Document:

Exhibit 10.14

 

 

MASTER COMMERCIAL AGREEMENT

 

	
1. Contract   Number: CW2232420
    	
Parties:   Blocks 2 & 3
    
	
 
    	
 
    
	
2. Company   (“Company”): 
    	
3. Supplier   (“Supplier”): 
    
	
Chesapeake   Operating, L.L.C. 
    	
FTS   INTERNATIONAL SERVICES, LLC 
    
	
6100   North Western Avenue 
    	
777 Main   Street, Suite 2900 
    
	
Oklahoma   City, OK 73118 
    	
Fort   Worth, TX 76102
    
	
United   States
    	
 
    
	
 
    	
 
    
	
4. Effective   Date: December 19, 2016
    	
 
    
	
 
    	
 
    
	
INTENDING TO BE LEGALLY BOUND,   Company and Supplier, by their duly authorized representatives, have executed   this Contract to be effective as of the day and year noted within block 4   above.
    
	
 
    
	
5. FOR   COMPANY: 
    	
6. FOR   SUPPLIER: 
    
	
 
    	
FTS   INTERNATIONAL SERVICES, LLC 
    
	
 
    	
 
    
	
/s/ Jason   Pigott 
    	
 
    	
/s/ Buddy   Petersen 
    
	
 
    	
 
    
	
Name:   Jason Pigott 
    	
Name:   Buddy Petersen 
    
	
Title:   Executive Vice President — Operations and 
    	
Title COO   
    
	
Technical   Services 
    	
 
    
	
Date: 12/24/2016 | 9:23:58 AM CST
    	
Date: 12/21/2016 | 2:38:02 PM CST
    
			

 

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CONTRACT (CW2232420)

 

1.              Legal Terms and Conditions

 

This Contract is subject to the terms and conditions of that certain MSA by and between Chesapeake Operating, Inc., now known as Chesapeake Operating, L.L.C., and Supplier dated July 9, 2012, and any amendments thereto, which is hereby incorporated by reference as if fully set forth herein.  Notwithstanding anything to the contrary contained in the MSA, the Parties expressly intend and agree that in the event of any conflict or inconsistency between the terms and conditions of the MSA and this Contract, the terms of this Contract shall govern, except that the MSA provisions governing indemnification and insurance obligations of the Parties shall not be altered or otherwise amended by any provision in this Contract.

 

2.              Definitions

 

As used in this Contract the following items shall have the following meaning:

 

2.1                               “Authorized Company Representative” means Company personnel with the actual authority to authorize Work.

 

2.2                               “Chesapeake Price List” means Supplier’s contracted pricing agreed upon by the Parties and formatted according to Chesapeake’s standard template for certain Work provided by Supplier under this Contract.

 

2.3                               “Contract” means all provisions contained herein, all related Scopes of Work and Orders under this Contract and all incorporated attachments.

 

2.4                               “Company” means Chesapeake Operating, L.L.C.

 

2.5                               “Confidential Information” means any information, data or material (regardless of the form) that is: (a) provided, disclosed or delivered to the Receiving Party by the Disclosing Party, any officer, director, employee, agent, attorney, accountant, contractor or other person or entity employed by Disclosing Party in any capacity, any customer, borrower or business associate of the Disclosing Party or any public authority having jurisdiction over the Disclosing Party or any business activity conducted by the Disclosing Party; or (b) produced, developed, obtained or prepared by the Receiving Party (whether or not such information was developed in the performance of this Contract) with respect to the Disclosing Party or any of the Disclosing Party’s assets, oil and gas or other prospects, business activities, officers, directors, employees, borrowers or customers; or (c) produced, developed, obtained or prepared by the Disclosing Party in connection with any audit performed pursuant to this Contract. Confidential information does not include information that: (a) is independently developed by Receiving Party after the Effective Date of this Contract without the use, reliance or benefit of Disclosing Party’s Confidential Information; (b) is or becomes publicly available through no fault of Receiving Party; (c) is obtained by the Receiving Party from a third party, who is under no obligation of confidence to Disclosing Party; and/or (iv) for which disclosure is required by court order or other governmental requirement, but only after providing Disclosing Party with reasonable notice prior to disclosure to allow Disclosing Party a reasonable opportunity to seek a protective order or equivalent.

 

2.6                               “KPIs” means Key Performance Indicators as may be set forth in separate SOW or Order.

 

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2.7                               “Materials” means goods, supplies, products, materials, tools, equipment, machinery and similar items.

 

2.8                               “MSA” means Master Service Agreement referenced herein.

 

2.9                               “Oildex” means a cloud-based software that enables invoicing via electronic document exchange.

 

2.10                        “Order” means any written purchase order or other written request for Work by an Authorized Company Representative to Supplier, other than an SOW, during the Contract term.

 

2.11                        “Parties” means jointly the Company and the Supplier.

 

2.12                        “Project Areas” means the location(s) in which Work will be performed as listed in any related Scope of Work.

 

2.13                        “Scope of Work” means a written addendum to this Contract establishing the Work to be provided under this Contract.

 

2.14                        “Services” means performance of work for Company by or on behalf of Supplier.

 

2.15                        “SOW” means Scope of Work defined herein.

 

2.16                        “Supplier” means the contracting party executing this Contract and “Contractor” as defined in the MSA.

 

2.17                        “Supplier’s Price Book” means Supplier’s list of published rates for general industry use, regardless of format.

 

2.18                        “Work” means any Materials and Services within an applicable SOW or Order by an Authorized Company Representative.

 

3.              Company Commitment

 

Company is not obligated to offer any specific level or amount of Work under this Contract.  Failure to offer any contemplated level or amount of Work will not prejudice Company’s right to receive any pricing agreed to under this Contract.  Only an Authorized Company Representative may offer Work to Supplier.

 

4.              Supplier Acceptance

 

Supplier will make reasonable efforts to accept Company’s offer of Work under this Contract.

 

5.              Term of Contract

 

This Contract shall remain in full force and effect until terminated by either Party in accordance with the termination provisions contained herein.

 

6.              General Scope of Work

 

6.1                               Supplier will provide the Work for Company during the Contract term in conformance with this Contract, on an as needed basis as determined by Company and as may be further set forth in a related SOW or Order.

 

6.2                               Work under this Contract may only be performed in accordance with: 1) a related written SOW signed by a duly authorized officer of Company or their delegatee and

 

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an individual with authority to contractually bind Supplier; or 2) a related written Order issued by an Authorized Company Representative.

 

6.3                               Supplier will collaborate with Company to provide planning, logistics, technical support, quality assurance and cost-effective solutions that are Work-, industry- and geography-appropriate.

 

6.4                               Supplier will give immediate notice to the designated Company employee (name of designee to be provided after each Order is received) if a delay or interruption in performance is reasonably foreseen.

 

7.              Inspection and Acceptance

 

In addition to any inspection and acceptance criteria outlined in a related SOW or Order, at a minimum, all Work is subject to final inspection and acceptance by Company.  Company assumes no responsibility for Work until accepted by Company.  Acceptance of delivery alone will not constitute acceptance of the Work.

 

8.              Work and Materials Warranties

 

8.1                               Any conflict between the language stated within this Provision and within a related SOW or Order shall be resolved by giving control and precedence in the following order: 1) Order; 2) SOW; and 3) this Provision.  In addition to any warranties contained in the MSA, the Parties expressly agree to the following warranty provisions:

 

8.2                               Performance of Work

 

A.                                    Supplier shall perform all Work with due diligence, in a good, safe and workmanlike manner, using skilled, trained, competent and experienced workmen and supervisors, and in strict conformity with (1) the specifications and requirements contained herein and as set forth in an applicable SOW or Order; and (2) generally accepted industry standards and practices, and (3) all applicable worksite policies.

 

B.                                    Supplier shall furnish, at its sole risk and expense, all necessary trained, qualified, and/or certified (all as applicable) personnel, Materials, expertise and supervision reasonably necessary for the safe performance of Work by Supplier.  In any Work, Supplier shall only employ employees or utilize subcontractors whose employment is in compliance with all applicable labor, employment and other applicable laws.

 

8.3                               Warranty of Materials

 

A.                                    Supplier warrants full, clear, and unrestricted title to all Materials sold or otherwise transferred to Company by Supplier in connection with this Contract (excluding Materials leased or rented to Company), free and clear of any and all liens, security interests, encumbrances and claims of others.  Supplier warrants that it has the right to use all Materials leased or rented to Company.

 

B.                                    All Materials sold, leased, rented or otherwise furnished to Company by Supplier in connection with this Contract shall: (i) strictly conform to the applicable SOW’s and Order’s specifications; (ii) be new (unless otherwise specifically

 

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agreed to in an related SOW or  Order), of merchantable quality and suitable for the use for which they are ordinarily employed and for purpose(s) intended by Company and disclosed to Supplier in advance of purchase, lease or use; (iii) conform with all applicable laws, ordinances, codes and regulations; and (iv) be free from defects in design, materials, performance, operation and workmanship for a period of 12 months after being placed into service by Company, unless otherwise expressly stated in a related SOW or Order.

 

C.                                    All Materials leased or rented to Company by Supplier in connection with this Contract shall be in good working condition throughout the rental period specified in the applicable SOW or Order (misuse by Company excepted).  If any Materials leased or rented to Company by Supplier fail to operate per the specifications set forth in the applicable SOW or Order, or are otherwise inoperable through no fault of Company, Supplier shall promptly repair or replace such Materials at Supplier’s sole cost and expense, and shall waive all rental payments until such Materials are repaired or replaced.

 

D.                                    Unless otherwise set forth in a related SOW or Order, if any Material (or portions thereof) are found to be defective, nonconforming or unsuitable, whether before or after delivery and acceptance, Supplier shall on an expedited basis remove, replace, repair and/or correct, as applicable, the defective, nonconforming or unsuitable Material at Supplier’s sole risk and expense, including payment by Supplier to Company for all damages resulting therefrom notwithstanding any other provision contained in this Contract or the MSA, without additional cost or risk to Company.

 

E.                                     Any Material that is repaired or replaced pursuant to this Provision shall be subject to the same warranties and remedies as new Material.

 

F.                                      In addition to the warranties set forth herein, if Supplier is not the manufacturer of Materials sold or otherwise furnished to Company by Supplier under any Order (excluding Materials leased or rented to Company), Supplier will obtain assignable warranties for such Materials from its subcontractors, vendors and suppliers, which it will assign to Company, and Supplier will cooperate with Company in the enforcement of such warranties.  If such warranties are non-assignable, Company shall be deemed subrogated to Supplier’s rights thereunder.  With respect to Materials leased or rented to Company, Supplier will assign to Company its rights against any seller or manufacturer for the duration of the rental term.

 

8.4                               Warranty for Services

 

A.                                    Unless otherwise set forth in a related SOW or Order, if any Service is found to be defective, nonconforming or unsuitable whether or not the defective or nonconforming Service is discovered prior to the acceptance of the Service, Supplier shall, on an expedited basis, remediate or re-perform any defective, nonconforming or unsuitable Service at Supplier’s sole risk and expense, including payment by Supplier to Company for all damages resulting therefrom notwithstanding any other provision contained in this Contract, without additional cost or risk to Company.

 

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B.                                    Any Service that is remediated or re-performed pursuant to this Provision shall be subject to the same warranties and remedies as new Service.

 

8.5                               Additional Warranties.

 

A.                                    Should Supplier refuse or fail to commence preparation for or actual remediation, removal, replacement, repair, re-performance and/or correction any such defective, nonconforming or unsuitable Work within 24 hours of notice by Company to Supplier, Company shall have the right to perform the remediation, removal, replacement, repair, re-performance and/or correction itself or to have the remediation, removal, replacement, repair, re-performance and/or correction conducted by a third party on an expedited basis.  Supplier shall be responsible for all costs of such remediation, removal, replacement, repair, re-performance and/or correction, including but not limited to any amounts payable to third parties, third-party certifications and testing, and Company’s internal costs.  Company may collect such amount directly from Supplier or by set-off against performance security, if any, or by deduction from other amounts due Supplier.  Any Work that is remediated, removed, replaced, repaired, re-performed or corrected pursuant to this Provision shall be subject to the same warranties and remedies contained herein.

 

B.                                    Notwithstanding and in lieu of the remedies provided in this Provision 8, Company may elect to have Supplier reimburse Company for the reasonable cost of the remediation, removal, replacement, repair, re-performance and/or correction, but in no event shall such cost of the remediation, removal, replacement, repair, re-performance or correction exceed 130% of the price of the Work, or portions thereof if such Work has been performed by Supplier, excluding other damages which Company may be entitled.

 

8.6                               Inspection and Verification of Materials.

 

A.                                    Supplier shall inspect all Materials furnished by Company for use in Work and shall notify Company of any apparent defects therein before using such Materials.  Notwithstanding any provision to the contrary contained in this Contract or the MSA, should Supplier use such Materials without notifying Company of any apparent defect(s), Supplier shall be deemed to have assumed all risk and liability for any mishap that may occur in operations conducted hereunder by reason of failure or defect(s) in such Materials; provided, however, that Supplier shall not be liable for any mishap due solely to unknown latent defects.

 

B.                                    Supplier shall verify and check the quantity, description and condition of all Materials furnished by vendors to Supplier, and all delivery tickets shall be properly certified as to receipt by Supplier’s representative.  Supplier must obtain prior written approval from an Authorized Company Representative prior to purchasing or renting any Materials for which Supplier is to be reimbursed by Company.

 

9.              Title and Risk of Loss

 

Notwithstanding any terms to the contrary contained in this Contract (as clarified in Provision 1) or the MSA, the Parties specifically intend and agree that the following

 

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provisions shall govern with respect to the subject matter contained therein with respect to all Work or portions thereof:

 

9.1                               Unless otherwise provided for in a related SOW or Order, with respect to all Work (excluding leased or rented Materials), title shall pass to Company upon Company’s acceptance, and if applicable, delivery of such Work.  Title shall include, but not be limited to, all tangible and intangible results, items and work product arising in the course of performing or constituting the results of the Work.  Any and all drawings or documents showing or describing the Work, including but not limited to “as-built” drawings, P&ID diagrams, equipment instructions and warranty documents, maps or any other materials which might facilitate utilization of the Work by Company or may be legally required to be created and/or maintained by Supplier or Company, shall be provided to Company as a precondition to compensation of Supplier.

 

9.2                               Unless otherwise provided for in a related SOW or Order, with respect to all Materials leased or rented to Company by Supplier, Supplier shall retain title to such Materials and no right, title or interest in such Materials (except Company’s right to possession, as appropriate) shall pass to Company.  While Materials leased or rented to Company by Supplier are under Company’s care, custody and control, Company assumes the risk of loss for damage to or destruction of such Materials where such damage or destruction results either from Company’s operations or from theft, fire, flood or other act of God.  However, Supplier shall bear the risk of loss for damage to or destruction of such Materials that results from or arises out of any other cause, including, without limitation, (1) Supplier’s operations; (2) normal wear and tear; (3) any defect in the design or manufacture of such Materials.

