10-K405

Use these links to rapidly review the document
TABLE OF CONTENTS

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For The Fiscal Year Ended December 31, 2001

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From                                      to                                     

Commission file number 0-13171

EVERGREEN RESOURCES, INC.
(Exact name of registrant as specified in its charter)

Colorado	84-0834147
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1401 17th Street Suite 1200 Denver, Colorado (Address of principal executive offices)	80202 (Zip Code)

(303) 298-8100
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, no par value	New York Stock Exchange
Share Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K, is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        As of February 28, 2002, the Registrant had 18,850,336 common shares outstanding, and the aggregate market value of the common shares held by non-affiliates was approximately $737.5 million based upon the closing price of $41.80 per share for the common stock on February 28, 2002, as reported on the New York Stock Exchange.

DOCUMENTS INCORPORATED BY REFERENCE: DEFINITIVE PROXY MATERIALS FOR 2002 ANNUAL MEETING OF STOCKHOLDERS—PART III, ITEMS 10, 11, 12, AND 13.

TABLE OF CONTENTS

	Part I
Item 1.	Business
Item 2.	Properties
Item 3.	Legal Proceedings
Item 4.	Submission of Matters to a Vote of Security Holders
	Part II
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters
Item 6.	Selected Financial Data
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Part III
Item 10.	Directors and Executive Officers of the Registrant
Item 11.	Executive Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management
Item 13.	Certain Relationships and Related Transactions
	Part IV
Item 14.	Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K
Signatures

2

CERTAIN DEFINITIONS

        The following are definitions of terms commonly used in the oil and natural gas industry and this document.

        Unless otherwise indicated in this document, natural gas volumes are stated at the legal pressure base of the state or area in which the reserves are located at 60 (degrees) Fahrenheit. As used in this document, the following terms have the following specific meanings: "Mcf" means thousand cubic feet, "MMcf" means million cubic feet, "Bcf" means billion cubic feet and "MMBtu" means million British thermal units.

        Average finding cost.    The amount of total capital expenditures, including acquisition costs, and exploration and abandonment costs, for oil and natural gas activities divided by the amount of proved reserves added in the specified period.

        Capital expenditures.    Costs associated with exploratory and development drilling (including exploratory dry holes); leasehold acquisitions; seismic data acquisitions; geological, geophysical and land related overhead expenditures; delay rentals; producing property acquisitions; other miscellaneous capital expenditures; compression equipment and pipeline costs.

        Developed acreage.    The number of acres which are allocated or assignable to producing wells or wells capable of production.

        Development well.    A well drilled within the proved area of an oil or natural gas reservoir to the depth of a producing horizon known to be productive.

        Exploratory well.    A well drilled to find and produce oil or natural gas in an unproved area, to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir, or to extend a known reservoir.

        Gob gas.    Gob gas is methane that has collected in abandoned underground coal mines.

        Gross acres or gross wells.    The total acres or wells, as the case may be, in which the Company has a working interest.

        LOE.    Lease operating expenses, which includes all costs related to production activities. Direct costs such as direct labor, direct materials, certain workover costs, repairs and maintenance, insurance costs, gas collection costs.

        Mine gas interaction well.    A well drilled into the fractured area surrounding an abandoned coal mine.

        Net acres or net wells.    A net acre or well is deemed to exist when the sum of the Company's fractional ownership working interests in gross acres or wells, as the case may be, equals one. The number of net acres or wells is the sum of the fractional working interests owned in gross acres or wells, as the case may be, expressed as whole numbers and fractions thereof.

        Operator.    The individual or company responsible to the working interest owners for the exploration, development and production of an oil or natural gas well or lease.

        Present value of future net revenues or PV-10.    The present value of estimated future net revenues to be generated from the production of proved reserves, net of estimated production and ad valorem taxes, future capital costs and operating expenses, using prices and costs in effect as of the date indicated, without giving effect to federal income taxes. The estimated future net revenues are discounted at an annual rate of 10% to determine their "present value." The present value reflects the

3

effect of time on the present value of the revenue stream. PV-10 should not be construed as being the fair market value of the properties.

        Recompletion.    The completion of an existing well for production from a formation that exists behind the casing of the well.

        Reserves.    Natural gas and crude oil, condensate and natural gas liquids on a net revenue interest basis, found to be commercially recoverable. "Proved developed reserves" includes proved developed producing reserves and proved developed behind-pipe reserves. "Proved developed producing reserves" includes only those reserves expected to be recovered from existing completion intervals in existing wells. "Proved undeveloped reserves" include those reserves expected to be recovered from new wells on proved undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.

        Undeveloped acreage.    Lease acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether or not such acreage contains proved reserves.

        Working interest.    An interest in an oil and natural gas lease that gives the owner of the interest the right to drill and produce oil and natural gas on the leased acreage and requires the owner to pay his/her proportionate share of the costs of drilling and production operations. The share of production to which a working interest owner is entitled will always be smaller than the share of costs that the working interest owner is required to bear, with the balance of the production accruing to governmental tax receipts and mineral interest royalties.

4

PART I

ITEM 1.    BUSINESS

General

        Evergreen Resources, Inc. ("Evergreen" or "the Company") is a Colorado corporation organized on January 14, 1981. Evergreen is an independent energy company engaged in the operation, development, production, exploration and acquisition of natural gas properties. Evergreen is one of the leading developers of coal bed methane reserves in the United States. Its current operations are principally focused on developing and expanding its coal bed methane project located in the Raton Basin in southern Colorado. The Company has begun coal bed methane projects in the United Kingdom and Alaska. In addition, the Company is engaged in the exploration of natural gas prospects in Northern Ireland and the Republic of Ireland, and owns additional interests in other domestic and international areas.

        Evergreen maintains its principal executive offices at 1401 17th Street, Suite 1200, Denver, Colorado 80202; telephone (303) 298-8100.

        The authorized capitalization of the Company is 50,000,000 shares of no par value common stock, of which 18,847,178 shares were issued and outstanding at December 31, 2001, and 24,900,000 shares of $1.00 par value preferred stock, none of which were issued and outstanding at December 31, 2001.

        This report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding, among other items, (i) the Company's growth strategies, (ii) anticipated trends in the Company's business and its future results of operations, (iii) market conditions in the oil and gas industry, (iv) the ability of the Company to make and integrate acquisitions and (v) the outcome of litigation and the impact of governmental regulation. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, many of which are beyond the Company's control. Actual results could differ materially from those implied by these forward-looking statements as a result of, among other things, a decline in natural gas production, a decline in natural gas prices, incorrect estimations of required capital expenditures, increases in the cost of drilling, completion and gas collection, an increase in the cost of production and operations, an inability to meet growth projections, or changes in general economic conditions. These and other risks are discussed under the heading "Business—Certain Risks." In light of these and other risks and uncertainties of which the Company may be unaware or which the Company currently deems immaterial, there can be no assurance that actual results will be as projected in the forward-looking statements.

        For a discussion of the development of the Company's business, see Item 2 and for a discussion of the assets by geographic area, see Note 15 to the Consolidated Financial Statements.

Business Activities

Raton Basin

        The Company's current operations are principally focused on developing and expanding its coal bed methane project located in the Raton Basin in southern Colorado.

        The Company is one of the largest holders of oil and gas leases in the Raton Basin. Evergreen holds interests in approximately 274,000 gross acres of coal bed methane properties in the basin. At December 31, 2001, the Company had estimated net proved reserves of 1.05 Tcf, 65% of which were proved developed, with a PV-10 of approximately $598 million. The Company's net daily gas sales at December 31, 2001 were approximately 97 MMcf from a total of 681 net producing wells. Total

5

production from the Company's wells accounted for an estimated 76% of the gas sold from the Raton Basin at December 31, 2001. Evergreen's Raton Basin drilling program has enabled the Company to build an extensive inventory of additional drilling locations. The Company has identified at least 750 additional drilling locations on its Raton Basin acreage, of which 329 were included in its estimated proved reserve base at December 31, 2001. The Company operates and has a 100% working interest in substantially all of its Raton Basin acreage and wells.

        Since Evergreen began its drilling efforts in the Raton Basin, the Company has drilled more than 500 wells and achieved a success rate of approximately 98%. In addition, the Company has acquired over 200 producing wells in the Raton Basin since the beginning of the Raton Basin project. From March 31, 1995 through December 31, 2001, Evergreen grew its estimated proved reserves from 58 Bcf to 1,051 Bcf, which represents a compound annual growth rate in excess of 50%. During the same period, the Company's net daily gas sales increased from just over 1 MMcf to approximately 97 MMcf.

        Management believes the Company's success in the Raton Basin has enabled Evergreen to become one of the lowest-cost finders, developers and producers among U.S. publicly-traded independent oil and gas companies. From the beginning of the Company's Raton Basin project through December 31, 2001, the Company has spent approximately $240 million on the drilling and completion of its wells, pipelines, gas collection systems and compression equipment, and $244 million on the acquisition of additional properties. This represents an estimated total finding and development cost of $0.31 per Mcf excluding acquisitions and $0.45 per Mcf including acquisitions.

United Kingdom Project

        Evergreen holds exploration licenses covering approximately 452,000 acres in the United Kingdom. In April 2000, the Company began drilling on these coal bed methane properties using the Company's own purpose-built equipment and personnel. Since the inception of the project, a total of eleven wells have been drilled in the U.K. Total costs through December 31, 2001 were approximately $23 million, which includes the cost of drilling and completion and other associated costs such as license fees. During 2001, Evergreen invested approximately $3.6 million in this project. In 2002, the Company anticipates an additional investment in the U.K. of up to approximately $5 million.

Northern Ireland and the Republic of Ireland Project

        In March and April 2001, the Company acquired 100% working interest in 1,085,000 acres of prospective tight gas sand properties in Northern Ireland (605,000 acres) and in the Republic of Ireland (480,000 acres) for total consideration of $1,250,000 (23,200 shares of Evergreen common stock valued at $750,000 and $500,000 in cash) plus a small retained net profits interest. The Company drilled four wells in Northern Ireland and two wells in the Republic of Ireland during 2001 to depths ranging from approximately 2,700 feet to 4,400 feet. The Company expects its evaluation of this initial drilling program to be completed by mid-year 2002. During 2001, Evergreen invested approximately $7.3 million in these two projects, and the Company anticipates an additional investment in these projects of approximately $5 million in 2002.

Business Strategy

        The Company's objective is to enhance shareholder value by increasing reserves, production, cash flow, earnings and net asset value per share. To accomplish this objective, the Company intends to capitalize on its experience and operating expertise in coal bed methane properties and on its other competitive strengths, which include:

•

an extensive inventory of drilling locations;

6

•

a track record for significantly growing the Company's reserve base through development drilling and acquisitions; and



•

an industry leading position as a low-cost finder, developer and producer of natural gas.

Customers and Markets

        Gas Marketing.    Primero Gas Marketing Company ("Primero") is a wholly-owned subsidiary of the Company that was formed to market and sell natural gas for the Company and third parties. To date, Primero has marketed and sold gas only on behalf of the Company, royalty interest and working interest partners. Primero also operates the Company's gas collection systems and purchases all the Company's production from its Raton Basin wells.

        Gas production from the Raton Basin is transported by Colorado Interstate Gas Co. ("CIG") through the Campo Lateral, a 115 mile, 16-inch pipeline and the Picketwire Lateral, which is a 10-inch and 20-inch looped line that connects to CIG's main pipeline system and permits Evergreen to sell its gas into the Mid-continent market.

        Current Raton Basin gas sales total approximately 150 MMcf per day. Takeaway capacity on the CIG system from the Raton Basin is currently 232 MMcf per day. CIG is planning an additional 30 MMcf per day expansion in 2002, which will increase the takeaway capacity to 262 MMcf per day. The Company believes that this expansion will provide sufficient transportation capacity to accommodate significant growth in its gas sales volumes in the future.

        The Company's current firm transportation commitments are 97 MMcf of gross gas sales per day. In addition, the Company has committed to an additional 30 MMcf per day, subject to a ramp-up schedule which anticipates 5 MMcf per day increments each four months from June 2002 through February 2004. Thus, Evergreen's total transportation commitments will increase in four increments to a total of 127 MMcf gross per day by February 2004. If the Company is unable to fulfill its transportation commitments, amounts paid for transportation on up to 41 MMcf per day can be credited toward future transportation costs through August 2006.

        Major Customers.    Evergreen has three major customers, Natural Gas Transmission Services, Inc., Xcel Energy and subsidiaries, and Aquila Energy Corporation, which purchased approximately 46%, 31% and 10%, respectively, of the Company's gas production for the year ended December 31, 2001. Based on the general demand for gas, the loss of any or all of these customers would not be expected to have a material adverse effect on Evergreen's business. As the Company's base of production grows in the Raton Basin, the Company hopes to be able to enter into long-term contracts with end users at favorable prices. Currently, the Company's gas is sold at spot market prices, under short-term contracts, and under swaps/ hedges.

        Competition.    The Company competes with numerous other companies in virtually all facets of its business, including many that have significantly greater resources. Such competitors may be able to pay more for desirable leases and to evaluate, bid for and purchase a greater number of properties than the financial or personnel resources of the Company permit. The ability of the Company to increase reserves in the future will be dependent on its ability to select and acquire suitable producing properties and prospects for future exploration and development. The availability of a market for oil and natural gas production depends upon numerous factors beyond the control of producers, including but not limited to the availability of other domestic or imported production, the locations and capacity of pipelines, and the effect of federal and state regulation on such production.

7

Government Regulation of the Oil and Gas Industry

Domestic

        General.    The Company's business is affected by numerous laws and regulations, including, among others, laws and regulations relating to energy, environment, conservation and tax. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and/or criminal penalties, the imposition of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on the Company's business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to the Company, the Company cannot predict the overall effect of such laws and regulations on its future operations.

        The Company believes that its operations comply in all material respects with applicable laws and regulations and that the existence and enforcement of such laws and regulations have no more restrictive effect on the Company's method of operations than on other similar companies in the energy industry.

        The following discussion contains summaries of certain laws and regulations and is qualified in its entirety by the foregoing.

        Federal Regulation of the Sale and Transportation of Oil and Gas.    Various aspects of the Company's oil and natural gas operations are regulated by agencies of the Federal government. The Federal Energy Regulatory Commission ("FERC") regulates the transportation and sale for resale of natural gas in interstate commerce pursuant to the Natural Gas Act of 1938 ("NGA") and the Natural Gas Policy Act of 1978 ("NGPA"). In the past, the Federal government has regulated the prices at which oil and gas could be sold. While "first sales" by producers of natural gas, and all sales of crude oil, condensate and natural gas liquids can currently be made at uncontrolled market prices, Congress could reenact price controls in the future. Deregulation of wellhead sales in the natural gas industry began with the enactment of the NGPA in 1978. In 1989, Congress enacted the Natural Gas Wellhead Decontrol Act (the "Decontrol Act"). The Decontrol Act removed all NGA and NGPA price and non-price controls affecting wellhead sales of natural gas effective January 1, 1993.

        Commencing in April 1992, the FERC issued Orders Nos. 636, 636-A, 636-B, 636-C and 636-D ("Order No. 636"), which require interstate pipelines to provide transportation services separate, or "unbundled," from the pipelines' sales of gas. Also, Order No. 636 requires pipelines to provide open access transportation on a nondiscriminatory basis that is equal for all natural gas shippers. Although Order No. 636 does not directly regulate the Company's production activities, the FERC has stated that it intends for Order No. 636 to foster increased competition within all phases of the natural gas industry. It is unclear what impact, if any, increased competition within the natural gas industry under Order No. 636 will have on the Company's activities.

        The courts have largely affirmed the significant features of Order No. 636 and numerous related orders pertaining to the individual pipelines, although certain appeals remain pending and the FERC continues to review and modify its open access regulations. In particular, the FERC is conducting a broad review of its transportation regulations, including how they operate in conjunction with state proposals for retail gas marketing restructuring, whether to eliminate cost-of-service rates for short-term transportation, whether to allocate all short-term capacity on the basis of competitive auctions, and whether changes to long-term transportation policies may also be appropriate to avoid a market bias toward short-term contracts. In February 2000, the FERC issued Order No. 637 amending certain regulations governing interstate natural gas pipeline companies in response to the development of more competitive markets for natural gas and natural gas transportation. The goal of Order No. 637 is to "fine tune" the open access regulations implemented by Order No. 636 to accommodate subsequent changes in the market. Key provisions of Order No. 637 include: (1) waiving the price

8

ceiling for short-term capacity release transactions until September 30, 2002, subject to review and possible extension of the program at that time; (2) permitting value-oriented peak/off peak rates to better allocate revenue responsibility between short-term and long-term markets; (3) permitting term-differentiated rates, in order to better allocate risks between shippers and the pipeline; (4) revising the regulations related to scheduling procedures, capacity, segmentation, imbalance management, and penalties; (5) retaining the right of first refusal ("ROFR") and the five-year matching cap for long-term shippers at maximum rates, but significantly narrowing the ROFR for customers that the FERC does not deem to be captive; and (6) adopting new web site reporting requirements that include daily transactional data on all firm and interruptible contracts and daily reporting of scheduled quantities at points or segments. The new reporting requirements became effective September 1, 2000. The Company cannot predict what action the FERC will take on these matters, in the future, nor can it accurately predict whether the FERC's actions will, over the long term, achieve the goal of increasing competition in markets in which the Company's natural gas is sold. However, the Company does not believe that it will be affected by any FERC-related action in a materially different manner than other natural gas producers and marketers with which it competes.

        Commencing in October 1993, the FERC issued a series of rules (Order Nos. 561 and 561-A) establishing an indexing system under which oil pipelines will be able to change their transportation rates, subject to prescribed ceiling levels. The indexing system, which allows pipelines to make rate changes to track changes in the Producer Price Index for Finished Goods, minus one percent, became effective January 1, 1995. The Company does not believe that, if it were to produce crude oil, these rules affect it any differently than other oil producers and marketers with which it competes.

        The FERC has also issued numerous orders confirming the sale and abandonment of natural gas gathering facilities previously owned by interstate pipelines and acknowledging that if the FERC does not have jurisdiction over services provided thereon, then such facilities and services may be subject to regulation by state authorities in accordance with state law. A number of states have either enacted new laws or are considering the adequacy of existing laws affecting gathering rates and/or services. Other state regulation of gathering facilities generally includes various safety, environmental, and in some circumstances, nondiscriminatory take requirements, but does not generally entail rate regulation. Thus, natural gas gathering may receive greater regulatory scrutiny of state agencies in the future. The Company's gathering operations could be adversely affected should they be subject in the future to increased state regulation of rates or services, although the Company does not believe that it would be affected by such regulation any differently than other natural gas producers or gatherers. In addition, the FERC's approval of transfers of previously regulated gathering systems to independent or pipeline affiliated gathering companies that are not subject to FERC regulation may affect competition for gathering or natural gas marketing services in areas served by those systems and thus may affect both the costs and the nature of gathering services that will be available to interested producers or shippers in the future.

        The Company owns certain natural gas pipeline facilities that it believes meet the traditional tests the FERC has used to establish a pipeline's status as a gatherer not subject to the FERC jurisdiction. Whether on state or federal land, natural gas gathering may receive greater regulatory scrutiny in the post-Order No. 636 environment.

        The Company conducts certain operations on federal oil and gas leases, which are administered by the Minerals Management Service (the "MMS"). Federal leases contain relatively standard terms and require compliance with detailed MMS regulations and orders, which are subject to change. Among other restrictions, the MMS has regulations restricting the flaring or venting of natural gas, and has proposed to amend such regulations to prohibit the flaring of liquid hydrocarbons and oil without prior authorization. Under certain circumstances, the MMS may require any Company operations on federal leases to be suspended or terminated. Any such suspension or termination could materially and adversely affect the Company's financial condition, cash flows and operations. The MMS issued a final

9

rule that amended its regulations governing the valuation of crude oil produced from federal leases. This rule, which became effective June 1, 2000, provides that the MMS will collect royalties based on the market value of oil produced from federal leases. The lawfulness of the new rule has been challenged in federal court. Evergreen cannot predict whether this new rule will be upheld in federal court, nor can the Company predict whether the MMS will take further action on this matter. However, the Company does not believe that, if it were to produce crude oil, this new rule will affect it any differently than other producers and marketers of crude oil.

        Additional proposals and proceedings that might affect the oil and gas industry are pending before Congress, the FERC, the MMS, state commissions and the courts. The Company cannot predict when or whether any such proposals and proceedings may become effective. In the past, the natural gas industry has been heavily regulated. There is no assurance that the regulatory approach currently pursued by various agencies will continue indefinitely. Notwithstanding the foregoing, the Company does not anticipate that compliance with existing federal, state and local laws, rules and regulations will have a material or significantly adverse effect upon the capital expenditures, earnings or competitive position of the Company or its subsidiaries. No material portion of Evergreen's business is subject to re-negotiation of profits or termination of contracts or subcontracts at the election of the Federal government.

        Bureau of Land Management.    Of the Company's Raton Basin acreage, approximately 134,000 gross acres are held within three federal units that the Company operates and that are administered by the Federal Bureau of Land Management ("BLM"). See "Item 2. Properties—Raton Basin Properties and Operations." Inclusion of property within a unit simplifies lease maintenance for the Company and promotes orderly development of its coal bed methane project.

        The BLM controls isolated parcels of federally owned surface and/or minerals in the Raton Basin. To date, two coal bed methane wells have been drilled on BLM minerals. Drilling and development of federal minerals and construction activities on federal surface are subject to the National Environmental Policy Act ("NEPA"). BLM has delayed additional drilling on federal oil and gas leases held by Evergreen, pending completion of an environmental assessment under NEPA. Development of adjacent fee lands and minerals has proceeded unhindered. Access to fee lands has not been hindered by the presence of isolated parcels of federal surface. The number of proposed wells on BLM minerals represents approximately one percent of the total number of wells Evergreen has planned in the Raton Basin.

        State Regulation.    The Company's operations are also subject to regulation at the state level and in some cases, county, municipal and local governmental levels. Such regulation includes requiring permits for the drilling of wells, maintaining bonding requirements in order to drill or operate wells and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, the plugging and abandoning of wells and the disposal of fluids used and produced in connection with operations. The Company's operations are also subject to various conservation laws and regulations. These include (1) the size of drilling and spacing units or proration units, (2) the density of wells that may be drilled and (3) the unitization or pooling of oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and gas wells, generally prohibit the venting or flaring of gas and impose certain requirements regarding the ratability of production. State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, nondiscriminatory take requirements, but (except as noted above) does not generally entail rate regulation. These regulatory burdens may affect profitability, and the Company is unable to predict the future cost or impact of complying with such regulations.

        Environmental Matters.    The Company is subject to extensive federal, state and local environmental laws and regulations that, among other things, regulate the discharge or disposal of materials or substances into the environment and otherwise are intended to protect the environment. Numerous

10

governmental agencies issue rules and regulations to implement and enforce such laws, which are often difficult and costly to comply with and which carry substantial administrative, civil and/or criminal penalties and in some cases injunctive relief for failure to comply. Some laws, rules and regulations relating to the protection of the environment may, in certain circumstances, impose "strict liability" for environmental contamination. Such laws render a person or company liable for environmental and natural resource damages, cleanup costs and, in the case of oil spills in certain states, consequential damages without regard to negligence or fault. Other laws, rules and regulations may require the rate of oil and natural gas production to be below the economically optimal rate or may even prohibit exploration or production activities in environmentally sensitive areas. In addition, state laws often require some form of remedial action such as closure of inactive pits and plugging of abandoned wells to prevent pollution from former or suspended operations. Legislation has been proposed and continues to be evaluated in Congress from time to time that would reclassify certain oil and gas exploration and production wastes as "hazardous wastes." This reclassification would make such wastes subject to much more stringent and expensive storage, treatment, disposal and clean-up requirements. If such legislation were to be enacted, it could have a significant adverse impact on the operating costs of the Company, as well as the oil and gas industry in general. Initiatives to regulate further the disposal of oil and gas wastes are also proposed in certain states from time to time and may include initiatives at county, municipal and local government levels. These various initiatives could have a similar adverse impact on the Company. The regulatory burden on the oil and natural gas industry increases its cost and risk of doing business and consequently affects its profitability.

        Compliance with these environmental requirements, including financial assurance requirements and the costs associated with the cleanup of any spill, could have a material adverse effect upon the Company's capital expenditures, earnings or competitive position. The Company believes that it is in substantial compliance with current applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on it. Nevertheless, changes in environmental laws and regulations have the potential to affect adversely Evergreen's operations. For example, the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), also known as the "Superfund" law, imposes liability, without regard to fault (i.e. strict and joint and several liability) or the legality of the original conduct, on certain classes of persons with respect to the release of a "hazardous substance" into the environment. These persons include the current or prior owner or operator of the disposal site or sites where the release occurred and companies that transported, disposed or arranged for the transport or disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources, and it is not uncommon for the federal or state government to pursue such claims. It is also not uncommon for neighboring landowners and other third parties to file claims for personal injury or property or natural resource damages allegedly caused by the hazardous substances released into the environment. Under CERCLA, certain oil and gas materials and products are, by definition, excluded from the term "hazardous substances." At least two Federal courts have held that certain wastes associated with the production of crude oil may be classified as hazardous substances under CERCLA. Similarly, under the federal Resource, Conservation and Recovery Act of 1976, as amended ("RCRA"), which governs the generation, treatment, storage and disposal of "solid wastes" and "hazardous wastes," certain exploration and production wastes are exempt from the definition of "hazardous wastes." This exemption continues to be subject to judicial interpretation and increasingly stringent state interpretation. During the normal course of the Company's operations, the Company generates or has generated in the past exempt and non-exempt wastes, including hazardous wastes, that are subject to RCRA and comparable state statutes and implementing regulations. The federal Environmental Protection Agency ("EPA") and various state agencies continue to promulgate

11

regulations that limit the disposal and permitting options for certain hazardous and non-hazardous wastes.

        The Company currently owns or leases, and has in the past owned or leased, several properties that have long been used to store and maintain oil and gas exploration and production equipment. In particular, current and prior operations of the Company included oil and gas production in the Rocky Mountain states and the portion of the Permian Basin that lies within the State of New Mexico. Although the Company utilized operating and disposal practices that were standard for the industry at the time, hydrocarbons, materials and/or solid or hazardous wastes may in the past have been disposed of or released on or under the properties owned or leased by the Company or on or under other locations where such wastes have been taken or placed for disposal. In addition, many of these properties have from time to time been operated by third parties whose management of hydrocarbons, hazardous materials and/or solid or hazardous and wastes was not under the Company's control. These properties and the hydrocarbons, materials or wastes disposed thereon may be subject to CERCLA, RCRA, and analogous state laws and regulations. Under such laws and regulations, the Company could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators) or property contamination (including groundwater contamination).

        In connection with the Company's coal bed methane gas production, the Company from time to time conducts production enhancement techniques, including various activities designed to induce hydraulic fracturing of the coal bed. While the Company performs its production enhancement techniques in substantial compliance with the requirements set forth by the State of Colorado, neither Colorado nor EPA regulates this coal bed formation hydraulic fracturing as a form of underground injection. On August 7, 1997, the U.S. Court of Appeals for the Eleventh Circuit held, in a case brought by a citizen environmental organization, that hydraulic fracturing performed in coal bed methane gas production in Alabama falls within the definition of "underground injection" as defined in the federal Safe Drinking Water Act and, therefore, EPA is required to regulate this activity. As a consequence of this holding, the Eleventh Circuit also granted a petition filed by the plaintiff in the case to review EPA's refusal to initiate proceedings that would withdraw federal approval of Alabama's Underground Injection Control program. EPA has recently commenced a comprehensive study of environmental risks associated with coal bed methane hydraulic fracturing techniques and anticipates that its final report will be completed by winter 2002. It is possible that hydraulic fracturing of coal beds for methane gas production will become regulated within the United States as a form of underground injection, resulting in the imposition of stricter performance standards (which, if not met, could result in diminished opportunities for methane gas production enhancement) and increased administrative and operating costs for the Company. Evergreen's management cannot predict whether potential future regulation of hydraulic fracturing as a form of underground injection would have an adverse material effect on the Company's operations or financial position. However, such regulation is not expected to be any more burdensome to the Company than it would be to other similarly situated companies involved in coal bed methane gas production or tight gas sands production within the United States.

        In Evergreen's coal bed methane gas production, the Company typically brings naturally occurring groundwater to the surface as a by-product of the production of methane gas. This "produced water" is either re-injected into the subsurface or stored or disposed of in evaporation ponds or permitted natural collection features located on the surface at or near the well-site in compliance with federal and state statutes and regulations. In some cases, the produced water is used for stock watering, agricultural or dust suppression purposes, also in substantial compliance with federal, state and local laws and regulations. The legal and regulatory classification of this produced water under the environmental laws discussed above as well as under the federal Clean Water Act, a strict liability statute that governs the discharge of "pollutants" to "waters of the United States," has been a source of dispute, as discussed

12

below. Under the Clean Water Act and various other state requirements and regulations, EPA, the State of Colorado's Department of Public Health and the Environment ("CDPHE"), and the Colorado Oil and Gas Conservation Commission ("COGCC") each continue to assert administrative and regulatory enforcement authority over the storage and disposal of such produced water. The EPA and the CDPHE have recently clarified their classification of either: (1) produced water as a "pollutant," and (2) the storage, use and disposal of such water on the surface as a "discharge to waters of the United States." This regulatory determination could have a significant impact on the regulatory treatment of this groundwater management practice and on the Company's understanding of its past and future compliance in connection with the Clean Water Act. On January 7, 2000, Evergreen Operating Corporation ("EOC"), one of the Company's wholly-owned subsidiaries, agreed to a Compliance Order on Consent from the CDPHE that resolved certain water storage and discharge issues between the CDPHE and EOC. Under the Consent Order, EOC has obtained additional permits and has installed a water supply system as a Supplemental Environmental Project ("SEP"), in lieu of civil penalties of $173,000, that will benefit rural landowners in one of the areas in which the Company operates. The Company may process a portion of its produced water to meet potability standards or pursue other water supply project options in cooperation with local governments. Under the Consent Order, the minimum and maximum costs of the SEP are $347,440 and $367,000, respectively. The Consent Order resolves all outstanding issues between EOC and Colorado state regulatory agencies, particularly the CDPHE, governing the discharge of produced water from the Company's coal bed methane operations in the Raton Basin.

        The Company's operations involve the use of gas-fired compressors to transport collected gas; these compressors are subject to federal and state regulations for the control of air emissions. The Company has filed a Title V permit application for its Burro Canyon compressor facility and construction permits for natural gas-fired compressors at other facilities, as applicable. Title V status for a facility results in significant increased testing, monitoring and administrative and compliance costs. To date, other compressor facilities have not triggered Title V requirements due to their design and the use of state-of-the-art engines and pollution control equipment that serve to reduce air emissions. In the autumn of 2000, Evergreen made a capital investment in enhanced emissions control equipment for six of its compressors at the Rita Canyon compressor facility, which eliminated this facility from the Title V threshold. The Company has obtained construction permits for additional compression in excess of current needs in anticipation of increased production from the Raton Basin. However, in the future, additional facilities could become subject to Title V requirements as compressor facilities are expanded or if regulatory interpretations of Title V applicability change. Stack testing and emissions monitoring costs will likely increase as these facilities are expanded, and if Title V compliance issues will need to be resolved. Evergreen recently received a Compliance Order on Consent resolving the CDPHE Air Pollution Control Division's allegations that the Company violated certain air permitting requirements. As settlement of these claims, the Company has paid a $52,000 civil penalty and performed an SEP, including the installation of pollution control equipment, at a combined cost of approximately $100,000. Evergreen is also engaged in discussions with CDPHE Air Pollution Control Division over the nature of a state permit requirement to report "insignificant sources" of emissions at the Burro Canyon facility. Evergreen believes that it is in substantial compliance with applicable laws, rules and regulations relating to the control of air emissions at all of its facilities. The Company is exploring the possibility of favorable tax treatment from the State of Colorado for the installation of oxidizing catalysts to reduce carbon monoxide emissions from the Company's compressor facilities and recovery of some compliance costs from the compressor engine manufacturer.

        At this time, the Company has no plans to make any material capital expenditures for environmental control facilities.

        Although the Company maintains insurance against some, but not all, of the risks described above, including insuring the costs of clean-up operations, public liability and physical damage, there is no

13

assurance that such insurance will be adequate to cover all such costs, that such insurance will continue to be available in the future or that such insurance will be available at premium levels that justify its purchase. The occurrence of a significant event not fully insured or indemnified against could have a material adverse effect on the Company's financial condition and operations.

International

        The Company's oil and gas operations outside of the United States are subject to similar foreign governmental controls and restrictions pertaining to the environment. These regulations, controls and restrictions may be more complex and onerous, resulting in increased costs for regulatory compliance over similar operations in the U.S. These costs may be increased by foreign government's unfamiliarity with coal bed methane operations and onshore drilling practices that are standard in the United States. The Company believes that compliance with existing requirements of such governmental bodies has not had a material adverse effect on the Company's operations.

Title to Properties

        As is customary in the oil and gas industry, only a preliminary title examination is conducted at the time the Company acquires leases of properties believed to be suitable for drilling operations. Prior to the commencement of drilling operations, a thorough title examination of the drill site tract is conducted by independent attorneys. Once production from a given well is established, the Company prepares a division order title report indicating the proper parties and percentages for payment of production proceeds, including royalties. The Company believes that titles to its leasehold properties are good and defensible in accordance with standards generally acceptable in the oil and gas industry.

Employees

        At February 15, 2002, the Company had 215 full-time employees.

Certain Risks

Oil and gas prices are volatile, and an extended decline in prices would hurt the Company's profitability and financial condition.

        Evergreen's revenues, operating results, profitability, future rate of growth and the carrying value of its oil and gas properties depend heavily on prevailing market prices for oil and gas. Management of the Company expects the markets for oil and gas to continue to be volatile. Any substantial or extended decline in the price of oil or gas would have a material adverse effect on the Company's financial condition and results of operations. It could reduce the Company's cash flow and borrowing capacity, as well as the value and the amount of its gas reserves. All of Evergreen's proved reserves are natural gas. Therefore, the Company is more directly impacted by volatility in the price of natural gas. Various factors beyond the Company's control will affect prices of oil and gas, including:

•

worldwide and domestic supplies of oil and gas;



•

the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;



•

political instability or armed conflict in oil or gas producing regions;



•

the price and level of foreign imports;



•

worldwide economic conditions;



•

marketability of production;

14

•

the level of consumer demand;



•

the price, availability and acceptance of alternative fuels;



•

the availability of pipeline capacity;



•

weather conditions; and



•

actions of federal, state, local and foreign authorities.

        These external factors and the volatile nature of the energy markets make it difficult to estimate future prices of oil and gas.

        The Company periodically reviews the carrying value of its oil and gas properties under the full cost accounting rules of the Securities and Exchange Commission. Under these rules, capitalized costs of proved oil and gas properties may not exceed the present value of estimated future net revenues from proved reserves, discounted at 10%. Application of the ceiling test generally requires pricing future revenue at the unescalated prices in effect as of the end of each fiscal quarter and requires a write-down for accounting purposes if the ceiling is exceeded, even if prices were depressed for only a short period of time. The Company may be required to write down or impair the carrying value of its oil and gas properties when oil and gas prices are depressed or unusually volatile. If a write-down is required, it would result in a charge to earnings, and book value but would not impact cash flow from operating activities. Once incurred, a write-down of oil and gas properties is not reversible at a later date.

The Company's operations require large amounts of capital.

        Evergreen's current development plans will require it to make large capital expenditures for the exploration and development of its natural gas properties. Also, the Company must secure substantial capital to explore and develop its international projects. Historically, Evergreen has funded its capital expenditures through a combination of funds generated internally from sales of production or properties, the issuance of equity, long-term debt financing and short-term financing arrangements. Management cannot be sure that any additional financing will be available to the Company on acceptable terms. Future cash flows and the availability of financing will be subject to a number of variables, such as:

•

the success of its coal bed methane project in the Raton Basin,



•

the Company's success in locating and producing new reserves,



•

the level of production from existing wells, and



•

prices of oil and natural gas.

        Issuing equity securities to satisfy the Company's financing requirements could cause substantial dilution to existing shareholders. Debt financing could lead to:

•

a substantial portion of the Company's operating cash flow being dedicated to the payment of principal and interest,



•

the Company being more vulnerable to competitive pressures and economic downturns, and



•

restrictions on the Company's operations.

        If the Company's revenues were to decrease due to lower oil and natural gas prices, decreased production or other reasons, and if it could not obtain capital through its credit facility or otherwise, the Company's ability to execute its development plans, replace its reserves or maintain production levels could be greatly limited.

Information concerning the Company's reserves and future net revenue estimates is uncertain.

        There are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves and their values, including many factors beyond the control of the Company. Estimates of proved undeveloped reserves, which comprise a significant portion of the Company's reserves, are by their nature uncertain. The reserve data included in this Form 10-K are estimated. Although management believes they are reasonable, estimates of production, revenues and reserve expenditures will likely vary from actual, and these variances may be material.

15

        Estimates of oil and natural gas reserves, by necessity, are projections based on geologic and engineering data, and there are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is a subjective process of estimating underground accumulations of oil and natural gas that are difficult to measure. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. Estimates of economically recoverable oil and natural gas reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effects of regulations by governmental agencies and assumptions governing future oil and natural gas prices, future operating costs, severance, ad valorem and excise taxes, development costs and workover and remedial costs, all of which may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, classifications of such reserves based on risk of recovery, and estimates of the future net cash flows expected therefrom may vary substantially. Any significant variance in the assumptions could materially affect the estimated quantity and value of the reserves. Actual production, revenues and expenditures with respect to the Company's reserves will likely vary from estimates, and such variances may be material. See "Item 2. Properties—Natural Gas Reserves."

        Analysts and investors should not construe PV-10 as the current market value of the estimated oil and natural gas reserves attributable to the Company's properties. Management has based the estimated discounted future net cash flows from proved reserves on prices and costs as of the date of the estimate, in accordance with applicable regulations, whereas actual future prices and costs may be materially higher or lower. For example, the reserve reports included in this Form 10-K were estimated using a calculated weighted average sales price of $2.32 per Mcf, which was based on the spot market price for gas on December 31, 2001. During 2001, the Company's net realized gas prices were as high as $10.02 per Mcf and as low as $1.24 per Mcf. Many factors will affect actual future net cash flows, including:

•

the amount and timing of actual production,



•

supply and demand for natural gas,



•

curtailments or increases in consumption by natural gas purchasers, and



•

changes in governmental regulations or taxation.

        The timing of the production of oil and natural gas properties and of the related expenses affect the timing of actual future net cash flows from proved reserves and, thus, their actual present value. In addition, the 10% discount factor, which the Company is required to use to calculate PV-10 for reporting purposes, is not necessarily the most appropriate discount factor given actual interest rates and risks to which Evergreen's business or the oil and natural gas industry in general are subject.

The Company depends heavily on expansion and development of the Raton Basin.

        All of Evergreen's proved reserves are in the Raton Basin and its future growth plans rely heavily on increasing production and reserves in the Raton Basin. The Company's proved reserves will decline as reserves are depleted, except to the extent the Company conducts successful exploration or development activities or acquires other properties containing proved reserves.

        At December 31, 2001, the Company had estimated net proved undeveloped reserves of approximately 366 Bcf, which constituted approximately 35% of its total estimated net proved reserves. The Company's development plan includes increasing its reserve base through continued drilling and development of its existing properties in the Raton Basin. Evergreen cannot be sure that its planned

16

projects in the Raton Basin will lead to significant additional reserves or that it will be able to continue drilling productive wells at anticipated finding and development costs.

Evergreen's producing property acquisitions carry significant risks.

        Evergreen's recent growth is due in part to acquisitions of producing properties. The successful acquisition of producing properties requires an assessment of a number of factors beyond the Company's control. These factors include recoverable reserves, future oil and gas prices, operating costs and potential environmental and other liabilities. These assessments are inexact and their accuracy is inherently uncertain. In connection with these assessments, the Company performs a review of the subject properties that it believes is generally consistent with industry practices. However, such a review will not reveal all existing or potential problems. In addition, the review will not permit a buyer to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities. The Company does not inspect every well. Even when a well is inspected, structural and environmental problems are not necessarily discovered. Normally, Evergreen acquires interests in properties on an "as is" basis with limited remedies for breaches of representations and warranties. In addition, competition for producing oil and gas properties is intense and many of its competitors have financial and other resources substantially greater than those available to the Company. Therefore, Evergreen cannot assure you that it will be able to acquire oil and gas properties that contain economically recoverable reserves or that it will acquire such properties at acceptable values.

The Company's industry is highly competitive.

        Major oil companies, independent producers and institutional and individual investors are actively seeking oil and gas properties throughout the world, along with the equipment, labor and materials required to operate properties. Many of the Company's competitors have financial and technological resources vastly exceeding those available to Evergreen. Many oil and gas properties are sold in a competitive bidding process in which the Company may lack technological information or expertise available to other bidders. The Company cannot be sure that it will be successful in acquiring and developing profitable properties in the face of this competition.

The oil and gas exploration business involves a high degree of business and financial risk.

        The business of exploring for and, to a lesser extent, developing oil and gas properties is an activity that involves a high degree of business and financial risk. Property acquisition decisions generally are based on various assumptions and subjective judgments that are speculative. Although available geological and geophysical information can provide information about the potential of a property, it is impossible to predict accurately the ultimate production potential, if any, of a particular property or well. Moreover, the successful completion of an oil or gas well does not ensure a profit on investment. A variety of factors, both geological and market-related, can cause a well to become uneconomic or marginally economic.

The Company's business is subject to operating hazards that could result in substantial losses.

        The oil and natural gas business involves operating hazards such as well blowouts, craterings, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, formations with abnormal pressures, pipeline ruptures or spills, pollution, releases of toxic gas and other environmental hazards and risks, any of which could cause the Company substantial losses. In addition, the Company may be held liable for environmental damage caused by previous owners of property it owns or leases. As a result, the Company may face substantial liabilities to third parties or governmental entities, which could reduce or eliminate funds available for exploration, development or acquisitions or cause Evergreen to incur losses. An event that is not fully covered by insurance—for example, losses resulting

17

from pollution and environmental risks, which are not fully insurable—could have a material adverse effect on the Company's financial condition and results of operations.

Exploratory drilling is an uncertain process with many risks.

        Exploratory drilling involves numerous risks, including the risk that the Company will not find any commercially productive natural gas or oil reservoirs. The cost of drilling, completing and operating wells is often uncertain, and a number of factors can delay or prevent drilling operations, including:

•

unexpected drilling conditions,



•

pressure or irregularities in formations,



•

equipment failures or accidents,



•

adverse weather conditions,



•

compliance with governmental requirements, and



•

shortages or delays in the availability of drilling rigs and the delivery of equipment.

        The Company's future drilling activities may not be successful, nor can Evergreen management be sure that the Company's overall drilling success rate or its drilling success rate for activity within a particular area will not decline. Unsuccessful drilling activities could have a material adverse effect on the Company's results of operations and financial condition. Also, Evergreen may not be able to obtain any options or lease rights in potential drilling locations that it identifies. Although the Company has identified numerous potential drilling locations, management cannot be sure that Evergreen will ever drill them or that it will produce natural gas from them or any other potential drilling locations.

Hedging transactions may limit the Company's potential gains or expose the Company to loss.

        To manage Evergreen's exposure to price risks in the marketing of its natural gas, the Company enters into natural gas fixed price physical delivery contracts as well as commodity price swap contracts from time to time with respect to a portion of its current or future production. While intended to reduce the effects of volatile natural gas prices, these transactions may limit the Company's potential gains if natural gas prices were to rise substantially over the price established by the hedge. In addition, such transactions may expose Evergreen to the risk of financial loss in certain circumstances, including instances in which:

•

the Company's production is less than expected,



•

there is a widening of price differentials between delivery points for the Company's production and the delivery point assumed in the hedge arrangement,



•

the counterparties to the Company's futures contracts fail to perform the contracts, or



•

a sudden, unexpected event materially impacts natural gas prices.

The Company may face unanticipated water disposal costs.

        Based on the Company's previous experience with coal bed methane gas production in the Raton Basin, management believes that the State of Colorado will continue to routinely approve permits for the use of well-site pits, water disposal wells and evaporation ponds for the disposal of produced water. Where groundwater produced from the Raton Basin coal seams will not exceed surface discharge permit levels, and in many cases will meet state and federal primary drinking water standards, Evergreen can lawfully discharge the water into arroyos and surface waters pursuant to permits it has obtained from the State of Colorado. All of these disposal options require a laboratory analysis program to ensure compliance with state permit standards. Additionally, the Company contracts with

18

an independent water sampling company that collects the water samples and monitors the Company's water management program. These monitoring costs are directly related to the number of well-site pits, evaporation ponds and discharge points.

