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

Date of Report (Date of earliest event reported): March 16, 2018

 

 

Flotek Industries, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-13270   90-0023731
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

10603 W. Sam Houston Pkwy N., Suite 300
Houston, Texas
  77064
(Address of principal executive offices)   (Zip Code)

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

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))

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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Employment Agreement with Joshua A. Snively, Executive Vice President Operations

On March 16, 2018 the Company and Mr. Joshua Snively entered into an Employment Agreement (the “Snively Employment Agreement”), pursuant to which Mr. Snively will continue to serve as Executive Vice President Operations of the Company.

The Snively Employment Agreement (i) provides for a term of employment until the earlier of (1) December 31, 2020, (2) Mr. Snively’s resignation with or without Good Reason (as defined in the Snively Employment Agreement) or Mr. Snively’s death or disability, or (3) termination by the Company with or without Cause (as defined in the Snively Employment Agreement); and (ii) provides that, upon termination of Mr. Snively’s employment by the Company without Cause or by Mr. Snively with Good Reason prior to the end of the term of employment and subject to the satisfaction of certain other specified conditions, Mr. Snively will be entitled to receive severance compensation in an amount equal to 150% of the sum of his annual base salary and target bonus, payable at the end of each of the nine full calendar months following the execution and effectiveness of a release agreement and in an amount equal to one-ninth of such severance compensation.

Pursuant to the Snively Employment Agreement, Mr. Snively will earn an annual base salary of $490,000, effective October 1, 2017 and was granted 75,000 shares of restricted stock of the Company pursuant to a Restricted Stock Agreement as described below. In addition to the foregoing, Mr. Snively will be entitled to certain other perquisites, including annual bonuses in accordance with the Company’s management incentive plan and performance unit plan and reimbursement for certain expenses. The description of the Snively Employment Agreement is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.1 to this Form 8-K, which is incorporated by reference.

Appointment of H. Richard Walton as Chief Accounting Officer and Employment Agreement

Also on March 16, 2018, the Company appointed H. Richard Walton as its Chief Accounting Officer, and he will serve as the Company’s principal accounting officer. The information required by Items 401(b), (d), (e) and Item 404(a) of Regulation S-K, as applicable, is disclosed in the Company’s Current Report on Form 8-K filed on February 17, 2017, which information and descriptions are incorporated herein by reference.

In addition, on March 16, 2018, the Company and Mr. Walton entered into an Employment Agreement (the “Walton Employment Agreement”), pursuant to which Mr. Walton will serve as Chief Accounting Officer of the Company.

The Walton Employment Agreement (i) provides for a term of employment until the earlier of (1) December 31, 2019, (2) Mr. Walton’s resignation with or without Good Reason (as defined in the Walton Employment Agreement) or Mr. Walton’s death or disability, or (3) termination by the Company with or without Cause (as defined in the Walton Employment Agreement); and (ii) provides that, upon termination of Mr. Walton’s employment by the Company without Cause or by Mr. Walton with Good Reason prior to the end of the term of employment and subject to the satisfaction of certain other specified conditions, Mr. Walton will be entitled to receive severance compensation in an amount equal to 100% of the sum of his annual base salary and target bonus if termination occurs within one year of the effective date of the Walton Employment Agreement, reducing to 75% of the sum of his annual salary and target bonus if termination occurs thereafter, payable at the end of each of the nine full calendar months following the execution and effectiveness of a release agreement and in an amount equal to one-ninth of such severance compensation.

Pursuant to the Walton Employment Agreement, Mr. Walton will earn an annual base salary of $375,000 and was granted 30,000 shares of restricted stock of the Company pursuant to a Restricted Stock Agreement as described below. In addition to the foregoing, Mr. Walton will be entitled to certain other perquisites, including annual bonuses in accordance with the Company’s management incentive plan and performance unit plan and reimbursement for certain expenses. The description of the Walton Employment Agreement is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.2 to this Form 8-K, which is incorporated by reference.

 

- 2 -


Appointment of Matthew B. Marietta as Executive Vice President of Finance and Corporate Development and Employment Agreement

Also on March 16, 2018, Matthew B. Marietta, 31, was appointed Executive Vice President of Finance and Corporate Development, and will serve as the Company’s principal financial officer. Previously, Mr. Marietta served as Senior Vice President of Corporate Development and Investor Relations since March 2017. Prior to joining Flotek, Mr. Marietta led the oilfield services equity research team at Stephens, Inc. from 2011 through March 2017. Prior to his work at Stephens, Inc., Mr. Marietta served as a Financial Planning & Analysis Analyst at Exterran. Mr. Marietta graduated from Texas Christian University and holds a degree in Finance.

Mr. Marietta has not been involved in any related transactions or relationships with the Company that would require disclosure under Item 404(a) of Regulation S-K.

On March 16, 2018 the Company and Mr. Marietta entered into an Employment Agreement (the “Marietta Employment Agreement”), pursuant to which Mr. Marietta will serve as Executive Vice President of Finance & Corporate Development.

The Marietta Employment Agreement (i) provides for a term of employment until the earlier of (1) December 31, 2020, (2) Mr. Marietta’s resignation with or without Good Reason (as defined in the Marietta Employment Agreement) or Mr. Marietta’s death or disability, or (3) termination by the Company with or without Cause (as defined in the Marietta Employment Agreement); and (ii) provides that, upon termination of Mr. Marietta’s employment by the Company without Cause or by Mr. Marietta with Good Reason prior to the end of the term of employment and subject to the satisfaction of certain other specified conditions, Mr. Marietta will be entitled to receive severance compensation in an amount equal to 150% of the sum of his annual base salary and target bonus if termination occurs within one year of the effective date of the Marietta Employment Agreement, reducing to 100% of the sum of his annual salary and target bonus if termination occurs thereafter, payable at the end of each of the nine full calendar months following the execution and effectiveness of a release agreement and in an amount equal to one-ninth of such severance compensation.

Pursuant to the Marietta Employment Agreement, Mr. Marietta will earn an annual base salary of $335,000 effective as of January 1, 2018 and was granted 60,000 shares of restricted stock of the Company pursuant to a Restricted Stock Agreement as described below. In addition to the foregoing, Mr. Marietta will be entitled to certain other perquisites, including annual bonuses in accordance with the Company’s management incentive plan and performance unit plan and reimbursement for certain expenses. The description of the Marietta Employment Agreement is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.3 to this Form 8-K, which is incorporated by reference.

Compensatory Arrangements of Certain Officers

On March 16, 2018, the Compensation Committee (the “Compensation Committee”) of the board of directors of the Company (the “Board”) approved base salaries for certain of the executive officers of the Company effective as of January 1, 2018 and, in order to provide appropriate incentives to work towards the continued growth and success of the Company, adopted a Management Incentive Plan (the “2018 MIP”) with respect to certain of its senior executive officers.

The 2018 MIP provides for the payment of cash bonuses to management personnel selected by the Compensation Committee, including all of the named executive officers. These bonuses are expressed as a percentage of each participant’s 2018 annual base salary (the “Target Bonus Percentage”). The Target Bonus Percentage for the President, Chief Executive Officer and Chairman is 110% of base salary. The range for other participants is 50% to 95% of base salary. The table below sets forth the 2018 Target Bonus Percentage for purposes of the 2018 MIP for the Company’s executive officers, including the principal executive officer, the principal financial officer, the principal accounting officer and the other executive officers of the Company.

Bonuses under the 2018 MIP are made up of three separate parts: a bonus based on Earnings Before Interest, Taxes, Depreciation and Amortization (the “EBITDA Bonus”), a bonus based on revenues (the “Revenue Bonus”) and a bonus based on the achievement of certain goals set by the Compensation Committee for each participant (the “Goal Bonus”).

 

- 3 -


The EBITDA Bonus accounts for 45% of the total bonus potentially payable under the MIP. The EBITDA Bonus is based on the Company’s 2018 Adjusted EBITDA. “Adjusted EBITDA” means the consolidated EBITDA of the Company, excluding the results from any operations considered discontinued operations for GAAP purposes, plus any amounts deducted in computing EBITDA with respect to noncash stock compensation and the MIP. The Compensation Committee has discretion to equitably adjust Adjusted EBITDA for other noncash and/or nonrecurring charges not directly related to the ongoing operations of the Company and the effect of any acquisition or disposition of any assets and/or lines of business or the impact of any extraordinary or nonrecurring items. Depending on the performance of the Company’s 2018 Adjusted EBITDA, a percentage (ranging from 0-200%) will be applied to each participant’s Target Bonus Percentage (the “EBITDA Bonus Percentage”). The EBITDA Bonus of a participant shall equal 45% of the EBITDA Bonus Percentage of the participant, multiplied by the annual salary as of the date that the MIP becomes applicable to the participant.

The Revenue Bonus accounts for 35% of the total bonus potentially payable under the MIP. The Revenue Bonus is based on the performance of the Company’s “Revenue.” Revenue is consolidated revenue, as determined pursuant to GAAP, excluding the results from any operations considered discontinued operations for GAAP purposes. The Compensation Committee has the discretion to equitably adjust Revenue to reflect the effect of any acquisition or disposition of any assets and/or lines of business and other extraordinary, nonrecurring items. Similar to the EBITDA Bonus, depending on the performance of the Company’s Revenues, a percentage (ranging from 0-200%) will be applied to each participant’s Target Bonus Percentage (the “Revenue Bonus Percentage”). The Revenue Bonus of a participant shall equal 35% of the Revenue Bonus Percentage of the participant, multiplied by the annual salary as of the date that the MIP becomes applicable to the participant.

The Goal Bonus accounts for 20% of the total bonus potentially payable under the MIP. The Compensation Committee shall, on or before March 31, 2018, inform the participant in writing of the goals which the Compensation Committee has established as being the criteria to be met by the participant in order to receive his/her Goal Bonus. The Compensation Committee may establish more than one goal for the participant and may allocate the Goal Bonus of that participant among the goals. The Goal Bonus (or a part thereof) shall be payable to the participant if the Compensation Committee determines, in its discretion, that the goal(s) that the Compensation Committee has determined to be applicable to that participant for that Goal Bonus has been achieved by the participant. The Goal Bonus shall equal 20% of the Goal Bonus Percentage of that participant, multiplied by the annual base salary of the participant as of the date that the MIP becomes applicable to the participant. The Goal Bonus percentage ranges between 0% and 200% depending on the level of achievement by the individual participant.

The table below sets forth the 2018 annual base salary and potential awards under the 2018 MIP for the Company’s executive officers, including the principal executive officer, the principal financial officer and the other executive officers of the Company.

 

Executive Officer

   2018 Base Annual Salary      2018 Target Bonus
Percentage of Salary For
Purpose of Cash
Bonuses under the 2018
MIP
 

John Chisholm*

Chairman, President and Chief Executive Officer

   $ 860,000        110

Joshua A. Snively,

Executive Vice President Operations

   $ 490,000        95

Matthew B. Marietta,

Executive Vice President of Finance and Corporate Development

   $ 335,000        80

H. Richard Walton,

Chief Accounting Officer

   $ 375,000        75

 

- 4 -


* A portion of Mr. Chisholm’s compensation is payable to companies controlled by Mr. Chisholm pursuant to the Fifth Amended and Restated Service Agreement, as amended, by and between the Company and such companies controlled by Mr. Chisholm. On February 13, 2017, the Board authorized the Company to enter into a letter agreement with Protechnics II, Inc. and Chisholm Management, Inc. to amend that certain Fifth Amended and Restated Service Agreement with such parties pursuant to which the compensation payable to such parties, which relates to the services provided by John Chisholm as Chairman, President and Chief Executive Officer of the Company, is increased to $810,000 effective as of January 1, 2017. This compensation amount is included in the base annual salary amount indicated above for Mr. Chisholm. The description of the letter agreement is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on February 17, 2017, which is incorporated by reference.

Restricted Stock Agreements

Pursuant to the Restricted Stock Agreements entered into in connection with the Marietta and Snively Employment Agreements (the “Marietta and Snively Restricted Stock Agreements”), the restricted stock awards (the “RSAs”) granted thereunder will vest annually in three equal installments, with one-third vesting on December 31, 2018 (the “Initial Vesting Date”), one-third vesting on the first anniversary of the Initial Vesting Date and one-third vesting on the second anniversary of the Initial Vesting Date.

Any unvested RSAs will immediately vest in the following instances: (i) a Change of Control, (ii) the death of the grantee, (iii) the Disability of the grantee, or (iv) a termination by the grantee for Good Reason which occurs within 12 months following a Change of Control (each term as defined in the Marietta and Snively Restricted Stock Agreements).

The foregoing description of the Marietta and Snively Restricted Stock Agreements in this Item 5.02 is qualified in its entirety by reference to the full text of the Form of Marietta and Snively Restricted Stock Agreement, which is filed as Exhibit 10.4 hereto and is incorporated herein by reference.

Pursuant to the Restricted Stock Agreement entered into in connection with the Walton Employment Agreement (the “Walton Restricted Stock Agreement”), the RSAs granted thereunder will vest in two equal installments with one-half vesting on the Initial Vesting Date and the remaining one-half vesting on the first anniversary of the Initial Vesting Date.

Any unvested RSAs will immediately vest in the following instances: (i) a Change of Control, (ii) the death of the grantee, (iii) the Disability of the grantee, or (iv) a termination by the grantee for Good Reason which occurs within 12 months following a Change of Control (each term as defined in the Walton Restricted Stock Agreement).

The foregoing description of the Walton Restricted Stock Agreement in this Item 5.02 is qualified in its entirety by reference to the full text of the Walton Restricted Stock Agreement, which is filed as Exhibit 10.5 hereto and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number

  

Description

10.1    Snively Employment Agreement dated effective March 16, 2018
10.2    Walton Employment Agreement dated effective March 16, 2018
10.3    Marietta Employment Agreement dated effective March 16, 2018
10.4    Form of Marietta and Snively Restricted Stock Agreement
10.5    Form of Walton Restricted Stock Agreement

 

- 5 -


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 22, 2018       /s/ Matthew B. Marietta
      Matthew B. Marietta
      Executive Vice President of Finance and Corporate Development

 

- 6 -

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT (this “Agreement”) is made as of March 16, 2018 (“Effective Date”), between Flotek Industries, Inc., a Delaware corporation (the “Company”), and Joshua Snively (“Employee”).

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Employment . The Company shall employ and continue to employ Employee, and Employee shall be employed and continue to be employed with the Company, upon the terms set forth in this Agreement for the period beginning on the date hereof and ending on December 31, 2020 (the “Expiration Date”), unless terminated earlier as set forth herein. The period during which the Employee is employed by the Company is referred to as the “Employment Period.”

2. Position and Duties .

(a) Employee shall serve as Executive Vice President Operations of the Company and shall be responsible for such duties as may be reasonably prescribed by the Board of Directors of the Company or the Chief Executive Officer of the Company. Employee will report to the Chief Executive Officer of the Company and work in the Company’s Houston office.

(b) Employee shall devote his reasonable best efforts and his full business time and attention (except for permitted vacation periods, periods of illness or other incapacity) to the business and affairs of the Company, and it shall not be considered a violation of this Agreement for the Employee to, (a) engage in or serve such professional, civic, trade association, charitable, community, religious or similar types of organizations or speaking selections as the Employee may select; (b) serve with the consent of the Chief Executive Officer of the Company on the boards of directors or advisory committees of any entities, or engage in other business activities; and (c) attend to the Employee’s personal matters and finances so long as such services and activities in (a) – (c) do not significantly interfere with the performance of Employee’s responsibilities as an employee of the Company.

3. Base Salary, Equity Award and Benefits .

(a) Employee’s annual base salary for the Employment Period shall initially be $490,000 (the “Base Salary”), effective October 1, 2017. The Base Salary shall be payable in equal installments in accordance with the Company’s general payroll practices and shall be subject to required withholding. Any change in Base Salary shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. During the Employment Period, Employee will be eligible to participate in the Company’s employee benefit programs.

(b) On the Effective Date, the Company shall issue to Employee 75,000 shares of restricted common stock of the Company (the Restricted Stock”), which will be subject to the provisions of a restricted stock agreement between the Company and Employee issued under the Company’s 2014 Long-Term Incentive Plan.


(c) Employee shall be eligible for annual bonuses in accordance with the Management Incentive Plan (the “MIP”) of the Company, pursuant to such terms as shall be established by the Compensation Committee of the Board. The Employee’s target bonus percentage for the 2018 MIP shall be 95 percent (95)%. Employee will be eligible to participate in the Performance Unit Plan (the “PUP”) of the Company pursuant to the terms of that plan and such terms as shall be established by the Compensation Committee of the Board. The factor for the 2018 PUP to determine the Employee’s award value shall be 2.00.

(d) The Company shall reimburse Employee for all reasonable expenses incurred in the course of performing duties under this Agreement which are consistent with the Company’s policies in effect with respect to travel, entertainment and other business expenses pursuant to applicable Treasury Regulations.

(e) Employee may be eligible to receive annual merit raises approved at the discretion of the Compensation Committee of the Board of Directors of the Company.

(f) Employee shall be eligible for vacations in accordance with Company policies, with a minimum of four weeks’ vacation during each year in the Employment Period.

4. Employment Term and Termination .

(a) The Employment Period shall continue until terminated upon the earlier of (i) the Expiration Date, (ii) Employee’s resignation with or without Good Reason or Employee’s death or Disability or (iii) the termination of the Employee by the Company with or without Cause.

(b) Employee’s employment with the Company will be “At Will,” meaning that either Employee or the Company may terminate Employee’s employment at any time and for any reason, with or without Cause or Good Reason. The date on which the Employees’ employment is terminated is referred herein as the “Termination Date.” If the reason for termination is without Cause or with Good Reason, Employee would receive a severance package consistent with the terms and conditions set forth in Section 5 below.

5. Severance .

(a) If Employee’s employment with the Company is terminated by the Company without Cause or by Employee with Good Reason prior to the Expiration Date, and provided that Employee signs and delivers to the Company a Confidential Severance and Release Agreement in a reasonable form as provided by the Company (the “Release Agreement”) within 60 days following the termination of Employee’s employment with the Company (such 60 th day being referred to as the “Release Date”) and does not revoke such signed Release Agreement, Employee shall be entitled to receive severance compensation equal to the following:

 

2


(i) if the Date of Termination occurs prior to the first anniversary of the Effective Date, 150 percent (150)% of the sum of the Employee’s annual Base Salary and Target Bonus for purposes of the MIP in effect for the year in which the Termination Date occurs (determined regardless of the actual results of the Company for that year) or

(ii) if the Date of Termination occurs on or after the first anniversary of the Effective Date and prior to the Expiration Date, 150 percent (150)% of the sum of the Employee’s annual Base Salary and Target Bonus for purposes of the MIP in effect for the year in which the Termination Date occurs (determined regardless of the actual results of the Company for that year), which amount under Section 5(a)(i) or (ii), as applicable, shall be payable in nine (9) monthly installments equal to one-ninth of such severance compensation, subject to required withholding, payable at the end of each of the next nine (9) full calendar months following the first full calendar month following the Release Date, and

(iii) if the Employee timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Employee for the monthly COBRA premium paid by the Employee for Employee and Employee’s dependents who were covered immediately preceding the Date of Termination. The reimbursement under Section 5(a)(2) shall be paid to the Employee prior to the last day of the month immediately following the month in which the Executive timely remits the premium payment, and the Employee shall be eligible to receive such reimbursement until the earliest of: (i) the 12-month anniversary of the Date of Termination; (ii) the date the Employee (or Employee’s dependents, if applicable) is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Employee receives substantially similar coverage from another employer or other source.

(b) Notwithstanding anything to the contrary herein contained, except to the extent required by law, the Company shall not be required to pay any amounts under this Section 5 or elsewhere in this Agreement if Employee is in breach of any of its obligations under this Agreement or any other Agreement with the Company, including without limitation, all employee policies of the Company and any obligation relating to the treatment of Company confidential information and any non-compete obligation.

(c) If Employee’s employment with the Company is terminated for Cause or death or Disability, or Employee resigns without Good Reason, Employee shall be entitled to receive: (i) Employee’s Base Salary earned and payable through the Termination Date; (ii) any accrued but unused vacation/time off to the extent required under applicable law; (iii) reimbursement for all incurred but unreimbursed expenses to the extent Employee is entitled to be reimbursed; and (iv) any other earned but unpaid compensation, if applicable, as of the Termination Date.

(d) For purposes of this Agreement, the following terms shall have the meanings set forth below:

“Cause” shall mean (i) Employee’s failure to substantially perform one or more of Employee’s essential duties and obligations to the Company (other than any such failure resulting from a Disability) which, to the extent such failure is remediable, Employee

 

3


fails to remedy in a reasonable period of time (not to exceed 60 days) after receipt of written notice from the Company; (ii) Employee’s refusal or failure to comply with the reasonable and legal directives of the Board of Directors after written notice from the Board describing Employee’s failure to comply and, if such failure is remediable, Employee’s failure to remedy same within 21 days of receiving written notice; (iii) any act of personal dishonesty, fraud or misrepresentation taken by Employee which was intended to result in or resulted in substantial gain or personal enrichment of the Employee at the expense of the Company; (iv) Employee’s violation of a federal or state law or regulation applicable to the Company’s business which violation was or is reasonably likely to be materially injurious to the Company; (v) Employee’s conviction of, or plea of nolo contendere or guilty to, a felony under the laws of the United States or any State that is reasonably likely to reasonably likely to be materially injurious to the Company; (vi) Employee’s abuse of drugs, other narcotics or alcohol during working hours or where such abuse (whenever occurring) impacts on Employee’s working day, (vii) Employee’s breach of any of his obligations under any written agreement with the Company (including without limitation this Agreement and any proprietary information and inventions assignment agreement with the Company) which, to the extent such breach is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 60 days) after receipt of written notice from the Company; or (viii) Employee’s violation of a policy of the Company which, to the extent such failure is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 30 days) after receipt of written notice from the Company.

“Disability” shall have the meaning assigned to such term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

“Good Reason” shall exist upon the occurrence of one of the following Company actions (unless Employee consents in writing to such action(s)): (i) a material reduction of the Employee’s salary and employee benefits to which the Employee was entitled immediately prior to such reduction unless such reduction applies to all similarly situated executives, (ii) a material reduction in the duties, authority or responsibilities relative to the Employee’s duties, authority or responsibilities as in effect immediately prior to such reduction, provided, however, that if the Company assigns to the Employee duties for another senior executive position with the Company, such assignment shall not constitute Good Reason; or (iii) the relocation of the Employee to a facility or a location more than fifty (50) miles from the Employee’s then present location; provided, however, that (A) Employee must provide the Company with written notice of the occurrence of such action(s) within 60 days of the initial occurrence of such action(s) and of his intent to terminate employment based on such action(s), (B) the written notice must describe the event constituting Good Reason in reasonable detail, and (C) within 30 days from the date that such written notice is received by the Company, the Company must cure such action(s).

(e) If there is a Change of Control of the Company prior to the Expiration Date: (i) Restricted Stock granted pursuant to Section 3(b) will become vested as set forth in the Restricted Stock Agreement, (ii) awards granted pursuant to the then applicable MIP and PUP will become subject to, and affected by, the Change of Control provisions contained in such

 

4


plans, and (iii) if Employee’s employment with the Company is terminated by the Company without Cause or by Employee for Good Reason prior to the Expiration Date, Employee will thereafter be entitled to receive severance pursuant and subject to the terms and conditions of Section 5 of this Agreement.

(f) Notwithstanding anything herein to the contrary, (i) to the extent required by Section 409A of the Code, each reimbursement or in-kind benefit provided under this Agreement shall be provided in a manner and at a time that complies with Section 409A; (ii) if at the time of Employee’s termination of employment with the Company, Employee is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of the commencement of any payments or benefits (or portions thereof) otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the payment or benefits shall be delayed to the earliest date required under Section 409A of the Code to the extent and amount necessary to comply with Section 409A of the Code, with such delayed payments to be accumulated and made in lump sum on the first business day following the earliest date permitted by Section 409A of the Code, (iii) for purposes of this Section 5, a termination of employment only occurs if it constitutes a “separation from service” under Section 409A of the Code, and (iv) each payment identified in Section 5(a)(i)-(iii), including each separate installment payment identified thereunder, will be considered the right to a series of separate payments. Notwithstanding any other provision in the Agreement, the Company and Employee will cooperate in good faith to amend or modify the Agreement so that the payments under this Agreement qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no representations that the payments under the Agreement shall be exempt from or comply with Section 409A of the Code.

6. Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by a nationally recognized overnight delivery service, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to Employee :

Joshua Snively

                                                 

                                                 

Notices to the Company:

Flotek Industries, Inc.

Attn: General Counsel

10603 W. Sam Houston Pkwy. N., Suite 300

Houston, TX 77043

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or, if sent by first class mail, three (3) days after so mailed.

 

5


7. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

8. Complete Agreement . Except with respect to any proprietary information and inventions assignment agreement between the Company and the Employee, this Agreement embodies with respect to the subject matter hereof the complete agreement and understanding among the parties and supersedes and preempts with respect to the subject matter hereof any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

9. Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

10. Successors and Assigns . This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee, the Company and their respective heirs, successors and assigns, except that Employee may not assign his rights or delegate his obligations hereunder without the prior written consent of the Company except by operation of law to Employee’s estate upon the death of Employee.

11. Choice of Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.

12. Consent to Personal Jurisdiction . Subject to terms and conditions of Section 13, any suit, action or other proceeding arising out of or based upon this Agreement and any other agreement with the Company shall be brought in the U.S. District Court for the Southern District of Texas, Houston Division.

13. Arbitration and Equitable Remedies . Employee agrees that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Houston, Texas, in accordance with the rules then in effect of the American Arbitration Association, provided however, the parties will be entitled to full and liberal evidentiary discovery in accordance with the rules governing civil litigation in courts of the same jurisdiction. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final,

 

6


conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company shall pay the legal costs and expenses of such arbitration; however, the prevailing party shall be entitled to recover from the non-prevailing party all reasonable legal costs and expenses incurred including staff time, court costs, attorneys’ fees, and all other related expenses incurred in such arbitration.

14. Amendment and Waiver . The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of such provision or any other provision of this Agreement.

 

7


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

FLOTEK INDUSTRIES, INC.
By:   /s/ John W. Chisholm
Name:   John W. Chisholm
Title:   President and Chief Executive Officer

 

/s/ Joshua S. Snively
Joshua Snively

SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

 

8

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT (this “Agreement”) is made as of March 16, 2018 (“Effective Date”), between Flotek Industries, Inc., a Delaware corporation (the “Company”), and H. Richard Walton (“Employee”).

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Employment . The Company shall employ and continue to employ Employee, and Employee shall be employed and continue to be employed with the Company, upon the terms set forth in this Agreement for the period beginning on the date hereof and ending on December 31, 2019 (the “Expiration Date”), unless terminated earlier as set forth herein. The period during which the Employee is employed by the Company is referred to as the “Employment Period.”

2. Position and Duties .

(a) Employee shall serve as Chief Accounting Officer of the Company and shall be responsible for such duties as may be reasonably prescribed by the Board of Directors of the Company or the Chief Executive Officer of the Company. Employee will report to the Chief Executive Officer of the Company and work in the Company’s Houston office.

(b) Employee shall devote his reasonable best efforts and his full business time and attention (except for permitted vacation periods, periods of illness or other incapacity) to the business and affairs of the Company, and it shall not be considered a violation of this Agreement for the Employee to, (a) engage in or serve such professional, civic, trade association, charitable, community, religious or similar types of organizations or speaking selections as the Employee may select; (b) serve with the consent of the Chief Executive Officer of the Company on the boards of directors or advisory committees of any entities, or engage in other business activities; and (c) attend to the Employee’s personal matters and finances so long as such services and activities in (a) – (c) do not significantly interfere with the performance of Employee’s responsibilities as an employee of the Company.

3. Base Salary, Equity Award and Benefits .

(a) Employee’s annual base salary for the Employment Period shall initially be $375,000 (the “Base Salary”), effective January 1, 2018. The Base Salary shall be payable in equal installments in accordance with the Company’s general payroll practices and shall be subject to required withholding. Any change in Base Salary shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. During the Employment Period, Employee will be eligible to participate in the Company’s employee benefit programs.

(b) On the Effective Date, the Company shall issue to Employee 30,000 shares of restricted common stock of the Company (the “Restricted Stock”), which will be subject to the provisions of a restricted stock agreement between the Company and Employee issued under the Company’s 2014 Long-Term Incentive Plan.


(c) Employee shall be eligible for annual bonuses in accordance with the Management Incentive Plan (the “MIP”) of the Company, pursuant to such terms as shall be established by the Compensation Committee of the Board. The Employee’s target bonus percentage for the 2018 MIP shall be 75 percent (75)%. Employee will be eligible to participate in the Performance Unit Plan (the “PUP”) of the Company pursuant to the terms of that plan and such terms as shall be established by the Compensation Committee of the Board. The factor for the 2018 PUP to determine the Employee’s award value shall be 1.35.

(d) The Company shall reimburse Employee for all reasonable expenses incurred in the course of performing duties under this Agreement which are consistent with the Company’s policies in effect with respect to travel, entertainment and other business expenses pursuant to applicable Treasury Regulations.

(e) Employee may be eligible to receive annual merit raises approved at the discretion of the Compensation Committee of the Board of Directors of the Company.

(f) Employee shall be eligible for vacations in accordance with Company policies with a minimum of four weeks’ vacation during each year in the Employment Period.

4. Employment Term and Termination .

(a) The Employment Period shall continue until terminated upon the earlier of (i) the Expiration Date, (ii) Employee’s resignation with or without Good Reason or Employee’s death or Disability or (iii) the termination of the Employee by the Company with or without Cause.

(b) Employee’s employment with the Company will be “At Will,” meaning that either Employee or the Company may terminate Employee’s employment at any time and for any reason, with or without Cause or Good Reason. The date on which the Employees’ employment is terminated is referred herein as the “Termination Date.” If the reason for termination is without Cause or with Good Reason, Employee would receive a severance package consistent with the terms and conditions set forth in Section 5 below.

5. Severance .

(a) If Employee’s employment with the Company is terminated by the Company without Cause or by Employee with Good Reason prior to the Expiration Date, and provided that Employee signs and delivers to the Company a Confidential Severance and Release Agreement in a reasonable form as provided by the Company (the “Release Agreement”) within 60 days following the termination of Employee’s employment with the Company (such 60 th day being referred to as the “Release Date”) and does not revoke such signed Release Agreement, Employee shall be entitled to receive severance compensation equal to the following:

 

2


(i) if the Date of Termination occurs prior to the first anniversary of the Effective Date, 100 percent (100)% of the sum of the Employee’s annual Base Salary and Target Bonus for purposes of the MIP in effect for the year in which the Termination Date occurs (determined regardless of the actual results of the Company for that year) or

(ii) if the Date of Termination occurs on or after the first anniversary of the Effective Date and prior to the Expiration Date, 75 percent (75)% of the sum of the Employee’s annual Base Salary and Target Bonus for purposes of the MIP in effect for the year in which the Termination Date occurs (determined regardless of the actual results of the Company for that year), which amount under Section 5(a)(i) or (ii), as applicable, shall be payable in nine (9) monthly installments equal to one-ninth of such severance compensation, subject to required withholding, payable at the end of each of the next nine (9) full calendar months following the first full calendar month following the Release Date, and

(iii) if the Employee timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Employee for the monthly COBRA premium paid by the Employee for Employee and Employee’s dependents who were covered immediately preceding the Date of Termination. The reimbursement under Section 5(a)(2) shall be paid to the Employee prior to the last day of the month immediately following the month in which the Executive timely remits the premium payment, and the Employee shall be eligible to receive such reimbursement until the earliest of: (i) the 12-month anniversary of the Date of Termination; (ii) the date the Employee (or Employee’s dependents, if applicable) is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Employee receives substantially similar coverage from another employer or other source.

(b) Notwithstanding anything to the contrary herein contained, except to the extent required by law, the Company shall not be required to pay any amounts under this Section 5 or elsewhere in this Agreement if Employee is in breach of any of its obligations under this Agreement or any other Agreement with the Company, including without limitation, all employee policies of the Company and any obligation relating to the treatment of Company confidential information and any non-compete obligation.

(c) If Employee’s employment with the Company is terminated for Cause or death or Disability, or Employee resigns without Good Reason, Employee shall be entitled to receive: (i) Employee’s Base Salary earned and payable through the Termination Date; (ii) any accrued but unused vacation/time off to the extent required under applicable law; (iii) reimbursement for all incurred but unreimbursed expenses to the extent Employee is entitled to be reimbursed; and (iv) any other earned but unpaid compensation, if applicable, as of the Termination Date.

(d) For purposes of this Agreement, the following terms shall have the meanings set forth below:

“Cause” shall mean (i) Employee’s failure to substantially perform one or more of Employee’s essential duties and obligations to the Company (other than any such failure resulting from a Disability) which, to the extent such failure is remediable, Employee

 

3


fails to remedy in a reasonable period of time (not to exceed 60 days) after receipt of written notice from the Company; (ii) Employee’s refusal or failure to comply with the reasonable and legal directives of the Board of Directors after written notice from the Board describing Employee’s failure to comply and, if such failure is remediable, Employee’s failure to remedy same within 21 days of receiving written notice; (iii) any act of personal dishonesty, fraud or misrepresentation taken by Employee which was intended to result in or resulted in substantial gain or personal enrichment of the Employee at the expense of the Company; (iv) Employee’s violation of a federal or state law or regulation applicable to the Company’s business which violation was or is reasonably likely to be materially injurious to the Company; (v) Employee’s conviction of, or plea of nolo contendere or guilty to, a felony under the laws of the United States or any State that is reasonably likely to reasonably likely to be materially injurious to the Company; (vi) Employee’s abuse of drugs, other narcotics or alcohol during working hours or where such abuse (whenever occurring) impacts on Employee’s working day, (vii) Employee’s breach of any of his obligations under any written agreement with the Company (including without limitation this Agreement and any proprietary information and inventions assignment agreement with the Company) which, to the extent such breach is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 60 days) after receipt of written notice from the Company; or (viii) Employee’s violation of a policy of the Company which, to the extent such failure is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 30 days) after receipt of written notice from the Company.

“Disability” shall have the meaning assigned to such term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

“Good Reason” shall exist upon the occurrence of one of the following Company actions (unless Employee consents in writing to such action(s)): (i) a material reduction of the Employee’s salary and employee benefits to which the Employee was entitled immediately prior to such reduction unless such reduction applies to all similarly situated executives, (ii) a material reduction in the duties, authority or responsibilities relative to the Employee’s duties, authority or responsibilities as in effect immediately prior to such reduction, provided, however, that if the Company assigns to the Employee duties for another senior executive position with the Company, such assignment shall not constitute Good Reason; or (iii) the relocation of the Employee to a facility or a location more than fifty (50) miles from the Employee’s then present location; provided, however, that (A) Employee must provide the Company with written notice of the occurrence of such action(s) within 60 days of the initial occurrence of such action(s) and of his intent to terminate employment based on such action(s), (B) the written notice must describe the event constituting Good Reason in reasonable detail, and (C) within 30 days from the date that such written notice is received by the Company, the Company must cure such action(s).

(e) If there is a Change of Control of the Company prior to the Expiration Date: (i) Restricted Stock granted pursuant to Section 3(b) will become vested as set forth in the Restricted Stock Agreement, (ii) awards granted pursuant to the then applicable MIP and PUP will become subject to, and affected by, the Change of Control provisions contained in such

 

4


plans, and (iii) if Employee’s employment with the Company is terminated by the Company without Cause or by Employee for Good Reason prior to the Expiration Date, Employee will thereafter be entitled to receive severance pursuant and subject to the terms and conditions of Section 5 of this Agreement.

(f) Notwithstanding anything herein to the contrary, (i) to the extent required by Section 409A of the Code, each reimbursement or in-kind benefit provided under this Agreement shall be provided in a manner and at a time that complies with Section 409A; (ii) if at the time of Employee’s termination of employment with the Company, Employee is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of the commencement of any payments or benefits (or portions thereof) otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the payment or benefits shall be delayed to the earliest date required under Section 409A of the Code to the extent and amount necessary to comply with Section 409A of the Code, with such delayed payments to be accumulated and made in lump sum on the first business day following the earliest date permitted by Section 409A of the Code, (iii) for purposes of this Section 5, a termination of employment only occurs if it constitutes a “separation from service” under Section 409A of the Code, and (iv) each payment identified in Section 5(a)(i)-(iii), including each separate installment payment identified thereunder, will be considered the right to a series of separate payments. Notwithstanding any other provision in the Agreement, the Company and Employee will cooperate in good faith to amend or modify the Agreement so that the payments under this Agreement qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no representations that the payments under the Agreement shall be exempt from or comply with Section 409A of the Code.

6. Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by a nationally recognized overnight delivery service, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to Employee :

H. Richard Walton

 

                                                 

 

                                                 

Notices to the Company:

Flotek Industries, Inc.

Attn: General Counsel

10603 W. Sam Houston Pkwy. N., Suite 300

Houston, TX 77043

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or, if sent by first class mail, three (3) days after so mailed.

 

5


7. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

8. Complete Agreement . Except with respect to any proprietary information and inventions assignment agreement between the Company and the Employee, this Agreement embodies with respect to the subject matter hereof the complete agreement and understanding among the parties and supersedes and preempts with respect to the subject matter hereof any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

9. Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

10. Successors and Assigns . This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee, the Company and their respective heirs, successors and assigns, except that Employee may not assign his rights or delegate his obligations hereunder without the prior written consent of the Company except by operation of law to Employee’s estate upon the death of Employee.

11. Choice of Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.

12. Consent to Personal Jurisdiction . Subject to terms and conditions of Section 13, any suit, action or other proceeding arising out of or based upon this Agreement and any other agreement with the Company shall be brought in the U.S. District Court for the Southern District of Texas, Houston Division.

13. Arbitration and Equitable Remedies . Employee agrees that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Houston, Texas, in accordance with the rules then in effect of the American Arbitration Association, provided however, the parties will be entitled to full and liberal evidentiary discovery in accordance with the rules governing civil litigation in courts of the same jurisdiction. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final,

 

6


conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company shall pay the legal costs and expenses of such arbitration; however, the prevailing party shall be entitled to recover from the non-prevailing party all reasonable legal costs and expenses incurred including staff time, court costs, attorneys’ fees, and all other related expenses incurred in such arbitration.

14. Amendment and Waiver . The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of such provision or any other provision of this Agreement.

 

7


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

FLOTEK INDUSTRIES, INC.
By:   /s/ John W. Chisholm
Name:   John W. Chisholm
Title:   President and Chief Executive Officer

 

/s/ H. Richard Walton
H. Richard Walton

SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

 

8

Exhibit 10.3

EMPLOYMENT AGREEMENT

THIS AGREEMENT (this “Agreement”) is made as of March 16, 2018 (“Effective Date”), between Flotek Industries, Inc., a Delaware corporation (the “Company”), and Matthew B. Marietta (“Employee”).

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Employment . The Company shall employ and continue to employ Employee, and Employee shall be employed and continue to be employed with the Company, upon the terms set forth in this Agreement for the period beginning on the date hereof and ending on December 31, 2020 (the “Expiration Date”), unless terminated earlier as set forth herein. The period during which the Employee is employed by the Company is referred to as the “Employment Period.”

2. Position and Duties .

(a) Employee shall serve as Executive Vice President of Finance and Corporate Development of the Company and shall be responsible for such duties as may be reasonably prescribed by the Board of Directors of the Company or the Chief Executive Officer of the Company. Employee will report to the Chief Executive Officer of the Company and work in the Company’s Houston office.

(b) Employee shall devote his reasonable best efforts and his full business time and attention (except for permitted vacation periods, periods of illness or other incapacity) to the business and affairs of the Company, and it shall not be considered a violation of this Agreement for the Employee to, (a) engage in or serve such professional, civic, trade association, charitable, community, religious or similar types of organizations or speaking selections as the Employee may select; (b) serve with the consent of the Chief Executive Officer of the Company on the boards of directors or advisory committees of any entities, or engage in other business activities; and (c) attend to the Employee’s personal matters and finances so long as such services and activities in (a) – (c) do not significantly interfere with the performance of Employee’s responsibilities as an employee of the Company.

3. Base Salary, Equity Award and Benefits .

(a) Employee’s annual base salary for the Employment Period shall initially be $335,000 (the “Base Salary”), effective January 1, 2018. The Base Salary shall be payable in equal installments in accordance with the Company’s general payroll practices and shall be subject to required withholding. Any change in Base Salary shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. During the Employment Period, Employee will be eligible to participate in the Company’s employee benefit programs.


(b) On the Effective Date, the Company shall issue to Employee 60,000 shares of restricted common stock of the Company (the “Restricted Stock”), which will be subject to the provisions of a restricted stock agreement between the Company and Employee issued under the Company’s 2014 Long-Term Incentive Plan.

(c) Employee shall be eligible for annual bonuses in accordance with the Management Incentive Plan (the “MIP”) of the Company, pursuant to such terms as shall be established by the Compensation Committee of the Board. The Employee’s target bonus percentage for the 2018 MIP shall be 80 percent (80)%. Employee will be eligible to participate in the Performance Unit Plan (the “PUP”) of the Company pursuant to the terms of that plan and such terms as shall be established by the Compensation Committee of the Board. The factor for the 2018 PUP to determine the Employee’s award value shall be 1.50.

(d) The Company shall reimburse Employee for all reasonable expenses incurred in the course of performing duties under this Agreement which are consistent with the Company’s policies in effect with respect to travel, entertainment and other business expenses pursuant to applicable Treasury Regulations.

(e) Employee may be eligible to receive annual merit raises approved at the discretion of the Compensation Committee of the Board of Directors of the Company.

(f) Employee shall be eligible for vacations in accordance with Company policies with a minimum of four weeks’ vacation during each year in the Employment Period.

4. Employment Term and Termination .

(a) The Employment Period shall continue until terminated upon the earlier of (i) the Expiration Date, (ii) Employee’s resignation with or without Good Reason or Employee’s death or Disability or (iii) the termination of the Employee by the Company with or without Cause.

(b) Employee’s employment with the Company will be “At Will,” meaning that either Employee or the Company may terminate Employee’s employment at any time and for any reason, with or without Cause or Good Reason. The date on which the Employees’ employment is terminated is referred herein as the “Termination Date.” If the reason for termination is without Cause or with Good Reason, Employee would receive a severance package consistent with the terms and conditions set forth in Section 5 below.

5. Severance .

(a) If Employee’s employment with the Company is terminated by the Company without Cause or by Employee with Good Reason prior to the Expiration Date, and provided that Employee signs and delivers to the Company a Confidential Severance and Release Agreement in a reasonable form as provided by the Company (the “Release Agreement”) within 60 days following the termination of Employee’s employment with the Company (such 60 th day being referred to as the “Release Date”) and does not revoke such signed Release Agreement, Employee shall be entitled to receive severance compensation equal to the following:


(i) if the Date of Termination occurs prior to the first anniversary of the Effective Date, 150 percent (150)% of the sum of the Employee’s annual Base Salary and Target Bonus for purposes of the MIP in effect for the year in which the Termination Date occurs (determined regardless of the actual results of the Company for that year) or

(ii) if the Date of Termination occurs on or after the first anniversary of the Effective Date and prior to the Expiration Date, 100 percent (100)% of the sum of the Employee’s annual Base Salary and Target Bonus for purposes of the MIP in effect for the year in which the Termination Date occurs (determined regardless of the actual results of the Company for that year), which amount under Section 5(a)(i) or (ii), as applicable, shall be payable in nine (9) monthly installments equal to one-ninth of such severance compensation, subject to required withholding, payable at the end of each of the next nine (9) full calendar months following the first full calendar month following the Release Date, and

(iii) if the Employee timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Employee for the monthly COBRA premium paid by the Employee for Employee and Employee’s dependents who were covered immediately preceding the Date of Termination. The reimbursement under Section 5(a)(2) shall be paid to the Employee prior to the last day of the month immediately following the month in which the Executive timely remits the premium payment, and the Employee shall be eligible to receive such reimbursement until the earliest of: (i) the 12-month anniversary of the Date of Termination; (ii) the date the Employee (or Employee’s dependents, if applicable) is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Employee receives substantially similar coverage from another employer or other source.

(b) Notwithstanding anything to the contrary herein contained, except to the extent required by law, the Company shall not be required to pay any amounts under this Section 5 or elsewhere in this Agreement if Employee is in breach of any of its obligations under this Agreement or any other Agreement with the Company, including without limitation, all employee policies of the Company and any obligation relating to the treatment of Company confidential information and any non-compete obligation.

(c) If Employee’s employment with the Company is terminated for Cause or death or Disability, or Employee resigns without Good Reason, Employee shall be entitled to receive: (i) Employee’s Base Salary earned and payable through the Termination Date; (ii) any accrued but unused vacation/time off to the extent required under applicable law; (iii) reimbursement for all incurred but unreimbursed expenses to the extent Employee is entitled to be reimbursed; and (iv) any other earned but unpaid compensation, if applicable, as of the Termination Date.


(d) For purposes of this Agreement, the following terms shall have the meanings set forth below:

“Cause” shall mean (i) Employee’s failure to substantially perform one or more of Employee’s essential duties and obligations to the Company (other than any such failure resulting from a Disability) which, to the extent such failure is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 60 days) after receipt of written notice from the Company; (ii) Employee’s refusal or failure to comply with the reasonable and legal directives of the Board of Directors after written notice from the Board describing Employee’s failure to comply and, if such failure is remediable, Employee’s failure to remedy same within 21 days of receiving written notice; (iii) any act of personal dishonesty, fraud or misrepresentation taken by Employee which was intended to result in or resulted in substantial gain or personal enrichment of the Employee at the expense of the Company; (iv) Employee’s violation of a federal or state law or regulation applicable to the Company’s business which violation was or is reasonably likely to be materially injurious to the Company; (v) Employee’s conviction of, or plea of nolo contendere or guilty to, a felony under the laws of the United States or any State that is reasonably likely to reasonably likely to be materially injurious to the Company; (vi) Employee’s abuse of drugs, other narcotics or alcohol during working hours or where such abuse (whenever occurring) impacts on Employee’s working day, (vii) Employee’s breach of any of his obligations under any written agreement with the Company (including without limitation this Agreement and any proprietary information and inventions assignment agreement with the Company) which, to the extent such breach is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 60 days) after receipt of written notice from the Company; or (viii) Employee’s violation of a policy of the Company which, to the extent such failure is remediable, Employee fails to remedy in a reasonable period of time (not to exceed 30 days) after receipt of written notice from the Company.

“Disability” shall have the meaning assigned to such term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

“Good Reason” shall exist upon the occurrence of one of the following Company actions (unless Employee consents in writing to such action(s)): (i) a material reduction of the Employee’s salary and employee benefits to which the Employee was entitled immediately prior to such reduction unless such reduction applies to all similarly situated executives, (ii) a material reduction in the duties, authority or responsibilities relative to the Employee’s duties, authority or responsibilities as in effect immediately prior to such reduction, provided, however, that if the Company assigns to the Employee duties for another senior executive position with the Company, such assignment shall not constitute Good Reason; or (iii) the relocation of the Employee to a facility or a location more than fifty (50) miles from the Employee’s then present location; provided, however, that (A) Employee must provide the Company with written notice of the occurrence of such action(s) within 60 days of the initial occurrence of such action(s) and of his intent to terminate employment based on such action(s), (B) the written notice must describe the event constituting Good Reason in reasonable detail, and (C) within 30 days from the date that such written notice is received by the Company, the Company must cure such action(s).


(e) If there is a Change of Control of the Company prior to the Expiration Date: (i) Restricted Stock granted pursuant to Section 3(b) will become vested as set forth in the Restricted Stock Agreement, (ii) awards granted pursuant to the then applicable MIP and PUP will become subject to, and affected by, the Change of Control provisions contained in such plans, and (iii) if Employee’s employment with the Company is terminated by the Company without Cause or by Employee for Good Reason prior to the Expiration Date, Employee will thereafter be entitled to receive severance pursuant and subject to the terms and conditions of Section 5 of this Agreement.

(f) Notwithstanding anything herein to the contrary, (i) to the extent required by Section 409A of the Code, each reimbursement or in-kind benefit provided under this Agreement shall be provided in a manner and at a time that complies with Section 409A; (ii) if at the time of Employee’s termination of employment with the Company, Employee is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of the commencement of any payments or benefits (or portions thereof) otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the payment or benefits shall be delayed to the earliest date required under Section 409A of the Code to the extent and amount necessary to comply with Section 409A of the Code, with such delayed payments to be accumulated and made in lump sum on the first business day following the earliest date permitted by Section 409A of the Code, (iii) for purposes of this Section 5, a termination of employment only occurs if it constitutes a “separation from service” under Section 409A of the Code, and (iv) each payment identified in Section 5(a)(i)-(iii), including each separate installment payment identified thereunder, will be considered the right to a series of separate payments. Notwithstanding any other provision in the Agreement, the Company and Employee will cooperate in good faith to amend or modify the Agreement so that the payments under this Agreement qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no representations that the payments under the Agreement shall be exempt from or comply with Section 409A of the Code.

6. Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by a nationally recognized overnight delivery service, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to Employee :

Matthew B. Marietta

_________________________

_________________________

Notices to the Company:

Flotek Industries, Inc.

Attn: General Counsel

10603 W. Sam Houston Pkwy. N., Suite 300

Houston, TX 77043

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or, if sent by first class mail, three (3) days after so mailed.


7. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

8. Complete Agreement . Except with respect to any proprietary information and inventions assignment agreement between the Company and the Employee, this Agreement embodies with respect to the subject matter hereof the complete agreement and understanding among the parties and supersedes and preempts with respect to the subject matter hereof any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

9. Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

10. Successors and Assigns . This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee, the Company and their respective heirs, successors and assigns, except that Employee may not assign his rights or delegate his obligations hereunder without the prior written consent of the Company except by operation of law to Employee’s estate upon the death of Employee.

11. Choice of Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.

12. Consent to Personal Jurisdiction . Subject to terms and conditions of Section 13, any suit, action or other proceeding arising out of or based upon this Agreement and any other agreement with the Company shall be brought in the U.S. District Court for the Southern District of Texas, Houston Division.

13. Arbitration and Equitable Remedies . Employee agrees that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Houston, Texas, in accordance with the rules then in effect of the American Arbitration Association, provided however, the parties will be entitled to full and liberal evidentiary discovery in accordance with the rules governing civil litigation in courts of the same jurisdiction. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final,


conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company shall pay the legal costs and expenses of such arbitration; however, the prevailing party shall be entitled to recover from the non-prevailing party all reasonable legal costs and expenses incurred including staff time, court costs, attorneys’ fees, and all other related expenses incurred in such arbitration.

14. Amendment and Waiver . The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of such provision or any other provision of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

FLOTEK INDUSTRIES, INC.
By:   /s/ John W. Chisholm
Name:   John W. Chisholm
Title:   President and Chief Executive Officer

 

/s/ Matthew B. Marietta
Matthew B. Marietta

SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

Exhibit 10.4

FLOTEK INDUSTRIES, INC.

RESTRICTED STOCK AGREEMENT

1.      Grant of Restricted Stock. Subject to the conditions described in this agreement (the “Award Agreement”) and in the Flotek Industries Inc. 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”), Flotek Industries, Inc., a Delaware corporation (the “Company”), hereby agrees to grant                  (“Participant”) shares of “Restricted Stock” of the Company.

2.      Number of Shares of Restricted Stock Granted .                  shares of Restricted Stock (Common Stock of the Company, $0.0001 par value per share).

3.      Grant Date.                  .

4.      Vesting. Subject to the satisfaction of the terms and conditions set forth in the Plan and this Award Agreement, including Participant’s continued employment/service with the Company through the applicable Vesting date(s), one-third (1/3) of the Restricted Stock granted hereunder shall Vest on December 31, 2018, one-third (1/3) of the Restricted Stock granted hereunder shall Vest on December 31, 2019 and the remaining one-third (1/3) of the Restricted Stock granted hereunder shall Vest on December 31, 2020.

5.      Issuance and Transferability .

(a)     Registration and Restricting Legend . Upon grant, the Restricted Stock granted hereunder shall be registered in the name of Participant and, unless and until such Restricted Stock vests, shall be left on deposit with the Company, or in trust or escrow pursuant to an agreement satisfactory to the Company, until such time as the restrictions on transfer have lapsed. If the shares of Restricted Stock are represented by certificates, such certificates shall be marked with the following legend:

“The shares represented by this certificate have been issued pursuant to the terms of the Flotek Industries, Inc. 2014 Long-Term Incentive Plan, as amended from time to time, and may not be sold, pledged, transferred, assigned or otherwise encumbered in any manner except as is set forth in the terms of the Restricted Stock Agreement dated                  .”

(b)     Book Entry Form . If the shares are held in book entry form, then such entry will reflect, in a manner sufficient to effect in a legally enforceable form that such shares of Restricted Stock are subject to the restrictions of this Award Agreement and the Plan.

(c)     Stock Power . Participant will deliver to the Company a stock power, in substantially the form as Exhibit A-1 attached hereto or such form as required by the Company, endorsed in blank, with respect to each Award of Restricted Stock.

(d)     Release of Restrictions . Upon Vesting of any portion of the shares of Restricted Stock and satisfaction of any other conditions required by the Plan or pursuant to this Award Agreement, the Company shall promptly either issue a stock certificate, without such restricted legend, for any shares of the Restricted Stock that have Vested, or, if the shares are held in book entry form, the Company shall remove the notations on the book entry registrations for any shares of the Restricted Stock that have Vested.


(e)     Prohibition on Transfer . Until restrictions lapse, the Restricted Stock shall not be transferable. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, or torts of Participant. Any purported assignment, alienation, pledge, attachment, sale, transfer or other encumbrance of the Restricted Stock, regardless of by whom initiated or attempted, prior to the lapse of restrictions shall be void and unenforceable against the Company. If, notwithstanding the foregoing, an assignment, alienation, pledge, attachment, sale, transfer or other encumbrance of the Restricted Stock is effected by operation of law, court order or otherwise, the affected Restricted Stock shall remain subject to the risk of forfeiture, Vesting requirement and all other terms and conditions of this Award Agreement. In the case of Participant’s death or Disability, Participant’s Vested rights under this Award Agreement (if any) may be exercised and enforced by Participant’s guardian or legal representative.

6.      Forfeiture .

(a)    In the event of Participant’s Termination for a reason other than a reason that causes Vesting pursuant to Section 6(b) or 6(c) of this Agreement, the unvested portion of the Restricted Stock held by Participant at that time shall immediately be forfeited and the Company shall repurchase such forfeited shares from the Participant for the lesser of (i) the amount paid by the Participant to the Company for such shares, if any, or (ii) the Fair Market Value of an equivalent number of shares of Common Stock determined on the date the Restricted Stock is forfeited.

(b)    The occurrence of any of the following events shall cause the portion of the Restricted Stock which is not yet Vested to be considered immediately Vested: (i) a Change of Control, (ii) the death of Participant, (iii) the Disability of Participant, or (iv) a termination by the Participant for Good Reason which occurs within 12 months after a Change in Control (as determined in the Plan). For purposes hereof, “Good Reason” shall exist upon the occurrence of one of the following Company actions (unless Participant consents in writing to such action(s)): (i) a material reduction of the Participant’s salary and Participant’s benefits to which the Participant was entitled immediately prior to such reduction, (ii) a material reduction in the duties, authority or responsibilities relative to the Participant’s duties, authority or responsibilities as in effect immediately prior to such reduction, or (iii) the relocation of the Participant to a facility or a location more than fifty (50) miles from the Participant’s then present location; provided, however, that (A) Participant must provide the Company with written notice of the occurrence of such action(s) within 60 days of the initial occurrence of such action(s) and of his or her intent to terminate employment based on such action(s), (B) the written notice must describe the event constituting Good Reason in reasonable detail, and (C) within 30 days from the date that such written notice is received by the Company, the Company must cure such action(s).

(c)    A Termination of the Participant by the Company which is not for Cause (and at a time that the Participant is otherwise willing and able to continue in employment) shall cause the portion of the Restricted Stock which is not yet Vested but which pursuant to its terms would with the passage of time only become Vested within twelve (12) months of the date of Termination to be considered immediately Vested. For clarity, (i) a Termination of


the Participant by the Company which is not for Cause shall not cause the Vesting of any other portion of the Restricted Stock than that referred to in the immediately preceding sentence and (ii) no Termination causing Vesting pursuant to Section 6(b) shall be considered a Termination by the Company which is without Cause.

7.      Ownership Rights . Subject to any reservations, conditions or restrictions set forth in this Award Agreement and/or the Plan, upon grant to Participant of the Restricted Stock, Participant shall be entitled to all voting rights applicable to the Restricted Stock during the Restricted Period. In the event of forfeiture of shares of Restricted Stock, the Participant shall have no further rights with respect to such Restricted Stock.

8.      Reorganization of the Company . The existence of this Award Agreement shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; any merger or consolidation of the Company; any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Restricted Stock or the rights thereof; the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

9.      Certain Restrictions . By executing this Award Agreement, Participant acknowledges that he will enter into such written representations, warranties and agreements and execute such documents as the Company may reasonably request in order to comply with the securities law or any other applicable laws, rules or regulations, or with this Award Agreement or the terms of the Plan.

10.      Amendment and Termination . This Award Agreement or the Plan may be amended or terminated in accordance with the terms of the Plan.

11.      Taxes and Withholdings .

(a)     Tax Consequences . The granting, Vesting and/or sale of all or any portion of the Restricted Stock may trigger tax liability. Participant agrees that he shall be solely responsible for any such tax liability. Participant is encouraged to contact his/her tax advisor to discuss any tax implications which may arise in connection with the Restricted Stock.

(b)     Withholding . Participant acknowledges that the Vesting of Restricted Stock granted pursuant to this Award Agreement, the making of an election under Section 83(b) of the Code and the Vesting and payment of any accrued dividends may result in federal, state or local tax withholding obligations. Participant understands and acknowledges that the Company will not deliver shares of Common Stock or make any payment of accrued dividends until it is satisfied that appropriate arrangements have been made to satisfy any tax obligation under this Award Agreement or the Plan and agrees to make appropriate arrangements suitable to the Company for satisfaction of all tax withholding obligations. Further, Participant hereby agrees and grants to the Company the right to withhold from any payments or amounts of compensation, payable in cash or otherwise, in order to meet any tax withholding obligations under this Award Agreement or the Plan. As such, if the Company requests that Participant take any action required to effect any action described in this Section and to satisfy the tax withholding obligation pursuant to this Award Agreement and the Plan, Participant hereby agrees to promptly take any such action.


(c)     Section 83(b) . Participant understands that any election under Section 83(b) of the Code with regard to the Restricted Stock must be made within thirty (30) days of the Grant Date and that, in the event of such election, Participant will so notify the Company in writing on or before such date.

12.      No Guarantee of Tax Consequences . The Company, Board and Committee make no commitment or guarantee to Participant that any federal, state or local tax treatment will apply or be available to any person eligible for benefits under this Award Agreement and assumes no liability whatsoever for the tax consequences to Participant.

13.      Severability . In the event that any provision of this Award Agreement is, becomes or is deemed to be illegal, invalid, or unenforceable for any reason, or would disqualify the Plan or this Award Agreement under any law deemed applicable by the Board or the Committee, such provision shall be construed or deemed amended as necessary to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board or the Committee, materially altering the intent of the Plan or this Award Agreement, such provision shall be stricken as to such jurisdiction, the Participant or this Award Agreement, and the remainder of this Award Agreement shall remain in full force and effect.

14.      Terms of the Plan Control . This Award Agreement and the underlying Award are made pursuant to the Plan. Notwithstanding anything in this Award Agreement to the contrary, the terms of the Plan, as amended from time to time and interpreted and applied by the Committee, shall govern and take precedence. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan, the terms of which are incorporated herein by reference.

15.      Governing Law . This Award Agreement shall be construed in accordance with (excluding any conflict or choice of law provisions of) the laws of the State of Delaware to the extent federal law does not supersede and preempt Delaware law.

16.      Consent to Electronic Delivery; Electronic Signature . Except as otherwise prohibited by law, in lieu of receiving documents in paper format, Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectuses supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other forms of communications) in connection with this and any other Award made or offered by the Company. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet to which Participant has access. Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may be required to deliver, and agrees that his/her electronic signature is the same as, and shall have the same force and effect as, his/her manual signature.

[ SIGNATURE PAGE FOLLOWS ]


COMPANY:
FLOTEK INDUSTRIES, INC.
By:    
Name:    
Title:    
Date:    
PARTICIPANT:
 
Address:
 
 
Date:    

Exhibit 10.5

FLOTEK INDUSTRIES, INC.

RESTRICTED STOCK AGREEMENT

1.      Grant of Restricted Stock. Subject to the conditions described in this agreement (the “Award Agreement”) and in the Flotek Industries Inc. 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”), Flotek Industries, Inc., a Delaware corporation (the “Company”), hereby agrees to grant                  (“Participant”) shares of “Restricted Stock” of the Company.

2.      Number of Shares of Restricted Stock Granted .                  shares of Restricted Stock (Common Stock of the Company, $0.0001 par value per share).

3.      Grant Date.                  .

4.      Vesting. Subject to the satisfaction of the terms and conditions set forth in the Plan and this Award Agreement, including Participant’s continued employment/service with the Company through the applicable Vesting date(s), one-half (1/2) of the Restricted Stock granted hereunder shall Vest on December 31, 2018, and the remaining one-half (1/2) of the Restricted Stock granted hereunder shall Vest on December 31, 2019.

5.      Issuance and Transferability .

(a)     Registration and Restricting Legend . Upon grant, the Restricted Stock granted hereunder shall be registered in the name of Participant and, unless and until such Restricted Stock vests, shall be left on deposit with the Company, or in trust or escrow pursuant to an agreement satisfactory to the Company, until such time as the restrictions on transfer have lapsed. If the shares of Restricted Stock are represented by certificates, such certificates shall be marked with the following legend:

“The shares represented by this certificate have been issued pursuant to the terms of the Flotek Industries, Inc. 2014 Long-Term Incentive Plan, as amended from time to time, and may not be sold, pledged, transferred, assigned or otherwise encumbered in any manner except as is set forth in the terms of the Restricted Stock Agreement dated                  .”

(b)     Book Entry Form . If the shares are held in book entry form, then such entry will reflect, in a manner sufficient to effect in a legally enforceable form that such shares of Restricted Stock are subject to the restrictions of this Award Agreement and the Plan.

(c)     Stock Power . Participant will deliver to the Company a stock power, in substantially the form as Exhibit A-1 attached hereto or such form as required by the Company, endorsed in blank, with respect to each Award of Restricted Stock.

(d)     Release of Restrictions . Upon Vesting of any portion of the shares of Restricted Stock and satisfaction of any other conditions required by the Plan or pursuant to this Award Agreement, the Company shall promptly either issue a stock certificate, without such restricted legend, for any shares of the Restricted Stock that have Vested, or, if the shares are held in book entry form, the Company shall remove the notations on the book entry registrations for any shares of the Restricted Stock that have Vested.


(e)     Prohibition on Transfer . Until restrictions lapse, the Restricted Stock shall not be transferable. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, or torts of Participant. Any purported assignment, alienation, pledge, attachment, sale, transfer or other encumbrance of the Restricted Stock, regardless of by whom initiated or attempted, prior to the lapse of restrictions shall be void and unenforceable against the Company. If, notwithstanding the foregoing, an assignment, alienation, pledge, attachment, sale, transfer or other encumbrance of the Restricted Stock is effected by operation of law, court order or otherwise, the affected Restricted Stock shall remain subject to the risk of forfeiture, Vesting requirement and all other terms and conditions of this Award Agreement. In the case of Participant’s death or Disability, Participant’s Vested rights under this Award Agreement (if any) may be exercised and enforced by Participant’s guardian or legal representative.

6.      Forfeiture .

(a)    In the event of Participant’s Termination for a reason other than a reason that causes Vesting pursuant to Section 6(b) or 6(c) of this Agreement, the unvested portion of the Restricted Stock held by Participant at that time shall immediately be forfeited and the Company shall repurchase such forfeited shares from the Participant for the lesser of (i) the amount paid by the Participant to the Company for such shares, if any, or (ii) the Fair Market Value of an equivalent number of shares of Common Stock determined on the date the Restricted Stock is forfeited.

(b)    The occurrence of any of the following events shall cause the portion of the Restricted Stock which is not yet Vested to be considered immediately Vested: (i) a Change of Control, (ii) the death of Participant, (iii) the Disability of Participant, or (iv) a termination by the Participant for Good Reason which occurs within 12 months after a Change in Control (as determined in the Plan). For purposes hereof, “Good Reason” shall exist upon the occurrence of one of the following Company actions (unless Participant consents in writing to such action(s)): (i) a material reduction of the Participant’s salary and Participant’s benefits to which the Participant was entitled immediately prior to such reduction, (ii) a material reduction in the duties, authority or responsibilities relative to the Participant’s duties, authority or responsibilities as in effect immediately prior to such reduction, or (iii) the relocation of the Participant to a facility or a location more than fifty (50) miles from the Participant’s then present location; provided, however, that (A) Participant must provide the Company with written notice of the occurrence of such action(s) within 60 days of the initial occurrence of such action(s) and of his or her intent to terminate employment based on such action(s), (B) the written notice must describe the event constituting Good Reason in reasonable detail, and (C) within 30 days from the date that such written notice is received by the Company, the Company must cure such action(s).

(c)    A Termination of the Participant by the Company which is not for Cause (and at a time that the Participant is otherwise willing and able to continue in employment) shall cause the portion of the Restricted Stock which is not yet Vested but which pursuant to its terms would with the passage of time only become Vested within twelve (12) months of the date of Termination to be considered immediately Vested. For clarity, (i) a Termination of the Participant by the Company which is not for Cause shall not cause the Vesting of any other portion of the Restricted Stock than that referred to in the immediately preceding sentence and (ii) no Termination causing Vesting pursuant to Section 6(b) shall be considered a Termination by the Company which is without Cause.


7.      Ownership Rights . Subject to any reservations, conditions or restrictions set forth in this Award Agreement and/or the Plan, upon grant to Participant of the Restricted Stock, Participant shall be entitled to all voting rights applicable to the Restricted Stock during the Restricted Period. In the event of forfeiture of shares of Restricted Stock, the Participant shall have no further rights with respect to such Restricted Stock.

8.      Reorganization of the Company . The existence of this Award Agreement shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; any merger or consolidation of the Company; any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Restricted Stock or the rights thereof; the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

9.      Certain Restrictions . By executing this Award Agreement, Participant acknowledges that he will enter into such written representations, warranties and agreements and execute such documents as the Company may reasonably request in order to comply with the securities law or any other applicable laws, rules or regulations, or with this Award Agreement or the terms of the Plan.

10.      Amendment and Termination . This Award Agreement or the Plan may be amended or terminated in accordance with the terms of the Plan.

11.      Taxes and Withholdings .

(a)     Tax Consequences . The granting, Vesting and/or sale of all or any portion of the Restricted Stock may trigger tax liability. Participant agrees that he shall be solely responsible for any such tax liability. Participant is encouraged to contact his/her tax advisor to discuss any tax implications which may arise in connection with the Restricted Stock.

(b)     Withholding . Participant acknowledges that the Vesting of Restricted Stock granted pursuant to this Award Agreement, the making of an election under Section 83(b) of the Code and the Vesting and payment of any accrued dividends may result in federal, state or local tax withholding obligations. Participant understands and acknowledges that the Company will not deliver shares of Common Stock or make any payment of accrued dividends until it is satisfied that appropriate arrangements have been made to satisfy any tax obligation under this Award Agreement or the Plan and agrees to make appropriate arrangements suitable to the Company for satisfaction of all tax withholding obligations. Further, Participant hereby agrees and grants to the Company the right to withhold from any payments or amounts of compensation, payable in cash or otherwise, in order to meet any tax withholding obligations under this Award Agreement or the Plan. As such, if the Company requests that Participant take any action required to effect any action described in this Section and to satisfy the tax withholding obligation pursuant to this Award Agreement and the Plan, Participant hereby agrees to promptly take any such action.

(c)     Section 83(b) . Participant understands that any election under Section 83(b) of the Code with regard to the Restricted Stock must be made within thirty (30) days of the Grant Date and that, in the event of such election, Participant will so notify the Company in writing on or before such date.


12.      No Guarantee of Tax Consequences . The Company, Board and Committee make no commitment or guarantee to Participant that any federal, state or local tax treatment will apply or be available to any person eligible for benefits under this Award Agreement and assumes no liability whatsoever for the tax consequences to Participant.

13.      Severability . In the event that any provision of this Award Agreement is, becomes or is deemed to be illegal, invalid, or unenforceable for any reason, or would disqualify the Plan or this Award Agreement under any law deemed applicable by the Board or the Committee, such provision shall be construed or deemed amended as necessary to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board or the Committee, materially altering the intent of the Plan or this Award Agreement, such provision shall be stricken as to such jurisdiction, the Participant or this Award Agreement, and the remainder of this Award Agreement shall remain in full force and effect.

14.      Terms of the Plan Control . This Award Agreement and the underlying Award are made pursuant to the Plan. Notwithstanding anything in this Award Agreement to the contrary, the terms of the Plan, as amended from time to time and interpreted and applied by the Committee, shall govern and take precedence. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan, the terms of which are incorporated herein by reference.

15.      Governing Law . This Award Agreement shall be construed in accordance with (excluding any conflict or choice of law provisions of) the laws of the State of Delaware to the extent federal law does not supersede and preempt Delaware law.

16.      Consent to Electronic Delivery; Electronic Signature . Except as otherwise prohibited by law, in lieu of receiving documents in paper format, Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectuses supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other forms of communications) in connection with this and any other Award made or offered by the Company. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet to which Participant has access. Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may be required to deliver, and agrees that his/her electronic signature is the same as, and shall have the same force and effect as, his/her manual signature.

[ SIGNATURE PAGE FOLLOWS ]


COMPANY:
FLOTEK INDUSTRIES, INC.
By:    
Name:    
Title:    
Date:    
PARTICIPANT:
 
Address:
 
 
Date: