Exhibit 10.2

EXECUTION VERSION

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, (I) THE LIENS AND SECURITY
INTERESTS GRANTED TO THE AGENT PURSUANT TO THIS AGREEMENT ARE EXPRESSLY SUBJECT
AND SUBORDINATE TO THE LIENS AND SECURITY INTERESTS GRANTED IN FAVOR OF THE
REVOLVING CREDIT AGREEMENT SECURED PARTIES (AS DEFINED IN THE INTERCREDITOR
AGREEMENT REFERRED TO BELOW) AND (II) THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
AGENT OR ANY OTHER SECURED PARTY HEREUNDER IS SUBJECT TO THE LIMITATIONS AND
PROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENT DATED AS OF APRIL 15, 2016
(AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE
“INTERCREDITOR AGREEMENT”), AMONG WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
PARI PASSU COLLATERAL AGENT, WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
REVOLVING CREDIT AGREEMENT AGENT, AND WILMINGTON SAVINGS FUND SOCIETY, FSB, AS
TERM LOAN AGENT. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE
INTERCREDITOR AGREEMENT AND THE TERMS OF THIS AGREEMENT, THE TERMS OF THE
INTERCREDITOR AGREEMENT SHALL GOVERN.

GUARANTY AND SECURITY AGREEMENT

This GUARANTY AND SECURITY AGREEMENT (this “Agreement”), dated as of April 15,
2016, among the Persons listed on the signature pages hereof as “Grantors” and
those additional entities that hereafter become parties hereto by executing the
form of Joinder attached hereto as Annex 1 (each, a “Grantor” and collectively,
the “Grantors”), WILMINGTON SAVINGS FUND SOCIETY, FSB (“Wilmington”), in its
capacity as administrative agent for each member of the Lender Group (in such
capacity, together with its successors and assigns in such capacity,
“Administrative Agent”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells
Fargo”), in its capacity as collateral agent for each member of the Lender Group
(in such capacity, together with its successors and assigns in such capacity,
“Collateral Agent” and, together with the Administrative Agent, the “Agents” and
each, an “Agent”).

W I T N E S S E T H:

WHEREAS, Nuverra Environmental Solutions, Inc., a Delaware corporation
(“Borrower”), the lenders party thereto as “Lenders” (each of such Lenders,
together with its successors and permitted assigns, is referred to hereinafter
as a “Lender”) and Administrative Agent are parties to that certain Term Loan
Credit Agreement dated as of April 15, 2016 (as the same may be amended, amended
and restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”);

WHEREAS, each of the Agents has agreed to act as an agent for the benefit of the
Lender Group in connection with the transactions contemplated by the Credit
Agreement and this Agreement;

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WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement
and the other Loan Documents, and to induce the Lender Group to make term loans
to Borrower as provided for in the Credit Agreement and the other Loan
Documents, (a) each Grantor (other than Borrower) has agreed to guaranty the
Guarantied Obligations and (b) each Grantor has agreed to grant to Collateral
Agent, for the benefit of the Lender Group, a continuing security interest in
and to the Collateral in order to secure the prompt and complete payment,
observance and performance of, among other things, the Secured Obligations;

WHEREAS, each Grantor (other than Borrower) is a Subsidiary of Borrower and, as
such, will benefit by virtue of the financial accommodations extended to
Borrower by the Lender Group.

NOW, THEREFORE, for and in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

1. Definitions; Construction.

(a) All initially capitalized terms used herein (including in the preamble and
recitals hereof) without definition shall have the meanings ascribed thereto in
the Credit Agreement (including Schedule 1.1 thereto). Any terms (whether
capitalized or lower case) used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein or in the Credit Agreement; provided that to the extent that the Code is
used to define any term used herein and if such term is defined differently in
different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern. In addition to those terms defined elsewhere
in this Agreement, as used in this Agreement, the following terms shall have the
following meanings:

(i) “Account” means an account (as that term is defined in Article 9 of the
Code).

(ii) “Account Debtor” means an account debtor (as that term is defined in the
Code).

(iii) “Activation Instruction” has the meaning specified therefor in Section
7(k).

(iv) “Administrative Agent” has the meaning specified therefor in the preamble
to this Agreement.

(v) “Agent” has the meaning specified therefor in the preamble to this
Agreement.

(vi) “Agreement” has the meaning specified therefor in the preamble to this
Agreement.

(vii) “Books” means books and records (including each Grantor’s Records
indicating, summarizing, or evidencing such Grantor’s assets (including the
Collateral) or

 

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liabilities, each Grantor’s Records relating to such Grantor’s business
operations or financial condition, and each Grantor’s goods or General
Intangibles related to such information).

(viii) “Borrower” has the meaning specified therefor in the recitals to this
Agreement.

(ix) “Cash Equivalents” has the meaning specified therefor in the Credit
Agreement.

(x) “Certificated Equipment” has the meaning specified therefor in the Credit
Agreement.

(xi) “Chattel Paper” means chattel paper (as that term is defined in the Code),
and includes tangible chattel paper and electronic chattel paper.

(xii) “Code” means the New York Uniform Commercial Code, as in effect from time
to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.

(xiii) “Collateral” has the meaning specified therefor in Section 3.

(xiv) “Collateral Agent” has the meaning specified therefor in the preamble to
this Agreement.

(xv) “Collateral Agent’s Lien” has the meaning specified therefor in the Credit
Agreement.

(xvi) “Commercial Tort Claims” means commercial tort claims (as that term is
defined in the Code), and includes those commercial tort claims listed on
Schedule 1.

(xvii) “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1
et seq.), as amended from time to time, and any successor statute.

(xviii) “Control Agreement” has the meaning specified therefor in the Credit
Agreement.

(xix) “Controlled Account” has the meaning specified therefor in Section 7(k).

(xx) “Controlled Account Agreements” means those certain cash management
agreements, in form and substance reasonably satisfactory to each Agent, each of
which is executed and delivered by a Grantor, Collateral Agent, and one of the
Controlled Account Banks.

 

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(xxi) “Controlled Account Bank” has the meaning specified therefor in Section
7(k).

(xxii) “Copyrights” means any and all rights in any works of authorship,
including (A) copyrights and moral rights, (B) copyright registrations and
recordings thereof and all applications in connection therewith including those
listed on Schedule 2, (C) income, license fees, royalties, damages, and payments
now and hereafter due or payable under and with respect thereto, including
payments under all licenses entered into in connection therewith and damages and
payments for past, present, or future infringements thereof, (D) the right to
sue for past, present, and future infringements thereof, and (E) all of each
Grantor’s rights corresponding thereto throughout the world.

(xxiii) “Copyright Security Agreement” means each Copyright Security Agreement
executed and delivered by Grantors, or any of them, and Collateral Agent, in
substantially the form of Exhibit A.

(xxiv) “Credit Agreement” has the meaning specified therefor in the recitals to
this Agreement.

(xxv) “Custodial Agreement” means (i) that certain Custodial Agreement dated as
of February 3, 2014, among the Borrower, the Revolving Credit Agreement Agent
(as defined in the Intercreditor Agreement), and Corporation Service Company, a
Delaware corporation, as custodian thereunder, and each custodial agreement now
or hereafter executed in form and substance reasonably satisfactory to each
Agent and (ii) any replacement custodial agreement entered into by the Borrower
substantially in the form of Exhibit E.

(xxvi) “Deposit Account” means a deposit account (as that term is defined in the
Code).

(xxvii) “Equipment” means equipment (as that term is defined in the Code).

(xxviii) “Equity Interests” has the meaning specified therefor in the Credit
Agreement.

(xxix) “Event of Default” has the meaning specified therefor in the Credit
Agreement.

(xxx) “Excluded Property” has the meaning specified therefor in Section 3.

(xxxi) “Farm Products” means farm products (as that term is defined in the
Code).

(xxxii) “Fixtures” means fixtures (as that term is defined in the Code).

(xxxiii) “Foreclosed Grantor” has the meaning specified therefor in
Section 2(i)(iii).

 

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(xxxiv) “General Intangibles” means general intangibles (as that term is defined
in the Code), and includes payment intangibles, software, contract rights,
rights to payment, rights under Hedge Agreements (including the right to receive
payment on account of the termination (voluntarily or involuntarily) of such
Hedge Agreements), rights arising under common law, statutes, or regulations,
choses or things in action, goodwill, Intellectual Property, Intellectual
Property Licenses, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, including Intellectual Property Licenses,
infringement claims, pension plan refunds, pension plan refund claims, insurance
premium rebates, tax refunds, and tax refund claims, interests in a partnership
or limited liability company which do not constitute a security under Article 8
of the Code, and any other personal property other than Commercial Tort Claims,
money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Property,
Negotiable Collateral, and oil, gas, or other minerals before extraction.

(xxxv) “Grantor” and “Grantors” have the respective meanings specified therefor
in the preamble to this Agreement.

(xxxvi) “Guarantied Obligations” means all of the Obligations now or hereafter
existing, whether for principal, interest (including any interest that accrues
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), fees (including the fees provided for in the Fee Letter), Lender
Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), or
otherwise, and any and all expenses (including reasonable counsel fees and
expenses) incurred by any Agent, any other member of the Lender Group (or any of
them) in enforcing any rights under the any of the Loan Documents. Without
limiting the generality of the foregoing, Guarantied Obligations shall include
all amounts that constitute part of the Guarantied Obligations and would be owed
by Borrower to any Agent, any other member of the Lender Group but for the fact
that they are unenforceable or not allowable, including due to the existence of
a bankruptcy, reorganization, other Insolvency Proceeding or similar proceeding
involving Borrower or any guarantor.

(xxxvii) “Guarantor” means each Grantor other than Borrower.

(xxxviii) “Guaranty” means the guaranty set forth in Section 2 hereof.

(xxxix) “Insolvency Proceeding” has the meaning specified therefor in the Credit
Agreement.

(xl) “Intellectual Property” means any and all Patents, Copyrights, Trademarks,
trade secrets, know-how, inventions (whether or not patentable), algorithms,
software programs (including source code and object code), processes, product
designs, industrial designs, blueprints, drawings, data, customer lists, URLs
and domain names, specifications, documentations, reports, catalogs, literature,
and any other forms of

 

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technology or proprietary information of any kind, including all rights therein
and all applications for registration or registrations thereof.

(xli) “Intellectual Property Licenses” means, with respect to any Person (the
“Specified Party”), (A) any licenses or other similar rights provided to the
Specified Party in or with respect to Intellectual Property owned or controlled
by any other Person, and (B) any licenses or other similar rights provided to
any other Person in or with respect to Intellectual Property owned or controlled
by the Specified Party, in each case, including (x) any software license
agreements (other than license agreements for commercially available
off-the-shelf software that is generally available to the public which have been
licensed to a Grantor pursuant to end-user licenses), (y) the license agreements
listed on Schedule 3, and (z) the right to use any of the licenses or other
similar rights described in this definition in connection with the enforcement
of the Lender Group’s rights under the Loan Documents.

(xlii) “Intercreditor Agreement” means the Intercreditor Agreement, dated as of
the Closing Date, by and among Wells Fargo Bank, National Association, as Pari
Passu Collateral Agent, Wells Fargo Bank, National Association, as Revolving
Credit Agreement Agent, Wilmington Savings Fund Society, FSB, as Term Loan
Agent, and acknowledged by the Borrower and its Subsidiaries party thereto from
time to time, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

(xliii) “Inventory” means inventory (as that term is defined in the Code).

(xliv) “Investment Property” means (A) any and all investment property (as that
term is defined in the Code), and (B) any and all of the following (regardless
of whether classified as investment property under the Code): all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

(xlv) “Joinder” means each Joinder to this Agreement executed and delivered by
Agents and each of the other parties listed on the signature pages thereto, in
substantially the form of Annex 1.

(xlvi) “Lender Group” has the meaning specified therefor in the Credit
Agreement.

(xlvii) “Lender” and “Lenders” have the respective meanings specified therefor
in the recitals to this Agreement.

(xlviii) “Loan Document” has the meaning specified therefor in the Credit
Agreement.

(xlix) “Negotiable Collateral” means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts and documents (as each such term is
defined in the Code).

(l) “Obligations” has the meaning specified therefor in the Credit Agreement.

 

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(li) “Patents” means patents and patent applications, including (A) the patents
and patent applications listed on Schedule 4, (B) all continuations,
divisionals, continuations-in-part, re-examinations, reissues, and renewals
thereof and improvements thereon, (C) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and
damages and payments for past, present, or future infringements thereof, (D) the
right to sue for past, present, and future infringements thereof, and (E) all of
each Grantor’s rights corresponding thereto throughout the world.

(lii) “Patent Security Agreement” means each Patent Security Agreement executed
and delivered by Grantors, or any of them, and Collateral Agent, in
substantially the form of Exhibit B.

(liii) “Permitted Investments” has the meaning specified therefor in the Credit
Agreement.

(liv) “Permitted Liens” has the meaning specified therefor in the Credit
Agreement.

(lv) “Person” has the meaning specified therefor in the Credit Agreement.

(lvi) “Pledged Companies” means each Person listed on Schedule 5 as a “Pledged
Company”, together with each other Person that becomes a Subsidiary of a Grantor
unless all of such Person’s Equity Interests constitute Excluded Property.

(lvii) “Pledged Interests” means all of each Grantor’s right, title and interest
in and to all of the Equity Interests now owned or hereafter acquired by such
Grantor, regardless of class or designation, including in each of the Pledged
Companies, and all substitutions therefor and replacements thereof, all proceeds
thereof and all rights relating thereto, also including any certificates
representing the Equity Interests, the right to receive any certificates
representing any of the Equity Interests, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect
thereof and the right to receive all dividends, distributions of income,
profits, surplus, or other compensation by way of income or liquidating
distributions, in cash or in kind, and all cash, instruments, and other property
from time to time received, receivable, or otherwise distributed in respect of
or in addition to, in substitution of, on account of, or in exchange for any or
all of the foregoing, provided, that Equity Interests that constitute Excluded
Property shall not be Pledged Interests.

(lviii) “Pledged Interests Addendum” means a Pledged Interests Addendum
substantially in the form of Exhibit C.

(lix) “Pledged Notes” has the meaning specified therefor in Section 6(i).

(lx) “Pledged Operating Agreements” means all of each Grantor’s rights, powers,
and remedies under the limited liability company operating agreements of each of
the Pledged Companies that are limited liability companies.

 

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(lxi) “Pledged Partnership Agreements” means all of each Grantor’s rights,
powers, and remedies under the partnership agreements of each of the Pledged
Companies that are partnerships.

(lxii) “Proceeds” has the meaning specified therefor in Section 3.

(lxiii) “PTO” means the United States Patent and Trademark Office.

(lxiv) “Real Property” means any estates or interests in real property now owned
or hereafter acquired by any Grantor or any Subsidiary of any Grantor and the
improvements thereto.

(lxv) “Record” means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.

(lxvi) “Rescission” has the meaning specified therefor in Section 7(k).

(lxvii) “Secured Obligations” means each and all of the following: (A) all of
the present and future obligations of each of the Grantors arising from, or
owing under or pursuant to, this Agreement (including the Guaranty), the Credit
Agreement, or any of the other Loan Documents and (B) all other Obligations of
Borrower and all other Guarantied Obligations of each Guarantor (including, in
the case of each of clauses (A) and (B), reasonable attorneys fees and expenses
and any interest, fees, or expenses that accrue after the filing of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any Insolvency Proceeding).

(lxviii) “Securities Account” means a securities account (as that term is
defined in the Code).

(lxix) “Security Interest” has the meaning specified therefor in Section 3.

(lxx) “Supporting Obligations” means supporting obligations (as such term is
defined in the Code), and includes letters of credit and guaranties issued in
support of Accounts, Chattel Paper, documents, General Intangibles, instruments
or Investment Property.

(lxxi) “Trademarks” means any and all trademarks, trade names, registered
trademarks, trademark applications, service marks, registered service marks and
service mark applications, including (A) the trade names, registered trademarks,
trademark applications, registered service marks and service mark applications
listed on Schedule 6, (B) all renewals thereof, (C) all income, royalties,
damages and payments now and hereafter due or payable under and with respect
thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions
thereof, (D) the right to sue for past, present and future infringements and
dilutions thereof, (E) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (F) all of each Grantor’s rights
corresponding thereto throughout the world.

 

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(lxxii) “Trademark Security Agreement” means each Trademark Security Agreement
executed and delivered by Grantors, or any of them, and Collateral Agent, in
substantially the form of Exhibit D.

(lxxiii) “Triggering Event” means, as of any date of determination, that (A) an
Event of Default has occurred as of such date or (B) Excess Availability (under
and as defined in the Revolving Credit Agreement referred to in the
Intercreditor Agreement) is less than the greater of (i) $15,625,000 and (ii)
12.5% of the Maximum Revolver Amount (under and as defined in the Revolving
Credit Agreement) as of such date.

(lxxiv) “URL” means “uniform resource locator,” an internet web address.

(lxxv) “VIN” has the meaning specified therefor in Section 5(h).