        Where water of lesser quality is discovered or the Company's wells produce water in excess of the applicable volumetric permit limits, Evergreen may have to drill additional disposal wells to re-inject the produced water back into deep underground rock formations. Produced water is currently injected at seven such wells and permits to drill two more of these underground injection control (UIC) wells are pending. The costs to dispose of this produced water may increase, which could have a material adverse effect on the Company's operations in this area, if any of the following occur: (1) the Company cannot obtain future permits from the State of Colorado, (2) water of lesser quality is discovered, (3) the Company's wells produce excess water or (4) new laws or regulations require water to be disposed of in a different manner.

        Evergreen has been the defendant in a lawsuit under the federal Water Pollution Control Act, or Clean Water Act, relating to regulatory requirements for its water disposal from certain of its Raton Basin wells.

The Company has limited protection for its technology and depends on technology owned by others.

        The Company uses operating practices that management believes are of significant value in developing coal bed methane resources. In most cases, patent or other intellectual property protection is unavailable for this technology. The Company's use of independent contractors in most aspects of its drilling and some completion operations makes the protection of such technology more difficult. Moreover, the Company relies on technological expertise of the independent contractors that it retains for its oil and gas operations. The Company has no long-term agreements with these contractors and management cannot be sure that the Company will continue to have access to this expertise.

The Company's industry is heavily regulated.

        Federal, state and local authorities extensively regulate the oil and gas industry. Legislation and regulations affecting the industry are under constant review for amendment or expansion, raising the possibility of changes that may affect, among other things, the pricing or marketing of oil and gas production. Noncompliance with statutes and regulations may lead to substantial penalties, and the overall regulatory burden on the industry increases the cost of doing business and, in turn, decreases profitability. State and local authorities regulate various aspects of oil and gas drilling and production activities, including the drilling of wells (through permit and bonding requirements), the spacing of wells, the unitization or pooling of oil and gas properties, environmental matters, safety standards, the sharing of markets, production limitations, plugging and abandonment, and restoration.

The Company must comply with complex environmental regulations.

        The Company's operations are subject to complex and constantly changing environmental laws and regulations adopted by U.S. federal, state and local governmental authorities as well as by foreign governments where the Company is engaged in exploration or production operations. New laws or regulations, or changes to current requirements, could have a material adverse effect on its business. State, federal and local environmental agencies have relatively little experience with the regulation of coal bed methane operations, which are technologically different from conventional oil and gas operations. This inexperience has created uncertainty regarding how these agencies will interpret air, water and waste requirements and other regulations to coal bed methane drilling, fracture stimulation methods, production and water disposal operations. Evergreen will continue to be subject to uncertainty associated with new regulatory interpretations and inconsistent interpretations between state and federal agencies. The Company could face significant liabilities to the government and third parties for

19

discharges of oil, natural gas or other pollutants into the air, soil or water, and Evergreen could have to spend substantial amounts on investigations, litigation and remediation. The Company cannot be sure that existing environmental laws or regulations, as currently interpreted or enforced, or as they may be interpreted, enforced or altered in the future, will not materially adversely affect its results of operations and financial condition. As a result, the Company may face material indemnity claims with respect to properties it owns or has owned.

The Company's business depends on transportation facilities owned by others.

        The marketability of the Company's gas production depends in part on the availability, proximity and capacity of pipeline systems owned by third parties. Although the Company has some contractual control over the transportation of its product, material changes in these business relationships could materially affect its operations. Federal and state regulation of gas and oil production and transportation, tax and energy policies, changes in supply and demand, pipeline pressures, and general economic conditions could adversely affect the Company's ability to produce, gather and transport natural gas.

Market conditions could cause the Company to incur losses on its transportation contracts.

        The Company has gas transportation contracts that require it to transport minimum volumes of natural gas. If the Company ships smaller volumes, it may be liable for the shortfall. Unforeseen events, including production problems or substantial decreases in the price for natural gas, could cause the Company to ship less than the required volumes, resulting in losses on these contracts. See Note 12 to the Consolidated Financial Statements.

The Company's international operations are subject to risks of doing business abroad.

        Evergreen holds exploration licenses onshore in the United Kingdom, in Northern Ireland and the Republic of Ireland, and in northern Chile. The Company also holds an interest in offshore exploration in the Falkland Islands. International operations are subject to political, economic and other uncertainties, including, among others, risk of war, revolution, border disputes, expropriation, re-negotiation or modification of existing contracts, import, export and transportation regulations and tariffs, taxation policies, including royalty and tax increases and retroactive tax claims, exchange controls, limits on allowable levels of production, currency fluctuations, labor disputes and other uncertainties arising out of foreign government sovereignty over Evergreen's international operations.

The Company depends on key personnel.

        Evergreen's success will continue to depend on the continued services of its executive officers and a limited number of other senior management and technical personnel. Loss of the services of any of these people could have a material adverse effect on the Company's operations. The Company does not have employment agreements with any of the executive officers.

The Company does not pay dividends.

        The Company has never declared nor paid any cash dividends on its common stock and management has no intention to do so in the near future.

The Company's articles of incorporation and bylaws have provisions that discourage corporate takeovers and could prevent shareholders from realizing a premium on their investment.

        The Company's articles of incorporation and bylaws contain provisions that may have the effect of delaying or preventing a change in control. These provisions, among other things, provide for noncumulative voting in the election of the board and impose procedural requirements on shareholders

20

who wish to make nominations for the election of directors or propose other actions at shareholders' meetings. Also, the Company's articles of incorporation authorize the Board to issue up to 24,900,000 shares of preferred stock without shareholder approval and to set the rights, preferences and other designations, including voting rights, of those shares as the Board may determine. These provisions, alone or in combination with each other and with the rights plan described below, may discourage transactions involving actual or potential changes of control, including transactions that otherwise could involve payment of a premium over prevailing market prices to shareholders for their common stock.

        On July 7, 1997 Evergreen's Board of Directors adopted a shareholder rights agreement, pursuant to which uncertificated stock purchase rights were distributed to shareholders of the Company at a rate of one right for each share of common stock held of record as of July 22, 1997. The rights plan is designed to enhance the Board's ability to prevent an acquirer from depriving shareholders of the long-term value of their investment and to protect shareholders against attempts to acquire Evergreen by means of unfair or abusive takeover tactics. However, the existence of the rights plan may impede a takeover of Evergreen not supported by the Board, including a takeover that may be desired by a majority of the Company's shareholders or involving a premium over the prevailing stock price.

The Company's stock price has been and is likely to continue to be volatile.

        The market price of Evergreen common stock has been volatile. During 2001, the sale price of the common stock on the NYSE has ranged from a low of $29.45 per share to a high of $50.99 per share. The market price of the Company's common stock is subject to many factors, including:

•

prices for oil and natural gas;



•

general stock market conditions;



•

conditions in the Company's industry;



•

changes in the Company's revenues and earnings; and



•

changes in analyst recommendations and projections.

21

ITEM 2.    PROPERTIES

Operations

        The Company's wholly-owned operating subsidiary, EOC, is primarily responsible for drilling, evaluation and production activities associated with various properties. As of February 15, 2002, EOC was serving as operator for approximately 725 gross producing wells owned by the Company.

        The Company believes that, as operator, it is in a better position to control costs, safety and timeliness of work as well as other critical factors affecting the economics of a well or a property, including maintaining good community relations.

        EOC presently operates wells which represent 100% of Evergreen's proved reserves.

Natural Gas Reserves

        The table below sets forth the Company's quantities of proved reserves, as audited as of December 31, 2001 and 2000 by independent petroleum engineers Netherland Sewell & Associates, Inc. ("NSAI"). For the year ended December 31, 1999, the proved reserves were audited by both NSAI and Resource Services International, Inc. All proved reserves are located in the continental U.S., and the present value of estimated future net revenues from these reserves was calculated on a non-escalated price basis discounted at 10 percent per year as of periods indicated. There has been no major discovery or other favorable or adverse event that is believed to have caused a significant change in estimated proved reserves subsequent to December 31, 2001.

	December 31,
	2001		2000		1999
Proved Developed Gas Reserves (MMcf)		684,167		544,211		334,805
Proved Undeveloped Gas Reserves (MMcf)		366,476		330,315		224,614
Total Proved Gas Reserves (MMcf)		1,050,643		874,526		559,419
Future Net Revenues (before future income tax expenses) (in thousands)	$	1,336,302	$	6,844,254	$	820,983
Present Value of Future Net Revenues (before future income tax expenses) (in thousands)	$	598,462	$	2,920,166	$	331,383

        Reference should be made to Note 15 (Supplemental Oil and Gas Information) to the Consolidated Financial Statements for additional information pertaining to the Company's proved oil and gas reserves. During fiscal 2001, the Company did not file any reports that included estimates of total proved net oil or gas reserves with any federal agency other than the Securities and Exchange Commission and the Department of Energy.

Sales

        The following table sets forth the Company's net natural gas sales for the periods indicated.

	Year Ended December 31,
	2001	2000	1999
Natural Gas (MMcf)	30,807	19,521	13,656

22

Average Sales Prices, Lease Operating Expenses, Transportation Costs and Production Taxes

        The following table sets forth the average sales price and the average lease operating expenses, transportation costs and production and property taxes per Mcf, for the periods indicated.

	Year Ended December 31,
	2001		2000		1999
Average sales price of natural gas (per Mcf) *	$	3.89	$	3.03	$	1.96
Lease operating expenses	$	0.40	$	0.38	$	0.31
Transportation costs	$	0.31	$	0.30	$	0.29
Production and property taxes	$	0.18	$	0.13	$	0.08

* Includes effects of hedging transactions

Productive Wells

        As of December 31, 2001, Evergreen had 713 gross and 681 net producing wells. The Company had no producing oil wells as of that date. Productive wells are producing wells and wells capable of production, including shut-in wells.

Acreage

        At December 31, 2001, Evergreen held developed and undeveloped acreage as set forth below:

	Developed Acres		Undeveloped Acres		Total
Location
	Gross	Net	Gross	Net	Gross	Net
Raton Basin	171,657	157,047	102,002	66,411	273,659	223,458
United Kingdom	—	—	452,000	452,000	452,000	452,000
Falkland Islands	—	—	400,600	160,200	400,600	160,200
Chile	—	—	1,200,000	1,200,000	1,200,000	1,200,000
Northern Ireland & Republic of Ireland	—	—	1,085,000	1,085,000	1,085,000	1,085,000
Alaska and other	—	—	87,705	80,661	87,705	80,661
Total	171,657	157,047	3,327,307	3,044,272	3,498,964	3,201,319

        The following table sets forth the expiration dates of the gross and net acres subject to domestic leases summarized in the table of undeveloped acreage.

	Acres Expiring
	Gross	Net
Twelve Months Ended:
December 31, 2002 and later	2,761	1,604

23

Drilling Activities

        The Company's drilling activities for the periods indicated are set forth below:

			Year Ended December 31,
			2001		2000		1999
			Gross	Net	Gross	Net	Gross	Net
Domestic
	Exploratory Wells
		Productive	1	1	2	2	—	—
		Dry	—	—	—	—	—	—
	Total		1	1	2	2	—	—
	Development Wells
		Productive	145	137	100	97	85	83
		Water Disposal	—	—	3	3	2	—
		Dry	—	—	—	—	—	—
	Total		145	137	103	100	87	83
International
	Exploratory Wells
		Productive	5	—	9	—	—	—
		Dry	1	—	—	—	—	—
	Total		6	—	9	—	—	—

Coal Bed Methane Versus Traditional Natural Gas

        Methane is the primary commercial component of the natural gas stream produced from traditional gas wells. Methane also exists in its natural state in coal seams. Natural gas produced from traditional wells also contains, in varying amounts, other hydrocarbons. However, the natural gas produced from coal beds generally contains only methane and, after simple water dehydration, is pipeline-quality gas.

        Coal bed methane production is similar to traditional natural gas production in terms of the physical producing facilities and the product produced. However, the subsurface mechanisms that allow the gas to move to the wellbore and the producing characteristics of coal bed methane wells differ greatly from traditional natural gas production. Unlike conventional gas wells, which require a porous and permeable reservoir, hydrocarbon migration and a natural structural and/or stratigraphic trap, coal bed methane gas is trapped in the molecular structure of the coal itself until released by pressure changes resulting from the removal of in situ water or natural gas in the micropore system.

        Methane is created as part of the coalification process, though coals vary in their methane content per ton. In addition to residing in open spaces in the coal structure, methane is absorbed onto the inner coal surfaces. When the coal is hydraulically fracture stimulated and exposed to lower pressures through the de-watering process, the gas leaves (desorbs from) the coal. Whether a coal bed will produce commercial quantities of methane gas depends on the coal quality, its original content of gas per ton of coal, the thickness of the coal beds, the reservoir pressure and the existence of natural fractures and cleating (permeability) through which the released gas can flow to the wellbore. Frequently, coal beds are partly or completely saturated with water. As the water is produced, internal pressures on the coal are decreased, allowing the gas to desorb from the coal and flow to the wellbore. Unlike traditional gas wells, new coal bed methane wells often produce water for several months and then, as the water production decreases, natural gas production increases as the coal seams de-water.

24

        In order to establish commercial gas production rates, a permanent conduit between the individual coal seams and the wellbore must be created. This is accomplished by hydraulically creating, and propping open with special quality sand, artificial fractures within the coal seams (known as "fracing" in the industry) so the pathway for water and gas migration to the wellbore is enhanced. These fractures are filled (propped) with uniform sized sand and become the enhanced conduits for water and methane to reach the well. The ability of gas to move through the coal to the wellbore is the key determinant of the rate at which a well will produce.

Raton Basin Properties and Operations

        The Raton Basin is approximately 80 miles long and 50 miles wide, located in southern Colorado and northern New Mexico. The Raton Basin contains two coal bearing formations, the Vermejo formation coals located at depths of between 450 and 4,000 feet and the shallower Raton formation coals, located at depths from the surface to approximately 3,000 feet. To date, the majority of Evergreen's production has been from the Vermejo formation coals; however, the Raton formation coal seams and interbedded sandstones are now being successfully developed as well.

Development History

        Exploration for coal bed methane began in the Raton Basin in the late 1970s and continued through the late 1980s, with several companies drilling and testing over 100 wells during this period. The absence of a pipeline to transport gas out of the Raton Basin prevented full-scale development until January 1995, when CIG constructed the Picketwire Lateral.

        Since December 1991, the Company has acquired oil and gas leases covering approximately 274,000 gross acres in the Raton Basin. The initial 70,000 acres were acquired in 1991 with additional acreage purchased from individual owners under various lease terms. Additional acreage positions and production have been increased by purchases in July 1998 and December 1998 and as discussed below.

        Effective September 1, 2000, the Company acquired approximately 24,000 gross acres of producing coal bed methane properties in the Raton Basin for $181.5 million from an affiliate of KLT Gas, Inc., which is an indirect wholly-owned subsidiary of Kansas City Power & Light Company. The purchase was accounted for using the purchase method of accounting. At closing, Evergreen paid total consideration of $176 million, consisting of approximately $70 million in cash, $100 million in mandatory redeemable preferred stock and 201,748 shares of common stock valued at $6 million. In addition to the consideration paid at the closing of the acquisition, on January 5, 2001, the Company delivered 116,009 additional shares of common stock valued at $4 million, under the terms of the acquisition agreement, because the average of the monthly settle prices for the 2001 NYMEX natural gas contracts exceeded $4.465 per MMBtu. Also, as additional purchase consideration, Evergreen paid monthly net profits interest payments and recorded various other post closing adjustments of $1.5 million. Evergreen redeemed the mandatory redeemable preferred stock on December 22, 2000 using new borrowings under its credit facility. The preferred stock earned dividends from September 1, 2000 through December 22, 2000 of $2,929,000, reflecting an annual rate of 9.5%.

        Effective June 1, 2001, Evergreen purchased an additional 35% ownership interest in Lorencito Gas Gathering Company, LLC, or LGG, and an additional 35% working interest in approximately 17,800 acres of producing coal bed methane properties in the Lorencito Canyon region of the Raton Basin for approximately $20 million. As a result of the purchase, Evergreen now owns 85% of LGG and an 80% working interest in the Lorencito properties. The acquired property interests represented an estimated 40 Bcf of proven net gas reserves at the time of acquisition. Approximately 63% of the reserves acquired were classified as proved developed with the remaining 37% classified as proved undeveloped. All of the estimated reserves were assigned to the Vermejo and Raton group of coals.

25

        Currently, Evergreen has a 100% working interest in three federal units, the Spanish Peaks Unit, the Cottontail Pass Unit and the Sangre de Cristo Unit. The total gross acreage in the federal units is approximately 134,000 acres. The Company is the named the operator for all three of these units. Formation of a unit simplifies lease maintenance so that the Company, as the operator, can base development decisions within the unit on technical, geologic and geophysical data and operational and cultural considerations rather than on the fulfillment of lease term obligations.

        Because of the inclusion of federal leases in the unit, administration within a federal unit is governed by federal rules. Production from any well in the unit area will maintain all of the leases beyond their primary terms. In October 1997, the first "participating area" was designated by the federal Bureau of Land Management under the Unit Agreement. Gas production in the participating area will be pooled and shared by the royalty owners, overriding royalty owners and working interest owners in that area in proportion to their acreage ownership of the mineral estate in the area. The participating area will be adjusted annually to encompass additional acreage as additional wells are completed.

        Evergreen also has working interests of between 75% and 100% in areas adjacent to the federal units, which include the Long Canyon and Lorencito areas and the Primero, Rita, Sarcillo and Weston tracts. These areas comprise approximately 140,000 acres.

Raton Basin Geology

        In the Raton Basin, Evergreen produces methane almost entirely from the Vermejo coals, consisting of several individual seams ranging in thickness between 1 and 12 feet, and at drilling depths between 450 and 4,000 feet below the surface. The Vermejo total coal thickness ranges from 5 to 50 feet thick throughout the Raton Basin. It is thickest in the center of the Basin, which the Company's acreage surrounds. The coal beds and interbedded sedimentary rocks formed during the late Cretaceous to early Tertiary period, between 65 and 40 million years ago. The Raton Basin is a highly asymmetric downward fold in the earth's crust that is approximately 80 miles long north to south and about 50 miles wide east to west. Organic material accumulated in thick layers within coastal swamps in the Raton Basin and was subsequently buried and subjected to heat and pressure, which formed the coals. Since these coals were buried, continued mountain building, in combination with basin downwarping, created an extensive series of faults and fractures in the coals and surrounding rocks. Later, the area was intruded by hot liquid rock or "magma" from lower in the earth's crust, which cooled to form two large present day mountain structures in the center of the Raton Basin known as the Spanish Peaks. The magma moved up through existing faults and fractures and created additional fractures that radiate outward from the Spanish Peaks. As the magma cooled, its heat altered the surrounding rocks, including the Vermejo and Raton coal beds. Evergreen believes that the simultaneous downwarping of the Raton trough and Larimide age mountain building with subsequent relaxation (extension) and the additional heating provided by magmatic activity in the Raton Basin have matured the coals and enhanced the ability of the Vermejo and Raton coals to yield coal bed methane gas.

        In the Raton Basin, Evergreen has found some coal seams to be continuous between wells over distances of several miles, though the thickness of these beds are variable. Individual wells are often completed to produce gas from 5 to 15 individual coal beds with individual thickness between 1 and 12 feet.

Coal Bed Methane Technology

        The Company has developed what management believes to be effective procedures for fracing the Vermejo and Raton coals in its Raton Basin wells. In addition, the Company has developed well completion and specialized drilling techniques that are suited to the Raton Basin. Traditional gas wells

26

are drilled with the use of rotary drill bits cooled and lubricated by drilling fluids or "mud." Coal bed methane production is particularly sensitive to the natural permeability of the coals. Exposing the Raton Basin coals to drilling mud appears to significantly reduce the permeability of the coals by plugging the coal cleat system and natural fractures in the coals. Therefore, Evergreen uses percussion air drilling (similar to a jackhammer) without traditional drilling muds in drilling its wells. The Company is continually working to improve and enhance its technology expertise.

Water Production and Disposal

        Based on the Company's experience in coal bed methane production in the Raton Basin and extensive laboratory analysis of water samples taken from its coal bed methane wells, management believes that the groundwater produced from the Raton Basin coal seams will not exceed permit levels and will be suitable for discharge into arroyos, surface water, well-site pits or evaporation ponds pursuant to permits obtained from the State of Colorado. Recent gas analyses confirm that the gas stream is 99% pure methane and lacks other hydrocarbon sources of contamination. In some cases the water is of such quality that it can be discharged to arroyos and surface water under general water discharge permits issued to the Company by the State of Colorado. These permits give Evergreen the flexibility to add water discharge points on an as-needed basis with minimal administrative paperwork and within 30 days or less of application. Evergreen has in excess of 300 approved discharge points and has received an increase in the total volume of water permitted for surface discharge. Approval of these requests is uncertain and is dependent upon completion of additional study by the State of Colorado. Additionally, the Company contracts with an independent water sampling company that collects the water samples and monitors all the Company's water management program. These monitoring costs are directly related to the number of well-site pits, evaporation ponds and discharge points. Because it originates in a natural groundwater system, there is some uncertainty whether water currently being discharged to streams and arroyos will continue to meet permit standards for total iron and suspended solids. Water not meeting these discharge standards can be disposed of in well-site pits and evaporation ponds.

        When water of lesser quality is discovered or Evergreen's wells produce water in excess of the applicable permit limits, the Company may have to drill additional disposal wells to re-inject the produced water into deeper sandstone horizons. This would also have to be accomplished through an appropriately issued permit that has been routinely approved in the past.

Raton Basin Production

        Evergreen's natural gas sales from the Raton Basin did not commence until the completion of a pipeline system in January 1995, which connected its Raton Basin wells to the CIG pipelines. From January 1995 through December 2001, the Company sold an aggregate of approximately 82.5 Bcf of coal bed methane gas from the Raton Basin. Evergreen's net daily gas sales are currently averaging approximately 97.5 MMcf per day. Because of the importance of removing water from the coal seams to enhance gas production, the Company expects to continue production from more modest wells because of the beneficial ambient effect of pressure reduction in adjacent, more productive wells. Each well creates its own "cone of depression" around the wellbore. The Company believes that some of its Raton Basin wells on adjacent 160-acre sites have already created overlapping cones of depression, enhancing gas production in each well within this pattern. In some cases this pattern of interference can be enhanced by drilling a fifth well in the 640-acre section.

        Raton Basin gas contains insignificant amounts of contaminants, such as hydrogen sulfide, carbon dioxide or nitrogen, that are sometimes present in conventional natural gas production. Therefore, the properties of Raton Basin gas, such as heat content per unit volume (Btu), are close to the average properties of pipeline gas from conventional gas wells.

27

United Kingdom

        In 1991 and 1992, Evergreen's wholly-owned subsidiary, Evergreen Resources (U.K.) Ltd. ("ERUK"), was awarded seven onshore United Kingdom hydrocarbon exploration licenses for the development of coal bed methane gas and conventional hydrocarbons. These original licenses provided ERUK with the largest onshore acreage position in the U.K.

        Selection of the licensed areas was made after evaluating geological, geophysical, petrophysical and measured methane gas content databases. The majority of the original database was acquired through technology sharing agreements with British Coal Corporation, which shared relevant available data on the six basins and granted use of this data to ERUK. ERUK has augmented this data with proprietary seismic and coal bed methane well data and also geologic data from the British Geologic Survey, and other sources.

        During the period from 1992 to 1994, Evergreen conducted seismic work and drilled three wells under two of the original licenses. The wells encountered 30 feet to 80 feet of gross coal intervals. Two of the wells were hydraulically fracture stimulated and one was tested for permeability. Following extensive production testing, none of the three wells produced gas in economic quantities. The three wells are presently shut-in.

        In 1997, under a new onshore licensing regime implemented by the U.K. Department of Trade and Industry, the Company converted its original licenses to new onshore licenses, called Petroleum Exploration and Development Licenses. Under these new licenses, the Company retains approximately 452,000 acres, which were high-graded for coal bed methane and conventional hydrocarbon potential. These licenses provide up to a 30-year term with optional periodic relinquishment of portions of the licenses, subject to future development plans. There are no royalties or burdens encumbering these licenses.

        Management believes that a major coal bed methane resource exists within the areas subject to the current licenses. However, further evaluation will be required to confirm this belief and determine the economic viability of extracting any reserves. Evaluation is expected to occur on a license-by-license basis because success or lack of success on one license may not be translated to similar results on other licenses or separate geologic basins.

        In April 2000, the Company began drilling activities on its coal bed methane gas project in the U.K. A total of nine wells were drilled during 2000, of which five were coal bed methane wells, three were mine-gas interaction wells and one was a gob gas well. Total well depth of the coal bed methane and interaction wells ranged from 2,213 feet to 3,960 feet for coal bed methane wells and 1,485 feet to 2,156 feet for the mine-gas interaction wells. Total coal thickness ranged from 75 feet to 97 feet of coal. The gob gas well has a total depth of 879 feet from an approximate six foot gob thickness. During 2000, the Company fracture stimulated the five coal bed methane wells using its own pumping equipment in conjunction with a new completion technology utilizing "coiled tubing." Evergreen believes this is the first time that nitrified foam fracs using coiled tubing technology have been used in the U.K. Coiled tubing completions isolate individual coal seams that are to be fraced versus fracing a group of coals using current technology. Coiled tubing also provides for a better in-zone propped fracture with increased length at lower overall costs.

        The Company experienced delays in its proposed 2001 drilling program throughout 2001 due to the regulatory environment, which included required approvals from local planning commissions for drilling permits, and was consequently unable to complete its anticipated drilling program for 2001. Drilling operations on the first of four planned gob gas wells expected to be drilled in 2002 on Evergreen's United Kingdom coal bed methane acreage began February 5, 2002. The Company expects to obtain planning permission for the remaining three gob gas wells which are expected to be drilled before the end of the second quarter of 2002. Additionally, the Company intends to fracture stimulate

28

three existing mine gas interaction wells in the United Kingdom late in the first quarter or early in the second quarter of 2002.

Northern Ireland and Republic of Ireland

        In March and April 2001, the Company acquired 100% working interest in 1,085,000 acres of prospective tight gas sand properties in Northern Ireland (605,000 acres) and in the Republic of Ireland (480,000 acres) for total consideration of $1,250,000 (23,200 shares of Evergreen common stock valued at $750,000 and $500,000 in cash) plus a small retained net profits interest. Evergreen has drilled four wells in Northern Ireland and two wells in the Republic of Ireland to depths ranging from approximately 2,700 feet to 4,400 feet. Evergreen is in the process of completing five of these six wells. Three wells have been fracture stimulated to date. The first well took nine stages and 358,000 lbs. of sand, while the second well was completed in six stages with 455,500 lbs. of sand and the third well completed in one stage and 66,000 lbs. of sand. All five wells are expected to be completed by the end of April 2002. After completion of each of the wells, the Company will start bottom hole pressure and flowback tests for 35 to 45 days.

Other Domestic and International Projects

        Evergreen holds a 100% working interest in approximately 64,000 acres of prospective coal bed methane properties in Alaska and exploratory acreage in northern Colorado. During 2002, the Company expects to drill up to 10 wells in the Pioneer Unit on its Alaska acreage. The Company continues to evaluate additional domestic properties. Evergreen also holds interests in two international projects located in northern Chile and the Falkland Islands. The Company is currently evaluating the hydrocarbon potential of these prospects and anticipates that they will require only modest capital expenditures through 2002.

Office and Operations Facilities

        The Company leases its corporate offices in Denver, Colorado. The Company has an office lease for approximately $620,000 per year through 2008. The Company believes its office space will be sufficient for the foreseeable future.

ITEM 3.    LEGAL PROCEEDINGS

        Evergreen is not engaged in any material legal proceedings to which the Company or its subsidiaries are a party or to which any of its property is subject.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Not applicable.

29

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

        Evergreen's common stock has been listed on the New York Stock Exchange under the market symbol "EVG" since September 8, 2000. Prior to then it was included for quotation in the Nasdaq National Market under the symbol "EVER." The following table sets forth the range of high and low sales prices per share of common stock for the periods indicated.

		High		Low
Year Ended December 31, 1999
	First Quarter	$	21.63	$	14.50
	Second Quarter		25.75		19.00
	Third Quarter		28.50		21.38
	Fourth Quarter		24.06		14.84
Year Ended December 31, 2000
	First Quarter	$	26.31	$	17.75
	Second Quarter		30.06		21.00
	Third Quarter		34.94		24.75
	Fourth Quarter		40.13		27.13
Year Ended December 31, 2001
	First Quarter	$	43.50	$	29.45
	Second Quarter		50.99		34.80
	Third Quarter		42.35		30.65
	Fourth Quarter		43.00		32.04

        On February 28, 2002, the last reported sale price of the common stock on the NYSE was $41.80 per share. As of February 28, 2002, there were approximately 1,500 holders of record of the common stock.

Dividend Policy

        The Company has not declared nor paid and does not anticipate declaring or paying any dividends on its common stock in the near future. Any future determination as to the declaration and payment of dividends will be at the discretion of the Company's board of directors and will depend on then existing conditions, including the Company's financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and such other factors as the board deems relevant.

Sale of Senior Convertible Notes

        On December 18, 2001, the Company sold $100 million of 4.75% senior convertible notes due 2021, receiving proceeds, after deducting commissions, of $97 million. The notes are convertible under certain circumstances into 2 million shares of Evergreen common stock at a per share price of $50.00. The notes were sold to initial purchasers, who in turn sold them to qualified institutional buyers, in a private placement pursuant to Section 4(2) of the Securities Act of 1933, as amended, and may be resold to qualified institutional buyers on the PORTAL market. The Company intends to file a registration statement on Form S-3 relating to the resale of the notes and the common stock into which the notes are convertible with the Securities and Exchange Commission.

30

ITEM 6.    SELECTED FINANCIAL DATA

        The selected consolidated financial information presented below for the years ended December 31, 2001, 2000, 1999, 1998 and 1997 is derived from the Consolidated Financial Statements of the Company.

        This information should be read in conjunction with the Consolidated Financial Statements and Notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations. Effective the fourth quarter 2000, the Company adopted Emerging Issues Task Force Issue 00-10, "Accounting for Shipping and Handling Fees and Costs," which provided that amounts billed for transportation and other shipping and handling fees should be classified as revenues and that the costs should be classified as operating expenses and not netted against natural gas revenues. With the adoption of this issue, the Company reclassified prior years' costs to conform with this presentation. As discussed in Note 3 to the Consolidated Financial Statements, the Company acquired certain properties in the KLT property acquisition and included the operations of these properties in its consolidated operations beginning September 1, 2000. As discussed in Note 14 to the Consolidated Financial Statements, effective February 18, 1999, Evergreen sold its 49% interest in Maverick Stimulation Company ("Maverick") and recorded a gain net of tax of approximately $452,000 or $0.03 per diluted share. This transaction was accounted for as a discontinued operation and the results of operations have been excluded from continuing operations in the consolidated statements of income for all periods

31

presented. Certain reclassifications have been made to prior financial statements to conform with the current presentation.

				Years Ended December 31,
				2001			2000			1999			1998			1997
				(In Thousands, Except Per Share Amounts)
Statement of Operations Data
	Revenues:
		Natural gas revenues		$	119,745		$	59,128		$	26,722		$	21,582		$	13,536
		Interest and other			1,025			565			207			178			136
			Total revenues		120,770			59,693			26,929			21,760			13,672
	Expenses:
		Lease operating expenses			12,228			7,475			4,245			2,280			1,297
		Transportation costs			9,524			5,902			4,001			2,519			1,398
		Production and property taxes			5,472			2,567			1,146			1,077			710
		Depreciation, depletion and amortization			16,212			8,190			4,757			3,860			2,794
		General and administrative			6,985			4,364			3,024			1,933			1,286
		Interest			8,331			3,330			1,927			1,870			777
		Other			653			178			175			286			259
			Total expenses		59,405			32,006			19,275			13,825			8,521
	Income from continuing operations before income taxes				61,365			27,687			7,654			7,935			5,151
	Income tax provision—deferred				22,838			10,695			2,979			3,062			—
	Income from continuing operations				38,527			16,992			4,675			4,873			5,151
	Discontinued operations
		Gain on disposal of discontinued operations, net			—			—			452			—			—
		Equity in earnings of discontinued operations, net			—			—			—			339			313
	Net income				38,527			16,992			5,127			5,212			5,464
	Preferred stock dividends				—			(2,929	)		—			—			(400	)
	Net income attributable to common stockholders			$	38,527		$	14,063		$	5,127		$	5,212		$	5,064
	Basic income per common share
		From continuing operations		$	2.08		$	0.91		$	0.36		$	0.47		$	0.50
		From discontinued operations			—			—			0.03			0.03			0.03
		Basic income per common share		$	2.08		$	0.91		$	0.39		$	0.50		$	0.53
	Diluted income per common share
		From continuing operations		$	1.98		$	0.87		$	0.34		$	0.44		$	0.48
		From discontinued operations			—			—			0.03			0.03			0.03
		Diluted income per common share		$	1.98		$	0.87		$	0.37		$	0.47		$	0.51
	Statement of Cash Flows Data
		Net cash provided by (used in):
			Operating activities	$	90,113		$	31,274		$	12,731		$	12,147		$	6,457
			Investing activities		(122,547	)		(144,196	)		(43,864	)		(47,202	)		(19,259	)
			Financing activities		31,457			116,269			30,471			34,260			12,253

32

		As of December 31,
		2001			2000		1999			1998			1997
		(In Thousands)
Balance Sheet Data
	Cash and cash equivalents	$	3,024		$	4,034	$	651		$	1,334		$	2,103
	Working capital (deficit)		(6,793	)		6,850		(62	)		(468	)		(118	)
	Total assets		556,025			450,745		184,369			139,626			87,306
	Total long-term obligations		181,000			149,748		15,500			47,045			14,841
	Total stockholders' equity		314,940			266,852		153,510			79,679			64,152

33

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following information should be read in conjunction with the Consolidated Financial Statements and Notes presented elsewhere in this Form 10-K. The Company follows the full-cost method of accounting for oil and gas properties. See "Summary of Accounting Policies," included in Note 1 to the Consolidated Financial Statements.

General

        Evergreen is an independent energy company engaged in the operation, development, production, exploration and acquisition of natural gas properties. Evergreen is one of the leading developers of coal bed methane reserves in the United States. Its current operations are principally focused on developing and expanding its coal bed methane projects located in the Raton Basin in southern Colorado. The Company has begun coal bed methane projects in the United Kingdom and Alaska. In addition, the Company is engaged in the exploration of natural gas prospects in Northern Ireland and the Republic of Ireland, and owns additional interests in other domestic and international areas.

        The Company had 681 net producing gas wells at December 31, 2001. The Company's average net daily natural gas sales are currently approximately 97.5 MMcf.

        The following table sets forth certain operating data of the Company for the periods presented:

		Years Ended December 31,
		2001		2000		1999		1998		1997
Natural gas sales (MMcf)			30,807		19,521		13,656		10,021		6,402
Average daily sales (MMcf)			84.4		53.3		37.4		27.5		17.5
Average realized sales price per Mcf*		$	3.89	$	3.03	$	1.96	$	2.15	$	2.11
Cost Per Mcf:
	Lease operating expenses	$	0.40	$	0.38	$	0.31	$	0.23	$	0.20
	Transportation costs		0.31		0.30		0.29		0.25		0.22
	Production and property taxes		0.18		0.13		0.08		0.11		0.11
	Depreciation, depletion and amortization		0.53		0.42		0.35		0.39		0.44
	General and administrative		0.23		0.22		0.22		0.19		0.20
	Interest expense		0.27		0.17		0.14		0.19		0.12

*  Includes effects of hedging

Results of Operations

Year ended December 31, 2001 compared to year ended December 31, 2000

        Net income attributable to common stockholders was $38,527,000 or $1.98 per diluted share for the year ended December 31, 2001 versus net income of $14,063,000 or $0.87 per diluted share for the same period in 2000.

        Natural gas revenues increased to $119,745,000 during the year ended December 31, 2001 from $59,128,000 in the prior year. The increase in natural gas revenues of $60,617,000, or 103%, was due to a 58% increase in sales volumes to 30.8 Bcf from 19.5 Bcf and a 28% increase in average gas prices to $3.89 per Mcf in 2001 from $3.03 per Mcf in 2000. The 28% increase in average gas prices was partially due to an increase in hedging gains to $13,895,000 in 2001 compared to $260,000 in 2000. The increase in sales volumes was due to increased drilling activity and the KLT and Lorencito property acquisitions, which occurred in September 2000 and June 2001, respectively. The number of net producing Raton Basin wells increased to 681 at December 31, 2001 from 491 at December 31, 2000.

34

Net sales from drilling operations increased by 23% to 20.1 Bcf (55.1 MMcf per day) in 2001 from 16.3 Bcf (44.5 MMcf per day) in 2000. Net sales from the acquired properties increased to 10.7 Bcf in 2001 from 3.2 Bcf in 2000. The increase in the property acquisition sales was primarily due to a full year of operations of the KLT properties in 2001 versus four months in 2000 and the addition of the Lorencito properties in mid-2001. On a daily sales comparison the average daily sales for the acquisition properties was 29.3 MMcf per day in 2001 versus 26.5 MMcf per day in 2000.

        Interest and other income increased to $1,025,000 during the year ended December 31, 2001 as compared to $565,000 in 2000, an increase of 81%. The increase was primarily due to the accretion of a $500,000 discount on convertible preferred stock the Company purchased in February 2001. (See Note 13 to the Consolidated Financial Statements for more information.)

        During the year ended December 31, 2001, lease operating expenses were $12,228,000 as compared to $7,475,000 in the prior year. The increase in lease operating expense was due to the increase in the number of producing wells, an increase in the number of compressors, an increase in field personnel, workover costs related to well repairs and maintenance costs for compressors. While overall lease operating expenses increased, lease operating expenses on a per Mcf basis remained generally consistent at $0.40 per Mcf for the year ended December 31, 2001 compared to $0.38 for the year ended December 31, 2000.

        Transportation costs increased $3,622,000 from $5,902,000 for the year ended December 31, 2000 to $9,524,000 for the year ended December 31, 2001. The increase of 61% was primarily due to the 58% increase in sales volumes.

        For the year ended December 31, 2001, production and property taxes were $5,472,000 or $0.18 per Mcf as compared to $2,567,000 or $0.13 per Mcf for the same period in the prior year. The increase in both total dollars and cost per Mcf was primarily due to higher natural gas prices. As a percentage of natural gas sales, production and property taxes were 4.6% and 4.3% for the years ending December 31, 2001 and 2000, respectively.

        Depreciation, depletion and amortization expense for the year ended December 31, 2001 was $16,212,000 versus $8,190,000 in 2000. Depreciation, depletion and amortization expense increased to $0.53 per Mcf in 2001 as compared to $0.42 per Mcf in 2000. The increase in cost per Mcf was primarily due to the KLT property acquisition in September 2000, which had an acquisition cost of $1.12 per Mcf.

        General and administrative expenses were $6,985,000 during the year ended December 31, 2001 versus $4,364,000 in 2000. The increase in 2001 of $2,621,000 was due to the expected increase in the overall growth in corporate activity. During 2001, personnel costs increased due to the addition of new staff, salary and bonus increases and related benefits, professional fees, insurance costs and office expense related to additional office space. Although the overall general and administrative expenses increased $2,621,000 for the year ended December 31, 2001, the cost per Mcf increased only slightly to $0.23 from $0.22 in the prior year.

        Interest expense, net of capitalized amounts, was $8,331,000 during the year ended December 31, 2001 as compared to $3,330,000 in 2000. The $5,001,000 increase for 2001 over the prior year was due to the increased average outstanding balance on the revolving credit facility in 2001 of approximately $155 million compared to approximately $53 million in 2000. The increase in the average amount outstanding on the revolving credit facility was offset by a decrease in the average interest rate on the revolving credit facility during 2001 to approximately 6%. The increase in average borrowings was due to the funds used for redemption of the mandatory redeemable preferred stock in December 2000, the KLT property acquisition in September 2000 and the accelerated development in the Raton Basin during 2001.

35

        Other expense of $653,000 for the year ended December 31, 2001 included a $307,000 charge to earnings related to the write-off of the majority of the assets of EnviroSeis, LLC, a wholly-owned 2-D seismic company.

        In connection with the KLT property acquisition in September 2000, the Company issued $100 million in redeemable preferred stock with an annual dividend rate of 9.5%. Dividends of $2,929,000 were paid during the period ended December 31, 2000. The redeemable preferred stock was redeemed on December 22, 2000 with funds from the Company's line of credit.

        The Company provided for deferred taxes for the first six months of 2001 at a rate of 38% and at a rate of 35.5% for the second half of 2001 versus 38.6% during 2000. The decrease in the tax rate was primarily due to state income tax credits the Company now expects to be able to utilize. The enterprise zone tax credits are due to the Company's development in Las Animas County. The Company had originally estimated that it would start to pay taxes in the second quarter of 2001. However, due to the reduction in natural gas prices, the increased drilling program and the related taxable deduction of intangible drilling costs and the utilization of net operating losses, the Company estimates that cash payments for taxes will not be required until 2003.

        On a quarterly basis the Company is required to review the carrying value of its oil and gas properties under the full cost accounting rules of the Securities and Exchange Commission. Under these rules, capitalized costs of proved oil and gas properties may not exceed the present value of estimated future net revenues from proved reserves, discounted at 10%. Application of the ceiling test generally requires pricing future revenue at the unescalated prices in effect as of the last day of the quarter and requires a write-down for accounting purposes if the ceiling is exceeded. At December 31, 2001, the spot price that the Company would have realized for its natural gas sales was $2.32 per Mcf. At this price level, the Company did not have a write-down as the present value of the Company's future net revenues, discounted at 10%, exceeded the Company's capitalized costs. If natural gas prices drop to lower levels during 2002 and future periods, the Company could be required to record a write-down of its capitalized costs.

Year ended December 31, 2000 compared to year ended December 31, 1999

        Net income attributable to common stockholders was $14,063,000 or $0.87 per diluted share for the year ended December 31, 2000 versus net income of $5,127,000 or $0.37 per diluted share for the same period in 1999.

        Natural gas revenues increased to $59,128,000 during the year ended December 31, 2000 from $26,722,000 in the prior year. The increase in natural gas revenues of $32,406,000, or 121% for the year ended December 31, 2000, compared to 1999 was due to a net gain of $260,000 recognized from hedging activities, an increase in sales volumes of 43% to 19.5 Bcf from 13.7 Bcf and a 55% increase in average gas prices to $3.03 per Mcf in 2000 from $1.96 per Mcf in 1999. The increase in sales volumes was partially due to increased drilling activity and the KLT property acquisition. At December 31, 2000, the number of net producing Raton Basin wells increased to 491 from 252 at December 31, 1999.

        Interest and other income increased to $565,000 during the year ended December 31, 2000 as compared to $207,000 in 1999, an increase of 173%. The increase was due to increased cash flow in 2000 and equipment rental income.

        During the year ended December 31, 2000, lease operating expenses were $7,475,000 or $0.38 per Mcf as compared to $4,245,000 or $0.31 per Mcf in the prior year. The increase in lease operating expense in 2000 as compared to 1999 was due to the increase in the number of producing wells, additional compressor expense, increase in field personnel and workover costs related to well repairs and maintenance costs for compressors. Lease operating expenses related to the wells from the KLT property acquisition were $1,311,000 for the year ended December 31, 2000 or $0.41 per Mcf.

36

        Effective in the fourth quarter 2000, the Emerging Issues Task Force ("EITF") Issue 00-10, "Accounting for Shipping and Handling Fees and Costs," required transportation costs to be included in operating expenses versus netted against natural gas revenues. Reclassifications were made to prior periods to conform with this presentation. Transportation costs for the year ended December 31, 2000 were $5,902,000 or $0.30 per Mcf as compared to $4,001,000 or $0.29 per Mcf in 1999. The increase of $1,901,000 was primarily due to the increase in production from new wells and the KLT property acquisition.

        For the year ended December 31, 2000, production and property taxes were $2,567,000 or $0.13 per Mcf as compared to $1,146,000 or $0.08 per Mcf for the same period in the prior year, due to higher natural gas prices.

        Depreciation, depletion and amortization expense for the year ended December 31, 2000 was $8,190,000 versus $4,757,000 in 1999. Depreciation, depletion and amortization expense increased to $0.42 per Mcf in 2000 as compared to $0.35 per Mcf in 1999. The increase in cost per Mcf in 2000 as compared to 1999 was primarily due to the KLT property acquisition. Excluding acquisitions, the Company had an average finding cost of $0.25 per Mcf from the inception of its drilling activities in the Raton Basin while the average finding cost associated with the KLT property acquisition was $1.12 per Mcf.

        General and administrative expenses were $4,364,000 during the year ended December 31, 2000 versus $3,024,000 in 1999. The increase in 2000 of $1,340,000 was due to the expected increase in the overall growth in corporate activity. During 2000, personnel costs increased due to the addition of new staff, salary increases, related benefits and insurance costs. Although the overall general and administrative expenses increased for the year ended December 31, 2000, the cost per Mcf remained at $0.22 in 2000, as in 1999. Through March 1999, EOC operated properties for various third party working interest owners and the related overhead charges received by EOC were netted against general and administrative expenses. The working interest owners sold those properties in January 1999. As such, EOC did not receive overhead payments for the operation of those properties after March 1999, which increased the Company's general and administrative expenses by $192,000 for the year ended December 31, 2000 as compared to 1999.

        Interest expense was $3,330,000 during the year ended December 31, 2000 as compared to $1,927,000 in 1999. The $1,403,000 increase for 2000 over the prior year was due to increased average borrowings under the Company's line of credit. The increase in borrowings was due to the funds used for redemption of the mandatory redeemable preferred stock, the KLT property acquisition and continuing development in the Raton Basin.

        On February 18, 1999, the Company sold its 49% interest in Maverick Stimulation Company ("Maverick") to the managing members of Maverick. The closing date was April 14, 1999. On that date, the Company received $2,258,000 in cash and was released from its debt guarantee with Maverick's bank. The Company recorded an after tax gain on the sale of its 49% interest of $452,000.

        In connection with the KLT property acquisition, the Company issued $100 million in redeemable preferred stock with an annual dividend rate of 9.5%. Dividends of $2,929,000 were paid during the year ended December 31, 2000. The stock was redeemed on December 22, 2000 with funds from the Company's line of credit.

Liquidity and Capital Resources

Sources and Uses

        The Company's primary sources of liquidity are cash provided by operations and debt financing. Capital markets have also been utilized in order to maintain the Company's indebtedness at moderate levels in order to provide sufficient financial flexibility to react to future opportunities. The Company's

37

primary needs for cash are for exploration, development and acquisitions of oil and gas properties and working capital obligations.

        In December 2001, the Company issued $100 million in senior unsecured convertible notes, receiving net proceeds of $97 million. The notes are due in 2021 and bear interest at a fixed annual rate of 4.75%, which is to be paid in cash on June 15 and December 15 of each year. In addition to the interest discussed above, the Company will pay contingent interest to the holders of the notes if the average trading price of the notes for an established number of days exceeds 120% or more of the principal amount of the notes. The rate of contingent interest payable in respect to any six-month period will equal the greater of (1) a per annum rate equal to 5% of the Company's estimated per annum borrowing rate for senior non-convertible fixed-rate debt with a maturity date comparable to the notes or (2) 0.30% per annum. In no event may the contingent interest rate exceed 0.40% per annum. See Note 5 to the Consolidated Financial Statements.

        The notes are general unsecured obligations, ranking on a parity in right of payment with all of Evergreen's existing and future senior indebtedness, and senior in right of payment with all of Evergreen's future subordinated indebtedness. The notes are due on December 15, 2021 but are redeemable at either the Company's option or the holder's option on other specified dates. The Company may redeem the notes at its option in whole or in part beginning on December 20, 2006, at 100% of their principal amount plus accrued and unpaid interest (including contingent interest). Holders of the notes may require the Company to repurchase the notes if a change in control of the Company occurs. Holders may also require the Company to repurchase all or part of the notes on December 20, 2006, December 15, 2011 and December 15, 2016 at a repurchase price of 100% of the principal amount of the notes plus accrued and unpaid interest (including contingent interest). On December 20, 2006, the Company may pay the repurchase price in cash, in shares of common stock, or in any combination of cash and common stock. On December 15, 2011 and December 15, 2016, the Company must pay the repurchase price in cash.

        The notes are convertible into common stock of Evergreen under certain circumstances as discussed below at a conversion price of $50 per share, subject to certain adjustments. The notes can be converted at the option of the holder if for a specified period of time, the closing price of the Company's common stock exceeds 110% of the $50 conversion price or if the average trading value of the notes for a specified period of time is less than 105% of an average conversion value as defined by the indenture governing the notes. The notes may also be converted into common shares of the Company at the election of the holder upon notice of redemption, or at any time the notes are rated by either Moody's Investors Service, Inc. or Standard & Poor's Rating Group and the credit rating initially assigned to the notes by either such rating agency is reduced by two or more ratings levels, or upon the occurrence of certain corporate transactions including a change in control or the distribution to current holders of the Company's common stock, certain purchase rights or any other asset that has a value exceeding 10% of the sale price of the common stock on the day preceding the declaration date of the distribution of such assets.

        The Company currently has a $200 million revolving credit facility with a bank group (the "Banks"). The credit facility is available through July 1, 2003. Advances pursuant to this credit facility are limited to a borrowing base, which is presently $200 million. The Company may elect to use either the London Interbank Offered Rate, or LIBOR, plus a margin of 1.125% to 1.50% or the Prime Rate plus a margin of 0% or 0.25%, with margins on both rates determined on the average outstanding borrowings under the credit facility. The borrowing base is redetermined semi-annually by the Banks based upon reserve evaluations of Evergreen's oil and gas properties. An average annual commitment fee of 0.3125% is charged quarterly for any unused portion of the credit line. The agreement is collateralized by all domestic oil and gas properties and guaranteed by substantially all of the Company's subsidiaries. The credit agreement also contains certain net worth, leverage and ratio covenants. At December 31, 2001 Evergreen had $81 million of outstanding borrowings under this

38

credit facility, with a current average interest rate of 3.5%. The Company was in compliance with all loan covenants at December 31, 2001 and 2000. The Company is currently in negotiations with the Banks to extend the maturity of the credit facility an additional two years to July 2005. The extension of the credit agreement is expected in March 2002. The total amount outstanding at February 28, 2002 was $89 million.

        The Company expects to continue to utilize cash from operations as well as its available funds under its revolving credit facility to fund capital expenditures and working capital obligations during 2002. As of February 28, 2002, the Company had $111 million available under its line of credit. Future cash flows will be influenced, among other factors, by the market price of natural gas as well as the number of producing properties on line. To the extent that gas prices decline, the Company's revenues, cash flows and earnings would be adversely affected, which would require the Company to rely more heavily on its revolving credit facility to fund its 2002 capital budget. The Company's management believes that if gas prices were to decline to a level that would have a material adverse effect on cash flows, the Company would continue to meet its working capital obligations and its 2002 capital budget (as discussed below) through its capacity on the revolving credit facility. If natural gas prices drop significantly for an extended period of time, management may reduce the anticipated capital expenditure budget for 2002.

        The Company's 2002 capital budget is estimated to be approximately $106.1 million. Of this total, approximately $87.4 million will be directed to Evergreen's coal bed methane operations in the Raton Basin, which includes approximately $31.6 million for infrastructure, approximately $37.7 million for the drilling and completion of 152 wells, and $18.1 million primarily for recompletions and equipment. Approximately $10 million of the 2002 capital budget is expected to be spent on the Company's coal bed methane project in the United Kingdom and tight gas sand project in Northern Ireland and the Republic of Ireland, and the remaining $8.7 million largely will be used for domestic exploration projects.

2001 and 2000 Cash Flows and Capital Expenditures

        Cash flows provided by operating activities were $90,113,000 for the year ended December 31, 2001 as compared to cash flows provided by operating activities of $31,274,000 for the year ended December 31, 2000. The increase of $58,839,000, or 188%, was primarily attributable to a 127% increase in net income along with a proportionate increase in the non-cash expenses of depreciation, depletion and amortization and deferred income taxes.

        Cash flows used in investing activities were $122,547,000 during the year ended December 31, 2001, versus $144,196,000 in 2000. The decrease of $21,649,000 was primarily attributable to a decrease in cash used in acquisitions from approximately $70 million last year to approximately $20 million in 2001. This decrease of $50 million was offset by additional cash used in an accelerated drilling program in 2001 of 145 wells in the Raton Basin compared to 105 wells drilled in the prior year.

        Total capital expenditures for the year ending December 31, 2001 were $126.1 million. These capital costs included: $23 million for the June 2001 property acquisition (which includes $2.5 million in post-acquisition development costs); $37.8 million to drill and complete 145 Raton Basin gas wells (the 2001 drilling program) and the completion of 32 wells drilled in 2000; $30.4 million for the Raton Basin gas collection system; $7.1 million related to other Raton Basin development costs; $4.7 million for domestic exploration projects; and $13.9 million for international exploration projects. The remaining amount of approximately $9.2 million consisted primarily of capital expenditures by the Company's wholly owned well service company, which included the purchase of a coiled tubing unit, two workover rigs and deposits on a second fleet of fracture stimulation and cementing units.

        Cash flows provided by financing activities were $31,457,000 during the year ended December 31, 2001, as compared to cash flows provided by financing activities of $116,269,000 in 2000. The significant

39

decrease was due to reduced net borrowings resulting from the increase in operating cash flows of $59 million and a decrease in cash used in investing activities of $22 million. In December 2001 the Company issued $100 million in convertible notes. See Note 5 to the Consolidated Financial Statements. The $97 million in net proceeds from the issuance of the notes were used to pay down the Company's revolving credit facility.

Contractual Obligations

        In addition to the revolving credit facility and senior convertible notes discussed above, the Company had various other contractual obligations as of December 31, 2001. The following table lists the Company's significant liabilities at December 31, 2001 including the revolving credit facility and the senior convertible notes:

	Payments Due By Period
Contractual Obligations	Less than 1 year		2-3 years		4-5 years		After 5 years		Total
	(In Thousands)
Revolving credit facility	$	—	$	81,000	$	—	$	—	$	81,000
Senior convertible notes		—		—		100,000		—		100,000
Operating leases		2,288		1,984		1,300		889		6,461
Transportation commitments		10,779		25,791		25,808		71,982		134,360
Unconditional purchase obligations		10,500		—		—		—		10,500
Drilling/Work commitments		4,700		—		—		—		4,700
Total contractual cash obligations	$	28,267	$	108,775	$	127,108	$	72,871	$	337,021

        The Company leases its corporate offices in Denver, Colorado under the terms of an operating lease, which expires in 2008. Yearly payments under the lease are approximately $620,000. The remaining operating lease commitments represent vehicle leases, which expire during 2002 through 2004. The Company anticipates it will continue to utilize operating leases for its vehicle needs in the future.

        Evergreen's current firm transportation commitments with CIG are 97 MMcf of gross gas sales per day. The Company has committed to an additional 30 MMcf per day, subject to a ramp-up schedule which anticipates 5 MMcf per day increments each four months from June 2002 through February 2004. Thus, Evergreen's total transportation commitments will increase in increments to a total of 127 MMcf per day by February 2004. If the Company is unable to fulfill its transportation commitments, amounts paid for transportation on up to 41 MMcf per day can be credited toward future transportation costs through August 2006. Under terms of these transportation agreements with CIG, the Company has committed to pay approximately $134 million through 2014.

        At December 31, 2001, the Company had entered into agreements with various vendors to construct well service equipment and gas gathering assets at a total cost of approximately $13 million. As of December 31, 2001, approximately $2.5 million was paid as deposits on such equipment, which is included in property and equipment on the Company's consolidated balance sheet. Subsequent to December 31, 2001, the Company committed to purchase two additional compressors at a combined estimated cost of approximately $3.5 million.

        The Company currently has a commitment to drill six wells in the Pioneer Unit in Alaska in 2002. Total expected costs related to this commitment are estimated to be approximately $3 million. The Company has also entered into a joint venture agreement with a work commitment covering 29,000 acres of coal bed methane properties in Huerfano County, Colorado, in the northern end of the Raton Basin. Under the agreement, Evergreen will spend $2 million through September 30, 2002 to earn a 50% working interest in the properties, which currently contain 15 shut-in wells. The properties are

40

located approximately 20 miles north of Evergreen's existing 274,000 acres of coal bed methane properties in Las Animas County, Colorado. Evergreen's planned expenditures will be primarily for drilling, completions, workovers, equipment and fracture stimulations. As of December 31, 2001, the Company had incurred approximately $300,000 toward the $2 million work commitment.

Hedging Transactions

        Evergreen's production is generally sold at prevailing market prices. However, the Company periodically enters into hedging transactions for a portion of its production when market conditions are deemed favorable and natural gas prices exceed the Company's minimum internal price targets. See "Item 7A—Quantitative and Qualitative Disclosure About Market Risk."

        The Company's objective in entering into hedging transactions is to manage price fluctuations and achieve a more predictable cash flow. These transactions limit Evergreen's exposure to declines in prices, but also limit the benefits Evergreen would realize if prices increase. As of December 31, 2001, the Company had entered into the following contracts to sell its gas production (the Company's hedging contracts are denoted in MMBtu, which convert on an approximately 1-for-1 basis into Mcf):

•

a maximum of 4 MMcf per day from January 1, 2001 through April 30, 2003, at a price of $2.40 per Mcf plus transportation costs, and



•

10 MMcf per day from January 1, 2001 through March 31, 2003 for the lesser of then current market price or a gross price of $2.45 per Mcf.

        In consideration for the extension of the $2.45 contract, Evergreen received $1,762,000 over the 12-month period ended October 31, 2000, which is being amortized over the contract term. As of December 31, 2001, $565,000 was recognized as deferred revenue and will be recognized as revenue in future periods.

        The Company may use derivative instruments to manage exposure to commodity prices, foreign currency and interest rate risks. The Company's objectives for holding derivatives are to minimize risks using the most effective methods to eliminate or reduce the impacts of these exposures.

        The Company occasionally enters into fixed-price physical delivery contracts as discussed above as well as commodity price swap derivatives to manage price risk with regard to a portion of its natural gas production. Commodity price swap derivative contracts are designated as cash flow hedges. As a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in Other Comprehensive Income ("OCI") and are recognized in the statement of income when the associated production occurs and the resulting cash flows are reported as cash flows from operations. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. To qualify as a cash flow hedge, these swap contracts must be designated as cash flow hedges and changes in their fair value must correlate with changes in the price of anticipated future production such that the Company's exposure to the effects of commodity price changes is reduced.

        During the year ended December 31, 2001, the Company had two commodity price swap agreements. One contract was for 10 MMcf per day from January 1, 2001 through December 31, 2001 at a hedge price of $6.10 per Mcf and the other contract was for 10 MMcf per day from February 1, 2001 through December 31, 2001 at a hedge price of $6.43 per Mcf. The contracts called for the Company to receive or make payments based upon the differential between the hedge price and the market gas price, as defined in the contracts, for the notional quantity. During the year ended December 31, 2001, the Company realized $13.9 million in gains on the two commodity swaps which have been included in natural gas revenues for the year ended December 31, 2001. At December 31, 2001, the Company had no financial hedges in place related to its natural gas production.

41

        In February 2002, the Company entered into the following commodity swap agreements (the swaps are denoted in MMBtu, which convert on an approximate 1-for-1 basis into Mcf):

Duration	Volume (Mcf) Per Day	Price Per Mcf
March 2002 - June 2002	20,000	$	2.315
March 2002 - June 2002	20,000	$	2.325
March 2002 - June 2002	10,000	$	2.380
March 2002 - June 2002	5,000	$	2.300
April 2002 - June 2002	5,000	$	2.300

        In April 2001, the Company entered into an interest rate swap designated as a cash flow hedge. The swap allows for strategies designed to protect against fluctuations. The swap exchanges a series of future cash payments, one on a fixed-rate basis and the other on a floating rate-basis, to lock in a specific interest rate that is received by the Company. The interest rate swap has a notional amount of $25 million at a LIBO rate of 4.4% and is effective April 23, 2001 through April 23, 2002. At December 31, 2001, the unrealized loss for this contract was approximately $129,000 net of taxes of $75,000. The Company recognized a $233,000 loss on this contract during the year ended December 31, 2001, which was included in interest expense for the period.

Income Taxes and Net Operating Losses

        The Company has net operating loss carryforwards for tax purposes of approximately $14,800,000, which expire beginning in 2010 through 2018. Additionally, the Company has tax credit carryforwards for tax purposes of approximately $5,609,000, $5,421,000 of which relate to state tax credits and will expire beginning in 2002 through 2013.

        The state tax credits are subject to limitation and the Company has concluded that, based upon expected future results, the future reversals of taxable temporary differences and the tax benefits derived from the exercise of non-qualified employee stock options, there is no reasonable assurance that the entire tax benefit of the tax credits can be used. Accordingly, a valuation allowance has been established. Because of the reduction in natural gas prices, the increased drilling program and the related intangible drilling costs and the utilization of the net operating losses, the Company estimates that cash payments for taxes will not be required until 2003.

Recent Accounting Pronouncements

        In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations." SFAS No. 141 is intended to improve the transparency of the accounting and reporting for business combinations by requiring that all business combinations be accounted for under a single method—the purchase method. This statement is effective for all business combinations initiated after June 30, 2001.

        In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." This statement applies to intangibles and goodwill acquired after June 30, 2001, as well as goodwill and intangibles previously acquired. Under this statement, goodwill as well as other intangibles determined to have an infinite life will no longer be amortized; however, these assets will be reviewed for impairment on a periodic basis. This statement is effective for the Company for the first quarter in the fiscal year ending December 31, 2002. Management does not believe that the adoption of this statement will have a material effect on the Company's financial statements.

        In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in

42

the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. Management has not yet determined the impact of the adoption of this statement.

        In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 requires that long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, is to be applied prospectively. Management has not yet determined the impact of the adoption of this statement.

Critical Accounting Policies and Estimates

        The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its Consolidated Financial Statements.

        Reserve Estimates:    The Company's estimates of oil and natural gas reserves, by necessity, are projections based on geologic and engineering data, and there are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is a subjective process of estimating underground accumulations of oil and natural gas that are difficult to measure. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. Estimates of economically recoverable oil and natural gas reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effects of regulations by governmental agencies and assumptions governing future oil and natural gas prices, future operating costs, severance and excise taxes, development costs and workover and remedial costs, all of which may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, classifications of such reserves based on risk of recovery, and estimates of the future net cash flows expected there from may vary substantially. Any significant variance in the assumptions could materially affect the estimated quantity and value of the reserves, which could affect the carrying value of the Company's oil and gas properties and/or the rate of depletion of the oil and gas properties. Actual production, revenues and expenditures with respect to the Company's reserves will likely vary from estimates, and such variances may be material.

        Many factors will affect actual future net cash flows, including:

•

the amount and timing of actual production;



•

supply and demand for natural gas;



•

curtailments or increases in consumption by natural gas purchasers; and



•

changes in governmental regulations or taxation.

        Property, Equipment and Depreciation:    The Company follows the full-cost method of accounting for oil and gas properties. Under this method, all productive and nonproductive costs incurred in connection with the exploration for and development of oil and gas reserves are capitalized. Such capitalized costs include lease acquisition, geological and geophysical work, delay rentals, drilling, completing and equipping oil and gas wells, including salaries, benefits and other internal salary related costs directly attributable to these activities. Costs associated with production and general corporate activities are expensed in the period incurred. Interest costs related to unproved properties and

43

properties under development are also capitalized to oil and gas properties. If the net investment in oil and gas properties exceeds an amount equal to the sum of (1) the standardized measure of discounted future net cash flows from proved reserves (see Note 15 to the Consolidated Financial Statements), and (2) the lower of cost or fair market value of properties in process of development and unexplored acreage, the excess is charged to expense as additional depletion. Normal dispositions of oil and gas properties are accounted for as adjustments of capitalized costs, with no gain or loss recognized.

        Gas collection and support equipment is stated at cost. Depreciation and amortization for the Raton Basin gas collection system, with the exception of the gas compressor facilities, is computed on the units-of-production method based upon total reserves of the field. Gas compressor facilities and other support equipment are depreciated using the straight-line method over the estimated useful lives of the assets of 3 to 30 years.

        The Company applies SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Under SFAS No. 121, long-lived assets and certain intangibles are reported at the lower of the carrying amount or their estimated recoverable amounts. Long-lived assets subject to the requirements of SFAS No. 121 are evaluated for possible impairment through review of undiscounted expected future cash flows. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized.

44

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        The Company measures its exposure to market risk at any point in time by comparing its open positions to a market risk of fair value. The market prices the Company uses to determine fair value are based on management's best estimates, which consider various factors including closing exchange prices, volatility factors and the time value of money. At December 31, 2001, the Company was exposed to some market risk with respect to long-term debt, foreign currency and natural gas prices; however, management did not believe such risk to be material.

        Commodity Risk.    The Company's major market risk exposure is in the pricing applicable to its gas production. Realized pricing is primarily driven by the prevailing price for crude oil and spot prices applicable to Evergreen's United States natural gas production. Historically, prices received for gas production have been volatile and unpredictable. Pricing volatility is expected to continue. Gas price realizations ranged from a monthly low of $1.24 per Mcf to a monthly high of $10.02 per Mcf during 2001.

        The Company periodically enters into hedging activities on a portion of its projected natural gas production through a variety of financial and physical arrangements intended to support natural gas prices at targeted levels and to manage its exposure to gas price fluctuations. Evergreen may use futures contracts, swaps, options and fixed-price physical delivery contracts to hedge its commodity prices. As discussed above, the Company had two fixed-price physical delivery contracts and no financial hedges in place at December 31, 2001.

        Assuming total gas production and the percentage of gas production hedged under physical delivery contracts remain at December 2001 levels, a 10% decrease in the average unhedged natural gas prices realized during the year would reduce the Company's natural gas revenues by approximately $11 million on an annual basis.

        Interest Rate Risk.    At December 31, 2001, Evergreen had long-term debt outstanding of $181 million. The interest rates on the Company's revolving credit facility range from LIBOR plus 1.5% to prime plus 0.25% and are variable; however, they may be fixed at Evergreen's option for periods of time between 30 to 90 days. A 10% increase in short-term interest rates on the floating-rate debt outstanding at the end of 2001 would equal approximately 35 basis points. Such an increase in interest rates would impact Evergreen's 2002 interest expense by approximately $283,500, assuming borrowed amounts under the credit facility remained at $81 million.

        The $100 million in convertible notes the Company issued in December 2001 have a fixed interest rate of 4.75%; however, as discussed in Note 5 to the Consolidated Financial Statements, up to an additional 0.40% may be paid as contingent interest if certain conditions are met. Accordingly, the Company's annual interest payment on the $100 million convertible notes will be a minimum of $4.75 million and a maximum of $5.15 million.

        Foreign Currency Risk.    In 2001, the Company drilled six tight gas sands wells in Northern Ireland and the Republic of Ireland. In 2002, the Company plans on drilling approximately 10 to 12 wells in Northern Ireland, the Republic of Ireland and in the United Kingdom at a total estimated cost of $10 million. The Company's assets, revenue and expense accounts relating to these projects are based on the U.S. dollar equivalent of such amounts measured in the British pound sterling and the Euro. The assets and liabilities of these projects are translated to U.S. dollars using the applicable exchange rate as of the end of a reporting period. Revenues, expenses and cash flow will be translated using the average exchange rate for the reporting period. Any significant change in the exchange rate for the pound sterling and/or Euro would have an impact on the cost of these drilling programs.

45

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

	Page
Report of Independent Certified Public Accountants	F-1
Consolidated Balance Sheets, December 31, 2001 and 2000	F-2
Consolidated Statements of Income for the Years ended December 31, 2001, 2000 and 1999	F-3
Consolidated Statements of Stockholders' Equity for the Years ended December 31, 2001, 2000, and 1999	F-4
Consolidated Statements of Cash Flows for the Years ended December 31, 2001, 2000, and 1999	F-5
Consolidated Statements of Comprehensive Income for the Years ended December 31, 2001, 2000, and 1999	F-6
Notes to Consolidated Financial Statements	F-7 to F-33

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

        Not Applicable.

PART III

        The information required by Part III of Form 10-K is incorporated herein by reference to Registrant's definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held May 7, 2002.

46

PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)

(1)    See Index to Consolidated Financial Statements at Item 8.

(a)

(2)    All other schedules have been omitted because the required information is inapplicable or is shown in the Notes to the Consolidated Financial Statements.

(a)

(3)    Exhibits:

3.1	Articles of Incorporation as amended: Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1, Commission File No. 33-273035, by reference to Exhibit I to the Company's Current Report on Form 8-K dated December 9, 1994 and by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed June 8, 1998.
3.2	Articles of Amendment to Articles of Incorporation stating terms of redeemable preferred stock: Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
3.3	Bylaws: Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed June 8, 1998.
4.1	Shareholders' Rights Agreement: Incorporated by reference to Exhibit 2 to the Company's Current Report on Form 8-K dated July 7, 1997. 4.2
4.2	Form of Global Note for 4.75% Senior Convertible Notes due December 15, 2021 (included in Exhibit 4.3)
4.3	Indenture, dated December 18, 2001
4.4	Registration Rights Agreement, dated December 18, 2001
10.1	Amended and Restated Credit Agreement by and among Evergreen Resources, Inc. and Hibernia National Bank, BNP Paribas, Wells Fargo Bank Texas, NA, BankOne, NA, Fleet National Bank, Bank of Scotland, and First Union National Bank dated August 15, 2000, as amended September 15, 2000 and November 15, 2000: Incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
10.2	Firm Transportation Service Agreement Rate Schedule TF-1 between Colorado Interstate Gas Company and Primero Gas Marketing Company, Dated August 22, 1997: Incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-3 filed on November 21, 1997, Commission File No. 333-40817.
10.3	Deeds of Variation between The Secretary of State for Trade and Industry and Evergreen Resources (UK) Limited dated January 9, 1997: Incorporated by reference to Exhibit 10.6 of the Company's Registration Statement on Form S-3 filed on November 21, 1997, Commission File No. 333-40817.
10.4	Evergreen Resources, Inc. Initial Stock Option Plan: Incorporated by reference to the exhibit accompanying the Company's Definitive Proxy Statement on Schedule 14A filed on April 20, 1998 (Compensatory plan or arrangement).

47

10.5	Firm Transportation Service Agreement Rate Schedule TF-1 between Colorado Interstate Gas Company and Consolidated Industrial Services, Inc., dated March 20, 1997: Incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
10.6	Firm Transportation Service Agreement Rate Schedule TF-1 between Colorado Interstate Gas Company and Amoco Energy Trading corporation, dated November 1, 1997: Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
10.7	2000 Stock Incentive Plan of Evergreen Resources, Inc.: Incorporated by reference to Exhibit A to the Company's definitive proxy materials on Schedule 14A filed on May 1, 2000 (Compensatory plan or arrangement).
10.8	Agreement for Purchase and Sale dated September 19, 2000, by and between Apache Canyon Gas, L.L.C., as Seller and Evergreen Resources, Inc. as Buyer: Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on October 5, 2000.
10.9	Agreement for Purchase and Sale dated September 19, 2000, by and between Apache Canyon Gas, L.L.C., as Seller and Evergreen Resources, Inc. as Buyer: Incorporated by reference to Exhibit 2.2 to the Company's Form 8-K filed on October 5, 2000.
21.0	Subsidiaries of registrant: Incorporated by reference to Note 1 of the Notes to Consolidated Financial Statements included herein.
22.0	Reserve Audit Report prepared by Netherland Sewell & Associates, Inc.
23.0	Consent of Independent Certified Public Accountants.
24.1	Power of Attorney: contained on signature page.

(b)

Reports on Form 8-K.

        On December 11, 2001, the Company filed a Current Report on Form 8-K to disclose that on December 10, 2001, it announced that it intended to offer, subject to market and other conditions, $100 million of Senior Convertible Notes due 2021 (plus an additional amount of up to $25 million at the option of the initial purchaser) to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended.

        On December 17, 2001, the Company filed a Current Report on Form 8-K to disclose that on December 13, 2001, it announced that it had sold $100 million of senior convertible notes to qualified institutional investors in a private placement.

48

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EVERGREEN RESOURCES, INC.
Date: March 1, 2002	By:	/s/  MARK S. SEXTON Mark S. Sexton President and Chief Executive Officer (Principal Executive Officer)

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark S. Sexton and Kevin R. Collins, and each of them, as true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all which said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Date: March 1, 2002	/s/ MARK S. SEXTON Mark S. Sexton President, Chief Executive Officer and Director (Principal Executive Officer)
Date: March 1, 2002	/s/  KEVIN R. COLLINS Kevin R. Collins, Vice President—Finance CFO and Treasurer (Principal Financial and Accounting Officer)
Date: March 1, 2002	/s/  ALAIN BLANCHARD Alain Blanchard, Director
Date: March 1, 2002	/s/  DENNIS R. CARLTON Dennis R. Carlton, Director

49

Date: March 1, 2002	/s/  LARRY D. ESTRIDGE Larry D. Estridge, Director
Date: March 1, 2002	/s/  JOHN J. RYAN III John J. Ryan III, Director
Date: March 1, 2002	/s/  SCOTT D. SHEFFIELD Scott D. Sheffield, Director
Date: March 1, 2002	/s/  ARTHUR L. SMITH Arthur L. Smith, Director

50

Report of Independent Certified Public Accountants

To the Stockholders and Board of Directors
Evergreen Resources, Inc.
Denver, Colorado

        We have audited the accompanying consolidated balance sheets of Evergreen Resources, Inc. and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders' equity, cash flows, and comprehensive income for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Evergreen Resources, Inc. and subsidiaries at December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 1 to the consolidated financial statements, effective January 1, 2001, the Company changed its method for recording derivative instruments.

BDO SEIDMAN, LLP

Denver, Colorado
February 15, 2002

F-1

Evergreen Resources, Inc.

Consolidated Balance Sheets

			December 31,
			2001			2000
			(In Thousands)
ASSETS
Current:
	Cash and cash equivalents		$	3,024		$	4,034
	Accounts receivable (Notes 2 and 10)			10,119			15,194
	Other current assets			1,455			1,156
		Total current assets		14,598			20,384
Property and equipment, at cost (Notes 1, 3, 4 and 15): based on the full cost method of accounting for oil and gas properties				584,150			446,001
	Less accumulated depreciation, depletion and amortization			51,561			34,052
	Net property and equipment			532,589			411,949
Designated cash (Note 1)				—			2,376
Other assets (Notes 1 and 13)				8,838			16,036
			$	556,025		$	450,745
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	7,355		$	5,408
	Amounts payable to oil and gas property owners (Note 1)			4,080			3,183
	Accrued expenses and other			9,956			4,943
		Total current liabilities		21,391			13,534
Notes payable (Note 4)				81,000			149,748
Senior convertible notes (Note 5)				100,000			—
Deferred income taxes (Note 6)				34,702			17,218
Production taxes payable				2,722			2,376
Deferred revenue (Note 12)				565			1,017
Total liabilities				240,380			183,893
Minority interest in subsidiary (Note 1)				705			—
Commitments and contingencies (Notes 3, 4, 5 and 12)
Stockholders' equity (Notes 3, 7, 8 and 9):
	Preferred stock, $1.00 par value; shares authorized, 24,900; none outstanding			—			—
	Common stock, $.01 stated value; shares authorized, 50,000; shares issued and outstanding 18,847 and 18,328			188			183
	Additional paid-in capital			256,978			247,377
	Retained earnings			58,795			20,268
	Accumulated other comprehensive loss			(1,021	)		(976	)
		Total stockholders' equity		314,940			266,852
			$	556,025		$	450,745

See accompanying Notes to Consolidated Financial Statements.

F-2

Evergreen Resources, Inc.

Consolidated Statements of Income

		Years Ended December 31,
		2001		2000			1999
		(In Thousands, Except Per Share Data)
Revenues:
	Natural gas revenues (Note 10)	$	119,745	$	59,128		$	26,722
	Interest and other		1,025		565			207
Total revenues			120,770		59,693			26,929
Expenses:
	Lease operating expense		12,228		7,475			4,245
	Transportation costs		9,524		5,902			4,001
	Production and property taxes		5,472		2,567			1,146
	Depreciation, depletion and amortization		16,212		8,190			4,757
	General and administrative expenses		6,985		4,364			3,024
	Interest expense		8,331		3,330			1,927
	Other		653		178			175
Total expenses			59,405		32,006			19,275
Income from continuing operations before income taxes			61,365		27,687			7,654
Income tax provision—deferred (Note 6)			22,838		10,695			2,979
Income from continuing operations			38,527		16,992			4,675
Discontinued operations (Note 14)
	Gain on disposal of discontinued operations, net		—		—			452
Net income			38,527		16,992			5,127
Preferred stock dividends (Notes 7 and 8)			—		(2,929	)		—
Net income attributable to common stockholders		$	38,527	$	14,063		$	5,127
Basic income per common share (Note 8):
	From continuing operations	$	2.08	$	0.91		$	0.36
	From discontinued operations		—		—			0.03
	Basic income per common share	$	2.08	$	0.91		$	0.39
Diluted income per common share (Note 8):
	From continuing operations	$	1.98	$	0.87		$	0.34
	From discontinued operations		—		—			0.03
	Diluted income per common share	$	1.98	$	0.87		$	0.37

See accompanying Notes to Consolidated Financial Statements.

F-3

Evergreen Resources, Inc.

Consolidated Statements of Stockholders' Equity

Years Ended December 31, 2001, 2000 and 1999

	Common Stock $.01 Stated Value
						Additional Paid-In Capital			Retained Earnings			Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Shares		Amount
	(In Thousands)
Balance, January 1, 1999	11,143		$	111		$	78,380		$	1,078		$	110		$	79,679
Issuance of common stock for services (Note 8)	51			1			800			—			—			801
Exercise of stock options and purchase warrants, net (Note 9)	188			2			1,361			—			—			1,363
Issuance of common stock for property interests (Note 8)	56			1			920			—			—			921
Issuance of common stock for subsidiary (Notes 3 and 8)	120			1			2,499			—			—			2,500
Issuance of common stock pursuant to public offering (Note 8)	3,163			31			65,041			—			—			65,072
Common stock repurchase (Note 8)	(100	)		(1	)		(1,708	)		—			—			(1,709	)
Issuance of warrants	—			—			33			—			—			33
Other comprehensive loss	—			—			—			—			(277	)		(277	)
Net income	—			—			—			5,127			—			5,127
Balance, December 31, 1999	14,621			146			147,326			6,205			(167	)		153,510
Issuance of common stock for services (Note 8)	27			—			722			—			—			722
Exercise of stock options and purchase warrants, net (Note 9)	44			1			323			—			—			324
Issuance of common stock for property interests (Note 8)	512			5			11,573			—			—			11,578
Issuance of common stock pursuant to public offering (Note 8)	3,008			30			83,434			—			—			83,464
Stock to be issued for property acquisition (Notes 3 and 8)	116			1			3,999			—			—			4,000
Other comprehensive loss	—			—			—			—			(809	)		(809	)
Preferred stock dividends	—			—			—			(2,929	)		—			(2,929	)
Net income	—			—			—			16,992			—			16,992
Balance, December 31, 2000	18,328			183			247,377			20,268			(976	)		266,852
Issuance of common stock for services (Note 8)	30			—			898			—			—			898
Exercise of stock options and purchase warrants, net (Note 9)	503			5			3,956			—			—			3,961
Common stock exchanged as payment for exercise of stock purchase options (Note 9)	(44	)		—			(1,653	)		—			—			(1,653	)
Tax benefit from exercise of non-qualified stock options and warrants	—			—			5,534			—			—			5,534
Issuance of common stock for property interests (Note 8)	40			1			1,219			—			—			1,220
Common stock repurchase (Note 8)	(10	)		(1	)		(353	)		—			—			(354	)
Other comprehensive loss	—			—			—			—			(45	)		(45	)
Net income	—			—			—			38,527			—			38,527
Balance, December 31, 2001	18,847		$	188		$	256,978		$	58,795		$	(1,021	)	$	314,940

See accompanying Notes to Consolidated Financial Statements.

F-4

Evergreen Resources, Inc.

Consolidated Statements of Cash Flows

				Years Ended December 31,
				2001			2000			1999
				(In Thousands)
Increase (Decrease) in Cash and Cash Equivalents
Operating activities:
	Net income			$	38,527		$	16,992		$	5,127
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation, depletion and amortization			16,212			8,190			4,757
		Deferred income taxes			22,838			10,655			2,979
		Gain on disposal of discontinued operations, net			—			—			(452	)
		Non-cash compensation			103			152			545
		Other			376			300			170
		Changes in operating assets and liabilities:
			Accounts receivable		5,370			(10,191	)		(293	)
			Other current assets		(443	)		(476	)		(527	)
			Change in designated cash		2,376			(63	)		468
			Accounts payable		(141	)		2,035			(187	)
			Non-current production taxes payable		191			63			(468	)
			Accrued expenses and other		5,156			2,600			612
			Deferred revenue		(452	)		1,017			—
Net cash provided by operating activities					90,113			31,274			12,731
Investing activities:
	Investment in property and equipment				(120,681	)		(130,101	)		(43,243	)
	Investment in affiliated company (Note 13)				(1,515	)		—			—
	Purchase of subsidiary (Note 3)				—			—			(2,500	)
	Proceeds from sale of investment (Note 14)				—			—			2,258
	Change in other assets				(351	)		(14,095	)		(379	)
Net cash used in investing activities					(122,547	)		(144,196	)		(43,864	)
Financing activities:
	Net (payments on) proceeds from notes payable				(68,748	)		134,248			(28,639	)
	Proceeds from senior convertible notes				100,000			—			—
	Redemption of preferred stock				—			(100,000	)		—
	Principal payments on capital lease obligations				—			—			(4,029	)
	Proceeds from issuance of common stock, net				2,308			83,788			66,448
	Common stock repurchase				(354	)		—			(1,709	)
	Dividends paid on preferred stock				—			(2,929	)		—
	Debt issue costs				(3,241	)		(597	)		(77	)
	Change in cash held from operating oil and gas properties				1,492			1,759			(1,523	)
Net cash provided by financing activities					31,457			116,269			30,471
Effect of exchange rate changes on cash					(33	)		36			(21	)
Increase (decrease) in cash and cash equivalents					(1,010	)		3,383			(683	)
Cash and cash equivalents, beginning of year					4,034			651			1,334
Cash and cash equivalents, end of year				$	3,024		$	4,034		$	651

See accompanying Notes to Consolidated Financial Statements.

F-5

Evergreen Resources, Inc.

Consolidated Statements of Comprehensive Income

		Years Ended December 31,
		2001			2000			1999
		(In Thousands)
Net income		$	38,527		$	16,992		$	5,127
Cumulative effect of change in accounting principle, net of tax of $273			(446	)		—			—
Derivative instruments:
	Unrealized gain on commodity price swaps		14,614			—			—
	Unrealized loss on interest rate swap		(437	)		—			—
	Reclassification adjustment to income		(13,895	)		—			—
	Reclassification adjustment to expense		233			—			—
	Derivative instruments, before taxes		515			—			—
	Related income tax effect		(198	)		—			—
Derivative instruments, net of tax			317			—			—
Available for sale instruments:
	Unrealized gain		1,046			—			—
	Related income tax effect		(389	)		—			—
Available for sale instruments, net of tax			657			—			—
Foreign currency translation adjustments			(573	)		(809	)		(277	)
Comprehensive income		$	38,482		$	16,183		$	4,850

See accompanying Notes to Consolidated Financial Statements.

F-6

Evergreen Resources, Inc.

Notes to Consolidated Financial Statements

Years Ended December 31, 2001, 2000 and 1999

(1) SUMMARY OF ACCOUNTING POLICIES

Business

        Evergreen Resources, Inc. ("Evergreen" or the "Company") is an independent energy company engaged in the operation, development, production, exploration and acquisition of natural gas properties. Evergreen is one of the leading developers of coal bed methane reserves in the United States. Its current operations are principally focused on developing and expanding its coal bed methane project located in the Raton Basin in southern Colorado. The Company has begun coal bed methane projects in the United Kingdom and Alaska. In addition, the Company is engaged in the exploration of natural gas prospects in Northern Ireland and the Republic of Ireland and owns additional interests in other domestic and international areas.

Consolidation

        The financial statements include the accounts of Evergreen and its wholly-owned subsidiaries, Evergreen Operating Corporation ("EOC"), Evergreen Resources (UK) Ltd. ("ERUK"), Powerbridge, Inc., Evergreen Well Service Company, Primero Gas Marketing Company ("PGMC"), Primero Gas Company, LLC, XYZ Minerals, Inc. ("XYZ"), Evergreen Resources (Alaska) Corporation, Long Canyon Gas Company, LLC ("LC"), Evergreen Supply and Distribution Company ("ESD"), and its majority owned subsidiary Lorencito Gas Gathering Company, LLC ("LGG"). ERUK is organized under the laws of the United Kingdom and XYZ is a Delaware corporation. The other subsidiaries are all organized under the laws of Colorado. PGMC owns an 85% interest in LGG. All significant intercompany balances and transactions have been eliminated in consolidation.

        The Company also has a 40% ownership in Argos Evergreen Limited, a Falkland Islands company, which owns offshore drilling rights in the North Falklands basin. This investment is accounted for by the equity method of accounting.

Uses of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the Unites States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserve volumes and the related present value of estimated future net cash flows. See Note 15 for unaudited supplemental oil and gas information.

Property and Equipment

        The Company follows the full-cost method of accounting for oil and gas properties. Under this method, all productive and nonproductive costs incurred in connection with the exploration for and development of oil and gas reserves are capitalized. Such capitalized costs include lease acquisition, geological and geophysical work, delay rentals, drilling, completing and equipping oil and gas wells, including salaries, benefits and other internal salary related costs directly attributable to these activities. Evergreen capitalized $4,548,000, $2,786,000, and $1,845,000 of internal costs for the years ended December 31, 2001, 2000 and 1999. Costs associated with production and general corporate activities

F-7

are expensed in the period incurred. Interest costs related to unproved properties and properties under development are also capitalized to oil and gas properties. If the net investment in oil and gas properties exceeds an amount equal to the sum of (1) the standardized measure of discounted future net cash flows from proved reserves (see Note 15) and (2) the lower of cost or fair market value of properties in process of development and unexplored acreage, the excess is charged to expense as additional depletion. Normal dispositions of oil and gas properties are accounted for as adjustments of capitalized costs, with no gain or loss recognized.

        Depreciation and depletion of proved oil and gas properties is computed on the units-of-production method based upon estimates of proved reserves with oil and gas being converted to a common unit of measure based on their relative energy content. Unproved oil and gas properties, including any related capitalized interest expense, are not amortized, but are assessed for impairment either individually or on an aggregated basis.

        The costs of certain unevaluated leasehold acreage, wells drilled and international concession rights are not being amortized. Costs not being amortized are periodically assessed for possible impairments or reductions in value. If a reduction in value has occurred, costs being amortized are increased or a charge is made against earnings for those international operations where a reserve base is not yet established.

        Gas collection and support equipment are stated at cost. Depreciation and amortization for the Raton Basin gas collection system, with the exception of the gas compressor facilities, is computed on the units-of-production method based upon total reserves of the field. Gas compressor facilities and other support equipment are depreciated using the straight-line method over the estimated useful lives of the assets of 3 to 30 years.

        The Company applies Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Under SFAS No. 121, long-lived assets and certain intangibles are reported at the lower of the carrying amount or their estimated recoverable amounts. Long-lived assets subject to the requirements of SFAS No. 121 are evaluated for possible impairment through review of undiscounted expected future cash flows. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized. No impairment existed at December 31, 2001.

Amounts Payable to Oil and Gas Property Owners

        Amounts payable to oil and gas property represents production revenue that the Company, as operator, is collecting and distributing to revenue interest owners.

Minority Interest

        The minority interest of $705,000 on the Company's consolidated balance sheet at December 31, 2001 represents the 15% outside ownership in LGG. The minority interest in LGG's net income was approximately $2,500 during the year ended December 31, 2001 and is included in other expense in the Company's consolidated statement of income.

F-8

Designated Cash

        Through September 30, 2001, the Company recorded designated cash equal to the production taxes its operating company, EOC, had withheld from Evergreen and outside working interest owners and royalty owners. Effective in the fourth quarter of 2001, the Company maintains a separate cash account with a balance equal only to the non-current production taxes EOC has withheld from revenue owners outside the consolidated companies.

Income Taxes

        The Company follows the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences. Accordingly, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.

Environmental Matters

        Environmental costs are expensed or capitalized depending on their future economic benefit. Costs that relate to an existing condition caused by past operations with no future economic benefit are expensed. Liabilities for future expenditures of a non-capital nature are recorded when future environmental expenditures and/or remediation is deemed probable and the costs can be reasonably estimated. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

Net Income Per Share

        The Company applies SFAS No. 128, "Earnings Per Share" for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of the Company.

Cash Equivalents

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

        Natural gas sales revenues generally are recorded using the sales method, whereby the Company recognizes sales revenue based on the amount of gas sold to purchasers on its behalf.

        The Company has received cash payments from a purchaser in consideration for a contract to sell certain future production. These cash payments were initially recorded as deferred revenue and are amortized as revenue pro-rata over the contract term.

F-9

Transportation Costs

        The Company accounts for transportation costs under Emerging Issues Task Force ("EITF") 00-10, "Accounting for Shipping and Handling Fees and Costs," whereby amounts paid for transportation costs are classified as operating expense and not netted against natural gas revenues.

Debt Issue Cost

        The Company had approximately $4.7 million and $1.3 million of debt issue costs at December 31, 2001 and 2000, respectively, net of accumulated amortization of $942,000 and $671,000, respectively, which are included in other assets in the Company's consolidated balance sheet. The debt issue costs are being amortized over the term of the associated long-term debt.

Comprehensive Income

        The Company has elected to report comprehensive income in a consolidated statement of comprehensive income. Comprehensive income is composed of net income and all changes to stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. The following table identifies the components of other comprehensive loss for each of the periods presented:

	December 31,
	2001			2000			1999
Accumulated foreign currency translation	$	(1,549	)	$	(976	)	$	(167	)
Unrealized loss on interest rate swap, net of tax		(129	)		—			—
Unrealized gain on investment, net of tax		657			—			—
	$	(1,021	)	$	(976	)	$	(167	)

Stock Options

        The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for all stock option plans. Under APB Opinion 25, compensation cost has been recognized for stock options granted in situations where the option price is less than the market price of the underlying common stock on the date of grant.

        SFAS No. 123, "Accounting for Stock-Based Compensation," requires the Company to provide pro forma information regarding net income as if compensation cost for the Company's stock option plans had been determined in accordance with the fair value based method prescribed in SFAS No. 123. To provide the required pro forma information, the Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.

Foreign Currency Translation

        The functional currency for the Company's foreign operations is the applicable foreign currency. The translation of the applicable foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The gains or losses resulting from

F-10

such translation are included in the consolidated statements of stockholders' equity and comprehensive income.

Financial Instruments

        The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 2001 and 2000.

	December 31,
	2001						2000
	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
	(In Thousands)
Cash and cash equivalents	$	3,024		$	3,024		$	4,034		$	4,034
Investment in common stock in unaffiliated company		2,476			2,476			1,080			1,840
Investment in KFx (Note 13)		1,949			2,000			—			—
Commodity swap		—			—			—			(719	)
Interest rate swap		(204	)		(204	)		—			—
Notes payable		(81,000	)		(81,000	)		(149,748	)		(149,748	)
Senior convertible notes		(100,000	)		(100,000	)		—			—

        The following methods and assumptions were used to estimate the fair value of the financial instruments summarized in the table above. The carrying values of accounts receivable, other assets, accounts payable and accrued expenses included in the accompanying consolidated balance sheets approximated market fair value at December 31, 2001 and 2000.

Cash and cash equivalents

        The carrying amounts approximate fair value due to the short-term maturity of the instruments.

Investments

        The fair value of the investment in the common stock of an unaffiliated company is based on the quoted market price of such common stock. The fair value of the investment in KFx is based on the anticipated cash flows, which approximates the carrying value.

Interest rate and commodity swaps

        The fair values of the swaps were based on expected future cash flows over the remaining life of the swaps discounted at the Company's effective borrowing rate. See "Hedging Activities" for more information on hedging activities.

Debt

        The carrying amount of notes payable approximated fair value because the interest rate on the notes payable is variable. The carrying amount of the senior convertible notes at December 31, 2001

F-11

approximates fair value as the notes were issued on December 18, 2001 and interest rates remained generally unchanged from December 18, 2001 to December 31, 2001.

        The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents. The Company's cash equivalents are cash investment funds which are placed with a major financial institution.

        The Company manages and controls market and credit risk through established formal internal control procedures, which are reviewed on an ongoing basis. The Company attempts to minimize credit risk exposure to purchasers of the Company's natural gas through formal credit policies, monitoring procedures and letters of credit. See Note 10 for concentrations of accounts receivable at December 31, 2001.

Hedging Activities

        Effective January 1, 2001, Evergreen adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." Under SFAS No. 133, all derivative instruments, whether designated as hedging relationships or not, are required to be recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income ("OCI") and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

        The adoption of SFAS No. 133 resulted in an after-tax reduction to OCI of $446,000 as a cumulative effect of change in accounting principle. The reduction to OCI at January 1, 2001 was attributable to the commodity price swap agreement designated as a cash flow hedge discussed below for 10 MMcf per day at a hedge price of $6.10 per Mcf. The derivative loss included in OCI as of January 1, 2001 has been reclassified into earnings during the year ended December 31, 2001.

        The Company sometimes enters into fixed-price physical delivery contracts and commodity price swap derivatives to manage price risk with regard to a portion of its natural gas production. The Company also occasionally enters into interest rate swaps to manage its exposure to interest rate fluctuations. Commodity price swap and interest rate swap derivative contracts are accounted for using cash flow hedge accounting. Under this method, realized gains and losses on qualifying hedges are recognized in gas revenues or interest expense when the associated revenue stream or expense occurs and the resulting cash flows are reported as cash flows from operations. To qualify as a hedge, these swap contracts must be designated as a cash flow hedge and changes in their fair value must correlate with changes in the price of anticipated future production or anticipated interest payments such that the Company's exposure to the effects of commodity price or interest rate changes is reduced. If the contract is not a hedge, changes in the fair value are recorded in the Company's statement of income currently. If a derivative financial instrument, such as the swaps discussed above, are settled before the date of the anticipated transaction, the Company carries forward the accumulated change in value of the contract and includes it in the measurement of the related transaction.

        During the year ended December 31, 2001, the Company had two commodity price swap agreements. One contract was for 10 MMcf per day from January 1, 2001 through December 31, 2001

F-12

at a hedge price of $6.10 per Mcf and the other contract was for 10 MMcf per day from February 1, 2001 through December 31, 2001 at a hedge price of $6.43 per Mcf. The contracts called for the Company to receive or make payments based upon the differential between the hedge price and the market gas price, as defined in the contracts, for the notional quantity. During the year ended December 31, 2001, the Company realized $13.9 million in gains on the two commodity swaps which have been included in natural gas revenues in the accompanying consolidated statement of income and in cash provided by operating activities in the accompanying consolidated statement of cash flows. At December 31, 2001, the Company had no financial hedges in place related to its natural gas production.

        In April 2001, the Company entered into an interest rate swap designated as a cash flow hedge to manage fluctuations in cash flows resulting from interest rate risk. The swap allows for strategies designed to protect against fluctuations. The swap exchanges a series of future cash payments, one on a fixed-rate basis and the other on a floating-rate basis, to lock in a specific interest rate that is received by the Company. The interest rate swap has a notional amount of $25 million at a LIBO rate of 4.4% and is effective April 23, 2001 through April 23, 2002. At December 31, 2001, the unrealized loss for this contract was approximately $129,000 net of taxes of $75,000, which was estimated based on the expected discounted net cash outflow based on the LIBOR strip at December 31, 2001. During the year ended December 31, 2001, the Company recognized a $233,000 loss on this contract, which was included in interest expense in the accompanying consolidated statements of income and in cash provided by operating activities in the accompanying consolidated statement of cash flows. The Company is exposed to credit risk in the event of nonperformance by the counterparty in the interest rate swap contract; however, the Company does not anticipate nonperformance by the counterparty.

        See Note 12 for discussion of commodity swap contracts entered into subsequent to December 31, 2001.

Reclassifications

        Certain items included in prior years' financial statements have been reclassified to conform to current year presentation.

Recent Accounting Pronouncements

        In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations." SFAS No. 141 is intended to improve the transparency of the accounting and reporting for business combinations by requiring that all business combinations be accounted for under a single method—the purchase method. This statement is effective for all business combinations initiated after June 30, 2001.

        In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." This statement applies to intangibles and goodwill acquired after June 30, 2001, as well as goodwill and intangibles previously acquired. Under this statement, goodwill as well as other intangibles determined to have an infinite life will no longer be amortized; however, these assets will be reviewed for impairment on a periodic basis. This statement is effective for the Company for the first quarter in the fiscal year ending December 31, 2002. Management does not believe that the adoption of this statement will have a material effect on the Company's financial statements.

F-13

        In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. Management has not yet determined the impact of the adoption of this statement.

        In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 requires that long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, is to be applied prospectively. Management has not yet determined the impact of the adoption of this statement.

(2) ACCOUNTS RECEIVABLE

        The components of accounts receivable include the following:

	December 31,
	2001		2000
	(In Thousands)
Natural gas sales	$	7,734	$	14,078
Joint interest billings and other		1,661		983
Employees		724		133
	$	10,119	$	15,194

        Accounts receivable from employees are primarily related to payroll taxes due to the Company in conjunction with the employee's exercise of stock purchase options.

F-14

(3) PROPERTY AND EQUIPMENT

        Property and equipment includes the following:

				December 31,
				2001			2000
				(In Thousands)
Oil and gas properties:
	Proved oil and gas properties			$	376,092		$	274,978
	Unevaluated properties not subject to amortization				56,480			42,410
	Accumulated depreciation, depletion and amortization				(38,353	)		(25,505	)
		Net oil and gas properties			394,219			291,883
Gas collection system					121,100			100,602
Construction in progress					3,674			7,857
Support equipment					26,804			20,154
Accumulated depreciation and amortization					(13,208	)		(8,547	)
			Net other property and equipment		138,370			120,066
Property and equipment, net of accumulated depreciation, depletion and amortization				$	532,589		$	411,949

        Included in construction in progress at December 31, 2001 and December 31, 2000 are costs associated with a new compressor station, gas collection laterals and costs for well equipment. Oil and gas property costs of $56,480,000 and $42,410,000 were not being amortized at December 31, 2001 and December 31, 2000. At December 31, 2001, these costs consisted of $22,150,000 for domestic properties, $22,622,000 for the United Kingdom, $5,203,000 for Northern Ireland, $2,131,000 for the Republic of Ireland, $1,335,000 for the Falkland Islands and $3,039,000 for Chile. The Company will classify the unevaluated costs for the U.K., Northern Ireland, the Republic of Ireland, the Falkland Islands and Chile as evaluated costs when future development of the licenses relating to such properties determines the viability of the underlying reserves. The Company anticipates that substantially all of the unevaluated costs related to domestic properties will be classified as evaluated costs within the next three to five years.

        Effective June 1, 2001, the Company purchased an additional 35% ownership interest in LGG and an additional 35% working interest in gas properties located in the Lorencito tract of the Raton Basin (the "Lorencito Property") for approximately $20 million. The Company paid the purchase consideration in July 2001 utilizing $17 million from its revolving credit facility. The acquisition was accounted for under the purchase method of accounting. The purchase price allocation, which was primarily allocated to proved properties and gas collection equipment, is preliminary and will be finalized after management completes its review of the relative fair values of the assets purchased. As a result of the purchase, the Company now owns 85% of LGG and an 80% working interest in the Lorencito properties.

F-15

The acquired Lorencito Property interests represented an estimated 40 billion cubic feet of proven net gas reserves at the time of acquisition (an average cost of 50 cents per Mcf). Approximately 63% of the reserves acquired were classified as proved developed with the remaining 37% classified as proved undeveloped. All of the estimated reserves were assigned to the Vermejo and Raton group of coals. The acquisition also included additional interests in an existing compressor station and associated gas collection system. The results of operations of the acquired properties are included in the Company's consolidated statements of income from the effective date of June 1, 2001 through December 31, 2001. The proforma condensed financial results of operations for prior periods have not been presented as the effect on consolidated operations was not material.

        Effective September 1, 2000, Evergreen acquired approximately 24,000 gross acres of producing coal bed methane properties in the Raton Basin for approximately $181.5 million. The purchase was accounted for using the purchase method of accounting. The purchase price consideration consisted of approximately $71.5 million in cash ($70 million paid at closing and $1.5 million in post closing adjustments), $100 million in mandatory redeemable preferred stock and $6 million in the Company's common stock paid at closing. In addition to the consideration paid at the closing, on January 5, 2001, the Company delivered 116,009 additional shares of common stock valued at $4 million, under the terms of the acquisition agreement, because the average of the monthly settle prices for the 2001 NYMEX natural gas contracts exceeded $4.465 per MMBtu. The total purchase price was allocated as follows: (1) $166 million to proved oil and gas properties, (2) $2.5 million to the fifty percent ownership interest acquired in LGG, (3) $10.5 million to gas collection equipment, and (4) $3.5 million to unevaluated properties, and $1 million to production and property taxes payable.

        In 1997, under a new onshore licensing regime implemented by the U.K. Department of Trade and Industry, Evergreen converted its original licenses to new onshore licenses called Petroleum Exploration and Development Licenses. In connection with such conversion, the Company relinquished rights to approximately 259,000 acres, which were not considered highly prospective for coal bed methane development. Under the licenses, the Company retained approximately 377,000 acres, which were high-graded for coal bed methane and conventional hydrocarbon potential. During 1999, the Company acquired an additional 136,000 acres. During 2000 and 2001, the Company relinquished certain acreage and now has approximately 452,000 acres. The licenses provide up to a 30 year term with optional periodic relinquishment of portions of the license, subject to future development plans. There are no royalties or burdens encumbering these licenses.

        The Company is in the process of developing properties in the United Kingdom and is unable to prepare reserve information in this area. The Company experienced delays in its proposed 2001 drilling program throughout 2001 due to the regulatory environment, which included required approvals from local planning commissions for drilling permits, and was consequently unable to complete its anticipated drilling program for 2001. Drilling operations on the first of four planned gob gas wells expected to be drilled in 2002 on Evergreen's United Kingdom coal bed methane acreage began February 5, 2002. The Company expects to obtain planning permission for the remaining three gob gas wells which are expected to be drilled before the end of the second quarter of 2002. Additionally, the Company intends to fracture stimulate three existing mine gas interaction wells in the United Kingdom late in the first quarter or early in the second quarter of 2002.

        In March and April 2001, the Company acquired 100% working interest in 1,085,000 acres of prospective tight gas sand properties in Northern Ireland (605,000 acres) and the Republic of Ireland

F-16

(480,000 acres) for total consideration of $1,250,000 (23,200 shares of Evergreen common stock valued at $750,000 and $500,000 in cash) plus a small retained net profits interest. Evergreen has drilled four wells in Northern Ireland and two wells in the Republic of Ireland to depths ranging from approximately 2,700 feet to 4,400 feet. Evergreen is in the process of completing five of these six wells. Three wells have been fracture stimulated to date. All five wells are expected to be completed by the end of April 2002. The sixth well has been plugged and abandoned.

        In October 1998, the Falkland Islands consortium, in which Evergreen had a net 2% interest, finished drilling its second well. The two wells on Tranche A have established good source rock seal and potential reservoir rocks. In 2000, the consortium assigned the license interests and operatorship to AEL, in which Evergreen owns a 40% interest. AEL is currently evaluating data from all wells drilled to determine the future strategy for the acreage. AEL has extended the license fees through September 2002 and expects to renew the licenses in October 2002 for approximately $50,000.

        At December 31, 2001 the Company held leases representing 1.2 million acres in Chile. The Company is awaiting government approval of a moratorium for the third and last year of an exploration period. If the next exploration period is entered, the Company will be required to drill a well in Chile within two years from the beginning of the next exploration period. The cost and depth of the well will be at the discretion of the Company but will require approval of the Chilean Minister of Mining.

(4) NOTE PAYABLE

        The Company currently has a $200 million revolving credit facility with a bank group (the "Banks"). The credit facility is available through July 1, 2003. Advances pursuant to this credit facility are limited to a borrowing base, which is presently $200 million. The Company may elect to use either the London interbank offered rate, or LIBOR, plus a margin of 1.125% to 1.50% or the prime rate plus a margin of 0% or 0.25%, with margins on both rates determined on the average outstanding borrowings under the credit facility. The borrowing base is redetermined semi-annually by the Banks based upon reserve evaluations of Evergreen's oil and gas properties. An average annual commitment fee of 0.3125% is charged quarterly for any unused portion of the credit line. The agreement is collateralized by all domestic oil and gas properties and guaranteed by substantially all of the Company's subsidiaries. The credit agreement also contains certain net worth, leverage and ratio requirements. The Company was in compliance with all loan covenants at December 31, 2001 and 2000. At December 31, 2001 and 2000, Evergreen had $81,000,000 and $149,748,000, respectively, of outstanding borrowings under this credit facility, with an interest rate of 3.5% and 7.8%, respectively. The Company is currently in negotiations with the Banks to extend the credit facility to July 1, 2005.

(5) SENIOR CONVERTIBLE NOTES

        In December 2001, the Company issued $100 million in senior unsecured convertible notes. The notes are due in 2021 and bear interest at a fixed annual rate of 4.75%, which is to be paid in cash on June 15 and December 15 of each year. In addition to the interest discussed above, the Company will pay contingent interest to the holders of the notes if the average trading price of the notes for an established number of days exceeds 120% or more of the principal amount of the notes. The rate of contingent interest payable in respect to any six-month period will equal the greater of (1) a per annum rate equal to 5% of the Company's estimated per annum borrowing rate for senior non-convertible

F-17

fixed-rate debt with a maturity date comparable to the notes or (2) 0.30% per annum. In no event may the contingent interest rate exceed 0.40% per annum.

        The notes are general unsecured obligations, ranking on a parity in right of payment with all of Evergreen's existing and future senior indebtedness, and senior in right of payment with all of Evergreen's future subordinated indebtedness. The notes are due on December 15, 2021 but are redeemable at either the Company's option or the holder's option on other specified dates. The Company may redeem the notes at its option in whole or in part beginning on December 20, 2006, at 100% of their principal amount plus accrued and unpaid interest (including contingent interest). Holders of the notes may require the Company to repurchase the notes if a change in control of the Company occurs. Holders may also require the Company to repurchase all or part of the notes on December 20, 2006, December 15, 2011 and December 15, 2016 at a repurchase price of 100% of the principal amount of the notes plus accrued and unpaid interest (including contingent interest). On December 20, 2006, the Company may pay the repurchase price in cash, in shares of common stock, or in any combination of cash and common stock. On December 15, 2011 and December 15, 2016, the Company must pay the repurchase price in cash.

        The notes are convertible into common stock of Evergreen under certain circumstances as discussed below at a conversion price of $50 per share, subject to certain adjustments. The notes can be converted at the option of the holder if for a specified period of time, the closing price of the Company's common stock exceeds 110% of the $50 conversion price or if the average trading value of the notes for a specified period of time is less than 105% of an average conversion value as defined by the indenture governing the notes. The notes may also be converted into common shares of the Company at the election of the holder upon notice of redemption, or at any time the notes are rated by either Moody's Investors Service, Inc. or Standard & Poor's Rating Group and the credit rating initially assigned to the notes by either such rating agency is reduced by two or more ratings levels, or upon the occurrence of certain corporate transactions including a change in control or the distribution to current holders of the Company's common stock certain purchase rights or any other asset that has a value exceeding 10% of the sale price of the common stock on the day preceding the declaration date of the distribution of such assets.

        At December 31, 2001, the Company accrued approximately $185,000 in interest related to these notes, which is included in accrued expenses on the Company's consolidated balance sheet. No shares were included in the dilutive shares outstanding at December 31, 2001, as none of the events discussed above that would make the notes convertible into common shares of the Company's stock had occurred as of December 31, 2001.

F-18

(6) INCOME TAXES

        The provision for deferred income taxes consisted of the following:

	Years Ended December 31,
	2001		2000		1999
	(In Thousands)
Federal	$	20,625	$	9,361	$	2,830
State		2,213		1,334		438
	$	22,838	$	10,695	$	3,268
Income tax for continuing operations	$	22,838	$	10,695	$	2,979
Income tax for discontinued operations		—		—		289
Total income tax provision—deferred	$	22,838	$	10,695	$	3,268

        The deferred income tax provision shown above excludes amounts related to the tax benefit of non-qualified stock options exercised in 2001 for which the benefit was credited directly to stockholders' equity.

        A reconciliation of income tax computed at the federal and state statutory tax rates and the Company's effective tax rate is as follows:

	Years Ended December 31,
	2001		2000		1999
Federal statutory rate	35.0	%	34.0	%	34.0	%
State statutory rate, net of federal benefit	3.0	%	3.3	%	3.3	%
Other	(0.8	)%	1.3	%	1.6	%
Effective tax rate	37.2	%	38.6	%	38.9	%

F-19

The components of the net deferred tax assets and liabilities are shown below:

		December 31,
		2001			2000
		(In Thousands)
Deferred tax assets:
	Net operating loss carryforwards	$	5,639		$	8,393
	Percentage depletion carryforwards		1,328			1,303
	Tax credits, net of valuation allowance of $3,513 and $4,116		2,096			—
	Other		446			695
Total deferred tax assets, net			9,509			10,391
Deferred tax liabilities
	Depreciation, depletion and amortization		(43,811	)		(27,609	)
	Other		(400	)		—
Total deferred tax liabilities			(44,211	)		(27,609	)
Net deferred tax liability		$	(34,702	)	$	(17,218	)

        As of December 31, 2001, the Company had net operating loss carryforwards for tax purposes of approximately $14,800,000, which expire beginning in 2010 through 2018. Additionally, the Company had tax credit carryforwards for tax purposes of approximately $5,609,000, $5,421,000 which relate to state tax credits and will expire beginning in 2002 through 2013.

        The state tax credits are subject to limitation and the Company has concluded that, based upon expected future results, the future reversals of taxable temporary differences and the tax benefits derived from the exercise of non-qualified employee stock options, there is no reasonable assurance that the entire tax benefit of the tax credits can be used. Accordingly, a valuation allowance has been established.

        Included in deferred income taxes payable at December 31, 2001 are the tax effects of unrealized gains on the Company's available for sale investments of $389,000 and unrealized loss on the interest rate swap of $75,000.

(7) REDEEMABLE PREFERRED STOCK

        In connection with the September 2000 property acquisition as discussed in Note 3, the Company issued 100,000 shares of mandatory redeemable preferred stock, with an aggregate liquidation value of $100 million, as part of the purchase consideration. Each share had a liquidation and redemption value of $1,000, plus accrued dividends. The Company redeemed the stock on December 22, 2000 using new borrowings under its credit facility. The preferred stock earned $2,929,000 of dividends from September 1, 2000 through December 22, 2000 at an annual rate of 9.5%.

F-20

(8) STOCKHOLDERS' EQUITY

Earnings per Share

        The following table sets forth the computation of basic and diluted earnings per share:

			Years Ended December 31,
			2001		2000			1999
			(In Thousands, Except Per Share Data)
Numerator:
	Net income from continuing operations		$	38,527	$	16,992		$	4,675
	Gain on disposal of discontinued operations, net			—		—			452
	Preferred stock dividends			—		(2,929	)		—
	Numerator for basic earnings per share—income available to common stockholders		$	38,527	$	14,063		$	5,127
	Numerator for dilutive earnings per share—income available to common stockholders after assumed conversions		$	38,527	$	14,063		$	5,127
Denominator:
	Denominator for basic earnings per share—weighted average shares			18,534		15,433			12,953
	Effect of dilutive securities:
		Stock options and warrants		876		772			680
		Stock to be issued (Note 3)		—		31			—
	Dilutive potential common shares			876		803			680
	Denominator for diluted earnings per share—adjusted weighted average shares and assumed conversions			19,410		16,236			13,633
Basic income per common share:
	From continuing operations		$	2.08	$	0.91		$	0.36
	From discontinued operations			—		—			0.03
Basic income per common share			$	2.08	$	0.91		$	0.39
Diluted income per common share:
	From continuing operations		$	1.98	$	0.87		$	0.34
	From discontinued operations			—		—			0.03
Diluted income per common share			$	1.98	$	0.87		$	0.37

        For the years ended December 31, 2000 and 1999 all common stock equivalents were included in the computation of diluted earnings per share. As discussed in Note 5, the Company issued $100 million in senior convertible notes in December 2001 that are convertible into shares of common stock under certain circumstances. At December 31, 2001, no common stock equivalents were included in the computation of diluted earnings per share related to these convertible senior notes as no circumstances occurred that would cause them to be convertible.

F-21

Stock Issued for Services

        During the years ended December 31, 2001, 2000 and 1999, the Company issued common stock valued at $876,000, $632,000 and $801,000 as bonuses to certain employees. During the years ended December 31, 2001 and 2000, the Company issued common stock to directors for directors' fees valued at $22,000 and $15,000. During 2000, the Company also issued common stock valued at $75,000 to a company for consulting services.

Stock Issued for Property Interests

        Effective September 30, 1999, Evergreen acquired XYZ for $5 million. The purchase price consisted of $2.5 million in cash and 120,000 shares of Evergreen stock valued at $2.5 million. Also during the year ended December 31, 1999, miscellaneous property interests and surface rights were acquired in exchange for 55,996 shares of the Company's common stock valued at $921,000.

        On January 20, 2000, the Company acquired additional interests in the Raton Basin in exchange for 309,834 shares of Evergreen common stock valued at approximately $5.6 million.

        Effective September 1, 2000, Evergreen acquired property in the Raton Basin for $181.5 million. The purchase price consisted of $71.5 million in cash ($70.0 million in cash paid at closing and $1.5 million in post closing adjustments), $100.0 million in mandatory redeemable preferred stock and 201,748 shares of Evergreen stock valued at $6.0 million. On January 5, 2001, the Company issued an additional 116,009 shares of Evergreen stock valued at $4.0 million as additional purchase price consideration. See Note 3 for further discussion.

        During the year ended December 31, 2001, the Company issued 39,690 shares of stock for property interests and right of ways valued at $1.2 million, which included 23,200 shares valued at $750,000 as partial consideration for a 100% working interest in 1,085,000 acres in Northern Ireland and the Republic of Ireland.

Other Equity Transactions

        During the year ended December 31, 1999, the Company repurchased 100,000 shares of its common stock on the market at prices ranging from $16 to $19.19 per share for a total of $1.7 million. During the year ended December 31, 2001, the Company repurchased 10,000 shares of its common stock on the market at $35.35 per share for a total of $354,000.

Public Offerings of Common Stock

        On June 22, 1999, the Company completed a public offering of its common shares, whereby it sold 3,162,500 shares at $22.00 per share. Proceeds, net of underwriters' commissions and expenses of $4.4 million, were $65.1 million, of which $58 million and $3.6 million were used to pay off the Company's line of credit and capital lease obligation, respectively.

        On November 20, 2000, the Company completed a public offering of its common shares, whereby it sold 3,008,300 shares at $29.375 per share. Proceeds, net of underwriters' commissions and expenses of $4.9 million, of $83.5 million were used to reduce the balance on the Company's line of credit.

F-22

Shareholder Rights Plan

        On July 7, 1997, the Board of Directors adopted a Shareholder Rights Plan ("Rights Plan"), pursuant to which stock purchase rights (the "Rights") were distributed as a dividend to the Company's common stockholders at a rate of one Right for each share of common stock held of record as of July 22, 1997 and for each share of stock issued thereafter. The Rights Plan is designed to enhance the Board's ability to prevent an acquirer from depriving stockholders of the long-term value of their investment and to protect shareholders against attempts to acquire the Company by means of unfair or abusive takeover tactics that have been prevalent in many unsolicited takeover attempts.

        Under the Rights Plan, the Rights will become exercisable only if a person or a group (except for 20% shareholders existing at the time the Rights Plan was adopted) acquires or commences a tender offer for 20% or more of the Company's common stock. Until they become exercisable, the Rights attach to and trade with the Company's common stock. The Rights will expire July 22, 2007. The Rights may be redeemed by the continuing members of the Board at $.001 per Right prior to the day after a person or group has accumulated 20% or more of the Company's common stock.

(9) STOCK OPTIONS AND WARRANTS

        On May 12, 1997, the Board of Directors adopted, and the Company's shareholders subsequently approved, an Initial Stock Option Plan (the "Plan"), whereby employees may be granted incentive options to purchase up to 500,000 shares of the common stock of the Company. The exercise price of incentive options must be equal to at least the fair market value of the common stock as of the date of grant. As of December 31, 2001, the Company had granted 500,000 options available under the Plan.

        Under the terms of the Company's Key Employee Equity Plan, options and/or warrants were granted to key employees at not less than the market price of the Company's common stock on the date of grant. The purpose of the warrants are to reward directors and key personnel for past performance and to give them an incentive to remain with the Company and to induce directors to take all or part of their non-executive directors' compensation in the form of common stock.

        On June 16, 2000, the Company's stockholders approved the 2000 Stock Incentive Plan (the "2000 Plan"). Under the 2000 Plan, the Company may grant options to purchase up to 1,000,000 shares of its common stock, plus an annual increase equal to the lesser of either 150,000 shares or an amount determined by the Board of Directors. The Board of Directors approved increases of 150,000 for 2001 and 2002. Awards which may be granted under the 2000 Plan include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards and restricted units. As of December 31, 2001, the Company had granted 934,000 awards under the 2000 Plan.

        During the year ended December 31, 2001, the Company granted options to purchase 462,300 shares to its directors, officers and employees at exercise prices of $29.50 to $36.00. During the year ended December 31, 2000, the Company granted options to purchase 679,280 shares to its directors, officers and employees at exercise prices ranging from $18.50 to $27.44. During the year ended

F-23

December 31, 1999, the Company granted options to purchase 221,301 shares to its directors and officers at an exercise price of $14.625.

		Years Ended December 31,
		2001				2000				1999
		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding, beginning of period		1,728,936		$	15.16	1,106,281		$	9.57	1,083,218		$	8.17
	Granted	462,300			33.20	679,280			23.84	221,301			14.625
	Exercised	(503,372	)		8.49	(43,625	)		8.02	(188,238	)		7.24
	Forfeitures	(16,750	)		24.36	—			—	—			—
	Expired	—			—	(13,000	)		16.81	(10,000	)		12.58
Outstanding, end of period		1,671,114		$	22.10	1,728,936		$	15.16	1,106,281		$	9.57
Options and warrants exercisable, end of period		619,426		$	14.52	820,187		$	8.50	762,781		$	7.94
Weighted average per share fair value of options and warrants granted during the period				$	22.40			$	18.66			$	9.48

        SFAS No. 123, "Accounting for Stock-Based Compensation," requires the Company to provide pro forma information regarding net income and net income per share as if compensation costs for the Company's stock option plans and other stock awards had been determined in accordance with the fair value based method prescribed in SFAS No. 123. The Company estimated the fair value of each stock award at the grant date by using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the year ended December 31, 1999: dividend yield at 0%; expected volatility of approximately 43%; risk-free interest rate of 4.5% and expected lives of five and ten years for the warrants and options. Assumptions used for the year ended December 31, 2000: dividend yield at 0%; expected volatility of approximately 43% to 50%; risk-free interest rates of 4.82% to 5.74% and expected lives of five to ten years for the warrants and options. Assumptions for the year ended December 31, 2001: dividend yield at 0%; expected volatility of approximately 51%; risk-free interest rate of 4.29% to 5.10% and expected lives of five to ten years for the warrants and options.

F-24

        Under the accounting provisions of SFAS No. 123, the Company's net income and net income per share would have been adjusted to the following pro forma amounts:

		Years Ended December 31, 2000
		2001				2000				1999
		As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
		(In Thousands, Except Per Share Data)
Basic net income available to common stockholders (Note 8):
Income from continuing operations		$	38,527	$	35,790	$	14,063	$	12,702	$	4,675	$	4,131
Discontinued operations			—		—		—		—		452		452
Net income		$	38,527	$	35,790	$	14,063	$	12,702	$	5,127	$	4,583
Basic income per common share:
	From continuing operations	$	2.08	$	1.93	$	0.91	$	0.82	$	0.36	$	0.32
	From discontinued operations		—		—		—		—		0.03		0.03
	Basic income per common share	$	2.08	$	1.93	$	0.91	$	0.82	$	0.39	$	0.35
Diluted net income (Note 8):
Income from continuing operations		$	38,527	$	35,790	$	14,063	$	12,702	$	4,675	$	4,131
Discontinued operations			—		—		—		—		452		452
Net income		$	38,527	$	35,790	$	14,063	$	12,702	$	5,127	$	4,583
Diluted income per common share:
	From continuing operations	$	1.98	$	1.84	$	0.87	$	0.78	$	0.34	$	0.31
	From discontinued operations		—		—		—		—		0.03		0.03
	Diluted income per common share	$	1.98	$	1.84	$	0.87	$	0.78	$	0.37	$	0.34

The following table summarizes information about stock options and warrants outstanding at December 31, 2001:

		Outstanding				Exercisable
Range of Exercise Prices		Number Outstanding at 12/31/01	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at 12/31/01	Weighted Average Exercise Price
$	7.00	236,560	1.85	$	7.00	236,560	$	7.00
	13.00	122,549	6.00		13.00	80,861		13.00
	14.63	219,500	6.78		14.63	114,500		14.63
	18.50	240,555	7.96		18.50	61,055		18.50
	27.38	251,200	8.81		27.38	89,200		27.38
	27.44	138,450	8.83		27.44	34,950		27.44
	29.50 - 36.00	462,300	9.79		33.19	2,300		36.00
$	7.00 - 36.00	1,671,114	7.50	$	22.10	619,426	$	14.52

F-25

(10) MAJOR CUSTOMERS

        During the years ended December 31, 2001, 2000 and 1999, the Company made sales to certain unrelated entities which individually comprised greater than 10% of total natural gas revenues. The following is a table summarizing the percentage provided by each customer.

	Years Ended December 31,
Customer
	2001		2000		1999
A	46	%	61	%	49	%
B	31	%	22	%	—	%
C	10	%	12	%	24	%
D	—	%	—	%	18	%

        At December 31, 2001, four customers represented 32%, 31%, 18% and 10% of natural gas sales accounts receivable.

(11) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

        Cash paid during the years ended December 31, 2001, 2000 and 1999 for interest was approximately $9,247,000, $3,599,000, and $2,194,000, respectively. During the years ended December 31, 2001, 2000 and 1999, approximately $1,172,000, $626,000 and $351,000 of interest paid was capitalized, respectively.

        See Notes 3, 7, 8, and 9 for additional non-cash transactions during the years ended December 31, 2001, 2000 and 1999.

(12) COMMITMENTS AND CONTINGENCIES

        Evergreen's current firm transportation commitments with Colorado Interstate Gas Co. ("CIG") are 97 MMcf of gross gas sales per day. The Company has committed to an additional 30 MMcf per day, subject to a ramp-up schedule which anticipates 5 MMcf per day increments each four months from June 2002 through February 2004. Thus, Evergreen's total transportation obligations committed to will increase in increments to 127 MMcf per day by February 2004. If the Company is unable to fulfill its transportation commitments, amounts paid for transportation on up to 41 MMcf per day can be credited toward future transportation costs through August 2006.

F-26

        Under terms of the transportation agreements, the Company has committed to pay the following transportation reservation charges with CIG to provide firm transportation capacity rights:

Year Ending December 31,	Reservation Charges
	(In Thousands)
2002	$	10,779
2003		12,353
2004		13,438
2005		12,904
2006		12,904
Thereafter		71,982
	$	134,360

        In May 1998, the Company entered into a new ten-year office lease, which was amended in March 2001 to include additional space, that now provides for lease payments of approximately $620,000 per year. Rental expense was approximately $559,000, $290,000, and $268,000 for the years ended December 31, 2001, 2000 and 1999, respectively. The Company also leases equipment under non-cancelable operating leases with maturity dates through the year ending 2004.

        The following table summarizes the future minimum lease payments under all noncancelable operating lease obligations.

Year Ending December 31,	Future Minimum Lease Payments
	(In Thousands)
2002	$	2,288
2003		1,159
2004		825
2005		637
2006		663
2007 and Thereafter		889
	$	6,461

        Effective January 1, 1997, the Company implemented a 401(k) plan for all eligible employees. The Company provides a matching contribution up to a certain percentage of the employees' contributions. The 401(k) plan also provides for a profit sharing contribution determined at the discretion of the Company. The total matching and profit sharing contributions for the years ended December 31, 2001, 2000 and 1999 were approximately $247,000, $179,000 and $46,000, respectively.

        At December 31, 2001, the Company had entered into agreements with various vendors to construct well service equipment and gas collection assets at a total cost of approximately $13 million. As of December 31, 2001, approximately $2.5 million was paid as deposits on such equipment, which is included in property and equipment on the Company's consolidated balance sheet. Subsequent to December 31, 2001, the Company committed to purchase two additional compressors at a combined estimated cost of approximately $3.5 million.

F-27

        The Company currently has a commitment to drill six wells in the Pioneer Unit in Alaska in 2002. Total expected costs related to this commitment are estimated to be approximately $3 million. The Company has also entered into a joint venture agreement with a work commitment covering 29,000 acres of coal bed methane properties in Huerfano County, Colorado, in the northern end of the Raton Basin. Under the agreement, Evergreen will spend $2 million through September 30, 2002 to earn a 50% working interest in the properties, which currently contain 15 shut-in wells. The properties are located approximately 20 miles north of Evergreen's existing 274,000 acres of coal bed methane properties in Las Animas County, Colorado. Evergreen's planned expenditures will be primarily for drilling, completions, workovers, equipment and fracture stimulations. As of December 31, 2001, the Company had incurred approximately $300,000 toward the work commitment of $2 million.

        As of December 31, 2001, the Company had entered into the following fixed-price physical delivery contracts to sell its gas production (the Company's hedging contracts are denoted in MMBtu's, which convert on an approximate 1-for-1 basis into Mcf):

•

a maximum of 4 MMcf per day from January 1, 2001 through April 30, 2003, at a price of $2.40 per Mcf plus transportation costs, and



•

10 MMcf per day from January 1, 2001 through March 31, 2003 for the lesser of then current market price or a gross price of $2.45 per Mcf.

        In consideration for the extension of the $2.45 contract, Evergreen received $1,762,000 over the 12-month period ended October 31, 2000, which is being amortized over the contract term. As of December 31, 2001, $565,000 was recognized as deferred revenue and will be recognized as revenue in future periods.

        Subsequent to December 31, 2001 through February 15, 2002, the Company entered into two commodity swap agreements. One contract is for 20 MMcf per day from March 1, 2002 through June 30, 2002 at a hedge price of $2.315 per Mcf and the other contract is for 20 MMcf per day from March 1, 2002 through June 30, 2002 at a hedge price of $2.325 per Mcf. The contracts provide for the Company to receive or make payments based upon the differential between the hedge price and the market gas price, as defined in the contracts, for the notional quantity.

(13) RELATED PARTIES AND OTHER

        On February 9, 2001, Evergreen closed a transaction with KFx Inc. ("KFx") under which KFx sold to Evergreen a portion of its convertible preferred stock investment in its Pegasus Technologies, Inc. subsidiary ("Pegasus"), representing an approximate 8.8% as converted interest in Pegasus, for $1.5 million. Under the terms of the agreement, the repurchase date was January 31, 2002 unless Evergreen elected to extend it to January 1, 2003. Evergreen has extended the repurchase date to January 1, 2003 in consideration for the option to purchase additional convertible preferred stock in Pegasus for $1.2 million any time prior to January 1, 2003, which is redeemable on or before January 1, 2003 for $1.6 million. In certain circumstances, Evergreen can elect to exchange this interest in Pegasus, valued at $2 million, and any subsequently acquired interest in Pegasus, for common stock of KFx at $3.65 per share, subject to certain adjustments. In addition, Evergreen was provided with a five-year warrant to purchase 1 million shares of KFx common stock at $3.65 per share, subject to certain adjustments, which includes the reduction in the warrant exercise price to $2.25 per share upon KFx's retirement of certain outstanding debentures. No value has been assigned to the warrants or the

F-28

purchase option as the Company does not believe the value to be significant given current stock liquidity factors. Should the Company elect to exercise the option to acquire more preferred stock at a discount, a gain could be recorded in the future which could affect the Company's carrying value and resulting gain. The President and Chief Executive Officer of Evergreen is on the board of directors of KFx. The Chief Financial Officer of Evergreen is on the board of directors of Pegasus.

        A director of the Company is a partner in a law firm that acts as counsel to the Company on various matters. The Company paid legal fees and expenses to the law firm of approximately $157,000, $139,000 and $207,000 in 2001, 2000 and 1999, respectively.

(14) DISCONTINUED OPERATIONS

        Effective February 18, 1999, Evergreen sold its 49% interest in Maverick to the managing members of Maverick for approximately $2,258,000. The sale resulted in a gain, net of tax, of approximately $452,000 or $0.03 per diluted share. The Company was also released from its guarantee of certain debt obligations of Maverick. This transaction was accounted for as a discontinued operation and the results of operations were excluded from continuing operations in the consolidated statements of income for all periods presented.

(15) SUPPLEMENTAL OIL AND GAS INFORMATION (Unaudited)

Costs incurred in Oil and Gas Exploration and Development Activities

        The Company's oil and gas activities are conducted in the United States, the United Kingdom, Northern Ireland and the Republic of Ireland, the Falkland Islands and Chile. See Note 3 for additional information regarding the Company's oil and gas properties. The following costs were

F-29

incurred in oil and gas acquisition, exploration, development, gas gathering and producing activities during the following periods:

		United States		United Kingdom		N. Ireland/ Republic of Ireland		Falkland Islands		Chile		Total
						(In Thousands)
Year Ended December 31, 2001
Acquisition costs:
	Proved	$	16,202	$	—	$	—	$	—	$	—	$	16,202
	Unproved		1,891		—		—		—		—		1,891
	Gas collection		2,153		—		—		—		—		2,153
Development			51,512		—		—		—		—		51,512
Gas collection			35,310		—		—		—		—		35,310
Exploration			3,587		3,574		7,334		—		119		14,614
		$	110,655	$	3,574	$	7,334	$	—	$	119	$	121,682
Year Ended December 31, 2000
Acquisition costs:
	Proved	$	135,505	$	—	$	—	$	—	$	—	$	135,505
	Unproved		6,647		—		—		—		—		6,647
	Gas collection		30,000		—		—		—		—		30,000
Development			31,666		—		—		—		—		31,666
Gas collection			24,401		—		—		—		—		24,401
Exploration			—		7,751		—		49		363		8,163
		$	228,219	$	7,751	$	—	$	49	$	363	$	236,382
Year Ended December 31, 1999
Acquisition costs:
	Proved	$	2,020	$	—	$	—	$	—	$	—	$	2,020
	Unproved		3,057		—		—		—		—		3,057
Development			21,597		—		—		—		—		21,597
Gas collection			14,835		—		—		—		—		14,835
Exploration			792		1,032		—		78		1,962		3,864
		$	42,301	$	1,032	$	—	$	78	$	1,962	$	45,373
Years Ended December 31, 1998 and prior
Acquisition costs:
	Proved	$	16,215	$	—	$	—	$	—	$	—	$	16,215
	Unproved		12,200		—		—		—		—		12,200
	Gas collection		4,485		—		—		—		—		4,485
Development			34,874		—		—		—		—		34,874
Gas collection			18,644		—		—		—		—		18,644
Exploration			2,365		10,265		—		1,208		595		14,433
		$	88,783	$	10,265	$	—	$	1,208	$	595	$	100,851

F-30

        The following table sets forth a summary of oil and gas property costs not being amortized at December 31, 2001, by the year in which such costs were incurred:

	Total		2001		2000		1999		1998 and Prior
	(In Thousands)
Property acquisition costs	$	23,795	$	1,891	$	6,647	$	3,057	$	12,200
Exploration and development, net of transfers to proved oil & gas properties		32,685		12,179		8,163		3,864		8,479
Total	$	56,480	$	14,070	$	14,810	$	6,921	$	20,679

        The following table sets forth a summary of capitalized interest that has been included in the unevaluated properties during the following periods:

Year Ending December 31,	United States		United Kingdom		N. Ireland/ Republic of Ireland		Falkland Islands		Chile		Total
2001	$	309	$	680	$	70	$	—	$	113	$	1,172
2000		134		354		—		—		138		626
1999		295		—		—		43		13		351
1998		392		—		—		43		13		448
1997 and prior		40		—		—		—		—		40
	$	1,170	$	1,034	$	70	$	86	$	277	$	2,637

        The Company's proved oil and gas properties and gas collection system are all located within the United States. The depreciation and depletion related to these assets was $15,659,000, $7,868,000 and $4,794,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Oil and Gas Reserves

        The estimates of the Company's proved natural gas reserves and related future net cash flows that are presented in the following tables are based upon estimates made by independent petroleum engineering consultants for the United States only.

