
provided that interest payable at the Stated Maturity or on a

27

 

Redemption Date as provided herein will be paid to the Person to whom principal is payable. Any such interest that is not so
punctually paid or duly provided for will forthwith cease to be payable to the Holders on such
Regular Record Date and may either be paid to the Person in whose name the Note (or one or more
Predecessor Securities) is registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of the Notes not less than 10 calendar days prior to such Special Record Date, or be paid
at any time 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, all as more fully provided in the Original Indenture.

     Payments of interest on the Notes will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for the Notes shall be computed and paid on
the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on
which interest is payable on the Notes is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the payment was originally
payable.

     Subject, in the case of any Global Security, to any applicable requirements of the Depositary,
payment of the principal, premium, if any, and interest due at the Stated Maturity of, or on a
Redemption Date for, the Notes shall be made upon surrender of the Notes at the Corporate Trust
Office of the Paying Agent. The principal of and interest on the Notes shall be paid 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. Payments of interest (including interest on any Interest Payment
Date) will be made, subject to such surrender where applicable, at the option of the Company, (i)
by check mailed to the address of the Person entitled thereto as such address shall appear in the
Security Register or (ii) by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the Trustee at least 15 days
prior to the date for payment by the Person entitled thereto.

     Section 1.04 Denominations. The Notes may be issued in denominations of $1,000, or
integral multiples of $1,000 in excess thereof.

     Section 1.05 Global Securities. The Notes will be initially issued in the form of one
or more Global Securities registered in the name of the Depositary (which initially shall be The
Depository Trust Company) or its nominee. Except under the limited circumstances described below,
Notes represented by such Global Securities will not be exchangeable for, and will not otherwise be
issuable as, Notes in definitive form. The Global Securities described above may not be
transferred except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or
its nominee.

     Owners of beneficial interests in such Global Securities will not be considered the Holders
thereof for any purpose under the Indenture, and no Global Security representing a Note shall be
exchangeable, except for another Global Security of like denomination and tenor to be registered in
the name of the Depositary or its nominee or to a successor Depositary or its nominee. The rights
of holders of beneficial interests in such Global Securities shall be exercised only through the
Depositary.

     A Global Security shall be exchangeable for Notes registered in the names of Persons other
than the Depositary or its nominee only as provided by Section 2.05 of the Original Indenture. Any
Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for
Notes registered in such names as the Depositary shall direct.

     Section 1.06 Transfer. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.

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     Section 1.07 Defeasance(a) . The provisions of Article V of the Original Indenture
will apply to the Notes.

     Section 1.08 Redemption at the Option of the Company.

          (a) Except as described in this Section 1.08, the Notes are not redeemable until [___],
2011. On and after [___], 2011, the Company may redeem all or, from time to time, a part of the
Notes upon not less than 30 nor more than 60 days’ notice, at the following Redemption Prices
(expressed as a percentage of principal amount) plus accrued and unpaid interest on the Notes, if
any, to the applicable Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the
twelve-month period beginning on [___] of the years indicated below:

	 	 	 	 	 
	Year	 	Percentage
	2011
	 	 	 	%
	2012
	 	 	 	%
	2013
	 	 	 	%
	2014 and thereafter
	 	 	100.00	%

          (b) Prior to [___], 2009, the Company may on any one or more occasions redeem up to 35% of
the original principal amount of the Notes with the Net Cash Proceeds of one or more equity
offerings at a Redemption Price of [___]% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on the relevant Interest Payment Date); provided that:

     (i) at least 65% of the original principal amount of the Notes remains
outstanding after each such redemption; and

     (ii) the redemption occurs within 90 days after the closing of such equity
offering.

          (c) In addition, at any time prior to [___], 2011, the Company may redeem the Notes, in
whole but not in part, at a Redemption Price equal to 100% of the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant
Interest Payment Date).

          (d) If the optional Redemption Date is on or after a Regular Record Date and on or before the
related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person
in whose name the Note is registered at the close of business on the Regular Record Date, and no
additional interest will be payable to Holders whose Notes will be subject to redemption.

          (e) In the case of any partial redemption, selection of the Notes for redemption will be made
by the Trustee:

     (i) in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed; or

     (ii) if the Notes are not listed, then on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion may deem to be fair and
appropriate.

No Note of $1,000 in original principal amount or less will be redeemed in part. If any Note is to
be redeemed in part only, the notice of redemption relating to such Note will state the portion of
the principal amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder upon cancellation of the
original Note.

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          (f) The Company shall notify the Trustee of the Redemption Price with respect to the
redemption promptly after the calculation thereof. The Trustee shall not be responsible for
calculating the Redemption Price.

     Section 1.09 Paying Agent. The Trustee shall initially serve as Paying Agent with
respect to the Notes, with the place of payment initially being the corporate trust office of the
Trustee in New York, New York.

     Section 1.10 Additional Notes. Subject to the terms and conditions contained herein,
the Company may from time to time, without the consent of the existing Holders of Notes create and
issue additional notes (the “Additional Notes”) having the same terms and conditions as the Notes
in all respects, except for issue date, issue price and the first payment of interest thereon. Such
Additional Notes, at the Company’s determination and in accordance with the provisions of the
Indenture, will be consolidated with and form a single series with the previously outstanding Notes
for all purposes of the Indenture, including, without limitation, amendments, waivers, and
redemptions. The aggregate principal amount of the Additional Notes, if any, shall be unlimited.

ARTICLE II

SUBSIDIARY GUARANTEES

     Section 2.01 Guarantee.

          (a) Subject to this Article II, each of the Subsidiary Guarantors hereby, jointly and
severally, fully and unconditionally Guarantees, on a senior subordinated basis, 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 or the
obligations of the Company hereunder or thereunder, that:

               (1) the principal of, premium, if any, and interest on the Notes will be promptly paid
in full when due, whether at Stated Maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the Notes, if any, if lawful, and all
other obligations of the Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the terms hereof and thereof,
and

               (2) in case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise.

     Failing payment when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection.

          (b) The Subsidiary Guarantors hereby agree that their obligations hereunder are unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor.

          (a) Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands whatsoever and

30

 

covenants that this Subsidiary Guarantee will not be discharged except by complete performance of
the obligations contained in the Notes and the Indenture.

          (b) If any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official
acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by either to
the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, will
be reinstated in full force and effect.

          (c) Each Subsidiary Guarantor agrees that it will not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of
all obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the
maturity of the obligations guaranteed hereby may be accelerated as provided in Article V hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2)
in the event of any declaration of acceleration of such obligations as provided in Article V
hereof, such obligations (whether or not due and payable) will forthwith become due and payable by
the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee.

          (d) The Subsidiary Guarantors will have the right to seek contribution from any non-paying
Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the
Holders under the Subsidiary Guarantee.

     Section 2.02 Limitation on Subsidiary Guarantor Liability. Each Subsidiary Guarantor,
and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such
parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any
Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the
Subsidiary Guarantors hereby irrevocably agree that the obligations of such Subsidiary Guarantor
will be limited to the maximum amount that will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under this Article II, result in the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.

     Section 2.03 Releases of Subsidiary Guarantees . The Subsidiary Guarantee of a Subsidiary Guarantor
will be released:

          (1) in connection with any sale, disposition or other transfer (including through
merger or consolidation) of (x) the Capital Stock of such Subsidiary Guarantor following
which such Subsidiary Guarantor is no longer a Subsidiary of the Company or (y) all or
substantially all the assets of the applicable Subsidiary Guarantor, in each case, to a
Person that is not (either before or after giving effect to such transaction) the Company
or a Restricted Subsidiary of the Company if such sale, disposition or other transfer is
made in compliance with the applicable provisions of this Indenture and all of the
obligations of the Subsidiary Guarantor under any Credit Facility and related documentation
and any other agreements relating to any other Indebtedness of the Company or its
Restricted Subsidiaries terminate upon consummation of such transaction;

          (2) in connection with the defeasance of the Notes and the Subsidiary Guarantees, to
the extent that the obligations of the Company have been discharged thereby; or

31

 

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

ARTICLE III

PARTICULAR COVENANTS OF THE COMPANY WITH RESPECT TO THE NOTES

     Section 3.01 Effectiveness of Covenants. From and after the first day on which:

	 	(1)	 	the Notes have an Investment Grade Rating from both of the Ratings Agencies; and
	 
	 	(2)	 	no Default has occurred and is continuing under the Indenture;

the Company and its Restricted Subsidiaries will cease to be subject to Sections 3.02, 3.04, 3.06,
3.07, 3.08, 3.09, 3.13 and clause (4) of Section 3.11 of this First Supplemental Indenture.

(collectively, the “Suspended Covenants”). If at any time the credit rating of the Notes is
downgraded from an Investment Grade Rating by either Rating Agency, then the Suspended Covenants
will thereafter be reinstated and again be applicable pursuant to the terms of the Indenture,
unless and until the Notes subsequently attain an Investment Grade Rating. Neither the failure of
the Company or any of its Subsidiaries to comply with a Suspended Covenant after the Notes attain
an Investment Grade Rating and before any reinstatement of the Suspended Covenants nor compliance
by the Company or any of its Subsidiaries with any contractual obligation entered into in
compliance with the Indenture during that period will constitute a Default, Event of Default or
breach of any kind under the Indenture, the Notes or the Subsidiary Guarantees.

     During any period when the Suspended Covenants are not in effect, the Board of Directors of
the Company may not designate any of the Company’s Subsidiaries as Unrestricted Subsidiaries
pursuant to the Indenture.

     Section 3.02 Limitation on Indebtedness.

     The Company may not, and may not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (including Acquired Indebtedness); except, that the Company and any Restricted
Subsidiary may Incur Indebtedness if on the date thereof:

        (1) the Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is
at least 2.25 to 1.0; and

        (2) no Default or Event of Default shall have occurred and be continuing or would
occur as a consequence of Incurring the Indebtedness or the transactions relating to such
Incurrence.

     The first paragraph of this Section 3.02 will not prohibit the Incurrence of the following
Indebtedness:

        (1) Indebtedness of the Company and its Restricted Subsidiaries Incurred pursuant to a
Credit Facility in an aggregate principal amount up to the greater of (x) $750 million or
(y) 30% of Adjusted Consolidated Net Tangible Assets, in each case, determined as of the
date of the Incurrence of the Indebtedness;

        (2) Guarantees of Indebtedness Incurred in accordance with the provisions of the
Indenture; provided that if the Indebtedness that is being Guaranteed is Guaranteed by a
Subsidiary Guarantor and is (a) Senior Subordinated Indebtedness or Guarantor Senior

32

 

Subordinated Indebtedness, then the related Guarantee shall rank equally in right of
payment to the Subsidiary Guarantee or (b) a Subordinated Obligation or a Guarantor
Subordinated Obligation, then the related Guarantee shall be subordinated in right of
payment to the Subsidiary Guarantee;

          (3) Indebtedness of the Company owing to and held by any Wholly-Owned Subsidiary or
Indebtedness of a Restricted Subsidiary owing to and held by the Company or any
Wholly-Owned Subsidiary; provided, however, that:

          (a) if the Company is the obligor on the Indebtedness, the Indebtedness is
subordinated in right of payment to all obligations with respect to the Notes;

          (b) if a Subsidiary Guarantor is the obligor on the Indebtedness and the
Company or a Subsidiary Guarantor is not the obligee, such Indebtedness is
subordinated in right of payment to the Subsidiary Guarantees of that Subsidiary
Guarantor; and

          (c) any subsequent issuance or transfer of Capital Stock, sale or other
transfer of any such Indebtedness or other event that results in any such
Indebtedness being held by a Person other than the Company or a Wholly-Owned
Subsidiary of the Company shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness by the Company or such Subsidiary, as the case may
be, as of the date such Indebtedness first became held by such Person;

          (4) Indebtedness represented by (a) the Notes issued on the Issue Date, and the
Subsidiary Guarantees, (b) any Indebtedness (other than the Indebtedness described in
clauses (1), (2), (3), (6), (8), (9) and (10) of this paragraph) outstanding on the Issue
Date, and (c) any Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (4) or clause (5) of this paragraph or Incurred pursuant to the
first paragraph of this Section 3.02;

          (5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on
which such Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred (a) to provide all or any portion of the funds utilized to consummate the
transaction or series of related transactions pursuant to which such Restricted Subsidiary
was acquired by the Company or (b) otherwise in connection with, or in contemplation of,
such acquisition); provided, however, that, at the time such Restricted Subsidiary is
acquired by the Company, the Company would have been able to Incur $1.00 of additional
Indebtedness pursuant to the first paragraph of this Section 3.02 after giving effect to
the Incurrence of such Indebtedness;

          (6) Indebtedness under Currency Agreements, Commodity Agreements and Interest Rate
Agreements; provided, that, in the case of Currency Agreements or Commodity Agreements,
such Currency Agreements or Commodity Agreements are related to business transactions of
the Company or its Restricted Subsidiaries entered into in the ordinary course of business
and, in the case of Currency Agreements, Commodity Agreements and Interest Rate Agreements,
such Currency Agreements, Commodity Agreements and Interest Rate Agreements are entered
into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as
determined in good faith by the Board of Directors or senior management of the Company);

          (7) the Incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase
money obligations with respect to assets other than Capital Stock or other Investments, in
each case Incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvements of property used in the business of the Company or the
Restricted Subsidiary, in an aggregate principal amount not to exceed $20 million at any
time outstanding;

33

 

          (8) Indebtedness Incurred in respect of workers’ compensation claims, self-insurance
obligations, bid, reimbursement, performance, surety, appeal and similar bonds, completion
guarantees provided by the Company or a Restricted Subsidiary in the ordinary course of
business, or required by regulatory authorities in connection with the conduct by the
Company and its Restricted Subsidiaries of their businesses, including supporting
Guarantees and letters of credit (in each case other than for an obligation for money
borrowed);

          (9) Indebtedness arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar obligations, in each
case, Incurred or assumed in connection with the disposition of any business, assets or
Capital Stock of the Company or a Restricted Subsidiary;

          (10) Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument (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 five business days of the Incurrence; and

          (11) in addition to the items referred to in clauses (1) through (10) of this
paragraph, Indebtedness of the Company and its Restricted Subsidiaries in an aggregate
outstanding principal amount which, when taken together with the principal amount of all
other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not
exceed $40 million at any time outstanding.

     The Company may not Incur any Indebtedness under the preceding paragraph if the proceeds
thereof are used, directly or indirectly, to refinance any Subordinated Obligations of the Company
unless such Indebtedness will be subordinated to the Notes to at least the same extent as such
Subordinated Obligations. No Subsidiary Guarantor may Incur any Indebtedness under the preceding
paragraph if the proceeds thereof are used, directly or indirectly, to refinance any Guarantor
Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness will be subordinated
to the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee to at least the same
extent as such Guarantor Subordinated Obligations. No Subsidiary Guarantor may Incur any
Indebtedness if the proceeds thereof are used, directly or indirectly, to refinance any Guarantor Senior Subordinated Indebtedness
unless such refinancing Indebtedness is either Guarantor Senior Subordinated Indebtedness or
Guarantor Subordinated Obligations. No Restricted Subsidiary may Incur any Indebtedness under the
preceding paragraph if the proceeds are used to refinance Indebtedness of the Company other than
Senior Indebtedness of the Company or the Notes.

     For purposes of determining compliance with, and the outstanding principal amount of any
particular Indebtedness Incurred pursuant to and in compliance with, this Section 3.02:

          (1) Indebtedness permitted by this Section 3.02 need not be permitted solely by one
provision permitting such Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this Section 3.02 permitting such
Indebtedness;

          (2) in the event that Indebtedness meets the criteria of more than one of the
provisions permitting the Incurrence of Indebtedness described in the first and second
paragraphs above, the Company, in its sole discretion, may classify (or subsequently
reclassify) such item of Indebtedness as being permitted by one or more such provisions;

          (3) all Indebtedness outstanding on the date of the Indenture under the Senior Secured
Credit Agreement shall be deemed initially Incurred on the Issue Date under clause (1) of
the second paragraph of this Section 3.02 and not the first paragraph or clause (4) of the
second paragraph of this Section 3.02;

34

 

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

          (5) if obligations in respect of letters of credit are Incurred pursuant to a Credit
Facility and are being treated as Incurred pursuant to clause (1) of the second paragraph
of this Section 3.02 and the letters of credit relate to other Indebtedness, then such
other Indebtedness shall not be included;

          (6) no item of Indebtedness will be given effect more than once in any calculation
contemplated by this Section 3.02 and no individual item or related items of Indebtedness
will be given effect at an aggregate amount in excess of the aggregate amount required to
satisfy and discharge the principal amount of such item or related items of Indebtedness;

          (7) the principal amount of any Disqualified Stock of the Company or a Restricted
Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Subsidiary
Guarantor, will be equal to the greater of the maximum mandatory redemption or repurchase
price (not including, in either case, any redemption or repurchase premium) or the
liquidation preference thereof; and

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

     Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of
interest in the form of additional Indebtedness and the payment of dividends in the form of
additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence
of Indebtedness for purposes of this Section 3.02. The amount of any Indebtedness outstanding as
of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with
original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than
30 days past due, in the case of any other Indebtedness.

