Exhibit 10.5
SERVICE
AGREEMENT
This Service Agreement (the
“Agreement”) is on the 11th day of August, 2009 (the
“Effective Date”), by and between Chisholm Management,
Inc. and Protechnics II, Inc., jointly and severally (the
“Chisholm Companies”), and Flotek Industries, Inc., a
Delaware corporation (the “Company”).
WHEREAS, it has been proposed that
the Chisholm Companies provide services to the Company;
NOW, THEREFORE, in consideration of
the foregoing and the covenants, representations and agreements set
forth below, the Company and the Chisholm Companies hereby agree as
follows:
1. Retention . The Company
hereby retains the Chisholm Companies, and the Chisholm Companies
hereby agree to render services to the Company, upon the terms and
conditions contained in this Agreement.
2. Term of the Agreement .
The term of this Agreement (the “Term”) shall commence
on the Effective Date and shall continue until terminated in
accordance with Section 6.
3. Services to be Provided by the
Chisholm Companies .
3.1. Scope, Responsibilities and
Duties .
(a) The Chisholm Companies agree
that they will each employ John Chisholm throughout the term of
this Agreement, and that they will each make John Chisholm
available to the Company to provide services (the
“Services”) to the Company so that the Company may have
the benefit of the experience and knowledge possessed by John
Chisholm in assisting the Company with respect to its business and
operations as reasonably requested by the Board of Directors of the
Company.
(b) The Services shall be performed
at times and places selected by mutual agreement of the Company and
the Chisholm Companies within normal business hours. The Chisholm
Companies shall comply with all applicable laws and regulations in
the performance of the Services, including but not limited to
applicable securities laws.
(c) The Chisholm Companies shall
make such periodic reports to the Company relating to the Services
as the Board of Directors of the Company may, from time to time,
reasonably request.
3.2. Non-exclusivity .
Subject to the provisions of Sections 7 and 8 below, the Chisholm
Companies by reason of the obligations ascribed to it hereunder
shall not be limited in any manner in accepting other employment
and performing services for others, provided he fully performs his
obligations hereunder.
4. Compensation . As
compensation for the Services to be provided by the Chisholm
Companies to the Company, the Company shall pay to the Chisholm
Companies, and the Chisholm Companies agrees to accept, a monthly
fee of $24,000 payable to Protechnics II, Inc., and a monthly fee
of $8,000 payable to Chisholm Management, Inc., payable on a weekly
basis. In consideration for the services rendered by the Chisholm
Companies prior to the date of this Agreement, such compensation
shall be payable beginning on August 1, 2009. The Chisholm
Companies shall not be entitled to any other compensation for the
Services to be provided hereunder, except as provided herein. The
Company shall not be responsible for withholding from the
compensation payable to the Chisholm Companies any amounts for
federal, state or local income taxes, social security or state
disability or unemployment insurance.
5. Expenses . Upon receipt of
itemized vouchers, expense account reports and supporting documents
submitted to the Company in accordance with the Company’s
procedures then in effect and as approved by the Board of Directors
of the Company, the Company shall reimburse the Chisholm Companies
for all reasonable and necessary business expenses (including
travel and entertainment expenses) incurred ordinarily and
necessarily by the Chisholm Companies in connection with the
performance of the Chisholm Companies’ duties hereunder.
Notwithstanding the foregoing, however, the Chisholm Companies
shall not receive any reimbursement for automobile or cellular
telephone expenses.
6. Termination . The Company
or the Chisholm Companies may terminate this Agreement for reason
at any time upon thirty days advance notice. This agreement shall
terminate immediately upon the election by the Company of a new
Chief Executive Officer. It is understood that termination of this
Agreement shall not relieve a party hereto from any liability
which, at the time of such termination, has already accrued to the
other party. The following provisions and all subsections therein
shall survive any expiration or termination of this Agreement:
Sections 5, 6, 7, 8, 9.2, 10, 11, 12, 13, 14, 15, and 16. Except as
otherwise expressly provided in this Section 6, all other
rights and obligations of the parties shall terminate upon
termination of this Agreement.
7. Confidential Information
.
7.1. Acknowledgment of
Proprietary Interest . As between the parties, the Chisholm
Companies agrees that all Confidential Information is a valuable,
special and unique asset of the Company’s business (and may
constitute “trade secrets” under the Uniform Trade
Secrets Act and Texas state law), access to and knowledge of which
are essential to the performance of the Chisholm Companies’
duties hereunder. The Chisholm Companies acknowledges the
proprietary interest of the Company in all Confidential
Information. The Chisholm Companies agree that all Confidential
Information learned by The Chisholm Companies in connection with
the provision of Services or otherwise, whether developed by the
Chisholm Companies alone or in conjunction with others or
otherwise, is and shall remain the exclusive property of the
Company. The Chisholm Companies acknowledge and agree that his
disclosure or use of any Confidential Information in violation of
this Section 7 will result in irreparable injury and damage to
the Company.
2
7.2. Confidential Information
Defined . “Confidential Information” means all
confidential and proprietary information of the Company, written,
oral or computerized, as it may exist from time to time, including
without limitation (i) information derived from reports,
investigations, experiments, rese
