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EXHIBIT
10.6
GUARANTY
AGREEMENT
This Guaranty
Agreement dated as of March 31, 2008 (“ Guaranty
”) is among each of the undersigned (individually a “
Guarantor ” and collectively, the “
Guarantors ”) and Wells Fargo Bank, N.A., as
Administrative Agent for the ratable benefit of itself, the Lenders
(as defined below), the Issuing Lender (as defined below), the Swap
Counterparties (as defined below), and Wells Fargo Bank, N.A. and
any of its affiliates providing Banking Services (as defined in the
Credit Agreement) to the Borrower or any of its Subsidiaries
(together with the Administrative Agent, the Issuing Lender and the
Lenders, individually a “ Beneficiary ”, and
collectively, the “ Beneficiaries ”).
INTRODUCTION
A. This Guaranty is
given in connection with that certain Credit Agreement dated as of
March 31, 2008 (as it has been or may be amended or otherwise
modified from time to time, the “ Credit Agreement
”) among Flotek Industries, Inc., a Delaware corporation (the
“ Borrower ”), the lenders party thereto from
time to time, (the “ Lenders ”) and Wells Fargo
Bank, N.A., as an administrative agent (in such capacity, the
“ Administrative Agent ”), , as the issuing
lender (in such capacity, the “ Issuing Lender
”) and as the swing line lender (in such capacity, the
“ Swing Line Lender ”).
B. Each Guarantor
is a Subsidiary of the Borrower and will derive substantial direct
and indirect benefit from (i) the transactions contemplated by
the Credit Agreement and the other Credit Documents (as defined in
the Credit Agreement), (ii) the Hedging Arrangements (as
defined in the Credit Agreement) entered into by the Borrower or
any of its other Subsidiaries with a Lender or an Affiliate of a
Lender (such counterparty being referred to as a “S wap
Counterparty ”), and (iii) the Banking Services (as
defined in the Credit Agreement) provided by Wells Fargo Bank, N.A.
or any of its Affiliates to the Borrower and its
Subsidiaries.
C. Each Guarantor
is executing and delivering this Guaranty (i) to induce the
Lenders to provide and to continue to provide Advances under the
Credit Agreement, (ii) to induce the Issuing Lender to provide
and to continue to provide Letters of Credit under the Credit
Agreement, and (iii) intending it to be a legal, valid,
binding, enforceable and continuing obligation of such
Guarantor.
NOW, THEREFORE, in
consideration of the premises, the Guarantors and the
Administrative Agent for the benefit of the Beneficiaries, do
hereby further agree as follows:
Section 1.
Definitions. All capitalized terms not otherwise defined in
this Guaranty that are defined in the Credit Agreement shall have
the meanings assigned to such terms by the Credit
Agreement.
Section 2.
Guaranty .
(a) Each Guarantor
hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment and performance, when due, whether at stated
maturity, by acceleration or otherwise, of all Secured Obligations
(including all Obligations, Banking Service Obligations and
obligations owing to Swap Counterparties), whether absolute or
contingent and
whether for principal,
interest (including, without limitation, interest that but for the
existence of a bankruptcy, reorganization or similar proceeding
would accrue), fees, amounts owing in respect of Letter of Credit
Obligations, amounts required to be provided as collateral,
indemnities, expenses or otherwise (collectively, the “
Guaranteed Obligations ”). Without limiting the
generality of the foregoing, each Guarantor’s liability shall
extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrower to the Administrative
Agent, the Issuing Lender, the Swing Line Lender or any Lender
under the Credit Documents and by the Borrower to the Swap
Counterparty but for the fact that they are unenforceable or not
allowable due to insolvency or the existence of a bankruptcy,
reorganization or similar proceeding involving the
Borrower.
(b) It is the
intention of the Guarantors and each Beneficiary that the amount of
the Guaranteed Obligations guaranteed by each Guarantor shall be
in, but not in excess of, the maximum amount permitted by
fraudulent conveyance, fraudulent transfer and similar Legal
Requirement applicable to such Guarantor. Accordingly,
notwithstanding anything to the contrary contained in this Guaranty
or in any other agreement or instrument executed in connection with
the payment of any of the Guaranteed Obligations, the amount of the
Guaranteed Obligations guaranteed by a Guarantor under this
Guaranty shall be limited to an aggregate amount equal to the
largest amount that would not render such Guarantor’s
obligations hereunder subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provision of
any other applicable law.
Section 3.