     In addition, the Company will not permit any of its Unrestricted Subsidiaries to Incur any
Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any
time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such
Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under this Section 3.02, the Company
shall be in Default of this Section 3.02).

     For purposes of determining compliance with any U.S. dollar-denominated restriction on the
Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated
in a foreign currency will be calculated based on the relevant currency exchange rate in effect on
the date the Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in
the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to
refinance other Indebtedness denominated in a foreign currency, and the refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of the refinancing, such U.S. dollar-dominated restriction
shall be deemed not to have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being refinanced.
Notwithstanding any other provision of this Section 3.02, the maximum amount of Indebtedness that
the Company may Incur pursuant to this Section 3.02 shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rate of currencies. The principal amount of any
Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the
Indebtedness being refinanced, will be calculated based on the currency exchange rate applicable to
the currencies in which the Refinancing Indebtedness is denominated that is in effect on the date
of such refinancing.

35

 

     Section 3.03 Limitation on Layering. The Company will not Incur any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any Senior Indebtedness
unless the Indebtedness is Senior Subordinated Indebtedness or is contractually subordinated in
right of payment to Senior Subordinated Indebtedness. No Subsidiary Guarantor will Incur any
Indebtedness if the Indebtedness is contractually subordinate or junior in ranking in any respect
to any Guarantor Senior Indebtedness of the Subsidiary Guarantor unless the Indebtedness is
Guarantor Senior Subordinated Indebtedness of the Subsidiary Guarantor or is contractually
subordinated in right of payment to Guarantor Senior Subordinated Indebtedness of the Subsidiary
Guarantor.

     Section 3.04 Limitation on Restricted Payments. The Company will not, and will not
permit any of its Restricted Subsidiaries, directly or indirectly, to:

          (1) pay any dividend or make any distribution on or in respect of its Capital Stock
(including any payment in respect of its Capital Stock in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries) except:

          (a) dividends or distributions payable in Capital Stock of the Company (other
than Disqualified Stock) or in options, warrants or other rights to purchase
Capital Stock of the Company; and

          (b) dividends or distributions payable to the Company or a Restricted
Subsidiary (and if the Restricted Subsidiary is not a Wholly-Owned Subsidiary, to
its other holders of Capital Stock on a pro rata basis);

          (2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the
Company or any direct or indirect parent of the Company held by Persons other than the
Company or a Restricted Subsidiary (other than in exchange for Capital Stock of the Company
or any direct or indirect parent of the Company (other than Disqualified Stock));

          (3) purchase, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or Guarantor Subordinated Obligations (other than the purchase,
repurchase, redemption, defeasance or other acquisition or retirement of Subordinated
Obligations or Guarantor Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case due within
one year of the date of purchase, repurchase, redemption, defeasance or other acquisition
or retirement); or

          (4) make any Restricted Investment in any Person;

(any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Restricted Investment referred to in clauses (1) through (4) of this paragraph being
referred to herein as a “Restricted Payment”), if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:

          (a) a Default shall have occurred and be continuing (or would result
therefrom); or

          (b) the Company is not able to Incur an additional $1.00 of Indebtedness
pursuant to the first paragraph under Section 3.02 above after giving effect, on a
pro forma basis, to the Restricted Payment; or

          (c) the aggregate amount of the Restricted Payment and all other Restricted
Payments made subsequent to the Issue Date would exceed the sum of:

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          (i) 50% of Consolidated Net Income for the period (treated as one
accounting period) from the beginning of the most recent fiscal quarter
ended prior to the Issue Date to the end of the most recent fiscal quarter
ending prior to the date of such Restricted Payment for which financial
statements are in existence (or, in case such Consolidated Net Income is a
deficit, minus 100% of such deficit);

          (ii) 100% of the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock (other than Disqualified
Stock) or other capital contributions subsequent to the Issue Date (other
than Net Cash Proceeds received from an issuance or sale of such Capital
Stock to a Subsidiary of the Company or an employee stock ownership plan,
option plan or similar trust to the extent such sale to an employee stock
ownership plan, option plan or similar trust is financed by loans from or
Guaranteed by the Company or any Restricted Subsidiary unless such loans
have been repaid with cash on or prior to the date of determination);

          (iii) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company’s balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue Date of any Indebtedness of the Company or its
Restricted Subsidiaries convertible into or exchangeable for Capital Stock
(other than Disqualified Stock) of the Company (less the amount of any
cash, or the fair market value of any other property, distributed by the Company
upon such conversion or exchange); and

          (iv) the amount equal to payments received by the Company or any
Restricted Subsidiary in respect of, or the net reduction in, Restricted
Investments made by the Company or any of its Restricted Subsidiaries in
any Person resulting from:

          (A) repurchases or redemptions of such Restricted Investments
by the Person in which such Restricted Investments are made,
proceeds realized upon the sale of such Restricted Investment to
an unaffiliated purchaser or payments in respect of such
Restricted Investment, whether through interest payments,
principal payments, dividends, distributions or otherwise, by such
Person to the Company or any Restricted Subsidiary; or

          (B) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the
definition of “Investment”) not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made
by the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary;

which amount in each case under clause (iv) was included in the calculation of the
amount of Restricted Payments; provided, however, that no amount will be included
under clause (iv) to the extent it is already included in Consolidated Net Income.

The provisions of the preceding paragraph will not prohibit:

          (1) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Capital Stock, Disqualified Stock or Subordinated Obligations or Guarantor
Subordinated Obligations made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other
than

37

 

Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or
similar trust to the extent such sale to an employee stock ownership plan or similar trust
is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless
such loans have been repaid with cash on or prior to the date of determination); provided,
however, that (a) such purchase, repurchase, redemption, defeasance, acquisition or
retirement will be excluded in subsequent calculations of the amount of Restricted Payments
and (b) the Net Cash Proceeds from such sale of Capital Stock will be excluded from clause
(c)(ii) of the preceding paragraph;

          (2) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Subordinated Obligations or Guarantor Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated
Obligations or any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Guarantor Subordinated Obligations made by exchange for or out of the
proceeds of the substantially concurrent sale of Guarantor Subordinated Obligations that,
in each case, is permitted to be Incurred under Section 3.02 of this First Supplemental
Indenture and that in each case constitutes Refinancing Indebtedness; provided, however,
that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be
excluded in subsequent calculations of the amount of Restricted Payments;

          (3) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange
for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of
the Company or such Restricted Subsidiary, as the case may be, that, in each case, is
permitted to be Incurred under Section 3.02 of this First Supplemental Indenture and that
in each case constitutes Refinancing Indebtedness; provided, however, that such purchase,
repurchase, redemption, defeasance, acquisition or retirement will be excluded in
subsequent calculations of the amount of Restricted Payments;

          (4) so long as no Default or Event of Default has occurred and is continuing, any
purchase or redemption of Subordinated Obligations or Guarantor Subordinated Obligations
from Net Available Cash to the extent permitted under Section 3.07 of this First
Supplemental Indenture; provided, however, that such purchase or redemption will be
excluded in subsequent calculations of the amount of Restricted Payments;

          (5) dividends paid within 60 days after the date of declaration if at such date of
declaration the dividend would have complied with this provision; provided, however, that
such dividends will be included in subsequent calculations of the amount of Restricted
Payments;