(b) Unless the context of this Agreement clearly requires otherwise, references
to the plural include the singular, references to the singular include the
plural, the terms “includes” and “including” are not limiting, and the term “or”
has, except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein or in
the Credit Agreement). The words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties. Any reference herein to the satisfaction,
repayment, or payment in full of the Secured Obligations or the Guarantied
Obligations shall mean (i) the payment or repayment in full in immediately
available funds of (A) the principal amount of, and interest accrued with
respect to, all outstanding Loans, together with the payment of any premium
applicable to the repayment of the Loans, (B) all Lender Group Expenses that
have accrued regardless of whether demand has been made therefor, (C) all fees
or charges that have accrued hereunder or under any other Loan Document and are
unpaid, (ii) the receipt by the Agents of cash collateral in order to secure any
other contingent Secured Obligations or Guarantied Obligations for which a claim
or demand for payment has been made at such time or in respect of matters or
circumstances known to an Agent or a Lender at the time that are reasonably
expected to result in any loss, cost, damage or expense (including attorneys
fees and legal expenses), such cash collateral to be in such amount as Agents
reasonably determine is appropriate to secure such contingent Secured
Obligations or Guarantied Obligations, (iii) the payment or repayment in full in
immediately available funds of all other Secured Obligations or Guarantied
Obligations (as the case may be) other than (A) unasserted contingent
indemnification obligations, and (iv) the termination of all of the Commitments
of the Lenders. Any reference herein to any Person shall be construed to include
such Person’s successors and assigns. Any requirement of a writing contained
herein shall be satisfied by the transmission of a Record.

 

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(c) All of the schedules and exhibits attached to this Agreement shall be deemed
incorporated herein by reference.

2. Guaranty.

(a) In recognition of the direct and indirect benefits to be received by
Guarantors from the proceeds of the Term Loans and by virtue of the financial
accommodations to be made to Borrower, each of the Guarantors, jointly and
severally, hereby unconditionally and irrevocably guarantees as a primary
obligor and not merely as a surety the full and prompt payment when due, whether
upon maturity, acceleration, or otherwise, of all of the Guarantied Obligations.
If any or all of the Obligations constituting Guarantied Obligations becomes due
and payable, each of the Guarantors, unconditionally and irrevocably, and
without the need for demand, protest, or any other notice or formality, promises
to pay such indebtedness to Administrative Agent, for the benefit of the Lender
Group, together with any and all expenses (including Lender Group Expenses) that
may be incurred by any Agent or any other member of the Lender Group in
demanding, enforcing, or collecting any of the Guarantied Obligations (including
the enforcement of any collateral for such Guarantied Obligations or any
collateral for the obligations of the Guarantors under this Guaranty). If claim
is ever made upon any Agent or any other member of the Lender Group for
repayment or recovery of any amount or amounts received in payment of or on
account of any or all of the Guarantied Obligations and any Agent or any other
member of the Lender Group repays all or part of said amount by reason of
(i) any judgment, decree, or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including Borrower or any Guarantor), then and in each such event, each of the
Guarantors agrees that any such judgment, decree, order, settlement, or
compromise shall be binding upon the Guarantors, notwithstanding any revocation
(or purported revocation) of this Guaranty or other instrument evidencing any
liability of any Grantor, and the Guarantors shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.

(b) Additionally, each of the Guarantors unconditionally and irrevocably
guarantees the payment of any and all of the Guarantied Obligations to
Administrative Agent, for the benefit of the Lender Group, whether or not due or
payable by any Loan Party upon the occurrence of any of the events specified in
Section 8.4 or 8.5 of the Credit Agreement, and irrevocably and unconditionally
promises to pay such indebtedness to Administrative Agent, for the benefit of
the Lender Group, without the requirement of demand, protest, or any other
notice or other formality, in lawful money of the United States.

(c) The liability of each of the Guarantors hereunder is primary, absolute, and
unconditional, and is independent of any security for or other guaranty of the
Guarantied Obligations, whether executed by any other Guarantor or by any other
Person, and the liability of each of the Guarantors hereunder shall not be
affected or impaired by (i) any payment on, or in reduction of, any such other
guaranty or undertaking, (ii) any dissolution, termination, or increase,
decrease, or change in personnel by any Grantor, (iii) any payment made to
Administrative Agent, any other member of the Lender Group on account of the
Obligations which Administrative Agent or such other member of the Lender Group
repays to any Grantor

 

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pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding (or any settlement or compromise of
any claim made in such a proceeding relating to such payment), and each of the
Guarantors waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding, or (iv) any action or inaction by
Administrative Agent or any other member of the Lender Group or (v) any
invalidity, irregularity, avoidability, or unenforceability of all or any part
of the Obligations or of any security therefor.

(d) This Guaranty includes all present and future Guarantied Obligations
including any under transactions continuing, compromising, extending,
increasing, modifying, releasing, or renewing the Guarantied Obligations,
changing the interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Guarantied Obligations after prior
Guarantied Obligations have been satisfied in whole or in part. To the maximum
extent permitted by law, each Guarantor hereby waives any right to revoke this
Guaranty as to future Guarantied Obligations. If such a revocation is effective
notwithstanding the foregoing waiver, each Guarantor acknowledges and agrees
that (i) no such revocation shall be effective until written notice thereof has
been received by Administrative Agent, (ii) no such revocation shall apply to
any Guarantied Obligations in existence on the date of receipt by Administrative
Agent of such written notice (including any subsequent continuation, extension,
or renewal thereof, or change in the interest rate, payment terms, or other
terms and conditions thereof), (iii) no such revocation shall apply to any
Guarantied Obligations made or created after such date to the extent made or
created pursuant to a legally binding commitment of any member of the Lender
Group in existence on the date of such revocation, (iv) no payment by any
Guarantor, Borrower, or from any other source, prior to the date of
Administrative Agent’s receipt of written notice of such revocation shall reduce
the maximum obligation of such Guarantor hereunder, and (v) any payment by
Borrower or from any source other than such Guarantor subsequent to the date of
such revocation shall first be applied to that portion of the Guarantied
Obligations as to which the revocation is effective and which are not,
therefore, guarantied hereunder, and to the extent so applied shall not reduce
the maximum obligation of such Guarantor hereunder. This Guaranty shall be
binding upon each Guarantor, its successors and assigns and inure to the benefit
of and be enforceable by Administrative Agent (for the benefit of the Lender
Group) and its successors, transferees, or assigns.

(e) The guaranty by each of the Guarantors hereunder is a guaranty of payment
and not of collection. The obligations of each of the Guarantors hereunder are
independent of the obligations of any other Guarantor or Grantor or any other
Person and a separate action or actions may be brought and prosecuted against
one or more of the Guarantors whether or not action is brought against any other
Guarantor or Grantor or any other Person and whether or not any other Guarantor
or Grantor or any other Person be joined in any such action or actions. Each of
the Guarantors waives, to the fullest extent permitted by law, the benefit of
any statute of limitations affecting its liability hereunder or the enforcement
hereof. Any payment by any Grantor or other circumstance which operates to toll
any statute of limitations as to any Grantor shall operate to toll the statute
of limitations as to each of the Guarantors.

(f) Each of the Guarantors authorizes Administrative Agent and the other members
of the Lender Group, without notice or demand, and without affecting or
impairing its liability hereunder, from time to time to:

 

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(i) change the manner, place, or terms of payment of, or change or extend the
time of payment of, renew, increase, accelerate, or alter: (A) any of the
Obligations (including any increase or decrease in the principal amount thereof
or the rate of interest or fees thereon); or (B) any security therefor or any
liability incurred directly or indirectly in respect thereof, and this Guaranty
shall apply to the Obligations as so changed, extended, renewed, or altered;

(ii) take and hold security for the payment of the Obligations and sell,
exchange, release, impair, surrender, realize upon, collect, settle, or
otherwise deal with in any manner and in any order any property at any time
pledged or mortgaged to secure the Obligations or any of the Guarantied
Obligations (including any of the obligations of all or any of the Guarantors
under this Guaranty) incurred directly or indirectly in respect thereof or
hereof, or any offset on account thereof;

(iii) exercise or refrain from exercising any rights against any Grantor;

(iv) release or substitute any one or more endorsers, guarantors, any Grantor,
or other obligors;

(v) settle or compromise any of the Obligations, any security therefor, or any
liability (including any of those of any of the Guarantors under this Guaranty)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Grantor to its creditors;

(vi) apply any sums by whomever paid or however realized to any liability or
liabilities of any Grantor to Administrative Agent or any other member of the
Lender Group regardless of what liability or liabilities of such Grantor remain
unpaid;

(vii) consent to or waive any breach of, or any act, omission, or default under,
this Agreement, any other Loan Document, or any of the instruments or agreements
referred to herein or therein, or otherwise amend, modify, or supplement this
Agreement, any other Loan Document, or any of such other instruments or
agreements; or

(viii) take any other action that could, under otherwise applicable principles
of law, give rise to a legal or equitable discharge of one or more of the
Guarantors from all or part of its liabilities under this Guaranty.

(g) It is not necessary for Administrative Agent or any other member of the
Lender Group to inquire into the capacity or powers of any of the Guarantors or
the officers, directors, partners or agents acting or purporting to act on their
behalf, and any Obligations made or created in reliance upon the professed
exercise of such powers shall be Guarantied hereunder.

(h) Each Guarantor jointly and severally guarantees that the Guarantied
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation, or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
member of the Lender Group with respect thereto. The obligations of each
Guarantor under this Guaranty are independent of the Guarantied Obligations, and
a separate action or actions may be brought and prosecuted against each

 

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Guarantor to enforce such obligations, irrespective of whether any action is
brought against any other Guarantor or whether any other Guarantor is joined in
any such action or actions. The liability of each Guarantor under this Guaranty
shall be absolute and unconditional irrespective of, and each Guarantor hereby
irrevocably waives any defense it may now or hereafter have in any way relating
to, any or all of the following:

(i) any lack of validity or enforceability of any Loan Document or any agreement
or instrument relating thereto;

(ii) any change in the time, manner, or place of payment of, or in any other
term of, all or any of the Guarantied Obligations, or any other amendment or
waiver of or any consent to departure from any Loan Document, including any
increase in the Guarantied Obligations resulting from the extension of
additional credit;

(iii) any taking, exchange, release, or non-perfection of any Lien in and to any
Collateral, or any taking, release, amendment, waiver of, or consent to
departure from any other guaranty, for all or any of the Guarantied Obligations;

(iv) the existence of any claim, set-off, defense, or other right that any
Guarantor may have at any time against any Person, including Administrative
Agent or any other member of the Lender Group;

(v) any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guarantied Obligations or any
security therefor;

(vi) any right or defense arising by reason of any claim or defense based upon
an election of remedies by any member of the Lender Group including any defense
based upon an impairment or elimination of such Guarantor’s rights of
subrogation, reimbursement, contribution, or indemnity of such Guarantor against
any other Grantor or any guarantors or sureties;

(vii) any change, restructuring, or termination of the corporate, limited
liability company, or partnership structure or existence of any Grantor; or

(viii) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or any other guarantor or surety.

(i) Waivers.

(i) Each of the Guarantors waives any right (except as shall be required by
applicable statute and cannot be waived) to require Administrative Agent or any
other member of the Lender Group to (i) proceed against any other Grantor or any
other Person, (ii) proceed against or exhaust any security held from any other
Grantor or any other Person, or (iii) protect, secure, perfect, or insure any
security interest or Lien on any property subject thereto or exhaust any right
to take any action against any other Grantor, any other Person, or any
collateral, or (iv) pursue any other remedy in any member of the Lender Group’s
power whatsoever. Each of the Guarantors waives any defense based on or arising
out of any defense

 

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of any Grantor or any other Person, other than payment of the Guarantied
Obligations to the extent of such payment, based on or arising out of the
disability of any Grantor or any other Person, or the validity, legality, or
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Grantor other than payment of
the Obligations to the extent of such payment. Each Agent may, at the election
of the Required Lenders, foreclose upon any Collateral held by any Agent by one
or more judicial or nonjudicial sales or other dispositions, whether or not
every aspect of any such sale is commercially reasonable or otherwise fails to
comply with applicable law or may exercise any other right or remedy any Agent
or any other member of the Lender Group may have against any Grantor or any
other Person, or any security, in each case, without affecting or impairing in
any way the liability of any of the Guarantors hereunder except to the extent
the Guarantied Obligations have been paid.

(ii) Each of the Guarantors waives all presentments, demands for performance,
protests and notices, including notices of nonperformance, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty, and notices of the
existence, creation, or incurring of new or additional Obligations or other
financial accommodations. Each of the Guarantors waives notice of any Default or
Event of Default under any of the Loan Documents. Each of the Guarantors assumes
all responsibility for being and keeping itself informed of each Grantor’s
financial condition and assets and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope, and extent of the
risks which each of the Guarantors assumes and incurs hereunder, and agrees that
neither Administrative Agent nor any of the other members of the Lender Group
shall have any duty to advise any of the Guarantors of information known to them
regarding such circumstances or risks.

(iii) To the fullest extent permitted by applicable law, each Guarantor hereby
waives: (A) any right to assert against any member of the Lender Group, any
defense (legal or equitable), set-off, counterclaim, or claim which each
Guarantor may now or at any time hereafter have against Borrower or any other
party liable to any member of the Lender Group; (B) any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity, or
enforceability of the Guarantied Obligations or any security therefor; (C) any
right or defense arising by reason of any claim or defense based upon an
election of remedies by any member of the Lender Group including any defense
based upon an impairment or elimination of such Guarantor’s rights of
subrogation, reimbursement, contribution, or indemnity of such Guarantor against
Borrower or other guarantors or sureties; and (D) the benefit of any statute of
limitations affecting such Guarantor’s liability hereunder or the enforcement
thereof, and any act which shall defer or delay the operation of any statute of
limitations applicable to the Guarantied Obligations shall similarly operate to
defer or delay the operation of such statute of limitations applicable to such
Guarantor’s liability hereunder.

(iv) No Guarantor will exercise any rights that it may now or hereafter acquire
against any Grantor or any other guarantor that arise from the existence,
payment, performance or enforcement of such Guarantor’s obligations under this
Guaranty, including any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of Administrative Agent or any other member of the Lender Group against
any Grantor or any other guarantor or any Collateral, whether or not such

 

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claim, remedy or right arises in equity or under contract, statute or common
law, including the right to take or receive from any Grantor or any other
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security solely on account of such claim, remedy or
right, unless and until all of the Guarantied Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash and all of the
Commitments have been terminated. If any amount shall be paid to any Guarantor
in violation of the immediately preceding sentence, such amount shall be held in
trust for the benefit of Administrative Agent, for the benefit of the Lender
Group, and shall forthwith be paid to Administrative Agent to be credited and
applied to the Guarantied Obligations and all other amounts payable under this
Guaranty, whether matured or unmatured, in accordance with the terms of the
Credit Agreement, or to be held as Collateral for any Guarantied Obligations or
other amounts payable under this Guaranty thereafter arising. Notwithstanding
anything to the contrary contained in this Guaranty, no Guarantor may exercise
any rights of subrogation, contribution, indemnity, reimbursement or other
similar rights against, and may not proceed or seek recourse against or with
respect to any property or asset of, any other Grantor (the “Foreclosed
Grantor”), including after payment in full of the Obligations, if all or any
portion of the Obligations have been satisfied in connection with an exercise of
remedies in respect of the Equity Interests of such Foreclosed Grantor whether
pursuant to this Agreement or otherwise.

(v) Each of the Guarantors hereby acknowledges and affirms that it understands
that to the extent the Guarantied Obligations are secured by Real Property
located in California, Guarantors shall be liable for the full amount of the
liability hereunder notwithstanding the foreclosure on such Real Property by
trustee sale or any other reason impairing such Guarantor’s right to proceed
against any Loan Party. In accordance with Section 2856 of the California Code
of Civil Procedure or any similar laws of any other applicable jurisdiction,
each of the Guarantors hereby waives until such time as the Guarantied
Obligations have been paid in full:

(1) all rights of subrogation, reimbursement, indemnification, and contribution
and any other rights and defenses that are or may become available to the
Guarantors by reason of Sections 2787 to 2855, inclusive, 2899, and 3433 of the
California Code of Civil Procedure or any similar laws of any other applicable
jurisdiction;

(2) all rights and defenses that the Guarantors may have because the Guarantied
Obligations are secured by Real Property located in California, meaning, among
other things, that: (A) Administrative Agent and the other members of the Lender
Group may collect from the Guarantors without first foreclosing on any real or
personal property collateral pledged by Borrower or any other Grantor, and
(B) if Administrative Agent, on behalf of the Lender Group, forecloses on any
Real Property collateral pledged by Borrower or any other Grantor, (1) the
amount of the Guarantied Obligations may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price, and (2) the Lender Group may collect from the
Guarantors even if, by foreclosing on the Real Property collateral,
Administrative Agent or the other members of the Lender Group have destroyed or
impaired any right the Guarantors may have to collect from any other Grantor, it
being understood that this is an unconditional and irrevocable waiver of any
rights and defenses the Guarantors may have because the Guarantied Obligations
are secured by Real Property (including, without limitation, any rights or
defenses based upon Sections 580a, 580d,

 

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or 726 of the California Code of Civil Procedure or any similar laws of any
other applicable jurisdiction); and

(3) all rights and defenses arising out of an election of remedies by
Administrative Agent and the other members of the Lender Group, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for the Guarantied Obligations, has destroyed Guarantors’ rights of subrogation
and reimbursement against any Grantor by the operation of Section 580d of the
California Code of Civil Procedure or any similar laws of any other applicable
jurisdiction or otherwise.

(vi) Each of the Guarantors represents, warrants, and agrees that each of the
waivers set forth above is made with full knowledge of its significance and
consequences and that if any of such waivers are determined to be contrary to
any applicable law or public policy, such waivers shall be effective to the
maximum extent permitted by law.

(vii) The provisions in this Section 2 which refer to certain sections of the
California Civil Code are included in this Guaranty solely out of an abundance
of caution and shall not be construed to mean that any of the above-referenced
provisions of California law are in any way applicable to this Guaranty.

3. Grant of Security. Each Grantor hereby unconditionally grants, assigns, and
pledges to Collateral Agent, for the benefit of each member of the Lender Group,
to secure the Secured Obligations, a continuing security interest (hereinafter
referred to as the “Security Interest”) in all of such Grantor’s right, title,
and interest in and to the following, whether now owned or hereafter acquired or
arising and wherever located (the “Collateral”):

(a) all of such Grantor’s Accounts;

(b) all of such Grantor’s Books;

(c) all of such Grantor’s Chattel Paper;

(d) all of such Grantor’s Commercial Tort Claims;

(e) all of such Grantor’s Deposit Accounts;

(f) all of such Grantor’s Equipment;

(g) all of such Grantor’s Farm Products;

(h) all of such Grantor’s Fixtures;

(i) all of such Grantor’s General Intangibles;

(j) all of such Grantor’s Inventory;

(k) all of such Grantor’s Investment Property;

 

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(l) all of such Grantor’s Intellectual Property and Intellectual Property
Licenses;

(m) all of such Grantor’s Negotiable Collateral (including all of such Grantor’s
Pledged Notes);

(n) all of such Grantor’s Pledged Interests (including all of such Grantor’s
Pledged Operating Agreements and Pledged Partnership Agreements);

(o) all of such Grantor’s Securities Accounts;

(p) all of such Grantor’s Supporting Obligations;

(q) all of such Grantor’s money, Cash Equivalents, or other assets of such
Grantor that now or hereafter come into the possession, custody, or control of
Collateral Agent (or its agent or designee) or any other member of the Lender
Group; and

(r) all of the proceeds (as such term is defined in the Code) and products,
whether tangible or intangible, of any of the foregoing, including proceeds of
insurance or Commercial Tort Claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, Fixtures, General Intangibles, Inventory, Investment Property,
Intellectual Property, Negotiable Collateral, Pledged Interests, Securities
Accounts, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, lease, license, exchange, collection, or other
disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion thereof or
interest therein, and the proceeds thereof, and all proceeds of any loss of,
damage to, or destruction of the above, whether insured or not insured, and, to
the extent not otherwise included, any indemnity, warranty, or guaranty payable
by reason of loss or damage to, or otherwise with respect to any of the
foregoing (the “Proceeds”). Without limiting the generality of the foregoing,
the term “Proceeds” includes whatever is receivable or received when Investment
Property or proceeds are sold, exchanged, collected, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes proceeds of
any indemnity or guaranty payable to any Grantor or any Agent from time to time
with respect to any of the Investment Property.

Notwithstanding anything contained in this Agreement to the contrary, the term
“Collateral” shall not include the following property (the “Excluded
Property”): (i) voting Equity Interests of any CFC, solely to the extent that
(y) such Equity Interests represent more than 65% of the outstanding voting
Equity Interests of such CFC, and (z) pledging or hypothecating more than 65% of
the total outstanding voting Equity Interests of such CFC would result in
adverse tax consequences or the costs to the Grantors of providing such pledge
are unreasonably excessive (as determined by Collateral Agent in consultation
with Borrower) in relation to the benefits to Collateral Agent and the other
members of the Lender Group of the security afforded thereby (which pledge, if
reasonably requested by Collateral Agent, shall be governed by the laws of the
jurisdiction of such Subsidiary); or (ii) any rights or interest in any
contract, lease, permit, license, or license agreement covering real or personal
property of any Grantor if under the terms

 

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of such contract, lease, permit, license, or license agreement, or applicable
law with respect thereto, the grant of a security interest or lien therein is
prohibited as a matter of law or under the terms of such contract, lease,
permit, license, or license agreement and such prohibition or restriction has
not been waived or the consent of the other party to such contract, lease,
permit, license, or license agreement has not been obtained (provided, that,
(A) the foregoing exclusions of this clause (ii) shall in no way be construed
(1) to apply to the extent that any described prohibition or restriction is
ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the Code or other
applicable law, or (2) to apply to the extent that any consent or waiver has
been obtained that would permit Collateral Agent’s security interest or lien to
attach notwithstanding the prohibition or restriction on the pledge of such
contract, lease, permit, license, or license agreement and (B) the foregoing
exclusions of clauses (i) and (ii) shall in no way be construed to limit,
impair, or otherwise affect any of Collateral Agent’s or any other member of the
Lender Group’s continuing security interests in and liens upon any rights or
interests of any Grantor in or to (1) monies due or to become due under or in
connection with any described contract, lease, permit, license, license
agreement, or Equity Interests (including any Accounts or Equity Interests), or
(2) any proceeds from the sale, license, lease, or other dispositions of any
such contract, lease, permit, license, license agreement, or Equity Interests);
or (iii) any United States intent-to-use trademark applications to the extent
that, and solely during the period in which, the grant of a security interest
therein would impair the validity or enforceability of such intent-to-use
trademark applications under applicable federal law, provided that upon
submission and acceptance by the PTO of an amendment to allege use pursuant to
15 U.S.C. Section 1060(a) (or any successor provision), such intent-to-use
trademark application shall be considered Collateral.

4. Security for Secured Obligations. The Security Interest created hereby
secures the payment and performance of the Secured Obligations, whether now
existing or arising hereafter. Without limiting the generality of the foregoing,
this Agreement secures the payment of all amounts which constitute part of the
Secured Obligations and would be owed by Grantors, or any of them, to Collateral
Agent, the Lender Group or any of them, but for the fact that they are
unenforceable or not allowable (in whole or in part) as a claim in an Insolvency
Proceeding involving any Grantor due to the existence of such Insolvency
Proceeding.

5. Grantors Remain Liable. Anything herein to the contrary notwithstanding,
(a) each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed,
(b) the exercise by Collateral Agent or any other member of the Lender Group of
any of the rights hereunder shall not release any Grantor from any of its duties
or obligations under such contracts and agreements included in the Collateral,
and (c) none of the members of the Lender Group shall have any obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the members of the Lender Group be
obligated to perform any of the obligations or duties of any Grantors thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder. Until an Event of Default shall occur and be continuing, except as
otherwise provided in this Agreement, the Credit Agreement, or any other Loan
Document, Grantors shall have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of their respective
businesses, subject to and upon the terms hereof and of the Credit Agreement and
the other Loan Documents. Without limiting the generality of the

 

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foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including all voting, consensual, dividend,
and distribution rights, shall remain in the applicable Grantor until (i) the
occurrence and continuance of an Event of Default and (ii) Collateral Agent has
notified the applicable Grantor of Collateral Agent’s election to exercise such
rights with respect to the Pledged Interests pursuant to Section 16.

6. Representations and Warranties. In order to induce Agents to enter into this
Agreement for the benefit of the Lender Group, each Grantor makes the following
representations and warranties to the Lender Group which shall be true, correct,
and complete, in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof), as of the Closing
Date, and such representations and warranties shall survive the execution and
delivery of this Agreement:

(a) The name (within the meaning of Section 9-503 of the Code) and jurisdiction
of organization of each Grantor and each of its Subsidiaries is set forth on
Schedule 7 (as such Schedule may be updated from time to time to reflect changes
resulting from transactions permitted under the Loan Documents).

(b) The chief executive office of each Grantor and each of its Subsidiaries is
located at the address indicated on Schedule 7 (as such Schedule may be updated
from time to time to reflect changes resulting from transactions permitted under
the Loan Documents).

(c) Each Grantor’s and each of its Subsidiaries’ tax identification numbers and
organizational identification numbers, if any, are identified on Schedule 7 (as
such Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under the Loan Documents).

(d) As of the Closing Date, no Grantor and no Subsidiary of a Grantor holds any
commercial tort claims that exceed $250,000 in amount, except as set forth on
Schedule 1.

(e) Set forth on Schedule 9 (as such Schedule may be updated from time to time
subject to Section 7(k)(iii) with respect to Controlled Accounts and provided
that Grantors comply with Section 7(c) hereof) is a listing of all of Grantors’
and their Subsidiaries’ Deposit Accounts and Securities Accounts, including,
with respect to each bank or securities intermediary (a) the name and address of
such Person, and (b) the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.

(f) Schedule 8 sets forth all Real Property owned in fee by any of the Grantors
as of the Closing Date.

(g) As of the Closing Date: (i) Schedule 2 provides a complete and correct list
of all registered Copyrights owned by any Grantor, all applications for
registration of Copyrights owned by any Grantor, and all other Copyrights owned
by any Grantor and material to the conduct of the business of any Grantor;
(ii) Schedule 3 provides a complete and correct list of all Intellectual
Property Licenses entered into by any Grantor pursuant to which (A) any Grantor
has provided any license or other rights in Intellectual Property owned or
controlled by such Grantor to any other Person (other than non-exclusive
software licenses granted in the

 

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ordinary course of business) or (B) any Person has granted to any Grantor any
license or other rights in Intellectual Property owned or controlled by such
Person, in each case, that is material to the business of such Grantor,
including any Intellectual Property that is incorporated in any Inventory,
software, or other product marketed, sold, licensed, or distributed by such
Grantor; (iii) Schedule 4 provides a complete and correct list of all Patents
owned by any Grantor and all applications for Patents owned by any Grantor; and
(iv) Schedule 6 provides a complete and correct list of all registered
Trademarks owned by any Grantor, all applications for registration of Trademarks
owned by any Grantor, and all other Trademarks owned by any Grantor and material
to the conduct of the business of any Grantor.

(h) (i) (A) each Grantor owns exclusively or holds licenses in all Intellectual
Property that is necessary in or material to the conduct of its business, and
(B) all employees and contractors of each Grantor who were involved in the
creation or development of any Intellectual Property for such Grantor that is
necessary in or material to the business of such Grantor have signed agreements
containing assignment of Intellectual Property rights to such Grantor and
obligations of confidentiality;

(i) to each Grantor’s knowledge, no Person has infringed or misappropriated or
is currently infringing or misappropriating any Intellectual Property rights
owned by such Grantor, in each case, that either individually or in the
aggregate could reasonably be expected to result in a Material Adverse Effect;

(ii) (A) to each Grantor’s knowledge, (1) such Grantor has never infringed or
misappropriated and is not currently infringing or misappropriating any
Intellectual Property rights of any Person, and (2) no product manufactured,
used, distributed, licensed, or sold by or service provided by such Grantor has
ever infringed or misappropriated or is currently infringing or misappropriating
any Intellectual Property rights of any Person, in each case, except where such
infringement either individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Effect, and (B) there are no
infringement or misappropriation claims or proceedings pending, or to any
Grantor’s knowledge, threatened in writing against any Grantor, and no Grantor
has received any written notice or other communication of any actual or alleged
infringement or misappropriation of any Intellectual Property rights of any
Person, in each case, except where such infringement either individually or in
the aggregate could not reasonably be expected to result in a Material Adverse
Effect;

(iii) to each Grantor’s knowledge, all registered Copyrights, registered
Trademarks, and issued Patents that are owned by such Grantor and necessary in
or material to the conduct of its business are valid, subsisting and enforceable
and in compliance with all legal requirements, filings, and payments and other
actions that are required to maintain such Intellectual Property in full force
and effect, and

(iv) each Grantor has taken reasonable steps to maintain the confidentiality of
and otherwise protect and enforce its rights in all trade secrets owned by such
Grantor that are necessary in or material to the conduct of the business of such
Grantor.

(i) This Agreement creates a valid security interest in the Collateral of each
Grantor, to the extent a security interest therein can be created under the
Code, securing the

 

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payment of the Secured Obligations. Except to the extent a security interest in
the Collateral cannot be perfected by the filing of a financing statement under
the Code, all filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken or will have been taken upon
the filing of financing statements listing each applicable Grantor, as a debtor,
and Collateral Agent, as secured party, in the jurisdictions listed next to such
Grantor’s name on Schedule 11. Upon the making of such filings, Collateral Agent
shall have a first priority (subject to the Intercreditor Agreement) perfected
security interest in the Collateral of each Grantor to the extent such security
interest can be perfected by the filing of a financing statement. Upon filing of
any Copyright Security Agreement with the United States Copyright Office, filing
of any Patent Security Agreement and any Trademark Security Agreement with the
PTO, and the filing of appropriate financing statements in the jurisdictions
listed on Schedule 11, all action necessary or desirable to protect and perfect
the Security Interest in and on each Grantor’s Patents, Trademarks, or
Copyrights has been taken and such perfected Security Interest is enforceable as
such as against any and all creditors of and purchasers from any Grantor. All
action by any Grantor necessary to protect and perfect such security interest on
each item of Collateral has been duly taken.

(j) (i) Except for the Security Interest created hereby, each Grantor is and
will at all times be the sole holder of record and the legal and beneficial
owner, free and clear of all Liens other than Permitted Liens, of the Pledged
Interests indicated on Schedule 5 as being owned by such Grantor and, when
acquired by such Grantor, any Pledged Interests acquired after the Closing Date;
(ii) all of the Pledged Interests are duly authorized, validly issued, fully
paid and nonassessable and the Pledged Interests constitute or will constitute
the percentage of the issued and outstanding Equity Interests of the Pledged
Companies of such Grantor identified on Schedule 5 as supplemented or modified
by any Pledged Interests Addendum or any Joinder to this Agreement; (iii) such
Grantor has the right and requisite authority to pledge, the Investment Property
pledged by such Grantor to Collateral Agent as provided herein; (iv) all actions
necessary or desirable to perfect and establish the first priority (subject to
the Intercreditor Agreement) of, or otherwise protect, Collateral Agent’s Liens
in the Investment Property, and the proceeds thereof, have been duly taken, upon
(A) the execution and delivery of this Agreement; (B) the taking of possession
by Collateral Agent (or its agent or designee) of any certificates representing
the Pledged Interests, together with undated powers (or other documents of
transfer acceptable to Collateral Agent) endorsed in blank by the applicable
Grantor; (C) the filing of financing statements in the applicable jurisdiction
set forth on Schedule 11 for such Grantor with respect to the Pledged Interests
of such Grantor that are not represented by certificates, and (D) with respect
to any Securities Accounts, the delivery of Control Agreements with respect
thereto; and (v) each Grantor has delivered to and deposited with Collateral
Agent all certificates representing the Pledged Interests owned by such Grantor
to the extent such Pledged Interests are represented by certificates, and
undated powers (or other documents of transfer acceptable to Collateral Agent)
endorsed in blank with respect to such certificates. None of the Pledged
Interests owned or held by such Grantor has been issued or transferred in
violation of any securities registration, securities disclosure, or similar laws
of any jurisdiction to which such issuance or transfer may be subject.

(k) No consent, approval, authorization, or other order or other action by, and
no notice to or filing with, any Governmental Authority or any other Person is
required (i) for the grant of a Security Interest by such Grantor in and to the
Collateral pursuant to this Agreement or

 

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for the execution, delivery, or performance of this Agreement by such Grantor,
or (ii) for the exercise by Collateral Agent of the voting or other rights
provided for in this Agreement with respect to the Investment Property or the
remedies in respect of the Collateral pursuant to this Agreement, except as may
be required in connection with such disposition of Investment Property by laws
affecting the offering and sale of securities generally and except for consents,
approvals, authorizations, or other orders or actions that have been obtained or
given (as applicable) and that are still in force. No Intellectual Property
License of any Grantor that is necessary in or material to the conduct of such
Grantor’s business requires any consent of any other Person that has not been
obtained in order for such Grantor to grant the security interest granted
hereunder in such Grantor’s right, title or interest in or to such Intellectual
Property License.

(l) Schedule 12 sets forth all Certificated Equipment owned by Grantors as of
the Closing Date, by model, model year, and vehicle identification number
(“VIN”).

(m) There is no default, breach, violation, or event of acceleration existing
under any promissory note (as defined in the Code) constituting Collateral and
pledged hereunder (each a “Pledged Note”) and no event has occurred or
circumstance exists which, with the passage of time or the giving of notice, or
both, would constitute a default, breach, violation, or event of acceleration
under any Pledged Note. No Grantor that is an obligee under a Pledged Note has
waived any default, breach, violation, or event of acceleration under such
Pledged Note.

