Document:

Form of Stock Option Award.

 Exhibit 10.50 
 Ambac 1997 Equity Plan 
 2008 NOTICE OF 2007 STOCK OPTION AWARD 
 Table of Contents 
  

					
	1.	  	Incorporation of Plan Terms	  	1
			
	2.	  	Grant of Option	  	1
			
	3.	  	Terms and Conditions of the Option	  	1
			
	4.	  	Termination of Employment	  	3
			
	5.	  	Transfer; Option Exercisable Only by Participant and Permitted Transferees	  	5
			
	6.	  	Tax Withholding	  	6
			
	7.	  	No Restriction on Right to Effect Corporate Changes; No Right to Employment	  	6
			
	8.	  	Adjustment of and Changes in Shares	  	6
			
	9.	  	Change in Control	  	6
			
	10.	  	Preemption of Applicable Laws and Regulations	  	7
			
	11.	  	Committee Decisions Final	  	8
			
	12.	  	Amendments	  	8
			
	13.	  	Notice Requirements	  	8
			
	14.	  	Governing Law	  	8
			
	15.	  	Entire Agreement; Headings	  	8
		
	Annex A: Stock Option Award and Vesting Schedule	  	

 Ambac 1997 Equity Plan 
 2008 NOTICE OF 2007 STOCK OPTION AWARD 
 Ambac Financial Group, Inc., a Delaware
corporation (the “Company”), has adopted the Ambac 1997 Equity Plan, as amended (the “Plan”), for the purposes of providing an incentive to selected employees of the Company and its affiliates to
remain in its employ and to increase their interest in the success of the Company by providing them with opportunities to increase their proprietary interest in the Company and to receive compensation based upon the Company’s success.

 This 2007 Notice of 2006 Stock Option Award (the “Award Agreement”) sets forth the terms and conditions of the
stock options granted pursuant to the Plan. Annex A of this Award Agreement (“Annex A”) names the individual to whom the option is granted (the “Participant”) and sets forth the number of shares of
common stock of the Company (“Common Stock”) subject to the option, the exercise price of such option, the date of grant and the expiration date of such option and the vesting schedule applicable thereto. 
 1. Incorporation of Plan Terms. 
 This Award Agreement
and the option granted hereby shall be subject to the Plan, the terms of which are incorporated herein by reference, and in the event of any conflict or inconsistency between the Plan and this Award Agreement, the Plan shall govern. Capitalized
terms used herein without definition shall have the meanings assigned to them in the Plan, a copy of which has been furnished to the Participant. 
 2.
Grant of Option. 
 Subject to the conditions contained herein and in the Plan, the Company grants to the Participant, as of the date of
grant indicated on Annex A (the “Date of Grant”), an option (the “Option”) to purchase the number of shares of Common Stock specified on Annex A, at an exercise price (the “Exercise
Price”) specified on Annex A. The shares of Common Stock issuable upon exercise of the Option are from time to time referred to herein as the “Option Shares.” The grant of an Option shall impose no obligation on
the part of the Participant to exercise the Option. The Option shall vest and be exercisable as hereinafter provided. 
 3. Terms and Conditions of the
Option. 
 The Option is granted subject to the following terms and conditions: 
 (a) Vesting; Exercisability. The Option shall vest and become exercisable in accordance with the vesting schedule set forth on Annex A,
unless the Option has earlier vested or been forfeited in accordance with the terms hereof. 
 (b) Term of the Option. The Option
shall terminate and no longer be exercisable on the earlier of (i) the seventh anniversary of the Date of Grant or (ii) the date specified for termination of the Option in Sections 4(a), 4(b) and 4(c) below; provided, however, if
the termination date falls on a date which the Participant is prohibited by Corporation policy in effect on such date, from engaging in transactions in the Corporation’s securities, such termination date shall be extended to the first date that
the Participant is permitted to engage in transactions in the Corporation’s securities under such Corporation policy. 
 (c) Notice
of Exercise. Subject to Sections 3(d), 3(f) and 4 hereof, the Participant may exercise all or any portion of the Option (to the extent vested) by giving notice of exercise to the Company or the Company’s agent, provided, however,
that no less than 10 Option Shares may be purchased upon any exercise of the Option unless the 

  

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number of Option Shares purchased at such time is the total number of Option Shares in respect of which the Option is then exercisable, and provided,
further, that in no event shall the Option be exercisable for a fractional share. The date of exercise of an Option shall be the later of (i) the date on which the Company or the Company’s agent receives such notice or (ii) the date
on which the conditions provided in Sections 3(d) and 3(f) are satisfied. Notwithstanding any other provision of this Award Agreement, the Participant may not exercise the Option, whether in whole or in part, and no Option Shares will be issued by
the Company in respect of any such attempted exercise, at any time when such exercise is prohibited by Company policy then in effect concerning transactions by the Participant in the Company’s securities. 
 (d) Payment. Prior to the issuance of a certificate pursuant to Section 3(g) hereof evidencing the Option Shares in respect of which all or a
portion of the Option shall have been exercised, the Participant shall have paid to the Company the Exercise Price for all Option Shares purchased pursuant to the exercise of such Option. Payment may be made by personal check, bank draft or postal
or express money order (such modes of payment are collectively referred to as “cash”) payable to the order of the Company in U.S. dollars. Payment may also be made in mature shares of Common Stock owned by the
Participant, or in any combination of cash or such mature shares as the Committee in its sole discretion may approve. Such shares shall be valued at their Fair Market Value as of the date of exercise. Payment of the Exercise Price in mature shares
of Common Stock owned by the Participant shall be made by delivering to the Company the share certificate(s) representing the required number of shares, with the Participant signing his or her name on the back, or by attaching executed stock powers
(with the signature of the Participant guaranteed in either case); payment of the exercise price in mature shares of Common Stock owned by the Participant may also be made through constructive surrender, by submission of an attestation of
ownership in the form approved by the Company and with such signatures or other guarantees as may be required by the Company. The Company may also permit the Participant to pay for such Option Shares by directing the Company to withhold shares of
Common Stock that would otherwise be received by the Participant, pursuant to such rules as the Committee may establish from time to time. In the discretion of the Committee, and in accordance with rules and procedures established by the Committee
(or by any person to whom authority to establish such rules and procedures shall have been delegated by the Committee), the Participant may be permitted to make a “cashless” exercise of all or a portion of the Option. 
 (e) Stockholder Rights. The Participant shall have no rights as a stockholder with respect to any shares of Common Stock issuable upon exercise of
the Option until the Participant shall become the holder of record thereof, and no adjustment shall be made for dividends or distributions or other rights in respect of any share for which the record date is prior to the date upon which the
Participant shall become the holder of record thereof. 
 (f) Limitation on Exercise. The Option shall not be exercisable unless the
offer and sale of Common Stock pursuant thereto has been registered under the Securities Act of 1933, as amended (the “1933 Act”), and qualified under applicable state “blue sky” laws or the Company
has determined that an exemption from registration under the 1933 Act and from qualification under such state “blue sky” laws is available. 
 (g) Issuance of Shares. Subject to the foregoing conditions, as soon as is reasonably practicable after its receipt of a proper notice of exercise and payment of the Exercise Price for the number of shares with
respect to which the Option is exercised, the Company either (i) shall deliver or cause to be delivered to the Participant (or to such person to whom the Option has been transferred pursuant to Section 5 hereof; or following the
Participant’s death, to such other person entitled to exercise the Option), at the principal office of the Company or at such other location as may be acceptable to the Company and the Participant (or such other person), one or more
stock certificates in the name of the Participant (or of the person or persons to whom such option was transferred by will or the laws of descent and distribution or pursuant to a Qualified Domestic Relations Order) for the appropriate number
of shares of Common Stock issued in connection with such exercise or (ii) shall transfer the appropriate number of shares of Common Stock issued in connection with such exercise to the brokerage account designated by the Participant to the
Company in writing prior to exercise. Such shares shall be fully paid and nonassessable. 
 (h) Non-qualified Status of the Option.
The Option granted hereby is not intended to qualify, and shall not be treated, as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

  

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 (i) Cancellation. Notwithstanding any other provision of this Award Agreement, the Committee may
cancel all or any unexercised portion of the Option, whether or not vested, if at any time the Participant initiates or becomes a party to any lawsuit or other legal action in any federal or state court in which the Participant seeks damages or
injunctive or other equitable relief from or against the Company, any of its Subsidiaries or any of its officers, employees or directors in connection with any claim arising from or relating to the Participant’s employment with the Company or
any of its Subsidiaries or the termination of such employment (and regardless of whether any such termination is the result of the Participant’s voluntary resignation or retirement or of the involuntary termination of the Participant’s
employment by the Company or one of its subsidiaries). This Section 3(i) is not intended as a waiver by the Participant of any claims the Participant may have against the Company, any of its subsidiaries or any of its officers, employees or
directors. Instead, it provides for the consequences specified in the second preceding sentence in the event the Participant engages in the conduct described therein. 
 (j) Acceptance of Award Terms. Notwithstanding any other provision of this Award Agreement, the Participant shall have no further rights in the Option represented by this Award Agreement, and this Award
Agreement and the Option represented thereby shall automatically be cancelled, unless the Participant accepts the terms and conditions of the grant by signing this Award Agreement in the space provided for below and returning a signed copy of this
award agreement to the Company’s Human Resources Department, or by electronically acknowledging receipt and acceptance of the terms of this Award Certificate in the manner indicated to the Participant by the Company, in either case no more than
[            ] business days after the Date of Grant. 
 (k) Notice
Period. By the Participant’s acceptance of the Option and the terms of this Award Agreement in the manner provided for in Section 3(j), the Participant agrees to provide the Company or the Subsidiary that employs the Participant with
at least three months advance written notice (the “Minimum Notice”) prior to termination of employment. Notwithstanding any other provision of this Award Agreement, the Committee may cancel all or any unexercised portion of
the Option, whether or not vested, if the Participant resigns his or her employment with the Company and its Subsidiaries without having provided the Company or the Subsidiary that employs the Participant with the Minimum Notice. During the period
covered by the Minimum Notice (the “Notice Period”), the Participant (i) shall remain employed by the Company and its Subsidiaries and receive base salary and certain benefits, but will not accrue any rights to a bonus, and
(ii) shall not commence employment with any other employer or directly or indirectly induce or solicit any client of the Company or any of its subsidiaries to terminate or modify its relationship with any of them. 
 4. Termination of Employment. 
 (a) General.
Subject to Section 4(c) hereof, if the Participant’s employment with the Company and its Subsidiaries terminates for any reason other than death or Permanent Disability (as defined herein) prior to the satisfaction of any vesting
period requirement under Section 3(a) hereof, the unvested portion of the Option shall be forfeited to the Company, and the Participant shall have no further right or interest therein, unless the Committee in its sole discretion shall determine
otherwise, provided, however, that in the case of a termination of employment mutually agreed to by the Participant and the Company (or the relevant employer Subsidiary), but not in the case of a termination for Cause (as
defined herein), if the Participant (A) signs a waiver and a release, in the form requested by the Company, irrevocably waiving any and all claims and liabilities relating to the Participant’s employment with the Company and its
affiliates and the termination thereof, (B) signs a noncompetition agreement in the form requested by the Company, and (C) takes any further action requested by the Company to perfect such release and waiver, then at the Company’s
discretion, the Option shall be deemed to have vested in full as of the date of the Participant’s termination of employment. 
 (b)
Exercise Following Termination of Employment. If the Participant’s employment with the Company and its Subsidiaries terminates for any reason other than death, Permanent Disability or Retirement (as defined herein) after the
Option has vested in accordance with Sections 3(a) and 4(a) hereof with respect to all or a portion of the shares of Common Stock subject to the Option, the Participant shall have the right, subject to the terms and conditions hereof and of the
Plan, to exercise the Option, to the extent it has vested as of the date of such termination of employment, at any time within one year after the date of such termination, subject to the earlier expiration of the Option as provided in
Section 3(b). 
  

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 (c) Exercise Following Termination of Employment Due to Death, Permanent Disability or Retirement.

 (i) If the Participant’s employment with the Company and its Subsidiaries terminates due to (A) death or
(B) Permanent Disability or (C) Retirement at age 55 or older after at least five years of continuous service with the Company and its Subsidiaries (including service with a corporation or other entity acquired by the Company), in
any such case prior to the satisfaction of any vesting period requirement under Section 3(a) hereof, the Option shall be deemed to have vested in full as of the date of death, termination due to Permanent Disability or such Retirement.

 (ii) Following termination of employment due to death or Permanent Disability, the Option may be exercised by the
Participant, or the Participant’s Permitted Transferee, estate, personal representative or beneficiary, as the case may be, within three years after the date of death or termination of employment due to Permanent Disability, subject to the
earlier expiration of the Option as provided in Section 3(b). In the event of Retirement (whether or not Retirement results in full vesting of the Option pursuant to clause (i) above), the Participant or the Participant’s Permitted
Transferee may exercise the Option, to the extent it has vested as of the date of Retirement, within three years after the date of Retirement, subject to the earlier expiration of the Option as provided in Section 3(b). 
 (d) Definitions. For purposes hereof, the following terms shall have the meanings specified below: 
 (i) Termination of Employment. The employment of the Participant shall be deemed terminated if the Participant is no longer
employed by the Company or any of its Subsidiaries for any reason. The Committee shall have discretion to determine whether military or government service or an authorized leave of absence (as a result of disability or otherwise) shall
constitute a termination of employment for purposes hereof. 
 (ii) Cause. Each of the following shall constitute
“Cause” for termination of employment: 
 (a) the willful commission by the Participant of acts that are dishonest
and demonstrably and materially injurious to the Company or any of its Subsidiaries or affiliates, monetarily or otherwise; 
 (b) the
conviction of the Participant for a felonious act resulting in material harm to the financial condition or business reputation of the Company or any of its Subsidiaries or affiliates; or 
 (c) except for actions taken in the course of the Participant’s employment or as required by law, the Participant’s divulgation, furnishing or
making accessible to any person any information of a confidential or proprietary nature obtained while in the employ of the Company or any of its Subsidiaries of affiliates, or the Participant’s failure, upon termination of his employment with
the Company or any of its Subsidiaries or affiliates, to return to the Company all such information which exists in written or any other form (including without limitation in the form of computer files or disks) and all copies thereof in his
possession or under his control. 
 Notwithstanding the foregoing, if the Company or any of its Subsidiaries or affiliates has entered or enters into any
employment, management retention, change in control, severance or similar agreement with the Participant, which agreement sets forth a definition of “Cause”, then such definition, rather than the definition set forth above,
shall control for purposes of this Award Agreement. 
 (iii) Permanent Disability. “Permanent
Disability” shall mean circumstances that entitle the Participant to receive benefits under the long-term disability policy maintained by the Company or any of its Subsidiaries for the Participant. 
 (iv) Retirement. “Retirement” shall mean the termination of the Participant’s employment on or after
age 55 and at least 5 years of service, except for Cause; provided , however, that the termination of the Participant’s employment will not be considered a Retirement if the Participant fails to provide the Company or the Subsidiary that
employs the Participant with the written notice required by Section 3(j) hereof or fails to comply with the Participant’s obligations during the Notice Period as set forth in Section 3(j) hereof. 
  