          (6) so long as no Default or Event of Default has occurred and is continuing,

          (a) the purchase, redemption or other acquisition, cancellation or retirement
for value of Capital Stock, or options, warrants, equity appreciation rights or
other rights to purchase or acquire Capital Stock of the Company or any Restricted
Subsidiary or any direct or indirect parent of the Company held by any existing or
former employees or directors of the Company or any Subsidiary of the Company or
their assigns, estates or heirs, in each case in accordance with the terms of
employee stock option or stock purchase agreements or other agreements to
compensate employees or directors; provided that such purchases, redemptions
acquisitions, cancellations or retirements pursuant to this clause will not exceed
$2.0 million in the aggregate during any calendar year; provided further however,
that the amount of any such purchases, redemptions, acquisitions, cancellations or
retirements will be included in subsequent calculations of the amount of Restricted
Payments; and

          (b) loans or advances to employees or directors of the Company or any
Subsidiary of the Company the proceeds of which are used to purchase Capital

38

 

Stock of the Company, in an aggregate amount not in excess of $2.0 million at any one
time outstanding; provided, however, that the amount of such loans and advances
will be included in subsequent calculations of the amount of Restricted Payments;

          (7) so long as no Default or Event of Default has occurred and is continuing, the
declaration and payment of dividends to holders of any class or series of Disqualified
Stock of the Company issued in accordance with the terms of the Indenture to the extent
such dividends are included in the definition of “Consolidated Interest Expense;” provided,
however, that the payment of such dividends will be excluded in subsequent calculations of
the amount of Restricted Payments;

          (8) repurchases of Capital Stock deemed to occur upon the exercise of stock options,
warrants or other convertible securities if such Capital Stock represents a portion of the
exercise price thereof; provided, however, that such repurchases will be excluded from
subsequent calculations of the amount of Restricted Payments;

          (9) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Obligation (i) at a purchase price not greater
than 101% of the principal amount of such Subordinated Obligation in the event of a Change
of Control in accordance with provisions similar to Section 3.15 of this First
Supplemental Indenture or (ii) at a purchase price not greater than 100% of the principal
amount thereof in accordance with provisions similar to Section 3.07 of this First
Supplemental Indenture; provided that, prior to or simultaneously with such purchase,
repurchase, redemption, defeasance or other acquisition or retirement, the Company has made
the Change of Control Offer or Asset Disposition Offer, as applicable, as required with
respect to the Notes and has completed the repurchase or redemption of all Notes validly
tendered for payment in connection with such Change of Control Offer or Asset Disposition
Offer; provided, however, that such repurchases will be excluded from subsequent
calculations of the amount of Restricted Payments;

          (10) any redemption of share purchase rights at a redemption price not to exceed $0.01
per right; provided, however, that such redemption will be included in subsequent
calculations of the amount of Restricted Payments;

          (11) the payment of cash in lieu of fractional shares of Capital Stock in connection
with any transaction otherwise permitted under the Indenture; provided, however, that such
payment will be included in subsequent calculations of the amount of Restricted Payments;

          (12) payments to dissenting stockholders not to exceed $5 million (x) pursuant to
applicable law or (y) in connection with the settlement or other satisfaction of legal
claims made pursuant to or in connection with a consolidation, merger or transfer of assets
in connection with a transaction that is not prohibited by the Indenture; provided,
however, that such payments will be included in subsequent calculations of the amount of
Restricted Payments; and

          (13) Restricted Payments in an amount not to exceed $25 million; provided, however,
that the amount of the Restricted Payments will be included in subsequent calculations of
the amount of Restricted Payments.

     The amount of all Restricted Payments (other than cash) shall be the fair market value on the
date of the Restricted Payment of the asset(s) or securities proposed to be paid, transferred or
issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any cash Restricted Payment shall be its face amount and any
non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the
Company acting in good faith, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such fair market value
is estimated in good faith by the Board of Directors of the Company to exceed $25 million.

39

 

     Section 3.05 Limitation on Liens. The Company may not, and may not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien
(other than Permitted Liens) upon any of its property or assets (including Capital Stock of
Restricted Subsidiaries), whether owned on the Issue Date or acquired after that date, which Lien
secures any Senior Subordinated Indebtedness, or Subordinated Obligations, Guarantor Senior
Subordinated Indebtedness or Guarantor Subordinated Obligations, unless contemporaneously with the
Incurrence of such Lien effective provision is made to secure the Indebtedness due with respect to
the Notes or, with respect to Liens on any Restricted Subsidiary’s property or assets, any
Subsidiary Guarantee of such Restricted Subsidiary, equally and ratably with (or prior to in the
case of Liens with respect to Subordinated Obligations or Guarantor Subordinated Obligations, as
the case may be) the Indebtedness secured by such Lien for so long as such Indebtedness is so
secured.

     Section 3.06
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company may not, and may not permit any Restricted Subsidiary to, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or consensual restriction
on the ability of any Restricted Subsidiary to:

          (1) pay dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligations owed to the Company or any Restricted Subsidiary (the
priority of any Preferred Stock in receiving dividends or liquidating distributions prior
to dividends or liquidating distributions being paid on Common Stock and any subordination
of any such Indebtedness or other obligations being deemed not to constitute such
encumbrances or restrictions);

          (2) make any loans or advances to the Company or any Restricted Subsidiary (the
subordination of loans or advances made to the Company or any Restricted Subsidiary to
other Indebtedness Incurred by the Company or any Restricted Subsidiary being deemed not to
constitute such an encumbrance or restriction); or

          (3) transfer any of its property or assets to the Company or any Restricted
Subsidiary.

The preceding provisions will not prohibit:

          (a) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date, including, without limitation, the Indenture, the
Notes and the Senior Secured Credit Agreement in effect on such date;

          (b) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Capital Stock or Indebtedness Incurred by
a Restricted Subsidiary on or before the date on which the Restricted Subsidiary
was acquired by the Company (other than Capital Stock or Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Company or in contemplation of the transaction or transactions) and outstanding on
such date provided, that any such encumbrance or restriction shall not extend to
any assets or property of the Company or any other Restricted Subsidiary other than
the assets and property so acquired;

          (c) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement effecting a refunding, replacement or refinancing of
Indebtedness Incurred pursuant to an agreement referred to in clause (a) or (b) of
this paragraph or this clause (c) or contained in any amendment to an agreement
referred to in clause (a) or (b) of this paragraph or this clause (c), including
successive refundings, replacements or refinancings; provided, however, that the
encumbrances and restrictions

40

 

with respect to such Restricted Subsidiary contained
in any such agreement are no less favorable in any material respect to the Holders
of the Notes than the encumbrances and restrictions contained in such agreements
referred to in clauses (a) or (b) of this paragraph on the Issue Date or the date
such Restricted Subsidiary became a Restricted Subsidiary, whichever is applicable;

          (d) in the case of clause (3) of the first paragraph of this Section 3.06, any
encumbrance or restriction:

          (i) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is subject to a lease, license
or similar contract, or the assignment or transfer of any such lease,
license or other contract;

          (ii) contained in mortgages, pledges or other security agreements
permitted under the Indenture securing Indebtedness of the Company or a
Restricted Subsidiary to the extent such encumbrances or restrictions
restrict the transfer of the property subject to such mortgages, pledges
or other security agreements; or

          (iii) pursuant to customary provisions restricting dispositions of
real property interests set forth in any reciprocal easement agreements of
the Company or any Restricted Subsidiary;

          (e) (i) purchase money obligations for property acquired in the ordinary
course of business and (ii) Capital Lease Obligations permitted under the
Indenture, in each case, that impose encumbrances or restrictions of the nature
described in clause (3) of the first paragraph of this Section 3.06 on the property
so acquired;

          (f) any restriction with respect to a Restricted Subsidiary (or any of its
property or assets) imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary (or the property or assets that are subject to
such restriction) pending the closing of such sale or disposition;

          (g) customary encumbrances or restrictions imposed pursuant to any agreement
referred to in the definition of “Permitted Business Investment;”

          (h) net worth provisions in leases and other agreements entered into by the
Company or any Restricted Subsidiary in the ordinary course of business; and

          (i) encumbrances or restrictions arising or existing by reason of applicable
law or any applicable rule, regulation or order.

     Section 3.07 Limitation on Sales of Assets and Subsidiary Stock. The Company may not,
and may not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless:

          (1) the Company or the Restricted Subsidiary, as the case may be, receives
consideration at the time of the Asset Disposition at least equal to the fair market value
of the assets subject to the Asset Disposition (determined on the date of contractually
agreeing to such Asset Disposition), as determined in good faith by senior management of
the Company or, if the consideration with respect to such Asset Disposition exceeds $10
million, the Board of Directors of the Company (including as to the value of all non-cash
consideration); and

41

 

          (2) at least 75% of the consideration from the Asset Disposition received by the
Company or the Restricted Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents.

     The Company or such Restricted Subsidiary, as the case may be, may elect to apply all or any
portion of the Net Available Cash from such Asset Disposition either:

          (1) to prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or
retire Senior Indebtedness of the Company (other than Disqualified Stock or
Subordinated Obligations) or Indebtedness of a Wholly-Owned Subsidiary (other than any
Disqualified Stock or Guarantor Senior Subordinated Indebtedness or Guarantor Subordinated
Obligation of a Wholly-Owned Subsidiary Guarantor) (in each case other than Indebtedness
owed to the Company or an Affiliate of the Company) within 365 days from the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; provided,
however, that, in connection with any prepayment, repayment, purchase, repurchase,
redemption, defeasance, or acquisition of Indebtedness pursuant to this clause (1), the
Company or such Restricted Subsidiary will retire such Indebtedness and, in the case of
revolving Indebtedness, will cause the related commitment (if any) to be permanently
reduced in an amount equal to the principal amount so retired; or

          (2) to invest in Additional Assets or make Permitted Business Investments within 365
days from the later of the date of such Asset Disposition or the receipt of such Net
Available Cash;

provided, that, pending the final application of any such Net Available Cash in accordance with
clauses (1) or (2) above, the Company and its Restricted Subsidiaries may temporarily reduce
Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the
Indenture.

     Any Net Available Cash from Asset Dispositions that is not applied or invested as provided in
the preceding paragraph will be deemed to constitute “Excess Proceeds.” On the 366th day after an
Asset Disposition, if the aggregate amount of Excess Proceeds exceeds $20 million, the Company must
make an offer (“Asset Disposition Offer”) to all Holders of Notes and to the extent required by the
terms of other Senior Subordinated Indebtedness, to all holders of other Senior Subordinated
Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase
such Senior Subordinated Indebtedness with the proceeds from any Asset Disposition (“Pari Passu
Notes”), to purchase the maximum principal amount of Notes and any Pari Passu Notes to which the
Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price
in cash in an amount equal to 100% of the principal amount of the Notes and Pari Passu Notes plus
accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in
the Indenture or the agreements governing the Pari Passu Notes, as applicable, in each case in
integral multiples of $1,000. To the extent that the aggregate amount of Notes and Pari Passu Notes
so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate
purposes, subject to the other covenants contained in the Indenture. If the aggregate principal
amount of Notes surrendered by Holders thereof and other Pari Passu Notes surrendered by holders or
lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes
and Pari Passu Notes to be purchased pro rata on the basis of the aggregate principal amount of
tendered Notes and Pari Passu Notes. Upon completion of the Asset Disposition Offer, the amount of
Excess Proceeds will be reset at zero.

     The Asset Disposition Offer must remain open for a period of 20 business days following its
commencement, except to the extent that a longer period is required by applicable law (the “Asset
Disposition Offer Period”). No later than five Business Days after the termination of the Asset
Disposition Offer Period (the “Asset Disposition Purchase Date”), the Company will purchase the
principal amount of Notes and Pari Passu Notes required to be purchased pursuant to the Asset
Disposition Offer (the “Asset Disposition Offer Amount”) or, if less than the Asset Disposition
Offer Amount has been so validly tendered, all Notes and Pari Passu Notes validly tendered in
response to the Asset Disposition Offer.

42

 

     If the Asset Disposition Purchase Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, any accrued and unpaid interest will be paid to the Person in
whose name a Note is registered at the close of business on such Record Date, and no additional
interest will be payable to Holders who tender Notes pursuant to the Asset Disposition Offer.

     On or before the Asset Disposition Purchase Date, the Company must, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount
of Notes and Pari Passu Notes or portions of Notes and Pari Passu Notes so validly tendered and not
properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount
has been validly tendered and not properly withdrawn, all Notes and Pari Passu Notes so validly
tendered and not properly withdrawn, in each case in integral multiples of $1,000. The Company or
the Paying Agent, as the case may be, must promptly (but in any case not later than five business
days after the termination of the Asset Disposition Offer Period) mail or deliver to each tendering
Holder of Notes or holder or lender of Pari Passu Notes, as the case may be, an amount equal to the
purchase price of the Notes or Pari Passu Notes so validly tendered and not properly withdrawn by
such holder or lender, as the case may be, and accepted by the Company for purchase, and the
Company must promptly issue a new Note, and the Trustee, upon delivery of an Officers’ Certificate
from the Company, must authenticate and mail or deliver such new Note to such Holder, in a
principal amount equal to any unpurchased portion of the Note surrendered; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple of $1,000. In addition,
the Company must take any and all other actions required by the agreements governing the Pari Passu
Notes. Any Note not so accepted must be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Asset Disposition Offer on the
Asset Disposition Purchase Date.

     For the purposes of this Section 3.07, the following will be deemed to be cash:

          (1) the assumption by the transferee of Indebtedness (other than Senior Subordinated
Indebtedness, Subordinated Obligations or Disqualified Stock) of the Company or
Indebtedness of a Wholly-Owned Subsidiary (other than Guarantor Senior Subordinated
Indebtedness, Guarantor Subordinated Obligations or Disqualified Stock of any Wholly-Owned
Subsidiary that is a Subsidiary Guarantor) and the release of the Company or the Restricted
Subsidiary from all liability on such Indebtedness in connection with the Asset
Disposition; and

          (2) securities, notes or other obligations received by the Company or any Restricted
Subsidiary from the transferee that are converted by the Company or such Restricted
Subsidiary into cash within 60 days after consummation of the Asset Disposition.

     The Company may not, and may not permit any Restricted Subsidiary to, engage in any Asset
Swaps, unless:

          (1) at the time of entering into the Asset Swap and immediately after giving effect to
the Asset Swap, no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof;

          (2) in the event the Asset Swap involves the transfer by the Company or any Restricted
Subsidiary of assets having an aggregate fair market value, as determined by the Board of
Directors of the Company in good faith, in excess of $10 million, the terms of the Asset
Swap have been approved by a majority of the members of the Board of Directors of the
Company; and

          (3) in the event the Asset Swap involves the transfer by the Company or any Restricted
Subsidiary of assets having an aggregate fair market value, as determined by the Board of
Directors of the Company in good faith, in excess of $25 million, the Company has received
a written opinion from an independent investment banking firm of nationally recognized
standing that the Asset Swap is fair to the Company or the Restricted Subsidiary, as the
case may be, from a financial point of view.

43

 

     The Company will comply, to the extent applicable, with the requirements of Section 14(e) of
the Exchange Act and any other securities laws or regulations in connection with the repurchase of
Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.07, the Company will comply with the
applicable securities laws and regulations and will be deemed not to have breached its obligations
under the Indenture by virtue of such compliance.

     Section 3.08 Limitation on Affiliate Transactions. The Company may not, and may not
permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any
transaction (including the purchase, sale, lease or exchange of any property or the rendering of
any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless:

          (1) the terms of the Affiliate Transaction are not materially less favorable to the
Company or the Restricted Subsidiary, as the case may be, than those that might reasonably
have been obtained in a comparable transaction at the time of such transaction on an
arm’s-length basis from a Person that is not an Affiliate of the Company;

          (2) in the event the Affiliate Transaction involves an aggregate consideration in
excess of $10 million, the terms of the transaction have been approved by a majority of the
members of the Board of Directors of the Company having no personal stake in the
transaction, if any (and such majority determines that the Affiliate Transaction satisfies
the criteria in clause (1) above); and

          (3) in the event the Affiliate Transaction involves an aggregate consideration in
excess of $25 million, the Company has received a written opinion from an independent
investment banking, accounting or appraisal firm of nationally recognized standing to the
effect that the terms of the Affiliate Transaction are not materially less favorable than
those that might reasonably have been obtained in a comparable transaction at the time of
such transaction on an arm’s-length basis from a Person that is not an Affiliate of the
Company.

The preceding paragraph will not apply to:

          (1) any Restricted Payment (other than a Restricted Investment) permitted to be made
pursuant to Section 3.04 of this First Supplemental Indenture;

          (2) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment agreements and other
compensation arrangements, options to purchase Capital Stock of the Company, restricted
stock plans, long-term incentive plans, stock appreciation rights plans, participation
plans or similar employee plans and/or insurance and indemnification arrangements provided
to or for the benefit of employees and directors approved by the Board of Directors of the
Company;

          (3) loans or advances to employees, officers or directors in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, but in any event not to
exceed $2.5 million in the aggregate outstanding at any one time with respect to all loans
or advances made since the Issue Date;

          (4) any transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries and Guarantees issued by the Company or a Restricted Subsidiary for
the benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance
with Section 3.02 of this First Supplemental Indenture;

          (5) the performance of obligations of the Company or any of its Restricted
Subsidiaries under the terms of any agreement to which the Company or any of its Restricted
Subsidiaries is a party as of or on the Issue Date, as these agreements may be amended,
modified,

44

 

supplemented, extended or renewed from time to time; provided, however, that any
future amendment, modification, supplement, extension or renewal entered into after the
Issue Date will be so excluded only if its terms are not more disadvantageous to the
Holders of the Notes than the terms of the agreements in effect on the Issue Date.

     Section 3.09 Limitation on Sale of Capital Stock of Restricted Subsidiaries. The
Company may not, and may not permit any Restricted Subsidiary to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Restricted Subsidiary or to issue any of the Capital
Stock of a Restricted Subsidiary (other than, if necessary, shares of its Voting Stock constituting
directors’ qualifying shares) to any Person except:

          (1) to the Company or a Wholly-Owned Subsidiary; or

          (2) in compliance with Section 3.07 of this First Supplemental Indenture and if
immediately after giving effect to such issuance or sale, such Restricted Subsidiary would
continue to be a Restricted Subsidiary.

     Notwithstanding the preceding paragraph, the Company or any Restricted Subsidiary may sell all
of the Capital Stock of a Restricted Subsidiary as long as the Company complies with the terms of
Section 3.07 of this First Supplemental Indenture.

     Section 3.10 SEC Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the
SEC (to the extent the SEC will accept such filing), and make available to the Trustee and the
registered Holders of the Notes, the annual reports and the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act. If the SEC will not
accept such filings, the Company will nevertheless make available such Exchange Act information to
the Trustee and the Holders of the Notes as if the Company were subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act.

     If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries and any
such Unrestricted Subsidiary has $10.0 million of net assets and its assets exceed its liabilities
by more than 5% of the amount by which the consolidated assets of the Company and its Subsidiaries
exceed consolidated liabilities of the Company and its Subsidiaries, then the quarterly and annual
financial information required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes to the financial
statements and in Management’s Discussion and Analysis of Results of Operations and Financial
Condition, of the financial condition and results of operations of the Company and its Restricted
Subsidiaries.

     Section 3.11 Merger and Consolidation. The Company may not consolidate with or merge
with or into any other Person, or transfer all or substantially all its properties and assets to
another Person, unless:

          (1) the Company is the continuing or surviving Person in the consolidation or merger;
or

          (2) the Person (if other than the Company) formed by the consolidation or into which
the Company is merged or to which all or substantially all of the Company’s properties and
assets are transferred is a corporation, partnership, limited liability company, business
trust, trust or other legal entity organized and validly existing under the laws of the
United States, any state thereof, or the District of Columbia, and expressly assumes, by a
supplemental indenture, all of the Company’s obligations under the Notes and the Indenture;
and

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          (3) immediately after the transaction and the Incurrence or anticipated Incurrence of
any Indebtedness to be Incurred in connection therewith, no Event of Default exists; and

          (4) immediately after giving effect to such transaction, the continuing or surviving
Person would be able to Incur at least an additional $1.00 of Indebtedness pursuant to the
first paragraph of Section 3.02 of this First Supplemental Indenture; and

          (5) each Subsidiary Guarantor shall have by supplemental indenture confirmed that its
Subsidiary Guarantee shall apply to such Person’s obligations (if other than the Company)
in respect of the Indenture and the Notes shall continue to be in effect;

          (6) an Officer’s Certificate is delivered to the Trustee to the effect that the
conditions set forth above have been satisfied and an Opinion of Counsel has been delivered
to the Trustee to the effect that the conditions set forth above have been satisfied.

     For purposes of the first paragraph of this Section 3.11, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the properties and assets
of one or more Subsidiaries of the Company, which properties and assets, if held by the Company
instead of its Subsidiaries, would constitute all or substantially all of the properties and assets
of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially
all of the properties and assets of the Company.

     The continuing, surviving or successor Person will succeed to and be substituted for the
Company with the same effect as if it had been named in the Indenture as a party thereof, and
thereafter the predecessor Person will be relieved of all obligations and covenants under the
Indenture and the Notes.

     Notwithstanding clauses (3) and (4) above and clause (1)(b) below, (x) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to
the Company or another Restricted Subsidiary and (y) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another jurisdiction;
provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company
will not be required to comply with clause (5) above.

     The Company may not permit any Subsidiary Guarantor to consolidate with or merge with or into
any Person (other than another Subsidiary Guarantor) and may not permit the conveyance, transfer or
lease of substantially all of the assets of any Subsidiary Guarantor (other than another
Subsidiary Guarantor) unless:

          (1) (a) the Person formed by the consolidation or into which the Subsidiary Guarantor
merged or to which all, or substantially all of the Subsidiary Guarantor’s properties and
assets are transferred is a corporation, partnership, limited liability company, business
trust, trust or other legal entity organized and validly existing under the laws of the
United States, any state thereof, or the District of Columbia and such Person (if not such
Subsidiary Guarantor) will expressly assume, by supplemental indenture, all the obligations
of such Subsidiary Guarantor under its Subsidiary Guarantee; (b) immediately after the
transaction and the Incurrence or anticipated Incurrence of any Indebtedness to be Incurred
in connection therewith, no Event of Default exists; and (c) the Company will deliver to
the Trustee an Officers’ Certificate and an Opinion of Counsel, each to the effect that the
conditions set forth above have been satisfied; and

          (2) the transaction is made in compliance with Section 3.07 of this First Supplemental
Indenture.

     Section 3.12 Future Subsidiary Guarantors . The Company will cause each Restricted Subsidiary (other than a Foreign Subsidiary or a
Special Entity) created or acquired by the Company or one

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or more of its Restricted Subsidiaries
after the Issue Date to execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which
such Subsidiary Guarantor will unconditionally Guarantee, on a joint and several basis, the full
and prompt payment of the principal of, premium, if any and interest on the Notes on a senior
subordinated basis.

     Section 3.13 Limitation on Lines of Business. The Company may not, and may not permit
any Restricted Subsidiary to, engage in any business other than the Oil and Gas Business.

     Section 3.14 Payments for Consent. Neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fees or otherwise, to any Holder of any Notes for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless
such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or amendment.

     Section 3.15 Offer to Repurchase Upon Change of Control.

          (a) If a Change of Control occurs, unless the Company has exercised its right to redeem all of
the Notes as described under Section 1.08 of this First Supplemental Indenture, the Company will be
required to offer to repurchase from each Holder all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal
amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date).

          (b) Within 30 days following any Change of Control, unless the Company has exercised its right
to redeem the Notes as described under Section 1.08 of this First Supplemental Indenture, the
Company will mail a notice (the “Change of Control Offer”) to each Holder, with a copy to the
Trustee, stating:

          (1) that a Change of Control has occurred and that the Company is offering to purchase
the Holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the
Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on a Regular Record Date to receive interest on the relevant
Interest Payment Date) (the “Change of Control Payment”);

          (2) the repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the “Change of Control Payment Date”); and

          (3) the procedures determined by the Company, consistent with the Indenture, that a
Holder must follow in order to have its Notes repurchased.

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

          (1) accept for payment all Notes or portions of Notes (in integral multiples of
$1,000) properly tendered pursuant to the Change of Control Offer;

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

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

          (d) The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of
Control Payment for the Notes, and the Trustee will promptly authenticate and mail (or cause to

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be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount
of $1,000 or an integral multiple thereof.

          (e) If the Change of Control Payment Date is on or after a Regular Record Date and on or
before the related Interest Payment Date, any accrued and unpaid interest will be paid to the
Person in whose name a Note is registered at the close of business on the Regular Record Date, and
no additional interest will be payable to Holders who tender pursuant to the Change of Control
Offer.

          (f) Prior to mailing a Change of Control Offer, the Company shall (1) cause the Senior
Indebtedness to be repaid in full and, in the case of revolving Indebtedness, cause all commitments
to lend thereunder to be terminated or offer to repay all Senior Indebtedness and make payments to
the holders that accept such offer and obtain waivers of any event of default from the remaining
holders of such Senior Indebtedness, or (2) obtain the consent of the requisite holders of Senior
Indebtedness to the Change of Control Offer. The failure of the Company to effect such payment or
obtain such consent within 30 days following a Change of Control will constitute a Default under
the Indenture.

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

          (h) The Company will comply, to the extent applicable, with the requirements of Section 14(e)
of the Exchange Act and any other securities laws or regulations in connection with the repurchase
of Notes pursuant to this Section 3.15. To the extent that the provisions of any securities laws
or regulations conflict with provisions of the Indenture, the Company will comply with the
applicable securities laws and regulations and will be deemed not to have breached its obligations
described in the Indenture by virtue of such compliance.

ARTICLE IV

SUBORDINATION

     Section 4.01 Agreement to Subordinate. The Company agrees, and each Holder by
accepting a Note agrees, that the payment of principal, premium, if any, and interest on, and other
Indebtedness evidenced by, the Notes is subordinated in right of payment, to the extent and in the
manner provided in this Article IV, to the prior payment in full of all Senior Indebtedness
(whether outstanding on the date hereof or hereafter incurred) of the Company, will rank equally in
right of payment with all existing and future Senior Subordinated Indebtedness of the Company and
will be senior in right of payment to all existing and future Subordinated Obligations of the
Company, and that the subordination is for the benefit of the holders of Senior Indebtedness.

     Section 4.02 Liquidation; Dissolution; Bankruptcy. In the event of:

          (1) a total or partial liquidation or a dissolution of the Company;

          (2) a reorganization, bankruptcy, insolvency, receivership of or similar proceeding
relating to the Company or its property; or

          (3) an assignment for the benefit of creditors or marshaling of the Company’s assets
and liabilities, then

the holders of Senior Indebtedness will be entitled to receive payment in full in cash or Cash
Equivalents in respect of Senior Indebtedness (including interest accruing after, or which would
accrue but for, the

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commencement of any proceeding at the rate specified in the applicable Senior
Indebtedness, whether or not a claim for such interest would be allowed in such proceeding) before
the Holders of the Notes will be entitled to receive any payment or distribution, in the event of
any payment or distribution of the assets or securities of the Company. In addition, until the
Senior Indebtedness is paid in full in cash or Cash Equivalents, any payment or distribution to
which holders of the Notes would be entitled but for the subordination provisions of the Indenture
will be made to holders of the Senior Indebtedness as their interests may appear. If a payment or
distribution is made to Holders of the Notes that, due to the subordination provisions, should not
have been made to them, the Holders shall hold it in trust for the holders of Senior Indebtedness
and pay the payment or distribution over to holders of Senior Indebtedness, as their interests may
appear.

     Section 4.03 Default on Senior Indebtedness. The Company may not pay principal of,
premium, if any, or interest on, or other payment obligations in respect of, the Notes or make any
deposit pursuant to Article V of the Original Indenture and may not otherwise repurchase, redeem or
retire any Notes (collectively, “pay the Notes”) if:

          (1) any Senior Indebtedness is not paid when due in cash or Cash Equivalents; or

          (2) any other default on Senior Indebtedness occurs and is continuing with respect to
Senior Indebtedness and the maturity of the Senior Indebtedness is accelerated in
accordance with its terms;

unless, in either case, the Senior Indebtedness has been paid in full in cash or Cash Equivalents
and, in the case of revolving Indebtedness, all commitments to lend thereunder have been terminated
or the default has been cured or waived and any acceleration has been rescinded. However, the
Company may pay the Notes if the Company and the Trustee receive written notice approving such
payment from the Representative of the Senior Indebtedness with respect to which either of the
events set forth in clause (1) or (2) of the immediately preceding sentence has occurred and is
continuing.

     The Company also will not be permitted to pay the Notes for a Payment Blockage Period (as
defined below) during the continuance of any default, other than a default described in clause (1)
or (2) of the preceding paragraph, on any Designated Senior Indebtedness that permits the holders
of the Designated Senior Indebtedness to accelerate its maturity immediately without either further
notice (except such notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods.

     A “Payment Blockage Period” commences on the receipt by the Trustee (with a copy to the
Company) of written notice (a “Blockage Notice”) of a default of the kind described in the
immediately preceding paragraph from the Representative of the holders of the Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and ends 179 days after
receipt of the notice. The Payment Blockage Period will end earlier if the Payment Blockage Period
is terminated:

          (1) by written notice to the Trustee and the Company from the Person or Persons who
gave the Blockage Notice;

          (2) because the default giving rise to the Blockage Notice is no longer continuing; or

          (3) because the Designated Senior Indebtedness has been repaid in full.

     The Company may resume payments on the Notes after the end of a Payment Blockage Period
(including any missed payments) unless the holders of the Designated Senior Indebtedness or the
Representatives of such holders have accelerated the maturity of the Designated Senior
Indebtedness. Not more than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior Indebtedness during that
period. However, if any

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Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than the Bank Indebtedness, the Representatives of
the Bank Indebtedness may give another Blockage Notice within that period. In no event, however,
may the total number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any consecutive 360-day period. No Default or Event of
Default that existed or was continuing on the date of the commencement of any Payment Blockage
Period with respect to the Designated Senior Indebtedness initiating the Payment Blockage Period
shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the
Representative of the Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such Default or Event of Default shall have been cured or waived for a
period of not less than 90 consecutive days.

     Section 4.04 Acceleration of Notes. The Company or the Trustee shall promptly notify
holders of Designated Senior Indebtedness if payment of the Notes is accelerated because of an
Event of Default.

     Section 4.05 When Distribution Must Be Paid Over. In the event that the Trustee or
any Holder receives any payment of any Indebtedness with respect to the Notes at a time when the
Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 4.03 hereof, such payment shall be held by the Trustee or such Holder, in trust for the
benefit of and, upon written request, shall be paid forthwith over and delivered to, the holders of
Senior Indebtedness as their interests may appear or their Representative under the indenture or
other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all obligations with respect to
Senior Indebtedness remaining unpaid to the extent necessary to pay such obligations in full in
accordance with their terms, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Indebtedness.

     With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only
such obligations on the part of the Trustee as are specifically set forth in this Article IV, and
no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person
money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this
Article IV, except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.

     Section 4.06 Notice by the Company. The Company shall promptly notify the Trustee and
the Paying Agent of any facts known to the Company that would cause a payment of any Indebtedness
with respect to the Notes to violate this Article IV, but failure to give such notice shall not affect the subordination of the Notes to the
Senior Indebtedness as provided in this Article.

     The Company may not pay the Notes until five business days after such holders or the
Representative of the Designated Senior Indebtedness receives notice of such acceleration and,
after that five business day period, may pay the Notes only if this Article IV otherwise permits
payment at that time.

     Section 4.07 Subrogation. After all Senior Indebtedness is irrevocably paid in full
in cash or Cash Equivalents reasonably satisfactory to the holders thereof and until the Notes are
paid in full, Holders shall be subrogated (equally and ratably with all other Senior Subordinated
Indebtedness pari passu with the Notes) to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable
to the Holders have been applied to the payment of Senior Indebtedness. A distribution made under
this Article IV to holders of Senior Indebtedness that otherwise would have been made to Holders is
not, as between the Company and Holders, a payment by the Company on the Notes.

     Section 4.08 Relative Rights. This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:

50

 

          (1) impair, as between the Company and Holders, the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on the Notes in accordance
with their terms;

          (2) affect the relative rights of Holders and other creditors of the Company other
than their rights in relation to holders of Senior Indebtedness; or

          (3) prevent the Trustee or any Holder from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and owners of Senior Debt to
receive distributions and payments otherwise payable to Holders.

     If the Company fails because of this Article IV to pay principal of or interest on a Note on
the due date, the failure is still a Default or Event of Default.

