Document:

Exhibit

INTERCREDITOR AGREEMENT 
 
dated as of 
 
December 15, 2017 
 
among 
 
SilverBow Resources, Inc.,
as Borrower,

each of the other GRANTORS party hereto, 
 
JPMorgan Chase Bank, N.A.,
 as First Lien Administrative Agent,
 
and
 
U.S. Bank National Association, 
as Second Lien Collateral Agent

 
 
 
 
THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN THE LOAN DOCUMENTS REFERRED TO HEREIN.

TABLE OF CONTENTS
		
	ARTICLE I DEFINITIONS
	2

		
	Section 1.01
	Certain Defined Terms    2

		
	Section 1.02
	Other Defined Terms    2

		
	Section 1.03
	Terms Generally    12

		
	ARTICLE II LIEN PRIORITIES
	13

		
	Section 2.01
	Relative Priorities    13

		
	Section 2.02
	Prohibition on Contesting Liens    13

		
	Section 2.03
	No New Liens    14

		
	Section 2.04
	Similar Liens and Agreements    14

		
	Section 2.05
	Judgment Creditors    15

		
	Section 2.06
	Perfection of Liens    15

		
	Section 2.07
	No Debt Subordination    15

		
	ARTICLE III ENFORCEMENT OF RIGHTS; MATTERS RELATING TO COLLATERAL
	15

		
	Section 3.01
	Exercise of Rights and Remedies    15

		
	Section 3.02
	No Interference    19

		
	Section 3.03
	Rights as Unsecured Creditors    21

		
	Section 3.04
	Automatic Release of Second Priority Liens    21

		
	Section 3.05
	Notice of Exercise of Second Liens    22

		
	Section 3.06
	Insurance and Condemnation Awards    23

		
	ARTICLE IV PAYMENTS
	23

		
	Section 4.01
	Application of Proceeds    23

		
	Section 4.02
	Payment Over    23

		
	Section 4.03
	Certain Agreements with Respect to Unenforceable 

Liens    24
		
	ARTICLE V BAILMENT
	25

		
	Section 5.01
	Bailment for Perfection of Certain Security Interests    25

		
	Section 5.02
	Bailment for Perfection of Certain Security Interests – Other Control Collateral (Second Liens)    26

		
	ARTICLE VI INSOLVENCY PROCEEDINGS
	27

		
	Section 6.01
	Finance and Sale Matters    27

		
	Section 6.02
	Relief from the Automatic Stay    30

		
	Section 6.03
	Reorganization Securities    30

		
	Section 6.04
	Post-Petition Interest    30

		
	Section 6.05
	Certain Waivers by the Second Lien Secured Parties    31

		
	Section 6.06
	Certain Voting Matters    31

		
	Section 6.07
	Separate Grants of Security and Separate Classification    31

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	ARTICLE VII OTHER AGREEMENTS
	32

		
	Section 7.01
	Matters Relating to Loan Documents    32

		
	Section 7.02
	Effect of Refinancing of Indebtedness    34

		
	Section 7.03
	No Waiver by First Lien Secured Parties    35

		
	Section 7.04
	Reinstatement    35

		
	Section 7.05
	Further Assurances    36

		
	Section 7.06
	Notice of Exercise of Remedies    36

		
	ARTICLE VIII REPRESENTATIONS AND WARRANTIES
	36

		
	Section 8.01
	Representations and Warranties of Each Party    36

		
	Section 8.02
	Representations and Warranties of First Lien Administrative Agent and Second Lien Collateral Agent    37

ARTICLE IX NO RELIANCE; NO LIABILITY; OBLIGATIONS 
		
	ABSOLUTE 
	37

		
	Section 9.01
	No Reliance; Information    37

		
	Section 9.02
	No Warranties or Liability    38

		
	Section 9.03
	Obligations Absoluate    38

		
	ARTICLE X MISCELLANEOUS
	39

		
	Section 10.01
	Notices    39

		
	Section 10.02
	Conflicts    41

		
	Section 10.03
	Effectiveness; Survival    41

		
	Section 10.04
	Severability    41

		
	Section 10.05
	Amendments; Waivers    41

		
	Section 10.06
	Subrogation    42

		
	Section 10.07
	Applicable Law; Jurisdiction; Consent to Service of Process    42

		
	Section 10.08
	Waiver of Jury Trial    42

		
	Section 10.09
	Parties in Interest    43

		
	Section 10.10
	Specific Performance    43

		
	Section 10.11
	Headings    43

		
	Section 10.12
	Counterparts    43

		
	Section 10.13
	Provisions Solely to Define Relative Rights    43

		
	Section 10.14
	Sharing of Information    44

		
	Section 10.15
	Agents    44

		
	Section 10.16
	No Indirect Actions    44

		
	Annex I 
	Provisions for the Second Lien Note Purchase Agreement and Certain Second Lien Collateral Documents

		
	Annex II 
	Form of Assumption Agreement

-ii-

INTERCREDITOR AGREEMENT dated as of December 15, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), among SilverBow Resources, Inc. (f/k/a Swift Energy Company), a Delaware corporation (the “Borrower”), each of the undersigned Grantors (as defined below), JPMorgan Chase Bank, N.A., as agent for the First Lien Secured Parties (as defined below) (in such capacity, together with its successors and assigns in such capacity, the “First Lien Administrative Agent”) and U.S. Bank National Association, in its capacity as “Agent” under the Second Lien Note Purchase Agreement (as defined below) for the Second Lien Secured Parties (as defined below) (in such capacity, together with its successors and assigns in such capacity, the “Second Lien Collateral Agent”).
PRELIMINARY STATEMENT
Reference is made to (a) the First Amended and Restated Credit Agreement dated as April 19, 2017 (as amended, restated, amended and restated, supplemented, modified or Refinanced from time to time in accordance with the terms of this Agreement, the “First Lien Credit Agreement”), among the Borrower, the lenders from time to time party thereto (the “First Lien Lenders”) and the First Lien Administrative Agent, (b) the Note Purchase Agreement dated as of even date hereof (as amended, restated, amended and restated, supplemented, modified or Refinanced from time to time in accordance with the terms of this Agreement, the “Second Lien Note Purchase Agreement”), by and among the Borrower, holders from time to time party thereto and the Second Lien Collateral Agent, and (c) the Security Documents referred to in the First Lien Credit Agreement and the Second Lien Note Purchase Agreement.
RECITALS
A.    Pursuant to (i) the First Lien Credit Agreement, the Borrower and certain of its Subsidiaries entered, and agreed to cause certain current and future Subsidiaries to enter, into (A) the First Amended and Restated Guaranty and Collateral Agreement, dated as of April 19, 2017 (as may be amended, restated, amended and restated, supplements or otherwise modified from time to time) to guarantee the First Lien Secured Obligations and grant a security interest in favor of the First Lien Administrative Agent to secure such obligations and (B) certain other First Lien Security Documents, including mortgages, to secure such First Lien Secured Obligations and (ii) the Second Lien Note Purchase Agreement, the Borrower and certain of its Subsidiaries are entering into, and agreed to cause certain current and future Subsidiaries to enter into, (A) the Second Lien Guaranty and Collateral Agreement (as may be amended, restated, amended and restated, supplements or otherwise modified from time to time), dated as of the date hereof, to guarantee the Second Lien Secured Obligations and grant a security interest in favor of the Second Lien Collateral Agent to secure such obligations and (B) certain other Second Lien Security Documents, including mortgages, to secure such Second Lien Secured Obligations;
B.    The obligations of (i) the Borrower under the First Lien Credit Agreement, (ii) the Borrower and/or any Guarantor under any Swap Agreements with Secured Swap 

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Providers, (iii) the Borrower and/or any Guarantor with respect to any Cash Management Agreements entered into with any Secured Cash Management Bank and (iv) any guarantees of the Borrower and the other Guarantors under the First Lien Security Documents will be secured on a first lien priority basis by security interests and liens granted by the Borrower and each Grantor on the Collateral, pursuant to the terms of the First Lien Security Documents;
C.    The obligations of the Borrower under the Second Lien Note Purchase Agreement and the guarantees of the Guarantors under the Second Lien Collateral Documents will be secured on a second lien priority basis by security interests and liens granted by the Borrower and each Grantor on the Collateral, pursuant to the terms of the Second Lien Collateral Documents;
D.    The First Lien Loan Documents (as defined below) and the Second Lien Note Documents (as defined below) provide, among other things, that the parties thereto shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and
E.    In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the First Lien Administrative Agent (on behalf of each First Lien Secured Party) and the Second Lien Collateral Agent (on behalf of each Second Lien Secured Party), intending to be legally bound, hereby agrees as follows:
ARTICLE I 
 
DEFINITIONS
Section 1.01    Certain Defined Terms. Terms defined above shall have the meanings ascribed to them. Unless otherwise indicated, capitalized terms used but not defined herein shall have the meaning given such terms in the First Lien Credit Agreement as in effect as of the date hereof; and, if not defined therein, such terms shall have the meaning given such terms in the Second Lien Note Purchase Agreement as in effect as of the date hereof. As used in this Agreement, the following terms shall have the following meanings:
Section 1.02    Other Defined Terms. As used in the Agreement, the following terms shall have the meanings specified below: 
“Additional First Lien Administrative Agent” shall have the meaning assigned to such term in Section 7.02(a).
“Additional First Lien Loan Documents” shall have the meaning assigned to such term in Section 7.02(a).
“Additional First Lien Obligations” shall have the meaning assigned to such term in Section 7.02(a).

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“Additional Second Lien Collateral Agent” shall have the meaning assigned to such term in Section 7.02(b).
“Additional Second Lien Note Documents” shall have the meaning assigned to such term in Section 7.02(b).
“Additional Second Lien Obligations” shall have the meaning assigned to such term in Section 7.02(b).
“Affiliate” shall have the meaning assigned to such term in the First Lien Credit Agreement on the date hereof.
“Agreement” shall have the meaning assigned to such term in the preamble to this Agreement.
“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now and hereinafter in effect, or any successor statute.
“Bankruptcy Law” shall mean the Bankruptcy Code and any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law.
“Borrower” shall have the meaning assigned to such term in the preamble to this Agreement.
“Borrowing Base” shall mean, at any time, the US Dollar amount determined to be the “Borrowing Base” in accordance with the terms of the First Lien Credit Agreement, including any redetermination or adjustment thereof in accordance with the terms of the First Lien Credit Agreement.
“Borrowing Base Deficiency” shall mean, as of any date of determination, the US Dollar amount determined to be the “Borrowing Base Deficiency” in accordance with the terms of the First Lien Credit Agreement.
“Borrowing Base Deficiency Advances” shall mean, at any time of determination, and in each case calculated for the period from and including the first date on which the then-existing Borrowing Base Deficiency was created through and including such time of determination, the sum of (a)(i) the principal amount of any loans advanced and (ii) the face amount of any letters of credit (other than any extension or renewal of outstanding letters of credit in amounts not exceeding the outstanding face amounts) being issued, as the case may be, under the First Lien Credit Agreement while a Borrowing Base Deficiency exists and (b)(i) the principal amount of any loans advanced and (ii) the face amount of any letters of credit issued under the First Lien Credit Agreement to the extent advancing such loans or issuing such letters of credit (other than any extensions or renewal of outstanding letters of credit in amounts not exceeding the outstanding face amounts) would cause a Borrowing Base Deficiency (it being understood that, for purposes of this clause (b) only the portion 

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of such loans or letters of credit in excess of the Borrowing Base shall be included in such calculation).
“Business Day” shall mean each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York, Houston, Texas, or in the place of payment are authorized or required by law to close.
“Cash Management Agreement” shall mean means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.
“Collateral” shall mean, collectively, the First Lien Collateral and the Second Lien Collateral. 
“Conforming Borrowing Base” shall mean, at any time, the US Dollar amount that would constitute the borrowing base under a Conforming Borrowing Base Facility under the First Lien Credit Agreement at such time (it being understood that a borrowing base amount determined in accordance with Section 2.07 of the First Lien Credit Agreement as in effect on the date hereof would cause the Borrowing Base and Conforming Borrowing Base to be equivalent numbers).
“Conforming Borrowing Base Deficiency” shall mean, at any time, the greater of (a) $0.00 and (b) the amount equal to (i) the First Lien Capped Obligations at such time minus (ii) the Conforming Borrowing Base at such time.  
“Conforming Borrowing Base Facility” shall mean, with respect to a First Lien Credit Agreement, at any time of determination, that the amount of First Lien Capped Obligations is subject to a conforming commercial banking borrowing base for oil and gas secured loan transactions, as determined by the First Lien Lenders, in accordance with their customary oil and gas lending criteria as they exist at such time and in accordance with the First Lien Credit Agreement, including customary mechanisms for periodic redeterminations of, and adjustments to, such borrowing base.
“Defaulting First Lien Secured Party” shall have the meaning assigned to such term in Section 3.01(e).
“Defaulting First Lien Secured Party Obligation” shall mean, as of any date of determination and with respect to any Defaulting First Lien Secured Party, any First Lien Secured Obligations of such Defaulting First Lien Secured Party as of such date.
“DIP Financing” shall have the meaning assigned to such term in Section 6.01(a)(ii).
“DIP Financing Liens” shall have the meaning assigned to such term in Section 6.01(a)(ii).

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“DIP Purchase Price” shall have the meaning assigned to such term in Section 6.01(b)(i).
“Discharge of Excess First Lien Obligations” shall mean, subject to Section 7.02 and Section 7.04, (a) the Discharge of First Lien Obligations has occurred, (b) payment in full in cash of the principal of and interest (including interest accruing during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding), expenses (including all legal fees) and premium, if any, on all Indebtedness outstanding under the First Lien Loan Documents constituting Excess First Lien Obligations and (c) payment in full of all other First Lien Capped Obligations constituting Excess First Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made).
“Discharge of First Lien Obligations” shall mean, subject to Section 7.02 and Section 7.04:
(a)    payment in full in cash of the principal of and interest (including interest accruing during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding) and expenses (including all legal fees) on all First Lien Secured Obligations outstanding under the First Lien Loan Documents and constituting First Lien Obligations;
(b)    payment in full in cash of all other First Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made);
(c)    cancellation of or the entry into arrangements reasonably satisfactory to the First Lien Administrative Agent and each LC Issuer with respect to all letters of credit issued and outstanding under the First Lien Credit Agreement and constituting First Lien Obligations (it being understood that the cash collateralization of such letters of credit in an amount equal to 105% of the face amount thereof shall be deemed satisfactory);
(d)    payment of the aggregate Swap Termination Value of all Secured Swap Agreements and all related fees, expenses and other amounts owed to the holders of the Secured Swap Obligations in connection therewith (or, with respect to any particular Secured Swap Agreement, such other arrangements as have been made by the Borrower and the applicable counterparty which is a party to such Secured Swap Agreement (and communicated to the First Lien Administrative Agent) as provided in the First Lien Credit Agreement);
(e)    termination, assignment, novation, or collateralization of all Secured Cash Management Obligations and other obligations associated therewith on terms satisfactory to the applicable Secured Cash Management Bank in its sole discretion and consistent with the respective Cash Management Agreement related thereto; and 

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(f)    termination or expiration of all commitments to lend and all obligations to issue or extend letters of credit under the First Lien Credit Agreement.
“Discharge of First Lien Non-Excluded Obligations” has the same meaning as “Discharge of First Lien Obligations” except that all references to “First Lien Obligations” in the definition of “Discharge of First Lien Obligations” shall be deemed for purposes of this definition to be references to “First Lien Obligations (other than Defaulting First Lien Secured Party Obligations)”.
“Discharge of Second Lien Obligations” shall mean, subject to Section 7.02 and Section 7.04, (a) payment in full in cash of the principal of and interest (including interest accruing during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding), expenses (including all legal fees) and premium, if any, on all Second Lien Secured Obligations outstanding under the Second Lien Note Documents and constituting Second Lien Obligations and (b) payment in full in cash of all other Second Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made). 
“Disposition” shall mean any sale, lease, exchange, transfer or other disposition. “Dispose” shall have a correlative meaning.
“Dollars” and the sign “$” shall mean the lawful money of the United States of America.
“Enforcement Action” shall mean any action to:
(a)    foreclose, execute, levy, or collect on, take possession or control of, sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral under the First Lien Loan Documents or the Second Lien Note Documents (including by way of setoff, recoupment, notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under landlord consents, if applicable);
(b)    solicit bids from third Persons, approve bid procedures for any proposed disposition of Collateral, to conduct the liquidation or disposition of Collateral or engage or retain sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third Persons for the purposes of marketing, promoting, and selling Collateral, in each case under the First Lien Loan Documents or the Second Lien Note Documents;
(c)    exercise remedies to cause a transfer of Collateral in satisfaction of any obligations secured thereby;

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(d)    otherwise enforce a security interest or exercise a remedy, as a secured creditor or pursuant to the First Lien Loan Documents or the Second Lien Note Documents (including the commencement of applicable legal proceedings or other actions with respect to all or any portion of the Collateral to facilitate the actions described in the preceding clauses and exercising voting rights in respect of equity interests comprising Collateral); or
(e)    Dispose of Collateral by any Grantor after the occurrence and during the continuation of an event of default under any Loan Document to satisfy a requirement to Dispose of Collateral imposed upon the Grantor by any First Lien Secured Party or Second Lien Secured Party, as applicable, in connection with any waiver or forbearance relating to such event of default in either case with the consent of First Lien Administrative Agent or the Second Lien Collateral Agent, as applicable.
“Excess First Lien Obligations” shall mean any obligations that would constitute First Lien Obligations if not for clause (c) of the definition of First Lien Obligations.
“Excluded First Lien Obligations” shall mean, with respect to the First Lien Secured Obligations, (a) the Excess First Lien Obligations, (b) Defaulting First Lien Secured Party Obligations of all Defaulting First Lien Secured Parties and (c) and any indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made.
“First Lien Administrative Agent” shall have the meaning assigned to such term in the preamble of this Agreement.
“First Lien Cap Amount” shall mean, at any time, in respect of First Lien Secured Obligations constituting First Lien Capped Obligations, an amount equal to the lesser of:
(a)    the sum of (i) the Borrowing Base under the First Lien Credit Agreement in effect at such time plus (ii) an amount equal to (A) the Borrowing Base Deficiency under the First Lien Credit Agreement, if any, at such time minus (B) the Borrowing Base Deficiency Advances, if any, at such time; provided that in no event shall such difference calculated under this clause (a)(ii) be less than $0.00; and
(b)    the sum of (i) the Conforming Borrowing Base at such time plus (ii) the amount equal to (A) the Conforming Borrowing Base Deficiency at such time minus (B) the Non-Conforming Advances, if any, at such time; provided that in no event shall such difference calculated under this clause (b)(ii) be less than $0.00.
For the avoidance of doubt, the calculation of the “First Lien Cap Amount” refers only to the First Lien Capped Obligations and does not include obligations in respect of Secured Swap Agreements, Cash Management Agreements or any other liability constituting a part of the First Lien Obligations.
“First Lien Capped Obligations” shall mean the outstanding principal balance of loans extended pursuant to the First Lien Loan Documents and the face amount of 

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outstanding letters of credit under the First Lien Loan Documents (including, without duplication, unreimbursed letter of credit obligations outstanding under the First Lien Loan Documents).
“First Lien Collateral” shall mean all Property of any Grantor, whether real, personal or mixed, now or at any time hereafter subject to Liens securing any First Lien Secured Obligations. 
“First Lien Credit Agreement” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“First Lien Lenders” shall have the meaning assigned to such term in the preliminary statement of this Agreement.
“First Lien Loan Documents” shall mean the “Loan Documents”, as defined in the First Lien Credit Agreement.
“First Lien Obligations” shall mean, subject to clause (c) hereof, the following:
(a)    all First Lien Secured Obligations and other obligations outstanding under, and all other obligations in respect of, the First Lien Credit Agreement, the other First Lien Loan Documents, each Secured Swap Agreement and each Cash Management Agreement;
(b)    to the extent any payment with respect to any First Lien Secured Obligation (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any Second Lien Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Lien Secured Parties and the Second Lien Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent that any interest, fees, expenses or other charges (including post-petition interest) to be paid pursuant to the First Lien Loan Documents are disallowed, disgorged or recharacterized by order of any court, including by order of a court of competent jurisdiction presiding over an Insolvency Proceeding, such interest, fees, expenses and charges (including post-petition interest) shall, as between the First Lien Secured Parties and the Second Lien Secured Parties, be deemed to continue to accrue and be added to the amount to be calculated as the “First Lien Obligations”; and 
(c)    notwithstanding the foregoing (but solely for purposes of defining the respective rights and obligations between the First Lien Secured Parties and the Second Lien Secured Parties under this Agreement), if the sum of the First Lien Capped Obligations is in excess of the First Lien Cap Amount, then only that portion of the First Lien Capped Obligations equal to the First Lien Cap Amount shall be included in First Lien Obligations, and interest, fees, reimbursement obligations and other amounts with respect to such First 

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Lien Capped Obligations shall constitute and be entitled to the benefits accorded to First Lien Obligations only to the extent related to First Lien Capped Obligations so included in the First Lien Obligations. First Lien Capped Obligations in excess of the First Lien Cap Amount and all interest, fees and other obligations related to such excess shall constitute Excess First Lien Obligations under this Agreement. Nothing in this clause (c) shall apply to, impair or have any effect whatsoever on, the obligations of the Borrower or any other Grantor owing to (x) the First Lien Secured Parties under the First Lien Loan Documents or (y) to the Second Lien Secured Parties under the Second Lien Note Documents.
“First Lien Refinancing Notice” shall have the meaning assigned to such term in Section 7.02(a).
“First Lien Required Lenders” shall mean the “Required Lenders”, as defined in the First Lien Credit Agreement.
“First Lien Secured Obligations” shall mean the “Secured Obligations” as defined in the First Lien Credit Agreement.
“First Lien Secured Parties” shall mean, at any time, the “Secured Parties” as defined in the First Lien Credit Agreement and, if applicable, the Additional First Lien Loan Documents.
“First Lien Security Documents” shall mean the “Security Instruments”, as defined in the First Lien Credit Agreement.
“First Priority Liens” shall mean all Liens on the First Lien Collateral securing the First Lien Obligations, including any judgment lien.
“Grantors” shall mean (a) the Borrower, (b) each other Person that shall have created or purported to create any Lien on all or any part of its Property to secure any First Lien Secured Obligations or Second Lien Secured Obligations, (c) each other Person that shall have provided a guaranty or other similar credit support for either the First Lien Secured Obligations or the Second Lien Secured Obligations and (d) each other Person that executes and delivers an assumption agreement pursuant to Section 7.05.
“Guarantors” shall mean, collectively, each Person that has guaranteed, or that from time to time hereafter guarantees, the First Lien Secured Obligations or the Second Lien Secured Obligations.
“Insolvency Proceeding” shall mean:
(a)    any voluntary or involuntary proceeding under the Bankruptcy Code or any other Bankruptcy Law with respect to any Grantor;
(b)    any voluntary or involuntary appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Grantor or for a substantial part of the Property of any Grantor;

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(c)    any voluntary or involuntary winding-up or liquidation of any Grantor; or
(d)    a general assignment for the benefit of creditors by any Grantor.
“Lien” shall mean any interest in Property securing an obligation owed to, or securing a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge, charge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable out of Oil and Gas Properties. The term “Lien” shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations granted to secure or evidence any such obligation or claim. For the purposes of this Agreement, a Grantor shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.
“Loan Documents” shall mean, collectively, the First Lien Loan Documents and the Second Lien Note Documents.
“Non-Conforming Advances” shall mean, at any time of determination, and in each case calculated for the period from and including the first date on which the then-existing Conforming Borrowing Base Deficiency was created through and including such time of determination, the sum of (a)(i) the principal amount of any loans advanced and (ii) the face amount of any letters of credit (other than any extensions or renewals of outstanding letters of credit in amounts not exceeding the outstanding face amounts) being issued, as the case may be, under the First Lien Credit Agreement while a Conforming Borrowing Base Deficiency exists and (b)(i) the principal amount of any loans advanced and (ii) the face amount of any letters of credit issued under the First Lien Credit Agreement to the extent advancing such loans or issuing such letters of credit (other than any extensions or renewals of outstanding letters of credit in amounts not exceeding the outstanding face amounts) would cause a Conforming Borrowing Base Deficiency (it being understood that, for purposes of this clause (b) only the portion of such loans or letters of credit in excess of the Conforming Borrowing Base shall be included in such calculation).
“Oil and Gas Properties” shall have the meaning assigned to such term in the First Lien Credit Agreement on the date hereof.
“Other Pledged or Controlled Collateral” shall have the meaning assigned to such term in Section 5.02.
“Person” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. 

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“Pledged or Controlled Collateral” shall have the meaning assigned to such term in Section 5.01.
“Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including cash, securities, accounts and contract rights.
“Refinance” shall mean, in respect of any Secured Obligations, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other Debt in exchange or replacement for, such Secured Obligations in whole or in part, regardless of whether the principal amount of such Refinancing Indebtedness is the same, greater than or less than the principal amount of the Refinanced Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
“Refinancing Indebtedness” shall mean indebtedness that Refinances First Lien Secured Obligations or Second Lien Secured Obligations pursuant to Article VII.
“Release” shall have the meaning assigned to such term in Section 3.04.
“Second Lien Collateral” shall mean all Property of any Grantor, whether real, personal or mixed, now or at any time hereafter subject to Liens securing any Second Lien Secured Obligations.
“Second Lien Collateral Agent” shall have the meaning assigned to such term in the preamble to this Agreement.
“Second Lien Collateral Documents” shall mean, collectively, the “Collateral Documents” as defined in the Second Lien Note Purchase Agreement.
“Second Lien Note Documents” shall mean, collectively, the “Note Documents”, as defined in the Second Lien Note Purchase Agreement.
“Second Lien Note Purchase Agreement” shall have the meaning assigned to such term in the preliminary statement to this Agreement.
“Second Lien Obligations” shall mean the following:
(a)    all Second Lien Secured Obligations and other obligations outstanding under, and all other obligations in respect of, the Second Lien Note Documents; and
(b)    to the extent any payment with respect to any Second Lien Secured Obligation (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Lien Secured 

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Parties and the Second Lien Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent that any interest, fees, expenses or other charges (including post-petition interest) to be paid pursuant to the Second Lien Note Documents are disallowed by order of any court, including by order of a court of competent jurisdiction presiding over an Insolvency Proceeding, such interest, fees, expenses and charges (including post-petition interest) shall, as between the First Lien Secured Parties and the Second Lien Secured Parties, be deemed to continue to accrue and be added to the amount to be calculated as the “Second Lien Obligations”.
“Second Lien Permitted Actions” shall have the meaning assigned to such term in Section 3.01(a).
“Second Lien Purchasers” shall have the meaning assigned to such term in Section 3.01(d).
“Second Lien Refinancing Notice” shall have the meaning assigned to such term in Section 7.02(b). 
“Second Lien Required Holders” shall mean the “Required Holders” (as defined in the Second Lien Note Purchase Agreement). 
“Second Lien Secured Obligations” shall collectively mean the “Obligations” (as defined in the Second Lien Note Purchase Agreement).
“Second Lien Secured Parties” shall mean, at any time, the “Agent” and the “Secured Parties” (each as defined in the Second Lien Note Documents).
“Second Priority Liens” shall mean all Liens on the Second Lien Collateral securing the Second Lien Obligations, including any judgment lien.
“Secured Cash Management Bank” means any First Lien Lender or any Affiliate of a First Lien Lender that is a counterparty to a Cash Management Agreement with the Borrower or any other Subsidiary. 
“Secured Cash Management Obligations” shall mean any First Lien Secured Obligations arising from time to time under any Cash Management Agreement with a Secured Cash Management Bank .
“Secured Obligations” means the First Lien Secured Obligations and the Second Lien Secured Obligations.
“Secured Swap Agreement” means each Swap Agreement between the Borrower or any Guarantor with any Secured Swap Provider.
“Secured Swap Obligations” means any First Lien Secured Obligations arising under any Secured Swap Agreement.

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“Secured Swap Provider” means any (a) Person that is a party to a Swap Agreement with the Borrower or any Guarantor that entered into such Swap Agreement before or while such Person was a First Lien Lender or an Affiliate of a First Lien Lender, whether or not such Person at any time ceases to be a First Lien Lender or an Affiliate of a First Lien Lender, as the case may be, or (b) assignee of any Person described in clause (a) above so long as such assignee is a First Lien Lender or an Affiliate of a First Lien Lender.
“Security Documents” shall mean the First Lien Security Documents and the Second Lien Collateral Documents.
“Standstill Period” shall have the meaning assigned to such term in Section 3.02(a).
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or its Subsidiaries shall be a Swap Agreement.
“Swap Termination Value” shall mean, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and any unpaid amounts and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such Swap Agreements.
“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in any applicable jurisdiction.
Section 1.03    Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise:
(a)    any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restriction or consent requirements with respect to, such amendments, supplements or modifications set forth herein or in any Loan Documents), 

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(b)    any reference herein (i) to any Person shall be construed to include such Person’s successors and assigns and (ii) to the Borrower or any other Grantor shall be construed to include the Borrower or such Grantor as debtor and debtor-in-possession and any receiver or trustee for the Borrower or any other Grantor, as the case may be, in any Insolvency Proceeding, 
(c)    the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and 
(d)    all references herein to Articles or Sections shall be construed to refer to Articles or Sections of this Agreement.
Section 1.04    Intent.  The parties agree that the existence of the terms Conforming Borrowing Base, Conforming Borrowing Base Deficiency and Non-Conforming Advances or the usage of the terms herein do not indicate that Second Lien Collateral Agent or Second Lien Secured Parties intend for there to be, or consent to, the Borrower permitting the First Lien Credit Agreement to cease to be a Conforming Borrowing Base Facility.
ARTICLE II 
 
LIEN PRIORITIES
Section 2.01    Relative Priorities. Notwithstanding (a) the date, time, method, manner or order of grant, attachment or perfection of any Second Priority Lien or any First Priority Lien, (b) any provision of the UCC or any other applicable law or the provisions of any Security Document or any other Loan Document, (c) any defect in, or non-perfection, setting aside, or avoidance of a Lien or a First Lien Loan Document or a Second Lien Note Document, (d) subject to Section 7.01, the modification of a First Lien Loan Document or a Second Lien Note Document, (e) the exchange of any security interest in any Collateral for a security interest in other Collateral, (f) the commencement of an Insolvency Proceeding or (g) any other circumstance whatsoever, including a circumstance that might be a defense available to, or a discharge of, a Grantor in respect of a First Lien Secured Obligation or a Second Lien Secured Obligation or holder of such obligation, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby agrees that, so long as the Discharge of First Lien Non-Excluded Obligations has not occurred:
(i)    any First Priority Lien now or hereafter held by or for the benefit of any First Lien Secured Party shall be senior in right, priority, operation, effect and all other respects to any and all Second Priority Liens, 
(ii)    any Second Priority Lien now or hereafter held by or for the benefit of any Second Lien Secured Party shall be junior and subordinate in right, priority, operation, effect and all other respects to any and all First Priority Liens, and

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(iii)    the First Priority Liens shall be and remain senior in right, priority, operation, effect and all other respects to any Second Priority Liens for all purposes, whether or not any First Priority Liens are subordinated in any respect to any other Lien securing any other obligation of the Borrower, any other Grantor or any other Person; 
provided that the First Lien Administrative Agent, on behalf of itself and the other First Lien Secured Parties, hereby acknowledges and agrees that any Liens securing the Excess First Lien Obligations and Defaulting First Lien Secured Party Obligations are hereby junior and subordinate in right, priority, operation, effect and all other respects to any and all Second Priority Liens on any Collateral granted to secure the Second Lien Obligations.
Section 2.02    Prohibition on Contesting Liens. Each of (x) the First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties and (y) the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that it will not, and hereby waives any right to, contest or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, perfection, validity or enforceability of any Second Priority Lien or any First Priority Lien, as the case may be; provided that nothing in this Agreement shall be construed to prevent or impair the rights of the First Lien Administrative Agent, Second Lien Collateral Agent, any other First Lien Secured Party or any Second Lien Secured Party to enforce this Agreement.
Section 2.03    No New Liens. The parties hereto agree that, so long as the Discharge of First Lien Obligations has not occurred, the Borrower shall not, and shall not permit any of its Subsidiaries or equity owners to:
(a)    grant or permit any additional Liens on any Property to secure any Second Lien Secured Obligation unless it has granted, or concurrently therewith grants, a senior Lien on such Property to secure the First Lien Secured Obligations, or
(b)    grant or permit any additional Liens on any Property to secure any First Lien Secured Obligations unless it has granted, or concurrently therewith grants, a second Lien on such Property to secure the Second Lien Secured Obligations, with each such Lien to be subject to the provisions of this Agreement. To the extent that the provisions of this Section 2.03 are not complied with for any reason, without limiting any other right or remedy available to the First Lien Administrative Agent or the other First Lien Secured Parties, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that any amounts received by or distributed to any Second Lien Secured Party pursuant to or as a result of any Lien granted in contravention of this Section 2.03 shall be subject to Section 4.02.
Section 2.04    Similar Liens and Agreements. Except as set forth in Section 2.03, the parties hereto acknowledge and agree that it is their intention that the First Lien Collateral and the Second Lien Collateral be identical. To the extent that, notwithstanding this Section 2.04, the First Lien Collateral and Second Lien Collateral are not identical, the Second Lien 

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Collateral Agent, on behalf of itself and the other Second Lien Secured Parties, agrees that any amounts received by or distributed to any Second Lien Secured Party pursuant to or as a result of Liens on Second Lien Collateral that is not First Lien Collateral, shall be subject to Section 4.02. In furtherance of the foregoing, the parties hereto agree:
(a)    to cooperate in good faith in order to determine, upon any reasonable request by the First Lien Administrative Agent or the Second Lien Collateral Agent, the specific Property included in the First Lien Collateral and the Second Lien Collateral, the steps taken to perfect the First Priority Liens and the Second Priority Liens thereon and the identity of the respective parties obligated under the First Lien Loan Documents and the Second Lien Note Documents; 
(b)    on the date hereof and on any date when any new First Lien Security Documents are entered into to add Collateral or add additional Guarantors, the Second Lien Collateral Documents shall be in all material respects in the same form as the First Lien Security Documents, other than with respect to the first priority and second priority nature of the Liens created or evidenced thereunder, the identity of the Secured Parties that are parties thereto or secured thereby and other matters contemplated by this Agreement (it being understood that the foregoing shall not require the Second Lien Secured Parties to forgo having the Second Lien Secured Obligations secured by any Collateral or guaranteed by any Guarantor contemplated by the Second Lien Note Documents); 
(c)    that at no time shall there be any Guarantor in respect of the Second Lien Secured Obligations that is not also a Guarantor in respect of the First Lien Secured Obligations, and vice versa; and
(d)    that the First Lien Administrative Agent (i) shall use, and shall instruct its legal counsel to use, commercially reasonable efforts to cooperate with the Second Lien Collateral Agent, the Second Lien Secured Party holding a plurality of the Second Lien Obligations and its legal counsel in connection with them conducting customary title diligence on the Oil and Gas Properties of the Borrower and its Subsidiaries and (ii) shall share, and instruct its legal counsel to share, on a non-reliance basis and without any representation or warranty, its one-line summary spreadsheet showing (A) the Oil and Gas Properties that have been mortgaged, (B) the Oil and Gas Properties for which the status of title has been confirmed by them and (C) its summary calculations of the percentage of the total present value of the Grantors’ proved Oil and Gas Properties that have been mortgaged and for which the status of title has been confirmed.
Section 2.05    Judgment Creditors. In the event that any Second Lien Secured Party becomes a judgment lien creditor as a result of its enforcement of its rights as an unsecured creditor, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the First Priority Liens and the First Lien Secured Obligations) to the same extent as all other Liens securing the Second Lien Secured Obligations are subject to the terms of this Agreement.

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Section 2.06    Perfection of Liens. Except for the arrangements contemplated by Section 5.01, neither the First Lien Administrative Agent nor the other First Lien Secured Parties shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Collateral for the benefit of the Second Lien Collateral Agent or the other Second Lien Secured Parties. Neither the Second Lien Collateral Agent nor the other Second Lien Secured Parties shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Collateral for the benefit of the First Lien Administrative Agent or the other First Lien Secured Parties. In the event that the First Lien Administrative Agent, the other First Lien Secured Parties, Second Lien Collateral Agent or the other Second Lien Secured Parties identify that a Lien granted under the Security Documents is not perfected or the perfection of such Lien is not maintained or risks not being maintained and notifies the First Lien Administrative Agent, in the case where such issue is identified by Second Lien Collateral Agent or the other Second Lien Secured Parties, or the Second Lien Collateral Agent, in the case where such issue is identified by the First Lien Administrative Agent or the other First Lien Secured Parties, as the case may be, the First Lien Administrative Agent or Second Lien Collateral Agent shall as promptly as reasonably practicable perfect such Lien or ensure that the perfection of such Lien is maintained.  The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the First Lien Secured Parties on the one hand and the Second Lien Secured Parties on the other hand and such provisions shall not impose on the First Lien Administrative Agent, the other First Lien Secured Parties, the Second Lien Collateral Agent, the other Second Lien Secured Parties or any agent or trustee therefor any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior-perfected claims therein in favor of any other Person or any order or decree of any court or Governmental Authority or any applicable law.
Section 2.07    No Payment Subordination.  Without prejudice to Section 4.01, nothing contained in this Agreement is intended to payment subordinate (as opposed to lien subordinate) any payment claim by a Second Lien Secured Party to a payment claim by a First Lien Secured Party.  All payment claims of the First Lien Secured Parties and the Second Lien Secured Parties are intended to be pari passu.
ARTICLE III 
 
ENFORCEMENT OF RIGHTS; MATTERS RELATING TO COLLATERAL
Section 3.01    Exercise of Rights and Remedies. 
(a)    So long as the Discharge of First Lien Non-Excluded Obligations has not occurred, the First Lien Administrative Agent and the other First Lien Secured Parties shall have the exclusive right to (i) commence and maintain any Enforcement Action (including rights to set-off or credit bid, except that the Second Lien Secured Parties shall have the credit bid rights set forth in Section 3.01(a)(v) on the terms set forth therein) whether or not any Insolvency Proceeding has been commenced, (ii) subject to Section 3.04, when an Insolvency Proceeding or Enforcement Action has commenced, make determinations regarding the release or Disposition of, or restrictions with respect to, the Collateral, and 

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(iii) otherwise enforce the rights and remedies of a secured creditor under the UCC and Bankruptcy Laws of any applicable jurisdiction, without any consultation with or the consent of the Second Lien Collateral Agent or any other Second Lien Secured Party so long as any proceeds received by the First Lien Administrative Agent in excess of those necessary to achieve a Discharge of First Lien Non-Excluded Obligations are distributed in accordance with Section 4.01; provided that, notwithstanding the foregoing,
(i)    in any Insolvency Proceeding, any Second Lien Secured Party may file a proof of claim or statement of interest with respect to the Second Lien Secured Obligations;
(ii)    the Second Lien Collateral Agent may take any action to preserve or protect the validity and enforceability of the Second Priority Liens, provided that, in each case, no such action (A) results in a Lien on the Collateral that is not subject to the terms of Section 2.01 or (B) is otherwise inconsistent with the terms of this Agreement, including the automatic release of Second Priority Liens provided in Section 3.04;
(iii)    the Second Lien Secured Parties may file any responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the Second Lien Secured Parties, including any claims secured by the Collateral or otherwise make any agreements or file any motions pertaining to the Second Lien Secured Obligations, in each case, to the extent not inconsistent with the terms of this Agreement;
(iv)    the Second Lien Secured Parties may exercise rights and remedies as unsecured creditors, as provided in Section 3.03; 
(v)    the Second Lien Secured Parties may (A) present a cash bid for or purchase Collateral or purchase Collateral for cash at any Section 363 hearing or at any private, public or judicial foreclosure sale and (B) credit bid for Collateral pursuant to Section 363(k) of the Bankruptcy Code (provided that such credit bid may only be made if it results or will concurrently result in the repayment in full in cash of all First Lien Obligations (other than Excess First Lien Obligations and any indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made) due to a cash bid for such Collateral in addition to such credit bid); provided, however, in no event shall the bid pursuant to this Section 3.01(a)(v) be less than the amount in cash that would be necessary to purchase the First Lien Obligations pursuant to Section 3.01(d) hereof;
(vi)    the Second Lien Secured Parties shall be entitled to support or vote their claims to accept any plan of reorganization so long as such plan (a) results in the repayment in full in cash of all First Lien Obligations (other than Excess First Lien Obligations and any indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made) on the effective 

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date of such plan of reorganization (in the case of a vote in favor of a plan of reorganization) or (b) is supported by the First Lien Secured Parties; 
(vii)    subject to Section 3.02(a), the Second Lien Collateral Agent and the other Second Lien Secured Parties may enforce any of their rights and exercise any of their remedies with respect to the Collateral after the termination of the Standstill Period; 
(viii)    the Second Lien Secured Parties may inspect or appraise the Collateral (and engage or retain investment bankers or appraisers for the sole purposes of appraising or valuing the Collateral) to the extent that such inspections and/or appraisals do not interfere in any material respect with an exercise of remedies by the First Lien Administrative Agent, or to receive information or reports concerning the Collateral that are prepared by the Borrower and its representatives (but, subject to Section 2.04(d), not reports prepared by or on behalf of any First Lien Secured Party); 
(ix)    subject to Section 6.01(a), in any Insolvency Proceeding, the Second Lien Secured Parties shall be entitled to propose and provide a debtor-in-possession or post-petition financing for the Borrower and its Subsidiaries, as applicable, under Section 364 of the Bankruptcy Code or any comparable provision of any other Bankruptcy Law; and
(x)    subject to Section 6.01(c), in any Insolvency Proceeding, the Second Lien Administrative Agent and the Second Lien Secured Parties may seek and accept such adequate protection of their interests in the Collateral as they choose;
(the actions described in clauses (i) through (x) above being referred to herein as the “Second Lien Permitted Actions”).  Except for the Second Lien Permitted Actions, unless and until the Discharge of First Lien Non-Excluded Obligations has occurred, the sole right of the Second Lien Collateral Agent and the other Second Lien Secured Parties with respect to the Collateral shall be to receive the proceeds of the Collateral, if any, remaining after the Discharge of First Lien Non-Excluded Obligations has occurred and in accordance with the Second Lien Note Documents and Section 4.01.
(b)    In exercising rights and remedies with respect to the Collateral, the First Lien Administrative Agent and the other First Lien Secured Parties may enforce the provisions of the First Lien Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to Dispose of Collateral upon foreclosure, to incur expenses in connection with any such Disposition and to exercise all the rights and remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy Code or any other Bankruptcy Law.  The First Lien Secured Parties will endeavor to provide at least five (5) Business Days’ prior written notice to the Second Lien Collateral Agent of their intention to take any Enforcement Action, provided that any failure to provide such prior notice shall not constitute a breach of this Agreement. 