(n) As to all limited liability company or partnership interests, issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
hereby represents and warrants that the Pledged Interests issued pursuant to
such agreement (A) are not dealt in or traded on securities exchanges or in
securities markets, (B) do not constitute investment company securities, and
(C) are not held by such Grantor in a Securities Account. In addition, none of
the Pledged Operating Agreements, the Pledged Partnership Agreements, or any
other agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide that such Pledged
Interests are securities governed by Article 8 of the Uniform Commercial Code as
in effect in any relevant jurisdiction.

7. Covenants. Each Grantor, jointly and severally, covenants and agrees with
each Agent that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section 23:

(a) Possession of Collateral. In the event that any Collateral, including
Proceeds, is evidenced by or consists of Negotiable Collateral, Investment
Property, or Chattel Paper having an aggregate value or face amount of $500,000
or more for all such Negotiable Collateral, Investment Property, or Chattel
Paper, the Grantors shall promptly (and in any event within five (5) Business
Days after acquisition thereof), notify Collateral Agent thereof, and if and to
the extent that perfection or priority of Collateral Agent’s Security Interest
is dependent on or enhanced by possession by Collateral Agent (or its bailee
acting on its behalf), the applicable Grantor, promptly (and in any event within
five (5) Business Days) after request by Collateral Agent (or its bailee acting
on its behalf), shall execute such other documents and instruments as shall be
requested by Collateral Agent (or its bailee acting on its behalf) or, if
applicable, endorse

 

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and deliver physical possession of such Negotiable Collateral, Investment
Property, or Chattel Paper to Collateral Agent (or its bailee acting on its
behalf), together with such undated powers (or other relevant document of
transfer acceptable to Collateral Agent (or its bailee acting on its behalf))
endorsed in blank as shall be requested by Collateral Agent (or its bailee
acting on its behalf), and shall do such other acts or things deemed necessary
or desirable by Collateral Agent to protect Collateral Agent’s Security Interest
therein;

(b) Chattel Paper.

(i) Promptly (and in any event within five (5) Business Days) after request by
Collateral Agent, each Grantor shall take all steps reasonably necessary to
grant Collateral Agent control of all electronic Chattel Paper in accordance
with the Code and all “transferable records” as that term is defined in Section
16 of the Uniform Electronic Transaction Act and Section 201 of the federal
Electronic Signatures in Global and National Commerce Act as in effect in any
relevant jurisdiction, to the extent that the aggregate value or face amount of
such electronic Chattel Paper equals or exceeds $500,000;

(ii) If any Grantor retains possession of any Chattel Paper or instruments
(which retention of possession shall be subject to the extent permitted hereby
and by the Credit Agreement), promptly upon the request of Collateral Agent,
such Chattel Paper and instruments shall be marked with the following legend:
“This writing and the obligations evidenced or secured hereby are subject to the
Security Interest of Wells Fargo Bank, National Association, as Collateral Agent
for the benefit of the Lender Group”;

(c) Control Agreements.

(i) Except to the extent otherwise excused by Section 7(k)(iv), each Grantor
shall obtain an authenticated Control Agreement (which may include a Controlled
Account Agreement), from each bank maintaining a Deposit Account or Securities
Account for such Grantor;

(ii) Except to the extent otherwise excused by Section 7(k)(iv), each Grantor
shall obtain an authenticated Control Agreement, from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for any Grantor, or
maintaining a Securities Account for such Grantor; and

(iii) Except to the extent otherwise excused by Section 7(k)(iv), each Grantor
shall obtain an authenticated Control Agreement with respect to all of such
Grantor’s investment property;

(d) Letter-of-Credit Rights. If the Grantors (or any of them) are or become the
beneficiary of letters of credit having a face amount or value of $500,000 or
more in the aggregate, then the applicable Grantor or Grantors shall promptly
(and in any event within five (5) Business Days after becoming a beneficiary),
notify Collateral Agent thereof and, promptly (and in any event within five (5)
Business Days) after request by Collateral Agent (or its bailee acting on its
behalf), enter into a tri-party agreement with Collateral Agent (or its bailee
acting on its behalf) and the issuer or confirming bank with respect to
letter-of-credit rights assigning

 

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such letter-of-credit rights to Collateral Agent (or its bailee acting on its
behalf) and directing all payments thereunder to Collateral Agent’s account (or
the account of its bailee acting on its behalf), all in form and substance
reasonably satisfactory to Collateral Agent;

(e) Commercial Tort Claims. If the Grantors (or any of them) obtain Commercial
Tort Claims having a value, or involving an asserted claim, in the amount of
$500,000 or more in the aggregate for all Commercial Tort Claims, then
the applicable Grantor or Grantors shall promptly (and in any event within five
(5) Business Days of obtaining such Commercial Tort Claim), notify Collateral
Agent upon incurring or otherwise obtaining such Commercial Tort Claims and,
promptly (and in any event within five (5) Business Days) after request by
Collateral Agent, amend Schedule 1 to describe such Commercial Tort Claims in a
manner that reasonably identifies such Commercial Tort Claims and which is
otherwise reasonably satisfactory to Collateral Agent, and hereby authorizes the
filing of additional financing statements or amendments to existing financing
statements describing such Commercial Tort Claims, and agrees to do such other
acts or things deemed necessary or desirable by Collateral Agent to give
Collateral Agent a first priority (subject to the Intercreditor Agreement),
perfected security interest in any such Commercial Tort Claim;

(f) Government Contracts. Other than Accounts and Chattel Paper the value of
which does not at any one time exceed $1,000,000, if any Account or Chattel
Paper arises out of a contract or contracts with the United States of America or
any department, agency, or instrumentality thereof, Grantors shall promptly (and
in any event within five (5) Business Days of the creation thereof) notify
Collateral Agent thereof and, promptly (and in any event within five (5)
Business Days) after request by Collateral Agent, execute any instruments or
take any steps reasonably required by Collateral Agent in order that all moneys
due or to become due under such contract or contracts shall be assigned to
Collateral Agent, for the benefit of the Lender Group, and shall provide written
notice thereof under the Assignment of Claims Act or other applicable law;

(g) Intellectual Property.

(i) Upon the request of Collateral Agent, in order to facilitate filings with
the PTO and the United States Copyright Office, each Grantor shall execute and
deliver to Collateral Agent one or more Copyright Security Agreements, Trademark
Security Agreements, or Patent Security Agreements to further evidence
Collateral Agent’s Lien on such Grantor’s Patents, Trademarks, or Copyrights,
and the General Intangibles of such Grantor relating thereto or represented
thereby;

(ii) Each Grantor shall have the duty, with respect to Intellectual Property
that is necessary in or material to the conduct of such Grantor’s business, to
protect and diligently enforce and defend at such Grantor’s expense its
Intellectual Property, including (A) to diligently enforce and defend, including
promptly suing for infringement, misappropriation, or dilution and to recover
any and all damages for such infringement, misappropriation, or dilution, and
filing for opposition, interference, and cancellation against conflicting
Intellectual Property rights of any Person, (B) to prosecute diligently any
trademark application or service mark application that is part of the Trademarks
pending as of the date hereof or hereafter until the termination of this
Agreement, (C) to prosecute diligently any patent application that is part of

 

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the Patents pending as of the date hereof or hereafter until the termination of
this Agreement, (D) to take all reasonable and necessary action to preserve and
maintain all of such Grantor’s Trademarks, Patents, Copyrights, Intellectual
Property Licenses, and its rights therein, including paying all maintenance fees
and filing of applications for renewal, affidavits of use, and affidavits of
noncontestability, and (E) to require all employees, consultants, and
contractors of each Grantor who were involved in the creation or development of
such Intellectual Property to sign agreements containing assignment of
Intellectual Property rights and obligations of confidentiality. Each Grantor
further agrees not to abandon any Intellectual Property or Intellectual Property
License that is necessary in or material to the conduct of such Grantor’s
business. Each Grantor hereby agrees to take the steps described in this
Section 7(g)(ii) with respect to all new or acquired Intellectual Property to
which it or any of its Subsidiaries is now or later becomes entitled that is
necessary in or material to the conduct of such Grantor’s business;

(iii) Grantors acknowledge and agree that the Lender Group shall have no duties
with respect to any Intellectual Property or Intellectual Property Licenses of
any Grantor. Without limiting the generality of this Section 7(g)(iii), Grantors
acknowledge and agree that no member of the Lender Group shall be under any
obligation to take any steps necessary to preserve rights in the Collateral
consisting of Intellectual Property or Intellectual Property Licenses against
any other Person, but any member of the Lender Group may do so at its option
from and after the occurrence and during the continuance of an Event of Default,
and all expenses incurred in connection therewith (including reasonable fees and
expenses of attorneys and other professionals) shall be for the sole account of
Borrower and shall be chargeable to the Loan Account;

(iv) On each date on which a Compliance Certificate is to be delivered pursuant
to Section 5.1 of the Credit Agreement in respect of a fiscal quarter (or, if an
Event of Default has occurred and is continuing, more frequently if requested by
Collateral Agent), each Grantor shall provide Collateral Agent with a written
report of all new Patents, Trademarks or Copyrights that are registered or the
subject of pending applications for registrations, and of all Intellectual
Property Licenses that are material to the conduct of such Grantor’s business,
in each case, which were acquired, registered, or for which applications for
registration were filed by any Grantor during the prior period and any statement
of use or amendment to allege use with respect to intent-to-use trademark
applications. In the case of such registrations or applications therefor, which
were acquired by any Grantor, each such Grantor shall file the necessary
documents with the appropriate Governmental Authority identifying the applicable
Grantor as the owner (or as a co-owner thereof, if such is the case) of such
Intellectual Property. In each of the foregoing cases, the applicable Grantor
shall promptly cause to be prepared, executed, and delivered to Collateral Agent
supplemental schedules to the applicable Loan Documents to identify such Patent,
Trademark and Copyright registrations and applications therefor (with the
exception of Trademark applications filed on an intent-to-use basis for which no
statement of use or amendment to allege use has been filed) and Intellectual
Property Licenses as being subject to the security interests created thereunder;

(v) Anything to the contrary in this Agreement notwithstanding, in no event
shall any Grantor, either itself or through any agent, employee, licensee, or
designee, file an application for the registration of any Copyright with the
United States Copyright Office or any similar office or agency in another
country without giving Collateral Agent written notice

 

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thereof at least five (5) Business Days prior to such filing and complying with
Section 7(g)(i). Upon receipt from the United States Copyright Office of notice
of registration of any Copyright, each Grantor shall promptly (but in no event
later than five (5) Business Days following such receipt) notify (but without
duplication of any notice required by Section 7(g)(iv)) Collateral Agent of such
registration by delivering, or causing to be delivered, to Collateral Agent,
documentation sufficient for Collateral Agent to perfect Collateral Agent’s
Liens on such Copyright. If any Grantor acquires from any Person any Copyright
registered with the United States Copyright Office or an application to register
any Copyright with the United States Copyright Office, such Grantor shall
promptly (but in no event later than five (5) Business Days following such
acquisition) notify Collateral Agent of such acquisition and deliver, or cause
to be delivered, to Collateral Agent, documentation sufficient for Collateral
Agent to perfect Collateral Agent’s Liens on such Copyright. In the case of such
Copyright registrations or applications therefor which were acquired by any
Grantor, each such Grantor shall promptly (but in no event later than five (5)
Business Days following such acquisition) file the necessary documents with the
appropriate Governmental Authority identifying the applicable Grantor as the
owner (or as a co-owner thereof, if such is the case) of such Copyrights;

(vi) Each Grantor shall take reasonable steps to maintain the confidentiality
of, and otherwise protect and enforce its rights in, the Intellectual Property
that is necessary in or material to the conduct of such Grantor’s business,
including, as applicable (A) protecting the secrecy and confidentiality of its
confidential information and trade secrets by having and enforcing a policy
requiring all current employees, consultants, licensees, vendors and contractors
with access to such information to execute appropriate confidentiality
agreements; (B) taking actions reasonably necessary to ensure that no trade
secret falls into the public domain; and (C) protecting the secrecy and
confidentiality of the source code of all software programs and applications of
which it is the owner or licensee by having and enforcing a policy requiring any
licensees (or sublicensees) of such source code to enter into license agreements
with commercially reasonable use and non-disclosure restrictions; and

(vii) No Grantor shall enter into any Intellectual Property License material to
the conduct of the business to receive any license or rights in any Intellectual
Property of any other Person unless such Grantor has used commercially
reasonable efforts to permit the assignment of or grant of a security interest
in such Intellectual Property License (and all rights of Grantor thereunder) to
Collateral Agent (and any transferees of Collateral Agent).

(h) Investment Property.

(i) If any Grantor shall acquire, obtain, receive or become entitled to receive
any Pledged Interests after the Closing Date, it shall promptly (and in any
event within ten (10) Business Days of acquiring or obtaining such Collateral)
deliver to Collateral Agent a duly executed Pledged Interests Addendum
identifying such Pledged Interests;

(ii) Upon the occurrence and during the continuance of an Event of Default,
following the request of Collateral Agent, all sums of money and property paid
or distributed in respect of the Investment Property that are received by any
Grantor shall be held by the Grantors in trust for the benefit of Collateral
Agent segregated from such Grantor’s other

 

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property, and such Grantor shall deliver it forthwith to Collateral Agent in the
exact form received;

(iii) Each Grantor shall promptly deliver to Collateral Agent a copy of each
material notice or other material communication received by it in respect of any
Pledged Interests;

(iv) No Grantor shall make or consent to any amendment or other modification or
waiver with respect to any Pledged Interests, Pledged Operating Agreement, or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests if the same is prohibited
pursuant to the Loan Documents;

(v) Each Grantor agrees that it will cooperate with Collateral Agent in
obtaining all necessary approvals and making all necessary filings under
federal, state, local, or foreign law to effect the perfection of the Security
Interest on the Investment Property or to effect any sale or transfer thereof;

(vi) As to all limited liability company or partnership interests, issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
hereby covenants that the Pledged Interests issued pursuant to such agreement
(A) are not and shall not be dealt in or traded on securities exchanges or in
securities markets, (B) do not and will not constitute investment company
securities, and (C) are not and will not be held by such Grantor in a securities
account. In addition, none of the Pledged Operating Agreements, the Pledged
Partnership Agreements, or any other agreements governing any of the Pledged
Interests issued under any Pledged Operating Agreement or Pledged Partnership
Agreement, provide or shall provide that such Pledged Interests are securities
governed by Article 8 of the Uniform Commercial Code as in effect in any
relevant jurisdiction.

(i) Real Property; Fixtures. Each Grantor covenants and agrees that upon the
acquisition of any fee interest in Real Property having a fair market value in
excess of $2,500,000 it will promptly (and in any event within ten (10) Business
Days of acquisition) notify Collateral Agent of the acquisition of such Real
Property and will grant to Collateral Agent, for the benefit of the Lender
Group, a first priority (subject to the Intercreditor Agreement) Mortgage on
each fee interest in Real Property now or hereafter owned by such Grantor and
shall deliver such other documentation and opinions, in form and substance
satisfactory to Collateral Agent, in connection with the grant of such Mortgage
as Collateral Agent shall request in its reasonable discretion, including title
insurance policies, financing statements, fixture filings and environmental
audits and such Grantor shall pay all recording costs, intangible taxes and
other fees and costs (including reasonable attorneys fees and expenses) incurred
in connection therewith. Each Grantor acknowledges and agrees that, to the
extent permitted by applicable law, all of the Collateral shall remain personal
property regardless of the manner of its attachment or affixation to real
property;

(j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, any of the Collateral, except as expressly permitted by the Credit
Agreement, or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral of any Grantor, except for Permitted Liens.

 

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The inclusion of Proceeds in the Collateral shall not be deemed to constitute
Collateral Agent’s consent to any sale or other disposition of any of the
Collateral except as expressly permitted in this Agreement or the other Loan
Documents;

(k) Controlled Accounts; Controlled Investments.

(i) Each Grantor shall (A) establish and maintain cash management services of a
type and on terms reasonably satisfactory to Collateral Agent at one or more of
the banks set forth on Schedule 10 (each a “Controlled Account Bank”), and shall
take reasonable steps to ensure that all of its Account Debtors forward payment
of the amounts owed by them directly to such Controlled Account Bank, and
(B) deposit or cause to be deposited promptly, and in any event no later than
the first Business Day after the date of receipt thereof, all of their
collections in respect of Collateral (including those sent directly by their
Account Debtors to a Grantor) into a bank account of such Grantor (each, a
“Controlled Account”) at one of the Controlled Account Banks.