Guaranty Absolute . Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the
terms of the Credit Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Administrative Agent, the
Issuing Lender, the Swing Line Lender, any Lender or any Swap
Counterparty with respect thereto but subject to Section 2(b)
above. The obligations of each Guarantor under this Guaranty are
independent of the Guaranteed Obligations or any other obligations
of any other Person under the Credit Documents or in connection
with any Hedging Arrangement, and a separate action or actions may
be brought and prosecuted against a Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against the
Borrower, any other Guarantor or any other Person or whether the
Borrower, any other Guarantor or any other Person is joined in any
such action or actions. The liability of each Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any
or all of the following:
(a) any lack of
validity or enforceability of any Credit Document or any agreement
or instrument relating thereto or any part of the Guaranteed
Obligations being irrecoverable;
(b) any change in
the time, manner or place of payment of, or in any other term of,
all or any of the Guaranteed Obligations or any other obligations
of any Person under the Credit Documents or any agreement or
instrument relating to Hedging Arrangements with a Swap
Counterparty, or any other amendment or waiver of or any consent to
departure from any Credit Document or any agreement or instrument
relating to Hedging Arrangements with a Swap Counterparty,
including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to
the Borrower or otherwise;
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(c) any taking,
exchange, release or non-perfection of any collateral, or any
taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of
application of collateral, or proceeds thereof, to all or any of
the Guaranteed Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Guaranteed
Obligations or any other obligations of any other Person under the
Credit Documents or any other assets of the Borrower or any of its
Subsidiaries;
(e) any change,
restructuring or termination of the corporate structure or
existence of the Borrower or any of its Subsidiaries;
(f) any failure of
any Lender, the Administrative Agent, the Issuing Lender, the Swing
Line Lender or any other Beneficiary to disclose to the Borrower or
any Guarantor any information relating to the business, condition
(financial or otherwise), operations, properties or prospects of
any Person now or in the future known to the Administrative Agent,
the Issuing Lender, the Swing Line Lender, any Lender or any other
Beneficiary (and each Guarantor hereby irrevocably waives any duty
on the part of any Beneficiary to disclose such
information);
(g) any signature
of any officer of the Borrower being mechanically reproduced in
facsimile or otherwise; or
(h) any other
circumstance or any existence of or reliance on any representation
by any Beneficiary that might otherwise constitute a defense
available to, or a discharge of, the Borrower, any Guarantor or any
other guarantor, surety or other Person.
Section 4.
Continuation and Reinstatement, Etc. Each Guarantor agrees
that, to the extent that payments of any of the Guaranteed
Obligations are made, or any Lender, the Administrative Agent, the
Issuing Lender, the Swing Line Lender or any Swap Counterparty
receives any proceeds of collateral, and such payments or proceeds
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, or otherwise required to be
repaid, then to the extent of such repayment the Guaranteed
Obligations shall be reinstated and continued in full force and
effect as of the date such initial payment or collection of
proceeds occurred. EACH GUARANTOR SHALL DEFEND AND INDEMNIFY
EACH BENEFICIARY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS,
LIABILITY, COST, OR EXPENSE UNDER THIS SECTION 4 (INCLUDING
REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF
ANY SUCH ACTION OR SUIT, INCLUDING SUCH CLAIM, DAMAGE, LOSS,
LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED
BENEFICIARY’S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED FROM SUCH INDEMNIFIED BENEFICIARY’S GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, OR BAD FAITH.
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Section 5.
Waivers and Acknowledgments .
(a) Each Guarantor
hereby waives promptness, diligence, presentment, notice of
acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that
any Beneficiary protect, secure, perfect or insure any Lien or any
property or exhaust any right or take any action against the
Borrower or any other Person or any collateral.
(b) Each Guarantor
hereby irrevocably waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies
to all Guaranteed Obligations, whether existing now or in the
future.
(c) Each Guarantor
acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements involving the Borrower or
any Subsidiary of the Borrower contemplated by the Credit Documents
and the Hedging Arrangements and that the waivers set forth in this
Guaranty are knowingly made in contemplation of such
benefits.
Section 6.
Subrogation and Subordination .
(a) No Guarantor
will exercise any rights that it may now have or hereafter acquire
against the Borrower or any other Person to the extent that such
rights arise from the existence, payment, performance or
enforcement of such Guarantor’s obligations under this
Guaranty or any other Credit Document, including, without
limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any
claim or remedy of any Beneficiary against the Borrower or any
other Person, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower or any
other Person, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account
of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and any and all other amounts payable by the
Guarantors under this Guaranty shall have been paid in full in cash
and no Letter of Credit Obligations shall remain outstanding and
all Commitments shall have expired or terminated. If any amount
shall be paid to a Guarantor in violation of the preceding sentence
at any time prior to (a) the payment in full in cash of the
Guaranteed Obligations and any and all other amounts payable by the
Guarantors under this Guaranty, (b) the satisfaction of all
Letter of Credit Obligations and the termination of all obligations
of the Issuing Lender and the Lenders in respect of Letters of
Credit, and (c) the termination of the Commitments, such
amount shall be held in trust for the benefit of the Beneficiaries
and shall forthwith be paid to the Administrative Agent to be
credited and applied to the Guaranteed Obligations and any and all
other amounts payable by the Guarantors under this Guaranty,
whether matured or unmatured, in accordance with the terms of the
Credit Documents.
(b) Each Guarantor
and the Borrower agrees that all Subordinated Guarantor Obligations
(as hereinafter defined) are and shall be subordinate and inferior
in rank, preference and priority to all obligations of such
Guarantor in respect of the Guaranteed Obligations hereunder, and
the Borrower and such Guarantor shall, if requested by the
Administrative Agent, execute a subordination agreement reasonably
satisfactory to the Administrative Agent to more fully set out the
terms of such subordination. Each Guarantor and the Borrower agrees
that none
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of the Subordinated Guarantor
Obligations shall be secured by a lien or security interest on any
assets of such Guarantor or any ownership interests in any
Subsidiary of such Guarantor. “ Subordinated Guarantor
Obligations ” means any and all obligations and
liabilities of a Guarantor owing to the Borrower or any other
Guarantor, direct or contingent, due or to become due, now existing
or hereafter arising, including, without limitation, all future
advances, with interest, attorneys’ fees, expenses of
collection and costs.
Section 7.
Representations and Warranties. Each Guarantor hereby
represents and warrants as follows:
(a) There are no
conditions precedent to the effectiveness of this Guaranty. Such
Guarantor benefits from executing this Guaranty.
(b) Such
Guarantor
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