        The Company's reserve information was prepared as of December 31, 2001, 2000 and 1999. The Company cautions that there are many inherent uncertainties in estimating proved reserve quantities, projecting future production rates, and timing of development expenditures. Accordingly, these estimates are likely to change as future information becomes available. Proved oil and gas reserves are the estimated quantities of crude oil, condensate, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those reserves expected to be recovered through existing wells, with existing equipment and operating methods.

F-31

        Estimated quantities of proved reserves and proved developed reserves of natural gas (all of which are located within the United States), as well as the changes in proved reserves, are as follows:

Proved Reserves:	2001 Gas (MMcf)		2000 Gas (MMcf)		1999 Gas (MMcf)
Beginning of year	874,526		559,419		404,936
Revisions of previous estimates	(609	)	(24,209	)	3,724
Extensions and discoveries	167,663		205,595		148,570
Production	(30,807	)	(19,521	)	(13,656	)
Purchase of reserves	39,870		153,242		15,845
End of year	1,050,643		874,526		559,419
Proved developed reserves	684,167		544,211		334,804
% of proved developed reserves	65.1	%	62.2	%	59.8	%

        The following table sets forth a standardized measure of the estimated discounted future net cash flows attributable to the Company's proved gas reserves. Gas prices have fluctuated widely in recent years. The calculated weighted average sales prices utilized for the purposes of estimating the Company's proved reserves and future net revenues were $2.32, $9.18 and $2.31 per Mcf of gas at December 31, 2001, 2000 and 1999. The future production and development costs represent the estimated future expenditures to be incurred in developing and producing the proved reserves, assuming continuation of existing economic conditions. Future income tax expense was computed by applying statutory income tax rates to the difference between pretax net cash flows relating to the Company's proved reserves and the tax basis of proved properties and available operating loss and percent depletion carryovers.

	December 31,
	2001			2000			1999
	(In Thousands)
Future cash inflows	$	2,438,286		$	8,028,403		$	1,294,494
Future production costs		(994,363	)		(1,090,286	)		(415,734	)
Future development costs		(107,620	)		(93,863	)		(57,777	)
Future income taxes		(402,896	)		(2,569,766	)		(298,798	)
Future net cash flows		933,407			4,274,488			522,185
10% discount to reflect timing of cash flows		(515,382	)		(2,450,737	)		(311,409	)
Standardized measure of discounted future net cash flows	$	418,025		$	1,823,751		$	210,776

F-32

        The following summarizes the principal factors comprising the changes in the standardized measure of discounted future net cash flows for the years ended December 31, 2001, 2000 and 1999.

	December 31,
	2001			2000			1999
	(In Thousands)
Standardized measure, beginning of period	$	1,823,751		$	210,776		$	143,429
Sales of natural gas, net of production costs		(92,521	)		(43,184	)		(17,330	)
Extensions and discoveries		73,701			621,650			66,120
Net change in sales prices, net of production costs		(2,661,828	)		1,766,677			54,802
Purchase of reserves		29,786			245,868			8,740
Revisions of quantity estimates		—			(114,000	)		3,000
Accretion of discount		292,017			33,138			21,468
Net change in income taxes		915,978			(975,808	)		(49,361	)
Changes in future development costs		(8,632	)		(3,773	)		(2,620	)
Changes in rates of production and other		45,773			82,407			(17,472	)
Standardized measure, end of period	$	418,025		$	1,823,751		$	210,776

(16) SUMMARIZED QUARTERLY FINANCIAL INFORMATION (Unaudited)

	Revenues		Expenses		Net Income		Basic Earnings Per Share		Diluted Earnings Per Share
	(In Thousands, Except Per Share Data)
2001
First quarter	$	37,944	$	22,978	$	14,966	$	0.81	$	0.78
Second quarter		32,776		21,614		11,162		0.61		0.57
Third quarter		25,635		18,489		7,146		0.38		0.37
Fourth quarter		24,415		19,162		5,253		0.28		0.27
	$	120,770	$	82,243	$	38,527
2000
First quarter	$	8,513	$	6,652	$	1,861	$	0.13	$	0.12
Second quarter		9,532		7,286		2,246		0.15		0.14
Third quarter		13,788		10,583		3,205		0.16		0.15
Fourth quarter		27,860		18,180		9,680		0.45		0.42
	$	59,693	$	42,701	$	16,992

F-33

EX-4.3

Exhibit 4.3

Execution Copy

EVERGREEN RESOURCES, INC.

4.75% SENIOR CONVERTIBLE NOTES
DUE 2021

INDENTURE

Dated as of December 18, 2001

FIRST UNION NATIONAL BANK,

as Trustee

CROSS-REFERENCE TABLE*

TIA Section		Indenture Section
Section	310(a)(1)		9.10
	(a)(2)		9.10
	(a)(3)		N.A.**
	(a)(4)		N.A.
	(a)(5)		9.10
	(b)		9.8; 9.10
	(c)		N.A.
Section	311(a)		9.11
	(b)		9.11
	(c)		N.A.
Section	312(a)		2.5
	(b)		13.3
	(c)		13.3
Section	313(a)		9.6
	(b)(1)		N.A.
	(b)(2)		9.6
	(c)		9.6; 13.2
	(d)		9.6
Section	314(a)		6.2; 6.3, 6.4; 13.2
	(b)		N.A.
	(c)(1)		13.4(a)
	(c)(2)		13.4(a)
	(c)(3)		N.A.
	(d)		N.A.
	(e)		13.4(b)
	(f)		N.A.
Section	315(a)		9.1(b)
	(b)		9.5; 13.2
	(c)		9.1(a)
	(d)		9.1(c)
	(e)		8.11
Section	316(a)(last sentence)		2.9
	(a)(1)(A)		8.5
	(a)(1)(B)		8.4
	(a)(2)		N.A.
	(b)		8.7
	(c)		13.5
Section	317(a)(1)		8.8
	(a)(2)		8.9
	(b)		2.4

* This Cross-Reference Table shall not, for any purpose, be deemed a part of this Indenture.

**    N.A. means Not Applicable.

TABLE OF CONTENTS

Section 1.1	Definitions.
Section 1.2	Other Definitions.
Section 1.3	Trust Indenture Act Provisions.
Section 1.4	Rules of Construction.

Section 2.1	Form and Dating
Section 2.2	Execution and Authentication
Section 2.3	Registrar, Paying Agent and Conversion Agent
Section 2.4	Paying Agent To Hold Money in Trust
Section 2.5	Securityholder Lists
Section 2.6	Transfer and Exchange
Section 2.7	Replacement Securities
Section 2.8	Outstanding Securities
Section 2.9	Treasury Securities
Section 2.10	Temporary Securities
Section 2.11	Cancellation
Section 2.12	Additional Transfer and Exchange Requirements
Section 2.13	CUSIP Numbers

Section 3.1	Right to Redeem; Notice to Trustee
Section 3.2	Selection of Securities to be Redeemed
Section 3.3	Notice of Redemption
Section 3.4	Effect of Notice of Redemption
Section 3.5	Deposit of Redemption Price
Section 3.6	Securities Redeemed in Part
Section 3.7	Conversion Arrangement on Call For Redemption

Section 4.1	Conversion Privilege
Section 4.2	Conversion Procedure
Section 4.3	Fractional Shares
Section 4.4	Taxes on Conversion
Section 4.5	Company to Provide Stock
Section 4.6	Adjustment of Conversion Price
Section 4.7	No Adjustment

ii

Section 4.8	Adjustment for Tax Purposes
Section 4.9	Notice of Adjustment
Section 4.10	Notice of Certain Transactions
Section 4.11	Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege
Section 4.12	Trustee’s Disclaimer
Section 4.13	Voluntary Reduction

Section 5.1	Optional Put
Section 5.2	The Company’s Right to Elect Manner of Payment of Optional Repurchase Price on December 20, 2006
Section 5.3	Purchase with Cash
Section 5.4	Payment by Issuance of Shares of Common Stock on December 20, 2006
Section 5.5	Notice of Election
Section 5.6	Covenants of the Company
Section 5.7	Procedure upon Repurchase
Section 5.8	Taxes
Section 5.9	Effect of Optional Repurchase Notice
Section 5.10	Deposit of Optional Repurchase Price
Section 5.11	Securities Repurchased in Part
Section 5.12	Comply with Securities Laws Upon Purchase of Securities
Section 5.13	Repayment to the Company
Section 5.14	Conversion Arrangement on Repurchase

Section 6.1	Payment of Securities
Section 6.2	SEC Reports
Section 6.3	Compliance Certificates
Section 6.4	Further Instruments and Acts
Section 6.5	Maintenance of Corporate Existence
Section 6.6	Rule 144A Information Requirement
Section 6.7	Stay, Extension and Usury Laws
Section 6.8	Payment of Liquidated Damages
Section 6.9	Resale of Certain Securities
Section 6.10	Tax Treatment of Securities

Section 7.1	Company May Consolidate, Etc. Only on Certain Terms
Section 7.2	Successor Substituted

iii

Section 8.1	Events of Default
Section 8.2	Acceleration
Section 8.3	Other Remedies
Section 8.4	Waiver of Defaults and Events of Default
Section 8.5	Control By Majority
Section 8.6	Limitations on Suits
Section 8.7	Rights of Holders to Receive Payment and to Convert
Section 8.8	Collection Suit By Trustee
Section 8.9	Trustee May File Proofs of Claim
Section 8.10	Priorities
Section 8.11	Undertaking for Costs

Section 9.1	Duties of Trustee
Section 9.2	Rights of Trustee
Section 9.3	Individual Rights of Trustee
Section 9.4	Trustee’s Disclaimer
Section 9.5	Notice of Default or Events of Default
Section 9.6	Reports By Trustee To Holders
Section 9.7	Compensation and Indemnity
Section 9.8	Replacement of Trustee
Section 9.9	Successor Trustee By Merger, Etc
Section 9.10	Eligibility; Disqualification
Section 9.11	Preferential Collection of Claims Against Company

Section 10.1	Satisfaction and Discharge of Indenture
Section 10.2	Application of Trust Money
Section 10.3	Repayment To Company
Section 10.4	Reinstatement

Section 11.1	Without Consent of Holders
Section 11.2	With Consent of Holders
Section 11.3	Compliance With Trust Indenture Act
Section 11.4	Revocation and Effect of Consents
Section 11.5	Notation on or Exchange of Securities
Section 11.6	Trustee To Sign Amendments, Etc

iv

Section 12.1	Change in Control Put
Section 12.2	Effect of Change in Control Repurchase Notice
Section 12.3	Deposit of Change in Control Repurchase Price
Section 12.4	Securities Purchased in Part
Section 12.5	Compliance with Securities Laws Upon Purchase of Securities
Section 12.6	Repayment to the Company

Section 13.1	Trust Indenture Act Controls
Section 13.2	Notices
Section 13.3	Communications By Holders With Other Holders
Section 13.4	Certificate and Opinion as to Conditions Precedent
Section 13.5	Record Date for Vote or Consent of Securityholders
Section 13.6	Rules By Trustee, Paying Agent, Registrar and Conversion Agent
Section 13.7	Legal Holidays
Section 13.8	Governing Law
Section 13.9	No Adverse Interpretation of Other Agreements
Section 13.10	No Recourse Against Others
Section 13.11	Successors
Section 13.12	Multiple Counterparts
Section 13.13	Separability
Section 13.14	Table of Contents, Headings, Etc

v

THIS INDENTURE dated as of December 18, 2001 is between Evergreen Resources, Inc., a Colorado corporation (the “Company”), and First Union National Bank, a national banking association, as Trustee (the “Trustee”).

In consideration of the premises and the purchase of the Securities by the Holders thereof, both parties agree as follows for the benefit of the other and for the equal and ratable benefit of the registered Holders of the Company’s 4.75% Senior Convertible Notes due 2021.

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.1Definitions.

“Affiliate” means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, “control” when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent” means any Registrar,  Paying Agent or Conversion Agent.

“Applicable Procedures” means, with respect to any transfer or exchange of beneficial ownership interests in a Global Security, the rules and procedures of the Depositary that are applicable to such transfer or exchange.

“Board of Directors” means the board of directors of the Company or any authorized committee of the Board of Directors.

“Business Day” means each day that is not a Legal Holiday.

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

“Cash” or “cash” means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts.

“Certificated Security” means a Security that is in substantially the form attached hereto as Exhibit A and that does not include the information or the schedule called for by footnotes 1, 3 and 4 thereof.

“Closing Price Per Share” means the closing price per share of the Company’s Common Stock determined in accordance with Section 4.6(d) hereof.

“Common Stock” means the common stock of the Company, no par value, as it exists on the date of this Indenture and any shares of any class or classes of Capital Stock of the Company resulting from any reclassification or reclassifications thereof and which have no preference in

respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided, however, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion of Securities shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

“Company” means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture, and thereafter means the successor.

“Contingent Interest” has the meaning specified in Section 1 of the form of Security attached hereto as Exhibit A.

“Conversion Period” means the period from and including the 30th Trading Day in a fiscal quarter to, but not including, the 30th Trading Day in the immediately following fiscal quarter.

“Conversion Rate” means the number of shares of Common Stock into which each $1,000 principal amount of Securities is convertible, which is initially $50.00, subject to adjustments as set forth herein.

“Conversion Value” of a Security as of any date means the product of the Sale Price of a share of Common Stock times the number of shares of Common Stock into which the Security could then be converted (assuming that the Security was convertible as of such date).

“Corporate Trust Office” means the corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of this Indenture is located at 5847 San Felipe, Suite 1050, Houston, Texas 77057, Attention: Corporate Trust Group, or at any other time at such other address as the Trustee may designate from time to time by notice to the Company.

“Default” or “default” means, when used with respect to the Securities, any event which is or, after notice or passage of time or both, would be an Event of Default.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

“Ex-Dividend Time” means, with respect to any issuance or distribution on shares of Common Stock, the first date on which the shares of Common Stock trade regular way on the principal securities market on which the shares of Common Stock are then traded without the right to receive such issuance or distribution.

“Fair Market Value” shall mean the amount which a willing buyer would pay a willing seller in an arm’s length transaction (as determined by the Board of Directors, whose determination shall be conclusive).

“Final Maturity Date” means December 15, 2021.

2

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the date of this Indenture, including those set forth in (1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (2) the statements and pronouncements of the Financial Accounting Standards Board, (3) such other statements by such other entity as approved by a significant segment of the accounting profession and (4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in registration statements filed under the Securities Act and periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

“Global Security” means a permanent Global Security that is in substantially the form attached hereto as Exhibit A and that includes the information and schedule called for by footnotes 1, 3 and 4 thereof and which is deposited with the Depositary or its custodian and registered in the name of the Depositary or its nominee.

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

“Indebtedness” means obligations (other than nonrecourse obligations) of, or guaranteed or assumed by, the Company for borrowed money, including obligations evidenced by bonds, debentures, notes or other similar instruments and reimbursement and cash collateralization of letters of credit, bankers’ acceptances, interest rate hedge and currency hedge agreements.

“Indenture” means this Indenture as amended or supplemented from time to time pursuant to the terms of this Indenture.

“Liquidated Damages” has the meaning specified in Section 3(a) of the Registration Rights Agreement. All references herein or in the Securities to interest accrued or payable as of any date shall include any Liquidated Damages accrued or payable as of such date as provided in the Registration Rights Agreement.

“Market Price” as of any date of determination means the average of the Sale Prices of the shares of Common Stock for the five Trading Day period ending on (if the third Business Day prior to the applicable date of determination is a Trading Day, or if not, then on the last Trading Day prior to), the third Business Day prior to the applicable Optional Repurchase Date appropriately adjusted to take into account the occurrence, during the period commencing on the first of such Trading Days during such five Trading Day period and ending on such date of determination, of any event described in Section 4.6; subject, however, to the conditions set forth in Section 4.7.

“Maturity” means the date on which the outstanding principal amount, Redemption Price, Optional Repurchase Price or Change in Control Repurchase Price with respect to such Securities becomes due and payable as therein or herein provided, whether at the Final Maturity Date or by acceleration, conversion, call for redemption, exercise of a repurchase right or otherwise.

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

3

“Officer” means the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, the Secretary or any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company.

“Officers’ Certificate” means a certificate signed by two Officers; provided, however, that for purposes of Sections 4.11 and 6.3, “Officers’ Certificate” means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company and by one other Officer.

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

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

“Principal” or “principal” of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security.

             “Record Date” shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of shares of Common Stock have the right to receive any cash, securities or other property or in which the shares of Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

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

             “Redemption Price” or “redemption price,” when used with respect to any Security to be redeemed, means the price fixed for such redemption pursuant to this Indenture, as set forth in the form of Security annexed as Exhibit A hereto.

             “Registration Rights Agreement” means the Registration Rights Agreement, dated as of December 18, 2001, between the Company and Bear, Stearns & Co. Inc., First Union Securities, Inc., UBS Warburg LLC, Jefferies & Company, Inc. and Stifel Nicolaus & Company, Incorporated, as initial purchasers.

             “Regular Record Date” for the interest (including Contingent Interest) payable on the Note means June 1 and December 1 (whether or not a Business Day), as applicable, next preceding the corresponding Interest Payment Date.

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

             “Restricted Certificated Security” means a Certificated Security which is a Transfer Restricted Security.

4

“Restricted Global Security” means a Global Security that is a Transfer Restricted Security.

“Restricted Security” means a Restricted Certificated Security or a Restricted Global Security.

“Rule 144” means Rule 144 under the Securities Act or any successor to such Rule.

“Rule 144A” means Rule 144A under the Securities Act or any successor to such Rule.

“Sale Price” of the shares of Common Stock on any date means:

                          (1)        the closing per share sale price (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such date as reported in the composite transactions for the principal United States securities exchange on which the shares of Common Stock are traded, or

                          (2)        if the Common Shares are not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System or its successors.

“SEC” means the Securities and Exchange Commission.

“Securities” means the 4.75% Senior Convertible Notes due 2021 or any of them (each, a “Security”), as amended or supplemented from time to time, that are issued under this Indenture.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

             “Securities Custodian” means the Trustee, as custodian with respect to the Securities in global form, or any successor thereto.

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

“Subsidiary” means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.

“TIA” means the Trust Indenture Act of 1939, as amended, as in effect on the date of this Indenture, except as provided in Section 13.3, and except to the extent any amendment to the Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on another date.

5

“Trading Day” means:

(1)     if the applicable Security is listed or admitted for trading on the New York Stock Exchange, a day on which

the New York Stock Exchange is open for business;

(2)     if that Security is not listed on the New York Stock Exchange, a day on which trades may be made on the

Nasdaq National Market;

(3)     if that Security is not so listed on the New York Stock Exchange and not quoted on the Nasdaq National

Market, a day on which the principal U.S. securities exchange on which the Securities are listed is open for business;

or

(4)     if the applicable Security is not so listed, admitted for trading or quoted, any day other than a Saturday or a

Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or

executive order to close.

“Trading Price” of a Security on any date of determination means:

(1)     the average of the secondary market bid quotations per Security obtained by the Company for $10,000,000

principal amount of the Securities at approximately 3:30 p.m., New York City time, on such determination date

from three independent nationally recognized securities dealers selected by the Company;

(2)     if at least three such bids cannot reasonably be obtained by the Company, but two such bids are obtained,

then the average of the two bids shall be used;

(3)     if only one such bid can reasonably be obtained by the Company, this one bid shall be used; or

(4)     if the Company cannot reasonably obtain at least one bid for $10,000,000 principal amount of the

Securities from a nationally recognized securities dealer or in the Company’s reasonable judgment, the bid

quotations are not indicative of the secondary market value of the Securities, then the trading price of the

Securities will equal (i) the then-applicable conversion rate of the Securities multiplied by (ii) the Sale

Price of the Company’s Common Stock on such determination date.

“Trustee” means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture, and thereafter means the successor.

“Trust Officer” means, with respect to the Trustee, any officer assigned to the Corporate Trust Office, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Unrestricted Certificated Security” means a Certificated Security that is not a Transfer Restricted Security.

“Unrestricted Global Security” means a Global Security that is not a Transfer Restricted Security.

6

“Voting Stock” of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

Section 1.2      Other Definitions.

	Defined in
Term	Section
“Agent Members”	2.1
“Bankruptcy Law”	8.1
“Change in Control”	12.1
“Change in Control Repurchase Date”	12.1
“Change in Control Repurchase Notice”	12.1
“Change in Control Repurchase Price”	12.1
“closing price”	4.6(d)
“Company Notice”	5.5
“Company Notice Date”	5.3
“Company Order”	2.2
“Contingent Payment Regulations”	6.10
“Conversion Agent”	2.3
“Conversion Date”	4.2
“Conversion Price”	4.6
“current market price”	4.6(d)
“Custodian”	8.1
“DTC”	2.1
“Depositary”	2.1
“Determination Date”	4.6(c)
“Event of Default”	8.1
“Expiration Date”	4.6(c)
“Expiration Time”	4.6(c)
“Legal Holiday”	13.7
“NNM”	4.5
“Optional Repurchase Date”	5.1
“Optional Repurchase Notice”	5.1
“Optional Repurchase Price”	5.1
“Paying Agent”	2.3
“Primary Registrar”	2.3
“Purchased Shares”	4.6(c)
“QIB”	2.1
“Registrar”	2.3
“Transfer Certificate”	2.12
“Transfer Restricted Security”	2.12
“Triggering Distribution”	4.6(c)
“Unissued Shares”	12.1

7

Section 1.3      Trust Indenture Act Provisions.

Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture. The Indenture shall also include those provisions of the TIA required to be included herein by the provisions of the Trust Indenture Reform Act of 1990. The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Securities;

“indenture security holder” means a Securityholder;

“indenture to be qualified” means this Indenture;

             “indenture trustee” or “institutional trustee” means the Trustee; and “obligor” on the indenture securities means the Company or any other obligor on the Securities.

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

Section 1.4      Rules of Construction.

Unless the context otherwise requires:

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

(ii)        an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

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

(iv)       provisions apply to successive events and transactions;

(v)        the masculine gender includes the feminine and the neuter;

(vi)       references to agreements and other instruments include subsequent amendments thereto; and

(vii)      “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

8

ARTICLE II

THE SECURITIES

Section 2.1      Form and Dating

The Securities and the Trustee’s certificate of authentication shall be substantially in the respective forms set forth in Exhibit A, which Exhibit is incorporated in and made part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Security shall be dated the date of its authentication. The Securities are being offered and sold by the Company in transactions exempt from, or not subject to, the registration requirements of the Securities Act.

(a)        Restricted Global Securities. All of the Securities are initially being offered and sold to qualified institutional buyers as defined in Rule 144A (collectively, “QIBs” or individually, each a “QIB”) in reliance on Rule 144A under the Securities Act and shall be issued initially in the form of one or more Restricted Global Securities, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the depositary, The Depository Trust Company (“DTC”) (such depositary, or any successor thereto, being hereinafter referred to as the “Depositary”), and registered in the name of its nominee, Cede & Co., duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Restricted Global Security may from time to time be increased or decreased by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in each case to compliance with the Applicable Procedures.

(b)        Global Securities in General. Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions, purchases or conversions of such Securities. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Securities Custodian in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian.

Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or under any Global Security, and the Depositary (including, for this purpose, its nominee) may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A) prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

9

(c)        Certificated Securities. Certificated Securities shall be issued only under the limited circumstances provided in Section 2.12(a)(1) hereof.

Section 2.2      Execution and Authentication

An Officer shall sign the Securities for the Company by manual or facsimile signature attested by the manual or facsimile signature of the Secretary or an Assistant Secretary of the Company. Typographic and other minor errors or defects in any such facsimile signature shall not affect the validity or enforceability of any Security which has been authenticated and delivered by the Trustee.

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

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

The Trustee shall authenticate and make available for delivery Securities for original issue in the aggregate principal amount of up to $100,000,000 upon receipt of a written order or orders of the Company signed by an Officer of the Company (a “Company Order”). The Company Order shall specify the amount of Securities to be authenticated, shall provide that all such Securities will be represented by a Restricted Global Security and the date on which each original issue of Securities is to be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed $100,000,000 except as provided in Section 2.7.

The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as an Agent to deal with the Company or an Affiliate of the Company.

The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof.

Section 2.3      Registrar, Paying Agent and Conversion Agent

The Company shall maintain one or more offices or agencies where Securities may be presented for registration of transfer or for exchange (each, a “Registrar”), one or more offices or agencies where Securities may be presented for payment (each, a “Paying Agent”), one or more offices or agencies where Securities may be presented for conversion (each, a “Conversion Agent”) and one or more offices or agencies where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will at all times maintain a Paying Agent, Conversion Agent, Registrar and an office or agency where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served in the Borough of Manhattan, the City of New York. One of the Registrars (the “Primary Registrar”) shall keep a register of the Securities and of their transfer and exchange.

10

The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent for service of notices and demands in any place required by this Indenture, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent (except for the purposes of Section 6.1 and Article X).

The Company hereby initially designates the Trustee as Paying Agent, Registrar, Securities Custodian and Conversion Agent (which shall initially be located at 1525 West W.T. Harris Boulevard, Charlotte, North Carolina 28288-1153, Attention: Corporate Trust Operations), one such office or agency of the Company for each of the aforesaid purposes.

Section 2.4      Paying Agent To Hold Money in Trust

Prior to 11:00 a.m., New York City time, on each due date of the principal of or interest, if any, on any Securities, the Company shall deposit with a Paying Agent a sum sufficient to pay such principal or interest (including Contingent Interest), if any, so becoming due. Subject to Section 5.9, a Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest, if any, on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time, on each due date of the principal of or interest on any Securities, segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any Default, upon written request to a Paying Agent, require such Paying Agent to forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall have no further liability for the money.

Section 2.5      Securityholder Lists

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Primary Registrar, the Company shall furnish to the Trustee on or before each semiannual interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.

Section 2.6      Transfer and Exchange

(a)        Subject to compliance with any applicable additional requirements contained in Section 2.12, when a Security is presented to a Registrar with a request to register a transfer thereof or to exchange such Security for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested; provided, however, that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by an assignment form and, if

11

applicable, a transfer certificate each in the form included in Exhibit A, and in form satisfactory to the Registrar duly executed by the Holder thereof or its attorney duly authorized in writing. To permit registration of transfers and exchanges, upon surrender of any Security for registration of transfer or exchange at an office or agency maintained pursuant to Section 2.3, the Company shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at the Registrar’s request. Any exchange or transfer shall be without charge, except that the Company or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, and provided, that this sentence shall not apply to any exchange pursuant to Section 2.7, 2.10, 2.12(a)(1), 3.6, 4.2 (last paragraph), 5.11, 11.5 or 12.4.

Neither the Company, any Registrar nor the Trustee shall be required to exchange or register a transfer of (a) any Securities for a period of 15 days next preceding any mailing of a notice of Securities to be redeemed, (b) any Securities or portions thereof selected or called for redemption (except, in the case of redemption of a Security in part, the portion not to be redeemed) or (c) any Securities or portions thereof in respect of which an Optional Repurchase Notice or a Change in Control Repurchase Notice has been delivered and not withdrawn by the Holder thereof (except, in the case of the purchase of a Security in part, the portion not to be purchased).

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

(b)        Any Registrar appointed pursuant to Section 2.3 hereof shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities.

(c)        Each Holder of a Security agrees to indemnify the Company, the Registrar and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Security in violation of any provision of this Indenture and/or applicable United States federal or state securities law.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or other beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.7      Replacement Securities

If any mutilated Security is surrendered to the Company, a Registrar or the Trustee, or the Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company, the applicable Registrar and

12

the Trustee such security or indemnity as will be required by them to save each of them harmless, then, in the absence of notice to the Company, such Registrar or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be redeemed or purchased by the Company pursuant to Article III, the Company in its discretion may, instead of issuing a new Security, pay, redeem or purchase such Security, as the case may be.

Upon the issuance of any new Securities under this Section 2.7, the Company shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Trustee or the Registrar) in connection therewith.

Every new Security issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

The provisions of this Section 2.7 are (to the extent lawful) exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

Section 2.8      Outstanding Securities

Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding.

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

If a Paying Agent (other than the Company or an Affiliate of the Company) holds on a redemption date, a Change in Control Repurchase Date, an Optional Repurchase Date or the Final Maturity Date money sufficient to pay the principal of (including premium, if any) and accrued interest (including Contingent Interest) on Securities (or portions thereof) payable on that date, then on and after that date such Securities (or portions thereof, as the case may be) cease to be outstanding and interest on them ceases to accrue.

Subject to the restrictions contained in Section 2.9, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.

13

Section 2.9      Treasury Securities

In determining whether the Holders of the required principal amount of Securities have concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be disregarded, except that, for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Securities which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Securities and that the pledgee is not the Company or any other obligor on the Securities or any Affiliate of the Company or of such other obligor.

Section 2.10    Temporary Securities

Until definitive Securities are ready for delivery, the Company may prepare and execute, and, upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company with the consent of the Trustee considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate and deliver definitive Securities in exchange for temporary Securities.

Section 2.11    Cancellation

The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any Securities surrendered to them for transfer, exchange, payment or conversion. The Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities surrendered for transfer, exchange, redemption, payment, conversion or cancellation and shall deliver the canceled Securities to the Company. All Securities which are redeemed, purchased or otherwise acquired by the Company or any of its Subsidiaries prior to the Final Maturity Date shall be delivered to the Trustee for cancellation and the Company may not hold or resell such Securities or issue any new Securities to replace any such Securities or any Securities that any Holder has converted pursuant to Article IV. Without limitation to the foregoing, any Securities acquired by any investment bankers or other purchasers pursuant to Section 3.7 shall be surrendered for conversion and thereafter cancelled, and may not be reoffered, sold or otherwise transferred.

Section 2.12    Additional Transfer and Exchange Requirements

(a)        Transfer and Exchange of Global Securities.

(1)         Certificated Securities shall be issued in exchange for interests in the Global Securities only if (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities or if it at any time ceases to be a “clearing agency” registered under the Exchange Act, if so required by applicable law or regulation and a successor Depositary is not appointed by the Company within 90 days, or (y) an Event of Default has occurred and is continuing. In either case, the

14

Company shall execute, and the Trustee shall, upon receipt of a Company Order (which the Company agrees to delivery promptly), authenticate and deliver Certificated Securities in an aggregate principal amount equal to the principal amount of such Global Securities in exchange therefor. Only Restricted Certificated Securities shall be issued in exchange for beneficial interests in Restricted Global Securities, and only Unrestricted Certificated Securities shall be issued in exchange for beneficial interests in Unrestricted Global Securities. Certificated Securities issued in exchange for beneficial interests in Global Securities shall be registered in such names and shall be in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver or cause to be delivered such Certificated Securities to the Persons in whose names such Securities are so registered. Such exchange shall be effected in accordance with the Applicable Procedures.

(2) Notwithstanding any other provisions of this Indenture other than the provisions set forth in Section 2.12(a)(1), a Global Security may not be transferred as a whole 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 by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(b)        Transfer and Exchange of Certificated Securities. In the event that Certificated Securities are issued in exchange for beneficial interests in Global Securities in accordance with Section 2.12(a)(1) of this Indenture, on or after such event when Certificated Securities are presented by a Holder to a Registrar with a request:

(x)       to register the transfer of the Certificated Securities to a person who will take delivery thereof in the

form of Certificated Securities only; or

(y)       to exchange such Certificated Securities for an equal principal amount of Certificated Securities of

other authorized denominations, such Registrar shall register the transfer or make the exchange as

requested;

provided, however, that the Certificated Securities presented or surrendered for register of transfer or exchange:

(1)       shall be duly endorsed or accompanied by a written instrument of transfer in accordance with the

proviso to the first paragraph of Section 2.6; and

(2)       in the case of a Restricted Certificated Security, such request shall be accompanied by the following

additional information and documents, as applicable:

(i)         if such Restricted Certificated Security is being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, or such Restricted Certificated Security is being transferred to the Company or a Subsidiary of the Company, a certification to that effect from such Holder (in substantially the form set forth in the Transfer Certificate);

15

(ii)        if such Restricted Certificated Security is being transferred to a person the Holder reasonably believes is a QIB in accordance with Rule 144A or pursuant to an effective registration statement under the Securities Act, a certification to that effect from such Holder (in substantially the form set forth in the Transfer Certificate); or

(iii)       if such Restricted Certificated Security is being transferred (i) pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 or (ii) pursuant to an exemption from the registration requirements of the Securities Act (other than pursuant to Rule 144A or Rule 144) and as a result of which, in the case of a Security transferred pursuant to this clause (ii), such Security shall cease to be a “restricted security” within the meaning of Rule 144, a certification to that effect from the Holder (in substantially the form set forth in the Transfer Certificate) and, if the Company or such Registrar so requests, a customary Opinion of Counsel, certificates and other information reasonably acceptable to the Company and such Registrar to the effect that such transfer is in compliance with the registration requirements of the Securities Act.

(c)        Transfer of a Beneficial Interest in a Restricted Global Security for a Beneficial Interest in an Unrestricted Global Security. Any person having a beneficial interest in a Restricted Global Security may upon request, subject to the Applicable Procedures, transfer such beneficial interest to a person who is required or permitted to take delivery thereof in the form of an Unrestricted Global Security. Upon receipt by the Trustee of written instructions, or such other form of instructions as is customary for the Depositary, from the Depositary or its nominee on behalf of any person having a beneficial interest in a Restricted Global Security and the following additional information and documents in such form as is customary for the Depositary from the Depositary or its nominee on behalf of the person having such beneficial interest in the Restricted Global Security (all of which may be submitted by facsimile or electronically):

(1)    if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form set forth in the Transfer Certificate); or

(2)    if such beneficial interest is being transferred (i) pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 or (ii) pursuant to an exemption from the registration requirements of the Securities Act (other than pursuant to Rule 144A or Rule 144) and as a result of which, in the case of a Security transferred pursuant to this clause (ii), such Security shall cease to be a “restricted security” within the meaning of Rule 144, a certification to that effect from the transferor (in substantially the form set forth in the Transfer Certificate) and, if the Company or the Trustee so requests, a customary Opinion of Counsel, certificates and other information reasonably acceptable to the Company and the Trustee to the effect that such transfer is in compliance with the registration requirements of the Securities Act, the Trustee, as a Registrar and Securities Custodian, shall reduce or cause to be reduced the aggregate principal amount of the Restricted Global Security by the appropriate principal amount and shall increase or cause to be increased the aggregate principal amount of the

16

Unrestricted Global Security by a like principal amount. Such transfer shall otherwise be effected in accordance with the Applicable Procedures. If no Unrestricted Global Security is then outstanding, the Company shall execute and the Trustee shall, upon receipt of a Company Order (which the Company agrees to deliver promptly), authenticate and deliver an Unrestricted Global Security.

(d)        Transfer of a Beneficial Interest in an Unrestricted Global Security for a Beneficial Interest in a Restricted Global Security. Any person having a beneficial interest in an Unrestricted Global Security may upon request, subject to the Applicable Procedures, transfer such beneficial interest to a person who is required or permitted to take delivery thereof in the form of a Restricted Global Security (it being understood that only QIBs may own beneficial interests in Restricted Global Securities). Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depositary, from the Depositary or its nominee, on behalf of any person having a beneficial interest in an Unrestricted Global Security and, in such form as is customary for the Depositary, from the Depositary or its nominee on behalf of the person having such beneficial interest in the Unrestricted Global Security (all of which may be submitted by facsimile or electronically) a certification from the transferor (in substantially the form set forth in the Transfer Certificate) to the effect that such beneficial interest is being transferred to a person that the transferor reasonably believes is a QIB in accordance with Rule 144A. The Trustee, as a Registrar and Securities Custodian, shall reduce or cause to be reduced the aggregate principal amount of the Unrestricted Global Security by the appropriate principal amount and shall increase or cause to be increased the aggregate principal amount of the Restricted Global Security by a like principal amount. Such transfer shall otherwise be effected in accordance with the Applicable Procedures. If no Restricted Global Security is then outstanding, the Company shall execute and the Trustee shall, upon receipt of a Company Order (which the Company agrees to deliver promptly), authenticate and deliver a Restricted Global Security.

(e)        Transfers of Certificated Securities for Beneficial Interest in Global Securities. In the event that Certificated Securities are issued in exchange for beneficial interests in Global Securities and, thereafter, the events or conditions specified in Section 2.12(a)(1) which required such exchange shall cease to exist, the Company shall mail notice to the Trustee and to the Holders stating that Holders may exchange Certificated Securities for interests in Global Securities by complying with the procedures set forth in this Indenture and briefly describing such procedures and the events or circumstances requiring that such notice be given. Thereafter, if Certificated Securities are presented by a Holder to a Registrar with a request:

(x)     to register the transfer of such Certificated Securities to a person who will take delivery thereof in the

form of a beneficial interest in a Global Security, which request shall specify whether such Global Security will be a Restricted Global Security or an Unrestricted Global Security; or

(y)    to exchange such Certificated Securities for an equal principal amount of beneficial interests in a Global

Security, which beneficial interests will be owned by the Holder transferring such Certificated Securities (provided that in the case of such an exchange, Restricted Certificated Securities may be exchanged only for Restricted Global Securities and Unrestricted Certificated Securities may be exchanged only for

17

Unrestricted Global Securities), the Registrar shall register the transfer or make the exchange as requested by canceling such Certificated Security and causing, or directing the Securities Custodian to cause, the aggregate principal amount of the applicable Global Security to be increased accordingly and, if no such Global Security is then outstanding, the Company shall issue and the Trustee shall, upon receipt of a Company Order (which the Company agrees to deliver promptly) authenticate and deliver a new Global Security;

provided, however, that the Certificated Securities presented or surrendered for registration of transfer or exchange:

(1)       shall be duly  endorsed or  accompanied  by a written  instrument of transfer in accordance  with the

Section 2.6;

(2)       in the case of a Restricted Certificated Security to be transferred for a beneficial interest in an Unrestricted Global Security, such request shall be accompanied by the following additional information and documents, as applicable:

(i)         if such Restricted Certificated Security is being transferred pursuant to an effective registration statement under the Securities Act, a certification to that effect from such Holder (in substantially the form set forth in the Transfer Certificate); or

(ii)         if such Restricted Certificated Security is being transferred pursuant to (A) an exemption from the registration requirements of the Securities Act in accordance with Rule 144 or (B) pursuant to an exemption from the registration requirements of the Securities Act (other than pursuant to Rule 144A or Rule 144) and as a result of which, in the case of a Security transferred pursuant to this clause (B), such Security shall cease to be a “restricted security” within the meaning of Rule 144, a certification to that effect from such Holder (in substantially the form set forth in the Transfer Certificate), and, if the Company or the Registrar so requests, a customary Opinion of Counsel, certificates and other information reasonably acceptable to the Company and the Trustee to the effect that such transfer is in compliance with the registration requirements of the Securities Act;

(3)       in the case of a Restricted Certificated Security to be transferred or exchanged for a beneficial interest in a Restricted Global Security, such request shall be accompanied by a certification from such Holder (in substantially the form set forth in the Transfer Certificate) to the effect that such Restricted Certificated Security is being transferred to a person the Holder reasonably believes is a QIB (which, in the case of an exchange, shall be such Holder) in accordance with Rule 144A;

(4)        in the case of an Unrestricted Certificated Security to be transferred or exchanged for a beneficial interest in an Unrestricted Global Security, such request need not be accompanied by any additional information or documents; and

18

(5)       in the case of an Unrestricted Certificated Security to be transferred or exchanged for a beneficial interest in a Restricted Global Security, such request shall be accompanied by a certification from such Holder (in substantially the form set forth in the Transfer Certificate) to the effect that such Unrestricted Certificated Security is being transferred to a person the Holder reasonably believes is a QIB (which, in the case of an exchange, shall be such Holder) in accordance with Rule 144A.

(f)         Legends.

(1)       Except as permitted by the following paragraphs (2) and (3), each Global Security and Certificated Security (and all Securities issued in exchange therefor or upon registration of transfer or replacement thereof) shall bear a legend in substantially the form called for by footnote 2 to Exhibit A hereto (each a “Transfer Restricted Security” for so long as it is required by this Indenture to bear such legend). Each Transfer Restricted Security shall have attached thereto a certificate (a “Transfer Certificate”) in substantially the form called for by footnote 5 to Exhibit A hereto.

(2)        Upon any sale or transfer of a Transfer Restricted Security (w) after the expiration of the holding period applicable to sales of the Securities under Rule 144(k) of the Securities Act, (x) pursuant to Rule 144, (y) pursuant to an effective registration statement under the Securities Act or (z) pursuant to any other available exemption (other than Rule 144A) from the registration requirements of the Securities Act and as a result of which, in the case of a Security transferred pursuant to this clause (z), such Security shall cease to be a “restricted security” within the meaning of Rule 144:

(i)       in the case of any Restricted Certificated Security, any Registrar shall permit the Holder thereof to exchange such Restricted Certificated Security for an Unrestricted Certificated Security, or (under the circumstances described in Section 2.12(e)) to transfer such Restricted Certificated Security to a transferee who shall take such Security in the form of a beneficial interest in an Unrestricted Global Security, and in each case shall rescind any restriction on the transfer of such Security; provided, however, that the Holder of such Restricted Certificated Security shall, in connection with such exchange or transfer, comply with the other applicable provisions of this Section 2.12; and

(ii)      in the case of any beneficial interest in a Restricted Global Security, the Trustee shall permit the beneficial owner thereof to transfer such beneficial interest to a transferee who shall take such interest in the form of a beneficial interest in an Unrestricted Global Security and shall rescind any restriction on transfer of such beneficial interest; provided, that such Unrestricted Global Security shall continue to be subject to the provisions of Section 2.12(a)(2); and provided, further, that the owner of such beneficial interest shall, in connection with such transfer, comply with the other applicable provisions of this Section 2.12.

(3)        Upon the exchange, registration of transfer or replacement of Securities not bearing the legend described in paragraph (1) above, the Company shall execute, and

19

the Trustee shall authenticate and deliver Securities that do not bear such legend and that do not have a Transfer Certificate attached thereto.

(4)        After the expiration of the holding period pursuant to Rule 144(k) of the Securities Act, the Company may with the consent of the Holder of a Restricted Global Security or Restricted Certificated Security, remove any restriction of transfer on such Security, and the Company shall execute, and the Trustee shall authenticate and deliver Securities that do not bear such legend and that do not have a Transfer Certificate attached thereto.

(g)        Transfers to the Company. Nothing in this Indenture or in the Securities shall prohibit the sale or other transfer of any Securities (including beneficial interests in Global Securities) to the Company or any of its Subsidiaries, which Securities shall thereupon be cancelled in accordance with Section 2.11.

Section 2.13    CUSIP Numbers

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

ARTICLE III

REDEMPTION

Section 3.1      Right to Redeem; Notice to Trustee

The Securities may be redeemed at the election of the Company, as a whole or from time to time in part, at any time on or after December 20, 2006, on at least 20 days and no more than 60 days notice at the redemption prices specified in paragraph 5 of the form of Security attached hereto as Exhibit A, together with accrued interest (including Contingent Interest) up to but not including the Redemption Date; provided that if the Redemption Date is an interest payment date, interest will be payable to the Holders in whose name the Securities are registered at the close of business on the relevant record dates for payment of such interest.

If the Company elects to redeem Securities pursuant to this Section 3.1 and paragraph 5 of the Securities, it shall notify the Trustee in writing, at the earlier of the time the Company notifies the Holders of such redemption or 45 days prior to the redemption date as fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), of the redemption date and the principal amount of Securities to be redeemed. If fewer than all of the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall not be less than ten days after the date of notice to the Trustee.

20

Section 3.2      Selection of Securities to be Redeemed

If less than all of the Securities are to be redeemed, the Trustee shall, not more than 60 days prior to the redemption date, select the Securities to be redeemed. The Trustee shall make the selection from the Securities outstanding and not previously called for redemption, by lot. Securities in denominations of $1,000 may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 or any multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption.

If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed shall be treated by the Trustee as outstanding for the purpose of such selection.

Section 3.3      Notice of Redemption

At least 20 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption to each Holder of Securities to be redeemed at such Holder’s address as it appears on the Primary Registrar’s books.

The notice shall identify the Securities (including CUSIP numbers) to be redeemed and shall state:

(1)         the Redemption Date;

(2)         the Redemption Price;

(3)         the then current Conversion Price;

(4)         the name and address of each Paying Agent and Conversion Agent;

(5)         that Securities called for redemption must be presented and surrendered to a Paying Agent to collect the redemption price;

(6)         that Holders who wish to convert Securities must surrender such Securities for conversion no later than the close of business on the second Business Day immediately preceding the redemption date and must satisfy the other requirements in paragraph 8 of the Securities;

(7)         that, unless the Company defaults in making the redemption payment, interest (including Contingent Interest) on Securities called for redemption shall cease accruing on and after the redemption date and the only remaining right of the Holder shall be to receive payment of the redemption price, plus accrued and unpaid interest (including Contingent Interest), if any upon presentation and surrender to a Paying Agent of the Securities; and

21

(8)         if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the redemption date, upon presentation and surrender of such Security, a new Security or Securities in aggregate principal amount equal to the unredeemed portion thereof will be issued.