(ii) Each Grantor shall establish and maintain Controlled Account Agreements
with Collateral Agent (or its bailee acting on its behalf) and the applicable
Controlled Account Bank, in form and substance reasonably acceptable to
Collateral Agent. Unless otherwise agreed to by Collateral Agent (or its bailee
acting on its behalf), each such Controlled Account Agreement shall provide,
among other things, that (A) the Controlled Account Bank will comply with any
instructions originated by Collateral Agent (or its bailee acting on its behalf)
directing the disposition of the funds in such Controlled Account without
further consent by the applicable Grantor, (B) the Controlled Account Bank
waives, subordinates, or agrees not to exercise any rights of setoff or
recoupment or any other claim against the applicable Controlled Account other
than for payment of its service fees and other charges directly related to the
administration of such Controlled Account and for returned checks or other items
of payment, and (C) upon the instruction of Collateral Agent (or its bailee
acting on its behalf) (an “Activation Instruction”), the Controlled Account Bank
will forward by daily sweep all amounts in the applicable Controlled Account to
the Collateral Agent’s account. Each Agent agrees not to issue an Activation
Instruction with respect to the Controlled Accounts unless a Triggering Event
has occurred and is continuing at the time such Activation Instruction is
issued. If a Triggering Event has occurred and is continuing, any Agent may in
its reasonable discretion issue an Activation Instruction, provided that if the
Triggering Event exists as a result of Excess Availability (under and as defined
in the Revolving Credit Agreement) being less than the greater of (i)
$15,625,000 and (ii) 12.5% of the Maximum Revolver Amount (under and as defined
in the Revolving Credit Agreement), an Agent (or its bailee acting on its
behalf) shall issue such Activation Instruction. Each Agent agrees to use
commercially reasonable efforts to rescind an Activation Instruction (the
“Rescission”) if, after the occurrence of such Triggering Event, (x) ninety (90)
consecutive days have passed during which Excess Availability has exceeded the
greater of (i) $15,625,000 and (ii) 12.5% of the Maximum Revolver Amount and (y)
no Event of Default has occurred and is continuing.

(iii) So long as no Default or Event of Default has occurred and is continuing,
Borrower may amend Schedule 10 to add or replace a Controlled Account Bank or
Controlled Account and shall upon such addition or replacement provide to
Collateral Agent an amended Schedule 10; provided, however, that (A) such
prospective Controlled Account Bank

 

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shall be reasonably satisfactory to Collateral Agent, and (B) prior to the time
of the opening of such Controlled Account, the applicable Grantor and such
prospective Controlled Account Bank shall have executed and delivered to
Collateral Agent (or its bailee acting on its behalf) a Controlled Account
Agreement. Each Grantor shall close any of its Controlled Accounts (and
establish replacement Controlled Account accounts in accordance with the
foregoing sentence) as promptly as practicable and in any event within
forty-five (45) days after notice from Collateral Agent that the operating
performance, funds transfer, or availability procedures or performance of the
Controlled Account Bank with respect to Controlled Account Accounts or
Collateral Agent’s liability under any Controlled Account Agreement with such
Controlled Account Bank is no longer acceptable in Collateral Agent’s reasonable
judgment.

(iv) Other than (i) an aggregate amount of not more than $250,000 at any one
time, in the case of Grantors and their Subsidiaries, and (ii) amounts deposited
into Deposit Accounts specially and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for any Grantor’s or its
Subsidiaries’ employees, no Grantor will, and no Grantor will permit its
Subsidiaries to, make, acquire, or permit to exist Permitted Investments
consisting of cash, Cash Equivalents, or amounts credited to Deposit Accounts or
Securities Accounts unless Grantor or its Subsidiary, as applicable, and the
applicable bank or securities intermediary have entered into Control Agreements
with Collateral Agent (or its bailee acting on its behalf) governing such
Permitted Investments in order to perfect (and further establish) Collateral
Agent’s Liens in such Permitted Investments.

(l) Name, Etc. No Grantor will, nor will any Grantor permit any of its
Subsidiaries to, change its name, organizational identification number,
jurisdiction of organization or organizational identity; provided, that Grantor
or any of its Subsidiaries may change its name upon at least five (5) Business
Days prior written notice to each Agent of such change.

(m) Certificated Equipment. Unless Collateral Agent otherwise agrees, Grantors
shall maintain the Custodial Agreement in force and effect or, at the request of
Collateral Agent, enter into a replacement custodial agreement with Collateral
Agent substantially in the form of Exhibit E. Promptly (and in any event within
five (5) Business Days) with respect to all goods covered by a certificate of
title owned by any Grantor, such Grantor shall deliver to the custodian under
the Custodial Agreement, the certificates of title for all such goods. On each
date on which a Compliance Certificate is to be delivered pursuant to Section
5.1 of the Credit Agreement in respect of a fiscal month (or, if an Event of
Default has occurred and is continuing, more frequently if requested by
Collateral Agent), Grantors shall provide Collateral Agent with an updated
Schedule 12 which shall identify (A) all Certificated Equipment acquired since
the last update of Schedule 12 and (B) all Certificated Equipment sold, disposed
of or otherwise no longer owned by a Grantor since the last update of Schedule
12; and

(n) Pledged Notes. Grantors (i) without the prior written consent of Collateral
Agent, will not (A) waive or release any monetary or material obligation of any
Person that is obligated under any of the Pledged Notes, (B) take or omit to
take any action or knowingly suffer or permit any action to be omitted or taken,
the taking or omission of which would result in any right of offset against sums
payable under the Pledged Notes, or (C) other

 

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than Permitted Dispositions, assign or surrender their rights and interests
under any of the Pledged Notes or terminate, cancel, modify, change, supplement
or amend the Pledged Notes in any manner materially adverse to Grantor, and
(ii) shall provide to Collateral Agent copies of all material written notices
(including notices of default) given or received with respect to the Pledged
Notes promptly after giving or receiving such notice.

8. Relation to Other Security Documents. The provisions of this Agreement shall
be read and construed with the other Loan Documents referred to below in the
manner so indicated.

(a) Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit
Agreement shall control.

(b) Patent, Trademark, Copyright Security Agreements. The provisions of the
Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Copyright Security Agreements, Trademark Security
Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of any Agent hereunder. In the event of any conflict between any
provision in this Agreement and a provision in a Copyright Security Agreement,
Trademark Security Agreement or Patent Security Agreement, such provision of
this Agreement shall control.

(c) Intercreditor Agreement. Notwithstanding any provision contained herein, (i)
this Agreement, the Liens created hereby and the rights, remedies, duties and
obligations provided for herein are subject to the Intercreditor Agreement and
(ii) in the event of a conflict between any provision in this Agreement and a
provision in the Intercreditor Agreement, the provisions of the Intercreditor
Agreement shall control.

9. Further Assurances.

(a) Each Grantor agrees that from time to time, at its own expense, such Grantor
will promptly execute and deliver all further instruments and documents, and
take all further action, that any Agent may reasonably request, in order to
perfect and protect the Security Interest granted hereby, to create, perfect or
protect the Security Interest purported to be granted hereby or to enable each
Agent to exercise and enforce its rights and remedies hereunder with respect to
any of the Collateral.

(b) Each Grantor authorizes the filing by any Agent of financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver to
each Agent such other instruments or notices, as such Agent may reasonably
request, in order to perfect and preserve the Security Interest granted or
purported to be granted hereby.

(c) Each Grantor authorizes each Agent at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements and
amendments (i) describing the Collateral as “all personal property of debtor” or
“all assets of debtor” or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code
for the

 

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sufficiency or filing office acceptance. Each Grantor also hereby ratifies any
and all financing statements or amendments previously filed by any Agent in any
jurisdiction.

(d) Each Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement filed in connection with this Agreement without the prior written
consent of Collateral Agent, subject to such Grantor’s rights under Section
9-509(d)(2) of the Code.

10. Agents’ Right to Perform Contracts, Exercise Rights, etc. Upon the
occurrence and during the continuance of an Event of Default, each Agent (or its
designee) (a) may proceed to perform any and all of the obligations of any
Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor’s rights under Intellectual
Property Licenses in connection with the enforcement of such Agent’s rights
hereunder, including the right to prepare for sale and sell any and all
Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses, and (c) shall have the right to request that
any Equity Interests that are pledged hereunder be registered in the name of
such Agent or any of its nominees.

11. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints Collateral Agent its attorney-in-fact, with full authority in the place
and stead of such Grantor and in the name of such Grantor or otherwise, at such
time as an Event of Default has occurred and is continuing under the Credit
Agreement, to take any action and to execute any instrument which Collateral
Agent may reasonably deem necessary or advisable to accomplish the purposes of
this Agreement, including:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Accounts or any other Collateral of such Grantor;

(b) to receive and open all mail addressed to such Grantor and to notify postal
authorities to change the address for the delivery of mail to such Grantor to
that of Collateral Agent;

(c) to receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

(d) to file any claims or take any action or institute any proceedings which
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral of such Grantor or otherwise to enforce the rights of Collateral
Agent with respect to any of the Collateral;

(e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or
in part the purchase order of any Person obligated to such Grantor in respect of
any Account of such Grantor;

(f) to use any Intellectual Property or Intellectual Property Licenses of such
Grantor, including but not limited to any labels, Patents, Trademarks, trade
names, URLs,

 

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domain names, industrial designs, Copyrights, or advertising matter, in
preparing for sale, advertising for sale, or selling Inventory or other
Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and

(g) Collateral Agent, on behalf of the Lender Group, shall have the right, but
shall not be obligated, to bring suit in its own name to enforce the
Intellectual Property and Intellectual Property Licenses and, if Collateral
Agent shall commence any such suit, the appropriate Grantor shall, at the
request of Collateral Agent, do any and all lawful acts and execute any and all
proper documents reasonably required by Collateral Agent in aid of such
enforcement.

To the extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated.

12. Agent May Perform. If any Grantor fails to perform any agreement contained
herein, each Agent may itself perform, or cause performance of, such agreement,
and the reasonable expenses of such Agent incurred in connection therewith shall
be payable, jointly and severally, by Grantors.

13. Collateral Agent’s Duties. The powers conferred on Collateral Agent
hereunder are solely to protect Collateral Agent’s interest in the Collateral,
for the benefit of the Lender Group, and shall not impose any duty upon
Collateral Agent to exercise any such powers. Except for the safe custody of any
Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is
accorded treatment substantially equal to that which Collateral Agent accords
its own property.

14. Collection of Accounts, General Intangibles and Negotiable Collateral. At
any time upon the occurrence and during the continuance of an Event of Default,
Collateral Agent or Collateral Agent’s designee may (a) notify Account Debtors
of any Grantor that the Accounts, General Intangibles, Chattel Paper or
Negotiable Collateral of such Grantor have been assigned to Collateral Agent,
for the benefit of the Lender Group, or that Collateral Agent has a security
interest therein, and (b) collect the Accounts, General Intangibles and
Negotiable Collateral of any Grantor directly, and any collection costs and
expenses shall constitute part of such Grantor’s Secured Obligations under the
Loan Documents.

15. Disposition of Pledged Interests by Collateral Agent. None of the Pledged
Interests existing as of the date of this Agreement are, and none of the Pledged
Interests hereafter acquired on the date of acquisition thereof will be,
registered or qualified under the various federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. Each Grantor understands that in connection with such
disposition, Collateral Agent may approach only a restricted number of potential
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that a sale under such circumstances may yield a lower price for the Pledged
Interests than if the Pledged Interests were registered and qualified pursuant
to federal and state securities laws and sold on the open market. Each Grantor,
therefore, agrees that: (a) if Collateral Agent shall, pursuant to the terms of
this Agreement, sell or cause the Pledged Interests or any portion thereof to be
sold at a private sale, Collateral Agent shall have the right to rely upon the
advice and opinion of any nationally recognized brokerage or investment firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that Collateral
Agent has handled the disposition in a commercially reasonable manner.

16. Voting and Other Rights in Respect of Pledged Interests.

(a) Upon the occurrence and during the continuation of an Event of Default,
(i) Collateral Agent may, at its option, and with two (2) Business Days prior
notice to any Grantor, and in addition to all rights and remedies available to
Collateral Agent under any other agreement, at law, in equity, or otherwise,
exercise all voting rights, or any other ownership or consensual rights
(including any dividend or distribution rights) in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is Collateral Agent
obligated by the terms of this Agreement to exercise such rights, and (ii) if
Collateral Agent duly exercises its right to vote any of such Pledged Interests,
each Grantor hereby appoints Collateral Agent, such Grantor’s true and lawful
attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any
manner Collateral Agent deems advisable for or against all matters submitted or
which may be submitted to a vote of shareholders, partners or members, as the
case may be. The power-of-attorney and proxy granted hereby is coupled with an
interest and shall be irrevocable.

(b) For so long as any Grantor shall have the right to vote the Pledged
Interests owned by it, such Grantor covenants and agrees that it will not,
without the prior written consent of Collateral Agent, vote or take any
consensual action with respect to such Pledged Interests which would materially
adversely affect the rights of Collateral Agent, the other members of the Lender
Group, or the value of the Pledged Interests.

17. Remedies. Upon the occurrence and during the continuance of an Event of
Default:

(a) Collateral Agent may, and, at the instruction of the Required Lenders, shall
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to it,
all the rights and remedies of a secured party on default under the Code or any
other applicable law. Without limiting the generality of the foregoing, each
Grantor expressly agrees that, in any such event, Collateral Agent without
demand of performance or other demand, advertisement or notice of any kind
(except a notice specified below of time and place of public or private sale) to
or upon any Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
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Collateral Agent forthwith, assemble all or part of the Collateral as directed
by Collateral Agent and make it available to Collateral Agent at one or more
locations where such Grantor regularly maintains Inventory, and (ii) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Collateral Agent’s offices
or elsewhere, for cash, on credit, and upon such other terms as Collateral Agent
may deem commercially reasonable. Each Grantor agrees that, to the extent
notification of sale shall be required by law, at least ten (10) days
notification by mail to the applicable Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notification shall
constitute a reasonable “authenticated notification of disposition” within the
meaning of Section 9-611 of the Code. Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notification of sale having been
given. Collateral Agent may adjourn any public sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor agrees that (A) the internet shall constitute a “place” for purposes of
Section 9-610(b) of the Code and (B) to the extent notification of sale shall be
required by law, notification by mail of the URL where a sale will occur and the
time when a sale will commence at least ten (10) days prior to the sale shall
constitute a reasonable notification for purposes of Section 9-611(b) of the
Code. Each Grantor agrees that any sale of Collateral to a licensor pursuant to
the terms of a license agreement between such licensor and a Grantor is
sufficient to constitute a commercially reasonable sale (including as to method,
terms, manner, and time) within the meaning of Section 9-610 of the Code.

(b) Collateral Agent is hereby granted a license or other right to use, without
liability for royalties or any other charge, each Grantor’s Intellectual
Property, including but not limited to, any labels, Patents, Trademarks, trade
names, URLs, domain names, industrial designs, Copyrights, and advertising
matter, whether owned by any Grantor or with respect to which any Grantor has
rights under license, sublicense, or other agreements (including any
Intellectual Property License), as it pertains to the Collateral, in preparing
for sale, advertising for sale and selling any Collateral, and each Grantor’s
rights under all licenses and all franchise agreements shall inure to the
benefit of Collateral Agent.

(c) Collateral Agent may, in addition to other rights and remedies provided for
herein, in the other Loan Documents, or otherwise available to it under
applicable law and without the requirement of notice to or upon any Grantor or
any other Person (which notice is hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), (i) with respect to any
Grantor’s Deposit Accounts in which Collateral Agent’s Liens are perfected by
control under Section 9-104 of the Code, instruct the bank maintaining such
Deposit Account for the applicable Grantor to pay the balance of such Deposit
Account to or for the benefit of Collateral Agent, and (ii) with respect to any
Grantor’s Securities Accounts in which Collateral Agent’s Liens are perfected by
control under Section 9-106 of the Code, instruct the securities intermediary
maintaining such Securities Account for the applicable Grantor to (A) transfer
any cash in such Securities Account to or for the benefit of Collateral Agent,
or (B) liquidate any financial assets in such Securities Account that are
customarily sold on a recognized market and transfer the cash proceeds thereof
to or for the benefit of Collateral Agent.

 

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(d) Any cash held by Collateral Agent as Collateral and all cash proceeds
received by Collateral Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied
against the Secured Obligations in the order set forth in the Credit Agreement.
In the event the proceeds of Collateral are insufficient to satisfy all of the
Secured Obligations in full, each Grantor shall remain jointly and severally
liable for any such deficiency.

(e) Each Grantor hereby acknowledges that the Secured Obligations arise out of a
commercial transaction, and agrees that if an Event of Default shall occur and
be continuing Collateral Agent shall have the right to an immediate writ of
possession without notice of a hearing. Collateral Agent shall have the right to
the appointment of a receiver for the properties and assets of each Grantor, and
each Grantor hereby consents to such rights and such appointment and hereby
waives any objection such Grantor may have thereto or the right to have a bond
or other security posted by Collateral Agent.

18. Remedies Cumulative. Each right, power, and remedy of any Agent, or any
other member of the Lender Group as provided for in this Agreement or the other
Loan Documents or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power, or remedy provided for in this Agreement and the other Loan
Documents or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by any Agent or any
other member of the Lender Group of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by such Agent or
such other member of the Lender Group of any or all such other rights, powers,
or remedies.

19. Marshaling. No Agent shall be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Secured Obligations or any of them or to resort to
such collateral security or other assurances of payment in any particular order,
and all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, each Grantor hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of any Agent’s rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Secured Obligations or
under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.

20. Indemnity and Expenses.

(a) Each Grantor agrees to indemnify each Agent and the other members of the
Lender Group from and against all claims, lawsuits and liabilities (including
reasonable attorneys fees) growing out of or resulting from this Agreement
(including enforcement of this Agreement) or any other Loan Document to which
such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent

 

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jurisdiction. This provision shall survive the termination of this Agreement and
the Credit Agreement and the repayment of the Secured Obligations.

(b) Grantors, jointly and severally, shall, upon demand, pay to each Agent (or
Administrative Agent may charge to the Loan Account) all the Lender Group
Expenses which any Agent or any other member of the Lender Group may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or, upon an Event of Default, the sale of,
collection from, or other realization upon, any of the Collateral in accordance
with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of any Agent hereunder or (iv) the failure by
any Grantor to perform or observe any of the provisions hereof.

21. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by each Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
amendment of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each Agent and each Grantor to which such
amendment applies.

22. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agents at their
respective addresses specified in the Credit Agreement, and to any of the
Grantors at their respective addresses specified in the Credit Agreement or
Guaranty, as applicable, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.

23. Continuing Security Interest: Assignments under Credit Agreement.

(a) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the Obligations have been
paid in full in accordance with the provisions of the Credit Agreement and the
Commitments have expired or have been terminated, (ii) be binding upon each
Grantor, and their respective successors and assigns, and (iii) inure to the
benefit of, and be enforceable by, each Agent, and its successors, transferees
and assigns. Without limiting the generality of the foregoing clause (iii), any
Lender may, in accordance with the provisions of the Credit Agreement, assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise. Upon payment in full of the Secured Obligations in
accordance with the provisions of the Credit Agreement and the expiration or
termination of the Commitments, the Guaranty made and the Security Interest
granted hereby shall terminate and all rights to the Collateral shall revert to
Grantors or any other Person entitled thereto. At such time, upon Borrower’s
request, each Agent will authorize the filing of appropriate termination
statements to terminate such Security Interest. No transfer or renewal,
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termination of this Agreement or of the Credit Agreement, any other Loan
Document, or any other instrument or document executed and delivered by any
Grantor to any Agent nor any other loans made by any Lender to Borrower, nor the
taking of further security, nor the retaking or re-delivery of the Collateral to
Grantors, or any of them, by any Agent, nor any other act of the Lender Group,
or any of them, shall release any Grantor from any obligation, except a release
or discharge executed in writing by the applicable Agent in accordance with the
provisions of the Credit Agreement. No Agent shall by any act, delay, omission
or otherwise, be deemed to have waived any of its rights or remedies hereunder,
unless such waiver is in writing and signed by such Agent and then only to the
extent therein set forth. A waiver by any Agent of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or
remedy which such Agent would otherwise have had on any other occasion.

(b) Each Grantor agrees that, if any payment made by any Grantor or other Person
and applied to the Secured Obligations is at any time annulled, avoided, set,
aside, rescinded, invalidated, declared to be fraudulent or preferential or
otherwise required to be refunded or repaid, or the proceeds of any Collateral
are required to be returned by Collateral Agent or any other member of the
Lender Group to such Grantor, its estate, trustee, receiver or any other party,
including any Grantor, under any bankruptcy law, state or federal law, common
law or equitable cause, then, to the extent of such payment or repayment, any
Lien or other Collateral securing such liability shall be and remain in full
force and effect, as fully as if such payment had never been made. If, prior to
any of the foregoing, (i) any Lien or other Collateral securing such Grantor’s
liability hereunder shall have been released or terminated by virtue of the
foregoing clause (a), or (ii) any provision of the Guaranty hereunder shall have
been terminated, cancelled or surrendered, such Lien, other Collateral or
provision shall be reinstated in full force and effect and such prior release,
termination, cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of any such Grantor in respect of any
Lien or other Collateral securing such obligation or the amount of such payment.

24. Survival. All representations and warranties made by the Grantors in this
Agreement and in the certificates or other instruments delivered in connection
with or pursuant to 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 and the making of any loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that any Agent or any
Lender may have had notice or knowledge of any Default or Event of Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any loan or any fee or any other amount payable
under the Credit Agreement is outstanding and so long as the Commitments have
not expired or terminated.

25. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF, THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES
ARISING HEREUNDER

 

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OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AN AGENT’S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR AND AGENT WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 25(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR AND AGENT
HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM,
CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS (EACH A “CLAIM”). EACH GRANTOR AND AGENT
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.

(d) EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK
AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY AGENT MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(e) NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST ANY AGENT, ANY LENDER, OR ANY
AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR
ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR
PUNITIVE DAMAGES IN

 

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RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR
ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH, AND EACH GRANTOR
HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR.

26. New Subsidiaries. Pursuant to Section 5.11 of the Credit Agreement, certain
Subsidiaries (whether by acquisition or creation) of any Grantor are required to
enter into this Agreement by executing and delivering in favor of each Agent a
Joinder to this Agreement in substantially the form of Annex 1. Upon the
execution and delivery of Annex 1 by any such new Subsidiary, such Subsidiary
shall become a Guarantor and Grantor hereunder with the same force and effect as
if originally named as a Guarantor and Grantor herein. The execution and
delivery of any instrument adding an additional Guarantor or Grantor as a party
to this Agreement shall not require the consent of any Guarantor or Grantor
hereunder. The rights and obligations of each Guarantor and Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Guarantor or Grantor hereunder.

27. Agents. Each reference herein to any right granted to, benefit conferred
upon or power exercisable by the “Administrative Agent” or “Collateral Agent”
shall be a reference to Administrative Agent or Collateral Agent, as applicable,
for the benefit of each member of the Lender Group.

28. Miscellaneous.

(a) This Agreement is a Loan Document. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

(b) Any provision of this Agreement which is prohibited or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction. Each
provision of this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal enforceability of any
specific provision.

 

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(c) Headings and numbers have been set forth herein for convenience only. Unless
the contrary is compelled by the context, everything contained in each Section
applies equally to this entire Agreement.

(d) Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed against any member of the Lender Group or any Grantor, whether under
any rule of construction or otherwise. This Agreement has been reviewed by all
parties and shall be construed and interpreted according to the ordinary meaning
of the words used so as to accomplish fairly the purposes and intentions of all
parties hereto.

[signature pages follow]

 

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IN WITNESS WHEREOF, the undersigned parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.

 

GRANTORS:     NUVERRA ENVIRONMENTAL SOLUTIONS, INC.     By:  

/s/ Mark D. Johnsrud

    Name:   Mark D. Johnsrud     Title:   Chairman and Chief Executive Officer  
 

1960 WELL SERVICES, LLC

BADLANDS LEASING, LLC

BADLANDS POWER FUELS, LLC (DE)

BADLANDS POWER FUELS, LLC (ND)

HECKMANN WATER RESOURCES CORPORATION

HECKMANN WATER RESOURCES (CVR), INC.

HECKMANN WOODS CROSS, LLC

HEK WATER SOLUTIONS, LLC

IDEAL OILFIELD DISPOSAL, LLC

LANDTECH ENTERPRISES, L.L.C.

NES WATER SOLUTIONS, LLC

NUVERRA TOTAL SOLUTIONS, LLC

    By:  

/s/ Mark D. Johnsrud

    Name:   Mark D. Johnsrud     Title:   President     APPALACHIAN WATER
SERVICES, LLC     By:   HEK Water Solutions, LLC, its managing member     By:  

/s/ Mark D. Johnsrud

    Name:   Mark D. Johnsrud     Title:   President

 

[SIGNATURE PAGE TO GUARANTY AND SECURITY AGREEMENT]

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

ADMINISTRATIVE AGENT:     WILMINGTON SAVINGS FUND SOCIETY, FSB     By:  

/s/ Geoffrey J. Lewis

    Name:   Geoffrey J. Lewis     Title:   Vice President

 

[SIGNATURE PAGE TO GUARANTY AND SECURITY AGREEMENT]

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

COLLATERAL AGENT:     WELLS FARGO BANK, NATIONAL ASSOCIATION     By:  

/s/ Zachary S. Buchanan

    Name:   Zachary S. Buchanan     Title:   AVP

 

[SIGNATURE PAGE TO GUARANTY AND SECURITY AGREEMENT]

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

ANNEX 1 TO GUARANTY AND SECURITY AGREEMENT

FORM OF JOINDER

Joinder No.      (this “Joinder”), dated as of              20    , to the
Guaranty and Security Agreement, dated as of April 15, 2016 (as amended,
restated, supplemented, or otherwise modified from time to time, the “Guaranty
and Security Agreement”), by and among each of the parties listed on the
signature pages thereto and those additional entities that thereafter become
parties thereto (collectively, jointly and severally, “Grantors” and each,
individually, a “Grantor”), WILMINGTON SAVINGS FUND SOCIETY, FSB (“Wilmington”),
in its capacity as agent for the Lender Group (in such capacity, together with
its successors and assigns in such capacity, “Administrative Agent”), and WELLS
FARGO BANK, NATIONAL ASSOCAITION (“Wells Fargo”), in its capacity as collateral
agent for each member of the Lender Group (in such capacity, together with its
successors and assigns in such capacity, “Collateral Agent” and, together with
the Administrative Agent, the “Agents” and each, an “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Term Loan Credit Agreement dated as of April
15, 2016 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”) by and among Nuverra Environmental Solutions,
Inc., a Delaware corporation, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (such Lenders, together with their respective successors
and assigns in such capacity, each, individually, a “Lender” and, collectively,
the “Lenders”), and Administrative Agent, the Lender Group has agreed to make
term loans available to Borrower pursuant to the terms and conditions thereof;
and

WHEREAS, initially capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Guaranty and
Security Agreement or, if not defined therein, in the Credit Agreement, and this
Joinder shall be subject to the rules of construction set forth in Section 1(b)
of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis; and

WHEREAS, Grantors have entered into the Guaranty and Security Agreement in order
to induce the Lender Group to make certain financial accommodations to Borrower
as provided for in the Credit Agreement and the other Loan Documents; and

WHEREAS, pursuant to Section 5.11 of the Credit Agreement and Section 26 of the
Guaranty and Security Agreement, certain Subsidiaries of the Loan Parties, must
execute and deliver certain Loan Documents, including the Guarantor and Security
Agreement, and the joinder to the Guaranty and Security Agreement by the
undersigned new Grantor or Grantors (collectively, the “New Grantors”) may be
accomplished by the execution of this Joinder in favor of each Agent, for the
benefit of the Lender Group; and

WHEREAS, each New Grantor (a) is [an Affiliate] [a Subsidiary] of Borrower and,
as such, will benefit by virtue of the financial accommodations extended to
Borrower by the Lender

 

Annex I - 1

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

Group and (b) by becoming a Grantor will benefit from certain rights granted to
the Grantors pursuant to the terms of the Loan Documents;

NOW, THEREFORE, for and in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:

1. In accordance with Section 26 of the Guaranty and Security Agreement, each
New Grantor, by its signature below, becomes a “Grantor” and “Guarantor” under
the Guaranty and Security Agreement with the same force and effect as if
originally named therein as a “Grantor” and “Guarantor” and each New Grantor
hereby (a) agrees to all of the terms and provisions of the Guaranty and
Security Agreement applicable to it as a “Grantor” or “Guarantor” thereunder and
(b) represents and warrants that the representations and warranties made by it
as a “Grantor” or “Guarantor” thereunder are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) on and as of the date hereof. In furtherance of
the foregoing, each New Grantor hereby (a) jointly and severally unconditionally
and irrevocably guarantees as a primary obligor and not merely as a surety the
full and prompt payment when due, whether upon maturity, acceleration, or
otherwise, of all of the Guarantied Obligations, and (b) unconditionally grants,
assigns, and pledges to Collateral Agent, for the benefit of the Lender Group,
to secure the Secured Obligations, a continuing security interest in and to all
of such New Grantor’s right, title and interest in and to the Collateral. Each
reference to a “Grantor” or “Guarantor” in the Guaranty and Security Agreement
shall be deemed to include each New Grantor. The Guaranty and Security Agreement
is incorporated herein by reference.

2. Schedule 1, “Commercial Tort Claims”, Schedule 2, “Copyrights”, Schedule 3,
“Intellectual Property Licenses”, Schedule 4, “Patents”, Schedule 5, “Pledged
Companies”, Schedule 6, “Trademarks”, Schedule 7, Name; Chief Executive Office;
Tax Identification Numbers and Organizational Numbers, Schedule 8, “Owned Real
Property”, Schedule 9, “Deposit Accounts and Securities Accounts”, Schedule 10,
“Controlled Account Banks”, Schedule 11, “List of Uniform Commercial Code Filing
Jurisdictions”, and Schedule 12, “Certificated Equipment” attached hereto
supplement Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule 5, Schedule
6, Schedule 7, Schedule 8, Schedule 9, Schedule 10, Schedule 11, and Schedule 12
respectively, to the Guaranty and Security Agreement and shall be deemed a part
thereof for all purposes of the Guaranty and Security Agreement.

3. Each New Grantor authorizes each Agent at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements and
amendments thereto (i) describing the Collateral as “all personal property of
debtor” or “all assets of debtor” or words of similar effect, (ii) describing
the Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code
for the sufficiency or filing office acceptance. Each New Grantor also hereby
ratifies any and all financing statements or amendments previously filed by any
Agent in any jurisdiction in connection with the Loan Documents.

 

Annex I - 2

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

4. Each New Grantor represents and warrants to each Agent and the Lender Group
that this Joinder has been duly executed and delivered by such New Grantor and
constitutes its legal, valid, and binding obligation, enforceable against it in
accordance with its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium, or
other similar laws affecting creditors’ rights generally and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).

5. This Joinder is a Loan Document. This Joinder may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Joinder. Delivery of an executed counterpart of this Joinder by telefacsimile or
other electronic method of transmission shall be equally as effective as
delivery of an original executed counterpart of this Joinder. Any party
delivering an executed counterpart of this Joinder by telefacsimile or other
electronic method of transmission also shall deliver an original executed
counterpart of this Joinder but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Joinder.

6. The Guaranty and Security Agreement, as supplemented hereby, shall remain in
full force and effect.

7. THIS JOINDER SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND
VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 25 OF THE
GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY
THIS REFERENCE, MUTATIS MUTANDIS.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

Annex I - 3

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

IN WITNESS WHEREOF, the parties hereto have caused this Joinder to the Guaranty
and Security Agreement to be executed and delivered as of the day and year first
above written.

 

NEW GRANTORS:     [NAME OF NEW GRANTOR]     By:  

 

    Name:  

 

    Title:  

 

    [NAME OF NEW GRANTOR]     By:  

 

    Name:  

 

    Title:  

 

ADMINISTRATIVE AGENT:     WILMINGTON SAVINGS FUND SOCIETY, FSB     By:  

 

    Name:  

 

    Title:  

 

COLLATERAL AGENT:     WELLS FARGO BANK, NATIONAL ASSOCIATION     By:  

 

    Name:  

 

    Title:  

 

Agreed and accepted:      

 

[NAME OF GRANTOR (EXCLUDING NEW GRANTORS)] By:  

 

Name:  

 

Title:  

 

[SIGNATURE PAGE TO JOINDER NO.      TO GUARANTY AND SECURITY AGREEMENT]

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

EXHIBIT A

COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made
this      day of             , 20    , by and among Grantors listed on the
signature pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells
Fargo”), in its capacity as collateral agent for each member of the Lender Group
(in such capacity, together with its successors and assigns in such capacity,
“Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Term Loan Credit Agreement dated as of April
15, 2016 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”) by and among Nuverra Environmental Solutions,
Inc., a Delaware corporation, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (such Lenders, together with their respective successors
and assigns in such capacity, each, individually, a “Lender” and, collectively,
the “Lenders”), and Wilmington Savings Fund Society, as administrative agent,
the Lender Group has agreed to make certain financial accommodations available
to Borrower from time to time pursuant to the terms and conditions thereof; and

WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Credit Agreement and the other
Loan Documents, but only upon the condition, among others, that Grantors shall
have executed and delivered to Collateral Agent, for the benefit of the Lender
Group, that certain Guaranty and Security Agreement, dated as of April 15, 2016
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Guaranty and
Security Agreement”); and

WHEREAS, pursuant to the Guaranty and Security Agreement, Grantors are required
to execute and deliver to Collateral Agent, for the benefit of the Lender Group,
this Copyright Security Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:

1. DEFINED TERMS. All initially capitalized terms used but not otherwise defined
herein have the meanings given to them in the Guaranty and Security Agreement
or, if not defined therein, in the Credit Agreement, and this Copyright Security
Agreement shall be subject to the rules of construction set forth in Section
1(b) of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis.

2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor hereby
unconditionally grants, assigns, and pledges to Collateral Agent, for the
benefit

 

A-1

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

of each member of the Lender Group, to secure the Secured Obligations, a
continuing security interest (referred to in this Copyright Security Agreement
as the “Security Interest”) in all of such Grantor’s right, title and interest
in and to the following, whether now owned or hereafter acquired or arising
(collectively, the “Copyright Collateral”):

(a) all of such Grantor’s Copyrights and Copyright Intellectual Property
Licenses to which it is a party including those referred to on Schedule I;

(b) all renewals or extensions of the foregoing; and

(c) all products and proceeds of the foregoing, including any claim by such
Grantor against third parties for past, present or future infringement of any
Copyright or any Copyright exclusively licensed under any Intellectual Property
License, including the right to receive damages, or the right to receive license
fees, royalties, and other compensation under any Copyright Intellectual
Property License.

3. SECURITY FOR SECURED OBLIGATIONS. This Copyright Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Copyright Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Collateral Agent, the other
members of the Lender Group, or any of them, whether or not they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.

4. SECURITY AGREEMENT. The Security Interest granted pursuant to this Copyright
Security Agreement is granted in conjunction with the security interests granted
to Collateral Agent, for the benefit of the Lender Group, pursuant to the
Guaranty and Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Collateral Agent with respect to the Security
Interest in the Copyright Collateral made and granted hereby are more fully set
forth in the Guaranty and Security Agreement, the terms and provisions of which
are incorporated by reference herein as if fully set forth herein. To the extent
there is any inconsistency between this Copyright Security Agreement and the
Guaranty and Security Agreement, the Guaranty and Security Agreement shall
control.

5. AUTHORIZATION TO SUPPLEMENT. Grantors shall give Collateral Agent prior
written notice of no less than five (5) Business Days before filing any
additional application for registration of any copyright and prompt notice in
writing of any additional copyright registrations granted therefor after the
date hereof. Without limiting Grantors’ obligations under this Section, Grantors
hereby authorize Collateral Agent unilaterally to modify this Copyright Security
Agreement by amending Schedule I to include any future United States registered
copyrights or applications therefor of each Grantor. Notwithstanding the
foregoing, no failure to so modify this Copyright Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Collateral
Agent’s continuing security interest in all Collateral, whether or not listed on
Schedule I.

 

A-2

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

6. COUNTERPARTS. This Copyright Security Agreement is a Loan Document. This
Copyright Security Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Copyright Security
Agreement. Delivery of an executed counterpart of this Copyright Security
Agreement by telefacsimile or other electronic method of transmission shall be
equally as effective as delivery of an original executed counterpart of this
Copyright Security Agreement. Any party delivering an executed counterpart of
this Copyright Security Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Copyright Security Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Copyright Security Agreement.

7. CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE
PROVISION. THIS COPYRIGHT SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS
REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET
FORTH IN SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS
ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

 

A-3

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

IN WITNESS WHEREOF, the parties hereto have caused this Copyright Security
Agreement to be executed and delivered as of the day and year first above
written.

 

GRANTORS:    

 

    By:  

 

    Name:  

 

    Title:  

 

   

 

    By:  

 

    Name:  

 

    Title:  

 

    ACCEPTED AND ACKNOWLEDGED BY: COLLATERAL AGENT:     WELLS FARGO BANK,
NATIONAL ASSOCIATION     By:  

 

    Name:  

 

    Title:  

 

[SIGNATURE PAGE TO COPYRIGHT SECURITY AGREEMENT]

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

SCHEDULE I

to

COPYRIGHT SECURITY AGREEMENT

Copyright Registrations

 

Grantor

 

Country

 

Copyright

  

Registration No.

  

Registration Date

                                                                               

Copyright Licenses

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

EXHIBIT B

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
     day of             , 20    , by and among Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells
Fargo”), in its capacity as collateral agent for each member of the Lender Group
(in such capacity, together with its successors and assigns in such capacity,
“Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Term Loan Credit Agreement dated as of April
15, 2016 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”) by and among Nuverra Environmental Solutions,
Inc., a Delaware corporation, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (such Lenders, together with their respective successors
and assigns in such capacity, each, individually, a “Lender” and, collectively,
the “Lenders”), and Wilmington Savings Fund Society, as administrative agent,
the Lender Group has agreed to make certain financial accommodations available
to Borrower from time to time pursuant to the terms and conditions thereof; and

WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Credit Agreement and the other
Loan Documents, but only upon the condition, among others, that Grantors shall
have executed and delivered to Collateral Agent, for the benefit of the Lender
Group, that certain Guaranty and Security Agreement, dated as of April 15, 2016
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Guaranty and
Security Agreement”); and

WHEREAS, pursuant to the Guaranty and Security Agreement, Grantors are required
to execute and deliver to Collateral Agent, for the benefit of the Lender Group,
this Patent Security Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

1. DEFINED TERMS. All initially capitalized terms used but not otherwise defined
herein have the meanings given to them in the Guaranty and Security Agreement
or, if not defined therein, in the Credit Agreement, and this Patent Security
Agreement shall be subject to the rules of construction set forth in Section
1(b) of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis.

2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
unconditionally grants, assigns, and pledges to Collateral Agent, for the
benefit

 

B-1

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

of each member of the Lender Group, to secure the Secured Obligations, a
continuing security interest (referred to in this Patent Security Agreement as
the “Security Interest”) in all of such Grantor’s right, title and interest in
and to the following, whether now owned or hereafter acquired or arising
(collectively, the “Patent Collateral”):

(a) all of its Patents and Patent Intellectual Property Licenses to which it is
a party including those referred to on Schedule I;

(b) all divisionals, continuations, continuations-in-part, reissues,
reexaminations, or extensions of the foregoing; and

(c) all products and proceeds of the foregoing, including any claim by such
Grantor against third parties for past, present or future infringement of any
Patent or any Patent exclusively licensed under any Intellectual Property
License, including the right to receive damages, or right to receive license
fees, royalties, and other compensation under any Patent Intellectual Property
License.

3. SECURITY FOR SECURED OBLIGATIONS. This Patent Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Patent Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Collateral Agent, the other
members of the Lender Group, or any of them, whether or not they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.

4. SECURITY AGREEMENT. The Security Interest granted pursuant to this Patent
Security Agreement is granted in conjunction with the security interests granted
to Collateral Agent, for the benefit of the Lender Group, pursuant to the
Guaranty and Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Collateral Agent with respect to the Security
Interest in the Patent Collateral made and granted hereby are more fully set
forth in the Guaranty and Security Agreement, the terms and provisions of which
are incorporated by reference herein as if fully set forth herein. To the extent
there is any inconsistency between this Patent Security Agreement and the
Guaranty and Security Agreement, the Guaranty and Security Agreement shall
control.

5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any new
patent application or issued patent or become entitled to the benefit of any
patent application or patent for any divisional, continuation,
continuation-in-part, reissue, or reexamination of any existing patent or patent
application, the provisions of this Patent Security Agreement shall
automatically apply thereto. Grantors shall give prompt notice in writing to
Collateral Agent with respect to any such new patent rights. Without limiting
Grantors’ obligations under this Section, Grantors hereby authorize Collateral
Agent unilaterally to modify this Patent Security Agreement by amending Schedule
I to include any such new patent rights of each Grantor. Notwithstanding the
foregoing, no failure to so modify this Patent Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Collateral
Agent’s continuing security interest in all Collateral, whether or not listed on
Schedule I.

 

B-2

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

6. COUNTERPARTS. This Patent Security Agreement is a Loan Document. This Patent
Security Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Patent Security
Agreement. Delivery of an executed counterpart of this Patent Security Agreement
by telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Patent
Security Agreement. Any party delivering an executed counterpart of this Patent
Security Agreement by telefacsimile or other electronic method of transmission
also shall deliver an original executed counterpart of this Patent Security
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Patent Security
Agreement.

7. CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE
PROVISION. THIS PATENT SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS
REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET
FORTH IN SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS
ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

 

B-3

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

IN WITNESS WHEREOF, the parties hereto have caused this Patent Security
Agreement to be executed and delivered as of the day and year first above
written.

 

GRANTORS:  

 

  By:  

 

  Name:  

 

  Title:  

 

 

 

  By:  

 

  Name:  

 

  Title:  

 

  ACCEPTED AND ACKNOWLEDGED BY: COLLATERAL AGENT:   WELLS FARGO BANK, NATIONAL
ASSOCIATION   By:  

 

  Name:  

 

  Title:  

 

[SIGNATURE PAGE TO PATENT SECURITY AGREEMENT]

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

SCHEDULE I

to

PATENT SECURITY AGREEMENT

Patents

 

Grantor

  

Country

  

Patent

  

Application/

Patent No.

  

Filing Date

                                                                                
              

Patent Licenses

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

EXHIBIT C

PLEDGED INTERESTS ADDENDUM

This Pledged Interests Addendum, dated as of                  , 20     (this
“Pledged Interests Addendum”), is delivered pursuant to Section 7 of the
Guaranty and Security Agreement referred to below. The undersigned hereby agrees
that this Pledged Interests Addendum may be attached to that certain Guaranty
and Security Agreement, dated as of April 15, 2016, (as amended, restated,
supplemented, or otherwise modified from time to time, the “Guaranty and
Security Agreement”), made by the undersigned, together with the other Grantors
named therein, to WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral
Agent. Initially capitalized terms used but not defined herein shall have the
meaning ascribed to such terms in the Guaranty and Security Agreement or, if not
defined therein, in the Credit Agreement, and this Pledged Interests Addendum
shall be subject to the rules of construction set forth in Section 1(b) of the
Guaranty and Security Agreement, which rules of construction are incorporated
herein by this reference, mutatis mutandis. The undersigned hereby agrees that
the additional interests listed on Schedule I shall be and become part of the
Pledged Interests pledged by the undersigned to Collateral Agent in the Guaranty
and Security Agreement and any pledged company set forth on Schedule I shall be
and become a “Pledged Company” under the Guaranty and Security Agreement, each
with the same force and effect as if originally named therein.

This Pledged interests Addendum is a Loan Document. Delivery of an executed
counterpart of this Pledged Interests Addendum by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery of
an original executed counterpart of this Pledged Interests Addendum. If the
undersigned delivers an executed counterpart of this Pledged Interests Addendum
by telefacsimile or other electronic method of transmission, the undersigned
shall also deliver an original executed counterpart of this Pledged Interests
Addendum but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Pledged
Interests Addendum.

The undersigned hereby certifies that the representations and warranties set
forth in Section 6 of the Guaranty and Security Agreement of the undersigned are
true and correct as to the Pledged Interests listed herein on and as of the date
hereof.

THIS PLEDGED INTERESTS ADDENDUM SHALL BE SUBJECT TO THE PROVISIONS REGARDING
CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN
SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

 

C-1

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

IN WITNESS WHEREOF, the undersigned has caused this Pledged Interests Addendum
to be executed and delivered as of the day and year first above written.

 

 

 

By:  

 

Name:  

 

Title:  

 

[SIGNATURE PAGE TO PLEDGED INTERESTS ADDENDUM]

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

SCHEDULE I

to

PLEDGED INTERESTS ADDENDUM

Pledged Interests

 

Name of Grantor

 

Name of Pledged
Company

 

Number of

Shares/Units

  

Class of

Interests

  

Percentage

of Class

Owned

  

Certificate

Nos.

                                      

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EXHIBIT D

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made
this      day of             , 20    , by and among Grantors listed on the
signature pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells
Fargo”), in its capacity as collateral agent for each member of the Lender Group
(in such capacity, together with its successors and assigns in such capacity,
“Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Term Loan Credit Agreement dated as of April
15, 2016 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”) by and among Nuverra Environmental Solutions,
Inc., a Delaware corporation, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (such Lenders, together with their respective successors
and assigns in such capacity, each, individually, a “Lender” and, collectively,
the “Lenders”), and Wilmington Savings Fund Society, as administrative agent,
the Lender Group has agreed to make certain financial accommodations available
to Borrower from time to time pursuant to the terms and conditions thereof; and

WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrower as provided for in the Credit Agreement and the other
Loan Documents, but only upon the condition, among others, that Grantors shall
have executed and delivered to Collateral Agent, for the benefit of the Lender
Group, that certain Guaranty and Security Agreement, dated as of April 15, 2016
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Guaranty and
Security Agreement”); and

WHEREAS, pursuant to the Guaranty and Security Agreement, Grantors are required
to execute and deliver to Collateral Agent, for the benefit of the Lender Group,
this Patent Security Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

1. DEFINED TERMS. All initially capitalized terms used but not otherwise defined
herein have the meanings given to them in the Guaranty and Security Agreement
or, if not defined therein, in the Credit Agreement, and this Trademark Security
Agreement shall be subject to the rules of construction set forth in Section
1(b) of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis.

 

D-1

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2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby
unconditionally grants, assigns, and pledges to Collateral Agent, for the
benefit of each member of the Lender Group, to secure the Secured Obligations, a
continuing security interest (referred to in this Trademark Security Agreement
as the “Security Interest”) in all of such Grantor’s right, title and interest
in and to the following, whether now owned or hereafter acquired or arising
(collectively, the “Trademark Collateral”):

(a) all of its Trademarks and Trademark Intellectual Property Licenses to which
it is a party including those referred to on Schedule I;

(b) all goodwill of the business connected with the use of, and symbolized by,
each Trademark and each Trademark Intellectual Property License; and

(c) all products and proceeds (as that term is defined in the Code) of the
foregoing, including any claim by such Grantor against third parties for past,
present or future (i) infringement or dilution of any Trademark or any
Trademarks exclusively licensed under any Intellectual Property License,
including right to receive any damages, (ii) injury to the goodwill associated
with any Trademark, or (iii) right to receive license fees, royalties, and other
compensation under any Trademark Intellectual Property License.

3. SECURITY FOR SECURED OBLIGATIONS. This Trademark Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Trademark Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Collateral Agent, the other
members of the Lender Group, or any of them, whether or not they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.

4. SECURITY AGREEMENT. The Security Interest granted pursuant to this Trademark
Security Agreement is granted in conjunction with the security interests granted
to Collateral Agent, for the benefit of the Lender Group, pursuant to the
Guaranty and Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Collateral Agent with respect to the Security
Interest in the Trademark Collateral made and granted hereby are more fully set
forth in the Guaranty and Security Agreement, the terms and provisions of which
are incorporated by reference herein as if fully set forth herein. To the extent
there is any inconsistency between this Trademark Security Agreement and the
Guaranty and Security Agreement, the Guaranty and Security Agreement shall
control.

5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any new
trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. Grantors shall give prompt notice in writing to
Collateral Agent with respect to any such new trademarks or renewal or extension
of any trademark registration. Without limiting Grantors’ obligations under this
Section, Grantors hereby authorize Collateral Agent unilaterally to modify this
Trademark Security Agreement by amending Schedule I to include any such new
trademark rights of each Grantor. Notwithstanding the foregoing, no failure to
so modify this Trademark Security Agreement or amend Schedule I shall in any way
affect,

 

D-2

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invalidate or detract from Collateral Agent’s continuing security interest in
all Collateral, whether or not listed on Schedule I.

6. COUNTERPARTS. This Trademark Security Agreement is a Loan Document. This
Trademark Security Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Trademark Security
Agreement. Delivery of an executed counterpart of this Trademark Security
Agreement by telefacsimile or other electronic method of transmission shall be
equally as effective as delivery of an original executed counterpart of this
Trademark Security Agreement. Any party delivering an executed counterpart of
this Trademark Security Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Trademark Security Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Trademark Security Agreement.

7. CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE
PROVISION. THIS TRADEMARK SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS
REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET
FORTH IN SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS
ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

 

D-3

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IN WITNESS WHEREOF, the parties hereto have caused this Trademark Security
Agreement to be executed and delivered as of the day and year first above
written.

 

GRANTORS:    

 

    By:  

 

    Name:  

 

    Title:  

 

   

 

    By:  

 

    Name:  

 

    Title:  

 

    ACCEPTED AND ACKNOWLEDGED BY: COLLATERAL AGENT:     WELLS FARGO BANK,
NATIONAL ASSOCIATION     By:  

 

    Name:  

 

    Title:  

 

[SIGNATURE PAGE TO TRADEMARK SECURITY AGREEMENT]

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

SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications

 

Grantor

  

Country

  

Mark

  

Application/

Registration No.

  

App/Reg Date

                                                                                
              

Trade Names

Common Law Trademarks

Trademarks Not Currently In Use

Trademark Licenses

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

EXHIBIT E

CUSTODIAL AGREEMENT

The Custodial Agreement (“Agreement”) is made and entered into as of
            , 20     by and among                     , Wells Fargo Bank,
National Association, as collateral agent (the “Secured Party”), and
                     (the “Company”).

RECITALS

A. Reference is made to that certain Term Loan Credit Agreement dated as of
April 15, 2016, which was made and entered into by and among Nuverra
Environmental Solutions, Inc., as the borrower, Wilmington Savings Fund Society,
FSB, as agent for certain lenders, the lenders from time to time party thereto
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”).

B. Pursuant to the terms of the Credit Agreement and the other Loan Documents,
Debtors are required to provide to the Secured Party a perfected, first priority
security interest in certain equipment and vehicles subject to certificates of
title now owned by or hereafter acquired by any Debtor (the “Vehicles”),
including without limitation, the equipment and vehicles which are subject to
certificates of title and listed on Schedule A to the Appraisal Certificate (the
“Appraisal Certificate”), dated as of the date hereof, by Borrower in favor of
the Secured Party (a copy of which has been delivered to Collateral Agent) (as
updated from time to time in accordance with Section 3.3).

C.                     , together with any of its agents or designees, and any
successor in such capacity (the “Collateral Agent”), has agreed to act as
Collateral Agent with respect to the Vehicles for the benefit of the Secured
Party pursuant to the terms of this Agreement.

Now, therefore, in consideration of the covenants and agreements set forth
herein, the parties agree as follows:

1. DEFINITIONS

All capitalized terms used but not otherwise defined herein have the meanings
given to them in the Credit Agreement. The following terms shall have the
following respective meanings (such meanings being equally applicable to both
the singular and plural form of the terms defined):

“Certificate” means, with respect to a Vehicle, the certificate of title or
equivalent certificate or document, issued by the relevant Jurisdiction,
evidencing ownership of the Vehicle.

“Debtors” means the Company and any of its subsidiaries or affiliates that are
required to provide to Secured Party a perfected, first priority security
interest in its Vehicles pursuant to the Loan Documents.

“Jurisdiction” means, with respect to a Vehicle, the state, commonwealth,
province, territory, county, or other governmental entity that is responsible
for issuing the Certificate for such Vehicle.

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

“Loan Documents” means the Loan Documents, as that term is defined in the Credit
Agreement.

“Released Vehicle” means any Vehicle with respect to which the Secured Party’s
Lien is to be released pursuant to Section 3.2.2.

“Required Perfection Documents” means, with respect to any Vehicle, the
Certificate with respect to such Vehicle, and any title applications and other
documentation necessary to be delivered to the Jurisdiction with respect to such
Vehicle in order to perfect the Secured Party’s security interest in such
Vehicle.

“Required Release Documents” means, with respect to a Released Vehicle, any
document or certificate (including, but not limited to, the Certificate) that
Collateral Agent reasonably believes to be necessary in order to have the
Secured Party’s Lien released and removed from the relevant Certificate.

“Required Signatures” means, in the case of a Certificate, the signatures, and
notarial acknowledgements if applicable, to any Required Perfection Documents or
any Required Release Documents that Collateral Agent reasonably believes to be
necessary in order to have such Certificate processed by the relevant
Jurisdiction to reflect the perfection of, or release of, the Secured Party’s
Lien. Where allowed by the relevant Jurisdiction, the Required Signatures may be
in the form of a stamp, or may be the signature of Collateral Agent acting with
power of attorney for the Secured Party as provided in Section 6, or Secured
Party acting with power of attorney for the Debtors granted under the Credit
Agreement or the Loan Documents.

“Vehicle Collateral” means any Certificates relating to the Vehicles.

2. PERFECTION OF LIENS IN VEHICLES.

(a) Perfection of Current Vehicles.

Collateral Agent hereby represents to Secured Party that on the date hereof, (a)
it has possession of (or in Jurisdictions with electronic titles, access to) the
Certificates for each of the Vehicles set forth on Schedule A to the Appraisal
Certificate that are marked under both Column “[    ]” ([                    ]
Received Original Certificate”) and Column “[    ]” (Wells Fargo as Lienholder)
thereof with a “Y”, and each such Certificate reflects Secured Party as the
first priority lienholder, and (b) it has possession of (or in Jurisdictions
with electronic titles, access to) the Certificates for each Vehicle set forth
on Schedule A to the Appraisal Certificate that are marked under Column “[    ]”
([    ] Received Original Certificate”) thereof with a “Y” and Column “[    ]”
(Wells Fargo as Lienholder) thereof with a “N” or blank, which Certificates do
not yet reflect Secured Party as a first priority lienholder. Collateral Agent
hereby agrees to prepare all Required Perfection Documents with respect to each
of the Certificates described in clause (b) of the immediately preceding
sentence and submit all such Required Perfection Documents in accordance with
the provisions of Section 2.2. The Company represents that, as of the date
hereof, the Certificates and Required Perfection Documents for each of the
Vehicles set forth on Schedule A to the Appraisal Certificate that are marked
under Column “[    ]” ([    ] Received Copy”) thereof with a “Y” have been
submitted to the applicable Jurisdictions, together with the applicable fees
required by such Jurisdictions. The Company hereby agrees that upon

 

2

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receipt of the Certificates for the Vehicles described in the immediately
preceding sentence following processing by the applicable Jurisdictions, the
Company shall promptly deliver such Certificates to the Collateral Agent.
Collateral Agent and the Company each hereby represent to Secured Party that as
of the date hereof, there are no Vehicles which are subject to certificates of
title listed on the Appraisal Certificate for which Collateral Agent has not
received an original Certificate (or in Jurisdictions with electronic titles,
access to) or for which a Certificate has been submitted to the applicable
Jurisdiction for processing to be returned to Collateral Agent.

(b) Perfection of Subsequent Vehicles.

With respect to any Certificates received by Collateral Agent which do not
reflect the Secured Party as a first priority lienholder, Collateral Agent shall
prepare all Required Perfection Documents with respect thereto and submit all
such Required Perfection Documents and required fees via hand delivery or
overnight Federal Express to the Jurisdiction with respect to such Certificates
within a reasonable and agreed upon timeframe.

3. APPOINTMENT AND AUTHORIZATION OF COLLATERAL AGENT; DUTIES OF COLLATERAL
AGENT.

(a) Appointment and Authorization.

Secured Party hereby designates and appoints                      to act as
Collateral Agent under this Agreement with respect to the Vehicle Collateral.
Secured Party hereby authorizes the Collateral Agent, and Collateral Agent
hereby agrees, (a) to take custody of the Certificates, (b) perform any such
administrative duties and obligations with respect to the Vehicles and the
Certificates as expressly delegated to the Collateral Agent in this Agreement,
and (c) to otherwise deal with the Vehicle Collateral as expressly requested by
Secured Party in writing. The parties hereto acknowledge and agree that in
providing agent services hereunder, the Collateral Agent is acting as an
independent contractor, and not as a fiduciary of any other party hereto.

(b) Certificates.

 

  (i) Custody of Certificates.

All processed Certificates received by Collateral Agent following processing by
a Jurisdiction, shall be maintained by Collateral Agent in a segregated,
fireproof location throughout the term of this Agreement, subject only to the
processing or release thereof pursuant to the terms of Section 3.2.2 of this
Agreement, or the delivery thereof upon the express written instructions of
Secured Party pursuant to the terms of Sections 8.1 and 8.2 of this Agreement.

 

  (ii) Releases.

The Collateral Agent agrees that within two (2) Business Days of receipt of a
notice from an authorized officer of the Secured Party instructing Collateral
Agent to release the Secured Party’s Lien from the Certificates respecting one
or more Vehicles (a “Release Designation”), Collateral Agent shall: (i) prepare,
in form ready for execution by each necessary party, all necessary Certificates
or associated lien documents with the appropriate Required Signatures, and (ii)
deliver each Certificate or associated lien document designated for release
together with

 

3

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the appropriate signature for release to the party identified by Secured Party
in such designation or, if there is no such party, to the Company.
Notwithstanding the foregoing, in the event the Collateral Agent receives
instructions from any Secured Party to release more than five hundred (500)
titles, the Collateral Agent shall have an additional two (2) Business Days to
comply with this Section 3.2.2 for each additional set of five hundred (500)
titles.

(c) Records; Reports.

On a monthly basis, on the first business day of each month, the Collateral
Agent shall deliver to Secured Party and to the Company an update to Schedule A
to the Appraisal Certificate showing the status of each Certificate listed
therein. In addition, the Collateral Agent shall provide to Secured Party and to
the Company (at the Company’s expense) such other information relating to the
Certificates, the Vehicles and the performance of the Collateral Agent’s duties
as such persons may reasonably request from time to time, but Collateral Agent
shall not be required to provide any such other requested information that is
not already within its possession or knowledge.

4. ACCESS TO AND REVIEW OF CERTIFICATES.

Secured Party shall have the right, from time to time during Collateral Agent’s
normal business hours, upon two (2) days prior written notice, to visit the
premises of Collateral Agent and to make on-site audits, to review the
Certificates and the Collateral Agent’s records relating thereto, and to make
notes and copies (at the Company’s expense) of the same, solely for the purpose
of verifying Collateral Agent’s compliance with its obligations under this
Agreement. Any such audit and review conducted by Secured Party shall be
conducted in such a way so as to not unreasonably interfere with Collateral
Agent’s operations. The entity conducting the audit or review shall execute a
written non-disclosure agreement with Collateral Agent before conducting any
such audit or review at Collateral Agent’s premises whereby that entity agrees
not to disclose any information learned in the audit or review to any third
party, nor to use any such information except for the limited purpose of
verifying Collateral Agent’s compliance with its obligations under this
Agreement. Prior to the occurrence of an Event of Default under the Credit
Agreement or under this Agreement, such visits shall not occur more frequently
than four times annually.

5. FEES AND CHARGES.

The Company is responsible for the fees and charges set forth on Schedule I and
Schedule II attached hereto. Such fees and charges set forth on Schedule I shall
be paid in the following manner: (i) title storage fees will be paid annually
from the date of receipt of the title; and (ii) title maintenance fees will be
paid transactionally as services are rendered, and may be modified upon thirty
(30) days written notice. Such fees and charges set forth on Schedule II shall
be paid to the Collateral Agent in the following manner: (i) one half (1/2) of
the estimated fees will be paid to the Collateral Agent prior to delivery of the
Certificates to the offices of the appropriate Jurisdiction; and (ii) the
remainder will be billed monthly as receipts are issued and delivered to the
Collateral Agent by the offices of the appropriate Jurisdiction. If, and to the
extent that, the Company fails to pay any amount payable under this Agreement,
the Secured Party shall make such payments (which shall be charged to the
Company and become part of the Obligations under the Credit Agreement). All fees
and charges are non-refundable.

 

4

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6. POWER OF ATTORNEY.

As outlined in Exhibit A, and subject in all instances to the terms and
conditions of this Agreement, each of the Company and the Secured Party hereby
appoints the Collateral Agent as its attorney in fact to sign, on its behalf,
any Required Perfection Documents and any Required Release Documents including
but not limited to the Certificates. This power, coupled with an interest, is
irrevocable so long as this Agreement remains in effect. On the date hereof the
Secured Party shall, and the Company shall cause each Debtor to, execute and
deliver to the Collateral Agent a power of attorney (each a “Power of Attorney”
substantially in the form attached hereto as Exhibit A.

7. INDEMNIFICATION, LIMITATION OF LIABILITY.

(a) The Company agrees to pay, indemnify, defend, and hold Secured Party and
Collateral Agent and each of their officers, directors, employees, affiliates,
counsel, agents, and attorneys-in-fact (each an “Indemnified Person”) harmless
(to the fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, and damages, and all
reasonable attorney’s fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or related
to the execution, delivery, enforcement, performance, and administration of this
Agreement, the transactions contemplated herein, or any act, omission, event or
circumstance in any manner related thereto (all of the foregoing, collectively,
the “Indemnified Liabilities”). The undertaking in this Section 7.1 shall
survive the payment of all Obligations (as defined in the Credit Agreement) to
the Secured Party and the resignation or replacement of the Collateral Agent
after the date of such termination, resignation or replacement.

(b) LIMITATION OF LIABILITY. IN NO EVENT SHALL COLLATERAL AGENT, SECURED PARTY
OR ANY OTHER INDEMNIFIED PERSON BE LIABLE TO THE COMPANY FOR ANY SPECIAL,
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (INCLUDING WITHOUT
LIMITATION ANY SUCH DAMAGES RESULTING FROM LOSS OF A LIEN OR THE PRIORITY
THEREOF, OR LOST BUSINESS OPPORTUNITY OR LOST PROFITS), INCURRED IN CONNECTION
WITH OR AS A RESULT OF OR RELATED TO THE EXECUTION, DELIVERY, ENFORCEMENT,
PERFORMANCE, AND ADMINISTRATION OF THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREIN, ANY ACT, OMISSION, EVENT OR CIRCUMSTANCE IN ANY MANNER RELATED THERETO.

8. TERMINATION; REMOVAL OR RESIGNATION OF COLLATERAL AGENT.

(a) Termination. Unless otherwise earlier terminated as provided in Section 8.2,
this Agreement shall terminate upon the Collateral Agent’s receipt of written
notice from Secured Party confirming that all Obligations (as defined in the
Credit Agreement) have been repaid in full (the “Termination Date”). Upon
receipt of such notice, Collateral Agent shall, upon the request of the Company,
execute all Required Release Documents and deliver the Certificates to the
Company or its designee. If the Company fails to pay for Collateral Agent’s
expenses associated with executing all Required Release Documents and delivery
of the Certificates to the

 

5

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Company or its designee, such fees shall promptly be paid to Collateral Agent by
the Secured Party so long as the Secured Party has received an invoice therefor
before delivery of the Certificates to the Company.

(b) Removal; Resignation. Secured Party shall have the right to remove
Collateral Agent at any time by giving written notice of such termination to
Collateral Agent and the Company. Collateral Agent may resign at any time by
giving at least ninety (90) days’ advance written notice of such resignation to
Secured Party and the Company; provided, however, that, if such resignation
occurs prior to the receipt of a notice of termination as provided in Section
8.1 above, for any reason other than the inability of the Collateral Agent to
continue to act in such capacity as a result of a change in law after the date
hereof (as specified in a written opinion of counsel reasonably acceptable to
Secured Party) or the non-payment of the fees and charges payable to Collateral
Agent pursuant to Section 5 of this Agreement, no removal or resignation shall
be effective until a successor collateral agent is appointed by the Secured
Party and the removed or resigning Collateral Agent shall have caused each
Certificate to be delivered to such successor together with all documents and
certificates necessary, completed as necessary, in order for the successor
collateral agent to perform its role hereunder. Upon the effectiveness of such
removal or resignation, such successor collateral agent shall succeed to all of
the rights, powers, and duties hereunder of its predecessor, and the predecessor
Collateral Agent’s rights, powers and duties hereunder shall be terminated.

(c) Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Debtor
for liquidation or reorganization, should any Debtor become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of any Debtor’s assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

9. MISCELLANEOUS

(a) Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, excluding that body of law
relating to choice of laws.

(b) Notice. Whenever it is provided herein that any notice, demand, request,
consent, approval, declaration, or other communication shall or may be given to
or served upon any of the parties hereto, or whenever any of the parties desires
to give or serve upon the other communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration, or other
communication shall be in writing and shall be delivered by hand or by a
recognized overnight mail service, addressed as follows:

 

6

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If to Collateral Agent: at   

[                    ]

Attn: [                    ]

Phone: [                    ]

Fax: [                    ]

With Copies to:   

[                    ]

Attn: [                    ]

If to Secured Party: at   

Wells Fargo Bank, N.A., as Agent

1100 Abernathy Road

Suite 1600

Atlanta, Georgia 30328

Attention: Account Manager - Nuverra

If to the Company, at:   

c/o Nuverra Environmental Solutions, Inc.

14624 North Scottsdale Road

Suite 300

Scottsdale, Arizona 85254

or at such other address as may be substituted by notice given as herein
provided.

Giving of any notice required hereunder may be waived in writing by the party
entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be deemed to have
been duly served, given or delivered upon (1)

Business Day after deposit with a reputable overnight courier with all charges
prepaid or, when delivered, if hand-delivered by messenger.

(c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

(d) Complete Agreement. This Agreement constitutes the complete agreement and
understanding of each of the parties hereto, and supersedes all prior or
contemporaneous oral and written negotiations, agreements and understandings,
express or implied, with respect to the subject matter hereof

(e) Amendment. This Agreement may be amended, modified, or waived only in a
writing signed by Secured Party and Collateral Agent.

(f) Counterparts. This Agreement may be executed in any number of counterparts,
and by the parties each in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same Agreement.
In proving this Agreement or any other Loan Document in any judicial
proceedings, it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom such enforcement is

 

7

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sought. Any signatures delivered by a party by facsimile transmission shall be
deemed an original signature hereto.

(g) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.

[Signature page follows.]

 

8

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first herein above set forth.

 

COLLATERAL AGENT:     SECURED PARTY: COLLATERAL AGENT:       SECURED PARTY:
[                    ]       WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

 

      By:  

 

Its:  

 

      Its:  

 

COMPANY:   [                    ].   By:  

 

        Its:  

 

                Collateral Agency Agreement

[SIGNATURE PAGE TO CUSTODIAL AGREEMENT]

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

EXHIBIT A

POWER OF ATTORNEY FOR MOTOR VEHICLE FILINGS

KNOW ALL MEN BY THESE PRESENTS THAT                                         

(hereinafter referred to as the “Principal”), a [corporation] [limited liability
company] with its principal place of business at the address last set forth
below, authorizes [                    ], a [                    ] with offices
at [                    ], to act as its attorney-in-fact for the limited
purpose of preparing, executing and filing in the Principal’s name any original
title applications and other such motor vehicle lien forms (hereinafter referred
to collectively as (“Motor Vehicle Forms”) as the Principal may request. This
Power of Attorney will remain in full force and effect until due notice of its
revocation is given by the Principal to the Attorney by registered mail.

IN WITNESS WHEREOF, the Principal has caused this instrument to be executed by a
duly authorized representative as of the date set forth below.

Principal (legal name and address):

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

Sworn to and subscribed before me on this      day of             .

 

 

NOTARY PUBLIC

My Commission Expires:

 

 

10

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Schedule I

All of the following fees are charged per title:

[                    ]

 

11

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Schedule II

(Cost Estimate)

[                    ]

 

12