Exhibit 10.3
RETIREMENT
AGREEMENT
This Retirement Agreement
(“Agreement”) is entered into as of the 11th day of
August, 2009 (“Agreement Date”), by and between Jerry
D. Dumas, Sr., an individual (“Dumas”), and Flotek
Industries, Inc., a Delaware corporation (the
“Company”).
WHEREAS, Dumas is the President and
Chief Executive Officer of the Company;
WHEREAS, Dumas has rendered good and
valuable services to the Company, and has played a crucial role in
the growth and success of the Company;
WHEREAS, Dumas and the Company have
concluded that it is in their mutual best interests to enter into
agreements concerning the contemplated retirement of Dumas and the
transition of his duties to a successor;
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is
hereby expressly acknowledged, the undersigned parties agree as
follows:
1. Transition of Duties
.
(a) Dumas hereby resigns as the
Chief Executive Officer of the Company, and as an officer and
director of each subsidiary of the Company, effective as of the
earlier of the following two dates: (i) the date the Board of
Directors of the Company indicates as the date that it has
determined to make effective the election of a new Chief Executive
Officer of the Company, or (ii) January 1,
2010.
(b) Dumas hereby resigns as the
President of the Company effective as of the earlier of the
following dates: (i) the date the Board of Directors of the
Company indicates as the date that it has determined to make
effective the election of a new President or interim President of
the Company, or (ii) January 1, 2010. The parties intend
that the Board of Directors of the Company will appoint an interim
President of the Company as soon as possible following the
execution of this Agreement.
(c) Subject to Section 2(e) and
(f), Dumas will continue as an employee of the Company through
June 30, 2010 (the “Employment Term”). During the
Employment Term: (i) so long as he is an employee of the
Company, he will only perform the duties requested by the Board of
Directors of the Company, provided that such duties shall not
exceed in scope those duties customarily performed by the Chief
Executive Officer or President of the Company, and provided further
that such duties shall be performed in a manner which strictly
conforms to all policies, procedures and directives of the Board of
Directors of the Company, and (ii) if his successor has been
elected as Chief Executive Officer or President of the Company, he
will for a period not to exceed 3 months from the date of the
election of each such successor, assist in the transition of his
duties to such successor(s) as such successor(s) and the Board of
Directors of the
Company shall reasonably request. The Employment
Term shall terminate prior to June 30, 2010 upon the earlier
death of Dumas, the Employment Disability of Dumas, or as provided
pursuant to Section 2(e) or (f). For purposes hereof, the term
“Employment Disability” means Dumas being subject to a
physical or mental illness or condition that qualifies him to
receive disability insurance benefits pursuant to Company
disability insurance policies for eight (8) or more
consecutive weeks. The date of any termination of the Employment
Term prior to June 30, 2010 because of the death of Dumas or
because of his Employment Disability is referred to herein as an
“Early Termination Date.”
(d) The resignations of Dumas
pursuant to Sections 1(a) and (b) shall have no effect on his
status as a director of the Company. Dumas shall remain as a
director of the Company until his term as member of the Board
expires in accordance with the Delaware General Corporation Law and
the governing documents of the Company at the next annual meeting
of the stockholders of the Company, and thereafter shall continue
as a director of the Company if and only if he is reelected at such
meeting.
(e) The resignations of Dumas
pursuant to Sections 1(a) and (b) shall have no effect on his
status as the Chairman of the Board of the Company. Dumas shall
remain as the Chairman of the Board of Directors of the Company
until the next annual meeting of the stockholders of the Company,
provided, however, that if (i) for any reason such annual
meeting has not been held on or prior to June 30, 2010,
(ii) the Employment Term is terminated for Cause pursuant to
Section 2(f), or (iii) Dumas is disabled to the extent
such disability materially interferes with the performance of his
duties as Chairman, Dumas may be replaced as Chairman at any time
thereafter as determined by the Board of Directors of the
Company.
2. Compensation and Benefits
.
a) Subject to Section 2(e) and
(f), Dumas shall continue to receive his current annual salary of
$450,000 throughout the Employment Term in accordance with the
payroll policies and practices of the Company, adjusted from time
to time for any Company-wide cost of living salary adjustments.
Dumas acknowledges that such payroll policies of the Company among
other things includes the policy of the Company to currently defer
the payment of 20% of the cash compensation of its employees on an
ongoing basis, and he hereby agrees that such deferral shall be
applicable to payments to Dumas pursuant to this Section 2(a)
so long as and to the extent such Company-wide policy remains in
force (the “Deferral Policy”).
b) Subject to Section 2
(e) and (f), within 5 days of the Subsequent Release Date (as
hereinafter defined), Dumas will receive a one time cash payment of
$225,000.
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c) Dumas will continue to be
entitled to continue to receive the benefits generally available to
the employees of the Company throughout the Employment Term. At the
expiration of the Employment Term, Dumas shall no longer be
entitled to coverage under any employee benefit plan of the Company
except with respect to any continuation coverage available under
the Consolidated Omnibus Budget Reconciliation Act of 1985 and the
terms of such plan. Dumas shall be entitled to be reimbursed for
reasonable out of pocket expenses incurred by him in the
performance of his duties to the Company in accordance with the
then applicable expense reimbursement policies of the
Company.
d) All payments to Dumas shall be
subject to withholding of employment, FICA, and other taxes as
required by law.
e) The obligation of the Company to
pay compensation pursuant to Section 2(a) or
Section 2(b), the employment of Dumas pursuant to
Section 1(c), the vesting of Non-Vested Options and Non-Vested
Shares pursuant to Section 3, and the terms of
Section 4(b) and Section 6(c) becoming effective shall
all be conditioned on both of the following conditions being
satisfied: (i) Dumas (or, if he is deceased or does not have
legal capacity, his legally empowered personal representative)
delivering to the Company a release agreement identical in form to
Exhibit A within 21 days of the date of this Agreement (the
“Age Discrimination Release”), and (ii) the 7 day
time period during which Dumas has the right to revoke the Age
Discrimination Release pursuant to the terms thereof expiring
without Dumas having exercised such revocation right. The
obligation of the Company to pay compensation pursuant to
Section 2(b) shall be additionally conditioned on Dumas ( or,
if he is deceased or does not have legal capacity, his legally
empowered personal representative), delivering to the Company a
release agreement identical in form to Exhibit B (the
“Subsequent Period Release”) during the period
beginning on June 30, 2009, and ending on July 15, 2010
(with such period extended as required to reasonably permit the
appointment of a personal representative if Dumas has died or
become legally incapacitated), and Dumas or such representative not
revoking the Subsequent Period Release within the 7 day revocation
period provided for therein. The date upon which such 7 day
revocation period has expired is referred to herein as the
“Subsequent Release Date.” The Company shall execute
and deliver the Age Discrimination Release and the Subsequent
Period Release to Dumas promptly upon the execution and delivery of
such release by Dumas to the Company pursuant to the terms
thereof.
(f) The Company shall have the right
to terminate the Employment Term for “Cause.” For
purposes hereof, the term “Cause” means
(i) Dumas’s continued failure to substantially perform
one or more of Dumas’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, Dumas
fails to remedy in a reasonable period of time (not to exceed ten
(10) days) after receipt of written notice from the Company of
such failure; (ii) Dumas’s refusal or failure to comply
with
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the reasonable and legal directives of the Board
of Directors after written notice from the Board describing
Dumas’s failure to comply and, if such failure is remediable,
Dumas’s failure to remedy same within ten (10) days of
receiving written notice of such failure; (iii) any act of
personal dishonesty, fraud or misrepresentation taken by Dumas
which was intended to result in gain or personal enrichment of the
Dumas at the expense of the Company; (iv) Dumas’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) Dumas’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 be materially
injurious to the Company; (vi) Dumas’s breach of any of
his obligations under this Agreement; or (vii) Dumas’s
violation of a material policy of the Company and, if such
violation is remediable, Dumas’s failure to remedy same
within ten (10) days of receiving written notice of such
violation. The termination of the Employment Term prior to
June 30, 2010 for Cause pursuant to the terms of this
Section 2(f) shall result in the obligation of the Company to
pay compensation pursuant to Section 2(a) and
Section 2(b) to terminate immediately as of the date of
termination, and the provisions of Section 3 requiring the
vesting of Non-Vested Options and Non-Vested Shares, and the terms
of Section 6(c), to each have no further force or effect. The
termination of the Employment Term because of the death of Dumas or
his Employment Disability shall not be considered a termination for
Cause.
3. Equity Awards .
(a) Dumas and the Company agree that
the grant to Dumas of the options to acquire shares of the stock of
the Company described on Schedule C as “Vested Options”
are “vested” as of the date hereof and shall be
exercisable by Dumas pursuant to the terms of the respective stock
option agreements and the applicable stock option plans of the
Company. Dumas and the Company agree that (i) the options to
acquire shares of stock of the Company listed in Schedule C as
“Non-Vested Options” are not vested as of the date
hereof, and (ii) the Non-Vested Options shall not be
considered to have been terminated by reason of the execution and
delivery of this Agreement and shall thus continue to be subject to
vesting through the remainder of the Employment Term as provided
pursuant to terms of the respective stock option agreements and the
applicable stock option plans of the Company. Subject to
Section 2(e) and (f), all of the Non-Vested Options shall be
considered vested and not subject to any obligation on the part of
Dumas to provide any additional services to avoid forfeiture as of
the earlier of June 30, 2010 or the Early Termination
Date.
(b) The number of shares of the
common stock of the Company issued pursuant to the terms of the
restricted stock agreements between the Company and Dumas listed on
Schedule D (the “Restricted Stock Agreements”) as
“Vested Shares” have become vested pursuant to the
term