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(c)    The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby acknowledges and agrees that the rights of any First Lien Secured Party to enforce any provision of this Agreement or any First Lien Loan Document will not be prejudiced or impaired by (i) any act or failure to act of any Grantor, any other First Lien Secured Party or the First Lien Administrative Agent, or (ii) subject to Section 3.02(a), noncompliance by any Person other than the First Lien Administrative Agent and such First Lien Secured Party with any provision of this Agreement, any First Lien Loan Document or any Second Lien Note Document.
(d)    Notwithstanding anything in this Agreement to the contrary, following the earliest to occur of (i) the acceleration of the First Lien Secured Obligations then outstanding under the First Lien Credit Agreement, (ii) a payment default under the First Lien Loan Documents that has not been cured within thirty (30) days of the occurrence thereof, (iii) the commencement of an Insolvency Proceeding with respect to the Borrower or any Guarantor, (iv) the commencement of any Enforcement Action with respect to the Collateral, (v) [reserved] or (vi) an event of default under Section 10.01(f) or Section 10.01(g) of the First Lien Credit Agreement (or any substantially equivalent provisions under the First Lien Credit Agreement (it being understood that as of the date hereof there are no such substantially equivalent provisions)) has occurred and remains uncured for more than sixty (60) days, upon ten (10) days prior notice from the Second Lien Collateral Agent to the First Lien Administrative Agent and the Borrower (or such shorter time to which the First Lien Administrative Agent may agree) of any Second Lien Purchaser’s exercise of its purchase option under this Section 3.01(d), the First Lien Secured Parties shall transfer and assign to the Second Lien Secured Parties and their Affiliates (or any subset thereof) (the “Second Lien Purchasers”), without warranty or representation or recourse (except for the amount of the First Lien Obligations being purchased and the representations and warranties required to be made by assigning lenders pursuant to the Assignment and Assumption Agreement (as such term is defined in the First Lien Credit Agreement on the date hereof)), pursuant to customary transfer and assignment documentation (or such other documentation approved by the First Lien Administrative Agent and the Second Lien Purchasers), all (but not less than all) of the First Lien Obligations (excluding or including, at the option of the Second Lien Purchasers, any Excluded First Lien Obligations), subject to the following requirements: 
(A) the Second Lien Purchasers shall have paid to the First Lien Administrative Agent, for the account of the First Lien Secured Parties, in immediately available funds, an amount equal to 100% of the principal of the First Lien Obligations (excluding any Excluded First Lien Obligations) plus all accrued and unpaid interest thereon plus all accrued and unpaid fees and expenses thereon then owed by the Borrower and Guarantors to the First Lien Secured Parties;
(B) with respect to the aggregate face amount of the letters of credit outstanding under the First Lien Credit Agreement, the amount paid shall be cash collateral in an amount in cash equal to 105% of the aggregate face amount of the letters of credit outstanding under the First Lien Credit Agreement (it being understood that any such 

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cash collateral amounts shall be returned to the Second Lien Purchasers to the extent any such letters of credit expire or are terminated without being drawn upon); and
(C) with respect to Secured Swap Agreements that constitute First Lien Secured Obligations, the amount paid shall be equal to 100% of the aggregate Swap Termination Value of such Secured Swap Agreements. 
(e)    In order to effectuate the foregoing, the First Lien Administrative Agent shall calculate, upon the written request of any Second Lien Secured Party from time to time, the amount in cash that would be necessary to purchase the First Lien Obligations (other than, as applicable, any Excluded First Lien Obligations), and such calculation shall be conclusive and binding absent manifest error.  Notwithstanding anything herein to the contrary, each party hereto agrees that any transfer and assignment of First Lien Obligations (excluding or including, at the option of the Second Lien Purchasers, any Excluded First Lien Obligations) may be effectuated pursuant to transfer and assignment documents executed by the First Lien Administrative Agent and Second Lien Purchasers only and that neither the Borrower nor any other First Lien Secured Party need be a party thereto (and each First Lien Secured Party hereby appoints the First Lien Administrative Agent, and any officer or agent of the First Lien Administrative Agent, with full power of substitution, as the attorney-in-fact of such First Lien Secured Party for the purpose of carrying out the provisions of Section 3.01(d) and taking any action and executing any documents that the First Lien Administrative Agent may deem necessary or advisable to accomplish the purposes of Section 3.01(d), which appointment is irrevocable and coupled with an interest). Each First Lien Secured Party will retain all rights to indemnification provided by the Borrower in the relevant First Lien Loan Documents for all claims and other amounts relating to periods prior to the purchase of the First Lien Obligations pursuant to this Section 3.01. Out of an abundance of caution, the Second Lien Collateral Agent, on behalf of itself and the other Second Lien Secured Parties, hereby acknowledges and agrees that (A) the obligations of the First Lien Secured Parties to sell their respective First Lien Obligations under Section 3.01(d) are several and not joint and several, (B) to the extent any First Lien Secured Party breaches its obligation to sell its First Lien Obligations under Section 3.01(d) (a “Defaulting First Lien Secured Party”), nothing in Section 3.01(d) shall be deemed to require the First Lien Administrative Agent or any other First Lien Secured Party to purchase such Defaulting First Lien Secured Party’s First Lien Obligations for resale to the Second Lien Secured Parties and (C) in all cases, the First Lien Administrative Agent and each First Lien Secured Party complying with the terms of this Section 3.01(d) shall not be deemed to be in default of this Agreement or otherwise be deemed liable for any action or inaction of any Defaulting First Lien Secured Party; provided that nothing in Section 3.01(d) shall (1) require the Second Lien Secured Parties to purchase less than all of the First Lien Obligations (other than the Excluded First Lien Obligations) or (2) prohibit the Second Lien Secured Parties from purchasing less than all of the First Lien Obligations of a First Lien Secured Party that becomes a Defaulting First Lien Secured Party.  In the event that one or more Second Lien Secured Parties exercises and consummates the purchase option set forth in Section 3.01(d) and upon the receipt by the First Lien Administrative Agent of all amounts payable pursuant to Section 3.01(d), if no Excluded First Lien Obligations remain outstanding, the Second 

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Lien Secured Parties shall have the right but not the obligation to require the First Lien Administrative Agent to resign in its capacity as First Lien Administrative Agent under the First Lien Loan Documents promptly according to customary resignation documentation.
(f)    In furtherance of the foregoing Section 3.01(d), the First Lien Administrative Agent shall endeavor to provide notice to the Second Lien Collateral Agent of any of the events set forth in Section 3.01(d)(i), 3.01(d)(ii), 3.01(d)(iv) and 3.01(d)(v) or the exercise of any rights or remedies under the First Lien Loan Documents; provided that the First Lien Administrative Agent’s failure to give such notice under this Section 3.01(f) shall not create any claim or cause of action on the part of any Second Lien Secured Party against the First Lien Administrative Agent for any reason whatsoever; and provided, further, that nothing in this Section 3.01 shall impose any duty on the Second Lien Collateral Agent to monitor payments or defaults under the First Lien Credit Agreement. 
Section 3.02    No Interference. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that, whether or not any Insolvency Proceeding has been commenced, the Second Lien Secured Parties:
(a)    except for Second Lien Permitted Actions, will not, so long as the Discharge of First Lien Non-Excluded Obligations has not occurred, commence any Enforcement Action; provided, however, that the Second Lien Collateral Agent may, subject to the other provisions of this Agreement (including the turnover provisions of Article IV), enforce or exercise any or all such rights and remedies, or commence, join with any Person in commencing, or petition for or vote in favor of any resolution for, any such action or proceeding, after a period of 180 days has elapsed since the date that is the earlier to occur of (i) the date on which the Second Lien Collateral Trustee has delivered to the First Lien Administrative Agent written notice of the existence of an Event of Default (as defined in the Second Lien Note Purchase Agreement) and (ii) the date on which the Second Lien Collateral Agent has delivered to the First Lien Administrative Agent written notice that the Second Lien Secured Obligations then outstanding under the Second Lien Note Purchase Agreement have been accelerated (the “Standstill Period”), so long as such event of default has not been cured or waived and such acceleration, if applicable, has not been rescinded; provided further, however, that notwithstanding the expiration of the Standstill Period or anything herein to the contrary, except for Second Lien Permitted Actions, in no event shall any Second Lien Secured Party commence an Enforcement Action with respect to any Collateral, or commence, join with any Person in commencing, or petition for or vote in favor of any resolution for, any such Enforcement Action, if the First Lien Administrative Agent or any other First Lien Secured Party shall have commenced prior to the expiration of the Standstill Period, and shall be diligently pursuing (or shall have sought or requested relief from or modification of the automatic stay or any other stay in any Insolvency Proceeding to enable the commencement and pursuit thereof), an Enforcement Action with respect to any material portion of the Collateral; 

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(b)    will not contest, protest or object to any Enforcement Action brought by the First Lien Administrative Agent or any other First Lien Secured Party, including any Enforcement Action by any First Lien Secured Party relating to the Collateral;
(c)    subject to the rights of the Second Lien Secured Parties under clause (a) above, will not object to the forbearance by the First Lien Administrative Agent or any other First Lien Secured Party from commencing or pursuing any Enforcement Action with respect to the Collateral;
(d)    will not, so long as the Discharge of First Lien Non-Excluded Obligations has not occurred and except for Second Lien Permitted Actions, take or receive any Collateral, or any proceeds thereof or payment with respect thereto, in connection with the exercise of any Enforcement Action with respect to any Collateral or in connection with any insurance policy award under a policy of insurance relating to any Collateral or any condemnation award (or deed in lieu of condemnation) relating to any Collateral;
(e)    will not, except for Second Lien Permitted Actions, take any action that would, or could reasonably be expected to, hinder, in any manner, any exercise of remedies under the First Lien Loan Documents, including any Disposition of any Collateral, whether by foreclosure or otherwise; 
(f)    will not, except for Second Lien Permitted Actions, object to the manner in which the First Lien Administrative Agent or any other First Lien Secured Party may seek to enforce or collect the First Lien Obligations or the First Priority Liens, regardless of whether any action or failure to act by or on behalf of the First Lien Administrative Agent or any other First Lien Secured Party is, or could be, adverse to the interests of the Second Lien Secured Parties, and will not assert, and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshalling or other similar right that may be available under applicable law with respect to the Collateral or any similar rights a junior secured creditor may have under applicable law; and
(g)    will not attempt, directly or indirectly, whether by judicial proceeding or otherwise, to challenge or question the validity or enforceability of any First Lien Secured Obligation or any First Lien Security Document, including this Agreement, or the validity or enforceability of the priorities, rights or obligations established by this Agreement;
provided, however, that, in the case of clauses (a) through (g) above, it is the intention of the parties hereto that the Liens granted to secure the Second Lien Obligations of the Second Lien Secured Parties shall attach to any proceeds remaining from any such Enforcement Action taken by the First Lien Administrative Agent or any First Lien Secured Party in accordance with this Agreement after application of such proceeds to effectuate a Discharge of First Lien Non-Excluded Obligations in accordance with Section 4.01.
Section 3.03    Rights as Unsecured Creditors. Notwithstanding anything herein to the contrary, the Second Lien Collateral Agent and the other Second Lien Secured Parties 

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may, in accordance with the terms of the Second Lien Note Documents and applicable law, enforce rights and exercise remedies against the Borrower and any Guarantor as unsecured creditors; provided that no such action is otherwise expressly prohibited by the terms of this Agreement.  Nothing in this Agreement shall prohibit the acceleration of the Second Lien Secured Obligations, the receipt by the Second Lien Collateral Agent or any other Second Lien Secured Party of the required payments of principal, premium, interest, fees and other amounts due under the Second Lien Note Documents so long as such receipt is not the direct or indirect result of the enforcement or exercise by the Second Lien Collateral Agent or any other Second Lien Secured Party of rights or remedies as a secured creditor (including any right of setoff) or enforcement in contravention of this Agreement of any Second Priority Lien. Any judgment Lien that applies to the Collateral and results from the exercise of remedies available to an unsecured creditor shall be subordinated to the Liens securing the First Lien Secured Obligations under this Agreement. 
Section 3.04    Automatic Release of Second Priority Liens. 
(a)    If, in connection with an Enforcement Action, the First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties, (x) releases any of the First Priority Liens, or (y) releases any Guarantor from its obligations under its guarantee of the First Lien Secured Obligations (in each case, a “Release”), other than any such Release granted after the occurrence of the Discharge of First Lien Non-Excluded Obligations, then the Second Priority Liens on such Collateral, and the obligations of such Guarantor under its guarantee of the Second Lien Secured Obligations, shall be automatically, unconditionally and simultaneously released, and the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, shall promptly execute and deliver to the First Lien Administrative Agent, the relevant Grantor or such Guarantor, at such Grantor’s or Guarantor’s sole cost and expense, such termination statements, releases and other documents as the First Lien Administrative Agent or the relevant Grantor or Guarantor may reasonably request to effectively confirm such Release; provided that, any proceeds received from such Disposition in connection with an Enforcement Action with respect to the Collateral shall be applied in accordance with the priorities set forth in Section 4.01 to reduce the First Lien Obligations and, if applicable, the Second Lien Obligations as set forth therein. 
(b)    Until the Discharge of First Lien Non-Excluded Obligations occurs, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby appoints the First Lien Administrative Agent, and any officer or agent of the First Lien Administrative Agent, with full power of substitution, as the attorney-in-fact of each Second Lien Secured Party for the purpose of carrying out the provisions of this Section 3.04 and taking any action and executing any instrument that the First Lien Administrative Agent may deem necessary or advisable to accomplish the purposes of this Section 3.04 (including any endorsements or other instruments of transfer or release), which appointment is irrevocable and coupled with an interest.
(c)    Until the Discharge of First Lien Non-Excluded Obligations occurs, to the extent that the First Lien Administrative Agent or the First Lien Secured Parties have released 

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any Lien on Collateral or any Grantor from its obligation under its guaranty and any such Liens or guaranty are later reinstated, then the Second Lien Collateral Agent, for itself and for the Second Lien Secured Parties, shall be granted a Lien on any such Collateral, subject to the lien subordination provisions of this Agreement, and an additional guaranty, as the case may be, in each case, at the time of such reinstatement of the Lien or guaranty in favor of the First Lien Administrative Agent.
Section 3.05    Notice of Exercise of Second Liens. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that upon termination of the Standstill Period or such longer period as provided in Section 3.02, if any Second Lien Secured Party or other representative of such Second Lien Secured Party intends to commence any Enforcement Action, then such Second Lien Secured Party or other representative shall endeavor to first deliver notice thereof in writing to the First Lien Administrative Agent not less than five (5) Business Days prior to taking any such Enforcement Action. Such notices may be given during the Standstill Period, provided that the Second Lien Collateral Agent’s failure to give such notice under this Section 3.05 shall not create any claim or cause of action on the part of any First Lien Secured Party against the Second Lien Collateral Agent for any reason whatsoever.
Section 3.06    Insurance and Condemnation Awards. So long as the Discharge of First Lien Non-Excluded Obligations has not occurred, the First Lien Administrative Agent and the other First Lien Secured Parties shall have the exclusive right, subject to the rights of the Grantors under the First Lien Loan Documents, to settle and adjust claims in respect of Collateral under policies of insurance covering Collateral and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation, in respect of the Collateral. All proceeds of any such policy and any such award, or any payments with respect to a deed in lieu of condemnation, shall be paid pursuant to the priorities set forth in Section 4.01. Until the Discharge of First Lien Non-Excluded Obligations has occurred, if the Second Lien Collateral Agent or any other Second Lien Secured Party shall, at any time, receive any proceeds of any such insurance policy or any such award or payment, it shall transfer and pay over such proceeds to the First Lien Administrative Agent in accordance with Section 4.02.
ARTICLE IV 
 
PAYMENTS
Section 4.01    Application of Proceeds. Regardless of whether an Insolvency Proceeding has been commenced, any Collateral or proceeds thereof received in connection with any Disposition of, or collection on, such Collateral following an Enforcement Action shall be applied: 
(a)    first, to the payment in full in cash or cash collateralization of all First Lien Obligations (other than any indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made); 

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(b)    second, upon the Discharge of First Lien Non-Excluded Obligations, to the payment in full in cash of the Second Lien Obligations (other than any indemnification and other contingent obligations not yet due or for which no claim or demand for payment has been made); 
(c)    third, upon the Discharge of Second Lien Obligations, to the payment in full in cash of any Excess First Lien Obligations; 
(d)    fourth, upon the Discharge of Excess First Lien Obligations, to the Borrower or as otherwise required by applicable law.
Notwithstanding the foregoing, any non-cash Collateral or non-cash proceeds will be held by the First Lien Administrative Agent as Collateral unless the failure to apply such amounts would be commercially unreasonable.  Upon the Discharge of First Lien Non-Excluded Obligations, the First Lien Administrative Agent shall deliver to the Second Lien Collateral Agent any remaining Collateral and any proceeds thereof then held by it in the same form as received, together with any necessary endorsements, or as a court of competent jurisdiction may otherwise direct, to be applied by the Second Lien Collateral Agent in accordance with Section 4.01 until the Discharge of the Second Lien Obligations.  
Section 4.02    Payment Over. So long as the Discharge of First Lien Non-Excluded Obligations has not occurred, any Collateral, or any proceeds thereof or payment with respect thereto (together with Property or proceeds subject to Liens referred to in the final sentence of Section 2.03), received by the Second Lien Collateral Agent or any other Second Lien Secured Party in connection with any Disposition of, or collection on, such Collateral upon the enforcement or the exercise of any right or remedy (including any right of setoff) with respect to the Collateral, shall be segregated and held in trust and forthwith transferred or paid over to the First Lien Administrative Agent for the benefit of the First Lien Secured Parties in the same form as received, together with any necessary endorsements, or as a court of competent jurisdiction may otherwise direct. Until the Discharge of First Lien Non-Excluded Obligations occurs, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby appoints the First Lien Administrative Agent, and any officer or agent of the First Lien Administrative Agent, with full power of substitution, the attorney-in-fact of each Second Lien Secured Party for the purpose of carrying out the provisions of this Section 4.02 and taking any action and executing any instrument that the First Lien Administrative Agent may deem necessary or advisable to accomplish the purposes of this Section 4.02, which appointment is irrevocable and coupled with an interest. 
Section 4.03    Certain Agreements with Respect to Unenforceable Liens. Notwithstanding anything to the contrary contained herein, if in any Insolvency Proceeding a determination is made that any Lien encumbering any Collateral is not enforceable for any reason, then the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that any distribution or recovery they may receive with respect to, or allocable to, the value of the Property intended to constitute such Collateral or any proceeds thereof shall (for so long as the Discharge of First Lien Non-Excluded 

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Obligations has not occurred) be segregated and held in trust and forthwith paid over to the First Lien Administrative Agent for the benefit of the First Lien Secured Parties in the same form as received without recourse, representation or warranty (other than a representation of the Second Lien Collateral Agent that it has not otherwise sold, assigned, transferred or pledged any right, title or interest in and to such distribution or recovery) but with any necessary endorsements or as a court of competent jurisdiction may otherwise direct until such time as the Discharge of First Lien Non-Excluded Obligations has occurred. Until the Discharge of First Lien Non-Excluded Obligations occurs, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby appoints the First Lien Administrative Agent, and any officer or agent of the First Lien Administrative Agent, with full power of substitution, the attorney-in-fact of each Second Lien Secured Party for the limited purpose of carrying out the provisions of this Section 4.03 and taking any action and executing any instrument that the First Lien Administrative Agent may deem necessary or advisable to accomplish the purposes of this Section 4.03, which appointment is irrevocable and coupled with an interest.
ARTICLE V 
 
BAILMENT
Section 5.01    Bailment for Perfection of Certain Security Interests. 
(a)    The First Lien Administrative Agent agrees that if it shall at any time hold a First Priority Lien on any Collateral that can be perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of the First Lien Administrative Agent, or of agents or bailees of the First Lien Administrative Agent (such Collateral being referred to herein as the “Pledged or Controlled Collateral”), the First Lien Administrative Agent shall, solely for the purpose of perfecting the Second Priority Liens granted under the Second Lien Note Documents and subject to the terms and conditions of this Article V, also hold such Pledged or Controlled Collateral as bailee for the Second Lien Secured Parties. The First Lien Administrative Agent shall not charge the Second Lien Secured Parties for holding such Collateral as bailee pursuant hereto.
(b)    So long as the Discharge of First Lien Non-Excluded Obligations has not occurred, the First Lien Administrative Agent shall be entitled to deal with the Pledged or Controlled Collateral in accordance with the terms of this Agreement and the other First Lien Loan Documents as if the Second Priority Liens did not exist until the expiration of the Standstill Period or such longer period as provided under Section 3.02. The obligations and responsibilities of the First Lien Administrative Agent to the Second Lien Collateral Agent and the other Second Lien Secured Parties under this Article V shall be limited solely to holding or controlling the Pledged or Controlled Collateral as bailee in accordance with this Article V. Without limiting the foregoing, the First Lien Administrative Agent shall have no obligation or responsibility to ensure that any Pledged or Controlled Collateral is genuine or owned by any of the Grantors. The First Lien Administrative Agent acting pursuant to this Article V shall not, by reason of this Agreement, any other Security Document or any 

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other document, have a fiduciary relationship in respect of any other First Lien Secured Party, the Second Lien Collateral Agent or any other Second Lien Secured Party.
(c)    Upon the Discharge of First Lien Non-Excluded Obligations, the First Lien Administrative Agent shall transfer the possession and control of the Pledged or Controlled Collateral, together with any necessary endorsements but without recourse or warranty (other than a representation of the First Lien Administrative Agent that it has not otherwise sold, assigned, transferred or pledged any right, title or interest in and to such Pledged or Controlled Collateral) and at the Borrower’s sole cost and expense, (i) if obligations under the Second Lien Note Purchase Agreement are outstanding at such time, to the Second Lien Collateral Agent and (ii) if no Second Lien Obligations or Excess First Lien Obligations are outstanding at such time, to the applicable Grantor or to whomever shall be entitled thereto, in each case so as to allow such Person to obtain possession and control of such Pledged or Controlled Collateral. Upon the Discharge of Second Lien Obligations, if the Second Lien Collateral Agent at such time holds any Pledged or Controlled Collateral, it shall transfer the possession and control of such Pledged or Controlled Collateral, together with any necessary endorsements but without recourse or warranty and at the Borrower’s sole cost and expense, (A) if any Excess First Lien Obligations are outstanding at such time, to the First Lien Administrative Agent and (B) if no Excess First Lien Obligations are outstanding at such time, to the applicable Grantor, in each case so as to allow such Person to obtain possession and control of such Pledged or Controlled Collateral. In connection with any transfer under this Section 5.01(c), subject to the provisions of Section 5.01(d), the First Lien Administrative Agent (and the Second Lien Collateral Agent, as applicable) agrees to take all actions in its power as shall be reasonably requested by the Second Lien Collateral Agent (or the First Lien Administrative Agent, as applicable) to permit the Second Lien Collateral Agent or First Lien Administrative agent, as applicable, to obtain, for the benefit of the applicable Second Lien Secured Parties or First Lien Secured Parties, a first priority security interest in the Pledged or Controlled Collateral.
(d)    Neither the Second Lien Collateral Agent nor the First Lien Administrative Agent shall be required to take any such action requested by any party that it in good faith believes exposes it to personal liability for expenses or other amounts unless it receives an indemnity satisfactory to it from the requesting party with respect to such action; provided, that nothing in this Section 5.01(d) shall require the Second Lien Collateral Agent or First Lien Administrative Agent to provide an indemnity in their individual capacity.
Section 5.02    Bailment for Perfection of Certain Security Interests – Other Control Collateral (Second Liens). Each of (x) the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties and (y) the First Lien Administrative Agent, on behalf of the First Lien Lenders, agrees that if it shall at any time hold a Lien on any Collateral that can be perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of such Person or of their respective agents or bailees (such Collateral being referred to herein as the “Other Pledged or Controlled Collateral”), such Person shall, solely for the purpose of perfecting the First Priority Liens 

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granted under the First Lien Loan Documents and the Second Priority Liens granted under the Second Lien Note Documents, also hold such Other Pledged or Controlled Collateral as bailee for the First Lien Administrative Agent and as bailee for the Second Lien Collateral Agent. No obligations shall be imposed on any Person by reason of this Section 5.02, and none of the First Lien Administrative Agent, the Second Lien Collateral Agent, any First Lien Lender or any other Second Lien Secured Party shall have a fiduciary relationship in respect of any other party. No party shall be required to take any action requested by any other party that such party in good faith believes exposes it to personal liability for expenses or other amounts unless such party receives an indemnity satisfactory to it from the party requesting action. No Person shall charge the First Lien Administrative Agent or the Second Lien Collateral Agent for holding such Collateral as bailee pursuant hereto.
ARTICLE VI 
 
INSOLVENCY PROCEEDINGS
Section 6.01    Finance and Sale Matters. 
(a)    Until the Discharge of First Lien Non-Excluded Obligations has occurred, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that, in the event of any Insolvency Proceeding, the Second Lien Secured Parties:
(i)    will not oppose or object to the use of any Collateral constituting cash collateral under Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, unless the First Lien Secured Parties, or a representative authorized by the First Lien Secured Parties, shall oppose or object to such use of cash collateral; 
(ii)    will not oppose or object to any post-petition financing, whether provided by the First Lien Secured Parties or any other Person, under Section 364 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (a “DIP Financing”), or the Liens securing any DIP Financing (“DIP Financing Liens”), unless the First Lien Secured Parties, or a representative authorized by the First Lien Secured Parties, shall then oppose or object to such DIP Financing or such DIP Financing Liens, and, to the extent that such DIP Financing Liens are senior to, or rank pari passu with, the First Priority Liens, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, will subordinate the Second Priority Liens to the First Priority Liens and the DIP Financing Liens on the terms of this Agreement.
(iii)    will agree that any customary “carve-out” or other similar administrative priority expense or claim consented to in writing by First Lien Administrative Agent to be paid prior to the Discharge of First Lien Non-Excluded Obligations be deemed for purposes of Section 6.01(a) (A) to be a use of cash 