If any of the Securities to be redeemed is in the form of a Global Security, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to redemptions. At the Company’s written request, which request shall (i) be irrevocable once given and (ii) set forth all relevant information required by clauses (1) through (8) of the preceding paragraph, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense.

Section 3.4      Effect of Notice of Redemption

Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice, together with accrued and unpaid interest, if any, except for Securities that are converted in accordance with the provisions of Article IV. Upon presentation and surrender to a Paying Agent, Securities called for redemption shall be paid at the redemption price, plus accrued interest up to but not including the redemption date; provided if the redemption date is an interest payment date, interest (including Contingent Interest) will be payable to the Holders in whose names the Securities are registered at the close of business on the relevant record dates for payment of such interest.

Section 3.5      Deposit of Redemption Price

The Company, prior to 11:00 a.m. New York City time, on the Redemption Date, shall deposit with a Paying Agent (or, if the Company acts as Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest (including Contingent Interest) on all Securities to be redeemed on that date, other than Securities or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall return to the Company any money not required for that purpose because of the conversion of Securities pursuant to Article IV or, if such money is then held by the Company in trust and is not required for such purpose, it shall be discharged from the trust.

Section 3.6      Securities Redeemed in Part

Upon presentation and surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security equal in principal amount to the unredeemed portion of the Security surrendered.

Section 3.7      Conversion Arrangement on Call For Redemption

In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to a Paying Agent (other than the Company or any of its Affiliates) in trust for the Holders, on or before

22

11:00 a.m., New York City time on the Redemption Date, an amount that, together with any amounts deposited with such Paying Agent by the Company for the redemption of such Securities, is not less than the Redemption Price, together with interest (including Contingent Interest) accrued to, but not including, the Redemption Date, of such Securities. Notwithstanding anything to the contrary contained in this Article III, the obligation of the Company to pay the Redemption Price of such Securities, including all accrued interest (including Contingent Interest), shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers; provided, however, that nothing in this Section 3.7 shall relieve the Company of its obligation to pay the Redemption Price, plus accrued interest to but excluding the relevant redemption date, on Securities called for redemption. If such an agreement with one or more investment banks or other purchasers is entered into, any Securities called for redemption and not surrendered for conversion by the Holders thereof prior to the relevant redemption date may, at the option of the Company upon written notice to the Trustee, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article IV) surrendered by such purchasers for conversion, all as of 11:00 a.m., New York City time on the Redemption Date, subject to payment of the above amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it for purchase in the same manner as it would money deposited with it by the Company for the redemption of Securities. Without the Paying Agent’s prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Paying Agent from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture.

ARTICLE IV

CONVERSION

Section 4.1      Conversion Privilege

(a)        Subject to and upon compliance with the provisions of this Article, at the option of the Holder, any Security or any portion of the principal amount thereof which is an integral multiple of $1,000 may be converted at the principal amount thereof, or of such portion thereof, into duly authorized, fully paid and nonassessable shares of Common Stock, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion:

(i)         during any Conversion Period, if the Sale Price of the Common Stock for at least 20 Trading Days in the 30 consecutive Trading Day period ending on the first day of the Conversion Period was more than 110% of the Conversion Price on that thirtieth Trading Day;

(ii)        during the five Trading Day period following any 10 consecutive Trading Day period in which the average of the Trading Prices for the Security for

23

that 10 Trading Day period was less than 105% of the average Conversion Value for the Security during that period;

(iii)      during any period in which the Securities are rated by Moody’s or Standard & Poor’s and the credit rating initially assigned to the Securities by either Moody’s or Standard & Poor’s is reduced by two or more ratings levels; provided, however, that the Company shall have no obligation to have the Securities rated;

(iv)     if the Company has called the Security for redemption, at any time prior to the close of business on the day that is two Business Days prior to the Redemption Date, even if the Securities are not otherwise convertible at that time; or

(v)       upon the occurrence of the corporate transactions specified in clause (b) of this Section 4.1.

The Company shall determine on a daily basis whether the Security shall be convertible as a result of the occurrence of an event specified in clause (i) or clause (ii) above and, if the Security shall be so convertible, the Company shall promptly deliver to the Trustee written notice thereof. Whenever the Security shall become convertible pursuant to Section 4.1, the Company or, at the Company’s written request, the Trustee in the name and at the expense of the Company, shall notify the Holders of the event triggering such convertibility in the manner provided in Section 4.2, and the Company shall also publicly announce such information and publish it on the Company’s web site. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.

(b)       In addition, in the event that:

(i)        (A) the Company distributes to all holders of its shares of Common Stock rights or warrants entitling them (for a period expiring within 60 days of the Record Date for such distribution) to subscribe for or purchase shares of Common Stock, at a price per share less than the Trading Price of the Common Stock on the Business Day immediately preceding the announcement of such distribution, (B) the Company distributes to all holders of its shares of Common Stock, cash or other assets, debt securities or rights or warrants to purchase its securities, where the Fair Market Value (as determined by the Board of Directors) of such distribution per share of Common Stock exceeds 10% of the Trading Price of a share of Common Stock on the Business Day immediately preceding the date of declaration of such distribution, or (C) a Change in Control occurs, then, in each case, the Security may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such right, which shall be not less than 20 days prior to the Ex-Dividend Time for such distribution, in the case of (A) or (B), or within 30 days after the occurrence of the Change in Control, in the case of (C), until the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Time or the date the Company announces that such distribution will not take place, in the case of (A)

24

or (B), or the earlier of 30 days after the Company’s delivery of the Change in Control Repurchase Notice or the date the Company announces that the Change in Control will not take place, in the case of (C), or

(ii)       the Company consolidates with or merges into another corporation, or is a party to a binding share exchange pursuant to which the shares of Common Stock would be converted into cash, securities or other property as set forth in Section 4.11 hereof, then the Security may be surrendered for conversion at any time from and after the date which is 15 days prior to the date announced by the Company as the anticipated effective time of such transaction until 15 days after the actual date of such transaction.

The Conversion Rate, at any time, shall equal (A) $1,000 divided by the Conversion Price at such time, rounded to three decimal places (rounded up if the fourth decimal place thereof is 5 or more and otherwise rounded down).

Notwithstanding the foregoing, if such Security is called for redemption pursuant to Article III or submitted or presented for repurchase pursuant to Articles V or XII, such conversion right shall terminate at the close of business on the second Business Day immediately preceding the Redemption Date, Optional Repurchase Date or Change in Control Repurchase Date, as the case may be, for such Security or such earlier date as the Holder presents such Security for redemption or for purchase (unless the Company shall default in making the Redemption Price, Optional Repurchase Price or Change in Control Repurchase Price payment when due, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Security is redeemed or purchased, as the case may be). If such Security is submitted or presented for purchase pursuant to Article III and is then subsequently withdrawn, such conversion right shall no longer be terminated, and the Holder of such Security may convert such Security pursuant to this Section 4.1. The number of shares of Common Stock issuable upon conversion of a Security shall be determined by dividing the principal amount of the Security or portion thereof surrendered for conversion by the Conversion Price in effect on the Conversion Date. The initial Conversion Price is set forth in paragraph 8 of the Securities and is subject to adjustment as provided in this Article IV.

Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security.

A Security in respect of which a Holder has delivered an Optional Repurchase Notice pursuant to Section 5.1 or a Change in Control Repurchase Notice pursuant to Section 12.1(c) exercising the option of such Holder to require the Company to purchase such Security may be converted only if such Optional Repurchase Notice or Change in Control Repurchase Notice, as the case may be, is withdrawn by a written notice of withdrawal delivered to a Paying Agent prior to the close of business on the Business Day immediately preceding the Optional Repurchase Date or Change in Control Repurchase Date, as the case may be, in accordance with Sections 5.9 or 12.2, respectively.

25

A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities to Common Stock, and only to the extent such Securities are deemed to have been converted into Common Stock pursuant to this Article IV.

Section 4.2      Conversion Procedure

To convert a Security, a Holder must (a) complete and manually sign the conversion notice on the back of the Security and deliver such notice to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if required. The date on which the Holder satisfies all of those requirements is the “Conversion Date.” As soon as practicable after the Conversion Date, the Company shall deliver to the Holder through a Conversion Agent a certificate for the number of whole shares of Common Stock issuable upon the conversion and cash in lieu of any fractional shares pursuant to Section 4.3. Anything herein to the contrary notwithstanding, in the case of Global Securities, conversion notices may be delivered and such Securities may be surrendered for conversion in accordance with the Applicable Procedures as in effect from time to time.

The person in whose name the Common Stock certificate is registered shall be deemed to be a stockholder of record on the Conversion Date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; provided, further, that such conversion shall be at the Conversion Price in effect on the Conversion Date as if the stock transfer books of the Company had not been closed. Upon conversion of a Security, such person shall no longer be a Holder of such Security. No payment or adjustment will be made for dividends or distributions on shares of Common Stock issued upon conversion of a Security.

Securities so surrendered for conversion (in whole or in part) during the period from the close of business on any regular record date to the opening of business on the next succeeding interest payment date (excluding Securities or portions thereof called for redemption on a Redemption Date during the period beginning at the close of business on a regular record date and ending at the opening of business on the first Business Day after the next succeeding interest payment date, or if such interest payment date is not a Business Day, the second such Business Day) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such interest payment date on the principal amount of such Security then being converted, and such interest shall be payable to such registered Holder notwithstanding the conversion of such Security, subject to the provisions of this Indenture relating to the payment of defaulted interest by the Company. Except as otherwise provided in this Section 4.2, no payment or adjustment will be made for accrued interest on a converted Security. If the Company defaults in the payment of interest payable on such interest payment date, the Company shall promptly repay such funds to such Holder.

26

Nothing in this Section shall affect the right of a Holder in whose name any Security is registered at the close of business on a record date to receive the interest payable on such Security on the related interest payment date in accordance with the terms of this Indenture and the Securities. If a Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the aggregate principal amount of Securities converted.

Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security equal in principal amount to the unconverted portion of the Security surrendered.

Section 4.3      Fractional Shares

The Company will not issue fractional shares of Common Stock upon conversion of Securities. In lieu thereof, the Company will pay an amount in cash based upon the current market price (determined as set forth in Section 4.6(d)) of the Common Stock on the Trading Day immediately prior to the Conversion Date.

Section 4.4      Taxes on Conversion

If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificate representing the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder’s name. Nothing herein shall preclude any tax withholding required by law or regulation.

Section 4.5      Company to Provide Stock

The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve, out of its authorized but unissued Common Stock, a sufficient number of shares of Common Stock to permit the conversion of all outstanding Securities into shares of Common Stock.

All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim.

The Company will endeavor promptly to comply with all federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or on the Nasdaq National Market (“NNM”) or other over-the-counter market or such other market on which the Common Stock is then listed or quoted; provided, however, that if rules of such automated quotation system or exchange permit the Company to defer the listing of such Common Stock until the first conversion of the Notes into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such

27

Common Stock issuable upon conversion of the Notes in accordance with the requirements of such automated quotation system or exchange at such time.

Section 4.6      Adjustment of Conversion Price

The conversion price as stated in paragraph 8 of the Securities (the “Conversion Price”) shall be adjusted from time to time by the Company as follows:

(a)        In case the Company shall (i) pay a dividend on its Common Stock in shares of Common Stock, (ii) make a distribution on its Common Stock in shares of Common Stock, (iii) subdivide its outstanding Common Stock into a greater number of shares, or (iv) combine its outstanding Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive that number of shares of Common Stock which it would have owned had such Security been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of subdivision or combination.

(b)        In case the Company shall issue rights or warrants to all or substantially all holders of its Common Stock entitling them (for a period commencing no earlier than the record date described below and expiring not more than 60 days after such record date) to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price per share (or having a conversion price per share) less than the current market price per share of Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the record date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered, which shall be determined by multiplying the number of shares of Common Stock issuable upon conversion of such convertible securities by the conversion price per share of Common Stock pursuant to the terms of such convertible securities) would purchase at the current market price per share (as defined in subsection (d) of this Section 4.6) of Common Stock on such record date, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after such record date. If at the end of the period during which such rights or warrants are exercisable not all rights or warrants shall have been exercised, the adjusted Conversion Price shall be immediately readjusted to what it would have been based upon the number of additional shares of Common Stock actually issued (or the number of shares of Common Stock issuable upon conversion of convertible securities actually issued).

28

(c)        In case the Company shall distribute to all or substantially all holders of its Common Stock any shares of Capital Stock of the Company (other than Common Stock), evidences of indebtedness or other non-cash assets (including securities of any person other than the Company but excluding (1) dividends or distributions paid exclusively in cash or (2) dividends or distributions referred to in subsection (a) of this Section 4.6), or shall distribute to all or substantially all holders of its Common Stock rights or warrants to subscribe for or purchase any of its securities (excluding those rights and warrants referred to in subsection (b) of this Section 4.6), then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the current Conversion Price by a fraction of which the numerator shall be the current market price per share (as defined in subsection (d) of this Section 4.6) of the Common Stock on the record date mentioned below less the fair market value on such record date (as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers’ Certificate delivered to the Trustee) of the portion of the Capital Stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the record date), and of which the denominator shall be the current market price per share (as defined in subsection (d) of this Section 4.6) of the Common Stock on such record date. Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution.

(1)           In case the Company shall, by dividend or otherwise, at any time distribute (a “Triggering Distribution”) to all or substantially all holders of its Common Stock cash in an aggregate amount that, together with the aggregate amount of (A) any cash and the fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence thereof and which shall be evidenced by an Officers’ Certificate delivered to the Trustee) of any other consideration payable in respect of any tender offer by the Company or a Subsidiary of the Company for Common Stock consummated within the 12 months preceding the date of payment of the Triggering Distribution and in respect of which no Conversion Price adjustment pursuant to this Section 4.6 has been made and (B) all other cash distributions to all or substantially all holders of its Common Stock made within the 12 months preceding the date of payment of the Triggering Distribution and in respect of which no Conversion Price adjustment pursuant to this Section 4.6 has been made, exceeds an amount equal to 10.0% of the product of the current market price per share of Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Business Day (the “Determination Date”) immediately preceding the day on which such Triggering Distribution is declared by the Company multiplied by the number of shares of Common Stock outstanding on the Determination Date (excluding shares held in the treasury of the Company), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying such Conversion Price in effect immediately prior to the Determination Date by a fraction of which the numerator shall be the current market price per share of the Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Determination Date less the sum of the aggregate amount of cash and the aggregate fair market value (determined as aforesaid in this Section 4.6(c)(1)) of any such other consideration so distributed, paid or payable within such 12 months (including, without

29

limitation, the Triggering Distribution) applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the Determination Date) and the denominator shall be such current market price per share of the Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Determination Date, such reduction to become effective immediately prior to the opening of business on the day next following the date on which the Triggering Distribution is paid.

(2)           In case any tender offer made by the Company or any of its Subsidiaries for Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall involve the payment of aggregate consideration in an amount (determined as the sum of the aggregate amount of cash consideration and the aggregate fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence thereof and which shall be evidenced by an Officers’ Certificate delivered to the Trustee thereof) of any other consideration) that, together with the aggregate amount of (A) any cash and the fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence thereof and which shall be evidenced by an Officers’ Certificate delivered to the Trustee) of any other consideration payable in respect of any other tender offers by the Company or any Subsidiary of the Company for Common Stock consummated within the 12 months preceding the date of the Expiration Date (as defined below) and in respect of which no Conversion Price adjustment pursuant to this Section 4.6 has been made and (B) all cash distributions to all or substantially all holders of its Common Stock made within the 12 months preceding the Expiration Date and in respect of which no Conversion Price adjustment pursuant to this Section 4.6 has been made, exceeds an amount equal to 10.0% of the product of the current market price per share of Common Stock (as determined in accordance with subsection (d) of this Section 4.6) as of the last date (the “Expiration Date”) tenders could have been made pursuant to such tender offer (as it may be amended) (the last time at which such tenders could have been made on the Expiration Date is hereinafter sometimes called the “Expiration Time”) multiplied by the number of shares of Common Stock outstanding (including tendered shares but excluding any shares held in the treasury of the Company) at the Expiration Time, then, immediately prior to the opening of business on the day after the Expiration Date, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to close of business on the Expiration Date by a fraction of which the numerator shall be the product of the number of shares of Common Stock outstanding (including tendered shares but excluding any shares held in the treasury of the Company) at the Expiration Time multiplied by the current market price per share of the Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Trading Day next succeeding the Expiration Date and the denominator shall be the sum of (x) the aggregate consideration (determined as aforesaid) payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares and excluding any shares held in the treasury of the Company) at the Expiration Time and the current market price per share of Common Stock (as determined in

30

accordance with subsection (d) of this Section 4.6) on the Trading Day next succeeding the Expiration Date, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Date. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would have been in effect based upon the number of shares actually purchased. If the application of this Section 4.6(c)(2) to any tender offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer under this Section 4.6(c)(2).

(3)           For purposes of this Section 4.6(c), the term “tender offer” shall mean and include both tender offers and exchange offers, all references to “purchases” of shares in tender offers (and all similar references) shall mean and include both the purchase of shares in tender offers and the acquisition of shares pursuant to exchange offers, and all references to “tendered shares” (and all similar references) shall mean and include shares tendered in both tender offers and exchange offers.

(d)        For the purpose of any computation under subsections (b), (c) and (d) of this Section 4.6, the current market price per share of Common Stock on any date shall be deemed to be the average of the daily closing prices for the 30 consecutive Trading Days commencing 45 Trading Days before (i) the Determination Date or the Expiration Date, as the case may be, with respect to distributions or tender offers under subsection (c) of this Section 4.6 or (ii) the record date with respect to distributions, issuances or other events requiring such computation under subsection (b) or (c) of this Section 4.6. The closing price for each day shall be the last reported sales price or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices in either case on the NNM or, if the Common Stock is not listed or admitted to trading on the NNM, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on the NNM or any national securities exchange, the last reported sales price of the Common Stock as quoted on NASDAQ or, in case no reported sales takes place, the average of the closing bid and asked prices as quoted on NASDAQ or any comparable system or, if the Common Stock is not quoted on NASDAQ or any comparable system, the closing sales price or, in case no reported sale takes place, the average of the closing bid and asked prices, as furnished by any two members of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose. If no such prices are available, the current market price per share shall be the fair value of a share of Common Stock as determined by the Board of Directors (which shall be evidenced by an Officers’ Certificate delivered to the Trustee).

(e)        In any case in which this Section 4.6 shall require that an adjustment be made following a record date or a Determination Date or Expiration Date, as the case may be, established for purposes of this Section 4.6, the Company may elect to defer (but only until five Business Days following the filing by the Company with the Trustee of the certificate described in Section 4.9) issuing to the Holder of any Security converted after such record date or Determination Date or Expiration Date the shares of Common Stock and other Capital Stock of the Company issuable upon such conversion over and above the shares of Common Stock and other Capital Stock of the Company issuable upon such conversion only on the basis of the

31

Conversion Price prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Company shall issue or cause its transfer agents to issue due bills or other appropriate evidence prepared by the Company of the right to receive such shares. If any distribution in respect of which an adjustment to the Conversion Price is required to be made as of the record date or Determination Date or Expiration Date therefor is not thereafter made or paid by the Company for any reason, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or such effective date or Determination Date or Expiration Date had not occurred.

Section 4.7      No Adjustment

No adjustment in the Conversion Price shall be required unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price as last adjusted; provided, however, that any adjustments which by reason of this Section 4.7 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article IV shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.

No adjustment need be made for issuances of Common Stock pursuant to a Company plan for reinvestment of dividends or interest or for a change in the par value or a change to no par value of the Common Stock.

To the extent that the Securities become convertible into the right to receive cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash.

Section 4.8      Adjustment for Tax Purposes

The Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by Section 4.6, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivisions of shares, distributions of rights to purchase stock or securities or distributions of securities convertible into or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable.

Section 4.9      Notice of Adjustment

Whenever the Conversion Price or conversion privilege is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment and file with the Trustee an Officers’ Certificate briefly stating the facts requiring the adjustment and the manner of computing it. Unless and until the Trustee shall receive an Officers’ Certificate setting forth an adjustment of the Conversion Price, the Trustee may assume without inquiry that the Conversion Price has not been adjusted and that the last Conversion Price of which it has knowledge remains in effect.

Section 4.10    Notice of Certain Transactions

In the event that:

(1)        the Company takes any action which would require an adjustment in the Conversion Price;

32

(2)        the Company consolidates or merges with, or transfers all or substantially all of its property and assets to, another corporation and shareholders of the Company must approve the transaction; or

(3)        there is a dissolution or liquidation of the Company,

the Company shall mail to Holders and file with the Trustee a notice stating the proposed record or effective date, as the case may be. The Company shall mail the notice at least ten days before such date. Failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 4.10.

Section 4.11    Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege

If any of the following shall occur, namely: (a) any reclassification or change of shares of Common Stock issuable upon conversion of the Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 4.6); (b) any consolidation or merger or combination to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock; or (c) any sale or conveyance as an entirety or substantially as an entirety of the property and assets of the Company, directly or indirectly, to any person, then the Company, or such successor, purchasing or transferee corporation, as the case may be, shall, as a condition precedent to such reclassification, change, combination, consolidation, merger, sale or conveyance, execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, combination, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock deliverable upon conversion of such Security immediately prior to such reclassification, change, combination, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments of the Conversion Price which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Price provided for in this Article IV. If, in the case of any such consolidation, merger, combination, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Common Stock include shares of stock or other securities and property of a person other than the successor, purchasing or transferee corporation, as the case may be, in such consolidation, merger, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other person and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 4.11 shall similarly apply to successive reclassifications, changes, combinations, consolidations, mergers, sales or conveyances.

In the event the Company shall execute a supplemental indenture pursuant to this Section 4.11, the Company shall promptly file with the Trustee (x) an Officers’ Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or other securities or property

33

(including cash) receivable by Holders of the Securities upon the conversion of their Securities after any such reclassification, change, combination, consolidation, merger, sale or conveyance, any adjustment to be made with respect thereto and that all conditions precedent have been complied with and (y) an Opinion of Counsel that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Holders.

Section 4.12    Trustee’s Disclaimer

The Trustee shall have no duty to determine when an adjustment under this Article IV should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of that fact or the correctness of any such adjustment, and shall be protected in relying upon, an Officers’ Certificate including the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.9. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the Company’s failure to comply with any provisions of this Article IV.

The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 4.11, but may accept as conclusive evidence of the correctness thereof, and shall be fully protected in relying upon, the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.11.

Section 4.13    Voluntary Reduction

The Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days and if the reduction is irrevocable during the period if the Board of Directors determines that such reduction would be in the best interest of the Company and the Company provides 15 days prior notice of any reduction in the Conversion Price; provided, however, that in no event may the Company reduce the Conversion Price to be less than the par value of a share of Common Stock.

ARTICLE V
REPURCHASE OF SECURITIES AT OPTION OF
THE HOLDER ON SPECIFIC DATES

Section 5.1      Optional Put

On December 20, 2006, December 15, 2011 and December 15, 2016 (each, an “Optional Repurchase Date”), each Holder shall have the right, at the Holder’s option, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder’s Securities not theretofore called for redemption, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple thereof as directed by such Holder pursuant to Section 5.3 (provided that no single Security may be repurchased in part unless the portion of the principal amount of such Securities to be outstanding after such repurchase is equal to $1,000 or an integral multiple thereof), at a purchase price equal to 100% of the principal amount of the Security to be repurchased plus accrued and unpaid interest (including

34

Contingent Interest), if any, on such Optional Repurchase Date (the “Optional Repurchase Price”).

Securities shall be repurchased by the Company pursuant to this Section 5.1 and paragraph 7(a) of the Securities on the Optional Repurchase Date, at the Repurchase Price, at the option of the Holder thereof, upon:

(a)     delivery to the Paying Agent by the Holder of a written notice of purchase (a “Optional Repurchase Notice”) at any time from the opening of business on the date that is 20 Business Days prior to an Optional Repurchase Date until the close of business on such Optional Repurchase Date stating:

(1)           the certificate number of the Security which the Holder will deliver to be repurchased,

(2)           the portion of the principal amount of the Security which the Holder will deliver to be repurchased, which portion must be $1,000 or an integral multiple thereof,

(3)           that such Security shall be purchased as of the Optional Repurchase Date pursuant to the terms and conditions specified under the paragraph 7(a) of the Securities and in this Indenture,

(4)           in the event that the Company elects, pursuant to Section 5.2 hereof, to pay the Optional Repurchase Price to be paid as of the Optional Repurchase Date occurring on December 20, 2006, in whole or in part, in shares of Common Stock but such portion of the Optional Repurchase Price shall ultimately be payable to such Holder entirely in cash because any of the conditions to payment of the Optional Repurchase Price in shares of Common Stock is not satisfied prior to the close of business on such Optional Repurchase Date, as set forth in Section 5.3 hereof, whether such Holder elects (i) to withdraw such Optional Repurchase Notice as to some or all of the Securities to which such Optional Repurchase Notice relates (stating the principal amount and certificate numbers of the Securities as to which such withdrawal shall relate), or (ii) to receive cash in respect of the entire Optional Repurchase Price for all Securities (or portions thereof) to which such Optional Repurchase Price relates, and

(b)     delivery of such Security to the Paying Agent prior to, on or after the Optional Repurchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Optional Repurchase Price therefor; provided, however, that such Optional Repurchase Price shall be so paid pursuant to this Article V only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Optional Repurchase Notice.

If a Holder, in such Holder’s Optional Repurchase Notice and in any written notice of withdrawal delivered by such Holder pursuant to the terms of Section 5.9 hereof, fails to indicate such Holder’s choice with respect to the election set forth in clause (4) of Section 5.1(a), such Holder shall be deemed to have elected to receive cash in respect of the Optional Repurchase Price for all Securities subject to the Optional Repurchase Notice in the circumstances set forth in such clause (4).

35

The Company shall purchase from the Holder thereof, pursuant to this Article V, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security.

Any purchase by the Company contemplated pursuant to the provisions of this Article V shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Optional Repurchase Date and the time of delivery of the Security.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Optional Repurchase Notice contemplated by this Section 5.1 shall have the right to withdraw such Optional Repurchase Notice at any time prior to the close of business on the Optional Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 5.9.

The Paying Agent shall promptly notify the Company of the receipt by it of any Optional Repurchase Notice or written notice of withdrawal thereof.

Section 5.2      The Company’s Right to Elect Manner of Payment of Optional Repurchase Price on December 20, 2006

The Optional Repurchase Price of Securities on December 20, 2006, in respect of which an Optional Repurchase Notice pursuant to Section 5.1 has been given, or a specified percentage thereof, will be paid by the Company, at the election of the Company, with cash or shares of Common Stock or in any combination of cash and shares of Common Stock, subject to the conditions set forth in Section 5.2 and 5.3 hereof. The Company shall designate, in the Company Notice delivered pursuant to Section 5.5 hereof, whether the Company will purchase the Securities for cash or shares of Common Stock, or, if a combination thereof, the percentages of the Optional Repurchase Price of Securities in respect of which it will pay in cash and shares of Common Stock; provided that the Company will pay cash for fractional interests in shares of Common Stock. For purposes of determining the existence of potential fractional interests, all Securities subject to purchase by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). Each Holder whose Securities are purchased pursuant to this Article V shall receive the same percentage of cash or shares of Common Stock in payment of the Optional Repurchase Price for such Securities, except (i) as provided in Section 5.4 with regard to the payment of cash in lieu of fractional shares of Common Stock and (ii) in the event that the Company is unable to purchase the Securities of a Holder or Holders for shares of Common Stock because any necessary qualifications or registrations of the shares of Common Stock under applicable state securities laws cannot be obtained, the Company may purchase the Securities of such Holder or Holders for cash. The Company may not change its election with respect to the consideration (or components or percentages of components thereof) to be paid once the Company has given its Company Notice to Holders except pursuant to this Section 5.2 or pursuant to Section 5.4 in the event of a failure to satisfy, prior to the close of business on the Optional Repurchase Date, any condition to the payment of the Optional Repurchase Price, in whole or in part, in shares of Common Stock.

36

At least three Business Days before the Company Notice Date, the Company shall deliver an Officers’ Certificate to the Trustee specifying:

(1)        the manner of payment selected by the Company,

(2)        the information required by Section 5.5,

(3)        if the Company elects to pay the Optional Repurchase Price, or a specified percentage thereof, in shares of Common Stock, that the conditions to such manner of payment set forth in Section 5.4 have been or will be complied with, and

(4)        whether the Company desires the Trustee to give the Company Notice required by Section 5.5.

Section 5.3      Purchase with Cash

On the Optional Repurchase Date occurring on December 20, 2006, at the option of the Company, the Optional Repurchase Price of Securities in respect of which an Optional Repurchase Notice pursuant to Section 5.1 has been given, or a specified percentage thereof, may be paid by the Company with cash equal to the aggregate Optional Repurchase Price of such Securities.  If the Company elects to purchase Securities on the Optional Repurchase Date, occurring on December 20, 2006 with cash, the Company Notice, as provided in Section 5.5, shall be sent to Holders (and to beneficial owners as required by applicable law) not less than 20 Business Days prior to such Optional Repurchase Date (the “Company Notice Date”).  On the Optional Repurchase Dates occurring on December 15, 2011 and December 15, 2016, the Optional Repurchase Price of the Securities in respect of which an Optional Repurchase Notice pursuant to Section 5.1 has been given must be paid in cash.

Section 5.4      Payment by Issuance of Shares of Common Stock on December 20, 2006

On the Optional Repurchase Date occurring on December 20, 2006 only (but not on the Optional Repurchase Dates occurring on December 15, 2011 and December 15, 2016), at the option of the Company, the Optional Repurchase Price of Securities in respect of which an Optional Repurchase Notice pursuant to Section 5.1 has been given, or a specified percentage thereof, may be paid by the Company by the issuance of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the amount of cash to which the Holders would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of the Optional Repurchase Price of such Securities in cash by (ii) 93% of the Market Price of a share of Common Stock, subject to the next succeeding paragraph.

The Company will not issue a fractional share of Common Stock in payment of the Optional Repurchase Price. Instead the Company will pay cash for the current market value of the fractional share. The current market value of a fraction of a share of Common Stock shall be determined by multiplying the Market Price by such fraction and rounding the product to the nearest whole cent with one half cent being rounded upwards. It is understood that if a Holder elects to have more than one Security repurchased, the number of shares of Common Stock shall be based on the aggregate amount of Securities to be repurchased.

37

If the Company elects to purchase the Securities by the issuance of shares of Common Stock, the Company Notice, as provided in Section 5.5, shall be sent to the Holders (and to beneficial owners as required by applicable law) not later than the Company Notice Date.

The Company’s right to exercise its election to purchase the Securities pursuant to this Article V through the issuance of shares of Common Stock shall be conditioned upon:

(a)           the Company’s not having given its Company Notice of an election to pay entirely in cash and its giving of timely Company Notice of election to purchase all or a specified percentage of the Securities with shares of Common Stock as provided herein;

(b)           the registration of the shares of Common Stock to be issued in respect of the payment of the Optional Repurchase Price under the Securities Act or the Exchange Act, in each case, if required for the initial issuance thereof;

(c)           any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; and

(d)           the receipt by the Trustee of an Officers’ Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the shares of Common Stock are in conformity with this Indenture and (B) the shares of Common Stock to be issued by the Company in payment of the Optional Repurchase Price in respect of Securities have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the Optional Repurchase Price in respect of the Securities, will be validly issued, fully paid and non-assessable and, to the best of such counsel’s knowledge, free from preemptive rights, and, in the case of such Officer’s Certificate, stating that conditions (a), (b) and (c) above and the condition set forth in the second succeeding sentence have been satisfied and, in the case of such Opinion of Counsel, stating that conditions (b) and (c) above have been satisfied.

Such Officers’ Certificate shall also set forth the number of shares of Common Stock to be issued for each $1,000 principal amount of Securities and the Sale Price of a share of Common Stock on each Trading Day during the period commencing on the first Trading Day of the period during which the Market Price is calculated and ending three Business Days prior to the applicable Optional Repurchase Date. The Company may pay the Optional Repurchase Price (or any portion thereof) in shares of Common Stock only if the information necessary to calculate the Market Price is published in The Wall Street Journal or another daily newspaper of national circulation. If the foregoing conditions are not satisfied with respect to a Holder or Holders prior to the close of business on the Optional Repurchase Date and the Company has elected to repurchase the Securities pursuant to this Article V through the issuance of shares of Common Stock, the Company shall pay, without further notice, the entire Optional Repurchase Price of the Securities of such Holder or Holders in cash.

Section 5.5      Notice of Election

The Company’s notice of election to repurchase with cash or shares of Common Stock or any combination thereof shall be sent to the Holders in the manner provided in the Indenture at the time specified in Section 5.3 or 5.4, as applicable (the “Company Notice”). Such Company Notice shall state the manner of payment elected and shall contain the following information:

38

In the event the Company has elected to pay the Optional Repurchase Price (or a specified percentage thereof) with shares of Common Stock, the Company Notice shall:

(a)           state that each Holder will receive shares of Common Stock with a Market Price equal to such specified percentage of the Optional Repurchase Price of the Securities held by such Holder (except any cash amount to be paid in lieu of fractional shares);

(b)           set forth the method of calculating the Market Price of the shares of Common Stock; and

(c)           state that because the Market Price of shares of Common Stock will be determined prior to the Optional Repurchase Date, Holders will bear the market risk with respect to the value of the shares of Common Stock to be received from the date such Market Price is determined to the Optional Repurchase Date.

In any case, each Company Notice shall include a form of Optional Repurchase Notice to be completed by a Holder and shall state:

(d)           the Optional Repurchase Price and the Conversion Rate;

(e)           the name and address of the Paying Agent and the Conversion Agent;

(f)            that Securities as to which an Optional Repurchase Notice has been given may be converted pursuant to Article IV hereof only if the applicable Optional Repurchase Notice has been withdrawn in accordance with the terms of this Indenture;

(g)           that Securities must be surrendered to the Paying Agent to collect payment;

(h)           that the Optional Repurchase Price for any Security as to which an Optional Repurchase Notice has been given and not withdrawn will be paid promptly following the later of the Optional Repurchase Date and the time of surrender of such Security as described in (g);

(i)            the procedures the Holder must follow to exercise repurchase rights under this Article V and a brief description of those rights;

(j)            briefly, the conversion rights of the Securities; and

(k)           the procedures for withdrawing an Optional Repurchase Notice (including, without limitation, for a conditional withdrawal pursuant to the terms of Sections 5.1 or 5.9).

At the Company’s request, the Trustee shall give such Company Notice in the Company’s name and at the Company’s expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company.

Upon determination of the actual number of shares of Common Stock to be issued for each $1,000 principal amount of Securities, the Company will publish such determination at the Company’s web site on the World Wide Web or through such other public medium as the Company may use at that time.

39

Section 5.6      Covenants of the Company

All shares of Common Stock delivered upon purchase of the Securities shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company shall use its reasonable efforts to list or cause to have quoted any shares of Common Stock to be issued to purchase Securities on the principal national securities exchange or over-the-counter or other domestic market on which the shares of Common Stock are then listed or quoted.

Section 5.7      Procedure upon Repurchase

The Company shall deposit cash (in respect of a cash purchase under Section 5.3 or for fractional shares of Common Stock, as applicable) or shares of Common Stock, or a combination thereof, as applicable, at the time and in the manner as provided in Section 5.10, sufficient to pay the aggregate Optional Repurchase Price of all Securities to be purchased on the applicable Optional Repurchase Date pursuant to this Article V.

As soon as practicable after the Optional Repurchase Date, the Company shall deliver to each Holder entitled to receive shares of Common Stock through the Paying Agent, a certificate for the number of full shares of Common Stock issuable in payment of the Optional Repurchase Price and cash in lieu of any fractional shares of Common Stock. The Person in whose name the certificate for shares of Common Stock is registered shall be treated as a holder of record of shares of Common Stock on the Business Day next following the Optional Repurchase Date. Subject to Section 5.4, no payment or adjustment will be made for dividends on the shares of Common Stock the record date for which occurred on or prior to the Optional Repurchase Date.

Section 5.8      Taxes

If a Holder of a Security is paid in shares of Common Stock, the Company shall pay any documentary, stamp or similar issue or transfer tax due on such issue of shares of Common Stock. However, the Holder shall pay any such tax which is due because the Holder requests the shares of Common Stock to be issued in a name other than the Holder’s name. The Paying Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until the Paying Agent receives a sum sufficient to pay any tax which will be due because the shares of Common Stock are to be issued in a name other than the Holder’s name. Nothing herein shall preclude any income tax withholding required by law or regulations.

Section 5.9      Effect of Optional Repurchase Notice

Upon receipt by the Paying Agent of the Optional Repurchase Notice, the Holder of the Security in respect of which such Optional Repurchase Notice was given shall (unless such Optional Repurchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Optional Repurchase Price with respect to such Security. Such Optional Repurchase Price shall be paid to such Holder, subject to receipt of funds and/or shares of Common Stock by the Paying Agent, promptly following the later of (x) the Optional Repurchase Date with respect to such Security (provided the conditions in Section

40

5.1 have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 5.1. Securities in respect of which an Optional Repurchase Notice has been given by the Holder thereof may not be converted pursuant to Article IV hereof on or after the date of the delivery of such Optional Repurchase Notice unless such Optional Repurchase Notice has first been validly withdrawn as specified in the following two paragraphs.

An Optional Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Optional Repurchase Notice at anytime prior to the close of business on the applicable Optional Repurchase Date specifying:

(a)           the certificate number of the Security in respect of which such notice of withdrawal is being submitted;

(b)           the principal amount of the Security with respect to which such notice of withdrawal is being submitted; and

(c)           the principal amount, if any, of such Security which remains subject to the original Optional Repurchase Notice and which has been or will be delivered for purchase by the Company.

A written notice of withdrawal of an Optional Repurchase Notice may be in the form set forth in the preceding paragraph or may be in the form of (i) a conditional withdrawal contained in an Optional Repurchase Notice pursuant to the terms of Section 5.1(a)(4) or (ii) a conditional withdrawal containing the information set forth in Section 5.1(a)(4) and the immediately preceding paragraph and contained in a written notice of withdrawal delivered to the Paying Agent as set forth in the immediately preceding paragraph.

There shall be no purchase of any Securities pursuant to this Article V (other than through the issuance of shares of Common Stock in payment of the Optional Repurchase Price, including cash in lieu of fractional shares) if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Optional Repurchase Notice) and is continuing an Event of Default (other than a default in the payment of the Optional Repurchase Price with respect to such Securities). The Paying Agent will promptly return to the respective Holders thereof any Securities (x) with respect to which an Optional Repurchase Notice has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Optional Repurchase Price with respect to such Securities) in which case, upon such return, the Optional Repurchase Notice with respect thereto shall be deemed to have been withdrawn.

Section 5.10    Deposit of Optional Repurchase Price

Prior to 11:00 a.m., New York City time, on the Business Day next following the Optional Repurchase Date, the Company shall deposit with the Trustee or with the Paying Agent an amount of money (in immediately available funds if deposited on such Business Day) and/or shares of Common Stock, if permitted hereunder, sufficient to pay the aggregate Optional

41

Repurchase Price of all of the Securities or portions thereof which are to be purchased as of the Optional Repurchase Date.

Section 5.11    Securities Repurchased in Part

Any Security which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company or the Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered which is not purchased.

Section 5.12    Comply with Securities Laws Upon Purchase of Securities

In connection with any offer to purchase or purchase of Securities under this Article V (provided that such offer or purchase constitutes an “issuer tender offer” for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (i) comply with Rule 13e-4 under the Exchange Act, (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, and (iii) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under Article V to be exercised in the time and in the manner specified in this Article V.

Section 5.13    Repayment to the Company

The Trustee and the Paying Agent shall return to the Company any cash or shares of Common Stock that remain unclaimed for two years, subject to applicable unclaimed property law, together with interest or dividends, if any, thereon held by them for the payment of the Optional Repurchase Price; provided, however, that to the extent that the aggregate amount of cash or shares of Common Stock deposited by the Company pursuant to Section 5.10 exceeds the aggregate Optional Repurchase Price of the Securities or portions thereof which the Company is obligated to purchase as of the Optional Repurchase Date, then promptly after the Business Day next following the Optional Repurchase Date the Trustee shall return any such excess to the Company together with interest or dividends, if any, thereon. After that, Holders entitled to money must look to the Company for payment as general creditors, unless an applicable abandoned property law designates another Person.

Section 5.14    Conversion Arrangement on Repurchase

Any Securities required to be repurchased under this Article V, unless surrendered for conversion before the close of business on the Optional Repurchase Date, may be deemed to be purchased from the Holders of such Securities for an amount in cash not less than the Optional Repurchase Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to convert them into shares of Common Stock of the Company and to make payment for such Securities to the Trustee in trust for such Holders.

42

ARTICLE VI
COVENANTS

Section 6.1      Payment of Securities

The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities and this Indenture. An installment of principal or interest (including Contingent Interest) shall be considered paid on the date it is due if the Paying Agent (other than the Company) holds by 11:00 a.m., New York City time, on that date money, deposited by the Company or an Affiliate thereof, sufficient to pay the installment. The Company shall, to the fullest extent permitted by law, pay interest on overdue principal (including premium, if any) and overdue installments of interest (including Contingent Interest) at the rate borne by the Securities per annum.  All references in this Indenture or the Securities to interest shall be deemed to include Liquidated Damages, if any, payable pursuant to the Registration Rights Agreement.

Payment of the principal of (and premium, if any) and any interest (including Contingent Interest) on the Securities shall be made at the Corporate Trust Office of the Paying Agent specified in Section 2.3 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; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address appears in the Register; provided further that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder.

Section 6.2      SEC Reports

The Company shall file all reports and other information and documents which it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, and within 15 days after it files them with the SEC, the Company shall file copies of all such reports, information and other documents with the Trustee.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Section 6.3      Compliance Certificates

The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company (beginning with the fiscal year ending December 31, 2002), an Officers’ Certificate as to the signer’s knowledge of the Company’s compliance with all conditions and covenants on its part contained in this Indenture and stating whether or not the signer knows of any default or Event of Default. If such signer knows of such a default or Event of Default, the Officers’ Certificate shall describe the default or Event of Default and the efforts to remedy the same. For the purposes of this Section 6.3, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture.

43

Section 6.4      Further Instruments and Acts

Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

Section 6.5      Maintenance of Corporate Existence

Subject to Article VII, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

Section 6.6      Rule 144A Information Requirement

Within the period prior to the expiration of the holding period applicable to sales of Restricted Securities under Rule 144(k) under the Securities Act (or any successor provision), the Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, make available to any Holder or beneficial holder of Securities or any Common Stock issued upon conversion thereof which continue to be Restricted Securities in connection with any sale thereof and any prospective purchaser of Securities or such Common Stock designated by such Holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any Holder or beneficial holder of the Securities or such Common Stock and it will take such further action as any Holder or beneficial holder of such Securities or such Common Stock may reasonably request, all to the extent required from time to time to enable such Holder or beneficial holder to sell its Securities or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the request of any Holder or any beneficial holder of the Securities or such Common Stock, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

Section 6.7      Stay, Extension and Usury Laws

The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest (including Liquidated Damages, if any) on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 6.8      Payment of Liquidated Damages

If Liquidated Damages are payable by the Company pursuant to the Registration Rights Agreement, the Company shall deliver to the Trustee a certificate to that effect stating (i) the amount of such Liquidated Damages that is payable and (ii) the date on which such Liquidated

44

Damages are payable. Unless and until a Trust Officer of the Trustee actually receives such a certificate, the Trustee may assume without inquiry that no such Liquidated Damages are payable. If the Company has paid Liquidated Damages directly to the Persons entitled to it, the Company shall deliver to the Trustee a certificate setting forth the particulars of such payment.

Section 6.9      Resale of Certain Securities

During the period of two years after the last date of original issuance of any Securities, the Company shall not, and shall not permit any of its “affiliates” (as defined under Rule 144 under the Securities Act) to, resell any Securities, or shares of Common Stock issuable upon conversion of the Securities, which constitute “restricted securities” under Rule 144, that are acquired by any of them within the United States or to “U.S. persons” (as defined in Regulation S) except pursuant to an effective registration statement under the Securities Act or an applicable exemption therefrom. The Trustee shall have no responsibility or liability in respect of the Company’s performance of its agreement in the preceding sentence.

