Exhibit 10.4

JUNIOR LIEN PATENT AND TRADEMARK SECURITY AGREEMENT

This Junior Lien Patent and Trademark Security Agreement dated as of March 31,
2010 (the “Patent and Trademark Security Agreement”) is made by Flotek
Industries, Inc., a Delaware corporation (the “Debtor”) and each subsidiary of
the Debtor signatory hereto (together with the Debtor, the “Grantors” and
individually, a “Grantor”), in favor of U.S. Bank National Association, as
Collateral Agent (in such capacity, together with its successors and assigns,
the “Collateral Agent”) for the benefit of the Secured Parties (as defined
herein).

Preliminary Statement

Pursuant to that certain Exchange Agreement dated as of March 31, 2010 (as
amended or otherwise modified from time to time, the “Exchange Agreement”) among
Debtor, the other Grantors and Whitebox Hedged High Yield Partners, LP (“WHHY”),
IAM Mini-Fund 14 Limited (“IAM”), Pandora Select Partners, LP (“Pandora”),
Whitebox Special Opportunities Fund, LP – Series B (“WSOB”), Whitebox Combined
Partners, LP (“WCP”), Whitebox Convertible Arbitrage Partners, LP (“WCAP”),
Whitebox Intermarket Partners LP (“WIP”), ECF Value Fund, L.P. (“ECF”), ECF
Value Fund II, L.P. (“ECF II”) and ECF Value Fund International Ltd. (“ECF
International”, together with WHHY, IAM, Pandora, WSOB, WCP, WCAP, WIP, ECF and
ECF II, collectively, the “Exchanging Noteholders”), the Debtor is issuing to
the Exchanging Noteholders up to $36,004,000 in aggregate principal amount of
the Company’s 5.25% Convertible Senior Secured Notes due 2028 (together with any
notes issued in substitution or exchange therefor, and as the same may be
amended, restated, supplemented or otherwise modified from time to time,
collectively, the “Notes”).

Grantors own the patents, patent registration, patent applications, trademarks,
trademark registrations, and trademark applications, and are parties to the
patent and trademark licenses listed on Schedule I attached hereto and by this
reference incorporated herein.

In connection with the Exchange Agreement, the Grantors entered into a Junior
Lien Pledge and Security Agreement of even date herewith (as amended or
otherwise modified from time to time, the “Pledge and Security Agreement”) in
favor of the Collateral Agent for the benefit of the Secured Parties (as defined
in the Pledge and Security Agreement), pursuant to which the Grantors have
granted to the Collateral Agent a security interest in all right, title and
interest of the Grantors in and to the Intellectual Property Collateral, as such
term is defined in the Pledge and Security Agreement, including, without
limitation, all right, title and interest of Grantors, in, to, and under all now
owned and hereafter acquired Patent Collateral and Trademark Collateral (each as
defined in the Pledge and Security Agreement), set forth on Schedule I attached
hereto, to secure the prompt payment, performance and observance of the Secured
Obligations (as defined in the Pledge and Security Agreement).

Agreement

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Grantors do hereby further confirm, and put on the public record,
their grant to the Collateral Agent of a security interest in, to, and under the
following, whether presently existing or hereafter created or acquired
(collectively, the “Patent and Trademark Collateral”);

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(a) (i) all inventions and discoveries, whether patentable or not, all letters
patent and applications for letters patent throughout the world, including but
not limited to all the property set forth as “Patents” on Schedule I hereto, and
any patent applications in preparation for filing, (ii) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals and reexaminations of
any of the items described in clause (i), and (iii) all patent licenses, and
other agreements providing any Grantor with the right to use any items of the
type referred to in clauses (i) and (ii) above;

(b) (i) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, certification
marks, collective marks, logos and other source or business identifiers, and all
goodwill of the business associated therewith, now existing or hereafter adopted
or acquired, including but not limited to all of the property set forth as
“Trademarks” on Schedule I hereto, whether currently in use or not, all
registrations and recordings thereof and all applications in connection
therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any office or agency of the United States of America, or
any State thereof or any other country or political subdivision thereof or
otherwise, and all common-law rights relating to the foregoing, (ii) the right
to obtain all reissues, extensions or renewals of the foregoing, (iii) all
trademark licenses for the grant by or to any Grantor of any right to use any
trademark, and (iv) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (i) and (ii), and to the
extent applicable clause (iii); and

(c) all products and proceeds of the foregoing, and rights associated therewith,
including, without limitation, licenses, royalties income, payments, claims,
damages and proceeds of infringement suits, any claim by Grantors against third
parties for past, present or future (i) infringement or dilution of any patent,
trademark, or patent or trademark registrations or licenses referred to herein,
the patent or trademark registrations issued with respect to the patent or
trademark applications referred to herein and the trademarks licensed under any
trademark license, or (ii) injury to the goodwill associated with any patent,
trademark, patent or trademark registration, or patent or trademark licensed
under any patent or trademark license.

This security interest is granted in conjunction with the security interests
granted to Secured Parties pursuant to the Pledge and Security Agreement.
Grantors hereby acknowledge and affirm that the rights and remedies of Secured
Parties with respect to the security interest in the Patent and Trademark
Collateral made and granted hereby are more fully set forth in the Pledge and
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.

[Signatures on following page]

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Junior Lien
Patent and Trademark Security Agreement to be duly executed and delivered by its
authorized officer as of the date first above written.

 

GRANTORS:

FLOTEK INDUSTRIES, INC.

By  

/s/ John Chisholm

  John Chisholm   President

TELEDRIFT COMPANY

FLOTEK PAYMASTER, INC.

MATERIAL TRANSLOGISTICS, INC.

PETROVALVE, INC.

TURBECO, INC.

USA PETROVALVE, INC.

FLOTEK INTERNATIONAL, INC.

PADKO INTERNATIONAL INCORPORATED

FLOTEK ECUADOR MANAGEMENT, LLC

FLOTEK ECUADOR INVESTMENTS, LLC

By  

/s/ John Chisholm

  John Chisholm   President

CESI CHEMICAL, INC.

CESI MANUFACTURING, LLC

SOONER ENERGY SERVICES, LLC

By  

/s/ John Chisholm

  John Chisholm   Chief Executive Officer

FLOTEK INDUSTRIES FZE

By  

/s/ John Chisholm

  John Chisholm   President

Signature Page to Junior Lien Patent and Trademark Security Agreement

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SCHEDULE I

TO

JUNIOR LIEN PATENT AND TRADEMARK SECURITY AGREEMENT

 

Item A. Patent Collateral

Issued Patents

 

Country

 

Serial No.

 

Filing Date

 

Inventor(s)

 

Title

USA   6,533,034   3/18/2003   Troy Barger   Centralized Stop Collar for Floating
Centralizer USA   5,829,952   11/3/1998   Darrel W. Shadden   Check Valve with
Reversible Valve Ball and Seat Canada   2,017,405   2/21/1995     Ball and
Seat-Type Valve for Downhole Rod Pump Canada   2,478,433   12/8/2009   John T.
Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for Well
Cleaning Venezuela   52500   10/7/1994     Ball and Seat-Type Valve for Downhole
Rod Pump USA   6,761,215   7/13/2004   James Eric Morrison and Guy Morrison, III
  Downhole Separator Method China (Peoples Republic)   ZL03824239.7   7/18/2007
    Downhole Separator and Method Eurasian Patent Organization   007040  
8/18/2006     Downhole Separator and Method

 

Schedule I to Junior Lien Patent and Trademark Security Agreement

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Country

 

Serial No.

 

Filing Date

 

Inventor(s)

 

Title

USA   7,122,509   10/17/2006   John Todd Sanner, Glenn S. Penny and Roger
Padgham   High Temperature Foamer Formulations for Downhole Injection USA  
7,544,639   6/9/2009   John T. Pursley, David L. Holcomb and Glenn S. Penny  
Composition and Process for the Treatment of Hydrogen Sulfide USA   7,380,606  
6/3/2008   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition
and Process for Well Cleaning Australia   2003278716   1/8/2009     Downhole
Separator and Method

Pending Patent Applications

 

Country

 

Serial No.

 

Filing Date

 

Inventor(s)

 

Title

Patent Cooperation Treaty   PCTUS9602445   2/23/1996     Improved Valve Plunger
for a Ball and Seat-Type Check Valve Canada   2,497,929   8/20/2003     Downhole
Separator and Method

 

Schedule I to Junior Lien Patent and Trademark Security Agreement

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Country

 

Serial No.

 

Filing Date

 

Inventor(s)

 

Title

Patent Cooperation Treaty/European Patent Office   03716227.8   2/28/2003   John
T. Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for
Well Cleaning Patent Cooperation Treaty/Norwegian National   2004 4148  
2/28/2003   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition
and Process for Well Cleaning USA  

339,248

 

Abandoned

  1/25/2006   Michael M. Brezinski   Method of Treating a Subterranean Formation
in the Presence of Ferric Ions and/or Sulfide Ions USA   518,648   9/11/2006  
Manoj Gopalan and Stephen B. Poe   Measurement While Drilling Apparatus and
Method of Using the Same Patent Cooperation Treaty   Publication No.
WO/2007/033126   9/12/2006     Measurement While Drilling Apparatus and Method
of Using the Same USA   Application No. 12/156,201   5/30/2008     Process for
Well Cleaning USA   Application No. 12/268,408   11/10/2008     Drag-Reducing
Copolymer Compositions USA   Application No. 61/174,617   5/1/2009     Low
Friction Centralizer

 

Schedule I to Junior Lien Patent and Trademark Security Agreement

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Country

 

Serial No.

 

Filing Date

 

Inventor(s)

 

Title

USA  

Application No. 12/618,535

 

Priority No. 61/114,125

  11/13/2009     Water-in-Oil Microemulsions for Oilfield Applications

Patent Applications in Preparation

NONE.

 

Item B. Trademark Collateral

Trademarks

 

Country

 

Trademark

 

Registration No.

 

Issue Date

USA   STIMLUBE   3,620,715   5/12/2009

Trademark Applications in Preparation

 

Country

 

Trademark

USA   FLOTEK USA   PETROVALVE USA   CESI USA   “OPEN CIRCLE” SYMBOL

 

Schedule I to Junior Lien Patent and Trademark Security Agreement