Exhibit 10.38

 

GUARANTY

 

This Guaranty (the “Guaranty” or the “Agreement”) is made as of March 25, 2015
by Coil Tubing Technology Holdings, Inc., a Nevada corporation (“Holdings”),
Total Downhole Solutions, Inc., a Texas corporation, Coil Tubing Technology,
Inc., a Texas corporation, Coil Tubing Technology Canada Inc., an Alberta Canada
corporation, and Excel Inspection, LLC, a Texas limited liability company
(collectively, with Holdings, the “Guarantor”) in favor of Jerry L. Swinford, an
individual (“Swinford”). When the context in which words are used in this
Agreement indicates that such is the intent, singular words shall include the
plural, and vice versa, and masculine words shall include the feminine and
neuter genders, and vice versa. Captions are inserted for convenience only, are
not a part of this Agreement, and shall not be used in the interpretation of
this Agreement. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement and the Notes (each as
defined below), unless the context requires otherwise.

 

Recitals

 

WHEREAS, Coil Tubing Technology, Inc., a Nevada corporation (“Coil Tubing”) has
previously entered into that certain Intellectual Property Purchase Agreement
with Swinford, dated as of March 25, 2015, pursuant to which Coil Tubing has
agreed to purchase certain intellectual property of Swinford (the “Purchase
Agreement”);

 

WHEREAS, Guarantor is the direct or indirect wholly-owned subsidiary of Coil
Tubing and will receive a direct benefit from the Purchase Agreement and the
terms and conditions thereof;

 

WHEREAS, Coil Tubing has entered into that certain Secured Promissory Note in
the amount of $3,750,000 dated March 6, 2015 in favor of Swinford (the “Note”),
evidencing amounts owed under the Purchase Agreement; and

 

WHEREAS, Swinford was unwilling to execute the Purchase Agreement and to enter
into the transactions described in the Purchase Agreement without receipt from
Guarantor of a guaranty of all of the obligations of Coil Tubing under the
Notes.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, receipt of which hereby is acknowledged, Guarantor hereby agrees
as follows:

 

1. Guaranty. Guarantor hereby jointly and severally, unconditionally and
irrevocably guarantees to Swinford and his successors and assigns (a) the full
and punctual payment (in lawful money of the United States and in immediately
available funds), as and when due, of all principal, interest, attorneys’ fees,
costs, expenses and other amounts which are or may become payable by Coil Tubing
under the Note (the “Coil Tubing Debt”) and (b) the full and punctual
performance of all other obligations of Coil Tubing under the Note and Purchase
Agreement (and exhibits thereto). The obligations of Coil Tubing under the Note,
including the payment obligations regarding the Coil Tubing Debt, are referred
to in this Guaranty as the “Coil Tubing Obligations”, and the covenants and
obligations of Guarantor that are described in the preceding sentence and
elsewhere in this Guaranty are referred to in this Guaranty as “Guarantor’s
Obligations”.

 

2. Certain Rights of Swinford. Guarantor authorizes Swinford, without giving
notice to Guarantor or obtaining Guarantor’s consent in its individual capacity
and without affecting the liability of Guarantor, but subject to obtaining Coil
Tubing’s written agreement to the extent its written agreement is required, from
time to time to: (a) renew, extend or increase the Coil Tubing Debt or any
portion thereof; (b) declare all Coil Tubing Debt due and payable upon the
occurrence of a default under the Note; (c) make changes in the dates on which
the Coil Tubing Debt is payable; (d) otherwise modify the terms of the Coil
Tubing Debt; (e) amend the Note in any respect; (f) take and hold additional
security for the Coil Tubing Debt and exchange, enforce, waive and release any
such security; (g) apply such security and direct the order or manner of sale
thereof as Swinford in his discretion may determine; and (h) add any one or more
guarantors of the Coil Tubing Debt.

 

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3. Guarantor’s Waivers. Guarantor waives: (a) any defense based upon any legal
disability or other defense of Coil Tubing or any other guarantor or person or
based upon Coil Tubing’s cessation for any reason of liability under any of the
Note; (b) any defense based upon any lack of authority of Coil Tubing’s officers
or other agents acting or purporting to act on behalf of Coil Tubing or any
defect in the formation of Coil Tubing; (c) any defense of Guarantor based upon
Swinford’s election of any remedy against Guarantor or Coil Tubing or both,
including, without limitation, any right to require Swinford to proceed against
Coil Tubing or another person or to proceed against any other security for the
Coil Tubing Obligations; (d) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in any other respects more burdensome than that of a principal; (e) any
right of subrogation, any right to enforce any remedy which Swinford may have
against Coil Tubing and any right to participate in, or benefit from, any
security for the Coil Tubing Obligations now or hereafter held by Swinford; (f)
presentment, demand, protest and notice of any kind; (g) the benefit of any
statute of limitations affecting the liability of Guarantor hereunder or the
enforcement hereof; (h) any right to require Swinford to pursue any other remedy
in Swinford’s power; and (i) any right to revoke this Guaranty. Guarantor waives
any other circumstance or event, in existence now or in the future, that might
otherwise constitute a legal or equitable defense to the enforcement of this
Guaranty.

 

4. Guarantor’s Representations and Warranties. Guarantor represents, warrants
and agrees that: (a) Swinford would not have entered into the Purchase Agreement
or the Note but for this Guaranty; (b) there are no conditions precedent to the
effectiveness of this Guaranty; and (c) this Guaranty shall continue in full
force and effect and shall be binding on Guarantor regardless of whether
Swinford obtains other collateral or any guaranties from others or takes any
other action. Guarantor consents to Coil Tubing’s execution, delivery and
performance of the Note.

 

5. Subordination. Guarantor subordinates all present and future indebtedness
owing by Coil Tubing to Guarantor to the Coil Tubing Debt and other obligations
under the Note at any time owing by Coil Tubing to Swinford. Guarantor assigns
to Swinford all such indebtedness owed by Coil Tubing to Guarantor as security
for this Guaranty. Guarantor further agrees not to assign all or any part of
such indebtedness prior to the full payment and performance of the Coil Tubing
Obligations.

 

6. Nature of Guarantor’s Liability Under This Guaranty. This is a guaranty of
payment and performance and not merely of collection. Guarantor’s obligations
under this Guaranty are independent of Coil Tubing’s obligations to Swinford
under the Note. Swinford may bring a separate action to enforce the provisions
hereof against Guarantor without taking action against Coil Tubing or any
collateral or joining Coil Tubing as a party to such action. The obligations of
Guarantor under this Guaranty constitute the full recourse obligations of
Guarantor and are enforceable against him and her to the full extent of their
assets.

 

7. Event of Default; Swinford’s Remedies.

 

(a) Event of Default. An “Event of Default” for purposes of this Guaranty means
(1) Coil Tubing’s or Guarantor’s failure to pay when due any Coil Tubing Debt,
(2) Coil Tubing’s or Guarantor’s failure to perform any other Coil Tubing
Obligations when due or in accordance with the terms of such obligations, (3)
Guarantor’s failure to perform any of Guarantor’s Obligations when due or in
accordance with their terms, or (4) the failure to be true of any representation
or warranty of Guarantor that is contained in this Guaranty or any of the
documents evidencing the Guarantor’s Obligations, if Guarantor does not remedy
in full any such failure described in this sentence within ten days after
receipt of written notice from Swinford.

 

(b) Remedies on an Event of Default. Upon the occurrence of an Event of Default,
Swinford shall have the immediate right to file an action at law or equity
against Guarantor and/or to take control of all or any part of any collateral,
with or without judicial process, and without demand of performance,
advertisement or notice to Guarantor, which are expressly waived by Guarantor;
provided, however, that if any notice is required by law in connection with the
exercise by Swinford of his rights and remedies, Guarantor agrees that ten days'
prior written notice is a reasonable time and manner for notice. Furthermore,
Swinford may exercise all of the other rights and remedies that are provided to
him under this Guaranty.

 

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(c) No Implied Waivers; Cumulative Remedies. No delay or failure of Swinford in
exercising any right or remedy under this Guaranty shall operate as a waiver
thereof, nor shall any single or partial exercise thereof or any abandonment or
discontinuance of steps to enforce such a right or remedy preclude any further
exercise thereof or of any other right or remedy. The rights and remedies of
Swinford under this Guaranty are cumulative and not exclusive of any rights or
remedies which he might otherwise have under applicable law. Any waiver, permit,
consent or approval of any kind or character on the part of Swinford of any
Event of Default or any such waiver of any provision of this Guaranty must be in
writing and shall be effective only to the extent specifically set forth in
writing. Guarantor acknowledges and agrees that the exercise by Swinford of his
rights under this Section 7 will not operate to release Guarantor from its
personal obligation to pay the Coil Tubing Debt until full payment of any
deficiency on the Coil Tubing Debt has been made in cash. Furthermore, Guarantor
acknowledges and agrees that Swinford is not obligated to exercise any of the
rights or remedies provided by this Section 7.

