Unassociated Document


    

      


      


      Exhibit
        4.6

      


      


      SUBSCRIPTION
        AND REGISTRATION RIGHTS AGREEMENT

      


      
        
          

        

      

      


      Private
        Offering

      of
        Shares of

      Common
        Stock

      


      


      This
        Subscription and Registration Rights Agreement (this “Agreement”),
        made
        as of the date set forth below by and between Flotek Industries, Inc, a Delaware
        corporation (the “Company”),
        and
        the undersigned (the “Subscriber”),
        is
        intended to set forth certain representations, covenants and agreements between
        the Company and the Subscriber, with respect to the offering (the “Offering”)
        for
        sale by the Company of shares of Common Stock, par value $.0001 per share
        (the
“Common
        Stock”),
        as
        described in the Company’s Private Placement Memorandum dated August 17, 2005
        (the “Memorandum”),
        a
        copy of which has been delivered to Subscriber. The Shares are being offered
        by
        the Company through Energy Capital Solutions, LP, as placement agent (the
        “Placement
        Agent”).

      


      1.  Subscription.
        Subject
        to the terms and conditions hereof, the Subscriber hereby irrevocably subscribes
        for and agrees to purchase from the Company the number of shares of Common
        Stock
        (the “Shares”)
        set
        forth under the Subscriber’s name on the signature page hereto at a purchase
        price of $16.30 per share (the “Offering
        Price”),
        and
        the Company agrees to sell such Shares to the Subscriber at the Offering
        Price,
        subject to the Company’s right to sell to the Subscriber such lesser number of
        Shares as the Company may, in its sole discretion, deem necessary or
        desirable.

       

      2.  Delivery
        of Subscription Amount; Acceptance of Subscription; Delivery of
        Shares.
        Subscriber understands and agrees that this subscription is made subject
        to the
        following terms and conditions:

       

      (a)  Subscriber
        understands that separate subscription agreements will be executed with other
        Subscribers for up to 1,300,000
        shares of Common Stock to be sold in the Offering;

       

      (b)  Contemporaneously
        with the execution and delivery of this Agreement, Subscriber shall execute
        and
        deliver the Certificate of Accredited Investor Status, and shall submit payment
        in the form of a check made payable to Flotek Industries, Inc. or wire to
        the
        Company, to hold in a non-interest bearing account, immediately available
        funds
        in the amount equal to the Offering Price multiplied by the number of Shares
        for
        which the Subscriber has subscribed (the “Subscription
        Amount”)
        in
        accordance with the Subscription Instructions set forth on Exhibit A
        hereto;

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      (c)  The
        subscription for Shares shall be deemed to be accepted only when this Agreement
        has been signed by an authorized officer of the Company, and the deposit
        of the
        Subscription Amount for clearance will not be deemed an acceptance of this
        Agreement;

       

      (d)  The
        Company shall have the right to reject this subscription, in whole or in
        part
        and shall have the right to allocate Shares among subscribers in any manner
        it
        may desire;

       

      (e)  The
        payment of the Subscription Amount (or, in the case of rejection of a portion
        of
        the Subscriber’s subscription, the part of the payment relating to such rejected
        portion) will be returned promptly, without interest, if Subscriber’s
        subscription is rejected in whole or in part or if the Offering is withdrawn
        or
        canceled; 

       

      (f)  The
        Placement Agent and the Company may conduct one or more closings of this
        Offering (each a “Closing”)
        until
        all 1,300,000 Shares of Common Stock offered hereby are sold;

       

      (g)  The
        Company may, in its sole discretion, terminate this Offering at any time
        and
        accept any subscriptions then in its receipt;

       

      (h)  Certificates
        representing the Shares purchased will be issued in the name of each Subscriber
        within 14 days of each Closing; and

       

      (i)  The
        representations and warranties of the Company and Subscriber set forth herein
        shall be true and correct as of the date that the Company accepts this
        subscription.

       

      3.  Terms
        of Subscription.

       

      (a)  The
        subscription period will begin as of August
        15, 2005, and will continue until such time as the Company terminates it
        in its
        sole discretion.

       

      (b)  The
        Placement Agent will receive a servicing fee of $15,000 and a placement
        management fee equal to six percent (6.0%) of the aggregate purchase price
        of
        the Shares sold. The Company shall also pay all expenses in connection with
        the
        Offering, except for those expenses that the Placement Agent has agreed to
        pay.

       

      (c)  If
        the
        Subscriber is not a United States citizen, the Subscriber hereby represents
        that
        it has satisfied itself as to the full observance of the laws of its
        jurisdiction in connection with any invitation to subscribe for the Shares
        or
        any use of this Agreement, including (i) the legal requirements within its
        jurisdiction for the purchase of the Shares, (ii) any foreign exchange
        restrictions applicable to such purchase, (iii) any governmental or other
        consents that may need to be obtained, and (iv) the income tax and other
        tax
        consequences, if any, that may be relevant to the purchase, holding, redemption,
        sale or transfer of the Shares. The Subscriber’s subscription and payment for,
        and his or her continued beneficial ownership of the Shares, will not violate
        any applicable securities or other laws of the Subscriber’s
        jurisdiction.

       

      
        
          
          

        

        
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      4.  Registration
        Rights.

       

      (a)  Subscriber
        acknowledges that it is acquiring the Shares for its own account and for
        the
        purpose of investment and not with a view to any distribution or resale thereof
        within the meaning of the Securities Act of 1933, as amended (the “Securities
        Act”).
        The
        Subscriber further agrees that it will not sell, assign or transfer the Shares
        at any time in violation of the Securities Act and acknowledges that, in
        taking
        unregistered securities, it must continue to bear the economic risk of its
        investment for an indefinite period of time because of the fact that the
        Shares
        have not been registered under the Securities Act, and further realizes that
        the
        Shares cannot be sold unless subsequently registered under the Securities
        Act or
        an exemption from such registration is available. The Subscriber also
        acknowledges that appropriate legends reflecting the status of the Shares
        under
        the Securities Act may be placed on the face of the certificates for such
        shares
        at the time of their transfer and delivery to the holder thereof.

       

      (b)  The
        Shares may not be transferred except in a transaction which is in compliance
        with the Securities Act. Except as provided hereafter with respect to
        registration of the Shares, it shall be a condition to any such transfer
        that
        the Company shall be furnished with an opinion of counsel to the holder of
        such
        Shares, reasonably satisfactory to the Company, to the effect that the proposed
        transfer would be in compliance with the Securities Act.

       

      (c)  Within
        60
        days after the last sale of shares of Common Stock in the Offering, the Company
        shall use its commercially reasonable efforts to prepare and file with the
        Securities and Exchange Commission (the “SEC”),
        a
        registration statement on Form S-3 (or any replacement thereof) and such
        other
        documents as may be necessary in the opinion of counsel for the Company,
        and use
        its commercially reasonable efforts to have such registration statement declared
        effective as soon as reasonably practicable after such filing, in order to
        comply with the provisions of the Securities Act so as to permit the registered
        resale of the Shares, for a period of two (2) years following the last Closing
        of the Offering by each and every holder of Shares, except for those holders
        who
        designate on the signature page hereto that they do not wish to have their
        Shares included in the registration statement. The Shares that are registered
        for resale under such registration statement are referred to herein as the
        “Offering Shares,” and the Subscribers who are eligible to sell their Offering
        Shares under such registration statement, together with their affiliates,
        are
        hereafter referred to as “Offering Holders.” The Company will include in such
        registration statement (i) the information required under the Securities
        Act to be so included concerning the Offering Holders, as provided by the
        Offering Holders on the signature pages to this Agreement and the other
        Subscription and Registration Rights Agreements entered into in connection
        with
        the Offering, including any changes in such information that may be provided
        by
        the Offering Holders in writing to the Company from time to time, and
        (ii) a section entitled “Plan of Distribution,” substantially in the form
        of Exhibit C hereto, that describes the various procedures that may
        be used
        by the Offering Holders in the sale of their Offering Shares.

       

      (d)  Notwithstanding
        the foregoing provisions of this Section 4, the Company may voluntarily
        suspend the effectiveness of any such registration statement for a limited
        time,
        which in no event shall be longer than 60 days in any three month period
        and no
        longer than 120 days in any twelve month period, if the Company has been
        advised
        in writing by counsel or underwriters to the Company that the offering of
        any
        Offering Shares pursuant to the registration statement would materially
        adversely affect, or would be improper in view of (or improper without
        disclosure in a prospectus), a proposed financing, reorganization,
        recapitalization, merger, consolidation, or similar transaction involving
        the
        Company. The Company shall notify all Offering Holders to such effect, and,
        upon
        receipt of such notice, each such Offering Holder shall immediately discontinue
        any sales of Offering Shares pursuant to such Registration Statement until
        such
        Offering Holder has received copies of a supplemented or amended prospectus
        or
        until such Offering Holder is advised in writing by the Company that the
        then
        current prospectus may be used and has received copies of any additional
        or
        supplemental filings that are incorporated or deemed incorporated by reference
        in such prospectus.

       

      
        
          
          

        

        
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      (e)  If
        any
        event occurs that would cause any such registration statement to contain
        a
        material misstatement or omission or not to be effective and usable during
        the
        period that such registration statement is required to be effective and usable,
        the Company shall promptly notify the Offering Holders of such event and,
        if
        requested, the Offering Holders shall immediately cease making offers of
        Offering Shares and return all prospectuses to the Company. The Company shall
        promptly file an amendment to the registration statement to correct such
        misstatement or omission and use its commercially reasonable efforts to cause
        such amendment to be declared effective as soon as practicable thereafter.
        The
        Company shall promptly provide the Offering Holders with revised prospectuses
        and, following receipt of the revised prospectuses, the Offering Holders
        shall
        be free to resume making offers of the Offering Shares.

       

      (f)  Notwithstanding
        any provision contained herein to the contrary, the Company’s obligation to
        include, or continue to include, Offering Shares in any such registration
        statement under this Section 4 shall terminate to the extent such
        shares
        are eligible for resale under Rule 144(k) promulgated under the Securities
        Act.

       

      (g)  If
        and
        whenever the Company is required by the provisions of this Agreement to use
        its
        commercially reasonable efforts to effect the registration of the Offering
        Shares under the Securities Act for the account of an Offering Holder, the
        Company will, as promptly as possible:

       

      (i)  prepare
        and file with the SEC a registration statement with respect to such securities
        and use its commercially reasonable efforts to cause such registration statement
        to become and remain effective;

       

      (ii)  prepare
        and file with the SEC such amendments and supplements to such registration
        statement and the prospectus used in connection therewith as may be necessary
        to
        keep such registration statement effective and to comply with the requirements
        of the Securities Act and the rules and regulations promulgated by the SEC
        thereunder relating to the sale or other disposition of the securities covered
        by such registration statement; and

       

      (iii)  furnish
        to each Offering Holder such numbers of copies of a prospectus, including
        a
        preliminary prospectus, complying with the requirements of the Securities
        Act,
        and such other documents as such Offering Holder may reasonably request in
        order
        to facilitate the public sale or other disposition of the Offering Shares
        owned
        by such Offering Holder, but such Offering Holder shall not be entitled to
        use
        any selling materials other than a prospectus and such other materials as
        may be
        approved by the Company, which approval will not be unreasonably
        withheld.