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 (e) Exercise Following Termination of Employment Subject to Company Policies on Insider Trading.
Any exercise of the Option pursuant to Section 4(b) or 4(c) above following termination of the Participant’s employment for any reason other than death shall be subject to, and shall be permitted only to the extent such exercise complies
with, the policies of the Company concerning insider trading. 
 (f) Cancellation of Option and Repayment of Option Gain.
Notwithstanding any other provision of this Award Agreement, the Committee may cancel all or any portion of the Option, whether or not vested, and may require the Participant to repay to the Company all or any portion of the Option Gain (as
defined herein) that the Participant realizes from any full or partial exercise of the Option occurring within six months before or after the termination of the Participant’s employment with the Company and its Subsidiaries, if (A) the
Participant engages in Competitive Activity (as defined herein) within six months following the termination of the Participant’s employment or (B) the Participant fails to provide the Company or the Subsidiary that employs the
Participant with the written notice required by Section 3(j) hereof or fails to comply with the Participant’s obligations during the Period Notice as set forth in Section 3(j) hereof. A Participant will be considered to engage in
“Competitive Activity” if the Participant (1) enters into a relationship as an employee, officer, partner, member, director, independent contractor, consultant, advisor or agent of, or in any similar relationship with,
any corporation, partnership, limited liability company, joint venture or other business entity that engages in any activity which the Committee determines is competitive with a principal business activity of the Company (a
“Competitor”), where the Participant will be responsible for providing services which are similar or substantially related to the services that the Participant provided during any of the last three years of the
Participant’s employment with the Company and its Subsidiaries or (2) either alone, or in concert with others, acquires or maintains beneficial ownership (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of any
class of equity securities of a Competitor. The amount of a Participant’s “Option Gain” realized upon full or partial exercise of an Option is the amount of income included (or to be included) in respect of such
exercise on the Form W-2 (or successor form) that the Company or one of its Subsidiaries issues to the Participant for the year in which such exercise occurs. The Company may require the Participant, in connection with any full or partial
exercise of an Option, to certify in a manner acceptable to the Company that the Participant has not engaged in Competitive Activity and may decline to give effect to such exercise if the Participant fails so to certify. If the Participant is
required to repay any Option Gain to the Company pursuant to this Section 4(f), the Participant shall pay such amount in such manner and on such terms and conditions as the Company may require, and the Company shall be entitled to withhold or
set-off against any other amount owed to the Participant by the Company or any of its Subsidiaries (other than any amount owed to the Participant under any retirement plan intended to be qualified under Section 401(a) of the Code) up to any
amount sufficient to satisfy any unpaid obligation of the Participant under this Section 4(f). 
 5. Transfer; Option Exercisable Only by Participant
and Permitted Transferees. 
 The Option may not be transferred, pledged, assigned, or otherwise disposed of, except (i) by will or
the laws of descent and distribution, (ii) pursuant to a domestic relations order or (iii) for no consideration, to a member or members of the Participant’s immediate family (as defined below) or to one or more trusts or
partnerships established in whole or in part for the benefit of one or more of such immediate family members (the parties identified in clauses (i), (ii), and (iii) being referred to collectively as “Permitted
Transferees”). If the Option is transferred to a Permitted Transferee, it shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant.
The Participant shall promptly notify the Company of any proposed transfer to a Permitted Transferee in advance in writing and shall upon request provide the Company with information concerning the Permitted Transferee’s financial condition and
investment experience. No assignment or transfer of the Option, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, except as permitted by this Section 5, shall vest in the assignee or
transferee any interest or right in the Option, but immediately upon any attempt to assign or transfer the Option the same shall terminate and be of no force or effect. For purposes of this Option Agreement, the Participant’s “immediate
family” means any child, stepchild, grandchild, spouse, son-in-law or daughter-in-law and shall include adoptive relationships. 
  

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 6. Tax Withholding. 
 The Company shall have the right, prior to the issuance of shares as set forth in section 3(g) hereof, to require the Participant to remit to the Company an amount sufficient to satisfy the minimum required Federal,
state or local tax withholding requirements. The Company may permit the Participant to satisfy, in whole or in part, such obligation to remit taxes, by directing the Company to withhold shares of Common Stock that would otherwise be received by the
Participant, pursuant to such rules as the Committee may establish from time to time. The Company shall also have the right to deduct from all cash payments made pursuant to or in connection with the Option the minimum required Federal, state or
local taxes required to be withheld with respect to such payments or such lesser amount as determined by the Company in order to assure that it complies with applicable accounting standards. 
 7. No Restriction on Right to Effect Corporate Changes; No Right to Employment. 
 Neither the Plan, this Award Agreement nor the existence of the Option shall affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or
otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise. 
 In addition, neither this Award Agreement, the grant of the Option nor any action taken hereunder shall be deemed
to limit or restrict the right of the Company to terminate the Participant’s employment at any time, for any reason, with or without Cause. 
 8.
Adjustment of and Changes in Shares. 
 In the event of any merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, special cash dividend, split-up, spin-off, or other transaction or change in corporate structure affecting the Common Stock, the Committee shall make equitable adjustments in order to preserve, but not increase, the benefits or potential
benefits intended to be made available to participants granted stock options. Any adjustments shall be determined by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final.

 9. Change in Control. 
 (a)
Committee Discretion to Take Certain Actions. The Committee, in its sole discretion, may at any time prior to, coincident with or after the time of a Change in Control (as defined herein): 
 (i) provide for the acceleration of any vesting conditions relating to the exercise of the Option or that the Option may be exercised in
full on or before a date fixed by the Committee; 
 (ii) provide for the purchase of the Option, upon the Participant’s
request, for an amount of cash equal to the amount, as determined by the Committee in its sole discretion, which could have been realized upon the exercise of the Option had the Option been currently exercisable; 
 (iii) make such adjustments to the Option as the Committee deems appropriate to reflect such Change in Control; or 
 (iv) cause the Option then to be assumed, or new rights substituted therefor, by the surviving corporation in such Change in Control.

 Any such actions shall be authorized by the Committee, whose determination as to what actions shall be taken and the extent thereof, shall be final.

  

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 (b) Definitions. For purposes hereof, a “Change in Control” shall be
deemed to occur on the date on which one of the following events occurs: 
 (i) the acquisition by any Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Common Stock then outstanding, but shall not include any such acquisition by: 
 (A) the Company; 
 (B) any Subsidiary of the Company; 
 (C) any employee benefit plan of the Company or of any Subsidiary of the
Company; 
 (D) any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any
such plan; 
 (E) any Person who as of January 31, 1996 was the beneficial owner of 15% or more of the shares of Common
stock outstanding on such date unless and until such Person, together with all affiliates and associates of such Person, becomes the beneficial owner of 25% or more of the shares of Common stock then outstanding whereupon a Change in Control shall
be deemed to have occurred; or 
 (F) any Person who becomes the beneficial owner of 20% or more, or, with respect to a Person
described in clause (E) above, 25% or more, of the shares of Common Stock then outstanding as a result of a reduction in the number of shares of Common Stock outstanding due to the repurchase of shares of Common Stock by the Company unless and
until such Person, after becoming aware that such Person has become the beneficial owner of 20% or more, or 25% or more, as the case may be, of the then outstanding shares of Common Stock, acquires beneficial ownership of additional shares of Common
Stock representing 1% or more of the shares of Common Stock then outstanding, whereupon a Change in Control shall be deemed to have occurred; or 
 (ii) individuals who, as of July 30, 1997, constitute the Board, and subsequently elected members of the Board whose election is approved or recommended by at least a majority of such current members or their
successors whose election was so approved or recommended (other than any subsequently elected members whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board), cease for any reason to constitute at least a majority of such Board; or 
 (iii) approval by the stockholders of the Company of (A) a merger or consolidation of the Company with any other corporation,
(B) the issuance of voting securities of the Company in connection with a merger or consolidation of the Company (or any Subsidiary) pursuant to applicable stock exchange requirements, or (C) sale or disposition of all or
substantially all of the assets of the Company or the acquisition of assets of another corporation (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, all or substantially
all of the individuals and entities who were the beneficial owners of the Common Stock outstanding immediately prior to such Business Combination beneficially own, directly or indirectly, more than 70% of the then outstanding shares of Common Stock
and 70% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Common Stock. 
 As used herein, “Person” means any
individual, firm, corporation, partnership or other entity. 
 10. Preemption of Applicable Laws and Regulations. 
 Anything herein to the contrary notwithstanding, if, at any time specified herein for the issuance of shares of Common Stock to the Participant, any law,
regulation or requirement of any governmental authority having jurisdiction shall require either the Company or the Participant to take any action in connection with the shares then to be issued, the issuance of such shares shall be deferred until
such action shall have been taken. 
  