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collateral and (B) not to be a principal amount of DIP Financing at the time of such consent;
(iv)    will not provide DIP Financing to the Borrower or other Grantor secured by Liens equal or senior in priority to the Liens securing any First Lien Obligations unless (A) such DIP Financing results in the Discharge of the First Lien Obligations concurrently with the incurrence of such DIP Financing or (B) either (1) the First Lien Administrative Agent shall have stated in writing that it will not make a proposal for DIP Financing, (2) the First Lien Administrative Agent has stated in writing that it is ceasing its efforts to provide a DIP Financing for which it has previously made a proposal (on its own behalf or on behalf of another First Lien Secured Party) or has abandoned such efforts, or, upon written request, not reconfirmed its intention to provide a DIP Financing (on its own behalf or on behalf of another First Lien Secured Party) or (3) the Borrower or any of its Affiliates has delivered a request for DIP Financing to the First Lien Administrative Agent (which request the Borrower agrees to share concurrently with the Second Lien Collateral Agent) and ten (10) calendar days shall have expired without delivery of a bona fide proposal in good faith for DIP Financing to the Borrower from the First Lien Administrative Agent (on its own behalf or on behalf of another First Lien Secured Party), and each of the Borrower and the First Lien Administrative Agent agrees to promptly deliver copies of any proposal for DIP Financing to the Second Lien Collateral Agent and, in each case, such DIP Financing (I) does not include any provisions for “roll up”, repayment or refinancing of the Second Lien Obligations, or any extension of Liens or administrative claims for the benefit of the Second Lien Obligations that are not subordinated to the liens for the benefit of the First Lien Obligations, or other forms of cross-collateralization with respect to the Second Lien Obligations, (II) shall expressly provide that the Second Lien Obligations shall continue to be subject to this Agreement, (III) does not require any asset sales or any structure of a plan of reorganization or milestones therefor, (IV) does not exceed the greater of (aa) $50,000,000 and (bb) fifteen percent (15%) of the sum of (x) the Borrowing Base in effect immediately prior to the commencement of such Insolvency Proceeding and (y) the amount of any Borrowing Base Deficiency that exists at such time and (V) shall entitle certain holders of the First Lien Obligations to purchase such DIP Financing at par at any time pursuant to Section 6.01(b);
(v)    except to the extent permitted by Section 6.01(c), in connection with the use of cash collateral as described in clause (i) above or a DIP Financing, will not request adequate protection or any other relief in connection with such use of cash collateral, DIP Financing or DIP Financing Liens; and
(vi)    will not oppose or object to any Disposition of any Collateral free and clear of the Second Priority Liens or other claims under Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, if the First Lien Secured Parties, or a representative authorized by the First Lien Secured Parties, shall consent to such Disposition so long as the interests of the Second Lien 

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Secured Parties in the Collateral (and any post-petition Property subject to adequate protection liens, if any, in favor of the Second Lien Collateral Agent) attach to the proceeds thereof, subject to the terms of this Agreement.
(b)    If, prior to the Discharge of the First Lien Non-Excluded Obligations, any Second Lien Secured Party provides any DIP Financing to the Borrower or any Guarantor, the Second Lien Secured Parties agree at any time, the First Lien Administrative Agent will have the right to exercise an option (on behalf of itself or on behalf of one or more First Lien Lenders that are commercial banks) to purchase the entire aggregate amount (but not less than the entirety) of outstanding obligations for such DIP Financing (including unfunded commitments under any DIP Financing documents) at the DIP Purchase Price without warranty or representation or recourse except as provided below, on a pro rata basis among the Second Lien Secured Parties party to such DIP Financing.
(i)    The “DIP Purchase Price” will equal the sum of (A) the full amount of all DIP Financing obligations then-outstanding and unpaid at par (including principal, accrued but unpaid interest and fees and any other unpaid amounts, including breakage costs), (B) the cash collateral to be furnished to the DIP Financing lenders providing letters of credit under the DIP Financing documents in such amount (not to exceed 105% thereof) as such DIP Financing lenders determine is reasonably necessary to secure such DIP Financing lenders in connection with any such outstanding and undrawn letters of credit and (C) all accrued and unpaid fees, expenses and other amounts (including attorneys’ fees and expenses) owed to the DIP Financing lenders under or pursuant to the DIP Financing documents on the date of purchase.
(ii)    If the First Lien Administrative Agent exercises the purchase option pursuant to Section 6.01(b) above (whether on its own behalf or on behalf of First Lien Lenders as set forth in Section 6.01(b) above), it shall be exercised pursuant to documentation mutually acceptable to each of the First Lien Administrative Agent and the Second Lien Secured Parties party to such DIP Financing and the parties shall use commercially reasonable efforts to close promptly after such exercise. Each DIP Financing party will retain all rights to indemnification provided in the relevant DIP Financing documents for all claims and other amounts relating to periods prior to the purchase of the DIP Financing obligations pursuant to this Section 6.01.
(iii)    The purchase and sale of the DIP Financing obligations under this Section 6.01(b) will be without recourse and without representation or warranty of any kind by the DIP Financing lenders, except that the DIP Financing lenders shall severally and not jointly represent and warrant to the First Lien Secured Parties that on the date of such purchase, immediately before giving effect to the purchase:
(A)    the principal of and accrued and unpaid interest on the DIP Financing obligations, and the fees and expenses thereof owed to the respective DIP Financing lenders, are as stated in any assignment agreement 

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prepared in connection with the purchase and sale of the DIP Financing obligations; and
(B)    the DIP Financing obligations purported to be owned by such DIP Financing lender is being sold free and clear of any Liens granted by it.
(c)    The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that no Second Lien Secured Party shall contest, or support any other Person in contesting, (i) any request by the First Lien Administrative Agent or any other First Lien Secured Party for adequate protection or (ii) any objection, based on a claim of a lack of adequate protection, by the First Lien Administrative Agent or any other First Lien Secured Party to any motion, relief, action or proceeding. Notwithstanding the immediately preceding sentence, if, in connection with any DIP Financing or use of cash collateral, (A)(1) any First Lien Secured Party is granted adequate protection in the form of a Lien on additional collateral, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the First Priority Liens and DIP Financing Liens on the same basis as the other Second Priority Liens are subordinated to the First Priority Liens under this Agreement or (2) any Second Lien Secured Party is granted adequate protection in the form of a Lien on additional collateral, the First Lien Administrative Agent shall, for itself and on behalf of the other First Lien Secured Parties, be granted adequate protection in the form of a Lien on such additional collateral that is senior to such Second Priority Lien as security for the First Lien Obligations, (B) (1) any First Lien Secured Party is granted adequate protection in the form of cash interest, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, may seek or request adequate protection in the form of cash interest (provided that the First Lien Administrative Agent shall in all cases retain its right to object to any such adequate protection in the form of cash interest) or (2) any Second Lien Secured Party is granted adequate protection in the form of cash interest, the First Lien Administrative Agent shall, for itself and on behalf of the other First Lien Secured Parties, be granted adequate protection in the form of cash interest and (C) in connection with any DIP Financing provided by any Second Lien Secured Party in accordance with this Agreement, the First Lien Collateral Agent, for itself and on behalf of the other First Lien Secured Parties will agree that any customary “carve-out” or other similar administrative priority expense or claim consented to in writing by the Second Lien Administrative Agent be deemed (x) to be a use of cash collateral and (y) not to be a principal amount of DIP Financing at the time of such consent.
(d)    Notwithstanding the foregoing, the applicable provisions of Section 6.01(a)(ii), Section 6.01(a)(v) and Section 6.01(c) shall only be binding on the Second Lien Secured Parties with respect to any DIP Financing to the extent that the maximum principal amount of Debt permitted under such DIP Financing does not exceed the sum of (i) the amount of First Lien Obligations refinanced with the proceeds thereof and (ii) an amount equal to the greater of (A) $50,000,000 and (B) fifteen percent (15%) of the sum of (1) the Borrowing 

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Base in effect immediately prior to the commencement of such Insolvency Proceeding plus (2) the amount of any Borrowing Base Deficiency that exists at such time.
Section 6.02    Relief from the Automatic Stay. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that, so long as the Discharge of First Lien Non-Excluded Obligations has not occurred, no Second Lien Secured Party shall, without the prior written consent of the First Lien Administrative Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency Proceeding in respect of any part of the Collateral, any proceeds thereof or any Second Priority Lien, unless any First Lien Secured Party is also then seeking or requesting the corresponding relief from or modification of the automatic stay or any other stay in any Insolvency Proceeding in respect of any part of the Collateral, any proceeds thereof or any First Priority Lien. 
Section 6.03    Reorganization Securities. If, in any Insolvency Proceeding, debt obligations of the reorganized debtor secured by Liens upon any Property of the reorganized debtor are distributed, pursuant to a plan of reorganization or similar dispositive restructuring plan, on account of both the First Lien Secured Obligations and the Second Lien Secured Obligations, then, to the extent the debt obligations distributed on account of the First Lien Secured Obligations and on account of the Second Lien Secured Obligations are secured by Liens upon the same Property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.
Section 6.04    Post-Petition Interest. 
(a)    The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that no Second Lien Secured Party shall oppose or seek to challenge any claim by the First Lien Administrative Agent or any other First Lien Secured Party for allowance or payment in any Insolvency Proceeding of First Lien Obligations consisting of post-petition interest, fees or expenses.
(b)    The First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties, agrees that no First Lien Secured Party shall oppose or seek to challenge any claim by the Second Lien Collateral Agent, or any other Second Lien Secured Party for allowance in any Insolvency Proceeding of Second Lien Obligations consisting of post-petition interest, fees or expenses.
Section 6.05    Certain Waivers by the Second Lien Secured Parties. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, waives any claim any Second Lien Secured Party may hereafter have against any First Lien Secured Party arising out of (a) the election by any First Lien Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, or (b) any use of cash collateral or financing arrangement, or any grant of a security interest in the Collateral in a manner consistent with this Agreement, in any Insolvency Proceeding.

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Section 6.06    Certain Voting Matters. Each of (x) the First Lien Administrative Agent, on behalf of itself and the other First Lien Secured Parties and (y) the Second Lien Collateral Agent on behalf of itself and the other Second Lien Secured Parties, agrees that, without the written consent of the other, it will not seek to vote with the other as a single class in connection with any plan of reorganization in any Insolvency Proceeding. Except as provided in this Section 6.06 or Section 3.01(a)(vi), nothing in this Agreement is intended, or shall be construed, to limit the ability of the Second Lien Collateral Agent, or the other Second Lien Secured Parties to vote on any plan of reorganization.
Section 6.07    Separate Grants of Security and Separate Classification. Each of (x) the First Lien Administrative Agent, on behalf of the First Lien Secured Parties and (y) the Second Lien Collateral Agent, on behalf of itself and the other Second Lien Secured Parties, acknowledges and agrees that (a) the grants of Liens pursuant to the First Lien Loan Documents and the Second Lien Note Documents constitute two separate and distinct grants of Liens and (b) because of, among other things, their differing rights in the Collateral, the Second Lien Secured Obligations are fundamentally different from the First Lien Secured Obligations and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims against the First Lien Secured Parties and Second Lien Secured Parties in respect of the Collateral constitute only one secured claim (rather than separate classes of first lien and second lien senior secured claims), then the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby acknowledges and agrees that all distributions shall be made as if there were separate classes of first lien and second lien senior secured claims against the Borrower and/or other Grantors in respect of the Collateral with the effect being that (i) to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all claims held by the Second Lien Secured Parties), the First Lien Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest before any distribution is made in respect of the claims held by the Second Lien Secured Parties and (ii) the Second Lien Secured Parties shall turn over to the First Lien Secured Parties amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the Second Lien Secured Parties.
ARTICLE VII 
 
OTHER AGREEMENTS
Section 7.01    Matters Relating to Loan Documents. 
(a)    The First Lien Loan Documents may be amended, restated, supplemented or otherwise modified in accordance with their terms, and the First Lien Secured Obligations under the First Lien Credit Agreement may be Refinanced (in an amount not to exceed the First Lien Cap Amount), in each case, without the consent of any Second Lien Secured Party (provided, that, the holders of the indebtedness resulting from any such Refinancing shall 

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agree in writing to be bound by the terms of this Agreement); provided, however, that, without the prior written consent of the Second Lien Collateral Agent (acting on the instructions of the Second Lien Required Holders), no such amendment, restatement, supplement, modification or Refinancing (or successive amendments, restatements, supplements, modifications or Refinancings) shall:
(i)    contravene any provision of this Agreement, 
(ii)    increase the applicable margin or any other component of yield under the under the First Lien Loan Documents such that the yield under the First Lien Credit Agreement (excluding increases resulting from the accrual of interest at the default rate) exceeds by more than 300 basis points the yield under the First Lien Credit Agreement on the date hereof at any Borrowing Base utilization level (for the purpose of making such determination, the LIBO Rate (as defined in the First Lien Credit Agreement on the date hereof) will be calculated in accordance with the then existing First Lien Credit Agreement (it being understood (A) for avoidance of doubt, that fluctuations in the LIBO Rate shall not be included in such determination of yield and (B) arrangement fees, structuring fees, commitment fees, underwriting fees or other fees payable to any lead arranger (or its affiliates) in connection with arranging such amendment, restatement, supplement, modification or Refinancing shall not be included in such determination of yield)), 
(iii)    permit the Borrowing Base to not be subject to a customary scheduled  redetermination for a conforming commercial banking borrowing base facility at least once in each eighteen (18) calendar month period, or
(iv)    modify a covenant, event of default or any other provision in the First Lien Loan Documents in a manner that prohibits or restricts one or more Grantors from making payments of principal, interest or otherwise in respect of the Second Lien Secured Obligations in a manner that is more restrictive than as permitted under the First Lien Loan Documents as in effect on the date hereof.
It is understood that, under the Second Lien Note Purchase Agreement as in effect on the date hereof, the Borrower is subject to Section 7.1(k) and Section 7.20 of the Second Lien Note Purchase Agreement, and the parties hereto agree that the provisions of Section 7.1(k) and Section 7.20 of the Second Lien Note Purchase Agreement do not conflict with this Agreement.
(b)    The Second Lien Note Documents may be amended, restated, supplemented or otherwise modified in accordance with their terms, and the Second Lien Secured Obligations under the Second Lien Note Purchase Agreement may be Refinanced, without the consent of any First Lien Secured Party (provided, that, the holders of the indebtedness resulting from any such Refinancing shall agree in writing to be bound by the terms of this Agreement); provided, however, that, until the Discharge of the First Lien Obligations occurs, without the prior written consent of the First Lien Administrative Agent (acting on the instructions of the First Lien Required Lenders), no Second Lien Note Document may 

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be amended, restated, supplemented or otherwise modified, or entered into, or Refinanced to the extent such amendment, restatement, supplement or modification, or the terms of such new Second Lien Note Document, or such Refinancing would:
(i)    contravene the provisions of this Agreement, 
(ii)    increase the applicable margin or any other component of yield under the under the Second Lien Note Documents such that the yield under the Second Lien Note Purchase Agreement (excluding increases resulting from the accrual of interest at the default rate) exceeds by more than 600 basis points the yield under the Second Lien Note Purchase Agreement on the date hereof (for the purpose of making such determination, the LIBOR (as defined in the Second Lien Note Purchase Agreement on the date hereof) will be calculated in accordance with the then existing Second Lien Note Purchase Agreement (it being understood (A) for avoidance of doubt, that fluctuations in the LIBOR shall not be included in such determination of yield and (B) arrangement fees, structuring fees, commitment fees, underwriting fees or other fees payable to any lead arranger (or its affiliates) in connection with arranging such amendment, restatement, supplement, modification or Refinancing shall not be included in such determination of yield)), 
(iii)    change (to earlier dates) any dates upon which payments of principal and interest are due under the Second Lien Note Documents, or reduce the weighted average life to maturity of the Second Lien Obligations,
(iv)    add to the Second Lien Collateral other than as specifically provided by this Agreement or as required pursuant to the terms of the Second Lien Note Documents as in effect on the date hereof, or
(v)    modify a covenant, event of default or any other provision of the Second Lien Note Documents that prohibits or restricts one or more Grantors from making payments of principal, interest or otherwise in respect of the First Lien Obligations in a manner that is more restrictive than as permitted under the Second Lien Note Documents as in effect on the date hereof.
It is understood that, under the First Lien Credit Agreement as in effect on the date hereof, the Borrower is subject to Section 9.04(c) of the First Lien Credit Agreement, and the parties hereto agree that the provisions of Section 9.04(c) of the First Lien Credit Agreement do not conflict with this Agreement.
(c)    Each of the Borrower and the Second Lien Collateral Agent agree that the Borrower shall cause each of the Second Lien Note Documents (other than the Guaranty Agreement as defined in the Second Lien Note Purchase Agreement) to contain the applicable provisions set forth on Annex I hereto, or similar provisions approved by the First Lien Administrative Agent, which approval shall not be unreasonably withheld, conditioned or delayed.

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Section 7.02    Effect of Refinancing of Indebtedness. 
(a)    First Lien Loan Documents. If the Borrower Refinances the First Lien Obligations (or any change to the terms thereof to the extent permitted by Section 7.01 hereof) and provided that (a) such Refinancing is permitted hereby and, subject to Section 7.01(b), by the terms of the Second Lien Note Purchase Agreement including Section 7.2(k) of the Second Lien Note Purchase Agreement and (b) the Borrower gives to the Second Lien Collateral Agent written notice (the “First Lien Refinancing Notice”) electing the application of the provisions of this Section 7.02(a) to such Refinancing Indebtedness, then (i) a Discharge of First Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement, (ii) such Refinancing Indebtedness and all other obligations under the loan documents evidencing such indebtedness (the “Additional First Lien Obligations”) shall automatically be treated as First Lien Secured Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (iii) the credit agreement and the other loan documents evidencing such Refinancing Indebtedness (the “Additional First Lien Loan Documents”) shall automatically be treated as a First Lien Credit Agreement and as First Lien Loan Documents and, in the case of Additional First Lien Loan Documents that are security documents, as the First Lien Security Documents for all purposes of this Agreement, (iv) the Administrative Agent under the Additional First Lien Loan Documents (the “Additional First Lien Administrative Agent”) shall be deemed to be the First Lien Administrative Agent for all purposes of this Agreement and (v) the lenders under the Additional First Lien Loan Documents shall be deemed to be the First Lien Lenders for all purposes of this Agreement. Upon receipt of a First Lien Refinancing Notice, which notice shall include the identity of the Additional First Lien Administrative Agent, the Second Lien Collateral Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the Borrower or such Additional First Lien Administrative Agent may reasonably request in order to provide to the Additional First Lien Administrative Agent the rights and powers contemplated hereby, in each case consistent with the terms of this Agreement. The Borrower shall cause the agreement, document or instrument pursuant to which the Additional First Lien Administrative Agent is appointed to provide that the Additional First Lien Administrative Agent agrees to be bound by the terms of this Agreement. In furtherance of Section 2.03, if the Additional First Lien Obligations are secured by Property of the Grantors that do not also secure the Second Lien Obligations, the applicable Grantors shall substantially contemporaneously grant a Second Priority Lien on such Property to secure the Second Lien Obligations.
(b)    Second Lien Note Documents. If the Borrower Refinances the Second Lien Obligations (including an increase thereof, or any change to the terms thereof to the extent permitted by Section 7.01 hereof) and provided that (a) such Refinancing is permitted hereby and, subject to Section 7.01(a), by the First Lien Credit Agreement and (b) the Borrower gives to the First Lien Administrative Agent written notice (the “Second Lien Refinancing Notice”) electing the application of the provisions of this Section 7.02(b) to such Refinancing Indebtedness, then (i) such Refinancing Indebtedness and all other obligations under the debt documents evidencing such indebtedness (the “Additional Second Lien Obligations”) 

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shall automatically be treated as Second Lien Secured Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (ii) the Note Purchase Agreement, credit agreement and the other debt documents evidencing such Refinancing Indebtedness (the “Additional Second Lien Note Documents”) shall automatically be treated as a Second Lien Note Purchase Agreement and as Second Lien Note Documents and, in the case of Additional Second Lien Note Documents that are security documents, as the Second Lien Collateral Documents for all purposes of this Agreement, (iii) the Second Lien Collateral Agent under the Additional Second Lien Note Documents (the “Additional Second Lien Collateral Agent”) shall be deemed to be a Second Lien Collateral Agent for all purposes of this Agreement and (iv) the lenders or noteholders under the Additional Second Lien Note Documents shall be deemed to be the Second Lien Lenders for all purposes of this Agreement. Upon receipt of a Second Lien Refinancing Notice, which notice shall include the identity of the Additional Second Lien Collateral Agent, the First Lien Administrative shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the Borrower or such Additional Second Lien Collateral Agent may reasonably request in order to provide to the Additional Second Lien Collateral Agent the rights and powers contemplated hereby, in each case consistent with the terms of this Agreement. The Borrower shall cause the agreement, document or instrument pursuant to which the Additional Second Lien Collateral Agent is appointed to provide that the Additional Second Lien Collateral Agent agrees to be bound by the terms of this Agreement. In furtherance of Section 2.03, if the Additional Second Lien Obligations are secured by Property of the Grantors that do not also secure the First Lien Obligations, the applicable Grantors shall substantially contemporaneously grant a First Priority Lien on such Property to secure the First Lien Obligations. 
Section 7.03    No Waiver by the First Lien Secured Parties. Other than with respect to the Second Lien Permitted Actions and as may otherwise be expressly provided herein, nothing contained herein shall prohibit or in any way limit the First Lien Administrative Agent or any other First Lien Secured Party from opposing, challenging or objecting to, in any Insolvency Proceeding or otherwise, any action taken, or any claim made, by the Second Lien Collateral Agent or any other Second Lien Secured Party, including any request by the Second Lien Collateral Agent or any other Second Lien Secured Party for adequate protection or any exercise by the Second Lien Collateral Agent or any other Second Lien Secured Party of any of its rights and remedies under the Second Lien Note Documents or otherwise.  
Section 7.04    Reinstatement. If, in any Insolvency Proceeding or otherwise, all or part of any payment with respect to the First Lien Obligations or Second Lien Secured Obligations, as the case may be, previously made shall be rescinded for any reason whatsoever, then the First Lien Obligations or Second Lien Secured Obligations, as the case may be, shall be reinstated to the extent of the amount so rescinded and, if theretofore terminated, this Agreement shall be reinstated in full force and effect and such prior termination shall not diminish, release, discharge, impair or otherwise affect the Lien priorities and the relative rights and obligations of the First Lien Secured Parties and the Second Lien Secured Parties provided for herein.

