UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

February 26, 2020
Date of Report (Date of earliest event reported)

Flotek Industries, Inc.
(Exact name of registrant as specified in its charter)

Delaware
001-13270
90-0023731
(State or Other Jurisdiction of
(Commission
(IRS Employer
Incorporation)
File Number)
Identification No.)

10603 W. Sam Houston Pkwy N.,
Suite 300
Houston, Texas 77064
(Address of principal executive office and zip code)

(713) 849-9911
(Registrant’s telephone number, including area code)

(Not applicable)
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.0001 par value
 
FTK
 
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 1.01.    Entry into a Material Definitive Agreement.

On February 26, 2020, Flotek Chemistry, LLC ("Flotek Chemistry"), a wholly-owned subsidiary of Flotek Industries, Inc., entered into an amendment (the "Amendment") to the Supply Agreement (the "Supply Agreement") dated February 28, 2019 between Flotek Chemistry and Florida Chemical Company, LLC ("FCC"). Pursuant to the terms and conditions of the Amendment, the Supply Agreement is amended to, among other things, (a) reduce the minimum quantity of terpene that Flotek Chemistry is required to purchase from FCC by approximately 3/4ths in 2020 and by approximately half in each of 2021, 2022 and 2023, (b) provide a fixed per pound price for terpene in 2020, (c) reduce the maximum amount of terpene subject to the Supply Agreement by approximately 1/3rd, and (d) change the payment terms to net 45 days. In order to make the terms and conditions of the Amendment effective, Flotek Chemistry made a one-time payment of $15,750,000 to FCC.

The foregoing description of the Amendment is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.1 to this Form 8-K, which is incorporated herein by reference.

Item 9.01.    Financial Statements and Exhibits

(d)    Exhibits.

Exhibit Number
 
Description____________________________________________________________________
10.1
 
Amendment to Supply Agreement between Flotek Chemistry, LLC and Florida Chemical Company, LLC dated February 26, 2020. Portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K in order for them to remain confidential.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FLOTEK INDUSTRIES, INC.


Date: March 2, 2020
 
/s/ Nicholas J. Bigney
 
 
 
Name:
Nicholas J. Bigney
 
 
 
Title:
Senior Vice President, General Counsel & Corporate Secretary
 





Exhibit 10.1

Information identified with "[***]" has been excluded from this exhibit because it is not material and would be competitively harmful if disclosed.


AMENDMENT TO SUPPLY AGREEMENT

THIS AMENDMENT to Supply Agreement (“Amendment”) is effective as of February 26, 2020 and is between Florida Chemical Company, LLC (“FCC”) and Flotek Chemistry, LLC (“Flotek”).

WHEREAS, FCC and Flotek previously entered into that certain Supply Agreement, effective on or about February 28, 2019 (the “Agreement”); and

WHEREAS, FCC and Flotek wish to the amend the Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.
Amendment.

a.
Section 1 of the Agreement (“Definitions”) is amended as follows:

The definition “Maximum Quantity” is deleted and replaced with, “‘Maximum Quantity’ means [***] pounds of the Terpene Product per Year, prorated for any partial Year included in the Term.”

The definition “Minimum Quantity” is deleted and replaced with, “‘Minimum Quantity’ means [***] pounds of Terpene Product in Year 2020 and [***] pounds of Terpene Product per Year in Years 2021, 2022 and 2023.”
The definition “Product Price” is deleted and replaced with, “‘Product Price’ means, (a) with respect to Terpene Product shipped by FCC to Flotek in Year 2020, $[***] per pound, FOB FCC facility, Winter Haven, Florida; and (b) with respect to Terpene Product shipped by FCC to Flotek after Year 2020 (including, if applicable, an extension of the Term pursuant to Section 3), Terpene Cost of that Terpene Product, plus the Margin.”

The definition “Terpene Cost” is deleted and replaced with, “‘Terpene Cost’ means the cost per pound to FCC of the raw materials incorporated by FCC into Terpene Product, in the month prior to FCC’s shipment of such Terpene Product to Flotek, computed based on the methodology used by FCC to account for its inventory (e.g. LIFO, FIFO) (provided that such method is in accordance with Generally Accepted Accounting Principles, consistently applied), plus a deemed allocation of other manufacturing costs of FCC of $[***] per pound.”

b.
Section 4 of the Agreement (“Price”) is amended to add the following sentence at the end thereof:

“FCC and Flotek may agree in writing to revise the Product Price for Years 2021 through 2023. No such change in the Product Price will be effective absent a written amendment to the Agreement, executed by FCC and Flotek.”

c.
Section 6 of the Agreement (“Orders; Delivery”) is amended to add the following at the end thereof:

“(e)    Flotek shall order Terpene Product on a monthly basis, at the same or similar volume every month, to ensure that the Minimum Quantity is met and evenly distributed in every Year of the Term. For Year 2020, Flotek shall order Terpene Product every month beginning in May, at the same or




similar volume every month, to ensure that the Minimum Quantity is met and evenly distributed in such Year.”

d.
Section 6(a) of the Agreement is amended to delete the phrase, “[***] pounds” and to replace such phrase with, “[***] pounds.”

e.
Section 6(c) of the Agreement is deleted and replaced by the following:

“(c)    FCC shall invoice Flotek for Terpene Product at the time of shipment. Payment of FCC invoices shall be due within forty-five (45) days of the respective invoice date.”

2.
Payment. In consideration of the foregoing amendments, Flotek shall pay to FCC an amount equal to $15,750,000 (the “Payment”) to the following bank account:

[***]

3.
Effectiveness. The provisions in Section 1 of this Amendment shall become effective on the later of (a) the date executed and delivered by both parties and (b) the date on which Flotek makes the Payment to FCC.

4.
Miscellaneous. Except as provided herein, all other terms and conditions of the Agreement remain unchanged and in full force and effect. This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered is deemed an original, but all such counterparts together constitute one and the same Amendment. The parties agree that execution of this Amendment by exchanging facsimile or PDF signatures has the same legal force and effect as the exchange of original signatures. 


[Signature page follows]







IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

Flotek Chemistry, LLC
Florida Chemical Company, LLC


By: /s/John W. Gibson, Jr.
By: /s/Joshua A. Snively         
(signature)
(signature)

Name: John W. Gibson, Jr
Name: Joshua A. Snively         
(printed name)
(printed name)

Title: CEO                         Title: President