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 11. Committee Decisions Final. 
 Any dispute or disagreement which shall arise under, or as a result of, or pursuant to, or in connection with, this Award Agreement or the Option shall be determined by the Committee, and any such determination or any
other determination by the Committee under or pursuant to this Award Agreement and any interpretation by the Committee of the terms of the Option shall be final and binding on all persons affected thereby. 
 12. Amendments. 
 The Committee shall have the power
to alter or amend the terms of the Option as set forth herein from time to time, in any manner consistent with the provisions of Section 16 of the Plan, and any alteration or amendment of the terms of the Option by the Committee shall, upon
adoption, become and be binding on all persons affected thereby without requirement for consent or other action with respect thereto by any such person. The Committee shall give written notice to the Participant of any such alteration or amendment
as promptly as practicable after the adoption thereof. The foregoing shall not restrict the ability of the Participant and the Company by mutual consent to alter or amend the terms of the Option in any manner which is consistent with the Plan and
approved by the Committee. In addition, the terms of the Option may be amended or supplemented by any employment, management retention, severance or similar agreement (an “Employment Agreement”) entered into between the
Company and the Participant (including any such agreement entered into prior to the Date of Grant) and approved, to the extent such Employment Agreement amends or supplements the terms of the Option, by the Committee. 
 13. Notice Requirements. 
 Any notice which either
party hereto may be required or permitted to give to the other shall be in writing. Such notice may be delivered to the Company personally or by mail, postage prepaid, addressed as follows: Ambac Financial Group, Inc., One State Street Plaza, New
York, New York 10004, attention: Senior Vice President, Chief Administrative Officer and Employment Counsel, or at such other address as the Company, by notice to the Participant, may designate in writing from time to time, and to the Participant at
the Participant’s address as shown on the records of the Company or at such other address as the Participant, by notice to the Company, may designate in writing from time to time. 
 14. Governing Law. 
 The terms and conditions stated herein are to be governed by, and construed in
accordance with, the laws of the State of Delaware. 
 15. Entire Agreement; Headings. 
 This Award Agreement (which includes Annex A) and the other related documents expressly referred to herein (including, if applicable, any
Employment Agreement) set forth the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof. In the event of a discrepancy or inconsistency in the
number of shares of common stock covered by the Option, the Date of Grant, the vesting schedule, the Exercise Price or any other term in this Award Agreement and the resolutions of the Committee authorizing the grant of the Option covered hereby,
such resolutions shall control and the Company shall have the right, in its sole discretion, to replace the Award Agreement or any portion thereof (including any portion of Annex A) with a correct version. The headings of Sections and
subsections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of this Award Agreement. 
 AMBAC FINANCIAL GROUP, INC. 
  

 8Stock Purchase Agreement

 STOCK PURCHASE AGREEMENT 
 THIS STOCK PURCHASE AGREEMENT, dated as of August 31, 2007 (the “Agreement”), is by and among Flotek Industries, Inc., a Delaware
corporation (“Buyer”), and SES Holdings, Inc., an Oklahoma corporation (“SES” ), and Owen Richman (“Richman”), Antony Dyakowski (“Dyakowski”) and Gwen Bristow (“Bristow”) (collectively,
the “Stockholders”). 
 W I T N E S S E T H: 
 WHEREAS, Stockholders own all of the issued and outstanding stock of SES; and 
 WHEREAS, Buyer desires to purchase from the Stockholders, and the Stockholders desire to sell to Buyer, all of the stock of SES; and 
 NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows: 
 ARTICLE I 
 THE PURCHASE 
 Section 1.1. Sale and Purchase. At the Closing
(as hereinafter defined) and in accordance with the provisions of this Agreement, Buyer shall purchase from the Stockholders, and the Stockholders shall sell to Buyer, all of the outstanding shares of equity stock of SES (the “SES
Shares”), in exchange for the consideration described in Section 1.2. At the Closing, the Stockholders shall transfer to Buyer good and marketable title to the SES Shares, free and clear of all pledges, liens, claims, charges, options,
calls, encumbrances, restrictions, and assessments whatsoever. 
 Section 1.2. Purchase Consideration.  
 (a) The Purchase Price for the delivery and transfer to Buyer of the SES Shares (the “Purchase Price”) shall be the price
determined pursuant to Section 1.2(b), as adjusted pursuant to Section 1.2(c) and Section 1.2(d). 
 (b) The
Purchase Price shall be the greater of (i) $7,000,000; or (ii) five (5) multiplied by the EBITDA of SES and Sooner Energy Services, Inc. (“Sooner”) for the period ending March 31, 2007; and shall be adjusted as
provided pursuant to Section 1.2.(c). For purposes hereof “EBITDA” means the consolidated net income of the Companies (as hereinafter defined) without adjustment, except net income shall be increased to the extent any of the
following amounts were taken into account in its computation: compensation in the form of bonuses and consulting and management fees to any of the Stockholders, interest, taxes, depreciation, and amortization. 
  

 (c) The Purchase Price will be adjusted upwards or downwards to reflect any positive or
negative change, respectively, in the Working Capital of the Companies for the period from March 31, 2007 through the Effective Date (as hereinafter defined). “Working Capital” means the excess, if any, of “Working
Capital Assets” over “Working Capital Liabilities.” “Working Capital Assets” means the consolidated cash, accounts receivable, inventory, and prepaid expenses of the Companies plus a reserve for prepaid
taxes in the amount of $82,778. “Working Capital Liabilities” means the consolidated accounts payable of the Companies and the balance as of the Effective Date of the line of credit of the Companies with BancFirst (the
“Line”), but excluding accrued taxes attributable to periods prior to the Effective Date. 
 (d) The Purchase
Price shall be reduced by the balance due: (i) on loans owed by the Companies to the Stockholders (the “Stockholders Loans”); and (ii) on promissory notes secured by real estate owned by the Companies (the “Real Estate
Loans”) but shall not be reduced by loans incurred by the Companies to acquire automobiles. 
 Section 1.3. Other
Agreements. At the Closing, each Stockholder shall execute and deliver agreements not to compete substantially identical in form to Exhibit 1.3(a) (the “NonCompete Agreements.”) 
 Section 1.4. Closing. 
 (a) The closing (the “Closing”) of the transaction contemplated by this Agreement (the “Transaction”) shall take place at Sooner’s office on August 31, 2007, or the first
subsequent date on which the last of the conditions set forth in Article V is fulfilled or waived, or at such other time and place as Buyer and the Stockholders shall agree in writing. The date on which the Closing occurs is referred to in this
Agreement as the “Closing Date.” 
 (b) The Closing will be deemed to be effective as of the close of
business on August 31, 2007 (the “Effective Date”). 
 (c) At the Closing, each of the parties shall
take such actions as shall be required pursuant to the terms hereof to be taken at the Closing, or which are otherwise reasonably required to cause the Transaction to be consummated. At the Closing, the Purchase Price shall be paid in immediately
available funds payable to the Stockholders in the percentages indicated on Schedule A. 
 (d) Buyer shall not withhold
any withholding for taxes which might be due from a Stockholder as a result of the Transaction. 
  

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 ARTICLE II 
 REPRESENTATIONS AND WARRANTIES OF BUYER 
 Buyer represents and warrants to the SES and Stockholders
as follows: 
 Section 2.1. Organization and Qualification. Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. 
 Section 2.2. Authority; Non-Contravention; Approvals. 
 (a) Buyer has full corporate power and authority to execute and deliver this Agreement and to consummate the Transaction. This Agreement
has been approved by the Board of Directors of Buyer, and no other corporate proceedings on the part of Buyer are necessary to authorize the execution and delivery of this Agreement or the consummation by Buyer of the Transaction, including, without
limitation, under the applicable requirements of any securities exchange. This Agreement has been duly executed and delivered by Buyer, and, assuming the due authorization, execution and delivery hereof by SES and the Stockholders, constitutes a
valid and legally binding agreement of Buyer enforceable against Buyer in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or
relating to the enforcement of creditors’ rights generally, and (ii) general equitable principles. 
 (b) The
execution and delivery of this Agreement by Buyer and the consummation by Buyer of the Transaction do not and will not violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Buyer under any of the terms, conditions or provisions of (i) the charter or bylaws of Buyer, (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to Buyer or any of Buyer’s respective properties or assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to which Buyer is now a party or by which Buyer or any of its respective properties or assets may be bound or affected. 
 (c) No declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the Transaction. 
 Section 2.3 Investment. The Buyer is acquiring the SES Shares for investment only, for Buyer’s own account, and not with a view to or for reoffer for sale in connection with the transfer pursuant to this Agreement.
The SES Shares are not being purchased for subdivision or fractionalization, and the Buyer has no contract, undertaking, agreement or arrangement with any person to sell, hypothecate, pledge, donate or otherwise transfer (with or without
consideration) to any such person any of the SES Shares. The Buyer has no present plans or intentions to enter into any such contract, undertaking, agreement or arrangement. 
  