       

      
        
          
          

        

        
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      (h)  Except
        as
        provided below in this Section 4, the expenses incurred by the Company
        in
        connection with action taken by the Company to comply with this Section 4,
        including, without limitation, all registration and filing fees, printing
        and
        delivery expenses, accounting fees, fees and disbursements of counsel to
        the
        Company, consultant and expert fees, premiums for liability insurance, if
        the
        Company chooses to obtain such insurance, obtained in connection with a
        registration statement filed to effect such compliance and all expenses,
        including counsel fees, of complying with any state securities laws, shall
        be
        paid by the Company. All fees and disbursements of any counsel, experts,
        or
        consultants employed by any Offering Holder shall be borne by such Offering
        Holder. The Company shall not be obligated in any way in connection with
        any
        registration pursuant to this Section 4 for any selling commissions
        or
        discounts payable by any Offering Holder to any underwriter or broker of
        securities to be sold by such Offering Holder. Subscriber agrees to pay all
        expenses required to be borne by such Offering Holder.

       

      (i)  In
        the
        event of any registration of shares of Common Stock pursuant to this
        Section 4, the Company will indemnify and hold harmless each Offering
        Holder, its officers, directors and each underwriter of such securities,
        and any
        person who controls such Offering Holder or underwriter within the meaning
        of
        Section 15 of the Securities Act, against all claims, actions, losses,
        damages, liabilities and expenses, joint or several, to which any of such
        persons may become subject under the Securities Act or otherwise, insofar
        as
        such losses, claims, damages, liabilities or actions arise out of or are
        based
        upon any untrue statement of any material fact contained in any registration
        statement under which such securities were registered under the Securities
        Act,
        any preliminary prospectus or final prospectus contained therein, or any
        amendment or supplement thereof, or arise out of or are based upon the omission
        to state therein a material fact required to be stated therein or necessary
        to
        make the statements therein, in light of the circumstances under which they
        were
        made, not misleading, and will reimburse such Offering Holder, its officers,
        directors and each underwriter of such securities, and each such controlling
        person or entity for any legal and any other expenses reasonably incurred
        by
        such Offering Holder, such underwriter, or such controlling person or entity
        in
        connection with investigating or defending any such loss, claim, damage,
        liability, or action; provided, however, that the Company will not be liable
        in
        any such case to the extent that any such loss, claim, damage, liability
        or
        action arises directly out of or is based primarily upon an untrue statement
        or
        omission made in said registration statement, said preliminary prospectus
        or
        said final prospectus, or said amendment of supplement in reliance upon and
        in
        conformity with written information furnished to the Company by any Offering
        Holder or any such underwriter specifically for use in the preparation thereof;
        and provided, further however, that the Company will not be liable in any
        such
        case to the extent that any such loss, claim, damage or liability or action
        arises directly out of or is based primarily upon an untrue statement or
        omission made in any preliminary prospectus or final prospectus if (i) such
        Offering Holder failed to send or deliver a copy of the final prospectus
        or
        prospectus supplement with or prior to the delivery of written confirmation
        of
        the sale of the Offering Shares, and (ii) the final prospectus or prospectus
        supplement would have corrected such untrue statement or omission.

       

      (j)  At
        any
        time when a prospectus relating to the Offering is required to be delivered
        under the Securities Act, the Company will notify the Offering Holder of
        the
        happening of any event, upon the notification or awareness of such event
        by an
        executive officer of the Company, as a result of which the prospectus included
        in such registration statement, as then in effect, includes an untrue statement
        of material fact or omits to state a material fact required to be stated
        therein
        or necessary to make the statements therein not misleading in light of the
        circumstances then existing.

       

      
        
          
          

        

        
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      (k)  In
        the
        event of any registration of any securities under the Securities Act pursuant
        to
        this Section 4, Subscriber agrees to indemnify and hold harmless the
        Company, its officers, directors and any person who controls the Company
        within
        the meaning of Section 15 of the Securities Act, against any losses,
        claims, damages, liabilities, or actions, joint or several, to which the
        Company, its officers, directors, or such controlling person or entity may
        become subject under the Securities Act or otherwise, insofar as such losses,
        claims, damages, liabilities, or actions arise out of or are based upon any
        untrue statement of any material fact contained in any registration statement
        under which such securities were registered under the Securities Act, any
        preliminary prospectus or final prospectus contained therein, or any amendment
        or supplement thereto, or arise out of or are based upon the omission to
        state
        therein a material fact required to be stated therein or necessary to make
        the
        statements therein not misleading, in each case to the extent and only to
        the
        extent that any such loss, claim, damage, liability, or action arises out
        of or
        is based upon an untrue statement or omission made in said registration
        statement, said preliminary prospectus or said final prospectus or said
        amendment or supplement in reliance upon and in conformity with written
        information furnished to the Company by Subscriber or any affiliate (as defined
        in the Securities Act) of Subscriber specifically for use in the preparation
        thereof.

       

      (l)  Any
        party
        entitled to indemnification hereunder will (i) give prompt written
        notice
        to the indemnifying party of any claim with respect to which it seeks
        indemnification and (ii) unless in such indemnified party’s reasonable
        judgment a conflict of interest between such indemnified and indemnifying
        parties may exist with respect to such claim, permit such indemnifying party
        to
        assume the defense of such claim with counsel reasonably satisfactory to
        the
        indemnified party. If such defense is assumed, the indemnifying party will
        not
        be subject to any liability for any settlement made by the indemnified party
        without its consent (which consent may not be unreasonably withheld). An
        indemnifying party who is not entitled to, or elects not to, assume the defense
        of a claim will not be obligated to pay the fees and expenses of more than
        one
        counsel for all parties indemnified by such indemnifying party with respect
        to
        such claim, unless in the reasonable judgment of any indemnified party a
        conflict of interest may exist between such indemnified party and any other
        of
        such indemnified parties with respect to such claim.

       

      (m)  With
        a
        view to making available to the Offering Holder the benefits of Rule 144
        promulgated under the Securities Act, the Company agrees that it will use
        its
        commercially reasonable efforts to maintain registration of its Common Stock
        under Section 12 or 15 of the Securities and Exchange Act of 1934,
        as
        amended (the “Exchange
        Act”),
        and
        to file with the SEC in a timely manner all reports and other documents required
        to be filed by an issuer of securities registered under the Exchange Act
        so as
        to maintain the availability of Rule 144. Upon the request of any
        record
        owner, the Company will deliver to such owner a written statement as to whether
        it has complied with the reporting requirements of Rule 144.