 

8. Bankruptcy. This Guaranty shall continue in full force and effect in the
event of any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar proceeding involving Coil Tubing or Guarantor, and this Guaranty shall
continue in full force and effect notwithstanding any subsequent change in the
ownership or assets of Coil Tubing. In any bankruptcy of Coil Tubing or other
proceeding involving Coil Tubing in which the filing of claims is required by
law, Guarantor shall file all claims which Guarantor may have against Coil
Tubing relating to any indebtedness of Coil Tubing to Guarantor and shall assign
to Swinford all rights of Guarantor thereunder. If Guarantor does not file any
such claim, Swinford, as attorney-in-fact for Guarantor, is hereby authorized to
do so in the name of Guarantor or, in Swinford’s discretion, to assign the claim
to a nominee and to cause proof of claim to be filed in the name of Swinford’s
nominee. The foregoing power of attorney is coupled with an interest and cannot
be revoked. Swinford or his nominee shall have the right, in his reasonable
discretion, to accept or reject any plan proposed in such proceeding and to take
any other action which a party filing a claim is entitled to do. In all such
cases, whether in administration, bankruptcy or otherwise, the person or persons
authorized to pay such claim shall pay to Swinford the amount payable on such
claim and, to the full extent necessary for that purpose, Guarantor hereby
assigns to Swinford all of Guarantor’s rights to any such payments or
distributions; provided, however, Guarantor’s obligations hereunder shall not be
satisfied except to the extent that Swinford receives cash by reason of any such
payment or distribution. If all or any portion of the Coil Tubing Debt and other
obligations guaranteed hereunder is paid or performed, the obligations of
Guarantor hereunder shall continue and shall remain in full force and effect in
the event that all or any part of such payment or performance is avoided or
recovered directly or indirectly from Swinford as a preference, fraudulent
transfer or otherwise under the Bankruptcy Code or other similar laws.

 

9. Successors and Assigns; Subsequent Subsidiaries. This Guaranty shall be
binding upon, and shall inure to the benefit of, the respective successors and
assigns of Guarantor and Swinford, provided that the foregoing provision shall
not be construed as permitting Guarantor to assign its obligations hereunder.
Promptly after the formation or acquisition by Holdings, or if applicable, any
other wholly-owned subsidiary of Coil Tubing Technology, Inc., a Nevada
corporation, of any Subsidiary not already a party hereto, such Subsidiary shall
provide a guaranty to Swinford in the form of this Guaranty, or agree to become
a party and guarantor hereunder, unless such requirement is waived by Swinford
in writing. For the purposes of this Section 9, “Subsidiary” means with respect
to the applicable entity, (i) any corporation at least a majority of the
outstanding voting stock of which is owned, directly or indirectly, by such
applicable entity or by one or more of its subsidiaries, or by such applicable
entity and one or more of its subsidiaries, (ii) any general partnership, joint
venture, limited liability company, statutory trust, or other entity, at least a
majority of the outstanding partnership, membership, or other similar equity
interests of which shall at the time be owned by such applicable entity, or by
one or more of its subsidiaries, or by such applicable entity and one or more of
its subsidiaries, and (iii) any limited partnership of which such applicable
entity or any of its subsidiaries is a general partner. For the purposes of this
definition, “voting stock” means shares, interests, participations, or other
equivalents in the equity interest (however designated) in such applicable
entity having ordinary voting power for the election of a majority of the
directors (or the equivalent) of such applicable entity, other than shares,
interests, participations, or other equivalents having such power only by reason
of the occurrence of a contingency.

 

10. Attorneys’ Fees. If any attorney is engaged by Swinford to enforce or defend
any provision of this Guaranty, with or without the filing of any legal action
or proceeding, Guarantor shall pay to Swinford, within ten days after demand
therefor, all reasonable attorneys’ fees and costs incurred by Swinford in
connection therewith (including, without limitation, in any appellate or
post-judgment proceedings), together with interest thereon from the date of such
demand until paid at the rate of ten percent per annum (or, if lower, at the
maximum rate allowed by applicable law).

 

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11. Rules of Construction. The term “person” as used herein shall include any
individual, corporation, trust or other legal entity of any kind whatsoever.
When the context and construction so require, all words used in the words in the
singular include the plural and words in the plural include the singular, and
words importing the masculine gender include the feminine and neuter genders.
All headings appearing in this Guaranty are for convenience only and shall be
disregarded in construing this Guaranty. This Guaranty is the result of
arms-length negotiations between Guarantor and Swinford and their respective
attorneys. Accordingly, neither Guarantor nor Swinford shall be deemed to be the
author of this Guaranty, and this Guaranty shall not be construed against either
party.

 

12. Notices. All notices required or permitted by this Guaranty to be delivered
to Guarantor or Swinford shall be delivered in writing, by personal delivery, by
overnight courier, by facsimile transmission or by registered or certified mail,
return receipt requested, postage prepaid, to the address for such party set
forth on the signature page of this Guaranty. Any such notice shall be deemed
given as follows: (a) if personally delivered, when served; (b) if sent by
overnight courier, on the first business day after delivery to the courier; (c)
if sent by facsimile, on the date of transmission if delivered on a business day
(or, if not delivered on a business day, on the next business day after
transmission); or (d) if sent by registered or certified mail, on the third day
after deposit in the mail.

 

13. General Provisions. If any provision of this Guaranty shall be determined by
a court of competent jurisdiction to be invalid, illegal or unenforceable, that
portion shall be deemed severed from this Guaranty and the remaining parts shall
remain in full force as though the invalid, illegal or unenforceable portion had
never been part of this Guaranty. This Guaranty constitutes the only agreement
between Guarantor and Swinford with respect to the subject matter hereof and
supersedes all previous agreements with respect thereto. This Guaranty may be
amended or terminated only by an agreement in writing executed by Guarantor and
Swinford. This Guaranty may be executed in two counterparts, which together
shall constitute but one and the same instrument. This Guaranty may be executed
by facsimile transmission or by e-mail transmission in PDF format.

 

14. Governing Law. This Guaranty shall be governed by, and construed in
accordance with, the internal laws of the State of Texas without giving effect
to such state’s conflict-of-law principles.

 

15. Waiver of Jury Trial. Guarantor and Swinford each hereby irrevocably waives
all rights that it may have under applicable law to a trial by jury of any issue
or claim arising under this Guaranty in any action to enforce or interpret this
Guaranty.

 

 

 

 

 

 

 

[Remainder of page left intentionally blank. Signature page follows.]

 

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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the
date appearing on the first page of this Guaranty.

 

 

Coil Tubing Technology Holdings, Inc.

(A Nevada corporation)

 

By: /s/ Jerry L. Swinford

Its: President

Printed Name: Jerry L. Swinford

 

 

Total Downhole Solutions, Inc.

(a Texas corporation)

 

By: /s/ Jerry L. Swinford

Its: President

Printed Name: Jerry L. Swinford

 

 

Coil Tubing Technology, Inc.

(a Texas corporation)

 

By: /s/ Jason L. Swinford

Its: Chief Executive Officer

Printed Name: Jason L. Swinford

 

Address for all entities above:

 

Attn: Jason Swinford

22305 Gosling Road

Spring, Texas 77389

Phone: (281) 651-0200

Fax: (281) 288-0400

 

 

Coil Tubing Technology Canada Inc.

(an Alberta Canada corporation)

 

By: /s/ Jason L. Swinford

Its: Chief Executive Officer

Printed Name: Jason L. Swinford

 

Address:

 

Attn: Jason Swinford

22305 Gosling Road

Spring, Texas 77389

Phone: (281) 651-0200

Fax: (281) 288-0400

 

 

Excel Inspection, LLC

(a Texas limited liability company)

 

By: /s/ Jason L. Swinford

Its: Managing Partner

Printed Name: Jason L. Swinford

 

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Address:

 

Attn: Jason Swinford

22305 Gosling Road

Spring, Texas 77389

Phone: (281) 651-0200

Fax: (281) 288-0400

AGREED TO AND ACCEPTED:

 

/s/ Jerry L. Swinford

Jerry L. Swinford

 

Address:

 

22305 Gosling Road

Spring, Texas 77389

Phone: (281) 651-0200

Fax: (281) 288-0400

 

 

 

 

 

 

 

 

 

 

 

 

 

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