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 Section 2.4. Disclosure. No representation or warranty of the Buyer set forth
hereunder or in any certificate delivered pursuant to Section 6.1(a) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading.

 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
 OF SES AND THE STOCKHOLDERS 
 Each Stockholder and SES severally represent and warrant to Buyer that except as indicated in the Disclosure Schedules delivered to Buyer in connection
with this Agreement (the “Disclosure Schedules”): 
 Section 3.1. Subsidiaries. Sooner is a wholly-owned
subsidiary of SES. SES and Sooner are referred to herein collectively as the “Companies” or separately as a “Company.” Neither of the Companies owns any equity interests of any other entity. 
 Section 3.2. Organization and Qualification. Each of the Companies are corporations duly organized, validly existing and in good
standing under the laws of the State of Oklahoma, and each of the Companies has the requisite corporate power and authority to own, lease and operate their respective assets and properties and to carry on its business as such business is now being
conducted. Each of the Companies is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the properties owned, leased, or operated by it or the nature of the business conducted by it makes such
qualification necessary. True, accurate and complete copies of the organizational documents of the Companies, in each case as in effect on the date hereof, including all amendments thereto, have been obtained by Buyer. 
 Section 3.3. Capitalization. The SES Shares are the only issued and outstanding shares of the capital stock of SES. The SES
Shares are validly issued and are fully paid, nonassessable and free of preemptive rights. There are no outstanding subscriptions, options, calls, contracts, rights or warrants, including any right of conversion or exchange obligating the
Companies or the Stockholders to issue, deliver or sell, additional shares of the capital stock of the Companies. Except as disclosed on the Section 3.3 Disclosure Schedule, there are no voting trusts, proxies or other agreements or
understandings to which either of the Companies or the Stockholders is a party or is bound with respect to the voting of or restricting the sale of any shares of capital stock of either of the Companies. Each Stockholder has good, valid and
marketable title to the SES Shares indicated as being owned by that Stockholder in Schedule A, free and clear of all pledges, liens, claims, charges, options, calls, encumbrances, restrictions, and assessments whatsoever. 
 Section 3.4. Authority; Non-Contravention; Approvals. 
 (a) SES has full corporate power and authority to execute and deliver this Agreement and to consummate the Transaction. This Agreement has
been approved by the Board of Directors of SES, and no other corporate proceedings on the part of SES are necessary 

  

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to authorize the execution and delivery of this Agreement or the consummation by SES of the Transaction. This Agreement has been duly executed and delivered
by SES and the Stockholders, and, assuming the due authorization, execution and delivery hereof by Buyer, constitutes a valid and legally binding agreement of SES and the Stockholders, enforceable against SES and the Stockholders in accordance with
its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general equitable
principles. 
 (b) The execution and delivery of this Agreement by SES and the Stockholders, and the consummation by SES and
the Stockholders of the Transaction, do not and will not violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the
Companies under any of the terms, conditions or provisions of (i) the charter or bylaws of either of the Companies, (ii) to the knowledge of Stockholders and SES any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority applicable to either of the Companies or any of its properties or assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, or any agreement to which either Company is now a party or by which either of the Companies any of its properties or assets may be bound or affected. 
 Section 3.5. Financial Statements. SES has furnished Buyer with an audited consolidated balance sheet, income statement and statement of cash flow for Sooner for the fiscal year ended June 30,
2006, an unaudited consolidated balance sheet, income statement, and statement of cash flow for SES for the fiscal year ended June 30, 2006, and audited balance sheets, income statements, and statements of cash flow for the Companies for the
year ended June 30, 2007, and an unaudited balance sheets, income statements, and statements of cash flow for the Companies for the one month period ended July 31, 2007, and if made available by SES to Buyer prior to Closing, for any
period ending in August, 2007 (collectively, the “Financial Statements”). Richman hereby represents that (i) he has not provided any misleading information to the preparers of the audited Financial Statements that would cause
them to be prepared other than in accordance with generally accepted accounting principles, consistently applied , and to fairly present the financial condition and result of operations of the Companies, and (ii) to his knowledge, the Financial
Statements have been prepared in accordance with generally accepted accounting principles, consistently applied (except for the absence of footnote disclosures and for the absence of normal year-end audit adjustments which are not material in the
aggregate). Bristow and Dyakowski hereby represents that, to their respective knowledge, the Financial Statements have been prepared in accordance with generally accepted accounting principles, consistently applied (except, in the unaudited
statements, for the absence of footnote disclosures and for the absence of normal year-end audit adjustments which are not material in the aggregate), and fairly present the financial condition and result of operations of the Companies. 

 

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 Section 3.6. Absence of Undisclosed Liabilities. Neither of the Companies are subject
to any liabilities (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities that are: (a) provided in the Financial Statements, or reflected in the notes thereto; or (b) undertaken in this Agreement

 Section 3.7. Absence of Certain Changes or Events. Except as disclosed in the Section 3.7 Disclosure Schedule,
since March 31, 2007, the business of the Companies has been conducted in the ordinary course of business consistent with past practices, and there has not been any event, occurrence, development or state of circumstances or facts which has
had, or is reasonably anticipated to have, in the aggregate, a material adverse effect with respect to the business of the Companies. 
 Section 3.8. Accounts Receivable. The accounts receivable of Sooner are valid, genuine and subsisting, arise out of bona fide sales and delivery of goods, performance of services or other business transactions in the
ordinary course of business, and are current and to the knowledge of the Stockholders and SES collectible. 
 Section 3.9.
Inventory. The inventory (the “Inventory”) reflected in the June 30, 2007, Financial Statements (the “June 30, 2007 Balance Sheet”) consists of items that are usable and saleable in the ordinary
course of business by Sooner. Except as disclosed in the Section 3.9 Disclosure Schedule, all items included in the Inventory are owned by the Company free and clear of any lien or encumbrance, and are not missing (except for sales made in the
ordinary course of business since June 30, 2007) or obsolete, and are in good condition. 
 Section 3.10. Tangible
Assets. The tangible personal property of the Companies reflected in the June 30, 2007 Balance Sheet (the “Tangible Personal Property”) and the items of personal property indicated in the Section 3.10 Disclosure
Schedule as being leased by the Companies (the “Leased Personal Property”) constitute all of the tangible personal property used by the Companies for the conduct by the Companies of their business as now conducted. The Companies
have good and indefeasible title to the Tangible Personal Property, free and clear of all mortgages, liens, pledges, charges, or encumbrance of any nature whatsoever except as set forth in the Section 3.10 Disclosure Schedule. The Tangible
Personal Property and Leased Personal Property are in good condition subject only to normal maintenance requirements. 
 Section 3.11.
Real Property. 
 (a) The Companies do not have any ownership interest of any kind in any real property except the real
estate described as now owned by the Companies in the Section 3.11 Disclosure Schedule (the “Company Owned Real Estate”). None of the Company Owned Real Estate is subject to any leases, except as disclosed on the
Section 3.11 Disclosure Schedule. 
 (b) The Companies do not lease or occupy any real estate not owned by the Companies
other than the premises described as leased by the Companies in the Section 3.11 Disclosure Schedule (the “Company Leased Premises”). (The Company Owned Real Estate and the Company Leased Premises are referred to herein
collectively as the “Company Facilities”). Except as disclosed in the Section 3.11 Disclosure Schedule, no consent of a landlord under any lease will be required in order for the leases applicable to the Company Leased Premises
to remain in effect in accordance with their terms after the occurrence of the Transaction. 
  