       

      
        
          
          

        

        
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      5.  Representations
        and Warranties of the Subscriber.
        Subscriber hereby represents and warrants to the Company as
        follows:

       

      (a)  Subscriber
        is acquiring the Shares for its own account, for investment and not with
        a view
        to, or for resale in connection with, any distribution or public offering
        thereof within the meaning of the Securities Act, and applicable state
        securities laws.

       

      (b)  The
        Subscriber understands that (A) the Shares (1) have not been registered under
        the Securities Act or any state securities laws, (2) will be issued in reliance
        upon an exemption from the registration and prospectus delivery requirements
        of
        the Securities Act pursuant to Section 4(2) and/or Regulation D thereof,
        (3)
        will be issued in reliance upon exemptions from the registration and prospectus
        delivery requirements of state securities laws which relate to private offerings
        and (4) must be held by the Subscriber indefinitely, and (B) the Subscriber
        must
        therefore bear the economic risk of such investment indefinitely unless a
        subsequent disposition thereof is registered under the Securities Act and
        applicable state securities laws or is exempt therefrom. Subscriber further
        understands that such exemptions depend upon, among other things, the bona
        fide
        nature of the investment intent of the Subscriber expressed herein. Pursuant
        to
        the foregoing, the Subscriber acknowledges that the certificates representing
        the Shares acquired by the Subscriber shall bear a restrictive legend
        substantially as follows:

       

      “THE
        SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND STATE SECURITIES LAWS,
        AND MAY
        NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
        DISPOSED OF UNLESS (I) REGISTERED UNDER THE APPLICABLE SECURITIES LAWS OR
        (II)
        AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE BOTH REASONABLY
        SATISFACTORY TO THE COMPANY, HAS BEEN DELIVERED TO THE COMPANY AND SUCH OPINION
        STATES THAT THE SHARES MAY BE TRANSFERRED WITHOUT SUCH
        REGISTRATION.”

      


      (c)  The
        Subscriber has knowledge, skill and experience in financial, business and
        investment matters relating to an investment of this type and is capable
        of
        evaluating the merits and risks of such investment and protecting the
        Subscriber’s interest in connection with the acquisition of the Shares. The
        Subscriber understands that the acquisition of the Shares is a speculative
        investment and involves substantial risks and that the Subscriber could lose
        the
        Subscriber’s entire investment in the Shares. Further, the undersigned has
        carefully read and considered the matters set forth under the section entitled
        “Risk Factors” in the Memorandum, and has taken full cognizance of and
        understands all of the risks related to the purchase of the Shares. To the
        extent deemed necessary by the Subscriber, the Subscriber has retained, at
        its
        own expense, and relied upon, appropriate professional advice regarding the
        investment, tax and legal merits and consequences of purchasing and owning
        the
        Shares. The Subscriber has the ability to bear the economic risks of the
        Subscriber’s investment in the Company, including a complete loss of the
        investment, and the Subscriber has no need for liquidity in such
        investment.

       

      
        
          
          

        

        
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      (d)  The
        Subscriber has been furnished by the Company all information (or provided
        access
        to all information) regarding the business and financial condition of the
        Company, its expected plans for future business activities, the attributes
        of
        the Shares and the merits and risks of an investment in the Shares which
        the
        Subscriber has requested or otherwise needs to evaluate the investment in
        the
        Company.

       

      (e)  Subscriber
        is in receipt of and has carefully read and understands the following
        items:

       

      (i)  the
        Memorandum;

       

      (ii)  the
        Annual Report on Form 10-KSB of the Company filed with the SEC for
        the year
        ended December 31, 2004; 

       

      (iii)  the
        Amendment to the Annual report on Form 10-KSBA filed with the SEC for the
        year
        ended December 31, 2004; 

       

      (iv)  the
        Proxy
        Statement on Schedule 14A filed with the SEC on May 16, 2005; 

       

      (v)  the
        Quarterly Reports of the Company on Form 10-QSB for the quarters ended March
        31,
        2005 and June 30, 2005; and

       

      (vi)  the
        Current Report(s) on form 8-K of the Company filed with the SEC on January
        24,
        2005; February 22, 2005; April 25, 2005; May 24, 2005; July 1, 2005; August
        9,
        2005; and August 12, 2005.

       

      (f)  In
        making
        the proposed investment decision, the Subscriber is relying solely on
        investigations made by the Subscriber and the Subscriber’s representatives. The
        offer to sell the Shares was communicated to the Subscriber in such a manner
        that the Subscriber was able to ask questions of and receive answers from
        the
        management of the Company concerning the terms and conditions of the proposed
        transaction and that at no time was the Subscriber presented with or solicited
        by or through any advertisement, article, leaflet, public promotional meeting,
        notice or other communication published in any newspaper, magazine or similar
        media or broadcast over television or radio or presented at any seminar or
        meeting or any other form of general or public advertising or
        solicitation.

       

      (g)  The
        Subscriber acknowledges that the Subscriber has been advised that:

       

      (i)  The
        Shares offered hereby have not been approved or disapproved by the SEC or
        any
        state securities commission nor has the SEC or any state securities commission
        passed upon the accuracy or adequacy of any representations by the Company.
        Any
        representation to the contrary is a criminal offense.

       

      (ii)  In
        making
        an investment decision, the Subscriber must rely on its own examination of
        the
        Company and the terms of the Offering, including the merits and risks involved.
        The Shares have not been recommended by any federal or state securities
        commission or regulatory authority. Furthermore, the foregoing authorities
        have
        not confirmed the accuracy or determined the adequacy of any representation.
        Any
        representation to the contrary is a criminal offense.