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Section 7.05    Further Assurances. Each of (x) the First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties, (y) the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties and (z) the Borrower, for itself and on behalf of its Subsidiaries that are Grantors, agrees that it will execute, or will cause to be executed, any and all further documents, agreements and instruments, and take all such further actions, as may be required under any applicable law, or which the First Lien Administrative Agent or the Second Lien Collateral Agent may reasonably request, to effectuate the terms of this Agreement, including the relative Lien priorities provided for herein. The parties further agree that, notwithstanding any failure to take the actions required by the immediately preceding sentence, each Person that becomes a Grantor at any time (and any security granted by any such Person) will be subject to the provisions hereof as fully as if it constituted a Grantor party hereto and had complied with the requirements of the immediately preceding sentence. Each Grantor party hereto agrees to cause each of its Subsidiaries formed or acquired after the date hereof that is a Grantor to become a party for all purposes of this Agreement by executing and delivering an assumption agreement substantially in the form attached hereto as Annex II.
Section 7.06    Notice of Exercise of Remedies. Subject to the terms of this Agreement, each of the First Lien Administrative Agent and the Second Lien Collateral Agent shall endeavor to provide advance notice to each other of an acceleration of any First Lien Secured Obligations or Second Lien Secured Obligations, as the case may be (other than with respect to any automatic accelerations thereunder); provided, however, neither party's failure to give such notice under this Section 7.06 shall create any claim or cause of action on the part of any other party against the party failing to give such notice for any reason whatsoever. Nothing contained in this Section 7.06 shall limit, restrict, alleviate, or amend any notice requirement otherwise provided in this Agreement or otherwise required under applicable law.
ARTICLE VIII 
 
REPRESENTATIONS AND WARRANTIES
Section 8.01    Representations and Warranties of Each Party. Each party hereto (other than the Grantors) represents and warrants to the other parties hereto as follows:
(a)    Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation and has all requisite power and authority to execute and deliver this Agreement and perform its obligations hereunder.
(b)    This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

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(c)    The execution, delivery and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any Governmental Authority and (ii) will not violate any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of such party or any order of any Governmental Authority or any provision of any indenture, agreement or other instrument binding upon such party.
Section 8.02    Representations and Warranties of First Lien Administrative Agent and Second Lien Collateral Agent. The First Lien Administrative Agent represents and warrants to the other parties hereto that it has been authorized by the First Lien Lenders to enter into this Agreement. The Second Lien Collateral Agent represents and warrants to the other parties hereto that it has been authorized by the Second Lien Secured Parties to enter into this Agreement. 
ARTICLE IX 
 
NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE
Section 9.01    No Reliance; Information. Each of the First Lien Administrative Agent and the Second Lien Collateral Agent, for itself and on behalf of the applicable other Secured Parties, acknowledges that (a) it and such Secured Parties have, independently and without reliance upon, in the case of the First Lien Secured Parties, any Second Lien Secured Party and, in the case of the Second Lien Secured Parties, any First Lien Secured Party, and based on such documents and information as they have deemed appropriate, made their own credit analyses and decisions to enter into the Loan Documents to which they are party and (b) it and such Secured Parties will, independently and without reliance upon, in the case of the First Lien Secured Parties, any Second Lien Secured Party and, in the case of the Second Lien Secured Parties, any First Lien Secured Party, and based on such documents and information as they shall from time to time deem appropriate, continue to make their own credit decisions in taking or not taking any action under this Agreement or any other Loan Document to which they are party, provided, that nothing in this Section 9.01 shall impose any duty on the Second Lien Collateral Agent to make any credit decisions. The First Lien Secured Parties and the Second Lien Secured Parties shall have no duty to disclose to any Second Lien Secured Party or to any First Lien Secured Party, respectively, any information relating to the Borrower or any of its Subsidiaries other than as expressly set forth herein, or any other circumstance bearing upon the risk of nonpayment of any of the First Lien Secured Obligations or the Second Lien Secured Obligations, as the case may be, that is known or becomes known to any of them or any of their Affiliates. In the event any First Lien Secured Party or any Second Lien Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any such information in such circumstances to, respectively, any Second Lien Secured Party or any First Lien Secured Party, it shall be under no obligation (i) to make, and shall not make or be deemed to have made, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of the information so provided, (ii) to provide any additional information or to provide any such information on any subsequent occasion, (iii) to undertake 

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any investigation or (iv) to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.
Section 9.02    No Warranties or Liability. 
(a)    The First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties, acknowledges and agrees that, except for the representations and warranties set forth in Article VIII, neither the Second Lien Collateral Agent nor any other Second Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Second Lien Note Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, acknowledges and agrees that, except for the representations and warranties set forth in Article VIII, neither the First Lien Administrative Agent nor any other First Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the First Lien Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.
(b)    The Second Lien Collateral Agent and the other Second Lien Secured Parties shall have no express or implied duty to the First Lien Administrative Agent or any other First Lien Secured Party, and the First Lien Administrative Agent and the other First Lien Secured Parties shall have no express or implied duty to the Second Lien Collateral Agent or any other Second Lien Secured Party, to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of a default or an event of default under any First Lien Loan Document and any Second Lien Note Document (other than, in each case, this Agreement), regardless of any knowledge thereof which they may have or be charged with.
(c)    The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that no First Lien Secured Party shall have any liability to the Second Lien Collateral Agent or any other Second Lien Secured Party, and hereby waives any claim against any First Lien Secured Party, arising out of any and all actions which the First Lien Administrative Agent or the other First Lien Secured Parties may take or permit or omit to take with respect to (i) the First Lien Loan Documents (other than this Agreement), (ii) the collection of the First Lien Obligations in accordance with this Agreement or (iii) the maintenance of, the preservation of, the foreclosure upon or the Disposition of any Collateral in accordance with this Agreement.  The First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties, agrees that no Second Lien Secured Party shall have any liability to the First Lien Administrative Agent or any other First Lien Secured Party, and hereby waives any claim against any Second Lien Secured Party, arising out of any and all actions which the Second Lien Collateral Agent or the other Second Lien Secured Parties may take or permit or omit to take with respect to (i) the Second Lien Note Documents (other than this Agreement), (ii) the collection of the Second Lien 

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Obligations in accordance with this Agreement or (iii) the maintenance of, the preservation of, the foreclosure upon or the Disposition of any Collateral in accordance with this Agreement.  
Section 9.03    Obligations Absolute. The Lien priorities provided for herein and the respective rights, interests, agreements and obligations hereunder of the First Lien Administrative Agent and the other First Lien Secured Parties and the Second Lien Collateral Agent and the other Second Lien Secured Parties shall remain in full force and effect irrespective of:
(a)    any lack of validity or enforceability of any Loan Document;
(b)    subject to the limitations set forth in Section 7.01, any change in the time, place or manner of payment of, or in any other term of (including the Refinancing of), all or any portion of the First Lien Secured Obligations or the Second Lien Secured Obligations, it being specifically acknowledged that a portion of the First Lien Secured Obligations consists or may consist of obligations that are revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed;
(c)    subject to the limitations set forth in Section 7.01, any change in the time, place or manner of payment of, or, in any other term of, all or any portion of the First Lien Secured Obligations or the Second Lien Secured Obligations;
(d)    subject to the limitations set forth in Section 7.01, any amendment, waiver or other modification, whether by course of conduct or otherwise, of any Loan Document;
(e)    the securing of any First Lien Secured Obligations or Second Lien Secured Obligations with any additional collateral or guaranty agreements, or any exchange, release, voiding, avoidance or non-perfection of any security interest in any Collateral or any other collateral or any release of any guaranty securing any First Lien Secured Obligations or Second Lien Secured Obligations, in each case not in violation of this Agreement; or
(f)    any other circumstances that otherwise might constitute a defense available to, or a discharge of, the Borrower or any other Loan Party in respect of the First Lien Secured Obligations, or the Second Lien Secured Obligations or this Agreement, or any of the Second Lien Secured Parties in respect of this Agreement.
ARTICLE X 
 
MISCELLANEOUS
Section 10.01    Notices. (a) Notices Generally. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile:

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(i)    if to the Borrower or any other Grantor, to it at its address for notices set forth in the First Lien Credit Agreement and Second Lien Note Purchase Agreement; and
(ii)    if to the First Lien Administrative Agent, to it at:
JPMorgan Chase Bank, N.A. 
712 Main St., 5th Floor
Houston, Texas 77002 
Attn: Jo Linda Papadakis 
Facsimile No.: 713-216-7770 
Email: jo.l.papadakis@jpmorgan.com 
With a copy to: 
 
Simpson Thacher & Bartlett LLP
600 Travis Street, Suite 5400
Houston, Texas 77002
Attn: Matthew Einbinder
Facsimile No.: 713-821-5602
Email: MEinbinder@stblaw.com 
(iii)    if to the Second Lien Collateral Agent, to it at: 
U.S. Bank National Association 
Global Corporate Trust Services 
225 Asylum Street, 23rd Floor
Hartford, CT 06103 
Attn:  Laurel Casasanta 
Email:  laurel.casasanta@usbank.com 

With a copy to:
Nicholas Fersen and Bryan Lothrop 
Emails:  Nicholas.Fersen@eigpartners.com and Bryan.Lothrop@eigpartners.com
With a further copy to:
Michael Chambers 
Latham & Watkins LLP 
811 Main Street, Suite 3700 
Houston, TX 77002 
Email: Michael.Chambers@lw.com

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Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent if the sender receives an acknowledgement of receipt (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in said subsection (b).
(b)    Electronic Communications. Notices and other communications may be delivered or furnished by electronic communication (including e-mail) pursuant to procedures approved by the First Lien Administrative Agent and the Second Lien Collateral Agent, provided that the foregoing shall not apply to notices to any party if such party has notified the other parties hereto that it is incapable of receiving notices by electronic communication.
Unless the First Lien Administrative Agent or the Second Lien Collateral Agent, as applicable, otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(c)    Change of Address, Etc. Each of the First Lien Administrative Agent and the Second Lien Collateral Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.
Section 10.02    Integration/Conflicts. This Agreement, the First Lien Loan Documents and the Second Lien Note Documents represent the entire agreement of the Grantors, the First Lien Secured Parties and the Second Lien Secured Parties with respect to the subject matter hereof and thereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof.  In the event of any conflict between the provisions of this Agreement and the provisions of the other Loan Documents, the provisions of this Agreement shall control.
Section 10.03    Effectiveness; Survival. This Agreement shall become effective when executed and delivered by the parties hereto. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency Proceeding. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby waives any and all rights the Second 

44

Lien Secured Parties may now or hereafter have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The First Lien Administrative Agent, for itself and on behalf of the other First Lien Secured Parties, hereby waives any and all rights the First Lien Secured Parties may now or hereafter have under applicable law to revoke this Agreement or any of the provisions of this Agreement.
Section 10.04    Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
Section 10.05    Amendments; Waivers. 
(a)    No failure or delay on the part of any party hereto in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 10.05, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.
(b)    Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the First Lien Administrative Agent and the Second Lien Collateral Agent; provided that no such agreement shall amend, modify or otherwise affect the rights or obligations of the Borrower or any Grantor (including, without limitation, Sections 2.03, 3.01(d), 5.01, 5.02, 6.01, 7.01, 7.02 and this Section 10.05 and the definitions of “Borrowing Base”, “Conforming Borrowing Base Facility” and “First Lien Capped Amount”) without such Person’s prior written consent.
Section 10.06    Subrogation. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby waives any rights of subrogation it or they may acquire as a result of any payment hereunder until the Discharge of First Lien Non-Excluded Obligations has occurred; provided, however, that, any such payment that is paid over to the First Lien Administrative Agent pursuant to this Agreement shall be deemed a payment on the First Lien Obligations and shall be deemed not to reduce any of the Second Lien Obligations unless and until the Discharge of First Lien Non-Excluded Obligations 

45

shall have occurred and the First Lien Administrative Agent redelivers any such payment to the Second Lien Collateral Agent. 
Section 10.07    Applicable Law; Jurisdiction; Consent to Service of Process. 
(a)    THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c)    Each party to this Agreement agrees that service of process in any such action or proceeding may, to the extent permitted by applicable law, be effected by delivering a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to any other party, as the case may be at its address set forth in Section 10.01 or at such other address of which the other parties shall have been notified pursuant thereto. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 10.08    Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.08.

46

Section 10.09    Parties in Interest. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as the other First Lien Secured Parties and Second Lien Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of, this Agreement. No other Person shall have or be entitled to assert rights or benefits hereunder.
Section 10.10    Specific Performance. Each of the First Lien Administrative Agent and the Second Lien Collateral Agent may demand specific performance of this Agreement and, on behalf of itself and the respective other Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action which may be brought by the respective Secured Parties.
Section 10.11    Headings. Article and Section headings used herein and the Table of Contents hereto are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 10.12    Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 10.03. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission (e.g., .pdf) shall be as effective as delivery of a manually signed counterpart of this Agreement.
Section 10.13    Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Secured Parties, on the one hand, and the Second Lien Secured Parties, on the other hand. Except as set forth in Section 10.09, no Person is a third-party beneficiary of this Agreement. Except for the sections and definitions referred to in Section 10.05 and as otherwise expressly provided in this Agreement, none of the Borrower, any other Grantor, any Guarantor or any other creditor thereof shall have any rights or obligations hereunder and none of the Borrower, any other Grantor or any Guarantor may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of the Borrower or any other Grantor or any Guarantor, which are absolute and unconditional, to pay the First Lien Secured Obligations and the Second Lien Secured Obligations as and when the same shall become due and payable in accordance with their terms.
Section 10.14    Sharing of Information. The Grantors agree that any information provided to the First Lien Administrative Agent, the Second Lien Collateral Agent, any First Lien Secured Party or any Second Lien Secured Party may be shared by such Person with any First Lien Secured Party, any Second Lien Secured Party, the First Lien Administrative Agent or the Second Lien Collateral Agent notwithstanding a request or demand by such Grantor that such information be kept confidential; provided, that such information shall otherwise be subject to the respective confidentiality provisions in the First Lien Credit Agreement and the Second Lien Note Purchase Agreement, as applicable.

47

Section 10.15    Agents.  It is understood and agreed that (a) the First Lien Administrative Agent is entering into this Agreement in its capacity as administrative agent under the First Lien Credit Agreement and the provisions of Article XI of the First Lien Credit Agreement applicable to the Administrative Agent (as defined therein) thereunder shall also apply to the First Lien Administrative Agent hereunder and (b) the Second Lien Collateral Agent is entering into this Agreement in its capacity as “Agent” under the Second Lien Note Purchase Agreement and the provisions of Section 9 of the Second Lien Note Purchase Agreement applicable to the Agent (as defined therein) thereunder shall also apply to the Second Lien Collateral Agent hereunder.
[Remainder of this page intentionally left blank]

48

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
BORROWER:
SILVERBOW RESOURCES, INC. 
(F/K/A SWIFT ENERGY COMPANY), 
a Delaware corporation

By:/s/ Christopher M. Abundis     
Name:    Christopher M. Abundis
Title:    Senior Vice President, General
Counsel and Secretary

GRANTORS:
SILVERBOW RESOURCES USA, INC. (F/K/A SWIFT ENERGY USA, INC.), 
a Delaware corporation

By:/s/ Christopher M. Abundis     
Name:    Christopher M. Abundis
Title:    Secretary

    

SILVERBOW RESOURCES OPERATING, LLC (F/K/A SWIFT ENERGY OPERATING, LLC), 
a Texas limited liability company

By:/s/ Christopher M. Abundis     
Name:    Christopher M. Abundis
Title:    Senior Vice President, General
Counsel and Secretary

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

JPMORGAN CHASE BANK, N.A., as First Lien Administrative Agent
By:/s/ Greg Determann    
Name:    Greg Determann
Title:    Authorized Officer

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

U.S. BANK NATIONAL ASSOCIATION, as Second Lien Collateral Agent
By:/s/ Laurel A. Melody-Casasanta    
Name:    Laurel A. Melody-Casasanta
Title:    Vice President

ANNEX I
Provision for the Second Lien Note Purchase Agreement
“Reference is made to the Intercreditor Agreement dated as of December 15, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Issuer, each of the Grantors (as defined therein) party thereto, JPMorgan Chase Bank, N.A., as First Lien Administrative Agent (as defined therein), and U.S. Bank National Association, as Second Lien Collateral Agent (as defined therein). Each Holder hereunder (a) consents to the subordination of Liens provided for in the Intercreditor Agreement, and (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement as if it was a signatory thereto.”
Provision for Certain Second Lien Collateral Documents
“Reference is made to the Intercreditor Agreement dated as of December 15, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Borrower, each of the Grantors (as defined therein) party thereto, JPMorgan Chase Bank, N.A., as First Lien Administrative Agent (as defined therein), and U.S. Bank National Association, as Second Lien Collateral Agent (as defined therein). Notwithstanding anything herein to the contrary, the lien and security interest granted to the Agent, for the benefit of the Secured Parties, pursuant to this Agreement and the exercise of any right or remedy by the Agent and the other Secured Parties hereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the provisions of the Intercreditor Agreement and this Agreement, the provisions of the Intercreditor Agreement shall control.”

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

ANNEX II
[FORM OF] SUPPLEMENT NO. [__] dated as of [_____], 20[__] (the “Supplement”), to the INTERCREDITOR AGREEMENT dated as of December 15, 2017 (the “Intercreditor Agreement”), among SilverBow Resources, Inc. (f/k/a Swift Energy Company), a Delaware corporation (the “Borrower”), the other Grantors party thereto, JPMORGAN CHASE BANK, N.A., as the First Lien Administrative Agent under the First Lien Credit Agreement, and U.S. BANK NATIONAL ASSOCIATION, as the Second Lien Collateral Agent under the Second Lien Note Purchase Agreement.
A.    Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.
B.    The Grantors have entered into the Intercreditor Agreement. Pursuant to the First Lien Credit Agreement, the Second Lien Note Purchase Agreement, certain Additional First Lien Loan Documents, and certain Additional Second Lien Note Documents, certain newly acquired or organized Subsidiaries of the Borrower are required to enter into the Intercreditor Agreement. Section 7.05 of the Intercreditor Agreement provides that such Subsidiaries may become party to the Intercreditor Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “New Grantor”) is executing this Supplement in accordance with the requirements of the First Lien Credit Agreement, the Second Lien Note Purchase Agreement, the Additional First Lien Loan Documents, and the Additional Second Lien Note Documents.
Accordingly, the New Grantor agrees and the First Lien Administrative Agent and the Second Lien Collateral Agent acknowledge as follows:
SECTION 1.    In accordance with Section 7.05 of the Intercreditor Agreement, the New Grantor by its signature below becomes a Grantor under the Intercreditor Agreement with the same force and effect as if originally named therein as a Grantor, and the New Grantor hereby agrees to all the terms and provisions of the Intercreditor Agreement applicable to it as a Grantor thereunder. Each reference to a “Grantor” in the Intercreditor Agreement shall be deemed to include the New Grantor. The Intercreditor Agreement is hereby incorporated herein by reference.
SECTION 2.    The New Grantor represents and warrants to the Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by Bankruptcy Laws and by general principles of equity.
SECTION 3.    This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the First Lien Administrative Agent and the Second Lien Collateral Agent shall have received a counterpart of this Supplement that bears the signature of the New Grantor. Delivery of an executed signature page to this 

Annex II

Supplement by facsimile transmission or other electronic method shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4.    Except as expressly supplemented hereby, the Intercreditor Agreement shall remain in full force and effect.
SECTION 5.    THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.    In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, no party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Intercreditor Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7.    All communications and notices hereunder shall be in writing and given as provided in Section 10.01 of the Intercreditor Agreement. All communications and notices hereunder to the New Grantor shall be given to it in care of the Borrower as specified in the Intercreditor Agreement.
SECTION 8.    The Grantors agree to reimburse the First Lien Administrative Agent and the Second Lien Collateral Agent for each of their reasonable fees and expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for each of the First Lien Administrative Agent and the Second Lien Collateral Agent as required by the applicable Loan Documents.

Annex II

IN WITNESS WHEREOF, the New Grantor has duly executed this Supplement to the Intercreditor Agreement as of the day and year first above written.
[NAME OF NEW SUBSIDIARY GRANTOR]

By:        
Name:  
Title:  

Annex IIExhibit 4.1

 

ARTICLES OF ASSOCIATION

OF

FOAMIX PHARMACEUTICLS LTD.

 

A COMPANY LIMITED BY SHARES

UNDER THE COMPANIES LAW, 5759 – 1999

 

	1.	
INTERPRETATION

 

		1.1.	
In these Articles, unless the context requires otherwise, the following capitalized terms shall have the meanings set opposite them:

 

“Alternate Nominee” has the meaning set out in Article 17.2;

 

“Articles” means these Articles of Association, as may be amended from time to time by a Resolution (as defined below);

 

“Board” means all of the directors of the Company holding office pursuant to these Articles, including alternates, substitutes or proxies;

 

“Business Day” means any day other than a Saturday, Sunday and any day in which banks in Israel are closed or in which the NASDAQ Stock Market is closed.

 

“Chairman of the Board” has the meaning set out in in Article 18.4;

 

“Companies Law” the Israeli Companies Law, 5759-1999,  as amended from time to time, including the regulations promulgated thereunder, or any other law which may come in its stead, including all amendments made thereto;

 

“Company” means Foamix Pharmaceuticals Ltd.;

 

“Compensation Committee” has the meaning set out in the Companies Law;

 

“Derivative Transaction” has the meaning set out in Article 14.5;

 

“Effective Time” means the closing of the initial underwritten public offering of the Company’s ordinary shares, at which time these Articles shall first become effective;

 

“External Director” has the meaning set out in the Companies Law;

 

“General Meeting” means either an annual or an extraordinary meeting of the shareholders;

 

“Incapacitated Person” has the meaning set out in the Israeli Legal Capacity and Guardianship Law, 5722-1962, as amended from time to time, including a minor who has not yet attained the age of 18 years, a person of unsound mind and a bankrupt person in respect of whom no rehabilitation has been granted;

 

“Nominees” has the meaning set out in Article 17.2;

 

“Office” means the registered office of the Company at that time;

 

“Office Holder” has the meaning set out in the Companies Law;

 

“Proposal Request” has the meaning set out in Article 14.5;

 

“Proposing Shareholder” has the meaning set out in Article 14.5;

 

“Register” means the register of shareholders administered in accordance with the Companies Law;

 

“Rights” has the meaning set out in Article 26.8;

 

“Special Fund” has the meaning set out in Article 26.8;

 

“U.S. Rules” means the applicable rules of the NASDAQ Stock Market and the U.S. securities rules and regulations, as amended from time to time; and

 

		1.2.	
Reference to “writing”, “written” or similar expressions in these Articles means handwriting, typewriting, photography, telex, email or any other legible form of writing. Reference to a “person” or “persons” shall also include corporations, companies, cooperative societies, partnerships, trusts of any kind or any other body of persons, whether incorporated or otherwise.

 

		1.3.	
Subject to the provisions of this Article 1 and unless the context necessitates another meaning, terms and expressions in these Articles which have been defined in the Companies Law shall have the meanings ascribed to them therein.

 

Words in the singular shall also include the plural, and vice versa. Words in the masculine shall include the feminine and vice versa.

 

		1.4.	
The captions to articles in these Articles are intended for the convenience of the reader only, and no use shall be made thereof in the interpretation of these Articles.

 

	2.	
LIMITED LIABILITY

 

The Company is a limited liability company and therefore each shareholder’s liability for the Company’s obligations shall be limited to the payment of the nominal value of the shares held by such shareholder, subject to the provisions of the Companies Law.

 

	3.	
OBJECTIVES

 

The Company’s objectives are to conduct all types of business as are permitted by law. The Company may donate a reasonable amount of money for any purpose that the Board finds appropriate, even if the donation is not for business considerations or for the purpose of achieving profits for the Company.

 

	4.	
REGISTERED OFFICE

 

The registered office shall be at such place as decided by the Board from time to time.

 

	5.	
AUTHORIZED SHARE CAPITAL

 

The authorized share capital of the Company shall consist of NIS 14,400,000, divided into 90,000,000 ordinary shares with a nominal value of NIS 0.16 each.

 

	6.	
RIGHTS ATTACHING TO THE ORDINARY SHARES

 

		6.1.	
The ordinary shares in respect of which all calls have been fully paid shall confer on the holders thereof the right to attend and to vote at General Meetings of the Company, both annual as well as extraordinary meetings.

 

		6.2.	
The ordinary shares shall confer on a holder thereof the right to receive a dividend, to participate in a distribution of bonus shares and to participate in the distribution of the assets of the Company upon its winding-up, pro rata to the nominal amount paid up on the shares or credited as paid up in respect thereof, and without reference to any premium which may have been paid in respect thereof.

 

	7.	
MODIFICATION OF CLASS RIGHTS

 

		7.1.	
Subject to applicable law, if at any time the share capital of the Company is divided into different classes of shares and unless the terms of issue of such class of shares otherwise stipulate, the rights attaching to any class of shares (including rights prescribed in the terms of issue of the shares) may be altered, modified or canceled by a resolution passed at a separate class meeting of the shareholders of that class.

 

		7.2.	
The provisions contained in these Articles with regard to General Meetings shall apply, mutatis mutandis as the case may be, to every class meeting of the holders of each such class of the Company’s shares.

 

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		7.3.	
Unless otherwise provided by these Articles, the increase of an authorized class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed, for purposes of this Article 7, to modify or abrogate the rights attached to previously issued shares of such class or of any other class.

 

	8.	
UNISSUED SHARE CAPITAL

 

		8.1.	
The unissued shares in the capital of the Company shall be under the control of the Board, which shall be entitled to allot or otherwise grant the same to such persons under such restrictions and conditions as it shall deem fit, whether for consideration or otherwise, and whether for consideration in cash or for consideration which is not in cash, above their nominal value or at a discount, all on such conditions, in such manner and at such times as the Board shall deem fit, subject to the provisions of the Companies Law. The Board shall be entitled, inter alia, to differentiate between shareholders with regard to the amounts of calls in respect of the allotment of shares (to the extent that there are calls) and with regard to the time for payment thereof. The Board may also issue options or warrants for the purchase of shares of the Company and prescribe the manner of the exercise of such options or warrants, including the time and price for such exercise and any other provision which is relevant to the method for distributing the issued shares of the Company amongst the purchasers thereof.

 

		8.2.	
The Board shall be entitled to prescribe the times for the issue of shares of the Company and the conditions therefore and any other matter which may arise in connection with the issue thereof.

 

		8.3.	
In every case of a rights offering the Board shall be entitled, in its discretion, to resolve any problems and difficulties arising or that are likely to arise in regard to fractions of rights, and without prejudice to the generality of the foregoing, the Board shall be entitled to specify that no shares shall be allotted in respect of fractions of rights, or that fractions of rights shall be sold and the net proceeds shall be paid to the persons entitled to the fractions of rights, or, in accordance with a decision by the Board, to the benefit of the Company.

 

	9.	
INCREASE OF CAPITAL; ALTERATIONS TO CAPITAL

 

		9.1.	
The Company may, from time to time, by a resolution of the shareholders at a General Meeting, increase its share capital by way of the creation of new shares, whether or not all the existing shares have been issued up to the date of the resolution, whether or not it has been decided to issue same, and whether or not calls have been made on all the issued shares.

 

		9.2.	
The increase of share capital shall be in such amount and divided into shares of such nominal value, and with such restrictions and conditions and with such rights and privileges as the resolution dealing with the creation of the shares prescribes, and if no provisions are contained in the resolution, then as the Board shall prescribe.

 

		9.3.	
Unless otherwise stated in the resolution approving the increase of the share capital, the new shares shall be subject to those provisions in regard to issue, allotment, alteration of rights, payment of calls, liens, forfeiture, transfer, transmission and other provisions which apply to the shares of the Company.

 

		9.4.	
By resolution of the shareholders in a General Meeting, the Company may, subject to any applicable provisions of the Companies Law:

 

		9.4.1.	
consolidate its existing share capital, or any part thereof, into shares of a larger denomination than the existing shares;

 

		9.4.2.	
sub-divide its share capital, in whole or in part, into shares of a smaller denomination than the nominal value of the existing shares and without prejudice to the foregoing, one or more of the shares so created may be granted any preferred or deferred rights or any special rights with regard to dividends, participation in assets upon winding-up, voting and so forth, subject to the provisions of these Articles;

 

		9.4.3.	
reduce its share capital; or

 

- 3 -

		9.4.4.	
cancel any shares which on the date of passing of the resolution have not been issued and to reduce its share capital by the amount of such shares.

 

		9.5.	
In the event that the Company’s shareholders shall adopt any of the resolutions described in Article 9.4 above, the Board shall be entitled to prescribe arrangements necessary in order to resolve any difficulty arising or that are likely to arise in connection with such resolutions, including, in the event of a consolidation, it shall be entitled to (i) allot, in contemplation of or subsequent to such consolidation or other action, shares or fractional shares sufficient to preclude or remove fractional share holdings; (ii) redeem, in the case of redeemable shares, and subject to applicable law, such shares or fractional shares sufficient to preclude or remove fractional share holdings; (iii) round up, round down or round to the nearest whole number, any fractional shares resulting from the consolidation or from any other action which may result in fractional shares; or (iv) cause the transfer of fractional shares by certain shareholders to other shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and, cause the transferees of such fractional shares to pay the transferors thereof the fair value thereof, and the Board is hereby authorized to act in connection with such transfer, as agent for the transferors and transferees of any such fractional shares, with full power of substitution, for the purposes of implementing the provisions of this Article 9.5.

 

	10.	
SHARE CERTIFICATES

 

		10.1.	
To the extent shares are certificated, share certificates evidencing title to the shares of the Company shall be issued under the seal or rubber stamp of the Company, and together with the signatures of two members of the Board, or one director together with the Chief Executive Officer, the Chief Financial Officer or any other person designated by the Board. The Board shall be entitled to decide that the signatures be effected in any mechanical or electronic form, provided that the signature shall be effected under the supervision of the Board in such manner as it prescribes.

 

		10.2.	
Every shareholder shall be entitled, free of charge, to one certificate in respect of all the shares of a single class registered in his name in the Register.

 

		10.3.	
The Board shall not refuse a request by a shareholder to obtain several certificates in place of one certificate, unless such request is, in the opinion of the Board, unreasonable. Where a shareholder has sold or transferred some of his shares, he shall be entitled, free of charge, to receive a certificate in respect of his remaining shares, provided that the previous certificate is delivered to the Company before the issuance of a new certificate.

 

		10.4.	
Every share certificate shall specify the number of the shares in respect of which such certificate is issued and also the amounts which have been paid up in respect of each share.

 

		10.5.	
No person shall be recognized by the Company as having any right to a share unless such person is the registered owner of the shares in the Register. The Company shall not be bound by and shall not recognize any right or privilege pursuant to the laws of equity, or a fiduciary relationship or a chose in action, future or partial, in any share, or a right or privilege to a fraction of a share, or (unless these Articles otherwise direct) any other right in respect of a share, except the absolute right to the share as a whole, where same is vested in the owner registered in the Register.

 

		10.6.	
A share certificate registered in the names of two or more persons shall be delivered to one of the joint holders, and the Company shall not be obliged to issue more than one certificate to all the joint holders of shares and the delivery of such certificate to one of the joint holders shall be deemed to be delivery to all of them.

 

		10.7.	
If a share certificate should be lost, destroyed or defaced, the Board shall be entitled to issue a new certificate in its place, provided that the certificate is delivered to it and destroyed by it, or it is proved to the satisfaction of the Board that the certificate was lost or destroyed and security has been received to its satisfaction in respect of any possible damages and after payment of such amount as the Board shall prescribe.

 

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	11.	
CALLS ON SHARES

 

		11.1.	
The Board may from time to time, in its discretion, make calls on shareholders in respect of amounts which are still unpaid in respect of the shares held by each of the shareholders (including premiums), if the terms of issue do not prescribe that same be paid at fixed times, and every shareholder shall be obliged to pay the amount of the call made on him, at such time and at such place as stipulated by the Board.

 

		11.2.	
In respect of any such call, prior notice of at least fourteen (14) Business Days shall be given, stating to whom the amount called is to be paid, the time for payment and the place thereof, provided that prior to the due date for payment of such call, the Board may, by written notice to the shareholders to which the call was made, cancel the call or extend the date of payment thereof.

 

		11.3.I	
f according to the terms of issue of any share, or otherwise, any amount is required to be paid at a fixed time or in installments at fixed times, whether the payment is made on account of the nominal value of the share or in form of a premium, every such payment or every such installment shall be paid as if it was a call duly made by the Board, in respect of which notice was duly given, and all the provisions contained in these Articles in regard to calls shall apply to such amount or to such installment.

 

		11.4.	
Joint holders of a share shall be jointly and severally liable for the payment of all installments and calls due in respect of such share.

 

		11.5.	
In the event that a call or installment due on account of a share is not paid on or before the date fixed for payment thereof, the holder of the share, or the person to whom the share has been allotted, shall be obliged to pay linkage differentials and interest on the amount of the call or the installment, at such rate as shall be determined by the Board, commencing from the date fixed for the payment thereof and until the date of actual payment. The Board may, however, waive the payment of the linkage differentials or the interest or part thereof.

 

		11.6.	
A shareholder shall not be entitled (i) to receive a dividend and (ii) to exercise any right as a shareholder, including but not limited to, the right to attend and vote at a General Meeting and to transfer the shares to another, unless he has paid all the calls payable from time to time and which apply to any of his shares, whether he holds same alone or jointly with another, plus linkage differentials, interest and expenses, if any.

 

		11.7.	
The Board may, if it deems fit, accept payment from a shareholder wishing to advance the payment of all moneys which remain unpaid on account of his shares, or part thereof which are over and above the amounts which have actually been called, and the Board shall be entitled to pay such shareholder linkage differentials and interest in respect of the amounts paid in advance, or that portion thereof which exceeds the amount called for the time being on account of the shares in respect of which the advance payment is made, at such rate as is agreed upon between the Board and the shareholder, with this being in addition to dividends (if any) payable on the paid-up portion of the share in respect of which the advance payment is made.  The Board may, at any time, repay the amount paid in advance as aforesaid, in whole or in part, in its sole discretion, without premium or penalty.  Nothing in this Article 11.7 shall derogate from the right of the Board to make any call for payment before or after receipt by the Company of any such advance.

 

	12.	
FORFEITURE AND LIEN

 

		12.1.	
If a shareholder fails to make payment of any call or other installment on or before the date fixed for the payment thereof, the Board may, at any time thereafter and for as long as the part of the call or installment remains unpaid, serve on such shareholder a notice demanding that he make payment thereof, together with the linkage differentials and interest at such rate as is specified by the Board and all the expenses incurred by the Company in consequence of such non-payment.

 

		12.2.	
The notice shall specify a further date, which shall be at least fourteen (14) Business Days after the date of the delivery of the notice, and a place or places at which such call or installment is to be paid, together with linkage differentials and interest and expenses as aforesaid. The notice shall further state that, if the amount is not paid on or before the date specified, and at the place mentioned in such notice, the shares in respect of which the call was made, or the installment is due, shall be liable to forfeiture.

 

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		12.3.	
If the demands contained in such notice are not complied with the Board may treat the shares in respect of which the notice referred to in Articles 12.1 and 12.2 was given as forfeited. Such forfeiture shall include all dividends, bonus shares and other benefits which have been declared in respect of the forfeited shares which have not actually been paid prior to the forfeiture.

 

		12.4.	
Any share so forfeited or waived shall be deemed to be the property of the Company and the Board shall be entitled, subject to the provisions of these Articles and the Companies Law, to sell, re-allot or otherwise dispose thereof, as it deems fit, whether the amount paid previously in respect of that share is credited, in whole or in part.

 

		12.5.	
The Board may, at any time before any share forfeited as aforesaid is sold or re-allotted or otherwise dispose of, cancel the forfeiture on such conditions as it deems fit.

 

		12.6.	
Any person whose shares have been forfeited shall cease to be a shareholder in respect of the forfeited shares, but shall, nonetheless remain liable for the payment to the Company of all calls, installments, linkage differentials, interest and expenses due on account of or in respect of such shares on the date of forfeiture, in respect of the forfeited shares, together with interest on such amounts reckoned from the date of forfeiture until the date of payment, at such rate as the Board shall from time to time specify. However, such person’s liability shall cease after the Company has received all the amounts called in respect of the shares as well as any expenses incurred by the Company relating to collecting the amounts called. The Board shall be entitled to collect the moneys which have been forfeited, or part thereof, as it shall deem fit, but it shall not be obliged to do so.

 

		12.7.	
The provisions of these Articles in regard to forfeiture shall also apply to cases of non-payment of any amount, which, according to the terms of issue of the share, or which under the conditions of allotment the due date for payment of which fell on a fixed date, whether this be on account of the nominal value of the share or in the form of a premium, as if such amount was payable pursuant to a call duly made and notified.

 

		12.8.	
The Company shall have a first and paramount lien over all the shares which have not been fully paid up and which are registered in the name of any shareholder (whether individually or jointly with others) and also over the proceeds of the sale thereof, as security for the debts and obligations of such shareholder to the Company and his contractual engagements with it, either individually or together with others. This right of lien shall apply whether or not the due date for payment of such debts or the fulfillment or performance of such obligations has arrived, and no rights in equity shall be created in respect of any share over which there is a lien as aforesaid. The aforesaid lien shall apply to all dividends or benefits which may be declared, from time to time, on such shares, unless the Board shall decide otherwise.

 

		12.9.	
In order to foreclose on such lien, the Board may sell the shares under lien at such time and in such manner as, it shall deem fit, but no share may be sold unless the period referred to below has elapsed and written notice has been given to the shareholder, his trustee, liquidator, receiver, the executors of his estate, or anyone who acquires a right to shares in consequence of the bankruptcy of a shareholder, as the case may be, stating that the Company intends to sell the shares, if he or they should fail to pay the aforesaid debts, or fail to discharge or fulfill the aforesaid obligations within fourteen (14) Business Days from the date of the delivery of the notice.

 

		12.10.	
The net proceeds of any such sale of shares, as contemplated by Article 12.9 above, after deduction of the expenses of the sale, shall serve for the discharge of the debts of such shareholder or for performance of such shareholder’s obligations (including debts, undertakings and contractual engagements the due date for the payment or performance of which has arrived) and the surplus, if any, shall be paid to the shareholder, his trustee, liquidator, receiver, guardians, the executors of his estate, or to his successors-in-title.

 

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		12.11.	
In every case of a sale following forfeiture or waiver, or for purposes of executing a lien by exercising all of the powers conferred above, the Board shall be entitled to appoint a person to sign an instrument of transfer of the shares sold, and to arrange for the registration of the name of the buyer in the Register in respect of the shares sold.

 

		12.12.	
An affidavit signed by the Chairman of the Board that a particular share of the Company was forfeited, waived or sold by the Company by virtue of a lien, shall serve as conclusive evidence of the facts contained therein as against any person claiming a right in the share. The purchaser of a share who relies on such affidavit shall not be obliged to investigate whether the sale, re-allotment or transfer, or the amount of consideration and the manner of application of the proceeds of the sale, were lawfully effected, and after his name has been registered in the Register he shall have a full right of title to the share and such right shall not be adversely affected by a defect or invalidity which occurred in the forfeiture, waiver, sale, re-allotment or transfer of the share.

 

	13.	
TRANSFER AND TRANSMISSION OF SHARES

 

		13.1.	
No transfer of shares shall be registered unless a proper instrument of transfer is delivered to the Company or, in the case of shares registered with a transfer agent, delivered to such transfer agent or to such other place specified for this purpose by the Board. Subject to the provisions of these Articles, an instrument of transfer of a share in the Company shall be signed by the transferor and the transferee. The Board may approve other methods of recognizing the transfer of shares in order to facilitate the trading of the Company’s shares on the Nasdaq Global Market or on any other stock exchange.  The transferor shall be deemed to remain the holder of the share up until the time the name of the transferee is registered in the Register in respect of the transferred share.

 

		13.2.	
Insofar as the circumstances permit, the instrument of transfer of a share shall be substantially in the form set out below, or in any other form that the Board may approve.

 

I _______________, I.D. _______________ of _______________ (the “Transferor”), in consideration for an amount of NIS _______________ (in words) paid to me by _______________ I.D. _______________ of _______________ (hereinafter: the “Transferee”), hereby transfer to the Transferee _______________ ______________ shares of nominal value NIS _______________ each, marked with the numbers _______________ to _______________ (inclusive) of Foamix Pharmaceuticals Ltd., to be held by the Transferee, the acquires of his rights and his successors-in title, under all the same conditions under which I held same prior to the signing of this instrument, and I, the Transferee, hereby agree to accept the aforementioned share in accordance with the above mentioned conditions.

 

In witness whereof we have hereunto signed this _____ day of _______ 20__.

 

Transferor _______________                                                                                                                                                      Transferee _______________

 

Witnesses to Signature _______________

 

		13.3.	
The Company may close the transfer registers and the Register for such period of time as the Board shall deem fit.

 

		13.4.	
Every instrument of transfer shall be submitted to the Office or to such other place as the Board shall prescribe, for purposes of registration, together with the share certificates to be transferred, or if no such certificate was issued, together with a letter of allotment of the shares to be transferred, and such other proof as the Board may demand in regard to the transferor’s right of title or his right to transfer the shares. The Board shall have the right to refuse to recognize an assignment of shares until the appropriate securities under the circumstances have been provided, as shall be determined by the Board in a specific case or from time to time in general. Instruments of transfer which serve as the basis for transfers that are registered shall remain with the Company.

 

		13.5.	
Every instrument of transfer shall relate to one class of shares only, unless the Board shall otherwise agree.

 

		13.6.	
The executors of the will or administrator of a deceased shareholder’s estate (such shareholder not being one of a joint owners of a share) or, in the absence of an administrator of the estate or executor of the will, the persons specified in Article 13.7 below, shall be entitled to demand that the Company recognize them as owners of rights in the share. The provisions of Article 13.4 above shall apply, mutatis mutandis, also in regard to this Article.

 

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		13.7.	
In the case of the death of one of the holders of a share registered in the names of two or more Persons, the Company shall recognize only the surviving owners as Persons having rights in the share. However, the aforementioned shall not be construed as releasing the estate of a deceased joint shareholder from any and all undertakings in respect of the shares. Any person who shall become an owner of shares following the death of a shareholder shall be entitled to be registered as owner of such shares after having presented to an officer of the Company to be designated by the Chief Executive Officer an inheritance order or probation order or order of appointment of an administrator of estate and any other proof as required - if these are sufficient in the opinion of such officer - testifying to such person’s right to appear as shareholder in accordance with these Articles, and which shall testify to his title to such shares. The provisions of Article 13.4 above shall apply, mutatis mutandis, also in regard to this Article.

 

		13.8.	
The receiver or liquidator of a shareholder who is a company or the trustee in bankruptcy or the official receiver of a shareholder who is bankrupt, upon presenting appropriate proof to the satisfaction of an officer of the Company to be designated by the Chief Executive Officer that such shareholder has the right to appear in this capacity and which testifies to such shareholder’s title, may, with the consent of the Board (the Board shall not be obligated to give such consent) be registered as the owner of such shares. Furthermore, such shareholder may assign such shares in accordance with the rules prescribed in these Articles. The provisions of Article 13.4 above shall apply, mutatis mutandis, also in regard to this Article.

 

		13.9.	
A person entitled to be registered as a shareholder following assignment pursuant to these Articles shall be entitled, if approved by the Board and to the extent and under the conditions prescribed by the Board, to dividends and any other monies paid in respect of the shares, and shall be entitled to give the Company confirmation of the payments; however, he shall not be entitled to be present or to vote at any General Meeting of the Company or, subject to the provisions of these Articles, to make use of any rights of shareholders, until he has been registered as owner of such shares in the Register.

 

	14.	
GENERAL MEETING

 

		14.1.	
A General Meeting shall be held at least once every year, not later than fifteen (15) months after the last General Meeting, at such time and at such place as the Board shall determine. Such General Meeting shall be called an annual meeting, and all other meetings of the shareholders shall be called extraordinary meetings.

 

		14.2.	
The Board may call an extraordinary meeting whenever it sees fit to do so.

 

		14.3.	
The Board shall be obliged to call an extraordinary meeting upon a requisition in writing in accordance with the Companies Law.

 

		14.4.	
The Company shall provide prior notice in regard to the holding of an annual meeting or an extraordinary meeting in accordance with the requirements of these Articles, the Companies Law and the regulations promulgated thereunder. Subject to the provisions of the Companies Law and the regulations promulgated thereunder, in counting the number of days of prior notice given, the day of publication of notice shall not be counted, but the day of the meeting shall be counted. The notice shall specify those items and contain such information as shall be required by the Companies Law, the regulations promulgated thereunder and any other applicable law and regulations.

 

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		14.5.	
Any shareholder requesting to add an item to the agenda of a General Meeting (a “Proposing Shareholder”) may submit such a request in accordance with the Companies Law (a “Proposal Request”).  Subject to any requirements under the Law, to be considered timely and thereby be added to such agenda, a Proposal Request must be delivered, either in person or by certified mail, postage prepaid, and received at the Office, (i) in the case of a General Meeting that is an annual meeting, no less than sixty (60) days nor more than one-hundred twenty (120) days prior to the date of the first anniversary of the preceding year’s annual meeting, provided, however, that, in the event that the date of the annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary of the preceding year’s annual meeting, notice by the Proposing Shareholder, in order to be timely, must be received no earlier than the close of business one-hundred twenty (120) days prior to such annual meeting and no later than the close of business on the later of ninety (90) days prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made, and (ii) in the case of a General Meeting that is an extraordinary meeting, no earlier than one-hundred twenty (120) days prior to such extraordinary meeting and no later than the close of business on the later of sixty (60) days prior to such extraordinary meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made, subject to applicable law.

 

		14.6.	
Such request to add an item to the agenda of the General Meeting shall also set forth: (i) the name and address of the Proposing Shareholder making the request; (ii) a representation that the Proposing Shareholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting; (iii) a description of all arrangements or understandings between the Proposing Shareholder and any other person or persons (naming such person or persons) in connection with the subject which is requested to be included in the agenda; (iv) a description of all Derivative Transactions (as defined below) by the Proposing Shareholder during the previous twelve (12) month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions; and (v) a declaration that all the information that is required under the Companies Law and any other applicable law to be provided to the Company in connection with such subject, if any, has been provided.  Furthermore, the Board, may, in its discretion, to the extent it deems necessary, request that the Proposing Shareholder(s) provide additional information necessary so as to include a subject in the agenda of a General Meeting, as the Board may reasonably require.  The information required pursuant to this Article 14.6 shall be updated as of the record date of the General Meeting, five (5) Business Days before the General Meeting, and any adjournment or postponement thereof.

 

		14.7.	
A “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any Proposing Shareholder or any of its affiliates or associates, whether of record or beneficial: (a) the value of which is derived in whole or in part from the value of any class or series of shares or other securities of the Company, (b) which otherwise provides any direct or indirect opportunity to gain or share in any gain derived from a change in the value of securities of the Company, (c) the effect or intent of which is to mitigate loss, manage risk or benefit of security value or price changes, or (d) which provides the right to vote or increase or decrease the voting power of such Proposing Shareholder, or any of its affiliates or associates, with respect to any shares or other securities of the Company, which agreement, arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap, stock appreciation right, short position, profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate interest of such Proposing Shareholder in the shares or other securities of the Company held by any general or limited partnership, or any limited liability company, of which such Proposing Shareholder is, directly or indirectly, a general partner or managing member.

 

		14.8.	
Subject to Article 15.9 below, in the event that the Company has established that an adjourned meeting shall be held on such date which is later than the date provided for in Section 78(b) of the Companies Law, such later date shall be included in the notice. The Company may add additional places for shareholders to review the full text of the proposed resolutions, including an internet site.  The notice shall be provided in the manner prescribed in Article 29.  In no event shall the public announcement of an adjournment or postponement of a General Meeting commence a new time period (or extend any time period) for the giving of a shareholder’s notice as described above.

 

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		14.9.	
Subject to any requirements under the Companies Law, nominations of persons for election to the Board may only be made at an extraordinary meeting if directors are to be elected at such meeting (a) by or at the direction of the Board, or (b) by any shareholder who is entitled to vote at the meeting and who complies with the notice procedures set forth in Article 14.6 above.

 

	15.	
PROCEEDINGS AT GENERAL MEETING

 

		15.1.	
No business shall be conducted at a General Meeting unless a quorum is present, and no resolution shall be passed unless a quorum is present at the time the resolution is voted on. Except in cases where it is otherwise stipulated, a quorum shall be constituted when there are personally present, or represented by proxy, at least two (2) shareholders who hold, in the aggregate, at least 25% of the voting rights in the Company. A proxy may be deemed to be two (2) or more shareholders pursuant to the number of shareholders he represents.

 

		15.2.	
If within half an hour from the time appointed for the meeting, a quorum is not present, without there being an obligation to notify the shareholders to that effect, the meeting shall be adjourned to the same day in the following week, at the same hour and at the same place or to a later time and date if so specified in the notice of the meeting, unless such day shall fall on a statutory holiday (either in Israel or in the United States), in which case the meeting will be adjourned to the first Business Day afterwards.

 

		15.3.	
If the original meeting was convened upon requisition under Section 63 of the Companies Law, one or more shareholders, present in person or by proxy and holding the number of shares required for making such requisition, shall constitute a quorum at the adjourned meeting, but in any other case any two (2) shareholders present in person or by proxy shall constitute a quorum at the adjourned meeting.

 

		15.4.	
The Chairman of the Board, or any other person appointed for this purpose by the Board, shall preside at every General Meeting.  If within fifteen (15) minutes from the time appointed for the meeting, the designated chairman for the meeting shall not be present, the shareholders present at the meeting shall elect one of their number to serve as chairman of the meeting.

 

		15.5.	
Except as required under the Companies Law or these Articles, any resolution of the shareholders shall be adopted by a majority of the voting power present and voting at the applicable General Meeting, in person or by proxy.  Every vote at a General Meeting shall be conducted according to the number of votes to which each shareholder is entitled on the basis of the number of ordinary shares held by such shareholder.

 

		15.6.	
Where a poll has been demanded, the chairman of the meeting shall be entitled - but not obliged - to accede to the demand. Where the chairman of the meeting has decided to hold a poll, such poll shall be held in such manner, at such time and at such place as the chairman of the meeting directs, either immediately or after an interval or postponement, or in any other way, and the results of the vote shall be deemed to be the resolution at the meeting at which the poll was demanded. A person demanding a poll may withdraw his demand prior to the poll being held.

 

		15.7.	
A demand for the holding of a poll shall not prevent the continued business of the meeting on all other questions apart of the question in respect of which a poll was demanded.

 

		15.8.	
The announcement by the chairman of the meeting that a resolution has been passed unanimously or by a particular majority, or has been rejected, and a note recorded to that effect in the Company’s minute book, shall serve as prima facie proof of such fact, and there shall be no necessity for proving the number of votes or the proportion of votes given for or against the resolution, unless otherwise required under applicable law and regulation.

 

		15.9.	
The chairman of a General Meeting at which a quorum is present may, with the consent of holders of a majority of the voting power represented in person and by proxy and voting on the question of adjournment, adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called. Subject to these Articles, it shall not be necessary to give any notice of an adjournment unless the meeting is adjourned for more than twenty one (21) days, in which case notice thereof shall be given in the manner required for the meeting as originally called.  Where a General Meeting has been adjourned without changing its agenda, to a date which is not more than twenty one (21) days, notices shall be given for the new date, as early as possible, and by no later than seventy two (72) hours before the General Meeting.

 

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	16.	
VOTES OF SHAREHOLDERS

 

		16.1.	
The voting rights of every shareholder entitled to vote at a General Meeting shall be as set forth in Article 6.1 of these Articles.

 

		16.2.	
In the case of joint shareholders, the vote of the senior joint holder, given personally or by proxy, shall be accepted, to the exclusion of the vote of the remaining joint shareholders, and for these purposes the senior of the joint shareholders shall be the person amongst the joint holders whose name appears first in the Register.

 

		16.3.	
A shareholder who is an Incapacitated Person may vote solely through his guardian or other person who fulfills the function of such guardian and who was appointed by a court, and any guardian or other person as aforesaid shall be entitled to vote by way of a proxy, or in such manner as the court directs.

 

		16.4.	
Any corporation which is a shareholder of the Company shall be entitled, by way of resolution of its board of directors or another organ which manages said corporation, to appoint such person which it deems fit, whether or not such person is a shareholder of the Company, to act as its representative at any General Meeting of the Company or at a meeting of a class of shares in the Company which such corporation is entitled to attend and to vote thereat, and the appointed as aforesaid shall be entitled, on behalf of the corporation whom he represents, to exercise all of the same powers and authorities which the corporation itself could have exercised had it been a natural person holding shares of the Company.

 

		16.5.	
Every shareholder who is entitled to attend and vote at a General Meeting of the Company shall be entitled to appoint a proxy. A proxy can be appointed by more than one shareholder and vote in different ways on behalf of each principal.

 

		16.6.	
The instrument appointing a proxy shall be in writing signed by the person making the appointment or by his authorized representative, and if the person making the appointment is a corporation, the power of attorney shall be signed in the manner in which the corporation signs on documents which bind it, and a certificate of an attorney with regard to the authority of the signatories to bind the corporation shall be attached thereto. The proxy need not be a shareholder of the Company.

 

		16.7.	
The instrument appointing a proxy, or a copy thereof certified by an attorney, shall be lodged at the Office, or at such other place as the Board shall specify, not less than forty-eight (48) hours prior to the General Meeting at which the proxy intends to vote based on such instrument of proxy. Notwithstanding the above, the chairman of the meeting shall have the right to waive the time requirement provided above with respect to all instruments of proxies and to accept any and all instruments of proxy until the beginning of a General Meeting. A document appointing a proxy shall be valid for every adjourned meeting of the General Meeting to which the document relates.

 

		16.8.	
Every instrument appointing a proxy, whether for a meeting specifically indicated, or otherwise, shall, as far as circumstances permit, be substantially in the following form, or in any other form approved by the Board:

 

I ______________ of ______________ being a shareholder holding shares in Foamix Pharmaceuticals Ltd., hereby appoint Mr. ______________ of ______________ or failing him, Mr. ______________ of ______________, or failing him, Mr. ______________ of ______________, to vote in my name, place and stead at the (ordinary/extraordinary) General Meeting of the Company to be held on the ____ of ______ 20__, and at any adjourned meeting thereof.

 

In witness whereof I have hereto set my hand on the _____ day of _____.

 

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		16.9.	
No shareholder shall be entitled to vote at a General Meeting unless he has paid all of the calls and all of the amounts due from him, for the time being, in respect of his shares.

 

		16.10.	
A vote given in accordance with the instructions contained in an instrument appointing a proxy shall be valid notwithstanding the death or bankruptcy of the appointer, or the revocation of the proxy, or the transfer of the share in respect of which the vote was given as aforesaid, unless notice in writing of the death, revocation or transfer is received at the Office, or by the chairman of the meeting, prior to such vote.

 

		16.11.	
Subject to the Companies Law, an instrument appointing a proxy shall be deemed revoked (i) upon receipt by the Company or the chairman of the meeting, subsequent to receipt by the Company of such instrument, of written notice signed by the person signing such instrument or by the shareholder appointing such proxy canceling the appointment thereunder (or the authority pursuant to which such instrument was signed) or of an instrument appointing a different proxy, provided such notice of cancellation or instrument appointing a different proxy were so received at the place and within the time for delivery of the instrument revoked thereby as referred to in Article 16.7 hereof, or (ii) if the appointing shareholder is present in person at the meeting for which such instrument of proxy was delivered, upon receipt by the chairman of such meeting of written notice from such shareholder of the revocation of such appointment, or if and when such shareholder votes at such meeting. A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the revocation or purported cancellation of the appointment, or the presence in person or vote of the appointing shareholder at a meeting for which it was rendered, unless such instrument of appointment was deemed revoked in accordance with the foregoing provisions of this Article 16.11 at or prior to the time such vote was cast.

 

	17.	
THE BOARD OF DIRECTORS

 

		17.1.	
Unless otherwise resolved by a resolution of the General Meeting, the prescribed number of directors of the Company shall be between five (5) and nine (9) (including the External Directors), as may be fixed from time to time by the Board. At any time the minimum number of directors (other than the External Directors) shall not fall below three (3). Any director shall be eligible for re-election upon termination of his term of office, subject to applicable law.

 

		17.2.	
Prior to every annual General Meeting of the Company, the Board (or a committee of the Board) may select, via a resolution adopted by a majority of the Board (or such committee), a number of persons to be proposed to the shareholders for election as directors at such annual General Meeting for service until the next annual General Meeting (the “Nominees”). Any shareholder entitled under applicable law to propose one or more persons as nominees for election as directors at a General Meeting (each such nominee, an “Alternate Nominee”) may make such proposal only if a written notice of such shareholder’s intent to that effect has been given to the Secretary of the Company (or, if there is no such Secretary, the Chief Executive Officer) within the periods set out in Article 14.5 above.  Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the Alternate Nominees; (b) a representation that the shareholder is a holder of record of shares of the Company entitled to vote at such meeting (including the number of shares held of record by the shareholder) and intends to appear in person or by proxy at the meeting to nominate the Alternate Nominees; (c) a description of all arrangements or understandings between the shareholder and each Alternate Nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) the consent of each Alternate Nominee to serve as a director of the Company if so elected and (e) a declaration signed by each Alternate Nominee declaring that there is no limitation under the Companies Law for the appointment of such a nominee and that all of the information that is required under the Companies Law to be provided to the Company in connection with such an appointment has been provided.  The Board may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

 

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		17.3.	
The Nominees or Alternate Nominees shall be elected by a resolution at the annual General Meeting at which they are subject to election.

 

		17.4.	
Every director, other than External Directors, shall hold office until the end of the next annual General Meeting following the annual General Meeting at which he was elected, unless his office is vacated in accordance with Articles 17.7 or 18.5 below. If, at an annual General Meeting, no Nominees or Alternate Nominees are proposed by either the Board or shareholders, or if no Nominees or Alternate Nominees are elected, the directors then in office shall continue to hold office until the convening of a General Meeting at which Nominees or Alternate Nominees shall be proposed and elected.

 

		17.5.	
If the office of a director shall be vacated, or if the number of incumbent directors is less than the maximum prescribed by Article 17.1 above, leaving one or more available offices unfilled, the remaining members of the Board shall be entitled to appoint another director in place of each director whose office has become or remains vacated, and such Board-appointed director (or directors) shall hold office until replaced in the manner set out in Article 17.4 above.  This Article 17.5 shall not apply to a vacated office of an External Director, which may be filled only in accordance with Article 17.9 below, unless there are two (2) or more External Directors in office at that time in addition to the vacated office.

 

		17.6.	
The directors in their capacity as such shall be entitled to receive remuneration as shall be determined in compliance with the Companies Law and the regulations promulgated thereunder.  The conditions (including remuneration) of the terms of office of members of the Board shall be decided by the Board or any committee thereof, but the same shall be valid only if ratified in the manner required under the Companies Law.  The remuneration of directors may be fixed as an overall payment or other consideration or as a payment or other consideration in respect of attendance at meetings of the Board, or a combination of both.  In addition to his remuneration, each director shall be entitled to be reimbursed, retroactively or in advance, in respect of his reasonable expenses connected with performing his functions and services as a director.  Such entitlement shall be determined in accordance with, and shall be subject to, a specific resolution or policy adopted by the Board regarding such matter and in accordance with the requirements of applicable law.

 

		17.7.	
Subject to the provisions of the Companies Law with regard to External Directors and subject to Article 17.4 above and Article 18.5 below, the office of a member of the Board shall be vacated in any one of the following events:

 

		17.7.1.	
if he resigns his office by way of a letter signed by him, lodged at the Office;

 

		17.7.2.	
if he is declared bankrupt;

 

		17.7.3.	
if he becomes insane or unsound of mind;

 

		17.7.4.	
upon his death;

 

		17.7.5.	
if he is prevented by applicable law from serving as a director of the Company;

 

		17.7.6.	
if the Board terminates his office according to Section 231 of the Companies Law;

 

		17.7.7.	
if a court order is given in accordance with Section 233 of the Companies Law;

 

		17.7.8.	
if he is removed from office by a Resolution at a General Meeting of the Company adopted by a majority of the voting power in the Company; or

 

		17.7.9.	
if his period of office has terminated in accordance with the provisions of these Articles.

 

		17.8.	
If the office of a member of the Board should be vacated, the remaining members of the Board shall be entitled to continue to act for all purposes for as long as their number does not fall below the minimum, as prescribed in Article 17.1 above, without limiting their right to fill the vacancy at any time in accordance with Article 17.5 above. Should their number fall below the aforesaid minimum, the directors shall not be entitled to act, except for the appointment of additional directors, or for the purpose of calling a General Meeting for the appointment of additional directors, or for the purpose of calling a General Meeting for the appointment of a new Board.

 

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		17.9.	
The office of an External Director shall be vacated and an External Director may be removed and replaced only in accordance with the provisions for vacation of office, removal and appointment of External Directors under the Companies Law.

 

	18.	
OTHER PROVISIONS REGARDING DIRECTORS

 

		18.1.	
Subject to any mandatory provisions of applicable law, a director shall not be disqualified by virtue of his office from holding another office in the Company or in any other company in which the Company is a shareholder or in which it has any other form of interest, or of entering into a contract with the Company, either as seller or buyer or otherwise. Likewise, no contract made by the Company or on its behalf in which a director has any form of interest may be nullified and a director shall not be obliged to account to the Company for any profit deriving from such office, or resulting from such contract, merely by virtue of the fact that he serves as a director or by reason of the fiduciary relationship thereby created, but such director shall be obliged to disclose to the Board the nature of any such interest at the first opportunity.

 

		18.2.	
A general notice to the effect that a director is a shareholder or has any other form of interest in a particular firm or a particular company and that he must be deemed to have an interest in any business with such firm or company shall be deemed to be adequate disclosure for purposes of this Article in relation to such director, and after such general notice has been given, such director shall not be obliged to give special notice in relation to any particular business with such firm or such company.

 

		18.3.	
Subject to the provisions of the Companies Law and these Articles, the Company shall be entitled to enter into a transaction in which an Office Holder of the Company has a personal interest, directly or indirectly, and may enter into any contract or otherwise transact any business with any third party in which contract or business an Office Holder has a personal interest, directly or indirectly.

 

		18.4.	
The Board shall elect one (1) or more of its members to serve as chairman (the “Chairman of the Board”), provided that, subject to the provisions of Section 121(c) of the Companies Law, the Chief Executive Officer of the Company shall not serve as Chairman of the Board. The office of Chairman of the Board shall be vacated in each of the cases mentioned in Articles 17.7 above and Article 18.5 below. The Board may also elect one or more members to serve as Vice Chairman, who shall have such duties and authorities as the Board may assign to him.

 

		18.5.	
Subject to the relevant provisions of the Companies Law, the Company may, in a General Meeting, by a resolution adopted by a majority of the voting power in the Company, dismiss any director prior to the end of his term of office, and the Board shall be entitled, by regular majority, to appoint another individual in his place as a director. The individual so appointed shall hold such office only for that period of time during which the director whom he replaces would have held office.  This Article 18.5 shall not apply to External Directors, who shall be appointed and removed in accordance with the Companies Law.

 

		18.6.	
A director shall not be obliged to hold any share in the Company.

 

	19.	
PROCEEDINGS OF THE BOARD OF DIRECTORS

 

		19.1.	
The Board shall convene for a meeting at least once every calendar quarter.

 

		19.2.	
The Board may meet in order to exercise its powers pursuant to Section 92 of the Companies Law, including without limitation to supervise the Company’s affairs, and it may, subject to the provisions of the Companies Law, adjourn its meetings and regulate its proceedings and operations as it deems fit. It may also prescribe the quorum required for the conduct of business. Until otherwise decided, a quorum shall be constituted if a majority of the directors holding office for the time being are present.

 

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		19.3.	
Should a director or directors be barred from being present and voting at a meeting of the Board pursuant to Section 278 of the Companies Law, the quorum shall be a majority of the directors entitled to be present and to vote at the meeting of the Board.

 

		19.4.	
Any director, the Chief Executive Officer or the auditor of the Company in the event stipulated in Section 169 of the Companies Law, may, at any time, demand the convening of a meeting of the Board. The Chairman of the Board shall be obliged, on such demand, to call such meeting on the date requested by the director, the Chief Executive Officer or the auditor of the Company soliciting such a meeting, provided that proper notice pursuant to Article 19.5 is given.

 

		19.5.	
Every director shall be entitled to receive notice of meetings of the Board, and such notice may be in writing or by facsimile, or electronic mail, sent to the last address (whether physical or electronic) or facsimile number given by the director for purposes of receiving notices, provided that the notice shall be given at least a reasonable amount of time prior to the meeting and in no event less than forty eight (48) hours prior notice, unless the urgency of the matter to be discussed at the meeting reasonably requires a shorter notice period.

 

		19.6.	
Every meeting of the Board at which a quorum is present shall have all the powers and authorities vested for the time being in the Board.  Any matter discussed in a meeting and brought up for decision by the Chairman of the Board shall be decided by a simple majority of the directors attending such meeting and voting on such matter. In the case of an equality of votes of the Board, the Chairman of the Board shall not have a second or casting vote, and the proposal shall be deemed to be defeated.

 

		19.7.	
If the Chairman of the Board is not present within thirty (30) minutes after the time appointed for the meeting, the directors present shall elect one of their members to preside at such meeting.

 

		19.8.	
The Board may adopt resolutions, without actually convening a meeting of the Board, provided that all the directors entitled to participate in the meeting and to vote on the subject brought for decision agree thereto. If resolutions are made as stated in this Article 19.8, the Chairman of the Board shall record minutes of the decisions stating the manner of voting of each director on the subjects brought for decision, as well as the fact that all the directors agreed to take the decision without actually convening.

 

		19.9.	
The Board may hold meetings by use of any means of communication, on condition that all participating directors can hear each other at the same time. In the case of a resolution passed by way of a telephone call or any such other means of communication, a copy of the text of the resolution shall be sent, as soon as possible thereafter, to the directors.

 

	20.	
GENERAL POWERS OF THE BOARD OF DIRECTORS

 

		20.1.	
The supervision of the Company’s affairs shall be in the hands of the Board, which shall be entitled to exercise all of the powers and authorities and to perform any act and deed which the Company is entitled to exercise and to perform in accordance with these Articles, and in respect of which there is no mandatory provision or requirement in the Companies Law or in the U.S. Rules that such powers and authorities be exercised or performed by the shareholders in a General Meeting or by a committee.

 

		20.2.	
The Board may, from time to time, in its absolute discretion, borrow or secure any amounts of money required by the Company for the conduct of its business. The Board shall be entitled to raise or secure the repayment of an amount obtained by it, in such way and on such conditions and times as it deems fit.

 

		20.3.	
The Board shall be entitled to issue documents of undertaking, such as options, debentures or debenture stock, whether linked or redeemable, convertible debentures or debentures convertible into other securities, or debentures which carry a right to purchase shares or to purchase other securities, or any mortgage, pledge, collateral or other charge over the property of the Company and its undertaking, in whole or in part, whether present or future, including the uncalled share capital or the share capital which has been called but not yet paid.  The deeds of undertaking, debentures of various types or other forms of collateral security may be issued at a discount, at a premium or otherwise and with such preferential or deferred or other rights, as the Board shall, from time to time, decide.

 

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	21.	
BOARD COMMITTEES

 

		21.1.	
The Board may, as it deems fit and subject to any applicable law, delegate to a committee certain of its powers and authorities, in whole or in part, as appropriate.  The curtailment or revocation of the powers and authorities of a committee by the Board shall not invalidate a prior act of such committee or an act taken in accordance with its instructions, which would have been valid had the powers and authorities of the committee not been altered or revoked by the Board. Subject to applicable law, a committee may be comprised of one or more directors, and it may comprise persons who are not directors if it is appointed solely for the purpose of advising the Board and is not delegated any of Board’s powers or authorities.

 

		21.2.	
The meetings and proceedings of every such committee which is comprised of two (2) or more members shall be conducted in accordance with the provisions contained in these Articles in regard to the conduct of meetings and proceedings of the Board to the extent that the same are suitable for such committee, and so long as no provisions have been adopted in replacement thereof by the Board.

 

	22.	
RATIFICATION OF ACTIONS

 

		22.1.	
Subject to the Companies Law, all acts taken in good faith by the Board or a committee or by an individual acting as a member thereof shall be valid even if it is subsequently discovered that there was a defect in the appointment of the Board, the committee or the member, as the case may be, or that the members, or one of them, was or were disqualified from being appointed as a director(s) or to a committee.

 

		22.2.	
The Board or any committee may ratify any act the performance of which at the time of the ratification was within the scope of the authority of the Board or the relevant committee. The General Meeting shall be entitled to ratify any act taken by the Board or any committee without authority or which was tainted by some other defect. From the time of the ratification, every act ratified as aforesaid, shall be treated as though lawfully performed from the outset.

 

	23.	
SIGNING POWERS

 

		23.1.	
Subject to any other resolution on the subject passed by the Board, the Company shall be bound only pursuant to a document in writing bearing its seal or its rubber stamp or its printed name, and the signature of whomever may be authorized by the Board, which shall be entitled to empower any person, either alone or jointly with another, even if he is not a shareholder or a director, to sign and act in the name and on behalf of the Company.

 

		23.2.	
The Board shall be entitled to prescribe separate signing power in regard to different businesses of the Company and in respect of the limit of the amounts in respect of which various persons shall be authorized to sign.

 

	24.	
CHIEF EXECUTIVE OFFICER

 

		24.1.	
The Board shall, from time to time, appoint a Chief Executive Officer and subject to the provisions of the Companies Law delineate his powers and authorities and his remuneration. Subject to any contract between the Chief Executive Officer and the Company, the Board may dismiss him or replace him at any time it deems fit.