     Section 4.09 Subordination May Not Be Impaired by the Company. No right of any holder
of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Notes
shall be impaired by any act or failure to act by the Company or any Holder or by the failure of
the Company or any Holder to comply with this Indenture.

     Section 4.10 Distribution or Notice to Representative. Whenever a distribution is to
be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the
notice given to their Representative.

     Upon any payment or distribution of assets of the Company referred to in this Article IV, the
Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee
or agent or other Person making any distribution to the Trustee or to the Holders for the purpose
of ascertaining the Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this
Article IV.

     Section 4.11 Rights of Trustee and Paying Agent. Notwithstanding the provisions of
this Article IV or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on
the Notes, unless the Trustee shall have received at its Corporate Trust Office at least one
Business Day prior to the date of such payment written notice of facts that would cause the payment
of any obligations with respect to the Notes to violate this Article. Only the Company or a
Representative may give the notice. Nothing in this Article IV shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 9.06 of the Original Indenture.

     The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a Representative of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness (or a Representative
of any such holder). In the event that the Trustee determines in good faith that further evidence
is required with respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article IV, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of such Person under
this Article IV, and if such evidence is not furnished, the Trustee may defer any payment which it
may be required to make for the benefit of such Person pursuant to the terms of this Indenture
pending judicial determination as to the rights of such Person to receive such payment.

     The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same
rights it would have if it were not Trustee. Any agent may do the same with like rights.

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     Section 4.12 Authorization to Effect Subordination. Each Holder of a Note by the
Holder’s acceptance thereof authorizes and directs the Trustee on the Holder’s behalf to take such
action as may be necessary or appropriate to effectuate the subordination as provided in this
Article IV, and appoints the Trustee to act as the Holder’s attorney-in-fact for any and all such
purposes.

     Section 4.13 Subordination of Subsidiary Guarantees. The obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee are subordinated in right of payment to the
obligations of each Guarantor under its Senior Debt in the same manner and to the same extent that
the Notes are subordinated to Senior Indebtedness of the Company pursuant to this Article IV.

     Section 4.14 Amendment to the Subordination Provisions of the Indenture. (a) No
amendment may be made to the subordination provisions of the Indenture that adversely affects the
rights of any holder of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a consent) consent to such
change.

          (b) Any amendment to Article IV of this First Supplemental Indenture that adversely affects
the rights of any Holder of the Notes will require the consent of the Holders of at least 66-2/3%
in aggregate principal amount of the Notes then outstanding.

ARTICLE V

EVENTS OF DEFAULT WITH RESPECT TO THE NOTES

     The term “Event of Default,” whenever used in the Original Indenture or this First
Supplemental Indenture with respect to the Notes, means any one of the following events:

          (1) failure to pay principal of or premium, if any, on any Note when due at its Stated
Maturity;

          (2) failure to pay any interest on any Note when due, which failure continues for 30
calendar days;

          (3) failure by the Company or any Subsidiary Guarantor to comply with its obligations
under Section 3.11 of this First Supplemental Indenture;

          (4) failure by the Company to comply with any of its obligations under Article III of
this First Supplemental Indenture (other than a failure to purchase Notes which will
constitute an Event of Default under clause (5) below and other than a failure to comply
with Section 3.11 of this First Supplemental Indenture which is covered by clause (3)
above), which failure or breach continues for 30 calendar days after written notice thereof
has been given to the Company as provided in the Indenture;

          (5) failure to redeem or repurchase any Note when required to do so under the terms
thereof;

          (6) failure to perform, or breach of, any other covenant of the Company in the
Indenture (other than a covenant included in the Indenture solely for the benefit of a
series of debt securities other than the Notes), which failure or breach continues for 60
calendar days after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Notes a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a “Notice of
Default” under the Indenture;

          (7) any nonpayment at maturity or other default (beyond any applicable grace period)
under any agreement or instrument relating to any other Indebtedness of the

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Company or a Significant Subsidiary, the unpaid principal amount of which is not less than $15 million,
which default results in the acceleration of the maturity of the Indebtedness prior to its
stated maturity or occurs at the final maturity thereof;

          (8) Events of Default of the type and subject to the conditions set forth in clauses
(vi) and (vii) of Section 8.01(a) of the Original Indenture;

          (9) failure by the Company or any Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated financial
statements for the Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary to pay final judgments aggregating in excess of $15 million (net of any amounts
that a reputable and creditworthy insurance company has acknowledged liability for in
writing), which judgments are not paid, discharged or stayed for a period of 60 calendar
days; or

          (10) any Subsidiary Guarantee of a Significant Subsidiary or group of Subsidiary
Guarantors that taken together as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries would constitute a Significant
Subsidiary ceases to be in full force and effect (except as contemplated by the terms of
the Indenture) or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor that is a Significant Subsidiary or group of Subsidiary Guarantors that taken
together as of the latest audited consolidated financial statements of the Company and its
Restricted Subsidiaries would constitute a Significant Subsidiary denies or disaffirms its
obligations under the Indenture or its Subsidiary Guarantee.

ARTICLE VI

MODIFICATION AND WAIVER

     Section 6.01 Without Consent of Holders of Notes.

          (a) The provisions of Section 10.01 of the Original Indenture shall apply to the Notes.

          (b) The Company, the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Holder of a Note to add Subsidiary Guarantees
with respect to the Notes.

     Section 6.02 With Consent of Holders of Notes. Without the consent of each Holder
affected, no amendment or waiver with respect to the Notes under this Article VI or under Article X
of the Original Indenture may, without the consent of each Holder of an outstanding Note affected
thereby:

          (a) reduce the principal amount of, the rate of interest on, or the premium, if any, payable
upon the repurchase of, the Notes; or

          (b) change the time at which any Note may be redeemed or repurchased as described above under
Section 1.08; Section 3.07 or Section 3.15 of this First Supplemental Indenture; or

          (c) modify the Subsidiary Guarantees in any manner adverse to the holders of the Notes.

ARTICLE VII

MISCELLANEOUS PROVISIONS

     Section 7.01 Recitals by the Company. The recitals in this First Supplemental
Indenture are made by the Company only and not by the Trustee, and the Trustee assumes no
responsibility for their

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correctness. The Trustee makes no representations as to the validity or
sufficiency of this First Supplemental Indenture or of the Notes. The Trustee shall not be
accountable for the use or application by the Company of the Notes or the proceeds thereof. All of
the provisions contained in the Original Indenture in respect of the rights, privileges,
immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and of
this First Supplemental Indenture as fully and with like effect as if set forth herein in full.

     Section 7.02 Ratification and Incorporation of Original Indenture. As supplemented hereby, the Original Indenture is in all respects ratified and confirmed,
and the Original Indenture and this First Supplemental Indenture shall be read, taken and construed
as one and the same instrument.

     Section 7.03 Executed in Counterparts. This First Supplemental Indenture may be
simultaneously executed in several counterparts, each of which shall be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.

     Section 7.04 New York Law to Govern. This First Supplemental Indenture and each Note
shall be governed by and construed in accordance with the law of the State of New York.

     Section 7.05 Successors and Assigns. All covenants and agreements in this First
Supplemental Indenture and each Note by the Company shall bind its successors and assigns, whether
so expressed or not.

     Section 7.06 Separability. In case any provision in this First Supplemental Indenture
or in any Note 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.

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     IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and
behalf by its duly authorized officers, all as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	QUICKSILVER RESOURCES INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	MERCURY MICHIGAN, INC., as Subsidiary Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	TERRA ENERGY LTD. , as Subsidiary Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	GTG PIPELINE CORPORATION, as Subsidiary
Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	COWTOWN PIPELINE FUNDING, INC. , as Subsidiary
Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	COWTOWN PIPELINE MANAGEMENT, INC. , as Subsidiary
Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	TERRA PIPELINE COMPANY, as Subsidiary Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	BEAVER CREEK PIPELINE, L.L.C., as Subsidiary
Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	COWTOWN PIPELINE L.P., as Subsidiary Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: COWTOWN PIPELINE MANAGEMENT, INC., its
general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	COWTOWN GAS PROCESSING L.P. , as Subsidiary
Guarantor	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: COWTOWN PIPELINE MANAGEMENT, INC., its
general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
Trustee	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

Name:

	 	 
	 	 
	 	 
	 	 
	Title

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]