 

9.3                               Except for Materials leased or rented to Company by Supplier that are under Company’s care, custody and control, Supplier assumes the risk of loss for damages to or destruction of Supplier’s Materials, regardless of how such damage or destruction occurs, and Company shall be under no liability to reimburse Supplier for any such loss or damage thereto.

 

9.4                               Notwithstanding anything contained in the MSA, Supplier shall be liable and responsible for damage to or destruction of Company’s Materials where such damage or destruction results from or arises out of Supplier’s (1) operations or (2) use of Company’s Materials that contain an apparent defect if Supplier has failed to notify Company of such defect.

 

10.       Purchase of Materials

 

With respect to an Order for the purchase of Materials, (a) if such Order is construed as an offer, it expressly limits acceptance by Supplier to the terms of the Order and this Contract, and (b) if such Order is construed as an acceptance of an offer, it is expressly conditioned on Supplier’s agreement to any additional or different terms contained herein.  All sections of the Uniform Commercial Code which expressly or impliedly protect a buyer are hereby incorporated by reference.

 

11.       Subcontractors

 

Notwithstanding any terms to the contrary contained in the MSA or this Contract, the Parties specifically intend and agree that, unless otherwise set forth in an SOW or related Order,

 

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Supplier may subcontract portions of the Work (but not all of the Work) as it shall determine to be necessary to subcontractors; provided, however, that Company has the right to reject and/or remove any subcontractor from a Company location or require that a subcontractor not perform Work under this Contract in Company’s sole and absolute discretion.  Supplier acknowledges and agrees that:

 

11.1                        This Provision shall not operate to limit or relieve in any way any obligation of Supplier to Company under this Contract, including obligations with respect to the conduct, quality and completion of the Work, in strict accordance with the terms of this Contract;

 

11.2                        Subcontractors hired by Supplier shall be required by Supplier to comply in writing with the terms and conditions of this Contract, and Supplier shall be responsible for ensuring such compliance;

 

11.3                        Supplier is liable to Company for all acts, omissions and defaults of Supplier’s subcontractors (and those of the personnel, agents and invitees of such subcontractors) relating to the Work, to the same extent as if they were the acts, omissions and defaults of Supplier;

 

11.4                        Supplier agrees to provide a list of all subcontractors performing Work under this Contract.   After execution of the Contract, if any change to the subcontractor list is required, Supplier agrees to promptly update the subcontractor list and submit it in accordance with the notice provisions herein.  If reasonably possible, such updates must be provided at least seven days prior to the subcontractor performing any Work; and

 

11.5                        For any Work performed by a third-party on behalf of Supplier, Supplier, not the third party, shall invoice Company at the agreed upon, documented cost.

 

12.       Environmental Health and Safety

 

12.1                        Supplier shall ensure that all Work conforms to all applicable environmental, health and safety rules, regulations and applicable law.

 

12.2                        Supplier shall reasonably cooperate in any environmental, health and safety assessments or audits performed by Company.

 

12.3                        Upon request of Company, Supplier will participate in applicable safety meetings while on Company locations.

 

12.4                        If Supplier provides any Work on a Company location, or upon the request of Company, Supplier shall join and maintain membership to ISNetWorld at its own expense.

 

12.5                        All Supplier personnel providing Work under this Contract on a Company location must complete Safeland, Rig Pass or Safegulf orientation training and provide documentation of completion prior to commencement of Work.

 

12.6                        All Supplier personnel providing Work under this Contract on a Company location must attend Company’s contractor orientation prior to commencement of Work.

 

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12.7                        All Supplier personnel, agents, and invitees on Company locations will either wear a uniform or an identification badge that displays the name of the Supplier and the individual’s first and last name.

 

13.       Firm Fixed Price

 

Unless otherwise provided in a related SOW or Order, Supplier’s pricing terms and discounts set forth in this Contract shall, except as expressly provided herein, constitute firm fixed prices, and remain fixed for the term of the related SOW or Order.  Any pricing adjustments shall be mutually agreed to in writing by Company and Supplier prior to implementation by Supplier.

 

14.       Pricing

 

14.1                        All rates for the Work shall be billed by Supplier in accordance with a related SOW or Order.

 

14.2                        Supplier’s prices shall not include sales, value added taxes, use or similar taxes.  Such taxes, where applicable, shall be added to the total prices and invoiced accordingly. Invoices must delineate the type of tax being charged (i.e. sales, use, etc.,) and if the tax is one that is legally the liability of Supplier but is being passed through to Company, the invoice shall denote that such tax is being passed through.  If tax legislation is enacted or reinterpreted in a particular jurisdiction requiring Supplier to increase or adjust the taxes, duties or levies it collects on Work, the Parties agree to meet in good faith to adjust Supplier’s compensation until Supplier can adjust its invoices accordingly.

 

15.       Invoicing and Payment Terms

 

Unless otherwise stated in a related SOW or Order, all invoicing and payment terms shall be in accordance with the following provisions:

 

15.1                        Invoices

 

A.                                    No invoices will be paid prior to Work being delivered or completed and accepted.

 

B.                                    All invoices must be submitted within 12 months after completion of Work.  In any event, Company reserves the right to refuse payment in full on any invoices received after 12 months, and Supplier agrees that Company shall be forever discharged from any obligations related to such payments for such invoice or Work related thereto.  Notwithstanding anything to the contrary in this Provision, Company reserves the right to pay discharged invoices submitted after the required time frame with reduction of 10% of the total invoice amount per month after the expiration of the required timeframe stated above.  Any full or partial payment by Company of a discharged invoice does not constitute a waiver of the discharged status of the related invoice.

 

C.                                    Supplier shall submit an original invoice electronically via Oildex.  All invoices must include the following:

 

i.                                          Name and address of Supplier;

 

ii.                                       Invoice date and number;

 

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iii.                                    Work start and end date, or delivery date;

 

iv.                                   Contract number, Contract Line Item Number, and if applicable, Purchase Order Date and Number;

 

v.                                      AFE number;

 

vi.                                   Well number;

 

vii.                                Detailed description, quantity, unit of measure, unit price and extended price of the items delivered;

 

viii.                             Shipping number and date of shipment, if applicable;

 

ix.                                   Terms of any discount for prompt payment offered;

 

x.                                      Payment address, if different; and

 

xi.                                   Name, title, and phone number of person to notify in event of defective invoice or billing questions.

 

D.                                    Invoices that include an attached field ticket signed by a Company employee will constitute acceptance that the Supplier was on site and provided a minimum level of Work.  It will not validate quantity or price unless otherwise stated in a related SOW or Order.

 

15.2                        Payment

 

A.                                    Payment Method.  Payment shall be made via Automatic Clearing House (ACH) for Work accepted by Company.

 

B.                                    Overpayment.  If Supplier becomes aware of a duplicate invoice payment or that Company has otherwise overpaid on an invoice payment, Supplier shall—

 

i.                                          Remit the overpayment to Company along with a description of overpayment including the—

 

a.                                      Circumstances of the overpayment (e.g.  duplicate payment, erroneous payment, date(s) of overpayment);

 

b.                                      Affected contract number(s), invoice number(s), check number(s) and delivery order number(s), if applicable;

 

c.                                       Affected contract line item or subline item, if applicable; and

 

d.                                      Contract point of contact.

 

ii.                                       Additionally provide a copy of remittance and supporting documentation in accordance with the notice provisions contained herein.

 

C.                                    Delay of Payment.  Company may withhold any payment until Supplier provides Company with (a) proof that there are no unsatisfied claims for labor, Materials or for injuries to persons or property not covered by insurance, and (b) proof of compliance with the insurance requirements set forth in the MSA.  Further, in the event of any dispute concerning the amount of any payment, Company may withhold payment of the disputed amount until Company and Supplier settle such dispute.

 

D.                                    Set-Off.  Company may set-off against payments due Supplier any amount due and owing Company by Supplier for any reason.

 

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E.                                     Terms.  Unless otherwise provided in a related SOW or Order, payment for invoices are due 30 days from date of receipt by Company.  For purposes of this Provision, any time calculation shall begin on the date a correct invoice in full compliance with the invoicing requirements herein is received by Company and any resulting due date falling on a weekend or holiday shall move to next business day.

 

16.       Audit

 

The Parties specifically intend and agree that the Audit provision(s) of the MSA is stricken in its entirety and replaced with the following:

 

16.1                        Supplier shall maintain during the course of the Work, and retain not less than three years after completion thereof, complete and accurate records of all costs of Supplier, Supplier’s contractors or subcontractors (of any tier) and its and their respective parent, subsidiaries and affiliates (for purposed of this Provision 16 “Supplier Group”) which are chargeable to Company under this Contract; and Company shall have the right, during normal working hours, to inspect, reproduce, audit and inspect those records by authorized representatives of its own, or any third-party contract compliance auditing firm selected by Company.  The records to be thus maintained and retained by Supplier Group must provide sufficient detail for such charges and shall include (without limitation):

 

A.                                    All invoices billed to Company;

 

B.                                    Payroll records (hours, employee name, employee classification, multiplier breakdown, etc.) and timesheets that account for total time worked related to Work;

 

C.                                    Canceled payroll checks (or time/detail register from Kronos or other workforce managements system then used by Supplier, if applicable) or signed receipts for cash payroll;

 

D.                                    Third-party invoices (including all back-up details) for purchases, receiving and issuing documents, and all inventory records for Supplier’s stock or capital items rebilled to Company;

 

E.                                     Paid invoices and canceled checks (or electronic payment records, if applicable) for purchased Materials, subcontractor and third-party charges;

 

F.                                      Detailed asset ledgers to support any Supplier-owned Materials billed to Company;

 

G.                                    Records relating to air freight and ground transportation, including but not limited to handling, hauling and disposing of materials/equipment; and

 

H.                                   Accurate, auditable records of gifts, entertainment and gratuities with a value of $10.00 or more to individual Company personnel.

 

Notwithstanding the foregoing, under no circumstances will Supplier be obligated to retain, nor may Company request to audit, any records with respect to any Work completed before November 1, 2014.

 

16.2                        In addition, Supplier shall assist Company with respect to ensuring that all members of Supplier Group, including in Supplier’s contracts with members of Supplier

 

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Group, adhere to and comply with the same requirements herein and shall cooperate fully to enforce Company’s right to audit and inspect records and accounts with respect to Work provided hereunder by any member of Supplier Group (including their successors and assigns).

 

16.3                        Both Parties understand that as a demonstration of the trust shared in the alliance relationship, Company will routinely pay invoices promptly without detailed scrutiny.  Notwithstanding the foregoing, to preserve the integrity of the relationship and to provide a reasonable level of quality assurance with respect to contract compliance, it is necessary to periodically conduct a detailed audit in accordance with the defined parameters stated herein.

 

16.4                        Electronic Data File.  In conducting the audit, Company may require that Supplier provide electronic data files containing all required information for all Company invoice activity for the entire audit period.  The data files shall be in a file format compatible with industry accepted financial software applications (MS — Excel, Access), and contain data elements of all items invoiced by the Supplier.  A listing of the minimum data field requirements is included in the attached Exhibit “A” titled Auditing Procedures, Section 1.

 

16.5                        Statistical Sampling.  As it is not administratively feasible for either Party to conduct an audit of the entire population of invoices, both Parties agree that statistical sampling and extrapolation techniques premised upon proven scientific principles and analyses shall be used.  Accordingly, both Parties shall comply with the language as stated in the attached Exhibit “A” titled Auditing Procedures, section 2.

 

16.6                        As part of the audit process, both Parties understand and agree that should errors occur, payment shall be made in accordance with the following terms.  For all errors found in Company’s favor, such errors shall be offset by the errors in favor of Supplier, and if the total aggregate errors found demonstrate underpayments to the Supplier, Company shall reimburse Supplier for the corresponding underpayments.  Conversely, should the total aggregate errors found demonstrate overpayments to Supplier, then Supplier shall reimburse Company for the corresponding overpayments made.  Both Parties agree that any undercharges or overpayments, once identified and agreed upon, shall be paid within 30 days of notice to the other Party.

 

16.7                        Supplier shall make available a responsible party with the authority and ability to promptly respond to audit questions, assist in document interpretation, and authorize requests for information. Supplier may exclude any trade secrets, formulae, processes, or payroll records from such inspection and audit, except to the extent they relate directly to payments or reimbursements in accordance with an Order, in which case Company shall hold such information confidential. Both Parties also agree that each shall bear its own internal and external costs incurred in conducting and supporting this audit process. Further, it is agreed that all documents to be reviewed by Company will be copied by Supplier, at Supplier’s expense.

 

17.       Contract Administration

 

Supplier will support and manage the Contract by, at a minimum, providing in writing the name(s) and contact telephone number(s) of the individual(s) that will be the primary contact

 

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for this Contract via the Company provided Supplier’s Contract point of contact (POC) document.  Should any changes in personnel for this position occur, Supplier will promptly notify Company of such changes via an updated Supplier’s Contract POC document and in accordance with the notice provisions herein.

 

18.       Termination

 

Notwithstanding any terms to the contrary contained in the MSA, the Parties expressly intend and agree that unless otherwise provided in a related SOW or Order, the following termination provisions shall govern with respect to this Contract or any portion of the Work rendered pursuant to this Contract:

 

18.1                        Convenience.  Upon 15 days’ notice to Supplier, Company may terminate this Contract, any related SOW, Order or any portion of the Work being furnished by Supplier hereunder, for any reason or no reason and without penalty.

 

18.2                        Cause.  Upon notice to Supplier, Company may immediately terminate this Contract, any related SOW, Order or any portion of the Work being furnished by Supplier hereunder, for cause if, in the opinion of Company, Supplier:

 

i.                                          Breaches or fails to perform any of the material terms and conditions of this Contract and fails to cure the same within a reasonable timeframe specified by Company;

 

ii.                                       Fails to commence the performance of the Work;

 

iii.                                    Causes, by any act or omission, the material stoppage, delay or interference with Company’s business operations or that of any of Company’s other contractors or suppliers;

 

iv.                                   Becomes insolvent, files a petition for bankruptcy or commences or has commenced against it proceedings relating to bankruptcy, receivership, reorganization or assignment; or

 

v.                                      Establishes a pattern, in the reasonable opinion of Company, of noncompliance with obligations related to environmental, health and safety matters.

 

18.3                        Actions Required.  Upon receipt of notice of termination, unless the notice otherwise directs, Supplier shall immediately (1) discontinue the Work and placing of orders and subcontracts in connection with this Contract; (2) transfer to Company all materials, supplies, work in progress, tools and equipment acquired by Supplier for delivery to Company in connection with this Contract; (3) take such action as may be necessary or as Company may direct to protect and preserve the Work; and (4) deliver to Company all plans, drawings, specifications and other necessary information related to the Work that would have been delivered to Company in the absence of termination.