 

		24.2.	
A Chief Executive Officer need not be a director or shareholder.  Subject to the provisions of any contract between the Chief Executive Officer and the Company, if the Chief Executive Officer is also a director, all of the same provisions with regard to appointment, resignation and removal from office shall apply to the Chief Executive Officer in his capacity as a director, as apply to the Company’s other directors.

 

		24.3.	
The Board shall be entitled from time to time to delegate to the Chief Executive Officer for the time being such of the powers it has pursuant to these Articles as it deems appropriate.  The Board shall be entitled to grant such powers for such period, for such purposes, on such conditions and with such restrictions as it deems appropriate, and it shall be entitled to grant such powers without renouncing the powers and authorities of the Board in such regard.  The Board may revoke, annul and alter such delegated powers and authorities, in whole or in part, at any time.

 

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		24.4.	
Subject to the provisions of any applicable law, the remuneration of the Chief Executive Officer shall be fixed from time to time by the Board (and, so long as required by the Companies Law, shall be approved by the Compensation Committee and by the shareholders unless exempted from shareholders’ approval) and such remuneration may be in the form of a fixed salary or commissions or a participation in profits, or combination thereof, or in any other manner which may be decided by the Board and approved according to this Article 24.4.

 

	25.	
SECRETARY, OFFICE-HOLDERS, CLERKS AND REPRESENTATIVES

 

		25.1.	
The Board shall be entitled, from time to time, to appoint, or to delegate to the Chief Executive Officer, either alone or together with other persons designated by the Board, the ability to appoint Office Holders (other than directors), a Secretary for the Company, employees and agents to such permanent, temporary or special positions, and to specify and change their titles, authorities and duties, and may set, or delegate to the Chief Executive Officer, either alone or together with other persons designated by the Board, the ability to set salaries, bonuses and other compensation of any employee or agent who is not an Office Holder.  Salaries, bonuses and compensation of Office Holders who are not directors shall be determined and approved by the Chief Executive Officer, or in such other manner as may be required from time to time under the Companies Law. The Board, or the Chief Executive Officer, either alone or together with other persons designated by the Board (in the case of any Office Holder, employee or agent appointed by the Board), shall be entitled at any time, in its, his or their (as applicable) sole and absolute discretion, to terminate the services of one of more of the foregoing persons (in the case of a director, however, subject to compliance with Article 18.5 above), subject to any other requirements under applicable law.

 

		25.2.	
The Board and the Chief Executive Officer may from time to time and at any time, subject to their powers under these Articles and the Companies Law, empower any person to serve as representative of the Company for such purposes and with such powers and authorities, instructions and discretions for such period and subject to such conditions as the Board or the Chief Executive Officer, as the case may be, shall deem appropriate. The Board or Chief Executive Officer may grant such person, inter alia, the power to further delegate the authority, powers and discretions vested in him, in whole or in part. The Board or the Chief Executive Officer, as the case may be, may revoke, annul, vary or change any such power or authority, or all such powers or authorities collectively.

 

	26.	
DIVIDENDS, BONUS SHARES, FUNDS AND CAPITALIZATION OF FUNDS AND PROFITS

 

		26.1.	
Unless otherwise permitted by the Companies Law, no dividends shall be paid other than out of the Company’s profits available for distribution as set forth in the Companies Law.  The Board may decide on the payment of a dividend or on the distribution of bonus shares.  A dividend in cash or bonus shares shall be paid or distributed, as the case may be, equally to the holders of the ordinary shares registered in the Register, pro rata to the nominal amount of capital paid up or credited as paid up on par value of the shares, without reference to any premium which may have been paid thereon. However, whenever the rights attached to any shares or the terms of issue of the shares do not provide otherwise, an amount paid on account of a share prior to the payment thereof having been called, or prior to the due date for payment thereof, and on which the Company is paying interest, shall not be taken into account for purposes of this Article as an amount paid-up on account of the share.

 

		26.2.	
Unless other instructions are given, it shall be permissible to pay any dividend by way of a check or payment order to be sent by post to the registered address of the shareholder or the person entitled thereto, or in the case of joint shareholders being registered, to the shareholder whose name appears first in the Register in relation to the joint shareholding. Every such check shall be made in favor of the person to whom it is sent. A receipt by the person whose name, on the date of declaration of the dividend, was registered in the Register as the owner of the shares, or in the case of joint holders, by one of the joint holders, shall serve as a discharge with regard to all the payments made in connection with such share.

 

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		26.3.	
The Board shall be entitled to invest any dividend which has not been claimed for a period of one (1) year after having been declared, or to make use thereof in any other way for the benefit of the Company until such time as it is claimed. A dividend or other beneficial rights in respect of shares shall not bear interest, and the Company shall not be obliged to pay interest or linkage in respect of an unclaimed dividend. The payment by the Board of any unclaimed dividend into a separate account shall not make the Company a trustee in respect thereof, and any dividend unclaimed after a period of seven (7) years from the date of declaration of such dividend shall be forfeited and shall revert to the Company, provided, however, that the Board may, at its discretion, cause the Company to pay any such dividend, or any part thereof, to a person who would have been entitled thereto had the same not reverted to the Company.

 

		26.4.	
Unless otherwise specified in the terms of issue of shares or securities convertible into, or which grant a right to purchase, shares, any shares that are fully paid-up or credited as paid-up shall at any time confer on their holders the right to participate in the full dividends and in any other distribution for which the determining date for the right to receive the same is the date at which the aforesaid shares were fully paid-up or credited as fully paid-up, as the case may be, or subsequent to such date.

 

		26.5.	
The Board shall be entitled to deduct from any dividend or other beneficial rights, all amounts of money which the holder of the share in respect of which the dividend is payable or in respect of which the other beneficial rights were given, may owe to the Company in respect of such share, whether or not the due date for payment thereof has arrived.  The Board shall be entitled to retain any dividend or bonus shares or other beneficial rights in respect of a share in relation to which the Company has a lien, and to utilize any such amount or the proceeds received from the sale of any bonus shares or other beneficial rights, for the discharge of the debts or liabilities in respect of which the Company has a lien.

 

		26.6.	
The Board may decide that a dividend is to be paid, in whole or in part, by way of a distribution of assets of the Company in kind, including by way of debentures of the Company, or shares or debentures of any other company, or in any other way.

 

		26.7.	
The Board may decide that any portion of the amounts standing for the time being to the credit of any capital fund (including a fund created as a result of a revaluation of the assets of the Company), or which are held by the Company as profits available for distribution, shall be capitalized subject to and in accordance with the provisions of the Companies Law and of these Articles, and serve for the payment up in full (either at par or with a premium as prescribed by the Company) of shares which have not yet been issued or of debentures of the Company, which shall then be allotted and distributed amongst the shareholders as fully paid-up shares or debentures, pro rata to each shareholder’s entitlement under these Articles.

 

		26.8.	
In every case that the Company issues bonus shares by way of a capitalization of profits or funds at a time at which securities issued by the Company are in circulation and confer on the holders thereof rights to convert the same into shares in the share capital of the Company, or options to purchase shares in the share capital of the Company (such rights of conversion or options shall henceforth be referred to as the “Rights”), the Board shall be entitled (in a case that the Rights or part thereof shall not be otherwise adjusted in accordance with the terms of their issue) to transfer to a special fund designated for the distribution of bonus shares in the future (to be called by any name that the Board may decide on and which shall henceforth be referred to as the “Special Fund”) an amount equivalent to the nominal amount of the share capital to which some or all of the Rights holders would have been entitled as a result of the issue of bonus shares, had they exercised their Rights prior to the determining date for the right to receive bonus shares, including rights to fractions of bonus shares, and in the case of a second or additional distribution of bonus shares in respect of which the Company acts pursuant to this Article, including entitlement stemming from a previous distribution of bonus shares.

 

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		26.9.	
In the case of the allotment of shares by the Company as a consequence of the exercise of entitlement by the owners of shares in those cases in which the Board has made a transfer to the Special Fund in respect of the Rights pursuant to Article 26.8 above, the Board shall allot to each such shareholder, in addition to the shares to which he is entitled by virtue of having exercised his rights, such number of fully paid-up shares the nominal value of which is equivalent to the amount transferred to the Special Fund in respect of his rights, by way of a capitalization to be effected by the Board of an appropriate amount out of the Special Fund.  The Board shall be entitled to decide on the manner of dealing with rights to fractions of shares in its sole discretion.

 

		26.10.	
If after any transfer to the Special Fund has been made the Rights should lapse, or the period should end for the exercise of Rights in respect of which the transfer was effected without such Rights being exercised, then any amount which was transferred to the Special Fund in respect of the aforesaid unexercised Rights shall be released from the Special Fund, and the Company may deal with the amount so released in any manner it would have been entitled to deal therewith had such amount not been transferred to the Special Fund.

 

		26.11.	
For the implementation of any resolution regarding a distribution of shares or debentures by way of a capitalization of profits as aforesaid, the Board may:

 

		26.11.1.	
Resolve any difficulty which arises or may arise in regard to the distribution in such manner as it deems fit and may take all of the steps that it deems appropriate in order to overcome such difficulty.

 

		26.11.2.	
Issue certificates in respect of fractions of shares, or decide that fractions of less than an amount to be decided by the Board shall not be taken into account for purposes of adjusting the rights of the shareholders or may sell the fractions of shares and pay the net proceeds to the persons entitled thereto.

 

		26.11.3.	
Sign, or appoint a person to sign, on behalf of the shareholders on any contract or other document which may be required for purposes of giving effect to the distribution, and, in particular, shall be entitled to sign or appoint a person who shall be entitled to appoint and submit a contract as referred to in Section 291 of the Companies Law.

 

		26.11.4.	
Make any arrangement or other scheme which is required in the opinion of the Board in order to facilitate the distribution.

 

		26.12.	
The Board shall be entitled, as it deems appropriate and expedient, to appoint trustees or nominees for those registered shareholders who have failed to notify the Company of a change of their address and who have not applied to the Company in order to receive dividends, shares or debentures out of capital, or other benefits during the aforesaid period. Such trustees or nominees shall be appointed for the use, collection or receipt of dividends, shares or debentures out of capital and rights to subscribe for shares which have not yet been issued and which are offered to the shareholders but they shall not be entitled to transfer the shares in respect of which they were appointed, or to vote on the basis of holding such shares.  In all of the terms and conditions governing such trusts and the appointment of such nominees it shall be stipulated by the Company that upon the first demand by a beneficial holder of a share being held by the trustee or nominee, such trustee or nominee shall be obliged to return to such shareholder the share in question and all of those rights held by it on the shareholder’s behalf (all as the case may be). Any act or arrangement effected by any such nominees or trustee and any agreement between the Board and a nominee or trustee shall be valid and binding in all respects.

 

	27.	
COMPANY RECORDS AND REGISTERS

 

		27.1.	
The Board shall comply with all the provisions of the Companies Law in regard to the recording of charges and the keeping and maintaining of a register of directors, register of shareholders and register of charges.

 

		27.2.	
Any book, register and record that the Company is obliged to keep in accordance with the Companies Law or pursuant to these Articles shall be recorded in a regular book, or by digital, electronic or other means, as the Board shall decide.

 

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		27.3.	
Subject to and in accordance with the provisions of Sections 138 and 139 of the Companies Law, the Company may cause supplementary registers to be kept in any place outside Israel as the Board may deem fit, and, subject to all applicable requirements of the Companies Law, the Board may from time to time adopt such rules and procedures as it may deem fit in connection with the keeping of such supplementary registers.

 

	28.	
BOOKS OF ACCOUNT

 

		28.1.	
The Board shall keep proper books of account in accordance with the provisions of the Companies Law. The books of account shall be kept at the Office, or at such other place or places as the Board shall deem appropriate, and shall at all times be open to the inspection of members of the Board. A shareholder of the Company who is not a member of the Board shall not have the right to inspect any books or accounts or documents of the Company, unless such right has been expressly granted to him by the Companies Law, or if he has been permitted to do so by the Board or by the shareholders based on a resolution adopted at a General Meeting.

 

		28.2.	
At least once each year the accounts of the Company and the correctness of the statement of income and the balance sheet shall be audited and confirmed by an independent auditor.

 

		28.3.	
The Company shall, in an annual General Meeting, appoint an independent auditor who shall hold such position until the next annual General Meeting, and his appointment, remuneration and rights and duties shall be subject to the provisions of the Companies Law, provided, however, that in exercising its authority to fix the remuneration of the auditor, the shareholders in an annual General Meeting may, by a resolution, act (and in the absence of any action in connection therewith shall be deemed to have so acted) to authorize the Board to fix such remuneration subject to such criteria or standards, if any, as may be provided in such resolution, and if no such criteria or standards are so provided, such remuneration shall be fixed in an amount commensurate with both the volume and nature of the services rendered by the auditor.  By an act appointing such auditor, the Company may appoint the auditor to serve for a period of up to the end of completion of the audit of the yearly financial statements for the three (3) year period then ended.

 

		28.4.	
The auditor shall be entitled to receive notices of every General Meeting of the Company and to attend such meetings and to express his opinions on all matters pertaining to his function as the auditor of the Company.

 

		28.5.	
Subject to the provisions of the Companies Law and the U.S. Rules, any act carried out by the auditor of the Company shall be valid as against any person doing business in good faith with the Company, notwithstanding any defect in the appointment or qualification of the auditor.

 

		28.6.	
For as long as the Company is a public company, as defined in the Companies Law, it shall appoint an internal auditor possessing the authorities set forth in the Companies Law. The internal auditor of the Company shall present all of its proposed work plans to the audit committee of the Board, which shall have the authority to approve them, subject to any modifications in its discretion.

 

	29.	
NOTICES

 

		29.1.	
The Company may serve any written notice or other document on a shareholder by way of delivery by hand, by facsimile transmission or by dispatch by prepaid registered mail to his address as recorded in the Register, or if there is no such recorded address, to the address given by him to the Company for the sending of notices to him.  Notwithstanding the foregoing or any other provision to the contrary contained herein, notices or any other information or documents required to be delivered to a shareholder shall be deemed to have been duly delivered if submitted, published, filed or lodged in any manner prescribed by applicable law. With respect to the manner of providing such notices or other disclosures, the Company may distinguish between the shareholders listed on its regular Registry and those listed in any “additional registry”, as defined in Section 138(a) of the Companies Law, administered by a transfer agent or stock exchange registration company.

 

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		29.2.	
Any shareholder may serve any written notice or other document on the Company by way of delivery by hand at the Office, by facsimile or email transmission to the Company or by dispatch by prepaid registered mail to the Company at the Office.

 

		29.3.	
Any notice or document which is delivered or sent to a shareholder in accordance with these Articles shall be deemed to have been duly delivered and sent in respect of the shares held by him (whether in respect of shares held by him alone or jointly with others), notwithstanding the fact that such shareholder has died or been declared bankrupt at such time (whether or not the Company knew of his death or bankruptcy), and shall be deemed to be sufficient delivery or dispatch to heirs, trustees, administrators or transferees and any other persons (if any) who have a right in the shares.

 

		29.4.	
Any such notice or other document shall be deemed to have been served:

 

		29.4.1.	
in the case of mailing, forty eight (48) hours after it has been posted, or when actually received by the addressee if sooner than 48 hours after it has been posted;

 

		29.4.2.	
in the case of overnight air courier, on the next day following the day sent, with receipt confirmed by the courier, or when actually received by the addressee if sooner;

 

		29.4.3.	
in the case of personal delivery, when actually tendered in person to such shareholder;

 

		29.4.4.	
in the case of facsimile or other electronic transmission (including email), the next day following the date on which the sender receives automatic electronic confirmation by the recipient’s facsimile machine or computer or other device that such notice was received by the addressee; or

 

		29.4.5.	
in the case a notice is, in fact, received by the addressee, when received, notwithstanding that it was defectively addressed or failed, in some other respect, to comply with the provisions of this Article 29.4.

 

		29.5.	
Any shareholder whose address is not described in the Register, and who shall not have designated in writing an address for the receipt of notices, shall not be entitled to receive any notice from the Company.  In the case of joint holders of a share, the Company shall be entitled to deliver a notice by dispatch to the joint holder whose name stands first in the Register in respect of such share.

 

		29.6.	
Whenever it is necessary to give notice of a particular number of days or a notice for another period, the day of delivery shall be counted in the number of calendar days or the period, unless otherwise specified.

 

		29.7.	
Notwithstanding anything to the contrary contained herein, notice by the Company of a General Meeting, containing the information required to be set forth in such notice under these Articles, which is published, within the time otherwise required for giving notice of such meeting, in:

 

		29.7.1.	
at least two daily newspapers in the State of Israel shall be deemed to be notice of such meeting duly given, for the purposes of these Articles, to any shareholder whose address as registered in the Register (or as designated in writing for the receipt of notices and other documents) is located in the State of Israel; and

 

		29.7.2.	
one daily newspaper in New York, NY, United States, and in one international wire service shall be deemed to be notice of such meeting duly given, for the purposes of these Articles, to any shareholder whose address as registered in the Register (or as designated in writing for the receipt of notices and other documents) is located outside the State of Israel.

 

	30.	
INSURANCE, INDEMNITY AND EXCULPATION

 

		30.1.	
Subject to the provisions of the Companies Law, the Company shall be entitled to enter into a contract to insure all or part of the liability of an Office Holder of the Company, imposed on him in consequence of an act which he has performed by virtue of being an Office Holder, in respect of any of the following:

 

		30.1.1.	
The breach of a duty of care to the Company or to any other person;

 

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		30.1.2.	
The breach of a fiduciary duty to the Company, provided that the Office Holder acted in good faith and had reasonable grounds for believing that the action would not adversely affect the best interests of the Company;

 

		30.1.3.	
A pecuniary liability imposed on him in favor of any other person in respect of an act done in his capacity as an Office Holder.

 

		30.1.4.	
Any other circumstances arising under the law with respect to which the Company may, or will be able to, insure an Office Holder.

 

		30.2.	
Subject to the provisions of the Companies Law, the Company shall be entitled to indemnify an Office Holder of the Company, to the fullest extent permitted by applicable law. Subject to the provisions of the Companies Law, including the receipt of all approvals as required therein or under any applicable law, the Company may resolve retroactively to indemnify an Office Holder with respect to the following liabilities and expenses, provided, in each of the below cases, that such liabilities or expenses were incurred by such Office Holder in such Office Holder’s capacity as an Office Holder of the Company:

 

		30.2.1.	
a monetary liability imposed on him in favor of a third party in any judgment, including any settlement confirmed as judgment and an arbitrator’s award which has been confirmed by the court, in respect of an act performed by the Office Holder by virtue of the Office Holder being an Office Holder of the Company; provided, however, that: (a) any indemnification undertaking with respect to the foregoing shall be limited (i) to events which, in the opinion of the Board, are foreseeable in light of the Company’s actual operations at the time of the granting of the indemnification undertaking, and (ii) to an amount or by criteria determined by the Board to be reasonable in the given circumstances; and (b) the events that in the opinion of the Board are foreseeable in light of the Company’s actual operations at the time of the granting of the indemnification undertaking are listed in the indemnification undertaking together with the amount or criteria determined by the Board to be reasonable in the given circumstances;

 

		30.2.2.	
reasonable litigation expenses, including legal fees, paid for by the Office Holder, in an investigation or proceeding conducted against such Office Holder by an agency authorized to conduct such investigation or proceeding, and which investigation or proceeding: (i) concluded without the filing of an indictment (as defined in the Companies Law) against such Office Holder and without a monetary liability having been imposed against such Office Holder in lieu of a criminal proceeding (as defined in the Companies Law); (ii) concluded without the filing of an indictment against such Office Holder but with a monetary liability having been imposed against such Office Holder in lieu of a criminal proceeding for an offense that does not require proof of criminal intent; or (iii) involves financial sanction;

 

		30.2.3.	
reasonable litigation expenses, including legal fees, paid for by the Office Holder, or which the Office Holder is obligated to pay under a court order, in a proceeding brought against the Office Holder by the Company, or on its behalf, or by a third party, or in a criminal proceeding in which the Office Holder is found innocent, or in a criminal proceeding in which the Office Holder was convicted of an offense that does not require proof of criminal intent; and

 

		30.2.4.	
any other event, occurrence or circumstances in respect of which the Company may lawfully indemnify an Office Holder of the Company (including, without limitation, indemnification with respect to the matters referred to under Section 56h(b)(1) of the Israeli Securities Law 5728-1968, as amended.

 

		30.3.	
The Company may undertake to indemnify an Office Holder as aforesaid: (i) prospectively, provided that the undertaking is limited to categories of events which in the opinion of the Board can be foreseen when the undertaking to indemnify is given, and to an amount set by the Board as reasonable under the circumstances, and (ii) retroactively.

 

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		30.4.	
Subject to the provisions of the Companies Law including the receipt of all approvals as required therein or under any applicable law, the Company may, to the maximum extent permitted by the Companies Law, exempt and release, in advance, any Office Holder from any liability for damages arising out of a breach of a duty of care towards the Company.

 

		30.5.	
Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to Articles 30.1, 30.2 and 30.4 and any amendments to such Articles shall be prospective in effect, and shall not affect the Company’s obligation or ability to indemnify or insure an Office Holder for any act or omission occurring prior to such amendment, unless otherwise provided by applicable law.

 

		30.6.	
The provisions of Articles Articles 30.1, 30.2 and 30.4 are not intended, and shall not be interpreted so as to restrict the Company, in any manner, in respect of the procurement of insurance or in respect of indemnification or exculpation, in favor of any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder; or any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law.

 

	31.	
WINDING-UP AND REORGANIZATION

 

		31.1.	
Should the Company be wound up and assets of the Company will remain available for distribution after covering all the Company’s outstanding liabilities, such assets shall be distributed among the shareholders pro rata to the nominal value of the paid-up capital on the shares held by each of them.

 

		31.2.	
Upon the sale of the Company’s assets, the Board may, or in the case of a liquidation, the liquidators may, if authorized to do so by a resolution of the Company, accept fully or partly paid-up shares, or securities of another company, Israeli or non-Israeli, whether in existence at such time or about to be formed, in order to purchase the property of the Company, or part thereof, and to the extent permitted under the Companies Law, the Board may (or in the case of a liquidation, the liquidators may) distribute the aforesaid shares or securities or any other property of the Company among the shareholders without realizing the same, or may deposit the same in the hands of trustees for the shareholders, and the General Meeting by a resolution may decide, subject to the provisions of the Companies Law, on the distribution or allotment of cash, shares or other securities, or the property of the Company and on the valuation of the aforesaid securities or property at such price and in such manner as the shareholders at such General Meeting shall decide, and all of the shareholders shall be obliged to accept any valuation or distribution determined as aforesaid and to waive their rights in this regard, except, in a case in which the Company is about to be wound-up and is in the process of liquidation, for those legal rights (if any) which, according to the provisions of the Companies Law, may not be changed or modified.

 

	32.	
TRANSLATION AND BINDING EFFECT

 

These Articles may be translated into Hebrew and/or into other languages. Notwithstanding the aforesaid, the English version of these Articles shall be binding upon the Company, its shareholders and/or any third party and shall supersede any translation thereof.

 

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