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 (c) The improvements included in the Company Facilities are in good condition (reasonable
wear and tear excepted), and are adequate for the operation of the business of the Companies as presently conducted. 
 (d) To
the knowledge of the Stockholders and SES the use by the Companies of Company Facilities in the normal conduct of their business does not violate any applicable building, zoning or other law, ordinance or regulation. 
 (e) The Companies have not experienced any material interruption in the delivery of adequate quantities of any utilities or other public
services to Company Facilities required by the Companies in the normal operation of their business. 
 Section 3.12. Intellectual
Property. The Section 3.12 Disclosure Schedule sets forth all patents, trademarks, service marks, trade names, copyrights, formulas, and other proprietary rights and processes (provided that formulas of the Companies are listed on such
Disclosure Schedule by general description only) that are material to the business of the Companies (collectively referred to herein with the trade secrets of the Companies as the “Intellectual Property Rights”). The Companies have
the right to use the Intellectual Property Rights freely and, except as indicated on the Section 3.12 Disclosure Schedule, own the Intellectual Property Rights, free of any lien, encumbrance, or existing or known claim. The Section 3.12
Disclosure Schedule describes any obligation of the Companies, or any other entity, to pay royalties or other compensation to third parties in exchange for the right to use the Intellectual Property Rights. The Companies have not assigned,
hypothecated or otherwise encumbered any of the Intellectual Property Rights. The Companies may freely assign or transfer all licenses that they may have with third parties with respect to the Intellectual Property Rights. Except as indicated in the
Section 3.12 Disclosure Schedule, the Stockholders and SES have no knowledge of any infringement of any of the Intellectual Property Rights, and neither Company has entered into any agreement to indemnify any party against any charge of
infringement of any of the Intellectual Property Rights. The Companies have not been sued for infringing any intellectual property right of another person or entity. None of the Intellectual Property Rights or other know-how relating to the business
of the Companies, whose value to the Companies are contingent upon maintenance of the confidentiality thereof, to the knowledge of the Stockholders and SES has been disclosed by either of the Companies or any of their agents to any person other than
those persons who are bound to hold such information in confidence by operation of law. The Stockholders do not claim any ownership or other interest with respect to the Intellectual Property Rights. 
 Section 3.13. Employee Benefits. The Section 3.13 Disclosure Schedule contains a complete list of employee benefit or welfare
plans of the Company. All such plans comply with applicable law, including but not limited to the Employee Retirement Income Security Act of 1974. 
  

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 Section 3.14. Litigation. Except as described on the Section 3.14 Disclosure
Schedule, there are no claims, suits, actions, or proceedings pending or, to the knowledge of Stockholders and SES, threatened against or relating to either of the Companies, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator. Except as described in the Section 3.14 Disclosure Schedule, neither of the Companies are subject to any judgment, decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality, authority, or any arbitrator. 
 Section 3.15. No Violation of Law. To the knowledge
of the Stockholders and SES the Companies are not in violation of, do not have notice of, and have not been charged with, any violation of any law, statute, order, rule, regulation, ordinance or judgment (including, without limitation, any
applicable environmental law) of any governmental or regulatory body or authority. To the knowledge of the Stockholders and SES no investigation or review by any governmental or regulatory body or authority is pending or threatened, nor has any
governmental or regulatory body or authority indicated its intent to conduct the same. To the knowledge of the Stockholders and SES the Companies have all permits, including without limitation environmental permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct their respective business as presently conducted (collectively, the “Company Permits”). To the knowledge of the Stockholders and
SES the Companies are not in violation of the terms of any Company Permits and are not required to possess any other permit, license, franchise, variance, exemption, order or other governmental authorization, consent or approval. 
 Section 3.16. Suppliers, Customers, and Distributors. Since March 31, 2007, there has not been (a) any material adverse
change in the business relationship of Sooner with any of the suppliers, customers, or distributors of Sooner; or (b) any change in any material term (including credit terms) of the agreements with any such person or entity. 
 Section 3.17. Labor Matters. Except as set forth in the Section 3.17 Disclosure Schedule: (a) there are no material
controversies pending or, to the knowledge of Stockholders and SES, threatened between either of the Companies and any of their respective employees; (b) neither of the Companies are party to a collective bargaining agreement or other labor
union contract applicable to persons employed by the Companies, nor do the Companies have any knowledge of any activities or proceedings of any labor union to organize any such employees; (c) the Companies are not party to any written
agreement, memorandum, or understanding with respect to the employment of any individual; and (d) neither the Companies nor the Stockholders are aware of any intention of any employee to terminate his or her employment with the Companies,
either as a result of the Transaction or otherwise. 
 Section 3.18. Material Contracts. The Section 3.18 Disclosure
Schedule lists all material agreements, commitments, contracts, undertakings or understandings to which either Company is a party, including but not limited to service agreements, manufacturing agreements, purchase or sale agreements, supply
agreements and distribution or distributor agreements, (the “Listed Agreements”). To the knowledge of the Stockholders and SES each Listed Agreement 

  

 8 

 
is a valid, binding and enforceable agreement of the respective Company and, to the knowledge of SES and the Stockholders, the other parties thereto. To the
knowledge of the Stockholders and SES there has not occurred any breach or default under any Listed Agreement on the part of the respective Company or, to the knowledge of SES or its Stockholders, any other parties thereto. To the knowledge of the
Stockholders and SES no event has occurred which, with the giving of notice or the lapse of time, or both, would constitute a default under any Listed Agreement on the part of the respective Company, or, to the knowledge of SES or the Stockholders,
any of the other parties thereto. To the knowledge of the Stockholders and SES there is no dispute between the parties to any Listed Agreement as to the interpretation thereof, or as to whether any party is in breach or default thereunder, and no
party to any Listed Agreement has indicated its intention to, or suggested it may evaluate whether to, terminate any Listed Agreement. 
 Section 3.19. Environmental Matters.  
 (a) Except as set forth in the Section 3.19
Disclosure Schedule: 
 (i) no notice, demand, request for information, citation, summons or order has been received by, no
complaint has been served upon, no penalty has been assessed against, and to the knowledge of the Stockholders and SES no investigation, action, claim, suit, proceeding or review is pending or, to the knowledge of SES or the Stockholders, is
threatened by any governmental entity or other person against the Companies, or any predecessors of a Company, relating to or arising out of any Environmental Laws (as hereinafter defined); 
 (ii) each Company is and has been in material compliance with all Environmental Laws and Environmental Permits (as hereinafter defined);
and 
 (iii) neither of the Companies has entered into any obligation, liability, order, settlement, judgment, injunction or
decree involving uncompleted, outstanding or unresolved requirements relating to or arising under Environmental Laws and, to the knowledge of SES or the Stockholders, there are no facts, conditions, situations or set of circumstances that could
reasonably be expected to result in, or be the basis for, any such obligation. 
 (b) For purposes of this Agreement:
(i) “Environmental Laws” mean any and all laws, statutes, ordinances, rules, regulations, orders or determinations of any Governmental Authority (as hereinafter defined) relating to the protection of the environment or
protection of human health from exposure to hazardous materials that is currently in effect in any jurisdiction in which the Companies own property, conduct business, or could otherwise for any reason be subject to liability or prevailing law,
including without limitation, the Clean Air Act, as amended; the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980, as amended; the Federal Water Pollution Control Act, as amended; the Occupational Safety and Health Act
of 1970, as amended; the Resource Conservation and Recovery Act of 1976, as amended; the Safe Drinking Water Act, as amended; the Toxic Substances Control Act, as amended; the Superfund Amendments and Reauthorization Act of 1986, as amended; or the
Hazardous Materials Transportation Act, as amended; (ii) “Governmental Authority” includes 

  