Section 6.10    Tax Treatment of Securities

The Company agrees, and by acceptance of beneficial ownership interest in the Securities each beneficial holder of Securities will be deemed to have agreed, for United States federal income tax purposes (1) to treat the Securities as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the “Contingent Payment Regulations”) and, for purposes of the Contingent Payment Regulations, to treat the fair market value of any stock beneficially received by a beneficial holder upon any conversion of the Securities as a contingent payment and (2) to be bound by the Company’s determination of the “comparable yield” and “projected payment schedule,” within the meaning of the Contingent Payment Regulations, with respect to the Securities. A Holder of Securities may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule by submitting a written request for it to the Company at the following address: Evergreen Resources, Inc., 1401 17th Street, Suite 1200, Denver, Colorado 80202, Attention: Chief Financial Officer.

ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

Section 7.1      Company May Consolidate, Etc. Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person (in a transaction in which the Company is not the surviving corporation) or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless:

(1)        in case the Company shall consolidate with or merge into another Person (in a transaction in which the Company is not the surviving corporation) or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and

45

delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including Contingent Interest) on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and the conversion rights shall be provided for in accordance with Article IV, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company) formed by such consolidation or into which the Company shall have been merged or by the Person which shall have acquired the Company’s assets;

(2)        immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and

(3)        the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

Section 7.2      Successor Substituted

Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 7.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.

ARTICLE VIII
DEFAULT AND REMEDIES

Section 8.1      Events of Default

An “Event of Default” shall occur if:

(1)        the Company defaults in the payment of any interest (including Contingent Interest) on any Security when the same becomes due and payable and the default continues for a period of 30 days;

(2)        the Company defaults in the payment of any principal of (including, without limitation, any premium, if any, on) any Security when the same becomes due and payable (whether at maturity, upon redemption, on an Optional Repurchase Date, a Change in Control Purchase Date or otherwise);

46

(3)        the Company fails to comply with any of its other agreements contained in the Securities or this Indenture and the default continues for the period and after the notice specified below;

(4)        a default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company or any of its Subsidiaries whether such Indebtedness now exists, or is created after the date of this Indenture, which default (a) involves the failure to pay principal of or any premium or interest on such Indebtedness when such Indebtedness becomes due and payable at the stated maturity thereof, and such default shall continue after any applicable grace period or (b) results in the acceleration of such Indebtedness unpaid prior to the stated maturity thereof and, in the case of (a) or (b), the principal amount of such Indebtedness, together with the principal amount of any other Indebtedness so unpaid at its stated maturity or the stated maturity of which has been so accelerated, aggregates $10 million or more;

(5)        failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $10 million, which judgments are not paid, discharged or stayed for a period of 60 days;

(6)        the Company pursuant to or within the meaning of any Bankruptcy Law:

(i)            commences a voluntary case or proceeding;

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

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

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

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

(i)            is for relief against the Company in an involuntary case or proceeding;

(ii)           appoints a Custodian of the Company or for all or substantially all of the property of the Company; or

(iii)          orders the liquidation of the Company;

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

The term “Bankruptcy Law” means Title 11 of the United States Code (or any successor thereto) or any similar federal or state law for the relief of debtors. The term “Custodian” means

47

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

A default under clause (3) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding notify the Company and the Trustee, of the default, and the Company does not cure the default within 60 days after receipt of such notice. The notice given pursuant to this Section 8.1 must specify the default, demand that it be remedied and state that the notice is a “Notice of Default.” When any default under this Section 8.1 is cured, it ceases.

The Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the Trustee by the Company, a Paying Agent, any Holder or any agent of any Holder.

Section 8.2      Acceleration

If an Event of Default (other than an Event of Default specified in clauses (6) or (7) of Section 8.1) occurs and is continuing, the Trustee may, by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may, by notice to the Company and the Trustee, declare all unpaid principal on the Securities then outstanding (if not then due and payable) to be due and payable upon any such declaration, and the same shall become and be immediately due and payable. If an Event of Default specified in clauses (6) or (7) of Section 8.1 occurs, all unpaid principal of the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if (a) all existing Events of Default, other than the nonpayment of the principal of the Securities which has become due solely by such declaration of acceleration, have been cured or waived; (b) to the extent the payment of such interest is lawful, interest (calculated at the rate per annum borne by the Securities) on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due to the Trustee and any predecessor Trustee under Section 9.7 have been made. No such rescission shall affect any subsequent default or impair any right consequent thereto.

Section 8.3      Other Remedies

If an Event of Default occurs and is continuing, the Trustee may, but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.

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

48

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

Section 8.4      Waiver of Defaults and Events of Default

Subject to Sections 8.7 and 11.2, the Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may waive an existing default or Event of Default and its consequence, except a default or Event of Default in the payment of the principal of or interest on any Security, a failure by the Company to convert any Securities into Common Stock or any default or Event of Default in respect of any provision of this Indenture or the Securities which, under Section 11.2, cannot be modified or amended without the consent of the Holder of each Security affected. When a default or Event of Default is waived, it is cured and ceases.

Section 8.5      Control By Majority

The Holders of a majority in principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder or the Trustee, or that may involve the Trustee in personal liability unless the Trustee is furnished indemnity satisfactory to it; provided, however, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

Section 8.6      Limitations on Suits

A Holder may not pursue any remedy with respect to this Indenture or the Securities (except actions for payment of overdue principal or interest (including Contingent Interest) or for the conversion of the Securities pursuant to Article IV) unless:

(1)           the Holder gives to the Trustee written notice of a continuing Event of Default;

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

(3)           such Holder or Holders furnishes to the Trustee reasonable indemnity to the Trustee against any loss, liability or expense;

(4)           the Trustee does not comply with the request within 60 days after receipt of the request and the furnishing of indemnity; and

(5)           no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Securities then outstanding.

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

49

Section 8.7      Rights of Holders to Receive Payment and to Convert

Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal of and interest on the Security, on or after the respective due dates expressed in the Security and this Indenture, to convert such Security in accordance with Article IV and to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder.

Section 8.8      Collection Suit By Trustee

If an Event of Default in the payment of principal or interest (including Contingent Interest) specified in clauses (1) or (2) of Section 8.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or another obligor on the Securities for the whole amount of principal and accrued interest remaining unpaid, together with, to the extent that payment of such interest is lawful, interest on overdue principal and on overdue installments of interest (including Contingent Interest), in each case at the rate per annum borne by the Securities and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 8.9      Trustee May File Proofs of Claim

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any money or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.7, and to the extent that such payment of the reasonable compensation, expenses, disbursements and advances in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the Holders may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to, or on behalf of any Holder, to authorize, accept or adopt any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

50

Section 8.10    Priorities

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

First, to the Trustee for amounts due under Section 9.7;

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

Third, to the Company.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 8.10.

Section 8.11    Undertaking for Costs

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 8.11 does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in principal amount of the Securities then outstanding.

ARTICLE IX
TRUSTEE

Section 9.1      Duties of Trustee

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

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

(1)           the Trustee need perform only those duties as are specifically set forth in this Indenture and no others; and

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

51

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

(1)           this paragraph does not limit the effect of subsection (b) of this Section 9.1;

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

(3)           the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.5.

(d)              No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers unless the Trustee shall have received adequate indemnity in its opinion against potential costs and liabilities incurred by it relating thereto.

(e)               Every provision of this Indenture that in any way relates to the Trustee is subject to subsections (a), (b), (c) and (d) of this Section 9.1.

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

Section 9.2      Rights of Trustee

Subject to Section 9.1:

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

(b)           Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, which shall conform to Section 13.4(b). The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Certificate or Opinion.

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

(d)           The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

(e)           The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection in respect of any such action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

52

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

(g)           The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(h)           The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice from the Company or the Holders of at least 25% of the Securities of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office, and such notice references the Securities and this Indenture.

(i)            The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed by it to act hereunder.

Section 9.3      Individual Rights of Trustee

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 9.10 and 9.11.

Section 9.4      Trustee’s Disclaimer

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

Section 9.5      Notice of Default or Events of Default

If a default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the default or Event of Default within 90 days after it occurs. However, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of Securityholders, except in the case of a default or an Event of Default in payment of the principal of or interest on any Security.

53

Section 9.6      Reports By Trustee To Holders

If such report is required by TIA Section 313, within 60 days after each May 15, beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b)(2) and (c).

A copy of each report at the time of its mailing to Securityholders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Securities are listed. The Company promptly shall notify the Trustee whenever the Securities become listed on any stock exchange or listed or admitted to trading on any quotation system and any changes in the stock exchanges or quotation systems on which the Securities are listed or admitted to trading and of any delisting thereof.

Section 9.7      Compensation and Indemnity

The Company shall pay to the Trustee from time to time such compensation (as agreed to from time to time by the Company and the Trustee in writing) for its services (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company shall reimburse the Trustee upon request for all reasonable, actual disbursements, expenses and advances incurred or made by it. Such expenses may include the reasonable, actual compensation, disbursements and expenses of the Trustee’s agents and counsel.

The Company shall indemnify the Trustee or any predecessor Trustee (which for purposes of this Section 9.7 shall include its officers, directors, employees and agents) for, and hold it harmless against, any and all loss, liability or expense including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), (including reasonable legal fees and expenses) incurred by it in connection with the acceptance or administration of its duties under this Indenture or any action or failure to act as authorized or within the discretion or rights or powers conferred upon the Trustee hereunder including the reasonable costs and expenses of the Trustee and its counsel in defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company need not pay for any settlement without its written consent, which shall not be unreasonably withheld.

The Company need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by it resulting from its gross negligence or bad faith.

To secure the Company’s payment obligations in this Section 9.7, the Trustee shall have a senior claim to which the Securities are hereby made subordinate on all money or property held or collected by the Trustee, except such money or property held in trust to pay the principal of and interest on the Securities. The obligations of the Company under this Section 9.7 shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

54

When the Trustee incurs expenses or renders services after an Event of Default specified in clauses (6) or (7) of Section 8.1 occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section shall survive the termination of this Indenture.

Section 9.8      Replacement of Trustee

The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and may, with the Company’s written consent, appoint a successor Trustee. The Company may remove the Trustee if:

(1)               the Trustee fails to comply with Section 9.10;

(2)               the Trustee is adjudged a bankrupt or an insolvent;

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

(4)               the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. The resignation or removal of a Trustee shall not be effective until a successor Trustee shall have delivered the written acceptance of its appointment as described below.

If a successor Trustee does not take office within 45 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the Securities then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Company.

If the Trustee fails to comply with Section 9.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee and be released from its obligations (exclusive of any liabilities that the retiring Trustee may have incurred while acting as Trustee) hereunder, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder.

A retiring Trustee shall not be liable for the acts or omissions of any successor Trustee after its succession.

Notwithstanding replacement of the Trustee pursuant to this Section 9.8, the Company’s obligations under Section 9.7 shall continue for the benefit of the retiring Trustee.

55

Section 9.9      Successor Trustee By Merger, Etc

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets (including the administration of this Indenture) to, another corporation, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee, provided such transferee corporation shall qualify and be eligible under Section 9.10. Such successor Trustee shall promptly mail notice of its succession to the Company and each Holder.

Section 9.10    Eligibility; Disqualification

The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA Section 310(a). The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000. If at any time the Trustee shall cease to satisfy any such requirements, it shall resign immediately in the manner and with the effect specified in this Article IX. The Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein shall prevent the Trustee from filing with the SEC the application referred to in the penultimate paragraph of TIA Section 310(b).

Section 9.11    Preferential Collection of Claims Against Company

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

ARTICLE X
SATISFACTION AND DISCHARGE OF INDENTURE

Section 10.1    Satisfaction and Discharge of Indenture

This Indenture shall cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for and except as further provided below), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(1)        either

(i)            all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7 and (ii) Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company as provided in Section 10.3) have been delivered to the Trustee for cancellation; or

(ii)           all such Securities not theretofore delivered to the Trustee for cancellation

56

(a)       have become due and payable, or

(b)       will become due and payable at the Final Maturity Date within one year, or

(c)       are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of clause (a), (b) or (c) above, has irrevocably deposited or caused to be irrevocably deposited with the Trustee or a Paying Agent (other than the Company or any of its Affiliates) as trust funds in trust for the purpose cash in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Final Maturity Date or Redemption Date, as the case may be;

(2)        the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(3)        the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 9.7 shall survive and, if money shall have been deposited with the Trustee pursuant to clause (1)(ii) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.12, Article IV, Article V, the last paragraph of Section 6.2, this Article X, Article XII and Section 13.5, shall survive until the Securities have been paid in full.

Section 10.2    Application of Trust Money

Subject to the provisions of Section 10.3, the Trustee or a Paying Agent shall hold in trust, for the benefit of the Holders, all money deposited with it pursuant to Section 10.1 and shall apply the deposited money in accordance with this Indenture and the Securities to the payment of the principal of and interest on the Securities.

Section 10.3    Repayment To Company

The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess money (i) deposited with them pursuant to Section 10.1 and (ii) held by them at any time.

The Trustee and each Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years after a right to such money has matured; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment, may at the expense of the Company cause to

57

be mailed to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors.

Section 10.4    Reinstatement

If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 10.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.1 until such time as the Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 10.2; provided, however, that if the Company has made any payment of the principal of or interest on any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive any such payment from the money held by the Trustee or such Paying Agent.

ARTICLE XI

AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 11.1    Without Consent of Holders

The Company and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder:

(a)        to comply with Sections 4.11 and 7.1;

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

(c)        to make any other change that does not adversely effect the rights of any Securityholder;

(d)        to comply with the provisions of the TIA; or

(e)        to appoint a successor Trustee.

Section 11.2    With Consent of Holders

The Company and the Trustee may amend or supplement this Indenture or the Securities with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding. The Holders of at least a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. However, notwithstanding the foregoing but subject to Section 11.4, without the written consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 8.4, may not:

58

(a)        extend the Maturity of the principal of, or interest (including Contingent Interest) on, any Security;

(b)        reduce the principal amount of, or any premium or interest (including Contingent Interest) on, any Security;

(c)        reduce the amount of principal payable upon acceleration of the maturity of any Security;

(d)        change the place or currency of payment of principal of, or any premium or interest on, any Security;

(e)        impair the right to institute suit for the enforcement of any payment on, or with respect to, any Security;

(f)         adversely affect the right of Holders to convert Securities other than as provided in or under Article IV of this Indenture;

(g)        reduce the percentage of the aggregate principal amount of the outstanding Securities whose Holders must consent to a supplement or amendment;

(h)        reduce the percentage of the aggregate principal amount of the outstanding Securities necessary for the waiver of compliance with certain provisions of this Indenture or the waiver of certain defaults under this Indenture; and

(i)         modify any of the provisions of this Section or Section 8.4, except to increase any such percentage or to provide that certain provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby.

It shall not be necessary for the consent of the Holders under this Section 11.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 11.2 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

Section 11.3    Compliance With Trust Indenture Act

Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as in effect at the date of such amendment or supplement.

Section 11.4    Revocation and Effect of Consents

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a

59

Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of a Security if the Trustee receives the notice of revocation in writing before the date the amendment, supplement or waiver becomes effective.

After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder, unless it makes a change described in any of clauses (a) through (i) of Section 11.2. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.

Section 11.5    Notation on or Exchange of Securities

If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms.

Section 11.6    Trustee To Sign Amendments, Etc

The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article XI if the amendment or supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, in its sole discretion, but need not sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 9.1, shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplemental indenture is authorized or permitted by this Indenture. The Company may not sign an amendment or supplemental indenture until the Board of Directors approves it.

ARTICLE XII

Repurchase at the option of Holders Upon a Change In Control

Section 12.1    Change in Control Put

(a)        In the event that a Change in Control shall occur, each Holder shall have the right (a “Change in Control Repurchase Right”), at the Holder’s option, but subject to the provisions of Section 12.1(a) hereof, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder’s Securities not theretofore called for redemption, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple thereof as directed by such Holder pursuant to Section 12.3 (provided that no single Securities may be repurchased in part unless the portion of the principal amount of such Securities to be outstanding after such repurchase is equal to $1,000 or an integral multiple thereof), on the date (the “Change in Control Repurchase Date”) that is a Business Day no earlier than 30 days nor later than 60 days after the date of the Company Notice at a purchase price in cash equal to 100% of the principal amount of the Securities to be repurchased (the “Change in Control Repurchase Price”), plus accrued and unpaid interest (including Contingent Interest) to,

60

but excluding, the Change in Control Repurchase Date; provided, however, that installments of interest (including Contingent Interest) on Securities whose Maturity is prior to or on the Change in Control Repurchase Date shall be payable to the Holders of such Securities, registered as such on the relevant regular record date.

A “Change in Control” shall be deemed to have occurred if any of the following occurs after the date hereof:

(1)        any “person” or “group” (as such terms are defined below) is or becomes the “beneficial owner” (as defined below), directly or indirectly, of shares of Voting Stock of the Company representing 50% or more of the total voting power of all outstanding classes of Voting Stock of the Company or has the power, directly or indirectly, to elect a majority of the members of the Board of Directors of the Company; or

(2)        the Company consolidates with, or merges with or into, another Person or the Company sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the assets of the Company, or any Person consolidates with, or merges with or into, the Company, in any such event other than pursuant to a transaction in which the Persons that “beneficially owned” (as defined below), directly or indirectly, shares of Voting Stock of the Company immediately prior to such transaction “beneficially own” (as defined below), directly or indirectly, shares of Voting Stock of the Company representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the surviving or transferee Person; or

(3)        there shall occur the liquidation or dissolution of the Company.

For the purpose of the definition of “Change in Control”, (i) “person” and “group” have the meanings given such terms under Section 13(d) and 14(d) of the Exchange Act or any successor provision to either of the foregoing, and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or any successor provision thereto), (ii) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in effect on the date of this Indenture, except that the number of shares of Voting Stock of the Company shall be deemed to include, in addition to all outstanding shares of Voting Stock of the Company and Unissued Shares deemed to be held by the “person” or “group” (as such terms are defined above) or other Person with respect to which the Change in Control determination is being made, all Unissued Shares deemed to be held by all other Persons, and (iii) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner”. The term “Unissued Shares” means shares of Voting Stock not outstanding that are subject to options, warrants, rights to purchase or conversion privileges exercisable within 60 days of the date of determination of a Change in Control.

Notwithstanding anything to the contrary set forth in this Section 12.1, a Change in Control will not be deemed to have occurred if either:

61

(4)        the closing price (determined in accordance with Section 4.6(d) of this Indenture) of the Common Stock for any five Trading Days within:

(i)         the period of the ten Trading Days immediately after the later of the Change in Control or the public announcement of the Change in Control, in the case of a Change in Control resulting solely from a Change in Control under Section 12.1(a)(1); or

(ii)        the period of the ten Trading Days immediately preceding the Change in Control, in the case of a Change in Control resulting from a Change in Control under Section 12.1(a)(2) or (3),

is at least equal to 105% of the Conversion Price in effect on such Trading Day; or

(5)        in the case of a merger or consolidation, all of the consideration excluding cash payments for fractional shares in the merger or consolidation constituting the Change in Control consists of common stock traded on a United States national securities exchange or quoted on the NNM (or which, will be so traded or quoted when issued or exchanged in connection with such Change in Control) and as a result of such transaction or transactions the Securities become convertible solely into such common stock.

(b)        Within 10 Business Days after the occurrence of a Change in Control, the Company shall mail a written notice of the Change in Control to the Trustee (and the Paying Agent if the Trustee is not then acting as Paying Agent) and to each Holder (and to beneficial owners as required by applicable law). The notice shall include the form of a Change in Control Repurchase Notice to be completed by the Holder and shall state:

(1)        the date of such Change in Control and, briefly, the events causing such Change in Control;

(2)        the date by which the Change in Control Repurchase Notice pursuant to this Section 12.1 must be given;

(3)        the Change in Control Repurchase Date;

(4)        the Change in Control Repurchase Price;

(5)        briefly, the conversion rights of the Securities;

(6)        the name and address of each Paying Agent and Conversion Agent;

(7)        the Conversion Price and any adjustments thereto;

(8)        that Securities as to which a Change in Control Repurchase Notice has been given may be converted into Common Stock pursuant to Article IV of this Indenture only to the extent that the Change in Control Repurchase Notice has been withdrawn in accordance with the terms of this Indenture;

62

(9)        the procedures that the Holder must follow to exercise rights under this Section 12.1;

(10)      the procedures for withdrawing a Change in Control Repurchase Notice, including a form of notice of withdrawal; and

(11)      that the Holder must satisfy the requirements set forth in the Securities in order to convert the Securities.

If any of the Securities is in the form of a Global Security, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to the repurchase of Global Securities.

(c)        A Holder may exercise its rights specified in subsection (a) of this Section 12.1 upon delivery of a written notice (which shall be in substantially the form included in Exhibit A hereto and which may be delivered by letter, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary’s customary procedures) of the exercise of such rights (a “Change in Control Repurchase Notice”) to any Paying Agent at any time prior to the close of business on the Business Day next preceding the Change in Control Repurchase Date.

The delivery of such Security to any Paying Agent (together with all necessary endorsements) at the office of such Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Repurchase Price therefor.

The Company shall purchase from the Holder thereof, pursuant to this Section 12.1, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of the Indenture that apply to the purchase of all of a Security pursuant to Sections 12.1 through Section 12.6 also apply to the purchase of such portion of such Security.

Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the Change in Control Repurchase Notice contemplated by this subsection (c) shall have the right to withdraw such Change in Control Repurchase Notice in whole or in a portion thereof that is a principal amount of $1,000 or in an integral multiple thereof at any time prior to the close of business on the Business Day next preceding the Change in Control Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 12.2.

A Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Repurchase Notice or written withdrawal thereof.

Anything herein to the contrary notwithstanding, in the case of Global Securities, any Change in Control Repurchase Notice may be delivered or withdrawn and such Securities may be surrendered or delivered for purchase in accordance with the Applicable Procedures as in effect from time to time.

63

Section 12.2    Effect of Change in Control Repurchase Notice

Upon receipt by any Paying Agent of the Change in Control Repurchase Notice specified in Section 12.1(c), the Holder of the Security in respect of which such Change in Control Repurchase Notice was given shall (unless such Change in Control Repurchase Notice is withdrawn as specified below) thereafter be entitled to receive the Change in Control Repurchase Price with respect to such Security. Such Change in Control Repurchase Price shall be paid to such Holder promptly following the later of (a) the Change in Control Repurchase Date with respect to such Security (provided the conditions in Section 12.1(c) have been satisfied) and (b) the time of delivery of such Security to a Paying Agent by the Holder thereof in the manner required by Section 12.1(c). Securities in respect of which a Change in Control Repurchase Notice has been given by the Holder thereof may not be converted into shares of Common Stock on or after the date of the delivery of such Change in Control Repurchase Notice unless such Change in Control Repurchase Notice has first been validly withdrawn.

A Change in Control Repurchase Notice may be withdrawn by means of a written notice (which may be delivered by letter, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary’s customary procedures) of withdrawal delivered by the Holder to a Paying Agent at any time prior to the close of business on the Business Day immediately preceding the Change in Control Repurchase Date, specifying the principal amount of the Security or portion thereof (which must be a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof) with respect to which such notice of withdrawal is being submitted.

Section 12.3    Deposit of Change in Control Repurchase Price

On or before 11:00 a.m., New York City time, on the Change in Control Repurchase Date, the Company shall deposit with the Trustee or with a Paying Agent (other than the Company or an Affiliate of the Company) an amount of money (in immediately available funds if deposited on such Business Day) sufficient to pay the aggregate Change in Control Repurchase Price of all the Securities or portions thereof that are to be purchased as of such Change in Control Repurchase Date. The manner in which the deposit required by this Section 12.3 is made by the Company shall be at the option of the Company, provided that such deposit shall be made in a manner such that the Trustee or a Paying Agent shall have immediately available funds on the Change in Control Repurchase Date.

If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the Change in Control Repurchase Price of any Security for which a Change in Control Repurchase Notice has been tendered and not withdrawn in accordance with this Indenture then, on the Change in Control Repurchase Date, such Security will cease to be outstanding and the rights of the Holder in respect thereof shall terminate (other than the right to receive the Change in Control Repurchase Price as aforesaid). The Company shall publicly announce the principal amount of Securities purchased as a result of such Change in Control on or as soon as practicable after the Change in Control Repurchase Date.

64

Section 12.4    Securities Purchased in Part

Any Security that is to be purchased only in part shall be surrendered at the office of a Paying Agent and promptly after the Change in Control Repurchase Date the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of such authorized denomination or denominations as may be requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased.

Section 12.5    Compliance with Securities Laws Upon Purchase of Securities

In connection with any offer to purchase or purchase of Securities under Section 12.1, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or any successor to either such Rule), if applicable, under the Exchange Act, (b) file the related Schedule TO (or any successor or similar schedule, form or report) if required under the Exchange Act, and (c) otherwise comply with all federal and state securities laws in connection with such offer to purchase or purchase of Securities, all so as to permit the rights of the Holders and obligations of the Company under Sections 12.1 through 12.6 to be exercised in the time and in the manner specified therein.

Section 12.6    Repayment to the Company

To the extent that the aggregate amount of cash deposited by the Company pursuant to Section 12.3 exceeds the aggregate Change in Control Repurchase Price together with interest (including Contingent Interest), if any, thereon of the Securities or portions thereof that the Company is obligated to purchase, then promptly after the Change in Control Repurchase Date the Trustee or a Paying Agent, as the case may be, shall return any such excess cash to the Company.

ARTICLE XIII

MISCELLANEOUS

Section 13.1    Trust Indenture Act Controls

If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such imposed duties shall control.

Section 13.2    Notices

Any notice, request or communication shall be given in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows:

If to the Company:

65

Evergreen Resources, Inc.
1401 17th Street, Suite 1200
Denver, Colorado 80202
Attention:  Chief Financial Officer

If to the Trustee:

First Union National Bank
5847 San Felipe, Suite 1050
Houston, Texas 77057
Attention:  Corporate Trust Group

Such notices or communications shall be effective when received.

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Securityholder shall be mailed by first-class mail to it at its address shown on the Register kept by the Primary Registrar.

Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication to a Securityholder is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

Section 13.3    Communications By Holders With Other Holders

Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c).

Section 13.4    Certificate and Opinion as to Conditions Precedent

(a)        Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee at the request of the Trustee:

(1)        an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2)        an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants, compliance with which constitutes a condition precedent) have been complied with.

(b)        Each Officers’ Certificate and Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include:

66

(1)        a statement that the person making such certificate or opinion has read such covenant or condition;

(2)        a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3)        a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4)        a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

Section 13.5    Record Date for Vote or Consent of Securityholders

The Company (or, in the event deposits have been made pursuant to Section 10.1, the Trustee) may set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall not be more than thirty (30) days prior to the date of the commencement of solicitation of such action. Notwithstanding the provisions of Section 11.4, if a record date is fixed, those persons who were Holders of Securities at the close of business on such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date.

Section 13.6    Rules By Trustee, Paying Agent, Registrar and Conversion Agent

The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for action by or at a meeting of Holders. Any Registrar, Paying Agent or Conversion Agent may make reasonable rules for its functions.

Section 13.7    Legal Holidays

A “Legal Holiday” is a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York and the state in which the Corporate Trust Office is located are not required to be open. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a Regular Record Date is a Legal Holiday, the Record Date shall not be affected.

Section 13.8    Governing Law

This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws.

67

Section 13.9    No Adverse Interpretation of Other Agreements

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 13.10      No Recourse Against Others

All liability described in paragraph 18 of the Securities of any director, officer, employee or shareholder, as such, of the Company is waived and released.

Section 13.11      Successors

All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.

Section 13.12      Multiple Counterparts

The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement.

Section 13.13      Separability

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

Section 13.14      Table of Contents, Headings, Etc

The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

68

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date and year first above written

EVERGREEN RESOURCES, INC.

By:

Name:

Title:

FIRST UNION NATIONAL BANK, as Trustee

By:

Name:

Title:

69

EXHIBIT A

[FORM OF FACE OF SECURITY]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]¹

 [THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.]²

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE

¹  This paragraph should be included only if the Security is a Global Security.

²  These paragraphs to be included only if the Security is a Transfer Restricted Security.

A-1

UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF AVAILABLE), (IV) IN THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF SUCH NOTES AND AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.]²

[THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.]

²   This paragraph should be included only if the Security is a Global Security.

A-2

EVERGREEN RESOURCES, INC.

CUSIP: 299-900-AA8 R-____________

4.75% SENIOR CONVERTIBLE NOTES DUE 2021

Evergreen Resources, Inc., a Colorado corporation (the "Company", which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to __________________________, or registered assigns, the principal sum of _____________________________ Dollars ($__________) on December 15, 2021 [or such greater or lesser amount as is indicated on the Schedule of Exchanges of Securities on the other side of this Security].³

Interest Payment Dates:  June 15 and December 15

Regular Record Dates:  June 1 and December 1

This Security is convertible as specified on the other side of this Security. Additional provisions of this Security are set forth on the other side of this Security.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

		EVERGREEN RESOURCES, INC.
		By:
			Name:
			Title:
Attest:
By:
	Name:
	Title:
Dated:
Trustee’s Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK, as Trustee
Authorized Signatory
By:

³  This phrase should be included only if the Security is a Global Security.

A-3

[FORM OF REVERSE SIDE OF SECURITY]

EVERGREEN RESOURCES, INC.

4.75% SENIOR CONVERTIBLE NOTES DUE 2021

1.          Interest (Including Contingent Interest)

Evergreen Resources, Inc., a Colorado corporation (the "Company", which term shall include any successor corporation under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Security at the rate of 4.75% per annum.  In addition, the Company will pay contingent interest ("Contingent Interest"), subject to the accrual and record date provisions described above, to the holders of Securities during any six-month period from June 15 to December 14 and from December 15 to June 14, as appropriate, commencing with the six-month period beginning June 15, 2002, if the average Trading Price of Securities for the five Trading Days ending on the second Trading Day immediately preceding the beginning of the relevant six-month period equals 120% or more of the principal amount of Securities.  Contingent Interest will accrue on this Security under the conditions specified in the Indenture and in this Note at a rate equal the greater of (i) a per annum rate equal to 5.00% of the Company’s estimated per annum borrowing rate for senior non-convertible fixed rate Indebtedness with a Maturity comparable to this Security and (ii) 0.30% per annum, but in no event may the rate of Contingent Interest exceed a per annum rate of 0.40%.  The Company shall pay interest semiannually on June 15 and December 15 of each year, commencing June 15, 2002.  Interest (including Contingent Interest) on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from December 18, 2001; provided, however, that if there is not an existing default in the payment of interest (including Contingent Interest) and if this Security is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date. Interest (including Contingent Interest) will be computed on the basis of a 360-day year of twelve 30-day months. Any reference herein to interest accrued or payable as of any date shall include any Liquidated Damages accrued or payable on such date as provided in the Registration Rights Agreement.

If any Security is surrendered for conversion subsequent to the Regular Record Date preceding an Interest Payment Date but on or prior to such Interest Payment Date (except Security called for redemption on a Redemption Date between such Regular Record Date and Interest Payment Date), the Holder of such Security at the close of business on such Regular Record Date shall be entitled to receive the interest (including Contingent Interest) payable on such Security on such Interest Payment Date notwithstanding the conversion thereof.  Any Security surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date shall (except in the case of Securities which have been called for redemption on a Redemption Date within such period) be accompanied by payment in New York Clearing House funds or other funds of an amount equal to the interest (including Contingent Interest) payable on such Interest Payment Date on the Security being surrendered for conversion.  Except as provided in this Security or in the Indenture, no adjustments in respect of payments of interest (including for conversion on any dividend or distributions or interest

A-4

(including Contingent Interest)) on any Security surrendered for conversion on any dividend or distributions or interest (including Contingent Interest) on the Common Stock issued upon conversion shall be made upon the conversion of any Security.

All percentages resulting from any calculation with respect to this Security will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one-millionths of a percentage point being rounded upward) and all dollar amounts used in or resulting from any such calculation with respect to this Security will be rounded to the nearest cent (with one-half cent being rounded upward.)

2.          Method of Payment

The Company shall pay interest on this Security (except defaulted interest) to the person who is the Holder of this Security at the close of business on June 1 or December 1, as the case may be, next preceding the related Interest Payment Date. The Holder must surrender this Security to a Paying Agent to collect payment of principal. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may, however, pay principal and interest in respect of any Certificated Security by check or wire payable in such money; provided, however, that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder. The Company may mail an interest check to the Holder’s registered address. Notwithstanding the foregoing, so long as this Security is registered in the name of a Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee.

3.          Paying Agent, Registrar And Conversion Agent

Initially, First Union National Bank (the "Trustee," which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice to the Holder. The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar.

4.          Indenture, Limitations

This Security is one of a duly authorized issue of Securities of the Company designated as its 4.75% Senior Convertible Notes due 2021 (the "Securities"), issued under an Indenture dated as of December 18, 2001 (together with any supplemental indentures thereto, the "Indenture"), between the Company and the Trustee. The terms of this Security include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Security is subject to all such terms, and the Holder of this Security is referred to the Indenture and said Act for a statement of them.

The Securities are senior unsecured obligations of the Company limited to $100,000,000 aggregate principal amount, subject to Section 2.2 of the Indenture. The Indenture does not limit other debt of the Company, secured or unsecured.

A-5

5.          Optional Redemption

The Securities are subject to redemption, at any time on or after December 20, 2006, on at least 20 days and no more than 60 days notice, in whole or in part, at the election of the Company, at a Redemption Price equal to 100% of the principal amount thereof, together with accrued interest (including Contingent Interest) up to but not including the Redemption Date; provided that if the redemption date is an Interest Payment Date, interest will be payable to the Holders in whose names the Securities are registered at the close of business on the relevant record dates.

6.          Notice of Redemption

Notice of redemption will be mailed by first-class mail at least 20 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at its registered address. Securities in denominations larger than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On and after the Redemption Date, subject to the deposit with the Paying Agent of funds sufficient to pay the Redemption Price plus accrued interest, if any, accrued to, but excluding, the Redemption Date, interest shall cease to accrue on Securities or portions of them called for redemption.

7.          Repurchase of Securities by the Company at Option of Holder

(a) Subject to the terms and conditions of the Indenture and at the option of the Holder, on December 20, 2006, on December 15, 2011 and December 15, 2016, the Company shall become obligated to purchase all of such Holder’s Securities, or any portion of the principal amount thereof that is equal to any integral multiple of $1,000, at a Repurchase Price equal to 100% of the principal amount of the Securities to be repurchased, plus accrued and unpaid interest (including Contingent Interest) to, but excluding, December 20, 2006, December 15, 2011 and December 15, 2016, as the case may be.  On December 20, 2006, the Repurchase Price may be paid, at the option of the Company, in cash or by the issuance of shares of Common Stock, or in any combination thereof, in accordance with the Indenture.  On December 15, 2011 and December 15, 2016, the Repurchase Price must be paid in cash only.

(b) In addition, subject to the terms and conditions of the Indenture and at the option of the Holder, following the occurrence of a Change in Control, the Company shall become obligated to purchase all of such Holder’s Securities, or any portion of the principal amount thereof that is equal to any integral multiple of $1,000, on the date that is 45 days after the date of the Company Notice given in connection with such Change in Control at a repurchase price equal to 100% of the principal amount of the Securities to be repurchased, plus accrued and unpaid interest (including Contingent Interest) to, but excluding, the Change in Control Repurchase Date.

8.          Conversion

Subject to compliance with the provisions of the Indenture, a Holder of a Security may convert the principal amount of such Security (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into shares of Common Stock at the Conversion Price in effect at the time of conversion under certain circumstances described in the Indenture;

A-6

 provided, however, that if the Security is called for redemption or subject to repurchase upon a specific date pursuant to Article V of the Indenture or upon a Change in Control, the conversion right will terminate at the close of business on the Business Day immediately preceding the redemption date or the Change in Control Repurchase Date, as the case may be, for such Security or such earlier date as the Holder presents such Security for redemption or purchase (unless the Company shall default in making the redemption payment, Optional Repurchase Price or Change in Control Repurchase Price, as the case may be, when due, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Security is redeemed or purchased).

The Company will notify Holders of any event triggering the right to convert the Security as specified above in accordance with the Indenture.

A Security in respect of which a Holder has delivered an Optional Repurchase Notice or a Change in Control Repurchase Notice exercising the option of such Holder to require the Company to repurchase such Security may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture.

The initial Conversion Price is $50.00 per share, subject to adjustment under certain circumstances. The number of shares of Common Stock issuable upon conversion of a Security is determined by dividing the principal amount of the Security or portion thereof converted by the Conversion Price in effect on the Conversion Date. No fractional shares will be issued upon conversion; in lieu thereof, an amount will be paid in cash based upon the closing price (as defined in the Indenture) of the Common Stock on the Trading Day immediately prior to the Conversion Date.

To convert a Security, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if required. Securities so surrendered for conversion (in whole or in part) during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date (excluding Securities or portions thereof called for redemption or subject to repurchase upon a specific date pursuant to Article V of the Indenture or upon a Change in Control on a Redemption Date, Optional Repurchase Date or Change in Control Repurchase Date, as the case may be, during the period beginning at the close of business on a Regular Record Date and ending at the opening of business on the first Business Day after the next succeeding Interest Payment Date, or if such Interest Payment Date is not a Business Day, the second such Business Day) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security then being converted, and such interest shall be payable to such registered Holder notwithstanding the conversion of such Security, subject to the provisions of this Indenture relating to the payment of defaulted interest by the Company. If the Company defaults in the payment of interest (including Contingent Interest) payable on such Interest Payment Date, the Company shall promptly repay such funds to such Holder. A Holder may convert a portion of a Security equal to $1,000 or any integral multiple thereof.

A-7

9.          Conversion Arrangement on Call for Redemption

Any Securities called for redemption, unless surrendered for conversion before the close of business on the Business Day immediately preceding the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, together with accrued interest, if any, to, but not including, the Redemption Date, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to convert them into Common Stock of the Company and to make payment for such Securities to the Paying Agent in trust for such Holders.

10.        Tax Treatment

The Company agrees, and by acceptance of a beneficial ownership interest in the Securities each beneficial holder of Securities will be deemed to have agreed, for United States  federal income tax purposes (1) to treat the Securities as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") and, for purposes of the Contingent Payment Regulations, to treat the fair market value of any stock beneficially received by a beneficial holder upon any conversion of the Securities as a contingent payment and (2) to be bound by the Company’s determination of the "comparable yield" and "projected payment schedule," within the meaning of the Contingent Payment Regulations, with respect to the Securities.  A Holder of Securities may obtain the amount of the original issue discount, issue date, yield to maturity, comparable yield and projected payment by submitting a written request for it to the Company at the following address: Evergreen Resources, Inc., 1401 17th Street, Suite 1200, Denver, Colorado 80202, Attention: Chief Financial Officer.

11.        Denominations, Transfer, Exchange

The Securities are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture.

12.        Persons Deemed Owners

The Holder of a Security may be treated as the owner of it for all purposes.

13.        Unclaimed Money

If money for the payment of principal or interest (including Contingent Interest) remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request. After that, Holders entitled to money must look to the Company for payment.

A-8

14.        Amendment, Supplement and Waiver

Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Securities then outstanding, and an existing default or Event of Default and its consequence or compliance with any provision of the Indenture or the Securities may be waived in a particular instance with the consent of the Holders of a majority in principal amount of the Securities then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder.

15.        Successor Corporation

When a successor corporation assumes all the obligations of its predecessor under the Securities and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation will (except in certain circumstances specified in the Indenture) be released from those obligations.

16.        Defaults and Remedies

Under the Indenture, an Event of Default includes: (i). default for 30 days in payment of any interest (including Contingent Interest) on any Securities; (ii). default in payment of any principal (including, without limitation, any premium, if any) on the Securities when due; (iii). failure by the Company for 60 days after notice to it to comply with any of its other agreements contained in the Indenture or the Securities; (iv). a default which involves the failure to pay principal of or any premium or interest on Indebtedness of the Company and its Subsidiaries, or which results in the acceleration of such Indebtedness prior to its stated maturity, if such Indebtedness aggregates $10 million or more; (v). failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $10 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vi) certain events of bankruptcy, insolvency or reorganization of the Company. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization of the Company or any of its Subsidiaries) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities then outstanding may declare all unpaid principal to the date of acceleration on the Securities then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Company, unpaid principal of the Securities then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest (including Contingent Interest)) if it determines that withholding notice is in their

A-9

interests. The Company is required to file periodic reports with the Trustee as to the absence of default.

17.        Trustee Dealings with the Company

First Union National Bank, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee.

18.        No Recourse Against Others

A director, officer, employee or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture nor for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Security by accepting this Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Security.

19.        Authentication

This Security shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Security.

20.        Abbreviations and Definitions

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

All terms defined in the Indenture and used in this Security but not specifically defined herein are defined in the Indenture and are used herein as so defined.

21.        Indenture to Control; Governing Law

In the case of any conflict between the provisions of this Security and the Indenture, the provisions of the Indenture shall control. This Security shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law.

The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: Evergreen Resources, Inc., 1401 17th Street, Suite 1200, Denver, Colorado 80202, Attention:  Chief Financial Officer.

A-10

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

____________________________________________________________________________________________________________

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

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

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

and irrevocably appoint ________________________________________________________________________________________
agent to transfer this Security on the books of the Company. The agent may substitute another to act for him or her.

	Your Signature:
Date:
	(Sign exactly as your name appears on the other side of this Security)
*Signature guaranteed by:
By:

^*The Signature must be guaranteed by an institution which is a member of one of the following recognized signature guarantly programs : (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

A-11

CONVERSION NOTICE

To convert this Security into Common Stock of the Company, check the box: o

To convert only part of this Security, state the principal amount to be converted (must be $1,000 or a multiple of $1,000): $____________.

If you want the stock certificate made out in another person’s name, fill in the form below:

____________________________________________________________________________________________________________

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

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

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

	Your Signature:
Date:
	(Sign exactly as your name appears on the other side of this Security)
*Signature guaranteed by:
By:

^*The Signature must be guaranteed by an institution which is a member of one of the following recognized signature guarantly programs : (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

A-12

OPTION TO ELECT REPURCHASE UPON A CHANGE IN CONTROL OR ON SPECIFIC DATES

To:       Evergreen Resources, Inc.

To elect to have this Security purchased by the Company pursuant to Article V (Repurchase at Option of Holder on Specific Dates) or Article XII (Repurchase at Option of Holder Upon a Change in Control) of the Indenture, check the applicable box:

oArticle V (Repurchase at Option of Holder on Specific Dates)
o         Article XII (Repurchase at Option of Holder Upon a Change in Control)

Date:
	Signature(s)
	Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
	Signature Guaranty
Principal amount to be redeemed (in an integral multiple of $1,000, if less than all):

Notice: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever.

A-13

SCHEDULE OF EXCHANGES OF NOTES⁴

The following exchanges, redemptions, repurchases or conversions of a part of this global Security have been made:

Principal Amount of this Global Security Following Such Decrease Date of Exchange (or Increase) Authorized Signatory of Securities Custodian Amount of Decrease in Principal Amount of this Global Security Amount of Increase in Principal Amount of this Global Security

⁴           This schedule should be included only if the security is a Global Security.

A-14

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES⁵

Re:        4.75% Senior Convertible Notes due 2021 (the “Securities”) of Evergreen Resources, Inc.

This certificate relates to $_______ principal amount of Securities owned in (check applicable box)

o  book-entry or  o  definitive form by ____________________ (the “Transferor”).

The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Securities.

In connection with such request and in respect of each such Security, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Securities as provided in Section 2.6 of the Indenture dated as of December 18, 2001 between Evergreen Resources, Inc. and First Union National Bank (the “Indenture”), and the transfer of such Security is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) (check applicable box) or the transfer or exchange, as the case may be, of such Security does not require registration under the Securities Act because (check applicable box):

o  Such Security is being transferred pursuant to an effective registration statement under the Securities Act.

o  Such Security is being acquired for the Transferor’s own account, without transfer.

o  Such Security is being transferred to the Company or a Subsidiary (as defined in the Indenture) of the Company.

o  Such Security is being transferred to a person the Transferor reasonably believes is a “qualified institutional buyer” (as defined in Rule 144A or any successor provision thereto (“Rule 144A”) under the Securities Act) that is purchasing for its own account or for the account of a “qualified institutional buyer”, in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A.

o  Such Security is being transferred outside the United States in an offshore transaction in accordance with Rule 904 under the Securities Act.

o  Such Security is being transferred in the United States to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) that, prior to such transfer, will furnish to the Trustee a signed letter containing certain representations and agreements relating to the transfer of such Securities and an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act.