 

18.4                        Remedies.  Company’s sole and exclusive liability to Supplier under this Provision shall be: (1) payment to Supplier for performance of Work, or portions thereof, satisfactorily performed, delivered and accepted by Company through the date of termination in accordance with rates in this Contract; and, if terminated for convenience then (2) reasonable costs actually incurred by Supplier as a direct result

 

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of termination by Company for non-cancellable or non-terminable charges directly related to the performance of Work. Company’s liability pursuant to this Provision 18.4 shall not exceed the amount that would otherwise be payable to Supplier in the absence of termination. Company shall not be liable to Supplier for loss of profits incurred as a result of termination by Company. In the event of termination for cause, Company may purchase the Work elsewhere and charge Supplier for any loss or added cost incurred as a result up to, but not exceeding 20% of the amount that would be charged by Supplier for the same or similar work. Such termination and charges for additional costs shall be without prejudice to the other legal or equitable remedies which may be available to Company. Termination by Company shall not be an exclusive remedy, but shall be in addition to any other rights and remedies provided by law to Company.

 

19.       Laws, Rules and Regulations

 

19.1                        Company and Supplier will comply with all laws, rules, and regulations, whether federal, state or local, that are now or may become applicable to Work covered by this Contract, or arising out of the performance of such Work, and any SOW or related Order, including, without limitation, the laws, statutes, rules, and regulations referenced herein and any amendments thereto.  If either Party violates any of these laws, rules, and regulations, the violating Party agrees to immediately reimburse the other Party for any fines, penalties, costs, expenses, and attorney fees that the non-violating Party incurs or pays as a result of the violation.

 

19.2                        Supplier makes the representations and warranties, and agrees to comply with the requirements, set forth in Exhibit “B” attached hereto.

 

19.3                        Supplier represents that neither Supplier nor any of its subsidiaries or affiliates has engaged in any activity in or with any of the following unless authorized under applicable law, including of the United States: (i) countries identified as a “State Sponsor of Terrorism” or (ii) persons or entities designated on the Office of Foreign Assets Control (“OFAC”) List of Specially Designated Nationals and Blocked Persons (“SDN List”).

 

19.4                        During the performance of this Contract, Supplier agrees as follows:

 

A.                                    Supplier will not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity or national origin.  The Supplier will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identity or national origin.  Such action shall include, but not be limited to the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.  The Supplier agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause.

 

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B.                                    Supplier will, in all solicitations or advancements for employees placed by or on behalf of the Supplier, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity or national origin.

 

C.                                    Supplier will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed or disclosed the compensation of the employee or applicant or another employee or applicant. This Provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing or action, including an investigation conducted by the employer, or is consistent with Supplier’s legal duty to furnish information.

 

D.                                    Supplier will send to each labor union, or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer, advising the labor union or workers’ representative of Supplier’s commitments under Section 202 of Executive Order No. 11246 of September 24, 1965, as in effect at any given time, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

 

E.                                     Supplier will comply with all provisions of Executive Order No. 11246 of Sept. 24, 1965, as in effect at any given time, and of the rules, regulations and relevant orders of the Secretary of Labor.

 

F.                                      Supplier will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, as in effect at any given time, and by the rules, regulations and orders of the Secretary of Labor, or pursuant thereto, and will permit access to Supplier’s books, records and accounts by Company and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations and orders.

 

G.                                    In the event of Supplier’s noncompliance with the nondiscrimination clauses of this Contract  or with any of such rules, regulations or orders, this Contract may be cancelled, terminated or suspended in whole or in part and Supplier may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 11246 of Sept. 24, 1965, as in effect at any given time,  and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, as in effect at any given time,  or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law.

 

H.                                   Supplier will comply with all provisions Executive Order 13465 (Employment Eligibility Verification); 73 FR 67704, as in effect at any given time.

 

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I.                                        Supplier will comply with all provisions Executive Order 13496 (Employee Rights Under National Labor Relations Act): 29 CFR 471, Appendix A to Subpart A, as in effect at any given time.

 

J.                                        Supplier and its subcontractors will comply with all the requirements of 41 CFR 60-300.5(a), as in effect at any given time, which prohibits discrimination against qualified protected veterans, and requires affirmative action by covered prime contractors and subcontractors to employ, and advance in employment, qualified protected veterans;

 

K.                                    Supplier and its subcontractors shall abide by the requirements of 41 CFR 60-741.5(a), as in effect at any given time.  This regulation prohibits discrimination against qualified individuals on the basis of disability, and requires affirmative action by covered prime contractors and subcontractors to employ, and advance in employment, qualified individuals with disabilities;

 

L.                                     Supplier will comply with all provisions of the Foreign Corrupt Practices Act as described in 15 U.S.C. 78dd-1, et al, as in effect at any given time; and

 

M.                                 Any provision of any law, rule or regulations that is required to be a part of this Contract by virtue of any such law, regulation, rule or order is incorporated herein by reference.

 

20.       Confidentiality

 

The Parties expressly intend and agree that the Confidentiality provision(s) of the MSA is stricken in its entirety and replaced with the following:

 

20.1                        Each Party agrees not to disclose, or use for any purpose other than the performance of this Contract, any Confidential Information of the other Party. The Receiving Party may disclose Confidential Information of the Disclosing Party only to the Receiving Party’s employees or subcontractors who need to have access to such Confidential Information in order for Supplier to perform the Work or for either Party to otherwise comply with this Contract, provided that the Receiving Party shall inform such employees or subcontractors of the confidential nature of the Confidential Information and the Receiving Party shall require them to be bound in writing by the restrictions contained in this Provision concerning Confidential Information. The Receiving Party shall undertake reasonable measures to safeguard and protect all Confidential Information in its custody or control, and shall be responsible for any breach of this Provision by any person to whom the Receiving Party has directly or indirectly disclosed Confidential Information. The Receiving Party will promptly give notice to the Disclosing Party (if to Company at legal@chk.com, and if to Supplier at legalcontracts@ftsi.com) if it becomes aware of or suspects any unauthorized use, disclosure or breach of the Confidential Information. The Receiving Party agrees to reasonably assist the Disclosing Party in remedying any such unauthorized use, disclosure or breach of the Confidential Information. If the Receiving Party is required to disclose Confidential Information pursuant to any court order or other governmental requirement, the Receiving Party shall provide the Disclosing Party with prompt written notice of such requirement for disclosure in sufficient time to enable the Disclosing Party to seek appropriate protection of such Confidential

 

16

 

Information. The Receiving Party agrees that upon request by the Disclosing Party at any time, or upon termination of this Contract, the Receiving Party will deliver to the Disclosing Party all of the information, data and material containing Confidential Information or, at the Disclosing Party’s request, destroy such Confidential Information and provide a certification of such destruction to the Disclosing Party.

 

20.2                        Each Party’s obligations with respect to Confidential Information shall survive three years from the termination, cancelation or expiration of this Contract.

 

21.       Publicity

 

Supplier agrees that it may not use in external customer or sales lists, customer reference, advertising, press release, promotion or any form or manner of publicity whatsoever (including on the Internet) the name of Company or its parent, subsidiaries or affiliates, or any trademark, trade dress, service mark, trade name, symbol or any abbreviation or contraction thereof owned by or referring to Company or its parent, subsidiaries or affiliates except as required by any court, governmental agency, law, rule or regulation or without the prior express written consent of an authorized officer of Company, which consent may be given, withheld or withdrawn in Company’s sole and absolute discretion.

 

22.       Waiver

 

No failure by a Party to enforce any provisions hereof after any event of default by the other Party shall be deemed a waiver of a Party’s rights with regard to that event, or any subsequent event.  Waiver shall not be construed to be a modification of terms of this Contract.

 

23.       Amendment

 

This Contract may not be amended or modified except if (i) in writing and (ii) signed by a duly authorized officer or their delegatee of the Company and Supplier.   This Contract and the MSA constitute the entire agreement between the Parties with respect to and supersede and replace all prior discussions, negotiation and agreements with regard to the Work expressly set forth and agreed in this Contract.  The terms of any Supplier’s bid, proposal, invoice, statement, quotation, purchase order, published rate or price schedule, or any other type of similar documentation, regardless of whether presented before or after the effective date of this Contract, is of no effect and does not govern any transaction between Company and Supplier with regard to the Work expressly set forth and agreed in this Contract.

 

24.       Assignment

 

Notwithstanding any provision to the contrary contained in the MSA, the Parties specifically intend and agree that Supplier may NOT sell, transfer or assign this Contract or any portion thereof, without written consent of Company.

 

25.       Severability

 

If any provision of this Contract is inconsistent with, or contrary to, any applicable law, rule or regulation, or if any provision of this Contract is found by a court of competent jurisdiction to be invalid or unenforceable, that provision will be deemed to be modified to the extent required to comply with said law, rule or regulation, or to make it valid and enforceable, and this Contract, as so modified, shall remain in full force and effect.  If said provision cannot be so modified, it

 

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shall be deemed deleted and the remainder of the Contract shall continue and remain in full force and effect.

 

26.       Counterpart Execution

 

This Contract may be entered into in one or more counterparts, with each executed counterpart deemed to be an original against any Party whose signature appears thereon, and all counterparts, taken together, constitute one and the same instrument.  A copy of this Contract signed by a Party hereto and delivered electronically to the other Party shall have the same force and effect as the delivery of an original of this Contract containing the original signature of such Party.

 

27.       Survival

 

The following titled provisions will survive the termination, cancelation, or expiration of this Contract: Inspection and Acceptance, Title and Risk of Loss, Invoicing and Payment Terms, Audit, Actions Required, Remedies, General Warranties, Confidentiality, Publicity, any warranty provisions contained in an SOW or Order, and any other provision of this Contract that must survive termination, cancelation or expiration to fulfill its essential purpose.

 

28.       Governing Law

 

Notwithstanding any provision to the contrary contained in the MSA, the Parties expressly intend and agree that this Contract and the MSA shall be governed, construed and interpreted in accordance with the laws of Oklahoma without regard to any choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of Oklahoma.

 

29.       Venue; Forum

 

Notwithstanding any provision to the contrary contained in the MSA, the Parties expressly intend and agree that that any dispute arising out of or relating to this Contract or the MSA shall only be commenced or filed in the District Court of Oklahoma County or the United States District Court for the Western District of Oklahoma.  The Parties agree to consent to the jurisdiction of these courts and that they are the sole and exclusive judicial forums for any litigation between the Parties.

 

30.       Notices

 

30.1                        All notices and other communications hereunder shall be deemed to have been given when made in writing and either (a) delivered in person, (b) delivered to any agent, such as an overnight or similar delivery service, (c) delivered via electronic facsimile, or (d) deposited in the US mail, postage prepaid, certified or registered.

 

30.2                        All notices to Company shall be addressed to the Company Contract Manager with a copy to the Legal Department at:  6100 N.  Western, Oklahoma City, Oklahoma 73118.

 

30.3                        All notices to Supplier shall be addressed to the attention of the Office of the General Counsel — Transactions at 777 Main Street, Suite 2900, Fort Worth, Texas 76102; or legalcontracts@ftsi.com.

 

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31.       Force Majeure

 

In addition to the Force Majeure Provisions contained in the MSA, the Parties intend and further agree that, except for a Party’s indemnification obligation,  neither Company nor Supplier shall be obligated to compensate the other for delays resulting from influences or acts outside their control constituting force majeure, including, but not limited to, acts, orders, rules, decrees, instructions or other requirements of governmental authorities, insurrections, riots, acts of terrorism, vandalism, sabotage, quarantines, floods, storms, hurricanes, tornadoes, droughts or other adverse weather conditions, fires and explosions.

 

32.       Order of Precedence

 

Unless otherwise provided for within this Contract, any inconsistency or conflicts in this Contract will be resolved by giving governing precedence in the order below, unless otherwise stated herein:

 

1.  Contract Provisions listed above;

2.  Related Scope(s) of Work;

3.  Pricing related attachments to Scope(s) of Work;

4.  Related Orders; then

5.  Other incorporated documents, exhibits, and attachments.

 

End of Contract

 

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CONTRACT (CW2232420)

 

EXHIBIT “A”

 

AUDITING PROCEDURES

 

1. Electronic Data File Audits:

 

Electronic data file audits will entail review of all invoice data for the audit period in electronic file format.  At a minimum, the data files will contain the following field requirements:

 

 

 

	
 
    	
 
    	
Payroll Data (Services)
    	
 
    
	
Invoice Data
    	
 
    	
 
    	
 
    
	
 
    	
Employee name
    
	
Invoice number (all)
    	
Employee number
    
	
Invoice date (all)
    	
Work week ending
    
	
Employee name (services)
    	
Job classification
    
	
Employee number (services)
    	
Wage code (ST, OT, DT, etc.)
    
	
Job classification (services)
    	
Union code
    
	
Wage code (ST, OT, DT, etc.) (services)
    	
Date worked
    
	
Union code (services)
    	
Job number
    
	
Date worked (services)
    	
Hours
    
	
Job number (all)
    	
Hourly Rate
    
	
Contract/Purchase Order number (all)
    	
Gross Wages
    
	
Supplier Sales Order number (materials)
    	
SUTA Wages
    
	
Transaction Type (stock vs. buyout) (materials)
    	
SUTA Taxes
    
	
Ship-to address (materials)
    	
FUTA Wages
    
	
Ship date (materials)
    	
FUTA Taxes
    
	
Client Product code/part number (materials)
    	
FICA Wages
    
	
Supplier Product code/part number (materials)
    	
FICA Taxes
    
	
Supplier Product description (materials)
    	
 
    
	
Product (service) description (all)
    	
Equipment Asset Ledger
    
	
Equipment number (rentals)
    	
Equipment number
    
	
Equipment description (rentals)
    	
Equipment description
    
	
Rental begin date (rentals)
    	
Equipment size and
    
	
Rental end date (rentals)
    	
characteristics
    
	
Quantity (all)
    	
Year of acquisition
    
	
Unit-of-measure (all)
    	
 
    
	
Unit cost billed (materials)
    	
 
    
	
Unit price billed (all)
    	
 
    
	
Total dollars invoiced (all)
    	
 
    
	
Tax (all)
    	
 
    
	
Freight (materials)
    	
 
    
	
 
    	
 
    

 

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2. Statistical Sampling Audits

 

Statistical sampling audits will be conducting using the following sample and extrapolation procedure:

 

A computer generated random sample of an appropriate number of invoices/transactions shall be selected from the population of invoices/transactions covering the audit period, (generally three years).  Two statistical tests shall be performed on the sample: the z-test to validate the sample mean and the chi-square test to validate sample variance.  These tests will allow the assumption, with a probability of error being less than one percent (p<.01), that the characteristics of the sample are representative of the characteristics of the population.  Therefore it shall be a valid statistical procedure to extrapolate the error rate found in the sample to the total population.  The resulting simple equation shall be:

 

	
error value of the sample
    	
 
    	
error value of the population
    
	
 
    	
 
    	
 
    
	
 
    	
=
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
dollar value of the sample
    	
 
    	
dollar value of the population
    

 

The above statistical audit procedure is intended to represent a general conceptual approach, not an inflexible policy indiscriminately applied to all audit situations.   It is recognized that each audit is a unique situation that requires fair and responsible judgment in the application of statistical procedures to the quantification of errors.  There are some types of errors that are isolated or singular events, which do not have the probability of recurring throughout the population.  These types of errors will not be extrapolated.  Only errors that have the probability of being recurrent events throughout the population will be extrapolated.  At the close of the audit, Supplier will have the opportunity to review all findings presented.  Errors will be excluded from the extrapolation only after mutual consent of both the Supplier and Company.

 

End of Exhibit “A”

 

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CONTRACT (CW2232420)

 

EXHIBIT “B”

 

Requirements and Disclosures Concerning Immigration Laws

 

a.                                      Supplier shall comply with all applicable federal, state, and local laws concerning immigration and will ensure that all of Supplier’s personnel are lawfully allowed to work in the United States.  Supplier agrees to obtain and maintain all legally required documentation, including Form I-9’s.

 

b.                                      Supplier represents and warrants that it is aware of, understands, and is currently in compliance with all applicable immigration laws, and is not knowingly employing any workers performing Services under this Contract in violation of such immigration laws.

 

c.                                       Supplier represents and warrants that it has not been the subject of enforcement or other action by U.S. Immigration and Customs Enforcement (“ICE”) and agrees to immediately inform Company (within 24 hours) if it receives notice from ICE or any other government agency concerning or relating to any investigations, inspections, or audits regarding immigration issues.   Upon receipt of such notice, or if Supplier has failed to disclose any prior actions by ICE, Company reserves the right to terminate this Contract (including suspension or termination of any outstanding Work or Services, or any Order) immediately, in its sole discretion.

 

d.                                      From time to time as Company may request in its sole discretion, Supplier shall, at its expense, audit such Form I-9’s as Company may designate.  At Company’s option, such audit shall be performed either by Supplier, or by Supplier’s third party immigration attorney or consultant, which attorney or consultant must be experienced and trained in the field of immigration compliance.  Such audit shall be completed within five days after Company’s request, and Company may suspend any Work or Services under this Contract or any Order pending the completion of such audit.

 

End of Exhibit “B”

 

22Exhibit 10.15

 

Execution Version

 

Notwithstanding anything herein to the contrary, the liens and security interests granted to the Agent pursuant to this Agreement in any ABL Collateral and the exercise of any right or remedy by the Agent with respect to any ABL Collateral hereunder are subject to the provisions of the Junior Lien Intercreditor Agreement, dated as of April 16, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Junior Lien Intercreditor Agreement”) among FTS INTERNATIONAL SERVICES, LLC, a Texas limited liability company, FTS International, Inc., a Delaware corporation, the other GRANTORS from time to time party thereto, WELLS FARGO BANK, NATIONAL ASSOCIATION, as ABL Facility Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Term Collateral Agent, U.S. BANK NATIONAL ASSOCIATION, as Notes Collateral Agent and certain other persons party or that may become party thereto from time to time.  In the event of any conflict between the terms of the Junior Lien Intercreditor Agreement and this Agreement, the terms of the Junior Lien Intercreditor Agreement shall govern and control.

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (this “Agreement”), dated as of April 16, 2014, 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”), and U.S. BANK NATIONAL BANK (“US Bank”), in its capacity as Collateral Agent (in such capacity, together with its successors and assigns in such capacity, “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Indenture of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the “Indenture”) by and among FTS INTERNATIONAL, INC., a Delaware corporation as issuer (the “Issuer”) the guarantors party thereto and US Bank as Trustee, the Issuer has issued on the date hereof $500,000,000 aggregate principal amount of its 6.250% Senior Secured Notes due 2022 (the “Initial Notes”); and

 

WHEREAS, each Grantor has agreed to grant to Agent, for the benefit of the Trustee, Agent and the holders (the “Noteholders”), from time to time of the Notes (collectively, the “Secured Parties”), 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; (as defined below); and

 

WHEREAS, each Grantor (other than Issuer ) is a Subsidiary of the Issuer and, as such, will benefit by virtue of the issuance of the Notes.

 

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 Indenture.  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 Indenture; 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 Collateral” has the meaning specified therefor in Section 3(c).

 

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

 

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

 

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

 

(v)        “Authorized Collateral Agent” has the meaning specified in the Junior Lien Intercreditor Agreement.

 

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

 

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

 

(viii)     “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.

 

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

 

(x)        “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.

 

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

 

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

 

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

 

(xiv)    “Discharge of ABL Obligations” has the meaning given to such term in the Junior Lien Intercreditor Agreement.

 

(xv)     “Excluded Assets” has the meaning specified therefor in Section 3 hereof.

 

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

 

(xvii)   “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 Swap Contracts (including the right to receive payment on account of the termination (voluntarily or involuntarily) of such Swap Contracts), 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, interests in a partnership or limited liability company which do not constitute a security under Article 8 of the Code.

 

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

 

(xix)    “Indenture” has the meaning specified therefor in the recitals to this Agreement.

 

(xx)     “Indenture Document” means the Indenture, the Notes (including any Additional Notes, any Exchange Notes and any guarantees of the foregoing), the Note Guarantees, the Contingent Registration Rights Agreement, the Security Documents and the Intercreditor Agreements.

 

(xxi)    “Intellectual Property” means any and all 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 technology or proprietary information of any kind, including all rights therein and all applications for registration or registrations thereof.

 

(xxii)   “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

 

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(z) the right to use any of the licenses or other similar rights described in this definition in connection with the enforcement of the Noteholders’ rights under the Indenture Documents.

 

(xxiii)  “Inventory Collateral” has the meaning specified therefor in Section 3(a).

 

(xxiv)  “Issuer” has the respective meanings specified therefor in the recitals to this Agreement.

 

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

 

(xxvi)  Material Adverse Effect” means (a) a material adverse effect on the business, assets, results of operations or financial condition of Issuer and its Restricted Subsidiaries taken as a whole or that would materially adversely affect the ability of the Issuer to perform its material obligations under the Indenture Documents, (b) a material impairment of the Agent or the Noteholders’ ability to enforce the Secured Obligations or realize upon the Collateral (other than as a result of an action taken or not taken that is solely in the control of Agent), or (c) a material impairment of the enforceability or priority of Agent’s Liens with respect to all or a material portion of the Collateral.

 

(xxvii) “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).

 

(xxviii) “Note Discharge” means the completion of a discharge, legal defeasance or covenant defeasance of the Indenture in accordance with Article VIII of the Indenture.

 

(xxix)  “Noteholders” has the meaning specified therefor in the recitals to this Agreement.

 

(xxx)   “Notes” means the Initial Notes, the Exchange Notes and the Additional Notes.

 

(xxxi)  “Pledged Collateral” means all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

 

(xxxii) “Pledged Companies” means each Person listed on Schedule 5 as a “Pledged Company”, together with each other Person, all or a portion of whose Equity Interests are acquired or otherwise owned by a Grantor after the Issue Date (in each case, to the extent not constituting Excluded Assets).

 

(xxxiii) “Pledged Interests” means each Grantor’s right, title and interest in and to the Equity Interests of the Pledged Companies as follows: 100% of the Equity Interests of all Domestic Subsidiaries of such Grantor other than Domestic Subsidiaries that are Foreign Subsidiary Holdcos, and 65% of the voting Equity Interests and 100% of the non-voting Equity Interests, if any, of all First-Tier Foreign Subsidiaries and all Foreign Subsidiary Holdcos owned by such Grantor, in each case, whether now owned or hereafter acquired by such Grantor, regardless of class or designation, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, also including any certificates representing the

 

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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 (in each case, to the extent not constituting Excluded Assets); provided, however, that, in no event will the Pledged Interests (including any Equity Interests of Domestic Subsidiaries) include or be deemed to include any rights in respect of (1) voting Equity Interests in excess of 65% of all outstanding voting Equity Interests of any Foreign Subsidiary or of any Foreign Subsidiary Holdco, or (2) any assets of any Foreign Subsidiary.

 

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

 

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

 

(xxxvi) “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.

 

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

 

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

 

(xxxix) “Receivables Collateral” has the meaning specified therefor in Section 3(b).

 

(xl)       “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.

 

(xli)      “Related Contract” has the meaning specified therefor in Section 3(b).

 

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

 

(xliii)    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, the Notes, or any of the other Indenture Documents, (B) all other Notes Obligations (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 or Liquidation Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any Insolvency or Liquidation Proceeding).  For the avoidance of doubt, in each of clauses (A) and (B), Secured Obligations shall include all fees of, reimbursement of expenses

 

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incurred by, indemnifications, damages and any other liabilities payable to, each of the Trustee and Agent.

 

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

 

(xlv)    “Specified Request” means, with respect to any Collateral, any request by the Agent given solely at the direction of the Holders of a majority in aggregate principal amount of the Notes or any similar request by any other Pari Passu Collateral Agent or by the ABL Collateral Agent in connection with the grant, creation, attachment, perfection or priority, or the exercise of any rights or remedies, with respect to the Agent’s Lien or the Lien in favor of any such Person on such Collateral.

 

(xlvi)   “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.

 

(xlvii)  “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.

 

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

 

(xlix)   “Triggering Event” means, as of any date of determination, that an Event of Default under the Indenture has occurred as of such date.

 

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

 

(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 Indenture).  Unless otherwise expressly provided herein, any definition or reference to any law, rule or regulation shall include all statutory and

 

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regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law, rule or regulation.  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 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 Notes, together with the payment of any premium applicable to the repayment of the Notes, (B) all 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 Indenture Document, (ii) the receipt by Agent of cash collateral in order to secure any other contingent Secured Obligations for which a claim or demand for payment has been made at such time or in respect of matters or circumstances known to Agent or a Noteholder 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 Agent reasonably determines is appropriate to secure such contingent Secured Obligations, and (iii) the payment or repayment in full in immediately available funds of all other Secured Obligations other than unasserted contingent indemnification obligations.  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.

 

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

 

2.             [Omitted]

 

3.             Grant of Security.  Each Grantor hereby unconditionally grants, assigns, and pledges to Agent, for the benefit of the Agent, the Trustee and each Noteholder, 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 (but none of such Grantor’s obligation under) the following, whether now owned or hereafter acquired or arising and wherever located (the “Collateral”):

 

(a)           all of such Grantor’s Inventory in all of its forms, including, without limitation, (a) all raw materials, work in process, finished goods and materials used or consumed in the manufacture, production, preparation or shipping thereof, (b) goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (c) goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents (as such term is defined in the Code), customs receipts, and shipping documents therefor, and all software that is embedded in and is part of the inventory (any and all such property being the “Inventory Collateral”)

 

(b)           all of such Grantor’s Accounts, Chattel Paper, Negotiable Collateral, General Intangibles and other obligations of any kind, in each case arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating to the foregoing property (any and all of such Accounts, Chattel Paper, Negotiable Collateral, General Intangibles and other obligations, being the “Receivables Collateral”, and any and all such supporting obligations, security agreements, mortgages, Liens, leases, letters of credit and other contracts being the “Related Contracts”);

 

(c)           all of the following (collectively, the “Account Collateral”):

 

(i)         all of such Grantor’s Deposit Accounts and all funds and financial assets from time to time credited thereto (including, without limitation, all Cash

 

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Equivalents), all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such funds and financial assets, and all certificates and instruments, if any, from time to time representing or evidencing the Deposit Accounts;

 

(ii)        all of such Grantor’s certificates of deposit, Deposit Accounts, checks and other instruments from time to time delivered to or otherwise possessed by the Agent for or on behalf of such Grantor, including, without limitation, those delivered or possessed in substitution for or in addition to any or all of the then existing Account Collateral;

 

(iii)       all of such Grantor’s collection accounts, disbursement accounts, lock-boxes, commodity accounts and Securities Accounts, including all cash, marketable securities, securities entitlements, financial assets and other funds and assets held in, on deposit in, or credited to any of the foregoing; and

 

(iv)       all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral;

 

(d)           all of such Grantor’s Trademarks, Intellectual Property and Intellectual Property Licenses, in each case, pertaining to any of the Collateral;

 

(e)           all of such Grantor’s Books (including, without limitation, customer lists, credit files, printouts and other computer output materials and records) pertaining to any of Collateral;

 

(f)            to the extent not otherwise included in the foregoing, all substitutes, replacements and accessions to any of the foregoing;

 

(g)           all proceeds (as such term is defined in the Code) of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and Supporting Obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and Supporting Obligations that constitute property of the types described in clauses (a) through (f) above and this clause (g)) (the “Proceeds”) and, to the extent not otherwise included, all (x) payments under insurance (whether or not the Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise, in each case, with respect to any of the foregoing Collateral, (y) tort claims, including, without limitation, all Commercial Tort Claims, in each case with respect to the foregoing Collateral and (z) cash with respect to the foregoing Collateral; and

 

(h)           all of such Grantor’s Pledged Collateral.

 

Notwithstanding anything contained in this Agreement or any other Indenture Document to the contrary, the term “Collateral” shall not (and none of the terms used therein will) include:

 

(i)                all of each Grantor’s right, title and interest in any real property, fixtures and equipment not constituting Inventory Collateral (including all vehicles and other rolling stock) of such Grantor (whether owned on the Issue Date or acquired following the Issue Date);

 

(ii)           any permit, lease, license, contract, property rights, agreement, trademark or other Intellectual Property, to which a Grantor is a party or any of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in (a) the abandonment, invalidation, cancellation or unenforceability of any right, title or interest of such Grantor therein or (b) a breach or

 

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termination pursuant to the terms of, or a default under, any such permit, lease, license, contract, property rights, agreement, trademark or other Intellectual Property (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Code (or any successor provision or provisions) of any relevant jurisdiction or any other applicable requirement of law or principles of equity);

 

(iii)          any Trademark or other Intellectual Property application to the extent the grant of a security interest therein would invalidate such application;

 

(iv)          fixed or capital assets that are subject to a purchase money Lien or a capital lease in each case that constitutes a Permitted Lien, to the extent granting a security interest therein would be prohibited or require third party consent that cannot be obtained after use of commercially reasonable efforts;

 

(v)           motor vehicles (or any equipment stored on or in any such motor vehicle), other goods covered by certificates of title or ownership or other rolling stock (whether or not covered by certificates of title or ownership);

 

(vi)          cash collateral for letters of credit or Hedging Obligations permitted by the Indenture securing, in the case of letters of credit, an amount not to exceed 105% of the face amount of cash collateralized letters of credit for the benefit of the Grantors and, in the case of Hedging Obligations, not to exceed 105% of the amount of such Hedging Obligations;

 

(vii)         any Equity Interests of any joint venture, partnership or other entity to the extent granting a security interest therein would constitute a default or termination under the terms of the joint venture agreement, partnership agreement, other organizational documents or other agreement of (or covering or purporting to cover the assets of) such joint venture, partnership or entity or its parent (that is not a Grantor) or result in the abandonment or invalidation of the Grantor’s or any Subsidiary of the Grantor’s interest in such joint venture, partnership or other entity;

 

(viii)        Equity Interests in excess of 65% of all outstanding voting Equity Interests of any First-Tier Foreign Subsidiary or any Foreign Subsidiary Holdco;

 

(ix)          Equity Interests in (a) an Immaterial Subsidiary, (b) any Foreign Subsidiary that is not a First-Tier Foreign Subsidiary, and (c) an Unrestricted Subsidiary;

 

(x)           assets owned by a Grantor that are located outside of the United States (other than foreign Equity Interests as otherwise provided herein) to the extent a Lien on such assets cannot be created under the United States federal law or the laws of any State of the United States or the District of Columbia;

 

(xi)          any Commercial Tort Claims or any letter of credit rights (other than Supporting Obligations constituting ABL Collateral);

 

(xii)         proceeds (as such term is defined in the Code) and products of the foregoing to the extent they are also Excluded Assets; and

 

(xiii)        (1) Deposit Accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the employees of any Grantor established and used in the ordinary course of business, including without limitation deposit and securities accounts the balance of which consists exclusively of (x) withheld income taxes and federal, state or local employment taxes in such amounts as are required to be paid to the Internal Revenue Service or state or local government

 

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agencies within the following two months with respect to employees of any Grantor, and (y) amounts required to be paid over to an employee benefit plan pursuant to DOL Reg. Sec. 2510.3-102 on behalf of or for the benefit of employees of any Grantor, (2) all segregated Deposit Accounts constituting (and the balance of which consists solely of funds set aside in connection with) tax accounts and trust accounts, (3) any Deposit Accounts or concentration accounts, the deposits in which shall not aggregate more than $2,500,000 or exceed $1,000,000 with respect to any one account for a period of five (5) consecutive Business Days, (4) any insurance trust accounts maintained in the ordinary course of business and holding only funds necessary to fund the accrued insurance obligations of any Grantor in respect of self-insured health insurance and workers’ compensation insurance, and (5) any escrow accounts required to be maintained in connection with any Permitted Investments or Permitted Dispositions;

 

(the items of property specified in clauses (i) through (xiii) above, collectively, “Excluded Assets”)  provided that, if any aforementioned asset or the proceeds thereof no longer constitute Excluded Assets, such asset shall immediately constitute Collateral, and a Lien on such asset shall immediately attach thereto.

 

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 Agent, the Trustee, the Noteholders, 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 or Liquidation Proceeding involving any Grantor due to the existence of such Insolvency or Liquidation 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 Agent or any Noteholder 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 Agent or any Noteholder shall have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any Agent or Noteholder 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 under the Indenture shall occur and be continuing, except as otherwise provided in this Agreement, the Indenture, or any other Indenture Document, Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting their respective businesses, subject to and upon the terms hereof and of the Indenture and the other Indenture Documents.  Without limiting the generality of the 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 under the Indenture and (ii) Agent has notified the applicable Grantor of 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 Agent to enter into this Agreement for the benefit of the Agent, the Trustee and the Noteholders, each Grantor makes the following representations and warranties 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 Issue Date, and 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

 

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of the date of the issue of any Additional Notes made thereafter, as though made on and as of the date of such subsequent date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct 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 such earlier 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 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 Indenture Documents).

 

(b)                                 The chief executive office of each Grantor 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 Indenture Documents).

 

(c)                                  Each Grantor’s 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 Indenture Documents).

 

(d)                                 As of the Issue Date, no Grantor holds any commercial tort claims that exceed $3,000,000 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’ 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)                                   As of the Issue Date:  (i) 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 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 that is necessary 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 (other than commercial off-the-shelf software); and (ii) Schedule 6 provides a complete and correct list of all registered Trademarks owned by any Grantor and all applications for registration of Trademarks owned by any Grantor.

 

(g)                                  (i) to each Grantor’s knowledge, such Grantor owns exclusively or holds licenses in all Intellectual Property that is necessary in the conduct of its business;

 

(ii)                        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 would reasonably be expected to result in a Material Adverse Effect; and

 

(i)                           to each Grantor’s knowledge, all registered Trademarks that are owned by such Grantor and necessary in the conduct of its business are valid, subsisting and enforceable and in compliance with all legal requirements, filings, and payments and other

 

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actions that are required to maintain such Intellectual Property in full force and effect, except as would not reasonably be expected to result in a Material Adverse Effect.

 

(h)                                 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 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 Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 11.  Upon the making of such filings, Agent shall have a first priority perfected security interest in the Notes Collateral (subject to Permitted Liens) and a second priority perfected security interest in the ABL Collateral (subject to Permitted Liens) of each Grantor to the extent such security interest can be perfected by the filing of a financing statement.  Upon filing of any Trademark Security Agreement with the PTO, and the filing of appropriate financing statements in the jurisdictions listed on Schedule 11, all action necessary to protect and perfect the Security Interest in and on each Grantor’s Trademarks has been taken and such perfected Security Interest is enforceable as such as against any and all creditors of and purchasers from any Grantor.

 

(i)                                     (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 Issue 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 Pledged Collateral pledged by such Grantor to Agent as provided herein; (iv) all actions necessary or desirable to perfect and establish the priority of (subject to the Junior Lien Intercreditor Agreement and the Pari Passu Intercreditor Agreement), or otherwise protect, Agent’s Liens in the Pledged Collateral, and the proceeds thereof, have been duly taken, upon (A) the execution and delivery of this Agreement; (B) the taking of possession by the Agent, any other Pari Passu Collateral Agent or the ABL Collateral Agent (or its agent or designee), or, subject to the terms of the Junior Lien Intercreditor Agreement or the Pari Passu Intercreditor Agreement, of any certificates representing the Pledged Interests, together with undated powers (or other documents of transfer acceptable to the ABL Collateral Agent, such other Pari Passu Collateral Agent or the Agent, as applicable) 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 granting control (x) in the case of ABL Collateral, to the ABL Collateral Agent, or after the Discharge of ABL Obligations, to the Authorized Collateral Agent, or (y) otherwise, to the Authorized Collateral Agent; and (v) subject to the terms of the Junior Lien Intercreditor Agreement or the Pari Passu Intercreditor Agreement, each Grantor has delivered to and deposited with the Authorized Collateral Agent or the ABL Collateral Agent, as bailee or agent for perfection for the benefit of the Agent as secured party, or the 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 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.

 

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(j)                                    Except, in each case, as would not reasonably be expected to result in a Material Adverse Effect, 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 for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by 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.

 

(k)                                 Except if any Grantor notifies Agent to the contrary, 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 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 or Chattel Paper having an aggregate value or face amount of $3,000,000 or more for all such Negotiable Collateral or Chattel Paper, the Grantors shall promptly notify Agent thereof, and if and to the extent that perfection or priority of Agent’s Security Interest is dependent on or enhanced by possession, the applicable Grantor promptly after a Specified Request shall execute such other documents and instruments as shall be so requested or, if applicable, endorse and deliver physical possession of such Negotiable Collateral or Chattel Paper to Agent (or, subject to the terms of the Pari Passu Intercreditor Agreement or the Junior Lien Intercreditor Agreement, as applicable, to the Authorized Collateral Agent or the ABL Collateral Agent), together with such undated powers (or other relevant document of transfer acceptable to Agent) endorsed in blank as shall be requested pursuant to a Specified Request, and shall do such other acts or things deemed necessary to protect Agent’s Security Interest therein;

 

(b)                                 Chattel Paper.

 

(i)                           Promptly after a Specified Request, each Grantor shall take all steps reasonably necessary to grant Agent control of all electronic Chattel Paper constituting Collateral 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 $3,000,000;

 

(ii)                        If any Grantor retains possession of any Chattel Paper or instruments constituting Collateral (which retention of possession shall be subject to the extent permitted hereby and by the Indenture), promptly after a Specified Request such Chattel Paper

 

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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 U.S. Bank National Association, as Agent for the benefit of the Trustee, the Agent and the Noteholders”;

 

(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)                     The Grantors shall have used their commercially reasonable efforts to complete, on or prior to the Issue Date, all actions required in connection with the perfection of all Security Interests in the Account Collateral, including obtaining the authenticated Control Agreements specified in clauses (i) and (ii) above.  To the extent that any such actions (including the obtaining of authenticated Control Agreements) have not been completed on or prior to the Issue Date with respect to Account Collateral, the Grantors shall use their commercially reasonable efforts to complete such actions as soon as reasonably practicable and in any event shall complete such actions within 90 days after the Issue Date.

 

(d)                                 Letter-of-Credit Rights.  If the Grantors (or any of them) are or become the beneficiary of letters of credit in respect of any Collateral having a face amount or value of $3,000,000 or more in the aggregate, then the applicable Grantor or Grantors shall promptly, notify Agent thereof and shall promptly after a Specified Request, enter into a tri-party agreement with Agent and the issuer or confirming bank with respect to letter-of-credit rights assigning such letter-of-credit rights to Agent and directing all payments thereunder to Agent’s Account, all in form and substance reasonably satisfactory to Agent;

 

(e)                                  Commercial Tort Claims.  If the Grantors (or any of them) obtain Commercial Tort Claims constituting Collateral having a value, or involving an asserted claim, in the amount of $3,000,000 or more in the aggregate for all Commercial Tort Claims, then the applicable Grantor or Grantors shall promptly notify Agent upon incurring or otherwise obtaining such Commercial Tort Claims and, shall promptly after a Specified Request 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 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 to give Agent a first priority, perfected security interest in any such Commercial Tort Claim;

 

(f)                                   Government Contracts.  Other than Accounts and Chattel Paper the aggregate value of which does not at any one time exceed $3,000,000, if any Account or Chattel Paper constituting Collateral arises out of a contract or contracts with the United States of America or any department, agency, or instrumentality thereof, Grantors shall promptly notify Agent thereof and shall promptly after a Specified Request execute any instruments or take any steps reasonably required in order that all moneys due or to become due under such contract or contracts shall be assigned to Agent, for the benefit of the

 

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Trustee, the Agent and the Noteholders, and shall provide written notice thereof under the Assignment of Claims Act or other applicable law to the Agent;

 

(g)                                  Intellectual Property.

 

(i)                           In order to facilitate filings with the PTO, each Grantor shall execute and deliver to Agent one or more Trademark Security Agreements to further evidence Agent’s Lien on such Grantor’s Trademarks constituting Collateral and the General Intangibles of such Grantor relating thereto or represented thereby;

 

(ii)                        Each Grantor shall take all commercially reasonable steps which it reasonably deems appropriate under the circumstances, with respect to Intellectual Property that is necessary to the conduct of such Grantor’s business, to protect and enforce and defend at such Grantor’s expense its Intellectual Property, including, in its reasonable business judgment (A) to 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 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, and (C) to take all reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, 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.  Each Grantor hereby agrees to take all commercially reasonable steps which it reasonably deems appropriate under the circumstances, as 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 to the conduct of such Grantor’s business;

 

(iii)                     Grantors acknowledge and agree that the Agent, the Trustee or the Noteholders 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 neither the Agent, the Trustee nor any Noteholder 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 the Agent or any Noteholder may (but is not obligated) to do so at its option from and after the occurrence and during the continuance of an Event of Default under the Indenture, and all reasonable documented out-of-pocket expenses incurred in connection therewith (including reasonable and documented fees and expenses of attorneys and other professionals) shall be for the sole account of the Grantors;

 

(iv)                    [Reserved].

 

(v)                       On each date on which financial statements are delivered pursuant to the Indenture in respect of a fiscal quarter, each Grantor shall provide Agent with a written report of all new Trademarks, if any, that are registered or the subject of pending applications for registrations, and of all Intellectual Property Licenses that are necessary 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 each of the foregoing cases, the applicable Grantor shall promptly cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Indenture Documents to identify

 

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such Trademark 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;

 

(h)                                 Pledged Collateral.

 

(i)                           If any Grantor shall acquire, obtain or receive any Pledged Interests after the Issue Date, it shall promptly deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests;

 

(ii)                        Upon the occurrence and during the continuance of an Event of Default under the Indenture, all sums of money and property paid or distributed in respect of the Investment Property constituting Collateral that are received by any Grantor shall be held by the Grantors in trust for the benefit of Agent, the Trustee and the Noteholders segregated from such Grantor’s other property, and such Grantor shall, subject to the requirements of the Pari Passu Intercreditor Agreement and Junior Lien Intercreditor Agreement, deliver it forthwith to Agent in the exact form received;

 

(iii)                     [Reserved].

 

(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 Indenture Documents;

 

(v)                       Each Grantor agrees that it will obtain all necessary approvals and make all necessary filings under federal, state, local, or foreign law to effect the perfection of the Security Interest in favor of the Agent on the Investment Property constituting Collateral and, upon the occurrence and during the continuation of an Event of Default under the Indenture, to effect any sale or transfer thereof; provided that no Grantor shall have any obligation to make any filings or registrations to allow for a public sale of any Investment Property.

 

(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)                                     [Reserved].

 

(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 Indenture, or (ii) create or permit to exist any Lien upon or with respect to any

 

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of the Collateral of any Grantor, except for Permitted Liens.  The inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent’s consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Indenture 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 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 (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 Agent and the applicable Controlled Account Bank with respect to Controlled Accounts that constitute Collateral, in form and substance reasonably acceptable to Agent.  Each such Controlled Account Agreement shall provide, among other things, that (A) the Controlled Account Bank will comply with any instructions originated by Agent 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 Agent (an “Activation Instruction”), the Controlled Account Bank will forward by daily sweep all amounts in the applicable Controlled Account to the Agent’s Account.  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.  Agent agrees to use commercially reasonable efforts to rescind an Activation Instruction (the “Rescission”) if the Triggering Event upon which such Activation Instruction was issued has been waived in writing in accordance with the terms of the Indenture, and (2) no additional Triggering Event has occurred and is continuing on the date of the Rescission or is reasonably expected to occur on or immediately after the date of the Rescission.

 

(iii)                     So long as no Default or Event of Default under the Indenture has occurred and is continuing, Issuer may amend Schedule 10 to add or replace a Controlled Account Bank or Controlled Account and shall upon such addition or replacement provide to Agent an amended Schedule 10; provided, however, that (A) such prospective Controlled Account Bank shall be the Agent, an Affiliate of the Agent, the ABL Collateral Agent or an Affiliate thereof, a Pari Passu Collateral Agent or an Affiliate thereof or otherwise reasonably satisfactory to Agent, and (B) prior to the time of the opening of such Controlled Account (except with respect to any Controlled Account existing as of the Issue Date), the applicable Grantor and such prospective Controlled Account Bank shall have executed and delivered to Agent a Controlled Account Agreement.

 

(iv)                    From and after the date that is ninety (90) days after the Issue Date, no Grantor will open or maintain any Deposit Accounts or Securities Accounts, other than Deposit Accounts or Securities Accounts that are Excluded Assets, unless Grantor and the applicable bank or securities intermediary have entered into Control Agreements with Agent in order to perfect (and further establish) Agent’s Liens in such Deposit Account or Securities

 

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Account and, notwithstanding anything in the Indenture Documents to the contrary, there shall be no Default or Event of Default under the Indenture until after the expiration of such ninety (90) day period for failure to have any such Control Agreements in place.

 

(l)                                     Name, Etc.  No Grantor will change its name, organizational identification number, jurisdiction of organization or organizational identity; provided, that Grantor may change its name upon at least ten (10) days’ prior written notice to Agent of such change.

 

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

 

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

 

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

 

(c)                                  Intercreditor Agreements.  Notwithstanding anything herein to the contrary, the Security Interest granted pursuant to or in connection with this Agreement, the terms of any other Security Document or the Indenture, certain other rights and privileges, and the exercise of any right or remedy by Agent hereunder are subject to the provisions of the Pari Passu Intercreditor Agreement and the Junior Lien Intercreditor Agreement (the “Intercreditor Agreements”).  In the event of any conflict between the terms of the Intercreditor Agreements and this Agreement, the Indenture or any other Security Document, the terms of the Intercreditor Agreements shall control; provided that the terms of the Junior Lien Intercreditor Agreement governs and controls in the event of any conflict with the Pari Passu Intercreditor Agreement.  In addition, whether expressly stated herein or in any other Indenture Document, so long as the Discharge of ABL Obligations has not occurred, the delivery of any ABL Collateral or any certificates, Instruments, Chattel Paper or Documents evidencing or in connection with such ABL Collateral to the ABL Collateral Agent as bailee or agent for perfection for the benefit of Agent as secured party, the granting of “control” over ABL Collateral, the execution and delivery of Control Agreements and/or the assignment of any ABL Collateral to the ABL Collateral Agent as bailee or agent for perfection for the benefit of Agent as secured party, in each case shall constitute compliance by the applicable Grantor with the provisions of this Agreement or any other Indenture Document which require delivery, possession, control and/or assignment of certain types of Collateral to the Agent or delivery of control agreements to the Agent.

 

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 may be reasonably required, pursuant to a Specified 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 Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.

 

(b)                                 Each Grantor authorizes the filing by Agent of financing or continuation statements, or amendments thereto, as are necessary to perfect or preserve Agent’s Security Interest in the Collateral and such Grantor will execute and deliver to Agent such other instruments or notices, as Agent

 

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may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby, it being understood that the Agent shall have no responsibility for any such filings.  For the avoidance of doubt, it is each Grantor’s primary responsibility to establish, maintain and preserve the perfection of the Liens granted under this Agreement.

 

(c)                                  Each Grantor authorizes 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 set forth herein, (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, it being understood that the Agent shall have no responsibility for any such filings.  For the avoidance of doubt, it is each Grantor’s primary responsibility to establish, maintain and preserve the perfection of the Liens granted under this Agreement.  Each Grantor also hereby ratifies any and all financing statements or amendments previously filed by Agent in any jurisdiction.

 

(d)                                 Each Grantor acknowledges and agrees that it shall not file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement prior to the earlier of (x) the payment in full of the Secured Obligations or (y) the occurrence of a Note Discharge, except in compliance with this Agreement and the Indenture subject to such Grantor’s rights under Section 9-509(d)(2) of the Code.

 

(e)                                  Each of the parties hereto acknowledges and agrees that nothing in this Agreement (i) creates, either directly or by implication, any Security Interest in, Lien on, or rights to any assets or property constituting Excluded Assets or (ii) requires compliance with any applicable foreign law with respect to the grant, creation and perfection of Liens on and Security Interest in any Collateral.

 

10.                               Agent’s Right to Perform Contracts, Exercise Rights, etc.  Upon the occurrence and during the continuance of an Event of Default under the Indenture, 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 (to the extent that such use (a) does not violate the express terms of any agreement between such Grantor and a third party governing such Grantor’s use of the Intellectual Property License and (b) is not prohibited by any rule of law, statute or regulation) in connection with the enforcement of Agent’s rights hereunder, including the right to prepare for sale and sell any and all Inventory 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 Agent or any of its nominees.  Agent shall have no obligation under this Agreement to take any such action.

 

11.                               Agent Appointed Attorney-in-Fact.  Each Grantor hereby irrevocably appoints Agent as 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 Indenture, subject to the terms of then existing leases, contracts and other agreements, to take any action and to execute any instrument which 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 Agent;

 

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

 

(d)                                 to file any claims or take any action or institute any proceedings which Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of 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 (to the extent that such use (i) does not violate the express terms of any agreement between such Grantor and a third party governing such Grantor’s use of the Intellectual Property License and (ii) is not prohibited by any rule of law, statute or regulation) of such Grantor, including but not limited to any labels, Trademarks, trade names, URLs, domain names, industrial designs, 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)                                  Agent, on behalf of the Trustee, the Agent and the Noteholders, 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 Agent shall commence any such suit, the appropriate Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents reasonably required by 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, Agent shall have the right, but shall not be obligated, to itself perform, or cause performance of, such agreement, and the reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by Grantors.

 

13.                               Agent’s Duties.  The powers conferred on Agent hereunder are solely to protect Agent’s interest in the Collateral, for the benefit of the Trustee, the Agent and the Noteholders, and shall not impose any duty upon 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, 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 and shall be under no obligation to act under this Agreement without instructions from Holders of a majority in aggregate principal amount of the Notes pursuant to the Indenture.  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 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 under the Indenture, Agent or 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 Agent, for the benefit of the Trustee, the Agent and the Noteholders, or that 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 Indenture Documents.

 

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15.                               Disposition of Pledged Interests by 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 under the Indenture 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, Agent may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if such 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 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, 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 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 under the Indenture, (i) Agent may, at its option, and with five (5) Business Days’ prior notice to any Grantor, and in addition to all rights and remedies available to 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 Agent obligated by the terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner 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 until either (x) the Secured Obligations have been paid in full or (y) a Note Discharge has occurred.

 

(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 vote or take any consensual action with respect to such Pledged Interests which would materially adversely affect the rights of Agent, the Trustee or the Noteholders without the prior written consent of the Holders of a majority in aggregate principal amount of the Notes, subject to the Intercreditor Agreements.

 

17.                               Remedies.  Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default under the Indenture:

 

(a)                                 At the instruction of the Holders of the requisite percentage in aggregate principal amount of the Notes pursuant to the Indenture, Agent shall exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Indenture 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, 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 or as required by applicable law) 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)

 

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require Grantors to, and each Grantor hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and make it available to 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 Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as 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.  Agent shall not be obligated to make any sale of Collateral regardless of notification of sale having been given.  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)                                 Subject to the terms of the existing applicable agreements and contracts, 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, Trademarks, trade names, URLs, domain names, industrial designs, 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 Agent.

 

(c)                                  Agent may, in addition to other rights and remedies provided for herein, in the other Indenture 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 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 Agent, and (ii) with respect to any Grantor’s Securities Accounts in which 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 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 Agent.

 

(d)                                 Any cash held by Agent as Collateral and all cash proceeds received by 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 Indenture.  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.

 

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

 

18.                               Remedies Cumulative.  Each right, power, and remedy of Agent, the Trustee or any Noteholders as provided for in this Agreement, the other Indenture Documents 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, the other Indenture Documents now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Agent, the Trustee or the Noteholders of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Agent, the Trustee or such other Noteholders of any or all such other rights, powers, or remedies.

 

19.                               Marshaling.  Agent shall not 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 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 Agent, the Trustee and the other Noteholders 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 Indenture 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 jurisdiction.  This provision shall survive the termination of this Agreement and the Indenture and the repayment of the Secured Obligations.

 

(b)                                 Grantors, jointly and severally, shall, upon demand, pay to Agent or the Trustee, as the case may be, all the reasonable and documented out-of-pocket expenses which Agent or the Trustee, respectively, 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 under the Indenture, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Indenture Documents, (iii) the exercise or enforcement of any of the rights of 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 INDENTURE 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

 

23

 

departure by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by Agent at the written direction of the Holders of a majority in aggregate principal amounts of the Notes, 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 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 Agent at its address specified in the Indenture, and to any of the Grantors at the addresses specified in the Indenture, for the Issuer, 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 Indenture.

 

(a)                                 This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until either (x) the Secured Obligations have been paid in full in accordance with the provisions of the Indenture or (y) a Note Discharge has occurred, (ii) be binding upon each Grantor, and their respective successors and assigns, and (iii) inure to the benefit of, and be enforceable by, Agent, and its successors, transferees and assigns.  Without limiting the generality of the foregoing clause (iii), any Noteholder may, in accordance with the provisions of the Indenture, assign or otherwise transfer all or any portion of its Notes to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Noteholder herein or otherwise.  Upon payment in full of the Secured Obligations in accordance with the provisions of the Indenture or upon the occurrence of a Note Discharge, the Security Interest granted hereby shall automatically terminate, without the requirement of further action by any party, and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto.  At such time Issuer shall be entitled to file the appropriate termination statements to terminate such Security Interest by each Grantor or its designees and Agent shall take such other actions requested by any Grantor (at Grantors’ expense) to terminate or evidence the termination of such Security Interest.  Except as set forth above, no transfer or renewal, extension, assignment, or termination of this Agreement or of the Indenture, any other Indenture Document, or any other instrument or document executed and delivered by any Grantor to Agent, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent, nor any other act of the Trustee or the Noteholders, or any of them, shall release any Grantor from any obligation, except in accordance with the provisions of the Indenture.  Agent shall not 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 Agent at the direction of the Holders of a majority in aggregate principal amount of the Notes and then only to the extent therein set forth.  A waiver by 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 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 Agent, the Trustee or any Noteholder 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, any Lien or other Collateral securing such Grantor’s liability hereunder shall have been released or terminated by virtue of the foregoing clause (a), 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

 

24

 

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, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Agent, the Trustee or any Noteholder may have had notice or knowledge of any Default or Event of Default under the Indenture 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 Indenture is outstanding and unpaid.

 

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 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 COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT 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 AND NOTEHOLDER (BY ITS PURCHASE OF A NOTE) HEREBY WAIVE (OR DEEMED TO 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 AND EACH NOTEHOLDER (BY ITS PURCHASE OF A NOTE) REPRESENT (OR SHALL BE DEEMED TO 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.

 

25

 

(d)         EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT 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 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 THE AGENT, THE TRUSTEE OR ANY NOTEHOLDER OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM, AND NO CLAIM MAY BE MADE BY THE AGENT, THE TRUSTEE OR ANY NOTEHOLDER AGAINST ANY GRANTOR, 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 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, THE AGENT, THE TRUSTEE AND EACH NOTEHOLDER 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 4.14 of the Indenture (and subject to the limitations therein), certain Subsidiaries (whether by acquisition or creation or as otherwise specified therein) of any Grantor are required to enter into this Agreement by executing and delivering in favor of 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 Grantor hereunder with the same force and effect as if originally named as a Grantor herein.  The execution and delivery of any instrument adding an additional Grantor as a party to this Agreement shall not require the consent of any Grantor hereunder.  The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

 

27.                               Agent.  Each reference herein to any right granted to, benefit conferred upon or power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Trustee, the Agent and each Noteholder.

 

28.                               Miscellaneous.

 

(a)                                 This Agreement is a Indenture 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

 

26

 

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 Indenture 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.

 

(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 Agents, the Trustee, Noteholders 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.

 

(e)                                  The Trustee and the Holders from time to time of the Notes shall be express third party beneficiaries of this Agreement.

 

[signature pages follow]

 

27

 

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:
    	
FTS INTERNATIONAL SERVICES, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael J. Doss
    
	
 
    	
 
    	
Name: Michael J. Doss
    
	
 
    	
 
    	
Title: Senior Vice   President — Finance and
    
	
 
    	
 
    	
Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FTS INTERNATIONAL, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael J. Doss
    
	
 
    	
 
    	
Name: Michael J. Doss
    
	
 
    	
 
    	
Title: Senior Vice   President — Finance and
    
	
 
    	
 
    	
Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FTS INTERNATIONAL   MANUFACTURING, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael J. Doss
    
	
 
    	
 
    	
Name: Michael J. Doss
    
	
 
    	
 
    	
Title: Senior Vice   President — Finance and
    
	
 
    	
 
    	
Treasurer
    

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

 

	
AGENT:
    	
U.S. BANK NATIONAL ASSOCIATION,   a national
    
	
 
    	
banking association,   solely in its capacity as Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Muriel Shaw
    
	
 
    	
 
    	
Name: Muriel Shaw
    
	
 
    	
 
    	
Title:   Assistant Vice President
    

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

 

SCHEDULE 1

 

COMMERCIAL TORT CLAIMS

 

1.              Counterclaim in excess of $3,000,000 against Continental Industrial Group, Inc. for breach of contract and fraudulent inducement. Continental Industries Group, Inc. v. FTS International Services, LLC (f/k/a Frac Tech Services, LLC), Cause No. 12 Civ. 6066 (ALC)(HP) pending in the United States District Court for the Southern District of New York.

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 3

 

INTELLECTUAL PROPERTY LICENSES

 

None.

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 5

 

PLEDGED COMPANIES

 

	
Name of
   Grantor
    	
 
    	
Name of
   Pledged
   Company
    	
 
    	
Number of
   Shares/Units
    	
 
    	
Class of
   Interests
    	
 
    	
Percentage of
   Class Owned
    	
 
    	
Percentage of
   Class Pledged
    	
 
    	
Certificate
   Nos.
    
	
FTS International, Inc.
    	
 
    	
FTS International Services, LLC
    	
 
    	
N/A
    	
 
    	
Membership interests
    	
 
    	
100%
    	
 
    	
100%
    	
 
    	
Uncertificated
    
	
FTS International Services, LLC.
    	
 
    	
FTS International Manufacturing, LLC
    	
 
    	
N/A
    	
 
    	
Membership interests
    	
 
    	
100%
    	
 
    	
100%
    	
 
    	
Uncertificated
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 6

 

TRADEMARKS

 

UNITED STATES TRADEMARKS

 

U.S. Registrations:

 

	
Owner
    	
 
    	
Registration

Number
    	
 
    	
Description
    
	
FTS International Services, LLC
    	
 
    	
4416031
    	
 
    	
Aquacor (design in blue)
    
	
FTS International Services, LLC
    	
 
    	
4416030
    	
 
    	
Aquacor
    
	
FTS International Services, LLC
    	
 
    	
4054905
    	
 
    	
CHL
    
	
FTS International Services, LLC
    	
 
    	
3497579
    	
 
    	
CITRINE
    
	
FTS International Services, LLC
    	
 
    	
3322250
    	
 
    	
CS-POLYBREAK 210
    
	
FTS International Services, LLC
    	
 
    	
4451132
    	
 
    	
DIAMOND design
    
	
FTS International Services, LLC
    	
 
    	
4189683
    	
 
    	
ECO GREEN
    
	
FTS International Services, LLC
    	
 
    	
4151986
    	
 
    	
ENERGY SOLUTIONS. WORLDWIDE.
    
	
FTS International Services, LLC
    	
 
    	
4193471
    	
 
    	
“F” (shield design)
    
	
FTS International Services, LLC
    	
 
    	
4193472
    	
 
    	
“F” (shield design in color)
    
	
FTS International Services, LLC
    	
 
    	
4185461
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
4204838
    	
 
    	
“F” (stylized design in color)
    
	
FTS International Services, LLC
    	
 
    	
4313998
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)
    
	
FTS International Services, LLC
    	
 
    	
4318050
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words in   color)
    
	
FTS International Services, LLC
    	
 
    	
4313999
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words)
    
	
FTS International Services, LLC
    	
 
    	
4314000
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color)
    
	
FTS International Services, LLC
    	
 
    	
4011448
    	
 
    	
FRAC TECH
    
	
FTS International Services, LLC
    	
 
    	
3522979
    	
 
    	
FT Frac Tech (logo & design)
    
	
FTS International Services, LLC
    	
 
    	
4313997
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
4471425
    	
 
    	
FTS INTERNATIONAL MANUFACTURING
    
	
FTS International Services, LLC
    	
 
    	
4329229
    	
 
    	
FTS INTERNATIONAL PROPPANTS
    
	
FTS International Services, LLC
    	
 
    	
4332747
    	
 
    	
FTS INTERNATIONAL SERVICES
    
	
FTS International Services, LLC
    	
 
    	
4388204
    	
 
    	
FTS INTERNATIONAL WIRELINE
    
	
FTS International Services, LLC
    	
 
    	
4332750
    	
 
    	
FTSI
    
	
FTS International Services, LLC
    	
 
    	
4290177
    	
 
    	
FTSI PROPPANTS
    
	
FTS International Services, LLC
    	
 
    	
3437249
    	
 
    	
JADE
    
	
FTS International Services, LLC
    	
 
    	
4214082
    	
 
    	
NPD
    
	
FTS International Services, LLC
    	
 
    	
4108769
    	
 
    	
NPD-2000
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

	
FTS International Services, LLC
    	
 
    	
4177022
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
3428709
    	
 
    	
OPAL
    
	
FTS International Services, LLC
    	
 
    	
4210164
    	
 
    	
PFP
    
	
FTS International Services, LLC
    	
 
    	
3393387
    	
 
    	
PLATINUM
    
	
FTS International Services, LLC
    	
 
    	
3383301
    	
 
    	
RUBY
    
	
FTS International Services, LLC
    	
 
    	
4159362
    	
 
    	
SLICKWATER GREEN
    
	
FTS International Services, LLC
    	
 
    	
4159141
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
3393386
    	
 
    	
TURQUOISE
    
	
FTS International Services, LLC
    	
 
    	
4018863
    	
 
    	
VS (design)
    

 

U.S. Applications:

 

	
Owner
    	
 
    	
Application
   Number
    	
 
    	
Description
    
	
FTS International Services, LLC
    	
 
    	
86226256
    	
 
    	
DIAMOND
    
	
FTS International Services, LLC
    	
 
    	
86228572
    	
 
    	
F FTS INTERNATIONAL Unconventional by Design   (horizontal design plus words)
    

 

OTHER TRADEMARKS

 

International Registrations:

 

	
Owner
    	
 
    	
Registration
   Number
    	
 
    	
Country
    	
 
    	
Description
    
	
FTS International Services, LLC
    	
 
    	
1084396
    	
 
    	
WIPO
    	
 
    	
CHL
    
	
FTS International Services, LLC
    	
 
    	
1266604
    	
 
    	
Mexico
    	
 
    	
CHL (International Class 035)
    
	
FTS International Services, LLC
    	
 
    	
1238597
    	
 
    	
Mexico
    	
 
    	
CHL (International Class 037)
    
	
FTS International Services, LLC
    	
 
    	
1238598
    	
 
    	
Mexico
    	
 
    	
CHL (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
1105982
    	
 
    	
European Union (WIPO)
    	
 
    	
“F” (shield design in color)
    
	
FTS International Services, LLC
    	
 
    	
1332713
    	
 
    	
Mexico
    	
 
    	
“F” (shield design in color)
    
	
FTS International Services, LLC
    	
 
    	
1476283 (Australia No.) 1106398 (WIPO No.)
    	
 
    	
Australia (WIPO)
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
1106398
    	
 
    	
European Union (WIPO)
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
1332717
    	
 
    	
Mexico
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
1106172
    	
 
    	
European Union (WIPO)
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)
    
	
FTS International Services, LLC
    	
 
    	
1332715
    	
 
    	
Mexico
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

	
FTS International Services, LLC
    	
 
    	
1105450
    	
 
    	
European Union (WIPO)
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in color)
    
	
FTS International Services, LLC
    	
 
    	
1332714
    	
 
    	
Mexico
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color)
    
	
FTS International Services, LLC
    	
 
    	
1072356
    	
 
    	
China (WIPO)
    	
 
    	
FRAC TECH
    
	
FTS International Services, LLC
    	
 
    	
1072356
    	
 
    	
European Union (WIPO)
    	
 
    	
FRAC TECH
    
	
FTS International Services, LLC
    	
 
    	
1066207
    	
 
    	
China (WIPO)
    	
 
    	
FT Frac Tech (logo and design)
    
	
FTS International Services, LLC
    	
 
    	
1066207
    	
 
    	
European Union (WIPO)
    	
 
    	
FT Frac Tech (logo and design)
    
	
FTS International Services, LLC
    	
 
    	
2574724
    	
 
    	
Argentina
    	
 
    	
FTS INTERNATIONAL (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
1105453
    	
 
    	
European Union (WIPO)
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
1332716
    	
 
    	
Mexico
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
1129118
    	
 
    	
China (WIPO)
    	
 
    	
FTSI
    
	
FTS International Services, LLC
    	
 
    	
1129118
    	
 
    	
European Union (WIPO)
    	
 
    	
FTSI
    
	
FTS International Services, LLC
    	
 
    	
1336222
    	
 
    	
Mexico
    	
 
    	
FTSI (International Class 001)
    
	
FTS International Services, LLC
    	
 
    	
1336223
    	
 
    	
Mexico
    	
 
    	
FTSI (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
2572756
    	
 
    	
Argentina
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
1113274
    	
 
    	
Australia (WIPO)
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
1113274
    	
 
    	
China (WIPO)
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
1113274
    	
 
    	
European Union (WIPO)
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
1292126
    	
 
    	
Mexico
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
1113274
    	
 
    	
Oman (WIPO)
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
2572757
    	
 
    	
Argentina
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
1123027
    	
 
    	
China (WIPO)
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
1123027
    	
 
    	
European Union (WIPO)
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
1292127
    	
 
    	
Mexico
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
2572758
    	
 
    	
Argentina
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1124015
    	
 
    	
Australia (WIPO)
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1124015
    	
 
    	
China (WIPO)
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1124015
    	
 
    	
European Union (WIPO)
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1292128
    	
 
    	
Mexico
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1087729
    	
 
    	
Australia (WIPO)
    	
 
    	
VS (design)
    
	
FTS International Services, LLC
    	
 
    	
1085369
    	
 
    	
China (WIPO)
    	
 
    	
VS (design)
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

	
FTS International Services, LLC
    	
 
    	
1085369
    	
 
    	
European Union (WIPO)
    	
 
    	
VS (design)
    
	
FTS International Services, LLC
    	
 
    	
1253770
    	
 
    	
Mexico
    	
 
    	
VS (design)
    
	
FTS International Services, LLC
    	
 
    	
3144472
    	
 
    	
Argentina
    	
 
    	
FTS INTERNATIONAL (International Class 001)
    

 

International Applications:

 

	
Owner
    	
 
    	
Application
   Number
    	
 
    	
Country
    	
 
    	
Description
    
	
FTS International Services, LLC
    	
 
    	
840084714
    	
 
    	
Brazil
    	
 
    	
“F” (shield design in color)
    
	
FTS International Services, LLC
    	
 
    	
840084692
    	
 
    	
Brazil
    	
 
    	
“F” (shield design (in color)
    
	
FTS International Services, LLC
    	
 
    	
1558350
    	
 
    	
Canada
    	
 
    	
“F” (shield design in color)
    
	
FTS International Services, LLC
    	
 
    	
177903
    	
 
    	
Saudi Arabia
    	
 
    	
“F” (shield design in color) International   Class 001
    
	
FTS International Services, LLC
    	
 
    	
177904
    	
 
    	
Saudi Arabia
    	
 
    	
“F” (shield design in color) International   Class 040
    
	
FTS International Services, LLC
    	
 
    	
840084587
    	
 
    	
Brazil
    	
 
    	
“F” (stylized design) International Class 001
    
	
FTS International Services, LLC
    	
 
    	
840084595
    	
 
    	
Brazil
    	
 
    	
“F” (stylized design) International Class 040
    
	
FTS International Services, LLC
    	
 
    	
1558357
    	
 
    	
Canada
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
1106398
    	
 
    	
China (WIPO)
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
1106398
    	
 
    	
Oman (WIPO)
    	
 
    	
“F” (stylized design)
    
	
FTS International Services, LLC
    	
 
    	
177911
    	
 
    	
Saudi Arabia
    	
 
    	
“F” (stylized design) International Class 001
    
	
FTS International Services, LLC
    	
 
    	
177912
    	
 
    	
Saudi Arabia
    	
 
    	
“F” (stylized design) International Class 040
    
	
FTS International Services, LLC
    	
 
    	
840084668
    	
 
    	
Brazil
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)   International Class 001
    
	
FTS International Services, LLC
    	
 
    	
840084641
    	
 
    	
Brazil
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words) International   Class 040
    
	
FTS International Services, LLC
    	
 
    	
1558355
    	
 
    	
Canada
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)
    
	
FTS International Services, LLC
    	
 
    	
1106172
    	
 
    	
Oman (WIPO)
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)
    
	
FTS International Services, LLC
    	
 
    	
177907
    	
 
    	
Saudi Arabia
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)   International Class 001
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

	
Owner
    	
 
    	
Application
   Number
    	
 
    	
Country
    	
 
    	
Description
    
	
FTS International Services, LLC
    	
 
    	
177908
    	
 
    	
Saudi Arabia
    	
 
    	
F FTS INTERNATIONAL (horizontal design plus words)   International Class 040
    
	
FTS International Services, LLC
    	
 
    	
840084684
    	
 
    	
Brazil
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color) International Class 001
    
	
FTS International Services, LLC
    	
 
    	
840084676
    	
 
    	
Brazil
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color) International Class 040
    
	
FTS International Services, LLC
    	
 
    	
1105450
    	
 
    	
Oman (WIPO)
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color)
    
	
FTS International Services, LLC
    	
 
    	
177905
    	
 
    	
Saudi Arabia
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color) International Class 001
    
	
FTS International Services, LLC
    	
 
    	
177906
    	
 
    	
Saudi Arabia
    	
 
    	
F FTS INTERNATIONAL (vertical design plus words in   color) International Class 040
    
	
FTS International Services, LLC
    	
 
    	
1521084
    	
 
    	
Canada
    	
 
    	
FT Frac Tech (logo and design)
    
	
FTS International Services, LLC
    	
 
    	
840582870
    	
 
    	
Brazil
    	
 
    	
FTS BRASIL (logo design) International   Class 001
    
	
FTS International Services, LLC
    	
 
    	
840582900
    	
 
    	
Brazil
    	
 
    	
FTS BRASIL (logo design) International   Class 040
    
	
FTS International Services, LLC
    	
 
    	
840084633
    	
 
    	
Brazil
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
840084617
    	
 
    	
Brazil
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
1558356
    	
 
    	
Canada
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
1105453
    	
 
    	
Oman (WIPO)
    	
 
    	
FTS INTERNATIONAL
    
	
FTS International Services, LLC
    	
 
    	
177909
    	
 
    	
Saudi Arabia
    	
 
    	
FTS INTERNATIONAL (International Class 001)
    
	
FTS International Services, LLC
    	
 
    	
177910
    	
 
    	
Saudi Arabia
    	
 
    	
FTS INTERNATIONAL (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
3184055
    	
 
    	
Argentina
    	
 
    	
FTSI (International Class 001)
    
	
FTS International Services, LLC
    	
 
    	
3184056
    	
 
    	
Argentina
    	
 
    	
FTSI (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
840230940
    	
 
    	
Brazil
    	
 
    	
FTSI (International Class 001)
    
	
FTS International Services, LLC
    	
 
    	
840230710
    	
 
    	
Brazil
    	
 
    	
FTSI (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
1589654
    	
 
    	
Canada
    	
 
    	
FTSI
    
	
FTS International Services, LLC
    	
 
    	
1129118
    	
 
    	
Oman (WIPO)
    	
 
    	
FTSI
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

	
Owner
    	
 
    	
Application
   Number
    	
 
    	
Country
    	
 
    	
Description
    
	
FTS International Services, LLC
    	
 
    	
185500
    	
 
    	
Saudi Arabia
    	
 
    	
FTSI (International Class 001)
    
	
FTS International Services, LLC
    	
 
    	
185501
    	
 
    	
Saudi Arabia
    	
 
    	
FTSI (International Class 040)
    
	
FTS International Services, LLC
    	
 
    	
840007566
    	
 
    	
Brazil
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
177900
    	
 
    	
Saudi Arabia
    	
 
    	
NPD-2000
    
	
FTS International Services, LLC
    	
 
    	
840007558
    	
 
    	
Brazil
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
1123027
    	
 
    	
Oman (WIPO)
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
1560495
    	
 
    	
Canada
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
177901
    	
 
    	
Saudi Arabia
    	
 
    	
NPD-3000
    
	
FTS International Services, LLC
    	
 
    	
840007540
    	
 
    	
Brazil
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1560498
    	
 
    	
Canada
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
1124015
    	
 
    	
Oman (WIPO)
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
177902
    	
 
    	
Saudi Arabia
    	
 
    	
SW-GREEN
    
	
FTS International Services, LLC
    	
 
    	
831171898
    	
 
    	
Brazil
    	
 
    	
VS (design)
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 7

 

NAME; CHIEF EXECUTIVE OFFICE; TAX IDENTIFICATION NUMBERS AND ORGANIZATIONAL NUMBERS

 

	
Grantor
    	
 
    	
Organizational
   Number
    	
 
    	
Federal
   Taxpayer
   Identification
   Number
    	
 
    	
Chief Executive
   Office
    	
 
    	
Jurisdiction
    
	
FTS International, Inc.
    	
 
    	
4966919
    	
 
    	
45-1610731
    	
 
    	
777 Main Street Suite 3000 Fort Worth, TX 76102
    	
 
    	
Delaware
    
	
FTS International Services, LLC
    	
 
    	
0801211281
    	
 
    	
75-2897729
    	
 
    	
777 Main Street Suite 3000 Fort Worth, TX 76102
    	
 
    	
Texas
    
	
FTS International Manufacturing, LLC
    	
 
    	
0800918108
    	
 
    	
75-2879132
    	
 
    	
777 Main Street Suite 3000 Fort Worth, TX 76102
    	
 
    	
Texas
    

 

	
Entity
    	
 
    	
Owner
    	
 
    	
Jurisdiction of
   Entity
    
	
FTS International Services, LLC
    	
 
    	
FTS International, Inc.
    	
 
    	
Texas
    
	
FTS International Manufacturing, LLC
    	
 
    	
FTS International Services, LLC
    	
 
    	
Texas
    
	
FTS International Ventures I, LLC
    	
 
    	
FTS International Services, LLC
    	
 
    	
Delaware
    
	
FTS International Ventures II, LLC
    	
 
    	
FTS International Services, LLC
    	
 
    	
Delaware
    
	
FTS International Netherlands I C.V.
    	
 
    	
FTS International Ventures I, LLC
    	
 
    	
Netherlands
    
	
 
    	
 
    	
FTS International Ventures II, LLC
    	
 
    	
 
    
	
FTS International Netherlands II C.V.
    	
 
    	
FTS International Netherlands I C.V.
    	
 
    	
Netherlands
    
	
 
    	
 
    	
FTS International Ventures II, LLC
    	
 
    	
 
    
	
FTS International Netherlands, LLC
    	
 
    	
FTS International Netherlands II C.V.
    	
 
    	
Delaware
    
	
FTS International Netherlands Coöperatief U.A.
    	
 
    	
FTS International Netherlands II C.V.
    	
 
    	
Netherlands
    
	
 
    	
FTS International Netherlands, LLC
    	
 
    	
 
    
	
FTS International Netherlands B.V.
    	
 
    	
FTS International Netherlands Coöperatief U.A.
    	
 
    	
Netherlands
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 9

 

DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS

 

 

	
 
    	
 
    	
Address and Contact of
    	
 
    	
 
    	
 
    	
Account
    	
 
    	
Type of
    
	
Depository
    	
 
    	
Depository
    	
 
    	
Grantor
    	
 
    	
Number
    	
 
    	
Account
    
	
Bank of
    	
 
    	
700 Louisiana Street
    	
 
    	
FTS International
    	
 
    	
488038435379
    	
 
    	
Investment
    
	
America, NA
    	
 
    	
8th Floor
    	
 
    	
Services, LLC
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Houston, Texas 77002
    	
 
    	
FTS International, Inc.
    	
 
    	
488035054999
    	
 
    	
Funding
    
	
 
    	
 
    	
 
    	
 
    	
FTS International, Inc.
    	
 
    	
488035055008
    	
 
    	
Equity
    
	
 
    	
 
    	
Contact:
    	
 
    	
FTS International, Inc.
    	
 
    	
488035055011
    	
 
    	
Payments
    
	
 
    	
 
    	
Carol Browder
    	
 
    	
FTS International, Inc.
    	
 
    	
4427225147
    	
 
    	
Debt Reserve
    
	
 
    	
 
    	
713-247-6134 carol.browder@baml.com
    	
 
    	
FTS International Services, LLC
    	
 
    	
91000143745765
    	
 
    	
Certificate of Deposit
    
	
US Bank(1)
    	
 
    	
412 Kokopelli Blvd
    	
 
    	
FTS International, Inc.
    	
 
    	
103680457860
    	
 
    	
Checking
    
	
 
    	
 
    	
Fruita, Colorado 81521
    	
 
    	
FTS International, Inc.
    	
 
    	
103659512786
    	
 
    	
Money

Market
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Contact:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Karen M. Troester
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
970-244-7318 karen.troester@usbank.com
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Wells Fargo
    	
 
    	
1000 Louisiana Street
    	
 
    	
FTS International
    	
 
    	
4124309303
    	
 
    	
Master
    
	
Bank NA
    	
 
    	
9th Floor
    	
 
    	
Manufacturing, LLC
    	
 
    	
 
    	
 
    	
Account
    
	
 
    	
 
    	
Houston, Texas 77002
    	
 
    	
FTS International
    	
 
    	
4124309311
    	
 
    	
Payroll
    
	
 
    	
 
    	
 
    	
 
    	
Manufacturing, LLC
    	
 
    	
 
    	
 
    	
Account
    
	
 
    	
 
    	
Contact: Cynthia Braizat
    	
 
    	
 
    	
 
    	
 
    	
 
    	
(ZBA)
    
	
 
    	
 
    	
713-319-1334 cynthia.m.braizat@wellsfarg o.com
    	
 
    	
FTS International Services, LLC
    	
 
    	
4122055304
    	
 
    	
Master - Logistics
    
	
 
    	
 
    	
 
    	
 
    	
FTS International
    	
 
    	
4121482244
    	
 
    	
Master
    
	
 
    	
 
    	
 
    	
 
    	
Services, LLC
    	
 
    	
 
    	
 
    	
Account
    
	
 
    	
 
    	
 
    	
 
    	
FTS International
    	
 
    	
4121482251
    	
 
    	
Payroll
    
	
 
    	
 
    	
 
    	
 
    	
Services, LLC
    	
 
    	
 
    	
 
    	
Account
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
(ZBA)
    
	
 
    	
 
    	
 
    	
 
    	
FTS International
    	
 
    	
4122257108
    	
 
    	
Flexible
    
	
 
    	
 
    	
 
    	
 
    	
Services, LLC
    	
 
    	
 
    	
 
    	
Spend
    
	
 
    	
 
    	
 
    	
 
    	
FTS International
    	
 
    	
4121484752
    	
 
    	
Master
    
	
 
    	
 
    	
 
    	
 
    	
Manufacturing, LLC
    	
 
    	
 
    	
 
    	
Account
    
	
 
    	
 
    	
 
    	
 
    	
FTS International
    	
 
    	
4121484760
    	
 
    	
Payroll
    
	
 
    	
 
    	
 
    	
 
    	
Manufacturing, LLC
    	
 
    	
 
    	
 
    	
Account
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
(ZBA)
    
	
 
    	
 
    	
 
    	
 
    	
FTS International, Inc.
    	
 
    	
4122456304
    	
 
    	
Deposit
    

 

(1)  US Bank accounts are holdover from Western Colorado Truck Center, LLC, which has been merged out of existence.

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 10

 

CONTROLLED ACCOUNT BANKS

 

Wells Fargo Bank, National Association

1000 Louisiana Street

9th Floor

Houston, Texas 77002

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

SCHEDULE 11

 

LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

 

	
Grantor
    	
 
    	
Jurisdiction
    
	
FTS International, Inc.
    	
 
    	
Delaware Secretary of State
    
	
FTS International Services, LLC
    	
 
    	
Texas Secretary of State
    
	
FTS International Manufacturing, LLC
    	
 
    	
Texas Secretary of State
    

 

[SCHEDULES TO SECURITY AGREEMENT]

 

 

ANNEX 1 TO SECURITY AGREEMENT
 FORM OF JOINDER

 

Joinder No.      (this “Joinder”), dated as of              20   , to the Security Agreement, dated as of April 16, 2014 (as amended, restated, supplemented, or otherwise modified from time to time, the “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”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“US Bank”), in its capacity as collateral agent for the Noteholders (as defined below) (in such capacity, together with its successors and assigns in such capacity, “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Indenture dated as of April 16, 2014 (as amended, restated, supplemented, or otherwise modified from time to time, the “Indenture”) by and among FTS INTERNATIONAL, INC., a Delaware corporation (the “Issuer”), and the guarantors party thereto and U.S. Bank National Association, as trustee, the Issuer issued $500,000,000 aggregate principal amount of 6.250%  Senior Secured Notes due 2022; and

 

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

 

WHEREAS, Grantors have entered into the Security Agreement to provide security for the Notes for the benefit of the Trustee, Agent and the holders of the Notes (the “Noteholders”); and

 

WHEREAS, pursuant to Section 4.14 of the Indenture and Section 26 of the Security Agreement, certain Subsidiaries of the Issuer must execute and deliver certain Indenture Documents, and the joinder to the 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 Agent, for the benefit of the Trustee, Agent and Noteholders;

 

WHEREAS, each New Grantor (a) is a Subsidiary of the Issuer  and, as such, will benefit or has benefited by virtue of the issuance of the Notes and (b) by becoming a Grantor will benefit from certain rights granted to the Grantors pursuant to the terms of the Indenture 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 Security Agreement, each New Grantor, by its signature below, becomes a “Grantor” under the Security Agreement with the same force and effect as if originally named therein as a “Grantor”  and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder and (b) represents and warrants that the representations and warranties made by it as a “Grantor” 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 unconditionally grants, assigns, and pledges to Agent, for the benefit of the Trustee, Agent and the Noteholders, 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” in the Security Agreement shall be deemed to include each New Grantor.  The Security Agreement is incorporated herein by reference.

 

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

 

3.             Each New Grantor shall file, transmit or communicate and, as applicable,  authorizes 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 set forth in the Security Agreement, (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, in each case as is necessary to perfect or preserve Agent’s Security Interest in the Collateral of each New Grantor, it being understood that the Agent shall have no responsibility for any such filings.  For the avoidance of doubt, it is each New Grantor’s primary responsibility to establish, maintain and preserve the perfection of the Liens on the Collateral.  Each New Grantor also hereby ratifies any and all financing statements or amendments previously filed by Agent in any jurisdiction in connection with the Indenture Documents.

 

4.             Each New Grantor represents and warrants to Agent and the Noteholders 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) and requirements of reasonableness, good faith and fair dealing.

 

5.             This Joinder is an Indenture 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 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 SECURITY AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Joinder to the 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:
    
	
 
    	
 
    
	
 
    	
 
    
	
AGENT:
    	
U.S. BANK NATIONAL ASSOCIATION,   a national banking association, in its capacity solely as Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[SIGNATURE PAGE TO JOINDER NO.    TO SECURITY AGREEMENT]

 

 

EXHIBIT A

 

[RESERVED]

 

 

EXHIBIT B

 

[RESERVED]

 

 

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 Security Agreement referred to below.  The undersigned hereby agrees that this Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of April 16, 2014, (as amended, restated, supplemented, or otherwise modified from time to time, the “Security Agreement”), made by the undersigned, together with the other Grantors named therein, to U.S. BANK NATIONAL ASSOCIATION, a national banking association, as Agent.  Initially capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Security Agreement or, if not defined therein, in the Indenture, and this Pledged Interests Addendum shall be subject to the rules of construction set forth in Section 1(b) of the 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 Agent pursuant to the Security Agreement and any pledged company set forth on Schedule I shall be and become a “Pledged Company” under the Security Agreement, each with the same force and effect as if originally named therein.

 

This Pledged Interests Addendum is an Indenture 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 Security Agreement of the undersigned are true and correct in all material respects 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 SECURITY AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

[SIGNATURE PAGE FOLLOWS]

 

 

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.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

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 U.S. BANK NATIONAL ASSOCIATION, a national banking association (“US Bank”), in its capacity as agent for the Noteholders (as defined below) (in such capacity, together with its successors and assigns in such capacity, “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Indenture dated as of April 16, 2014 (as amended, restated, supplemented, or otherwise modified from time to time, the “Indenture”) by and among FTS INTERNATIONAL, INC., a Delaware corporation as issuer (the “Issuer”) the guarantors party thereto and US Bank as trustee, the Issuer has issued on the date hereof $500,000,000 aggregate principal amount of its 6.250% Senior Secured Notes due 2022; and

 

WHEREAS, each Grantor has agreed, under that certain Security Agreement dated as of April 16, 2014 (the “Security Agreement”), to grant to Agent, for the benefit of the Trustee, Agent and the holders of the Notes (the “Noteholders”), 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; and

 

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of the Trustee, Agent and the Noteholders, this Trademark 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:

 

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

 

9.             GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL.  Each Grantor hereby unconditionally grants, assigns, and pledges to Agent, for the benefit of the Trustee, Agent and the Noteholders, 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, in each case, to the extent that such property constitutes ABL Collateral.

 

10.          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, to any Noteholders, Agent or the Trustee or any of them, whether or not they are unenforceable or not allowable due to the existence of an Insolvency or Liquidation Proceeding involving any Grantor.

 

11.          SECURITY AGREEMENT.  The Security Interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interests granted to Agent, for the benefit of the Trustee, Agent and the Noteholders, pursuant to the Security Agreement.  Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the Security Interest in the Trademark Collateral made and granted hereby are more fully set forth in the 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 Security Agreement, the Security Agreement shall control.

 

12.          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 Agent with respect to any such new trademarks or renewal or extension of any trademark registration and shall amend Schedule I to include any such new trademark rights.  Without limiting Grantors’ obligations under this Section, Grantors hereby authorize 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, invalidate or detract from Agent’s continuing security interest in all Collateral, whether or not listed on Schedule I.

 

13.          COUNTERPARTS.  This Trademark Security Agreement is a Indenture 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.

 

14.          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 SECURITY AGREEMENT,

 

2

 

AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

[SIGNATURE PAGE FOLLOWS]

 

3

 

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:
    
	
 
    	
 
    
	
AGENT:
    	
ACCEPTED AND ACKNOWLEDGED BY:
    
	
 
    	
 
    
	
 
    	
U.S. BANK NATIONAL ASSOCIATION,   a
    
	
 
    	
national banking   association, in its capacity
    
	
 
    	
solely as Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[SIGNATURE PAGE TO TRADEMARK SECURITY AGREEMENT]

 

 

SCHEDULE I
 to
  TRADEMARK SECURITY AGREEMENT

 

  Trademark Registrations/Applications

 

	
Grantor
    	
 
    	
Country
    	
 
    	
Mark
    	
 
    	
Application/
   Registration No.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Trade Names

 

Common Law Trademarks

 

Trademarks Not Currently In Use

 

Trademark Licenses

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