 9 

 
the United States of America and any other jurisdiction or state, county, city or political subdivision in which the Company owns property, conducts
business, or could otherwise for any reason be subject to liability or prevailing law, and any agency, department, commission, board, bureau or instrumentality of any of them that exercises jurisdiction over the Companies pursuant to Environmental
Laws; and (iii) “Environmental Permits” mean all permits, licenses, certificates, registrations, identification numbers, applications, consents, approvals, variances, notices of intent, and exemptions necessary for the
ownership, use and/or operation of any facility or operation of the Companies to comply with any requirements of Environmental Laws. 
 Section 3.20. FIRPTA. Neither of the Companies are real-property holding corporations for purposes of Section 897 of the Internal Revenue Code of 1986. 
 Section 3.21. Disclosure. No representation or warranty of SES or Stockholders set forth hereunder or in any certificate delivered
pursuant to Section 6.2(a) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. 
 Section 3.22. Stockholders. Notwithstanding any other provision of the Agreement to the contrary, any representation, warranty,
covenant or agreement of a Stockholder is made by the individual Stockholder and not jointly with the other Stockholders, and a breach, misrepresentation or omission by a Stockholder relating to this Agreement, any Schedule or the Transaction shall
not constitute a breach, misrepresentation or omission by the other Stockholders. 
 ARTICLE IV 
 CONDUCT OF BUSINESS PENDING THE CLOSING 
 Section 4.1. Conduct of Business of the Companies. From the date of this Agreement until the Closing, the Companies shall operate their business in, and only in, the ordinary course of business in substantially the same
manner as operated on the date of this Agreement. Specifically, but not by way of limitation, except as described in the Section 4.1 Disclosure Schedule, the Companies shall not, except for the payment of bonuses described in the
Section 4.1 Disclosure Schedule, increase the compensation of any employees. The Stockholders will assure that the Companies comply with the requirements of this Section. 
 Section 4.2. Business Organization. Prior to the Closing, SES and the Stockholders shall use their best efforts to: (a) preserve
intact the business organization of the Companies; (b) keep available the services of the officers and employees of the Companies; (c) preserve the good will of the Companies; (d) maintain and keep the properties and assets of the
Companies in as good repair and condition as presently exists; and (e) maintain in full force and effect any insurance coverage of the Companies. 
  

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 ARTICLE V 
 ADDITIONAL AGREEMENTS 
 Section 5.1. Cooperation. SES and the Stockholders shall
afford to Buyer and its accountants, counsel, financial advisors and other representatives reasonable access during normal business hours throughout the period prior to and including the Closing to all of the properties, books, and records of the
Companies (including, but not limited to, tax returns and any and all records or documents which are within the possession of governmental or regulatory authorities, agencies or bodies, and the disclosure of which the Companies or their Stockholders
can facilitate or control). Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Companies or with the performance of any of the employees of the
Companies. 
 Section 5.2. Further Assurances. SES and the Stockholders shall execute, acknowledge and deliver or cause to
be executed, acknowledged and delivered to Buyer at and after Closing such assignments or other instruments of transfer, assignment and conveyance, in form and substance reasonably satisfactory to counsels of Buyer and the Stockholders, as shall be
necessary to vest in Buyer all of the right, title and interest in and to the SES Shares, free and clear of all liens, charges, encumbrances, rights of others, mortgages, pledges or security interests, and any other document reasonably requested by
Buyer in connection with this Agreement. 
 Section 5.3. Expenses and Fees. Subject to Section 8.3, all costs and
expenses incurred in connection with this Agreement and the Transaction by Buyer shall be paid by Buyer. All costs and expenses incurred in connection with this Agreement and the Transaction by Stockholders and SES shall be paid by Sooner; provided,
however, that such fees and expenses shall be considered a charge against Working Capital for purposes of Section 1.2. 
 Section 5.4 Payment of Loans. At the Closing, Buyer shall pay the balance of the Line, the Real Estate Loans, and the Stockholder Loans. The payment of these amounts pursuant to this Section shall not impact the effect of
the balance of such loans on the Purchase Price as provided pursuant to Section 1.2 
 ARTICLE VI 
 CONDITIONS TO CLOSING 
 Section 6.1. Conditions to Obligation of the Stockholders and SES to Effect the Transaction. Unless waived by the Stockholders and SES the obligation of the Stockholders and SES to effect the Transaction shall be subject
to the fulfillment on or prior to the Closing Date of the following additional conditions: 
 (a) Buyer shall have performed
in all material respects (or in all respects in the case of any agreement containing any materiality qualification) its agreements contained in this Agreement required to be performed on or prior to the Closing Date and the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all material respects 

  

 11 

 
(or in all respects in the case of any representation or warranty containing any materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date, and SES and Stockholders shall have received a certificate executed on behalf of Buyer by the President or a Vice President of Buyer to that effect. 
 (b) Buyer shall have executed the Disclosure Schedules. 
 Section 6.2. Conditions to Obligations of Buyer to Effect the Transaction. Unless waived by Buyer, the obligations of Buyer to effect the Transaction shall be subject to the fulfillment on or prior
to the Closing Date of the following additional conditions: 
 (a) SES and the Stockholders shall have performed in all
material respects (or in all respects in the case of any agreement containing any materiality qualification) their agreements contained in this Agreement required to be performed on or prior to the Closing Date and the representations and warranties
of SES and the Stockholders contained in this Agreement shall be true and correct in all material respects (or in all respects in the case of any representation or warranty containing any materiality qualification) on and as of the date made and on
and as of the Closing Date as if made at and as of such date; 
 (b) Since March 31, 2007, there shall have been no
changes that constitute, and no event or events shall have occurred which have resulted in or constitute, a material adverse effect or a material adverse change with respect to the business or results of operation of the Companies; 
 (c) The Stockholders shall have entered into Noncompete Agreements; and 
 (d) SES shall have executed and delivered the Disclosure Schedules. 
 ARTICLE VII 
 INDEMNIFICATION 
 Section 7.1. Indemnification of Buyer. Subject to the limitations of Section 3.22, each Stockholder severally agrees to indemnify
Buyer and hold Buyer harmless from and against, any and all claims, actions, causes of action, arbitrations, proceedings, losses, damages, liabilities, judgments and expenses (including, without limitation, reasonable attorneys’ fees)
(“Indemnified Amounts”) incurred by the Buyer as a result of: (a) any error, inaccuracy, breach or misrepresentation in any of the representations and warranties made by or on behalf of SES or such Stockholder in this
Agreement; (b) any violation or breach by SES or such Stockholders of or default by SES or such Stockholder under the terms of this Agreement; or (c) relating to or arising from the operation of the Companies prior to the Effective Date.

 Section 7.2. Indemnification of Stockholders. Buyer agrees to indemnify each of the Stockholders against, and hold each
of them harmless from and against, any and all Indemnified Amounts incurred by a Stockholder as a result of: (a) any error, inaccuracy, breach or misrepresentation in any of the representations and warranties made by or on behalf of Buyer in

  

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this Agreement; (b) any violation or breach by Buyer of or default by Buyer under the terms of this Agreement; or (iii) relating to or arising from
the operation of the Companies subsequent to the Effective Date. 
 Section 7.3. Procedure. The defense of any claim,
action, suit, proceeding or investigation subject to indemnification under this Article VII shall be conducted by the indemnifying party. If the indemnifying party fails to conduct such defense, the indemnified party may retain counsel of such
indemnified party’s own choosing, and the indemnifying party shall pay all reasonable fees and expenses of such counsel for the indemnified party promptly as statements therefor are received. The party not conducting the defense will use
reasonable efforts to assist in the vigorous defense of any such matter, provided that such party shall not be liable for any settlement of any claim reached without its written consent, which consent shall not be unreasonably withheld. Any
indemnified party wishing to claim indemnification under this Article VII, upon learning of any such claim, action, suit, proceeding or investigation, shall notify the indemnifying party (but the failure so to notify a party shall not relieve such
party from any liability which it may have under this Article VII except to the extent such failure materially prejudices such party). If the indemnifying party is responsible for the attorneys’ fees of more than one indemnified party, then the
indemnified parties as a group may retain only one law firm to represent them with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any issue between the positions of any two or more
indemnified parties. 
 ARTICLE VIII 
 MISCELLANEOUS 
 Section 8.1. Termination. This Agreement may be terminated at any
time prior to the Closing, as follows: 
 (a) The Stockholders shall have the right to terminate this Agreement: 

(i) if the representations and warranties of Buyer fail to be true and correct in all material respects (or in all respects in the case
of any representation or warranty containing any materiality qualification) on and as of the date made and as of the Closing Date and such failure shall not have been cured in all material respects (or in all respects in the case of any
representation or warranty containing any materiality qualification) within 30 days after written notice of such failure is given to Buyer by the Stockholders; 
 (ii) if the Transaction is not completed by August 31, 2007 (provided that the right to terminate this Agreement under this
Section 8.1(a)(ii) shall not be available to the Stockholders if the failure of the SES or the Stockholders to fulfill any obligation to Buyer under or in connection with this Agreement is the cause of or resulted in the failure of the
Transaction to occur on or before such date); 
 (iii) if Buyer (A) fails to perform in any respects any of Buyer’s
covenants in this Agreement, and (B) does not cure such default in all material respects (or in all respects in the case of any covenant containing any materiality qualification) within 30 days after written notice of such default is given to
Buyer by the Stockholders. 
  

 13 

 (b) Buyer shall have the right to terminate this Agreement: 
 (i) if the representations and warranties of SES or the Stockholders fail to be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any materiality qualification) on and as of the date made and as of the Closing Date and such failure shall not have been cured in all material respects (or in all respects in the
case of any representation or warranty containing any materiality qualification) within 30 days after written notice of such failure is given to Stockholders by Buyer; 
 (ii) if the Transaction is not completed by August 31, 2007 (provided that the right to terminate this Agreement under this
Section 8.1(b)(ii) shall not be available to Buyer if the failure of Buyer to fulfill any obligation to SES or the Stockholders under or in connection with this Agreement has been the cause of or resulted in the failure of the Transaction to
occur on or before such date); or 
 (iii) if SES or the Stockholders (A) fail to perform in any material respect (or in
all respects in the case of any covenant containing any materiality qualification) any of SES’s or Stockholders’ covenants in this Agreement and (B) do not cure such default in all material respects (or in all respects in the case of
any covenant containing any materiality qualification) within 30 days after notice of such default is given to the Stockholders by Buyer. 
 Section 8.2. Effect of Termination. In the event of termination of this Agreement by either Buyer or the Stockholders pursuant to the provisions of Section 8.1, this Agreement shall forthwith become void, and there
shall be no further obligations on the part of SES, Stockholders or Buyer or their respective officers or directors (except as set forth in this Section 8.2 and in Sections 5.3, 8.3, 8.9, 8.10 and 8.15, all of which shall survive the
termination). Nothing in this Section 8.2 shall relieve any party from liability for any breach of this Agreement. 
 Section 8.3.
Remedies. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the
successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and all costs incurred in that action or proceeding in addition to any other relief to which it may be entitled at law or equity. 
 Section 8.4. Notices. All notices, consents, demands or other communications required or permitted to be given pursuant to this
Agreement shall be in writing and shall be deemed sufficiently given: (i) when delivered personally during a business day to the appropriate location described below or telefaxed to the telefax number indicated below; or (ii) five
(5) business days after the posting thereof by United States first class, registered or certified mail, return receipt requested, with postage fee prepaid and addressed: 
  

 14 

			
	 If to Buyer:
	  	7030 Empire Central Drive
		  	Houston, Texas 77040
		  	Telefax No. (713) 466-8386
		
		  	
	 With a copy to:
	  	Casey W. Doherty
		  	Doherty & Doherty LLP
		  	1717 St. James Place, Suite 520
		  	Houston, Texas 77056
		  	Telefax No. (713) 572-1001
		  	
		
	 If to SES (before closing)
	  	Owen Richman
	 or the Stockholders:
	  	#10-4751 Shell Road
		  	Richmond, BC
		  	Canada V6X3H4
		  	Telefax No. (604) 273-1982
		  	
	 With a copy to:
	  	James E. Britton
		  	Mulinix Ogden Hall Andrews & Ludlam
		  	210 West Park Avenue
		  	3030 First Oklahoma Tower
		  	Oklahoma City, Oklahoma 73102
		  	Telefax No. 405-232-8999.

 Section 8.5. Successors. This Agreement shall be binding upon each of the
parties upon their execution, and inure to the benefit of the parties hereto and their successors and assigns. 
 Section 8.6.
Severability. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement. 
 Section 8.7. Section Headings. The section headings used herein
are descriptive only and shall have no legal force or effect whatsoever. Except to the extent the context specifically indicates otherwise, all references to articles, schedules, exhibits and sections refer to articles schedules, exhibits and
sections of this Agreement. 
 Section 8.8. Gender. Whenever the context so requires, the reference to a gender shall
include all other gender and the singular shall include the plural and conversely. 
 Section 8.9. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the State of Texas, U.S.A., applicable to agreements and contracts executed and to be wholly performed there, without giving effect to the conflicts of law principles
thereof. The parties hereto agree that the Transaction has a reasonable relation to the State of Texas because the corporate headquarters of Buyer is located in Texas. 
  

 15 

 Section 8.10. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original. 
 Section 8.11. Waiver. Any waiver by either party must be in
writing to be enforceable, and no waiver by either party shall constitute a continuing waiver. 
 Section 8.12. Entire
Agreement. This Agreement and the other agreements referred to herein set forth the entire understanding of the parties hereto relating to the subject matter hereof and thereof and supersede all prior agreements and understandings among or
between any of the parties relating to the subject matter hereof and thereof. 
 Section 8.13. References. References in
this Agreement to Articles, Sections, Schedules and Exhibits shall be deemed references to Articles, Sections, Schedules, and Exhibits to this Agreement unless the context clearly indicates otherwise. 
 Section 8.14. Representative. Owen Richman is hereby appointed by the Stockholders as their exclusive representative for purposes of
giving and receiving notice pursuant to this Agreement. 
 Section 8.15 Confidentiality. Any non-public information
furnished by the Companies and/or Stockholders to Buyer, its officers, directors, employees, attorneys, accountants, agents or representatives, with respect to the Companies and/or Stockholders or obtained by the Buyer or any of its officers,
directors, employees, attorneys, accountants, agents or representatives in connection with this Agreement, the Transaction and the Letter of Intent between Flotek Industries, Inc., and Owen Richman and SES, including the Disclosure Schedules shall
be considered “Confidential Material.” Confidential Material shall not include public information or non-public information obtained by Buyer or its representatives on a non-confidential basis from another source. In the event that
the Transaction is not Closed or consummated Buyer shall cause all persons and entities in possession of Confidential Material to promptly return all written and electronic Confidential Material and copies thereof furnished to it by the party
originally providing the Confidential Material. Except as otherwise required by law, the Buyer, its officers, directors, employees, attorneys, accountants, agents and representatives, shall keep the Confidential Material confidential, not use the
Confidential Material for any purpose other than to the extent contemplated by this Agreement, or permit any such Confidential Material to be made available to third parties other than Buyer’s designated representatives or agents whom the Buyer
shall direct to maintain the Confidential Material confidential. Confidential Material may be disclosed to the extent required in the course of inspections or inquiries by any federal or state regulatory agency to whose jurisdiction the parties are
subject and that have the legal right to inspect the files that contain the Confidential Material. The obligations of the Buyer and its officers, directors, employees, attorneys, accountants, agents and representatives under the provisions of this
Section 8.15 shall expire upon the earlier of the Closing or five (5) years after the date of this Agreement. 
  

 16 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first set forth
above. 
  

							
	 Stockholders:
	 		 	 SES:
  
 SES Holdings, Inc.

				
	 /s/ Owen Richman
	 		 	By:	 	/s/ Owen Richman
	 Owen Richman
	 		 		 	Owen Richman, President
			
	 /s/ Antony Dyakowski
  
 Antony
Dyakowski
	 		 	 BUYER:
  
 Flotek Industries, Inc.
  
 /s/ Lisa Meier

				
	 /s/ Gwen Bristow
	 		 	 	 	 
	 Gwen Bristow
	 		 	By:	 	Lisa Meier
		 		 		 	its Chief Financial Officer

  

 17 

 SCHEDULE A 
 TO 
 STOCK PURCHASE AGREEMENT 
 The Stockholders own the following percentage of SES Stock: 
  

			
	 Stockholder
	  	Percentage
	 Owen Richman
	  	54.5
	 Antony Dyakowski
	  	33.5
	 Gwen Bristow
	  	12.0
		  	 
	 Total
	  	100.0
		  	 

  

 18

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