       

      
        
          
          

        

        
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      (iii)  The
        Shares will be “restricted securities” within the meaning of Rule 144 under the
        Securities Act, are subject to restrictions on transferability and resale
        and
        may not be transferred or resold except as permitted under the Securities
        Act
        and applicable state securities laws, pursuant to registration or exemption
        therefrom. The Subscriber is aware that the Subscriber may be required to
        bear
        the financial risks of this investment for an indefinite period of
        time.

       

      (h)  The
        Subscriber acknowledges and is aware that there has never been any
        representation, guarantee or warranty made by the Company or any officer,
        director, employee, agent or representative of the Company, expressly or
        by
        implication, as to (i) the approximate or exact length of time that the
        Subscriber will be required to remain an owner of the Shares; (ii) the
        percentage of profit and/or amount of or type of consideration, profit or
        loss
        to be realized, if any, as a result of this investment; or (iii) that the
        limited past performance (if any) or experience on the part of the Company,
        or
        any future expectations will in any way indicate the predictable results
        of the
        ownership of Shares or of the overall financial performance of the
        Company.

       

      (i)  The
        Subscriber agrees to furnish the Company such other information as the Company
        may reasonably request in order to verify the accuracy of the information
        contained herein and agrees to notify the Company immediately of any material
        change in the information provided herein that occurs prior to the Company’s
        acceptance of this Agreement.

       

      (j)  The
        Subscriber further represents and warrants that the Subscriber is an “accredited
        investor” within the meaning of Rule 501 of Regulation D under the Securities
        Act, and Subscriber has executed the Certificate of Accredited Investor Status,
        attached hereto as Exhibit B.

       

      (k)  As
        of the
        date of this Agreement the Subscriber and its affiliates do not have, and
        during
        the 30 day period prior to the date of this Agreement the Subscriber and
        its
        affiliates have not entered into, any “put equivalent position” as such term is
        defined in Rule 16a-1 of under the Exchange Act or short sale positions with
        respect to the Common Stock of the Company. 

       

      (l)  If
        the
        Subscriber is a natural person, the Subscriber has reached the age of majority
        in the state in which the Subscriber resides, has adequate means of providing
        for the Subscriber’s current financial needs and contingencies, is able to bear
        the substantial economic risks of an investment in the Shares for an indefinite
        period of time, has no need for liquidity in such investment and, at the
        present
        time, could afford a complete loss of such investment.

       

      (m)  If
        this
        Agreement is executed and delivered on behalf of a partnership, corporation,
        trust, estate or other entity (an “Entity”):
        (i)
        such Entity has the full legal right and power and all authority and approval
        required (a) to execute and deliver, or authorize execution and delivery
        of,
        this Agreement and all other instruments executed and delivered by or on
        behalf
        of such Entity in connection with the purchase of the Shares, (b) to delegate
        authority pursuant to power of attorney and (c) to purchase and hold such
        Shares, (ii) the signature of the party signing on behalf of such Entity
        is
        binding upon such Entity; and (iii) such Entity has not been formed for the
        specific purpose of acquiring such Shares, unless each beneficial owner of
        such
        entity is qualified as an accredited investor within the meaning of Rule
        501(a)
        of Regulation D promulgated under the Securities Act and has submitted
        information substantiating such individual qualification.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      (n)  If
        the
        Subscriber is a retirement plan or is investing on behalf of a retirement
        plan,
        the Subscriber acknowledges that investment in the Common Stock poses additional
        risks including the inability to use losses generated by an investment in
        the
        Common Stock to offset taxable income.

       

      The
        foregoing representations and warranties and undertakings are made by the
        Subscriber with the intent that they be relied upon in determining its
        suitability as an investor and the Subscriber hereby agrees that such
        representations and warranties shall survive its purchase of the
        Shares.

       

      6.  Representations
        and Warranties of the Company.
        The
        Company hereby represents and warrants to the Subscriber as
        follows:

       

      (a)  The
        Company is duly incorporated, validly existing and in good standing under
        the
        laws of its state of incorporation, and is duly qualified to do business
        as a
        foreign corporation in all jurisdictions in which the failure to be so qualified
        would materially and adversely affect the business or financial condition,
        properties or operations of the Company.

       

      (b)  The
        Company has duly authorized the issuance and sale of the Shares in accordance
        with the terms of this Agreement (as described herein) by all requisite
        corporate action, including the authorization of the Company’s Board of
        Directors of the issuance and sale of the Shares in accordance herewith,
        and the
        execution, delivery and performance of any other agreements and instruments
        executed in connection herewith. This Agreement constitutes a valid and legally
        binding obligation of the Company, enforceable in accordance with its terms,
        except (i) as limited by applicable bankruptcy, insolvency, reorganization,
        moratorium, and other laws of general application affecting enforcement of
        creditors’ rights generally, (ii) as limited by laws relating to the
        availability of specific performance, injunctive relief, or other equitable
        remedies, and (iii) to the extent the indemnification provisions contained
        herein may be limited by applicable federal or state securities
        laws.

       

      (c)  As
        of the
        date of this Agreement, the Memorandum does not contain any untrue statement
        of
        a material fact or omit to state any material fact required to be stated
        therein
        or necessary in order to make the statements therein, in the light of the
        circumstances under which they were made, not misleading.

       

      (d)  The
        documents incorporated by reference or included with the Memorandum, at the
        time
        they were filed with the SEC, complied in all material respects with the
        requirements of the Exchange Act, and, when read together and with the other
        information in the Memorandum, do not contain any untrue statement of a material
        fact or omit to state a material fact required to be stated therein or necessary
        in order to make the statements therein, in the light of the circumstances
        under
        which they were made, not misleading.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      7.  Understandings.
        The
        Subscriber understands, acknowledges and agrees with the Company as
        follows:

       

      (a)  This
        Subscription may be rejected, in whole or in part, by the Company in its
        sole
        and absolute discretion, at any time before the Closing, notwithstanding
        prior
        receipt by the undersigned of notice of acceptance of the undersigned’s
        Subscription. The Company may terminate this Offering at any time in its
        sole
        discretion. The execution of this Agreement or solicitation of the investment
        contemplated hereby, shall create no obligation of the Company to accept
        any
        subscription or complete the Offering.

       

      (b)  Except
        as
        set forth in Section 7(a) above, the Subscriber hereby acknowledges and agrees
        that the subscription hereunder is irrevocable by the Subscriber, that, except
        as required by law, the Subscriber is not entitled to cancel, terminate or
        revoke this Agreement or any agreements of the Subscriber hereunder and that
        this Agreement and such other agreements shall survive the death or disability
        of the Subscriber and shall be binding upon and inure to the benefit of the
        parties and their heirs, executors, administrators, successors, legal
        representatives and permitted assigns. If the Subscriber is more than one
        person, the obligations of the Subscriber hereunder shall be joint and several
        and the agreements, representations, warranties and acknowledgments herein
        contained shall be deemed to be made by and be binding upon each such person
        and
        his/her heirs, executors, administrators, successors, legal representatives
        and
        permitted assigns.

       

      (c)  No
        federal or state agency has made any finding or determination as to the accuracy
        or adequacy of the Memorandum or as to the suitability of this offering for
        investment nor any recommendation or endorsement of the Shares.

       

      (d)  The
        Offering is intended to be exempt from registration under the Securities
        Act by
        virtue of Section 4(2) of the Securities Act and the provisions of Regulation
        D
        thereunder, which is in part dependent upon the truth, completeness and accuracy
        of the statements made by the Subscriber herein.

       

      (e)  There
        is
        only a limited public market for the Common Stock. There can be no assurance
        that the Subscriber will be able to sell or dispose of the Shares. It is
        understood that in order not to jeopardize the Offering’s exempt status under
        Section 4(2) of the Securities Act and Regulation D, any transferee will,
        at a
        minimum, be required to fulfill the investor suitability requirements
        thereunder.

       

      (f)  The
        Subscriber acknowledges that the information contained in the Memorandum
        is
        confidential and non-public and agrees that all such information shall be
        kept
        in confidence by the Subscriber and neither used for the Subscriber’s personal
        benefit (other than in connection with this subscription) nor disclosed to
        any
        third party for any reason; provided, however, that this confidentiality
        obligation shall not apply to any such information that (i) is part of the
        public knowledge or literature, (ii) becomes part of the public knowledge
        or
        literature (except as a result of a breach of this provision) or (iii) is
        received from third parties (except third parties who disclose such information
        in violation of any confidentiality agreements or obligations, including,
        without limitation, any subscription agreement entered into with the Company).
        In addition, the Subscriber may disclose any information as may be required
        by
        law or applicable legal process; provided, however, to the extent permitted
        by
        law or applicable legal process, the Subscriber shall provide the Company
        at
        least five business days prior written notice before making any such
        disclosure.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      (g)  The
        representations, warranties and agreements of the Subscriber contained herein
        and in any other writing delivered in connection with the transactions
        contemplated hereby shall be true and correct in all respects on and as of
        the
        date of the Closing of the sale of the Shares as if made on and as of such
        date
        and shall survive the execution and delivery of this Agreement and the purchase
        of the Shares.

       

      8.  Survival;
        Indemnification.
        All
        representations, warranties and covenants contained in this Agreement and
        the
        indemnification contained in this Section 8 shall survive (i) the acceptance
        of
        this Agreement by the Company, (ii) changes in the transactions, documents
        and
        instruments described herein which are not material or which are to the benefit
        of Subscriber, and (iii) the death or disability of Subscriber. Subscriber
        acknowledges the meaning and legal consequences of the representations,
        warranties and covenants in Section 5 hereof and that the Company has relied
        upon such representations, warranties and covenants in determining Subscriber’s
        qualification and suitability to purchase the Shares. Subscriber hereby agrees
        to indemnify, defend and hold harmless the Company, its officers, directors,
        employees, agents and controlling persons, from and against any and all losses,
        claims, damages, liabilities, expenses (including attorneys’ fees and
        disbursements), judgments or amounts paid in settlement of actions arising
        out
        of or resulting from the untruth of any representation of Subscriber herein
        or
        the breach of any warranty or covenant herein by Subscriber. Notwithstanding
        the
        foregoing, however, no representation, warranty, covenant or acknowledgment
        made
        herein by Subscriber shall in any manner be deemed to constitute a waiver
        of any
        rights granted to it under the Securities Act or state securities
        laws.

       

      9.  Notices.
        All
        notices and other communications provided for herein shall be in writing
        and
        shall be deemed to have been duly given if delivered personally or sent by
        registered or certified mail, return receipt requested, postage
        prepaid:

       

      (a)  if
        to the
        Company, to the following address:

       

      Flotek
        Industries, Inc.

      7030
        Empire Central Drive

      Houston,
        Texas 77040

      Attn:
        Lisa Bromiley Meier

      (281)
        854-2578

      


      (b)  if
        to
        Subscriber, to the address set forth on the signature page hereto.

       

      (c)  or
        at
        such other address as any party shall have specified by notice in writing
        to the
        others.

       

      10.  Notification
        of Changes.
        Subscriber agrees and covenants to notify the Company immediately upon the
        occurrence of any event prior to the consummation of this Offering that would
        cause any representation, warranty, covenant or other statement contained
        in
        this Agreement to be false or incorrect or of any change in any statement
        made
        herein occurring prior to the consummation of this Offering.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      11.  Assignability.
        This
        Agreement is not assignable by the Subscriber, and may not be modified, waived
        or terminated except by an instrument in writing signed by the party against
        whom enforcement of such modification, waiver or termination is
        sought.

       

      12.  Binding
        Effect.
        Except
        as otherwise provided herein, this Agreement shall be binding upon and inure
        to
        the benefit of the parties and their heirs, executors, administrators,
        successors, legal representatives and assigns, and the agreements,
        representations, warranties and acknowledgments contained herein shall be
        deemed
        to be made by and be binding upon such heirs, executors, administrators,
        successors, legal representatives and assigns.

       

      13.  Obligations
        Irrevocable.
        The
        obligations of the Subscriber shall be irrevocable, except with the consent
        of
        the Company, until the consummation or termination of the Offering.

       

      14.  Entire
        Agreement.
        This
        Agreement constitutes the entire agreement of the Subscriber and the Company
        relating to the matters contained herein, superseding all prior contracts
        or
        agreements, whether oral or written.

       

      15.  Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of Delaware, without regard to the principles of conflicts of law thereof
        that would require the application of the laws of any jurisdiction other
        than
        Delaware. In addition, the laws of the State of Delaware shall apply to any
        claims brought by any parties hereto which relate to the Offering whether
        or not
        such claim is based on contract law. Each party to this Agreement hereby
        irrevocably agrees that any legal action or proceeding arising out of or
        relating to this Agreement or any agreements or transactions contemplated
        hereby
        shall be brought in the courts of the State of Delaware or of the United
        States
        of America for the District of Delaware and hereby expressly submits to the
        personal jurisdiction and venue of such courts for the purposes thereof and
        expressly waives any claim of improper venue and any claim that such courts
        are
        an inconvenient forum. 

       

      16.  Severability.
        If any
        provision of this Agreement or the application thereof to Subscriber or any
        circumstance shall be held invalid or unenforceable to any extent, the remainder
        of this Agreement and the application of such provision to other subscriptions
        or circumstances shall not be affected thereby and shall be enforced to the
        greatest extent permitted by law.

       

      17.  Headings.
        The
        headings in this Agreement are inserted for convenience and identification
        only
        and are not intended to describe, interpret, define, or limit the scope,
        extent
        or intent of this Agreement or any provision hereof.

       

      18.  Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which when
        so
        executed and delivered shall be deemed to be an original and all of which
        together shall be deemed to be one and the same agreement.

       

      19.  Counsel.
        Subscriber hereby acknowledges that the Company and its counsel, Doherty
&
        Doherty LLP, represent the interests of the Company and not those of the
        Subscriber in any agreement (including this Agreement) to which the Company
        is a
        party.

       

      


       

      [Signature
        Page to follow]

       


      
        
          
          

          
          

        

        
          13

          
            

          

        

        
          
          

          
          

        

      



      


       

      IN
        WITNESS WHEREOF, Subscriber has executed this Subscription and Registration
        Rights Agreement as of August 29, 2005.

       

      SUBSCRIBER

      


      


      Number
        of
        Shares: ____________________

      Offering
        Price per Share: $______

      Subscription
        Amount: $_________________

      


      


      By:
        ________________________________

      Name:______________________________

      Title:_______________________________

      Address:
        ____________________________

      ___________________________________

      ___________________________________

      


      


      


       

      The
        Company hereby accepts the foregoing subscription subject to the terms and
        conditions hereof as of August 29, 2005.

       

      


      Flotek
        Industries, Inc. 

      a
        Delaware corporation

      


      


      


      By:
        /s/
        Jerry D. Dumas, Sr.

      Name:
        Jerry D. Dumas, Sr.

      Title:
        Chief Executive Officer

      


      


       

      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      Exhibit
        A

      


      SUBSCRIPTION
        INSTRUCTIONS

      


      (1) If
        you
        are subscribing for the purchase of Shares, please date and sign the signature
        page to this Subscription and Registration Rights Agreement in the applicable
        spaces. Please signify the amount of Shares you are purchasing by inserting
        such
        amount in the space provided for on the signature page to the Agreement.
        

      


      (2) Complete
        and sign the accompanying Accredited Investor Certificate.

      


      (3) Send
        all
        completed documents to:

      


      Energy
        Capital Solutions   

      2651
        N.
        Harwood, Suite 410

      Dallas,
        TX 75201     

      


      Attn:
         Brad
        Nelson   

      Phone:
        214-219-8200

      Fax:
         214-219-8206
        

      


      (4) Transmit
        funds via wire to the following account of Flotek Industries, Inc.

      


      Bank: Wells
        Fargo Bank 

      ABA
        #
 121000248

      Acct
        #
 4121097299

      


      in
        an
        amount equal to the number of shares you are purchasing multiplied by the
        Offering Price.

      


      ATTENTION
        SUBSCRIBERS:
        NO SUBSCRIPTION WILL BE ACCEPTED UNLESS ALL DOCUMENTATION PRESCRIBED HEREIN
        IS
        FULLY COMPLETED AND EXECUTED. ANY MATERIALS RECEIVED THAT ARE INCOMPLETE
        IN ANY
        RESPECT WILL BE RETURNED BY THE COMPANY.

      


      



      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      


      Exhibit
        B

      


      CERTIFICATE
        OF ACCREDITED INVESTOR STATUS

      


      Except
        as
        may be indicated by the undersigned below, the undersigned is an “accredited
        investor,” as that term is defined in Regulation D under the Securities Act of
        1933, as amended (the “Securities
        Act”).
        The
        undersigned has checked the box below indicating the basis on which he is
        representing his status as an “accredited investor”:

      


      
        	
                □

              	
                a
                  bank as defined in Section 3(a)(2) of the Securities Act, or any
                  savings
                  and loan association or other institution as defined in Section
                  3(a)(5)(A)
                  of the Securities Act whether acting in its individual or fiduciary
                  capacity; a broker or dealer registered pursuant to Section 15
                  of the
                  Securities Exchange Act of 1934, as amended; an insurance company
                  as
                  defined in Section 2(13) of the Securities Act; an investment company
                  registered under the Investment Company Act of 1940 or a business
                  development company as defined in Section 2(a)(48) of that Act;
                  a small
                  business investment company licensed by the U.S. Small Business
                  Administration under Section 301(c) or (d) of the Small Business
                  Investment Act of 1958; a plan established and maintained by a
                  state, its
                  political subdivisions, or any agency or instrumentality of a state
                  or its
                  political subdivisions, for the benefit of its employees, and such
                  plan
                  has total assets in excess of $5,000,000; an employee benefit plan
                  within
                  the meaning of the Employee Retirement Income Security Act of 1974,
                  if the
                  investment decision is made by a plan fiduciary, as defined in
                  Section
                  3(21) of such Act, which is either a bank, savings and loan association,
                  insurance company, or registered investment adviser, or if the
                  employee
                  benefit plan has total assets in excess of $5,000,000 or, if a
                  self-directed plan, with investment decisions made solely by persons
                  that
                  are “accredited investors”;

              


      

      


      
        	
                □

              	
                a
                  private business development company as defined in Section 202(a)(22)
                  of
                  the Investment Advisers Act of
                  1940;

              


      

      


      
        	
                □

              	
                an
                  organization described in Section 501(c)(3) of the Internal Revenue
                  Code,
                  corporation, Massachusetts or similar business trust, or partnership,
                  not
                  formed for the specific purpose of acquiring the securities offered,
                  with
                  total assets in excess of
                  $5,000,000;

              


      

      


      
        	
                □

              	
                a
                  natural person whose individual net worth, or joint net worth with
                  the
                  undersigned’s spouse, at the time of this purchase exceeds
                  $1,000,000;

              


      

      


      
        	
                □

              	
                a
                  natural person who had an individual income in excess of $200,000
                  in each
                  of the two most recent years or joint income with the undersigned’s spouse
                  in excess of $300,000 in each of those years and has a reasonable
                  expectation of reaching the same income level in the current
                  year;

              


      

      


      
        	
                □

              	
                a
                  trust with total assets in excess of $5,000,000, not formed for
                  the
                  specific purpose of acquiring the securities offered, whose purchase
                  is
                  directed by a person who has such knowledge and experience in financial
                  and business matters that he is capable of evaluating the merits
                  and risks
                  of the prospective investment;

              


      

      


      
        	
                □

              	
                an
                  entity in which all of the equity holders are “accredited investors” by
                  virtue of their meeting one or more of the above standards;
                  or

              


      

      


      
        	
                □

              	
                an
                  individual who is a director or executive officer of
                  ____________________.

              


      

      


      


      


      IN
        WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited
        Investor Status effective as of the __ day of ___________, 200__.

      Name
        of
        Subscriber

      


      By:
        ________________________

      Name:
        ______________________

      Title:
        _______________________

      


      



      
        
          
          

          
          

        

        
          2

          
            

          

        

        
          
          

          
          

        

      



      Exhibit
        C

      


      PLAN
        OF DISTRIBUTION

       

      As
        of the
        date of this prospectus, we have not been advised by the selling stockholders
        as
        to any plan of distribution. Distributions of the shares by the selling
        stockholders, or by their partners, pledgees, donees (including charitable
        organizations), transferees or other successors in interest, may from time
        to
        time be offered for sale either directly by such individual, or through
        underwriters, dealers or agents or on any exchange on which the shares may
        from
        time to time be traded, in the over-the-counter market, or in independently
        negotiated transactions or otherwise. The methods by which the shares may
        be
        sold include:

       

      
        	§ 	
                a
                  block trade (which may involve crosses) in which the broker or
                  dealer so
                  engaged will attempt to sell the securities as agent but may position
                  and
                  resell a portion of the block as principal to facilitate the transaction;
                  

              


      

       

      
        	§ 	
                purchases
                  by a broker or dealer as principal and resale by such broker or
                  dealer for
                  its own account pursuant to this
                  prospectus;

              


      

       

      
        	§ 	
                exchange
                  distributions and/or secondary
                  distributions;

              


      

       

      
        	§ 	
                sales
                  in the over-the-counter market;

              


      

       

      
        	§ 	
                underwritten
                  transactions;

              


      

       

      
        	§ 	
                ordinary
                  brokerage transactions and transactions in which the broker solicits
                  purchasers; and 

              


      

       

      
        	§ 	
                privately
                  negotiated transactions.

              


      

       

      Such
        transactions may be effected by the selling stockholders at market prices
        prevailing at the time of sale or at negotiated prices. The selling stockholders
        may effect such transactions by selling the common stock to underwriters
        or to
        or through broker-dealers, and such underwriters or broker-dealers may receive
        compensations in the form of discounts or commissions from the selling
        stockholders and may receive commissions from the purchasers of the common
        stock
        for whom they may act as agent. The selling stockholders may agree to indemnify
        any underwriter, broker-dealer or agent that participates in transactions
        involving sales of the shares against certain liabilities, including liabilities
        arising under the Securities Act. We have agreed to register the shares for
        sale
        under the Securities Act and to indemnify the selling stockholders and each
        person who participates as an underwriter in the offering of the shares against
        certain civil liabilities, including certain liabilities under the Securities
        Act.

       

      In
        connection with sales of the common stock under this prospectus, the selling
        stockholders may enter into hedging transactions with broker-dealers, who
        may in
        turn engage in short sales of the common stock in the course of hedging the
        positions they assume. The selling stockholders also may sell shares of common
        stock short and deliver them to close out the short positions, or loan or
        pledge
        the shares of common stock to broker-dealers that in turn may sell
        them.

       

      The
        selling stockholders and any underwriters, dealers or agents that participate
        in
        distribution of the shares may be deemed to be underwriters, and any profit
        on
        sale of the shares by them and any discounts, commissions or concessions
        received by any underwriter, dealer or agent may be deemed to be underwriting
        discounts and commissions under the Securities Act. 

       

      There
        can
        be no assurances that the selling stockholders will sell any or all of the
        shares offered under this prospectus.