⁵           This certificate should only be included if this Security is a Transfer Restricted Security

A-15

o  Such Security is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) (“Rule 144”) under the Securities Act.

o  Such Security is being transferred pursuant to and in compliance with an exemption from the registration requirements of the Securities Act (other than an exemption referred to above) and as a result of which such Security will, upon such transfer, cease to be a “restricted security” within the meaning of Rule 144 under the Securities Act.

The Transferor acknowledges and agrees that, if the transferee will hold any such Securities in the form of beneficial interests in a global Security which is a “restricted security” within the meaning of Rule 144 under the Securities Act, then such transfer can only be made pursuant to Rule 144A under the Securities Act and such transferee must be a “qualified institutional buyer” (as defined in Rule 144A).

Date:
	(Insert Name of Transferor)

A-16

EX-4.4

Exhibit 4.4

Execution Copy

REGISTRATION RIGHTS AGREEMENT

between

EVERGREEN RESOURCES, INC.

and

BEAR, STEARNS & CO. INC.

FIRST UNION SECURITIES, INC.

UBS WARBURG LLC

JEFFERIES & COMPANY, INC.

STIFEL, NICOLAUS & COMPANY, INCORPORATED

Dated as of December 18, 2001

This REGISTRATION RIGHTS AGREEMENT, dated as of December 18, 2001, is between EVERGREEN RESOURCES, INC., a Colorado corporation (together with any successor entity, herein referred to as the “Issuer”), and BEAR, STEARNS & CO. INC., FIRST UNION SECURITIES, INC., UBS WARBURG LLC, JEFFERIES & COMPANY, INC. and STIFEL, NICOLAUS & COMPANY, INCORPORATED (collectively, the “Initial Purchasers”).

Pursuant to the Purchase Agreement, dated December 12, 2001, between the Issuer and the Initial Purchasers (the “Purchase Agreement”), the Initial Purchasers have agreed to purchase from the Issuer $100,000,000 aggregate principal amount of 4.75% Senior Convertible Notes due 2021 (the “Convertible Notes”). The Convertible Notes will be convertible into fully paid, nonassessable common stock, no par value per share, of the Issuer (the “Common Stock”) on the terms, and subject to the conditions, set forth in the Indenture (as defined herein). To induce the Initial Purchasers to purchase the Convertible Notes, and in satisfaction of a condition to the Initial Purchasers’ obligations under the Purchase Agreement, the Issuer has agreed to provide the registration rights set forth in this Agreement.

The parties hereby agree as follows:

1.          Definitions.

As used in this Agreement, the following capitalized terms shall have the following meanings:

“Advice”: As defined in Section 4(c)(ii) hereof.

“Affiliate”: With respect to any specified Person, means an “Affiliate,” as defined in Rule 144 under the Securities Act, of such Person.

“Agreement”: This Registration Rights Agreement.

“Blue Sky Application”: As defined in Section 6(a)(i) hereof.

“Broker-Dealer”: Any broker or dealer registered under the Exchange Act.

“Business Day”: A day other than a Saturday or Sunday or any federal holiday in the United States.

“Closing Date”: The date of this Agreement.

“Commission”: The United States Securities and Exchange Commission.

“Common Stock”: As defined in the preamble hereto.

“Control”: With respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.

“Convertible Notes”: As defined in the preamble hereto.

“Damages Payment Date”: Each interest payment date with respect to the Convertible Notes.

“Effectiveness Period”: As defined in Section 2(a)(iii) hereof.

“Effectiveness Target Date”: As defined in Section 2(a)(ii) hereof.

“Exchange Act”: The Securities Exchange Act of 1934, as amended.

“Holder”: A Person who owns, beneficially or otherwise, Registrable Securities.

“Indemnified Holder”: As defined in Section 6(a) hereof.

“Indenture”: The Indenture, dated as of December 18, 2001, between the Issuer and First Union National Bank, as trustee (the “Trustee”), pursuant to which the Convertible Notes are to be issued, as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof.

“Initial Purchasers”: As defined in the preamble hereto.

“Issuer”: As defined in the preamble hereto.

“Liquidated Damages”: As defined in Section 3(a) hereof.

“Majority of Holders”: Holders holding over 50% of the aggregate principal amount of Convertible Notes outstanding; provided that, for purpose of this definition, a Holder of shares of Common Stock that constitute Registrable Securities and issued upon conversion of the Convertible Notes shall be deemed to hold an aggregate principal amount of Convertible Notes (in addition to the principal amount of Convertible Notes held by such Holder) equal to the product of (x) the number of such shares of Common Stock held by such Holder and (y) the prevailing conversion price, such prevailing conversion price as determined in accordance with Article 4 of the Indenture.

“NASD”: National Association of Securities Dealers, Inc.

“Person”: An individual, partnership, corporation, unincorporated organization, trust, joint venture or a government or agency or political subdivision thereof.

“Prospectus”: The prospectus included in a Shelf Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

“Questionnaire Deadline”: As defined in Section 2(b) hereof.

“Record Holder”: With respect to any Damages Payment Date, each Person who is a Holder on the record date with respect to the interest payment date on which such Damages Payment Date shall occur. In the case of a Holder of shares of Common Stock issued upon

3

conversion of the Convertible Notes, “Record Holder” shall mean each Person who is a Holder of shares of Common Stock that constitute Registrable Securities on the June 1 or December 1 immediately preceding the Damages Payment Date.

“Registrable Securities”: Each Convertible Note and each share of Common Stock issued upon conversion of Convertible Notes until, in the case of any such security, (A) the earliest of (i) its effective registration under the Securities Act and resale in accordance with the Registration Statement covering it, (ii) expiration of the holding period that would be applicable thereto under Rule 144(k) under the Securities Act were it not held by an Affiliate of the Issuer or (iii) its sale to the public pursuant to Rule 144 under the Securities Act, and (B) as a result of the event or circumstance described in any of the foregoing clauses (i) through (iii), the legends with respect to transfer restrictions required under the Indenture are removed or removable in accordance with the terms of the Indenture or such legend, as the case may be.

“Registration Default”: As defined in Section 3(a)(iv) hereof.

“Registration Statement”: Means any registration statement of the Issuer that covers any of the Registrable Securities pursuant to the provisions of this Agreement including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such registration statement.

“Sale Notice”: As defined in Section 4(e) hereof.

“Securities Act”: The Securities Act of 1933, as amended.

“Shelf Filing Deadline”: As defined in Section 2(a)(i) hereof.

“Shelf Registration Statement”: As defined in Section 2(a)(i) hereof.

“Suspension Period”: As defined in Section 4(b)(i) hereof.

“TIA”: The Trust Indenture Act of 1939, as in effect on the date the Indenture is qualified under that act.

“Underwriting Majority”: On any date, Holders holding at least 66 2/3% of the aggregate principal amount of the Registrable Securities outstanding on such date; provided, that for the purpose of this definition, a holder of shares of Common Stock that constitute Registrable Securities and issued upon conversion of Convertible Notes shall be deemed to hold an aggregate principal amount of Registrable Securities (in addition to the principal amount of Convertible Notes held by such holder) equal to (x) the number of such shares of Common Stock that are Registrable Securities held by such holder multiplied by (y) the then applicable Conversion Price (as defined in the Indenture).

“Underwritten Registration” or “Underwritten Offering”: A registration in which securities of the Issuer are sold to an underwriter for reoffering to the public.

4

2.          Shelf Registration.

(a)        The Issuer shall:

(i)         not later than 90 days after the date hereof (the “Shelf Filing Deadline”), cause to be filed a registration statement pursuant to Rule 415 under the Securities Act (the “Shelf Registration Statement”), which Shelf Registration Statement shall provide for resales of all Registrable Securities held by Holders that have provided the information required pursuant to the terms of Section 2(b) hereof;

(ii)        use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective by the Commission no later than 180 days after the date hereof (the “Effectiveness Target Date”); and

(iii)       subject to Section 4(b)(i) hereof, use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 4(b) hereof to the extent necessary to ensure that (A) it is available for resales by the Holders of Registrable Securities entitled to the benefit of this Agreement and (B) conforms with the requirements of this Agreement and the Securities Act and the rules and regulations of the Commission promulgated thereunder as announced from time to time for a period (the “Effectiveness Period”) of:

(1)        two years after the date of filing of the Shelf Registration Statement; or

(2)        such shorter period, from the date of filing of the Shelf Registration Statement until either of (i) the sale pursuant to a Shelf Registration Statement of all the Registrable Securities or (ii) the expiration of the holding period applicable to the Registrable Securities held by Holders that are not Affiliates of the Issuer under Rule 144(k) under the Securities Act.

(b)        No Holder of Registrable Securities may include any of its Registrable Securities in the Shelf Registration Statement pursuant to this Agreement unless such Holder furnishes to the Issuer in writing, prior to or on the 20th Business Day after receipt of a request therefor (the “Questionnaire Deadline”), such information as the Issuer may reasonably request for use in connection with the Shelf Registration Statement or Prospectus or preliminary Prospectus included therein and in any application to be filed with or under state securities laws. In connection with all such requests for information from Holders of Registrable Securities, the Issuer shall notify such Holders of the requirements set forth in the preceding sentence. No Holder of Registrable Securities shall be entitled to Liquidated Damages pursuant to Section 3 hereof unless such Holder shall have provided all such reasonably requested information prior to or on the Questionnaire Deadline. Each Holder as to which the Shelf Registration Statement is being effected agrees to furnish promptly to the Issuer all information required to be disclosed in order to make information previously furnished to the Issuer by such Holder not materially misleading.

5

3.          Liquidated Damages.

(a)        If:

(i)         the Shelf Registration Statement has not been filed with the Commission prior to or on the Shelf Filing Deadline,

(ii)        the Shelf Registration Statement has not been declared effective by the Commission prior to or on the Effectiveness Target Date,

(iii)       subject to the provisions of Section 4(b)(i) hereof, the Shelf Registration Statement is filed and declared effective but, during the Effectiveness Period and after the Effectiveness Target Date, shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within five Business Days by a post-effective amendment to the Shelf Registration Statement or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such failure and, in the case of a post-effective amendment, is itself declared effective within such five Business Day period, or

(iv)       prior to or on the 45th or 60th day, as the case may be, of any Suspension Period, such suspension has not been terminated, (each such event referred to in foregoing clauses (i) through (iv), a “Registration Default”),

then the Issuer hereby agrees to pay liquidated damages (“Liquidated Damages”) to each Holder from and including the day following the Registration Default to but excluding the day on which the Registration Default has been cured in an amount equal to:

(A)       with respect to such Holder’s Convertible Notes, for the first 90-day period during which a Registration Default shall have occurred and be continuing but excluding the day on which all Registration Defaults have been cured, an amount equal to 0.25% per annum on the principal amount of such Holder’s then outstanding and not converted Convertible Notes, increasing to an amount per annum on the principal amount of such Holder’s then outstanding and not converted Convertible Notes equal to 0.50% on the 91st day, provided that in no event shall the aggregate Liquidated Damages pursuant to this clause accrue at a rate per annum exceeding 0.50% of the sum of the principal amount of the then outstanding Convertible Notes;

(B)       with respect to such Holder’s Common Stock issued upon conversion of Convertible Notes for the first 90-day period during which a Registration Default shall have occurred and be continuing but excluding the day on which all Registration Defaults have been cured, an amount equal to 0.25% per annum on the principal amount of such Holder’s converted Convertible Notes, increasing to an amount per annum on the principal amount of such Holder’s converted Convertible Notes equal to 0.50% on the 91st day, provided that in no event shall the aggregate Liquidated Damages pursuant to this clause accrue at a rate per annum exceeding 0.50% of the sum of the principal amount of the then converted Convertible Notes;

6

(b)        All accrued Liquidated Damages shall be paid in arrears to Record Holders by the Issuer on each Damages Payment Date by wire transfer of immediately available funds or by federal funds check. Following the cure of all Registration Defaults relating to any particular Convertible Note or share of Common Stock, the accrual of Liquidated Damages with respect to such Convertible Note or share of Common Stock will cease.

All obligations of the Issuer set forth in this Section 3 that are outstanding with respect to any Registrable Security at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such Registrable Security shall have been satisfied in full.

The Liquidated Damages set forth above shall be the exclusive monetary remedy available to the Holders of Registrable Securities for such Registration Default.

4.          Registration Procedures.

(a)        In connection with the Shelf Registration Statement, the Issuer shall comply with all the provisions of  Section 4(b) hereof and shall, in accordance with Section 2 hereof, prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Securities Act.

(b)        In connection with the Shelf Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Registrable Securities, the Issuer shall:

(i)         Subject to any notice by the Issuer in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iii)(D), use its reasonable best efforts to keep the Shelf Registration Statement continuously effective during the Effectiveness Period; upon the occurrence of any event that would cause the Shelf Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not be effective and usable for resale of Registrable Securities during the Effectiveness Period, the Issuer shall file promptly an appropriate amendment to the Shelf Registration Statement or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its reasonable best efforts to cause such amendment to be declared effective and the Shelf Registration Statement and the related Prospectus to become usable for their intended purposes as soon as practicable thereafter. Notwithstanding the foregoing, the Issuer may suspend the effectiveness of the Shelf Registration Statement by written notice to the Holders for a period not to exceed an aggregate of 45 days in any 90-day period (each such period, a “Suspension Period”) if:

(x)         an event occurs and is continuing as a result of which the Shelf Registration Statement would, in the Issuer’s reasonable judgment, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and

7

(y)        the Issuer reasonably determines that the disclosure of such event at such time would have a material adverse effect on the business of the Issuer (and its subsidiaries, if any, taken as a whole);

provided, that (A) in the event the disclosure relates to a previously undisclosed proposed or pending material business transaction, the disclosure of which would impede the Issuer’s ability to consummate such transaction, the Issuer may extend a Suspension Period from 45 days to 60 days and (B) the Suspension Periods shall not exceed an aggregate of 90 days in any 360-day period. Each Holder, by its acceptance of a Registrable Security, agrees to hold in confidence any communication by the Issuer relating to an event described in Section 4(b)(i)(x) and (y) or Section 4(b)(iii)(D).

(ii)        Prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration Statement as may be necessary to keep the Shelf Registration Statement effective during the Effectiveness Period; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Shelf Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in the Shelf Registration Statement or supplement to the Prospectus.

(iii)       Advise the underwriter(s), if any, and, in the case of (A), (C) and (D) below, the selling Holders promptly and, if requested by such Persons, to confirm such advice in writing:

(A)       when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment thereto, when the same has become effective,

(B)       of any request by the Commission for amendments to the Shelf Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto,

(C)       of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Registrable Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, or

(D)       of the existence of any fact or the happening of any event, during the Effectiveness Period, that makes any statement of a material fact made in the Shelf Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or

8

that requires the making of any additions to or changes in the Shelf Registration Statement or the Prospectus in order to make the statements therein not misleading.

If at any time the Commission shall issue any stop order suspending the effectiveness of the Shelf Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Registrable Securities under state securities or Blue Sky laws, the Issuer shall use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time.

(iv)       Furnish to one counsel for the selling Holders and each of the underwriter(s), if any, before filing with the Commission, a copy of the Shelf Registration Statement and copies of any Prospectus included therein or any amendments or supplements to either of the Shelf Registration Statement or Prospectus (other than documents incorporated by reference after the initial filing of the Shelf Registration Statement), which documents will be subject to the review of such counsel and underwriter(s), if any, for a period of two Business Days, and the Issuer will not file the Shelf Registration Statement or Prospectus or any amendment or supplement to the Shelf Registration Statement or Prospectus (other than documents incorporated by reference) to which such counsel or the underwriter(s), if any, shall reasonably object within two Business Days after the receipt thereof. Such counsel or underwriter, if any, shall be deemed to have reasonably objected to such filing if the Shelf Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission.

(v)        Subject to the execution of a confidentiality agreement reasonably acceptable to the Issuer, make available at reasonable times for inspection by one or more representatives of the selling Holders, designated in writing by a Majority of Holders whose Registrable Securities are included in the Shelf Registration Statement, any underwriter, if any, participating in any distribution pursuant to the Shelf Registration Statement, and any attorney or accountant retained by the Majority of Holders or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Issuer as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the Issuer’s officers, directors, managers and employees to supply all information reasonably requested by any such representative or representatives of the selling Holders, underwriter, attorney or accountant in connection with the Shelf Registration Statement after the filing thereof and before its effectiveness; provided, however, that any information designated by the Issuer as confidential at the time of delivery of such information shall be kept confidential by the recipient thereof.

(vi)       If requested by any selling Holders or the underwriter(s), if any, incorporate in the Shelf Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation: (1) information relating to the “Plan of Distribution” of the

9

Registrable Securities, (2) information with respect to the principal amount of Convertible Notes or number of shares of Common Stock being sold, (3) the purchase price being paid therefor and (4) any other terms of the offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after the Issuer is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment.

(vii)      Furnish to each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Shelf Registration Statement, as first filed with the Commission, and of each amendment thereto (and any documents incorporated by reference therein or exhibits thereto (or exhibits incorporated in such exhibits by reference) as such Person may request in writing).

(viii)     Deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; subject to any notice by the Issuer in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iii)(D), the Issuer hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto.

(ix)        If an underwriting agreement is entered into and the registration is an Underwritten Registration, the Issuer shall:

(A)       upon request, furnish to each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of closing of any sale of Registrable Securities in an Underwritten Registration:

(1)        a certificate, dated the date of such closing, signed by (y) the Chairman of the Board, the President or a Vice President and (z) the Chief Financial Officer of the Issuer confirming, as of the date thereof, such matters as such parties may reasonably request;

(2)        opinions, each dated the date of such closing, of counsel to the Issuer covering such matters as are customarily covered in legal opinions to underwriters in connection with primary underwritten offerings of securities; and

(3)        customary comfort letters, dated the date of such closing, from the Issuer’s independent accountants (and from any other accountants whose report is contained or incorporated by

10

reference in the Shelf Registration Statement), in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with primary underwritten offerings of securities;

(B)       set forth in full in the underwriting agreement, if any, indemnification provisions and procedures which provide rights no less protective than those set forth in Section 6 hereof with respect to all parties to be indemnified; and

(C)       deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the selling Holders pursuant to this clause (ix).

(x)         Before any public offering of Registrable Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Registrable Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Shelf Registration Statement; provided, however, that the Issuer shall not be required (A) to register or qualify as a foreign corporation or a dealer of securities where it is not now so qualified or to take any action that would subject it to the service of process in any jurisdiction where it is not now so subject or (B) to subject itself to taxation in any such jurisdiction if it is not now so subject.

(xi)        Cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends (unless required by applicable securities laws); and enable such Registrable Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may reasonably request at least two Business Days before any sale of Registrable Securities made by such underwriter(s).

(xii)       Use its reasonable best efforts to cause the Registrable Securities covered by the Shelf Registration Statement to be registered with or approved by such other U.S. governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Registrable Securities, subject to the proviso in clause (x) above.

(xiii)      Subject to Section 4(b)(i) hereof, if any fact or event contemplated by Section 4(b)(iii)(D) hereof shall exist or have occurred, use its reasonable best efforts prepare a supplement or post-effective amendment to the Shelf Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Registrable

11

Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.

(xiv)     Provide CUSIP numbers for all Registrable Securities not later than the effective date of the Shelf Registration Statement and provide the Trustee under the Indenture with certificates for the Convertible Notes that are in a form eligible for deposit with The Depository Trust Company.

(xv)      Cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter that is required to be retained in accordance with the rules and regulations of the NASD.

(xvi)     Otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and all reporting requirements under the rules and regulations of the Exchange Act.

(xvii)    Cause the Indenture to be qualified under the TIA not later than the effective date of the Shelf Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the holders of Convertible Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its reasonable best efforts to cause the Trustee thereunder to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner.

(xviii)   Cause all Registrable Securities covered by the Shelf Registration Statement to be listed or quoted, as the case may be, on each securities exchange or automated quotation system on which securities issued by the Issuer of the same series are then listed or quoted.

(xix)      Provide promptly to each Holder upon written request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act after the effective date of the Shelf Registration Statement, unless such documents are available from EDGAR.

(xx)       If requested by the underwriters in an Underwritten Offering, make appropriate officers of the Issuer reasonably available to the underwriters for meetings with prospective purchasers of the Registrable Securities and prepare and present to potential investors customary “road show” material in a manner consistent with other new issuances of other securities similar to the Registrable Securities.

(c)        Each Holder agrees by acquisition of a Registrable Security that, upon receipt of any notice from the Issuer of the existence of any fact of the kind described in Section 4(b)(iii)(D) hereof, such Holder will, and will use its reasonable best efforts to cause any underwriter(s) in an Underwritten Offering to, forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement until:

12

(i)         such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 4(b)(xiii) hereof; or

(ii)        such Holder is advised in writing (the “Advice”) by the Issuer that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus.

If so directed by the Issuer, each Holder will deliver to the Issuer (at the Issuer’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities that was current at the time of receipt of such notice of suspension.

(d)        Each Holder who intends to be named as a selling Holder in the Shelf Registration Statement shall furnish to the Issuer in writing, within 20 Business Days after receipt of a request therefor as set forth in a questionnaire in the form attached hereto as Annex A, such information regarding such Holder and the proposed distribution by such Holder of its Registrable Securities as the Issuer may reasonably request for use in connection with the Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. Holders that do not complete the questionnaire and deliver it to the Issuer shall not be named as selling securityholders in the Prospectus or preliminary Prospectus included in the Shelf Registration Statement and therefore shall not be permitted to sell any Registrable Securities pursuant to the Shelf Registration Statement. Each Holder who intends to be named as a selling Holder in the Shelf Registration Statement shall promptly furnish to the Issuer in writing all information required to be disclosed in order to make information previously furnished to the Issuer by such Holder not materially misleading and such other information as the Issuer may from time to time reasonably request in writing.

(e)        Upon the effectiveness of the Shelf Registration Statement, each Holder shall notify the Issuer at least three Business Days prior to any intended distribution of Registrable Securities pursuant to the Shelf Registration Statement (a “Sale Notice”), which notice shall be effective for five Business Days. Each Holder of this Security, by accepting the same, agrees to hold any communication by the Issuer in response to a Sale Notice in confidence.

5.          Registration Expenses.

(a)        All expenses incident to the Issuer’s performance of or compliance with this Agreement shall be borne by the Issuer regardless of whether a Shelf Registration Statement becomes effective, including, without limitation:

(i)         all registration and filing fees and expenses (other than filings made by any Initial Purchasers or Holders with the NASD);

(ii)        all fees and expenses of compliance with federal securities and state Blue Sky or securities laws;

13

(iii)       all expenses of printing (including printing of Prospectuses and certificates for the Common Stock to be issued upon conversion of the Convertible Notes), messenger and delivery services, and telephone;

(iv)       all reasonable fees and disbursements of counsel to the Issuer and, subject to Section 5(b) below, the Holders of Registrable Securities;

(v)        all application and filing fees in connection with listing (or authorizing for quotation) the Common Stock on a national securities exchange or automated quotation system pursuant to the requirements hereof; and

(vi)       all fees and disbursements of independent certified public accountants of the Issuer (including the expenses of any special audit and comfort letters required by or incident to such performance).

The Issuer shall bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal, accounting or other duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Issuer.

(b)        In connection with the Shelf Registration Statement required by this Agreement, the Issuer shall reimburse the Initial Purchasers and the Holders of Registrable Securities being registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, which shall be Vinson & Elkins L.L.P. or such other chosen by a Majority of Holders for whose benefit the Shelf Registration Statement is being prepared and is reasonably acceptable to the Issuer. The Issuer shall not be required to pay any underwriter discount, commission or similar fees related to the sale of the Securities.

6.          Indemnification and Contribution.

(a)        The Issuer shall indemnify and hold harmless each Holder, such Holder’s directors, officers, employees, representatives, agents and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act (each, an “Indemnified Holder”), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to resales of the Registrable Securities), to which such Indemnified Holder may become subject, under the Securities Act or otherwise, insofar as any such loss, claim, damage, liability or action arises out of, or is based upon:

(i)         any untrue statement or alleged untrue statement of a material fact contained in (A) the Shelf Registration Statement or Prospectus or any amendment or supplement thereto or (B) any blue sky application or other document or any amendment or supplement thereto prepared or executed by the Issuer (or based upon written information furnished by or on behalf of the Issuer expressly for use in such blue sky application or other document or amendment on supplement) filed in any jurisdiction specifically for the purpose of qualifying any or all of the Registrable Securities under the

14

securities law of any state or other jurisdiction (such application or document being hereinafter called a “Blue Sky Application”); or

(ii)        the omission or alleged omission to state in the Shelf Registration Statement any material fact required to be stated therein or necessary to make the statements therein not misleading, or the omission or alleged omission to state in the Prospectus any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Indemnified Holder promptly upon demand for any legal or other expenses reasonably incurred by such Indemnified Holder in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Issuer shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in the Shelf Registration Statement or Prospectus or amendment or supplement thereto or Blue Sky Application in reliance upon and in conformity with written information furnished to the Issuer by or on behalf of any Holder (or its related Indemnified Holder) specifically for use therein; provided, further, that as to any preliminary Prospectus, this indemnity agreement shall not inure to the benefit of any Indemnified Holder or any officer, employee, representative, agent, director or controlling person of that Indemnified Holder on account of any loss, claim, damage, liability or action arising from the sale of the Registrable Securities sold pursuant to the Shelf Registration Statement to any person by such Indemnified Holder if (i) that Indemnified Holder failed to send or give a copy of the Prospectus, as the same may be amended or supplemented, to that person within the time required by the Securities Act and (ii) the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such preliminary Prospectus was corrected in the Prospectus or a supplement or amendment thereto, as the case may be, unless in each case, such failure resulted from noncompliance by the Issuer with Section 4. The foregoing indemnity agreement is in addition to any liability that the Issuer may otherwise have to any Indemnified Holder.

(b)        Each Holder, severally and not jointly, shall indemnify and hold harmless the Issuer, its directors, officers, employees, representatives, agents and each person, if any, who controls the Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Issuer or any such officer, employee, representative, agent or controlling person may become subject, insofar as any such loss, claim, damage or liability or action arises out of, or is based upon:

(i)         any untrue statement or alleged untrue statement of any material fact contained in the Shelf Registration Statement or Prospectus or any amendment or supplement thereto or any Blue Sky Application; or

(ii)        the omission or the alleged omission to state in the Shelf Registration Statement any material fact required to be stated therein or necessary to make the statements therein not misleading, or the omission or alleged omission to state

15

in the Prospectus any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Issuer by or on behalf of such Holder (or its related Indemnified Holder) specifically for use therein, and shall reimburse the Issuer and any such director, officer, employee, representative, agent or controlling person promptly upon demand for any legal or other expenses reasonably incurred by the Issuer or any such officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability that any Holder may otherwise have to the Issuer and any such director, officer, employee or controlling person.

(c)        Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have under this Section 6 except to the extent it has been materially prejudiced by such failure and, provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under this Section 6. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the indemnified party shall have the right to employ counsel to represent jointly the indemnified party and its respective directors, employees, officers and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against the indemnifying party under this Section 6 if such indemnified party shall have been advised in writing that the representation of such indemnified party and those directors, employees, officers and controlling persons by the same counsel would be inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them, and in that event the fees and expenses of such separate counsel shall be paid by the indemnifying party. It is understood that the indemnifying party shall not be liable for the fees and expenses of more than one separate firm (in addition to local counsel in each jurisdiction) for all indemnified parties in connection with any proceeding or related proceedings. Each indemnified party, as a condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall use its reasonable best efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall:

16

(i)         without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld) effect any settlement of any pending or threatened action in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability arising out of such claim, action, suit or proceeding and does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party, or

(ii)        be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss of liability by reason of such settlement or judgment in accordance with this Section 6.

(d)        If the indemnification provided for in this Section 6 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the registration of the Registrable Securities pursuant to the Shelf Registration, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 6(d), the Holders of the Registrable Securities shall not be required to contribute any amount in excess of the amount by which the gross proceeds received by such Holders from the sale of the Registrable Securities pursuant to the Shelf Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such

17

fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Issuer within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Issuer.

(e)        The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser, any Holder or any person controlling any Initial Purchaser or any Holder, or by or on behalf of the Issuer, its officers or directors or any person controlling the Issuer, and (iii) any sale of Registrable Securities pursuant to the Shelf Registration Statement.

7.          Rule 144A.

In the event the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, the Issuer hereby agrees with each Holder, for so long as any Registrable Securities remain outstanding, to make available to any Holder or beneficial owner of Registrable Securities in connection with any sale thereof and any prospective purchaser of such Registrable Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Registrable Securities pursuant to Rule 144A.

8.          Underwritten Registrations.

(a)        The Underwriting Majority may sell its Registrable Securities in an Underwritten Offering pursuant to the Shelf Registration Statement only with the Issuer’s consent, which consent may be granted or withheld in the Issuer’s sole discretion.

(b)        Participation of Holders. No Holder may participate in any Underwritten Registration hereunder unless such Holder:

(i)         agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; and

(ii)        completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents reasonably required under the terms of such underwriting arrangements.

(c)        Selection of Underwriters. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by a Majority of Holders whose Registrable Securities are included in such Underwriting Offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Issuer.

18

9.          Miscellaneous.

(a)        Remedies. The Issuer acknowledges and agrees that any failure by the Issuer to comply with its obligations under Section 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Issuer’s obligations under Section 2 hereof. The Issuer further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(b)        No Inconsistent Agreements. The Issuer will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. In addition, the Issuer shall not grant to any of its security holders (other than the holders of Registrable Securities in such capacity) the right to include any of its securities in the Shelf Registration Statement provided for in this Agreement other than the Registrable Securities. Other than as disclosed in the Issuer’s Offering Memorandum dated December 12, 2001, the Issuer has not previously entered into any agreement (which has not expired or been terminated) granting any registration rights with respect to its securities to any Person, which rights conflict with the provisions hereof.

(c)        Adjustments Affecting Registrable Securities. The Issuer shall not, directly or indirectly, take any action with respect to the Registrable Securities as a class that would adversely affect the ability of the Holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement.

(d)        Amendments and Waivers. This Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, unless the Issuer has obtained the written consent of a Majority of Holders; provided, however, that no amendment, modification, supplement, waiver or consent to or departure from the provisions of Section 6 that materially and adversely affects a Holder hereof shall be effective as against any such Holder of Registrable Securities unless consented to in writing by such Holder.

(e)        Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

(i)         if to a Holder, at the address set forth on the records of the registrar under the Indenture or the transfer agent of the Common Stock, as the case may be; and

19

(ii)        if to the Issuer:

Evergreen Resources, Inc.

1401 17th Street

Denver, Colorado 80202

Fax No.:  (303) 295-7895

Attention:  Kevin R. Collins

With a copy to:

Womble Carlyle Sandridge & Rice, PLLC

3300 One First Union Center

301 South College Street

Charlotte, North Carolina 28202

Fax No.: (704) 338-7814

Attention:  Douglas A. Mays

(iii)       if to the Initial Purchasers:

c/o Bear, Stearns & Co. Inc.

383 Madison Avenue

New York, New York 10179

Fax No.:  (212) 272-3092

Attention:  Convertible Capital Markets

With a copy to:

Vinson & Elkins L.L.P.

666 Fifth Avenue, 27th Floor

New York, New York  10103

Fax No.:  (917) 206-8100

Attention:  Alan P. Baden

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

A document or notice shall be deemed to have been furnished to the Holders of the Registrable Securities if it is provided to the registered holders of the Registrable Securities at the address set forth in clause (i) above.

20

(f)         Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Registrable Securities; provided, however, that (i) nothing contained herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture and (ii) this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Registrable Securities from such Holder. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Issuer with respect to any failure by a Holder to comply with, or breach by any Holder of, any of the obligations of such Holder under this Agreement.

(g)        Purchases and Sales of Convertible Notes. The Issuer shall not, and shall use its reasonable best efforts to cause its affiliates (as defined in Rule 405 under the Securities Act) within its Control not to, resell or otherwise transfer any Convertible Notes acquired by the Company or such affiliates, except pursuant to an effective registration statement under the Securities Act or an exemption therefrom.

(h)        Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Issuer and the Initial Purchasers, and such Initial Purchasers shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.

(i)         Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(j)         Securities Held by the Issuer or Their Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Issuer or its affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(k)        Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(l)         Governing Law. This agreement shall be coverned by, and construed in accordance with, the laws of the State of New York.

21

(m)       Consent to Jurisdiction. Each party irrevocably agrees that any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the City of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the “Specified Courts”), and irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “Related Judgment”), as to which such Jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. The parties further agree that service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any lawsuit, action or other proceeding brought in any such court. The parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any lawsuit, action or other proceeding in the Specified Courts, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such lawsuit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

(n)        Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(o)        Entire Agreement. This Agreement, together with the Purchase Agreement and the Indenture, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Issuer with respect to the Registrable Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

[Signature page to follow]

22

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

Very truly yours,
EVERGREEN RESOURCES, INC.
By:
	Name:
	Title:

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written.

BEAR, STEARNS & CO. INC.,
	on behalf of the Initial Purchasers
By:
	Name:
	Title:

23

ANNEX A

Evergreen Resources, Inc.
Notice of Registration Statement
and Selling Securityholder Election and Questionnaire

Notice

Evergreen Resources, Inc. (the “Company”) has filed, or intends shortly to file, with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 or such other Form as may be available (the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Company’s 4.75% Senior Convertible Notes due 2021 (CUSIP No. 299-900-AA8) (the “Notes”), and common stock, no par value per share, issuable upon conversion and thereof (the “Shares” and together with the Notes, the “Transfer Restricted Securities”) in accordance with the terms of the Registration Rights Agreement, dated as of December 18, 2001 (the “Registration Rights Agreement”) between the Company and Bear, Stearns & Co. Inc., First Union Securities, Inc., UBS Warburg LLC, Jefferies & Company, Inc. and Stifel, Nicolaus & Company, Incorporated.  A copy of the Registration Rights Agreement is available from the Company. All capitalized terms not otherwise defined herein have the meaning ascribed thereto in the Registration Rights Agreement.

To sell or otherwise dispose of any Transfer Restricted Securities pursuant to the Shelf Registration Statement, a beneficial owner of Transfer Restricted Securities generally will be required to be named as a selling securityholder in the related Prospectus, deliver a Prospectus to purchasers of Transfer Restricted Securities, be subject to certain civil liability provisions of the Securities Act and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification rights and obligations, as described below). To be included in the Shelf Registration Statement, this Election and Questionnaire must be completed, executed and delivered to the Company at the address set forth herein for receipt prior to or on the 20th business day from the receipt hereof (the “Election and Questionnaire Deadline”).  Beneficial Owners that do not complete and return this Election and Questionnaire prior to the Election and Questionnaire Deadline and deliver it to the Company as provided below will not be named as Selling Securityholders in the Shelf Registration Statement and therefore will not be permitted to sell any Trnasfer Restricted Securities pursuant to the Shelf Registration Statement.

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related Prospectus. Accordingly, holders and beneficial owners of Transfer Restricted Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and the related Prospectus.

A-1

ELECTION

The undersigned holder (the “Selling Securityholder”) of Transfer Restricted Securities hereby elects to include in the Shelf Registration Statement the Transfer Restricted Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3). The undersigned, by signing and returning this Election and Questionnaire, understands that it will be bound with respect to such Transfer Restricted Securities by the terms and conditions of this Election and Questionnaire and the Registration Rights Agreement.

Pursuant to the Registration Rights Agreement, the Selling Securityholder has agreed to indemnify and hold harmless the Company, the Company’s directors, the Company’s officers, employees, representatives and agents who sign the Shelf Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against certain losses arising in connection with statements concerning the Selling Securityholder made in the Shelf Registration Statement or the related Prospectus in reliance upon the information provided in this Election and Questionnaire.

The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

QUESTIONNAIRE

1.        (a)       Full Legal Name of Selling Securityholder:

(b)      Full legal name of registered holder (if not the same as (a) above) through which Transfer Restricted Securities listed in (3) below are held:

(c)       Full legal name of DTC participant (if applicable and if not the same as (b) above) through which Transfer Restricted Securities listed in (3) are held:

2.        Address for notices to Selling Securityholders:

Telephone:	Fax:
Contact Person:

A-2

3.          Beneficial ownership of Transfer Restricted Securities:

(a)        Type of Transfer Restricted Securities beneficially owned, and principal amount of Notes or Number of shares of Common Stock, as the case may be, beneficially owned:

(b)        CUSIP No(s). of such Transfer Restricted Securities beneficially owned:

4.          Beneficial ownership of the Company’s securities owned by the Selling Securityholder:

EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS NOT THE BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER THAN THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3) (“Other Securities”).

(a)        Type and amount of Other Securities beneficially owned by the Selling Securityholder:

(b)        CUSIP No(s). of such Other Securities beneficially owned:

5.          Relationship with the Company

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or their predecessors or affiliates) during the past three years.

State any exceptions here:

6.          Plan of Distribution:

Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Transfer Restricted Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows (if at all). Such Transfer Restricted Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters, broker-dealers or agents. If the Transfer Restricted Securities are sold through underwriters or broker-dealers, the Selling Securityholder will be responsible for underwriting discounts or commissions or agent’s commissions. Such Transfer Restricted Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions):

A-3

(i)         on any national securities exchange or quotation service on which the Transfer Restricted Securities may be listed or quoted at the time of sale;

(ii)        in the over-the-counter market;

(iii)       in transactions otherwise than on such exchanges or services or in the over-the-counter market; or

(iv)       through the writing of options.

In connection with sales of the Transfer Restricted Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Transfer Restricted Securities and deliver Transfer Restricted Securities to close out such short positions, or loan or pledge Transfer Restricted Securities to broker-dealers that in turn may sell such securities. State any exceptions here:

Note: In no event will such method(s) of distribution take the form of an underwritten offering of the Transfer Restricted Securities without the prior agreement of the Company.

By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees it will comply, with the provisions of the prospectus delivery and other provisions of the Securities Act and Exchange Act and the respective rules and regulations promulgated thereunder, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Transfer Restricted Securities pursuant to the Shelf Registration Statement.

If the Selling Securityholder transfers all or any portion of the Transfer Restricted Securities listed in Item 3 above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Election and Questionnaire and the Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and the related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related Prospectus.

In accordance with the Selling Securityholder’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices

A-4

hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below.

Once this Election and Questionnaire is executed by the Selling Securityholders and received by the Company, the terms of this Election and Questionnaire and the representations and warranties contained herein shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the Selling Securityholder with respect to the Transfer Restricted Securities beneficially owned by such Selling Securityholder and listed in Item 3 above. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Election and Questionnaire to be executed and delivered either in person or by its authorized agent.

Dated:
	Beneficial Owner
	By:
		Name:
		Title:

Please return the completed and executed Election and Questionnaire for receipt PRIOR TO OR ON THE 20TH BUSINESS DAY FROM RECEIPT HEREOF to Evergreen Resources, Inc. at:

Evergreen Resources, Inc.

1401 17th Street

Suite 1200

Denver, Colorado 80202

Attention:  Chief Financial Officer

A-5

EXHIBIT 1 TO ANNEX A

NOTICE TO TRANSFER PURSUANT
TO REGISTRATION STATEMENT

Evergreen Resources, Inc.

1401 17th Street

Suite 1200

Denver, Colorado  80202

First Union National Bank

Corporate Trust

5847 San Felipe, Suite 1050

Houston, Texas 77057

Attention: Institutional Trust Services

Re:Evergreen Resources, Inc.’s
4.75% Senior Convertible Notes due 2021 (the “Notes”)

Dear Sirs:

Please be advised that __________ has transferred $_________ aggregate principal amount of the above-referenced Notes or ____________________________ shares of the Company’s Common Stock issued on conversion or repurchase of Notes, pursuant to the Registration Statement on Form S-3 (File No. 333- __________ ) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied with respect to the transfer described above and that the above named beneficial owner of the Notes or Common Stock is named as a selling securityholder in the Prospectus dated _____________________ , or in amendments or supplements thereto, and that the aggregate principal amount of the Notes or number of shares of Common Stock transferred are [all or a portion of] the Notes or Common Stock listed in such Prospectus, as amended or supplemented, opposite such owner’s name.

	Very truly yours,
	[name]
	By:
		(Authorized signature)
Dated:

A-6

EX-22.0

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 22.0

[NSA LETTERHEAD]

January 31, 2001

Mr. Mark S. Sexton
Evergreen Resources, Inc.
1401 Seventeenth Street, Suite 1200
Denver, Colorado 80202

Dear Mr. Sexton:

        In accordance with your request, we have audited the estimates prepared by Evergreen Resources, Inc. (Evergreen), as of December 31, 2001, of the proved reserves and future net revenue to the Evergreen interest in certain oil and gas properties located in the Raton Basin, Las Animas County, Colorado. These estimates are based on constant prices and costs in accordance with Securities and Exchange Commission (SEC) guidelines. The following table sets forth Evergreen's estimates of the proved reserves and future net revenue, as of December 31, 2001, for the audited properties:

		Net Reserves		Future Net Revenue (M$)
Category		Condensate (MBBL)	Gas (MMCF)	Total	Present Worth at 10%
Proved Developed		0.0	684,166.6	926,222.0	475,374.9
Proved Undeveloped		0.0	366,476.9	410,080.2	123,087.0
	Total Proved(1)	0.0	1,050,643.0	1,336,302.0	598,461.8

(1)

Totals may not add due to rounding.

        Gas volumes are expressed in millions of standard cubic feet (MMCF) at the contract temperature and pressure bases. These properties have never produced commercial volumes of condensate.

        When compared on a property-by-property basis, some of the estimates of Evergreen are greater and some are lesser than the estimates of Netherland, Sewell & Associates, Inc.; however, in our opinion, Evergreen's estimates of net proved oil and gas reserves and future net revenue, as shown herein and in certain computer printouts on file in our office, are in the aggregate reasonable and have been prepared in accordance with generally accepted petroleum engineering and evaluation principles. These principles are set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserve Information promulgated by the Society of Petroleum Engineers. We are satisfied with the methods and procedures utilized by Evergreen in preparing the December 31, 2001 reserve and future revenue estimates, and we saw nothing of an unusual nature that would cause us to take exception with the estimates, in the aggregate, as prepared by Evergreen.

        The estimated reserves and future revenue shown herein are for proved developed and proved undeveloped reserves. Evergreen's estimates do not include value for probable or possible reserves which may exist for these properties, nor do they include any consideration of undeveloped acreage beyond those tracts for which undeveloped reserves have been estimated.

        The gas price used by Evergreen is based on an Oklahoma PEPL spot market price of $2.52 per MMBTU, in effect for flow on December 31, 2001. This price is adjusted for fuel usage, regional price differentials, and BTU content and is held constant in accordance with SEC guidelines. Gas prices are also adjusted to reflect existing hedges during 2002 and a portion of 2003. Lease and well operating costs used by Evergreen are based on historical operating expense records. These costs include direct lease and field level costs of $1,190 per well per month and gathering and transportation fees totaling $0.43 per net MCF. Overhead expenses above the field level, along with headquarters general and administrative overhead expenses of Evergreen are not included. The lease and well operating costs

were held constant for the remaining life of the properties in accordance with SEC guidelines. Evergreen's estimates of capital costs are included as required for workovers, new development wells, and production equipment.

        It should be understood that our audit does not constitute a complete reserve study of Evergreen's oil and gas properties. Our audit consisted of a detailed review of properties making up 100 percent of the present worth for the total proved reserves. In our audit, we accepted without independent verification the accuracy and completeness of the historical information and data furnished by Evergreen with respect to ownership interest, oil and gas production, well test data, oil and gas prices, operating and development costs, and any agreements relating to current and future operations of the properties and sales of production. However, if in the course of our examination something came to our attention which brought into question the validity or sufficiency of any such information or data, we did not rely on such information or data until we had satisfactorily resolved our questions relating thereto or had independently verified such information or data.

        We are independent petroleum engineers, geologists, and geophysicists with respect to Evergreen Resources, Inc. as provided in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserve Information promulgated by the Society of Petroleum Engineers. We do not own an interest in these properties and are not employed on a contingent basis.

Very truly yours,

/s/ FREDERIC D. SEWELL

DDS:PJA

Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.

QuickLinks

Exhibit 22.0

EX-23.0

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 23.0

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Evergreen Resources, Inc.
1401 17th Street, Suite 1200
Denver, Colorado 80202

        We hereby consent to the incorporation by reference in the Prospectus constituting a part of the Registration Statements on Form S-8 (Files No. 333-48138 and No. 333-92831) of our report dated February 15, 2002, relating to the Consolidated Financial Statements of Evergreen Resources, Inc. appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

/s/ BDO SEIDMAN, LLP

Denver, Colorado
March 4, 2002

QuickLinks

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS