Exhibit 10.1
Execution Version
FIRST AMENDMENT AND TEMPORARY
WAIVER AGREEMENT
This FIRST AMENDMENT AND TEMPORARY
WAIVER AGREEMENT (“ Agreement ”) entered into on
February 25, 2009 but made effective as of February 11,
2009 (the “ Effective Date ”) is among Flotek
Industries, Inc., a Delaware corporation (“ Borrower
”), the Lenders (as defined below), and Wells Fargo Bank,
N.A., as Administrative Agent (as defined below), Issuing Lender
(as defined below), and Swing Line Lender (as defined below) for
the Lenders.
RECITALS
A. The Borrower is party to that
certain Credit Agreement dated as of March 31, 2008 (as
amended, supplemented, amended and restated or otherwise modified
from time to time, the “ Credit Agreement ”),
among the Borrower, the lenders party thereto from time to time
(the “ Lenders ”), and Wells Fargo Bank, N.A.,
as administrative agent (in such capacity, the “
Administrative Agent ”), issuing lender (in such
capacity, the “ Issuing Lender ”), and swing
line lender (in such capacity, the “ Swing Line Lender
”).
B. The parties hereto wish to,
subject to the terms and conditions of this Agreement,
(1) reduce the aggregate Revolving Commitment under the Credit
Agreement, (2) acknowledge the possible existence of an Event
of Default arising as a result of the Borrower’s failure to
comply with the minimum net worth covenant set forth in the Credit
Agreement, (3) provide for a temporary waiver of such possible
Event of Default, and (4) make certain amendments to the
Credit Agreement.
THEREFORE, the parties hereto hereby
agree as follows:
Section 1. Defined Terms;
Other Definitional Provisions . As used in this Agreement,
each of the terms defined in the opening paragraph and the Recitals
above shall have the meanings assigned to such terms therein. Each
term defined in the Credit Agreement and used herein without
definition shall have the meaning assigned to such term in the
Credit Agreement, unless expressly provided to the contrary. The
words “hereof”, “herein”, and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. Paragraph headings have
been inserted in this Agreement as a matter of convenience for
reference only and it is agreed that such paragraph headings are
not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.
Section 2. Amendments to
Credit Agreement .
(a) Section 1.1 (Certain
Defined Terms) . Section 1.1 of the Credit Agreement is
hereby amended by deleting the defined terms “Applicable
Margin” and “Letter of Credit Maximum Amount” in
their entirety and replacing them with the following corresponding
terms:
“ Applicable Margin
” means, (a) at any time prior to May 15, 2009,
(i) with respect to Eurodollar Advances and Letters of Credit,
a per annum rate equal to 5.25%,
(ii) with respect to Base Rate
Advances, a per annum rate equal to 4.25%, and (iii) with
respect to the Commitment Fee, a per annum rate equal to 0.45% and
(b) at any other time, with respect to each Type of Advance,
the Letters of Credit and the Commitment Fee, the percentage rate
per annum which is applicable at such time with respect to such
Advance, Letter of Credit or Commitment Fee as set forth in
Schedule I and subject to further adjustments as set forth
Section 2.8(d).
“ Letter of Credit
Maximum Amount ” means $7,500,000; provided that,
on and after the Revolving Maturity Date, the Letter of Credit
Maximum Amount shall be zero.
(b) Section 1.1 (Certain
Defined Terms) . Section 1.1 of the Credit Agreement is
hereby amended by deleting the second sentence of the defined term
“Revolving Commitment” in its entirety and replacing it
with the following:
“The aggregate Revolving
Commitment on the First Amendment Effective Date is
$15,000,000.”
(c) Section 1.1 (Certain
Defined Terms) . Section 1.1 of the Credit Agreement is
hereby amended by adding the following new term “First
Amendment Effective Date” in alphabetical order:
“ First Amendment
Effective Date ” means February 11,
2009.
(d) Section 2.15(a).
Section 2.15(a) of the Credit Agreement is hereby amended by
replacing the reference to “ $40,000,000 ” found
therein with a reference to “ $30,000,000
”.
(e) Section 6.24
(Convertible Senior Notes) . Section 6.24 of the Credit
Agreement is hereby amended by deleting subsection (b) in its
entirety and replacing it with the following:
(b) The Borrower shall not, nor
shall it permit any of its Subsidiaries to, make or offer to make
any optional or voluntary repurchase, redemption, prepayment,
repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the
foregoing) (whether in whole or in part) of any of the Convertible
Senior Notes; provided that , the Borrower may voluntarily
convert the Convertible Senior Notes into common stock of the
Borrower so long as (i) the aggregate principal amount of the
Convertible Senior Notes that are converted into common stock of
the Borrower does not exceed $40,000,000 and (ii) neither the
Borrower nor any of its Subsidiaries may pay or otherwise provide
any consideration (cash or otherwise) to the holders of such
converted Convertible Senior Notes in connection with, or related
to, such conversion other than the shares of common stock of the
Borrower.
(f) Reduction in Revolving
Commitment . Notwithstanding the notice requirements set forth
in the Credit Agreement, the aggregate Revolving Commitment is
reduced to $15,000,000 (and each Lender’s Revolving
Commitment is ratably reduced in accordance with
2
such Lender’s Revolving Pro Rata Share of
the total reduction). The Lenders hereby waive the notice
requirements set forth in the Credit Agreement related to a
reduction in Commitments but solely in connection with the
reduction provided herein.
(g) Schedule II (Commitments,
Applicable Lending Offices, Contact Information) . Schedule II
to the Credit Agreement is replaced in its entirety with Schedule
II attached hereto to reflect the revised Revolving Commitments of
the Lenders after giving effect to the reduction of the aggregate
Revolving Commitment to $15,000,000.
Section 3. Temporary Waiver
.
(a) The Borrower hereby informs the
Lenders and acknowledges that the Borrower may have failed to
comply with the minimum net worth covenant set forth in
Section 6.17 of the Credit Agreement for the fiscal quarter
ended December 31, 2008 which would result in an Event of
Default under the Credit Agreement as of December 31, 2008
(the “ Existing Default ”).
(b) The Lenders hereby agree,
subject to the terms of this Agreement, to temporarily waive the
Existing Default until the date (“ Waiver Termination
Date ”) that is the earlier to occur of
(i) May 15, 2009 and (ii) the date of the occurrence
of a Waiver Default (as defined below). The waiver set forth in
this Section 3(b) is temporary in nature and the Existing
Default shall, unless otherwise agreed to in writing by the
Majority Revolving Lenders and the Majority Lenders, be immediately
and automatically reinstated on the Waiver Termination Date and
shall constitute an “Event of Default” under the Credit
Agreement and the other Credit Documents. The waiver by the Lenders
described above is contingent upon the satisfaction of the
conditions precedent set forth below and is limited to the Existing
Default. This waiver is limited to the extent described herein and
shall not be construed to be a consent to or a permanent waiver of
the Existing Default or any other terms, provisions, covenants,
warranties or agreements contained in the Credit Agreement or in
any of the other Credit Documents or a waiver of any Default or
Event of Default that may hereafter occur. The Lenders reserve the
right to exercise any rights and remedies available to them in
connection with any other present or future defaults with respect
to the Credit Agreement or any other provision of any Credit
Document.
(c) The Borrower and each Guarantor
hereby agrees and acknowledges that (i) the Existing Default
has not been permanently waived as a result of this Agreement and
that such waiver is temporary in nature, and
(ii) co
