Document:

Exhibit 4.1

 

 

PIEDMONT NATURAL GAS COMPANY, INC.

 

AND

 

THE BANK OF NEW YORK MELLON

 

TRUST COMPANY, N.A., AS TRUSTEE

 

NINTH SUPPLEMENTAL INDENTURE

 

DATED AS OF MAY 24, 2019

 

SUPPLEMENT TO INDENTURE DATED AS OF APRIL 1, 1993

 

3.50% SENIOR NOTES, DUE 2029

 

 

 

TABLE OF CONTENTS(1)

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1 3.50%   Senior Notes Due 2029
    	
2
    
	
 
    	
 
    
	
SECTION 101. Establishment
    	
2
    
	
 
    	
 
    
	
SECTION 102. Definitions
    	
3
    
	
 
    	
 
    
	
SECTION 103. Payment of Principal and   Interest
    	
3
    
	
 
    	
 
    
	
SECTION 104. Denominations
    	
4
    
	
 
    	
 
    
	
SECTION 105. Book-Entry Debt Securities
    	
4
    
	
 
    	
 
    
	
SECTION 106. Transfer
    	
5
    
	
 
    	
 
    
	
SECTION 107. Redemption at the Company’s   Option
    	
5
    
	
 
    	
 
    
	
ARTICLE 2   Miscellaneous Provisions
    	
6
    
	
 
    	
 
    
	
SECTION 201. Concerning the Trustee
    	
6
    
	
 
    	
 
    
	
SECTION 202. Defeasance; Satisfaction   and Discharge
    	
6
    
	
 
    	
 
    
	
SECTION 203. Sinking Fund
    	
6
    
	
 
    	
 
    
	
SECTION 204. Notices
    	
6
    
	
 
    	
 
    
	
SECTION 205. Miscellaneous
    	
6
    
	
 
    	
 
    
	
EXHIBIT A   FORM OF NOTE
    	
 
    
	
 
    	
 
    
	
EXHIBIT B   CERTIFICATE OF AUTHENTICATION
    	
 
    

 

(1)  This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.

 

i

 

THIS NINTH SUPPLEMENTAL INDENTURE (this “Ninth Supplemental Indenture”), dated as of May 24, 2019, between PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized and existing under the laws of the State of North Carolina (the “Company”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under the laws of the United States, as successor to Citibank, N.A. (the “Trustee”).

 

WITNESSETH:

 

WHEREAS, a predecessor to the Company has heretofore executed and delivered to the Trustee an Indenture dated as of April 1, 1993 (the “Base Indenture”, as amended by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture (each as defined below), the “Original Indenture”);

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a First Supplemental Indenture dated as of February 25, 1994 (the “First Supplemental Indenture”) pursuant to which the Company assumed all of the obligations of its predecessor company under the Base Indenture;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Second Supplemental Indenture dated as of June 15, 2003 (the “Second Supplemental Indenture”) pursuant to which Section 4.07 (“Limitation on Liens”) of the Base Indenture was amended, applicable to all Series of Debt Securities issued after June 15, 2003;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Third Supplemental Indenture dated as of June 20, 2006 (the “Third Supplemental Indenture”) pursuant to which (i) the Company issued $200,000,000 in aggregate principal amount of its 6.25% Insured Quarterly Notes Series 2006 due 2036 and (ii) the Limitation on Liens and related definitions in Section 1.01 of the Base Indenture were amended, applicable to all series of Debt Securities issued on or after June 20, 2006;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Fourth Supplemental Indenture dated as of May 6, 2011 (the “Fourth Supplemental Indenture”) pursuant to which Section 5.03 of the Base Indenture was amended, applicable to all series of Debt Securities issued on or after May 6, 2011;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Fifth Supplemental Indenture dated as of August 1, 2013 pursuant to which the Company issued $300,000,000 in aggregate principal amount of its 4.65% Senior Notes due 2043;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Sixth Supplemental Indenture dated as of September 18, 2014 pursuant to which the Company issued $250,000,000 in aggregate principal amount of its 4.10% Senior Notes due 2034;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Seventh Supplemental Indenture dated as of September 14, 2015 pursuant to which the Company issued $150,000,000 in aggregate principal amount of its 3.60% Senior Notes due 2025;

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee an Eighth Supplemental Indenture dated as of July 28, 2016 pursuant to which the Company issued $300,000,000 in aggregate principal amount of its 3.64% Senior Notes due 2046;

 

 

WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as heretofore supplemented and as further supplemented by this Ninth Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, the Original Indenture provides that the Company and the Trustee may from time to time enter into indentures supplemental thereto to issue and establish the form or terms of a new series of Debt Securities;

 

WHEREAS, the Company proposes to issue under the Indenture a new series of Debt Securities; and

 

WHEREAS, the Company represents that all acts and things necessary to constitute this Ninth Supplemental Indenture and the Notes (as defined below), when executed by the Company and authenticated and delivered by the Trustee, the valid, binding and enforceable obligations of the Company have been done and performed, and the execution of this Ninth Supplemental Indenture has in all respects been duly authorized, and the Company, in the exercise of legal right and power in it vested, is executing this Ninth Supplemental Indenture.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other valuable consideration, the receipt whereof is hereby acknowledged, the parties have executed and delivered this Ninth Supplemental Indenture and the Company covenants and agrees with the Trustee as follows:

 

ARTICLE 1

 

3.50% Senior Notes Due 2029

 

SECTION 101.                                        Establishment.  There is hereby established a new series of Debt Securities to be issued under the Indenture, to be designated as the Company’s 3.50% Senior Notes Due 2029 (the “Notes”).

 

There are to be initially authenticated and delivered $600,000,000 aggregate principal amount of Notes; provided, however, that the authorized aggregate principal amount of the Notes may be increased above such amount without the consent of the Holders of any then outstanding Notes by a Board Resolution authorizing such increase; provided, however, that such additional Notes issued pursuant to such increase will be fungible with the initially issued Notes for U.S. Federal income tax purposes, and any such additional Notes issued in this manner will be consolidated with, and will form a single series with, the initially issued Notes.  The Notes shall be issued in definitive fully registered form.

 

The Notes shall be issued in the form of a Book-Entry Debt Security in substantially the form set out in Exhibit A hereto.  The Depository with respect to the Notes shall be The Depository Trust Company.

 

The form of the Trustee’s Certificate of Authentication for the Notes shall be in substantially the form set forth in Exhibit B hereto.

 

Each Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

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SECTION 102.                                        Definitions.  The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed (assuming, for this purpose, that the Notes matured on the Par Call Date), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

 

“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations as determined by the Company.

 

“Interest Payment Dates” means June 1 and December 1 of each year, commencing December 1, 2019.

 

“Original Issue Date” means May 24, 2019.

 

“Par Call Date” means March 1, 2029.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means (1) each of BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, a Primary Treasury Dealer (as defined below) selected by U.S. Bancorp Investments, Inc. and a Primary Treasury Dealers selected by SMBC Nikko Securities America, Inc., plus one other financial institution appointed by the Company at the time of any redemption, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States of America (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

 

“Stated Maturity” means June 1, 2029.

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 

SECTION 103.                                        Payment of Principal and Interest.  The principal of the Notes shall be due at the Stated Maturity (unless earlier redeemed).  The unpaid principal amount of the Notes shall bear interest at the rate of 3.50% per annum until paid or duly provided for.  Interest shall be paid semi-annually in arrears on each Interest Payment Date to the Person in whose name the Notes are registered at

 

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the close of business on the Record Date for such Interest Payment Date, provided that interest payable at the Stated Maturity of principal or on a redemption date as provided herein will be paid to the Person to whom principal is payable.  Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Record Date and will be paid to the Person in whose name the Notes are registered on a subsequent record date established for the payment of such defaulted interest by notice given by mail or on behalf of the Company to the Holders no less than fifteen (15) days preceding such subsequent record date, such record date to be not less than five (5) days preceding the date of payment of such defaulted interest or in any other lawful manner acceptable to the Trustee.

 

Payments of interest on the Notes will include interest accrued to but excluding the respective Interest Payment Date.  Interest payments for the Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial periods shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months).  In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on the date the payment was originally payable.

 

Payment of the principal and interest due at the Stated Maturity or earlier redemption of the Notes shall be made upon surrender of the Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of the principal and interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by wire transfer to the Holders entitled thereto who have provided appropriate wire transfer instructions to the Trustee, or by check mailed to the Holders of the Notes entitled thereto at their last addresses as they appear on the Debt Security Register or (ii) if the Notes are Book-Entry Debt Securities, the Depository, as Holder of the Notes, shall be entitled to receive payment of interest by wire transfer of immediately available funds.

 

SECTION 104.                                        Denominations.  The Notes may be issued in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

SECTION 105.                                        Book-Entry Debt Securities.  The Notes will be issued in the form of a Book-Entry Debt Security registered in the name of the Depository or its nominee.  Except under the limited circumstances described below, Notes represented by the Book-Entry Debt Security will not be exchangeable for, and will not otherwise be issuable as, Notes in definitive, non-global form.  The Book-Entry Debt Securities described above may not be transferred except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or to a successor Depository or its nominee.

 

Owners of beneficial interests in such a Book-Entry Debt Security will not be considered the Holders thereof for any purpose under the Indenture, and no Book-Entry Debt Security representing a Note shall be exchangeable, except for another Book-Entry Debt Security of like denomination and tenor to be registered in the name of the Depository or its nominee or to a successor Depository or its nominee.  The rights of Holders of such Book-Entry Debt Security shall be exercised only through the Depository.

 

Subject to the procedures of the Depository, a Book-Entry Debt Security shall be exchangeable for Notes registered in the names of persons other than the Depository or its nominee only if (i) the Depository notifies the Company that it is unwilling or unable to continue as a Depository for such Book-Entry Debt Security and no successor Depository shall have been appointed by the Company, or if at any time the Depository ceases to be a clearing agency registered under the Securities Exchange Act of 1934,

 

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as amended, at a time when the Depository is required to be so registered to act as such Depository and no successor Depository shall have been appointed by the Company, in each case within 60 days after the Company receives such notice or becomes aware of such cessation, (ii) the Company in its sole discretion determines that such Book-Entry Debt Security shall be so exchangeable, or (iii) there shall have occurred an Event of Default with respect to the Notes.  Any Book-Entry Debt Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Notes registered in such names as the Depository shall direct.

 

SECTION 106.                                        Transfer.  No service charge will be made for the exchange or to register a transfer of Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

The Company shall not be required to exchange or register a transfer of (a) Notes for a period of fifteen (15) days next preceding the mailing of the notice of any redemption of Notes to be redeemed, or (b) Notes selected, called or being called for redemption, except, in the case of Notes to be redeemed in part, the portion thereof not to be so redeemed.

 

SECTION 107.                                        Redemption at the Company’s Option.  Prior to the Par Call Date, the Company shall have the right to redeem the Notes, at its option, at any time in whole or in part and from time to time, at a redemption price calculated by the Company equal to the greater of:

 

(i)                                     100% of the principal amount of the Notes to be redeemed; and

 

(ii)                                  the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed that would be due if the Notes matured on the Par Call Date (exclusive of interest accrued as of the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus 20 basis points;

 

plus, in each case, accrued and unpaid interest on the principal amount being redeemed to, but excluding, such redemption date.

 

On or after the Par Call Date, the Company shall have the right to redeem the Notes, at its option, at any time in whole or in part and from time to time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest on the principal amount of the Notes being redeemed to, but excluding, such redemption date.

 

Notwithstanding the foregoing, installments of interest on the Notes that are due and payable on an Interest Payment Date falling on or prior to a redemption date shall be payable on such Interest Payment Date to the Holders as of the close of business on the relevant Record Date.

 

On or after the date of redemption, interest will cease to accrue on the Notes or portion of the Notes redeemed.  However, interest will continue to accrue if the Company defaults in the payment of the amount due upon redemption.

 

Notice of redemption to each Holder of the Notes shall be given by the Company, or, at the Company’s request, by the Trustee, in the manner provided in Section  3.02 of the Original Indenture, at least ten (10) and not more than sixty (60) days prior to the date fixed for redemption.

 

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ARTICLE 2

 

Miscellaneous Provisions

 

SECTION 201.                                        Concerning the Trustee.  The Trustee accepts the trusts of the Indenture and agrees to perform the same, but only upon the terms and conditions set forth in the Indenture, to which the parties hereto and the Holders from time to time agree.  Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals herein contained, which shall be taken as the statements of the Company.  The Trustee makes no representation or warranty as to, and assumes no responsibility for, the validity or adequacy of this Ninth Supplemental Indenture or the Notes, it shall not be accountable for the Company’s use of proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Ninth Supplemental Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

 

SECTION 202.                                        Defeasance; Satisfaction and Discharge.  The provisions of Article Thirteen of the Base Indenture shall apply to the Notes.

 

SECTION 203.                                        Sinking Fund.  The Notes are not entitled to the benefits of any sinking fund.

 

SECTION 204.                                        Notices.  The address for any notice or demand under this Ninth Supplemental Indenture for each of the parties shall be as follows:

 

If to the Company:
 Piedmont Natural Gas Company, Inc.
 4720 Piedmont Row Drive
 Charlotte, North Carolina 28210
 Attention: Treasurer

 

With a copy to:
 Duke Energy Corporation
 550 South Tryon Street
 Charlotte, North Carolina 28202
 Attention: General Counsel

 

If to the Trustee:
 The Bank of New York Mellon Trust Company, N.A.
 10161 Centurion Parkway
 Jacksonville, Florida 32256
 Attention: Corporate Trust Administration

 

SECTION 205.                                        Miscellaneous.

 

(a)                                 Except as expressly amended hereby with respect to the Notes, the Original Indenture is in all respects ratified and confirmed and all the terms, provisions and conditions thereof shall be and remain in full force and effect.

 

(b)                                 All the covenants, stipulations, promises and agreements in this Ninth Supplemental Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not.

 

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(c)                                  This Ninth Supplemental Indenture and each Note shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of said State.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

(d)                                 If any provision of the Indenture limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of or govern the Indenture, such latter provision shall control.  If any provision of the Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to the Indenture as so modified or to be excluded, as the case may be.

 

(e)                                  The titles and headings of the sections of this Ninth Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

 

(f)                                   This Ninth Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed an original, and such counterparts shall together constitute one and the same instrument.

 

(g)                                  In case any provision in this Ninth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof or of the Indenture shall not in any way be affected or impaired thereby.

 

[Signature page to follow.]

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused this Ninth Supplemental Indenture to be duly executed, and attested, all as of the date first above written.

 

	
ATTEST:
    	
 
    	
PIEDMONT   NATURAL GAS COMPANY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Robert T. Lucas III
    	
 
    	
By:
    	
/s/   William E. Currens, Jr.
    
	
 
    	
Name:   Robert T. Lucas III
    	
 
    	
 
    	
Name:
    	
William   E. Currens, Jr.
    
	
 
    	
Title:   Assistant Corporate Secretary
    	
 
    	
 
    	
Title:
    	
Senior   Vice President,Financial Planning and Analysis
    
	
 
    	
 
    	
 
    	
 
    
	
ATTEST:
    	
 
    	
THE   BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as   Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Mark A. Golder
    	
 
    	
By:
    	
/s/   Karen Yu
    
	
 
    	
Name:   Mark A. Golder
    	
 
    	
 
    	
Name:   Karen Yu
    
	
 
    	
Title:   Vice President
    	
 
    	
 
    	
Title:   Vice President
    

 

 

EXHIBIT A

 

FORM OF NOTE

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

THIS DEBT SECURITY IS A BOOK-ENTRY DEBT SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.  THIS DEBT SECURITY IS EXCHANGEABLE FOR DEBT SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS DEBT SECURITY (OTHER THAN A TRANSFER OF THIS DEBT SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

 

PIEDMONT NATURAL GAS COMPANY, INC.

 

3.50% SENIOR NOTES DUE 2029

 

	
No. R-
    	
$
    

 

CUSIP No. 720186 AL9

 

PIEDMONT NATURAL GAS COMPANY, INC., a corporation validly existing under the laws of the State of North Carolina (herein called the “Company”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of                      DOLLARS ($                      ) on June 1, 2029 and to pay interest thereon from May 24, 2019 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on June 1 and December 1 (each an “Interest Payment Date”) in each year, commencing December 1, 2019 at the rate of 3.50% per annum, until the principal hereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 3.50% per annum on any overdue principal and on any overdue installment of interest.  The amount of interest payable on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note is registered at the close of business on the regular Record Date for such interest, which shall be the fifteenth calendar day next preceding each Interest Payment Date (whether or not a Business Day), provided that interest payable at the Stated Maturity of principal or on a redemption date as provided in the Indenture will be paid to the Person to whom principal is payable.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such regular Record Date

 

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and will be paid to the Person in whose name the Notes are registered at the close of business on a subsequent record date established for the payment of such defaulted interest by notice given by mail or on behalf of the Company to the Holders no less than fifteen (15) days preceding such subsequent record date, such record date to be not less than five (5) days preceding the date of payment of such defaulted interest or in any other lawful manner acceptable to the Trustee.

 

Payments of interest on this Note will include interest accrued to but excluding the respective Interest Payment Date.  Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial periods shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months).  In the event that any Interest Payment Date would otherwise be a day that is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on the date the payment was originally payable.

 

Payment of the principal of and interest on this Note will be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payment of interest on this Note (other than interest payable at maturity) will be made, at the option of the Company, by wire transfer to the Holders entitled thereto who have provided appropriate wire transfer instructions to the Trustee or by check mailed to the address of the Holder as such address shall appear in the Debt Security Register; provided, however, that if this Note is a Book-Entry Debt Security the Depository, as Holder of this Note, shall be entitled to receive payment of interest by wire transfer of immediately available funds.  Notices regarding changes of address shall be effective upon recordation in the Debt Securities Register.  Payment of the principal of and interest on this Note payable at maturity will be made in immediately available funds upon surrender of this Note at the corporate trust office of the Trustee in the Borough of Manhattan, The City of New York, or such other office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York, provided, however, that if this Note is a Book-Entry Debt Security the Depository, as Holder of this Note, shall be entitled to receive payment of interest by wire transfer of immediately available funds in accordance with the arrangements with the Depository.

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

A-2

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

Dated: May 24, 2019

 

	
ATTEST: 
    	
 
    	
PIEDMONT   NATURAL GAS COMPANY, INC. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:   
    	
 
    	
 
    	
By:   
    	
 
    
	
(Signature)
    	
 
    	
(Authorized   Signature)
    
					

 

[Seal]

 

A-3

 

(Reverse Side of Note)

 

This Note is one of a duly authorized issue of securities of the Company (herein called the “Notes”), issued and to be issued in one or more series under an Indenture, dated as of April 1, 1993, as amended (as amended and supplemented the “Indenture”), between Piedmont Natural Gas Company, Inc., a New York corporation and the predecessor to the Company and The Bank of New York Mellon Trust Company, N.A.  (as successor to Citibank N.A.), as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.  This Note is a global Book-Entry Debt Security and is limited initially in the aggregate principal amount of $                    ; provided however that the authorized aggregate principal amount of this Note may be increased above such amount by a Board Resolution authorizing such increase.

 

Prior to March 1, 2029 (the “Par Call Date”), the Company shall have the right to redeem this Note, at its option, at any time in whole or in part and from time to time, at a redemption price calculated by the Company equal to the greater of (i) 100% of the principal amount to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Note to be redeemed that would be due if the Notes matured on the Par Call Date (exclusive of interest accrued as of the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points; plus, in each case, accrued and unpaid interest on the principal amount of this Note being redeemed to, but excluding, such redemption date.

 

On or after the Par Call Date, the Company shall have the right to redeem this Note, at its option, at any time in whole or in part and from time to time, at a redemption price equal to 100% of the principal amount of this Note to be redeemed, plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, such redemption date.

 

For purposes of determining the redemption price:

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed (assuming, for this purpose, that the Notes matured on the Par Call Date), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

 

“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations determined by the Company.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means (1) each of BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, a Primary Treasury Dealer (as defined below) selected by U.S. Bancorp Investments, Inc. and a Primary Treasury Dealers selected by SMBC Nikko Securities America, Inc., plus one other financial institution appointed by the Company at the time of any redemption, or their

 

 

respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States of America (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 

This Note will not have a sinking fund.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the aggregate principal amount of the Notes may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.

 

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of this Note and (b) certain restrictive covenants, in each case upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Note.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of at least a 66 2/3% in aggregate principal amount of such Debt Securities.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfers hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations herein and therein set forth, the transfer of this Note is registrable in the Debt Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Debt Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transfers or transferees.

 

 

This global Book-Entry Debt Security is exchangeable for Notes in definitive, non-global form only under certain limited circumstances set forth in the Indenture.  Notes of this series so issued are issuable only in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

No service charge shall be made for any such registration of transferor exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN   COM-
    	
as   tenants in common
    	
UNIF   GIFT MIN ACT-
    	
                  Custodian                     
    
	
 
    	
 
    	
 
    	
   (Cust)
    	
(Minor)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
TEN   ENT-
    	
as   tenants by the entireties as joint tenants
    	
 
    	
under   Uniform Gifts to Minors Act

                                         

(State)
    
	
 
    	
 
    	
 
    	
 
    
	
JT   TEN-
    	
with   right of survivorship and not as tenants in common
    	
 
    	
 
    

 

Additional abbreviations may also be used
 though not on the above list.

 

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

 

	
 
    
	
(please insert Social   Security or other identifying number of assignee)
    
	
 
    
	
PLEASE PRINT OR   TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE
    
	
 
    
	
 
    
	
 
    
	
the within Note and all   rights thereunder, hereby irrevocably constituting and appointing
    
	
 
    
	
 
    
	
 
    
	
agent to transfer said   Note on the books of the Company, with full power of substitution in the   premises.
    

 

Dated:                 ,              

 

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever.

 

 

EXHIBIT B

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture.

 

Dated:  May 24, 2019

 

	
THE BANK OF NEW YORK   MELLON
    	
 
    
	
TRUST COMPANY, N.A., as   Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
(Authorized Signature)
    	
 
    
			

 

B-1EX-10.1

 Exhibit 10.1 

EMPLOYMENT AGREEMENT 

THIS AGREEMENT (this “Agreement”) is entered into on May 20, 2019 and effective as of April 1, 2019 (“Effective
Date”), between Flotek Industries, Inc., a Delaware corporation (the “Company”), and John W. Chisholm (“Employee”). 

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows: 
 1.    Employment. The Company shall employ Employee,
and Employee shall be employed with the Company, upon the terms set forth in this Agreement for the period beginning April 1, 2019 and ending on March 31, 2020 (the “Expiration Date”), unless terminated earlier as set forth
herein, or unless extended or renewed by mutual written agreement of the parties hereto prior to the then existing Expiration Date. The period during which the Employee is employed by the Company is referred to as the “Employment Period.”

 2.    Position and Duties. 

(a)    Employee shall serve as Chief Executive Officer and President of the Company and shall be responsible for such
duties as may be reasonably prescribed by the Board of Directors of the Company which are consistent with the customary duties of such offices. Employee will report to the Board of Directors of the Company and based in the Company’s Houston
office. 
 (b)     Employee shall devote his reasonable best efforts and his full business time and attention (except for
permitted vacation periods, periods of illness or other incapacity) to the business and affairs of the Company, and it shall not be considered a violation of this Agreement for the Employee to, (a) engage in or serve such professional, civic,
trade association, charitable, community, religious or similar types of organizations or speaking selections as the Employee may select; (b) serve with the consent of the Board of Directors of the Company on the boards of directors or advisory
committees of any entities, or engage in other business activities; and (c) attend to the Employee’s personal matters and finances so long as such services and activities in (a) – (c) do not significantly interfere with the
performance of Employee’s responsibilities as an employee of the Company. 
 (c)     As part of his duties, Employee
shall support and assist Company to the best of his ability in identifying and hiring his successor as Company’s new C.E.O. and President, and shall assert his best efforts in transitioning duties to the successor, once hired. 

(d)     As partial consideration for, and as a condition of, Employee’s employment with the Company, Employee has
executed contemporaneously with the execution of this Agreement, the Confidentiality and Restrictive Covenants Agreement attached hereto as Exhibit A. 

3.    Base Salary, Equity Award and Benefits. 

(a)     Employee’s annual base salary for the Employment Period shall initially be $550,000 (the “Base
Salary”). The Base Salary shall be payable in equal installments in 

 
accordance with the Company’s general payroll practices and shall be subject to required withholding. Any change in Base Salary shall, subject to Section 5, be at the sole discretion of
the Compensation Committee of the Board of Directors of the Company. During the Employment Period, Employee will be eligible to participate in the Company’s employee benefit programs on the same basis as other employees of the Company. 

(b)     Employee shall be eligible for quarterly and annual bonuses in accordance with the Management Incentive Plan (the
“MIP”) of the Company, pursuant to the terms of such plan and such terms as shall be established by the Compensation Committee of the Board. The Employee’s target bonus percentage for the 2019 MIP and 2020 MIP shall be one hundred ten
percent (110%). Employee will be eligible to participate in the Performance Unit Plan (the “PUP”) of the Company or other equity plan for senior executives pursuant to the terms of that plan and such terms as shall be established by the
Compensation Committee of the Board. The factor for the 2019 PUP and 2020 PUP to determine the Employee’s award value shall be 2.25. 

(c)    Promptly after the execution of this Agreement, Employee shall be granted 85,000 share of restricted Company stock,
which shall vest upon Employee’s termination of employment, or March 31, 2020, whichever is earlier. 

(d)    The Company shall reimburse Employee for all reasonable expenses incurred in the course of performing duties under
this Agreement which are consistent with the Company’s policies in effect with respect to travel, entertainment and other business expenses pursuant to applicable Treasury Regulations. 

(e)    Employee may be eligible to receive annual merit raises approved at the discretion of the Compensation Committee of
the Board of Directors of the Company. 
 (f)    Employee shall be eligible for vacations in accordance with Company
policies with a minimum of five weeks’ vacation during each year in the Employment Period. 

4.    Employment Term and Termination. 

(a)    The Employment Period shall continue until terminated upon the earlier of (i) the Expiration Date of this
Agreement or of any extension or renewal period; (ii) Employee’s resignation with or without Good Reason or Employee’s death or Disability or (iii) the termination of the Employee by the Company with or without cause. 

(b)    Employee’s employment with the Company will be “At Will,” meaning that either Employee or the Company
may terminate Employee’s employment at any time and for any reason, with or without cause or Good Reason. The date on which the Employee’s employment is terminated is referred herein as the “Termination Date.” Notwithstanding any
other provisions of this agreement or any other agreement, upon termination of employment by the Company for any reason, termination by Employee for Good Reason, and upon expiration of this Agreement at the end of the Employment Period, Employee
will receive a severance package consistent with the terms and conditions set forth in Section 5 below. 

 5.    Severance. 

(a)    Provided that Employee has not terminated his employment without Good Reason, and provided that Employee signs and
delivers to the Company a Confidential Severance and Release Agreement in the form set forth in Exhibit B attached hereto and to be provided by the Company within 5 days of the Termination Date (the “Release Agreement”) within 60 days
following the termination of Employee’s employment with the Company (such 60th day following termination being referred to as the “Release Date”) and does not revoke such signed
Release Agreement pursuant to the terms thereof, Employee, upon termination of employment prior to or upon the expiration of the Employment Period (which must qualify as a “Separation from Service” within the meaning of Section 409A
of the Code to the extent applicable), shall be entitled to receive severance compensation equal to the following: 

(i)    The sum of $3,612,000, which shall be payable in twenty-four (24) monthly installments equal to one-twenty-fourth of such severance compensation, subject to required withholding, with the first payment made on the last day of the month in which the Release Date falls, and subsequent payments on the last day of
each of the next twenty-three (23) full calendar months following the Release Date.” 
 (ii)    if the Employee
timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Employee for the monthly COBRA premium paid by the Employee for Employee
and Employee’s dependents who were covered under the Company’s health plan immediately preceding the Date of Termination. The reimbursement under Section 5(a)(2) shall be paid to the Employee prior to the last day of the month
immediately following the month in which the Executive timely remits the premium payment, and the Employee shall be eligible to receive such reimbursement until the earliest of: (i) the 12-month
anniversary of the Date of Termination; (ii) the date the Employee (or Employee’s dependents, if applicable) is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Employee receives coverage from
another employer or other source. 
 (iii)    The time vested portion of the 2019 PUP, which equals 123,750 shares. Any
decision by the Company to vest shares under the 2018 PUP in the event of early termination, shall be made by the full Board. 

(iv)    Any benefits earned for quarterly or annual bonuses under the MIP, but not yet paid as of the termination date.

 (c)    Employee shall receive none of the severance compensation outlined in Sections 5(a)(i) and 5(a)(ii), if
Employee resigns without Good Reason, but Employee shall be entitled to receive: (i) Employee’s Base Salary earned and payable through the Termination Date; (ii) any accrued but unused vacation/time off to the extent required under
applicable law; (iii) reimbursement for all incurred but unreimbursed expenses to the extent Employee is entitled to be reimbursed; and (iv) any other earned but unpaid compensation, if applicable, as of the Termination Date. 

 (d)    For purposes of this Agreement, the following terms shall have
the meanings set forth below: 
 “Disability” shall have the meaning assigned to such term in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the “Code”). 
 “Good Reason” shall exist upon the
occurrence of one of the following Company actions (unless Employee consents in writing to such action(s)): (i) a material reduction of the Employee’s base salary and employee benefits to which the Employee was entitled immediately prior
to such reduction, (ii) a material reduction in the duties, authority or responsibilities relative to the Employee’s duties, authority or responsibilities as in effect immediately prior to such reduction, or (iii) the relocation of
the Employee to a facility or a location more than fifty (50) miles from the Employee’s then present location; provided, however, that in all cases (A) Employee must provide the Company with written notice of the occurrence of
such action(s) described under (i), (ii) or (iii) above within 60 days of the initial occurrence of such action(s) and of his intent to terminate employment based on such action(s), (B) the written notice must describe the event constituting
Good Reason in reasonable detail, (C) the Company shall have 30 days from the date that such written notice is received by the Company in which to cure such action(s), and (D) any termination of employment for Good Reason must take place
within the six-month period following the initial occurrence of the Good Reason event. 

6.    Section 409A. Notwithstanding anything herein to the contrary, to the extent required to comply with
Section 409A of the Code (“Section 409A”), (i) each reimbursement or in-kind benefit provided under this Agreement shall be provided in a manner and at a time that complies with
Section 409A; (ii) if at the time of Employee’s termination of employment with the Company, Employee is a “specified employee” within the meaning of Section 409A, any payments and/or benefits provided under this
Agreement that constitute “nonqualified deferred compensation” subject to Section 409A that are provided to Employee or for Employee’s benefit on account of his separation from service shall not be provided until the first
payroll date to occur following the six-month anniversary of Employee’s termination date (“Specified Employee Payment Date”), and the aggregate amount of any payments that would otherwise have
been made to Employee during such six-month period shall be paid in a lump sum to Employee on the Specified Employee Payment Date without interest and, thereafter, any remaining payments shall be paid without
delay in accordance with their original schedule; (iii) a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a
termination of employment unless such termination also constitutes a “Separation from Service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment,” “separation from service” or like terms shall mean Separation from Service;, and (iv) each payment identified in Section 5(a)(i)-(ii), including each separate installment payment identified
thereunder, will be considered a separate payment for purposes of Section 409A. Terms defined in the Agreement will have the meanings given such terms under Section 409A if and to the extent required to comply with Section 409A.
Notwithstanding any other provision in the Agreement, the Company and Employee will cooperate in good faith to amend or modify the Agreement so that the payments under this Agreement qualify for exemption from or comply with Code Section 409A;
provided, however, that the Company makes no representations that the payments under the Agreement shall be exempt from or comply with Section 409A of the Code and any such taxes shall be the responsibility of the Employee. 

 7.    Parachute Payments. 

(a)    Notwithstanding anything contained in this Agreement to the contrary, (i) to the extent that
any payment, benefit or distribution of any type to or for the Employee by the Company, any affiliate of the Company, any person or entity (referred to herein as a “Person”) who acquires ownership or effective control of the Company
or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of Internal Revenue Code of 1986 (the “Code”), as amended, and the regulations and other guidance issued thereunder), or any
affiliate of such Person, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Payments”) constitute “parachute payments” (within the meaning of
Section 280G of the Code), and if (ii) such Payments would result in the imposition of an excise tax under Section 4999 of the Code (the “Excise Tax”), then such Payments shall be reduced (but not below zero) if and
to the extent necessary so that no Payments to be made or benefit to be provided to the Employee shall be subject to the Excise Tax. If the Payments are so reduced, the Company shall reduce or eliminate the Payments (A) by first reducing or
eliminating the portion of the Payments which are not payable in cash (other than that portion of the Payments subject to clause (C) hereof), (B) then by reducing or eliminating cash payments (other than that portion of the Payments subject to
clause (C) hereof) and (C) then by reducing or eliminating the portion of the Payments (whether payable in cash or not payable in cash) to which Treasury Regulation § 1.280G-1 Q/A 24(c) (or
any successor thereto) applies, in each case in reverse order beginning with payments or benefits which are to be paid the latest in time. 

(b)    It is possible that after the determinations and selections made pursuant to this Section 7
Employee will receive 280G benefits that are, in the aggregate, more than the amount provided under this Section 7 (hereafter referred to as an “Excess Payment”). If it is established, pursuant to a final determination
of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, then Employee shall promptly pay an amount equal to the Excess Payment to the Company, together with interest
on such amount at the applicable federal rate (as defined in and under Section 1274(d) of the Code) from the date of Employee’s receipt of such Excess Payment until the date of such payment. 

8.    Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally
delivered, sent by a nationally recognized overnight delivery service, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated: 

Notices to Employee: 

John W. Chisholm 
 40 Buttonbrush
Court 
 Spring, TX 77380 

 Notices to the Company: 

Flotek Industries, Inc. 
 Attn:
General Counsel 
 10603 W. Sam Houston Pkwy. N., Suite 300 

Houston, TX 77043 
 or such other address or to
the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or, if sent by first class mail, three
(3) days after so mailed. 
 9.    Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein. 
 10.    Employee’s Attorney Fees. Company shall pay the
reasonable attorney fees incurred by Employee to obtain advice regarding his employment with the Company and in reviewing and negotiating the terms of this Agreement, in an amount up to $20,000.

11.    Complete Agreement. Except with respect to the aforementioned Confidentiality and Restrictive Covenants
Agreement between the Company and the Employee, this Agreement embodies with respect to the subject matter hereof the complete agreement and understanding among the parties and supersedes and preempts with respect to the subject matter hereof any
prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 

12.    Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an
original and all of which taken together constitute one and the same agreement. 
 13.    Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee, the Company and their respective heirs, successors and assigns, except that Employee may not assign his rights or delegate his obligations hereunder
without the prior written consent of the Company except by operation of law to Employee’s estate upon the death of Employee. 

14.    Choice of Law. All issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. 

 15.    Consent to Personal Jurisdiction. Any suit, action or
other proceeding arising out of or based upon this Agreement and any other agreement with the Company which is not subject to the arbitration provisions of Section 13, shall be brought in a court in the State of Texas. - 

16.    Arbitration and Equitable Remedies. The parties agree that any dispute or controversy arising out of or
relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Houston, Texas, in accordance with the rules then in effect of the American Arbitration Association, provided
however, the parties will be entitled to full and liberal evidentiary discovery in accordance with the rules governing civil litigation in courts of the same jurisdiction. The arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company shall pay the legal costs
and expenses of such arbitration; however, the prevailing party shall be entitled to recover from the non-prevailing party all reasonable legal costs and expenses incurred including time of law firm staff,
court costs, attorneys’ fees, and all other related expenses incurred in such arbitration. 
 17.    Amendment
and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the
validity, binding effect or enforceability of such provision or any other provision of this Agreement. 

18.    Withholding. All compensation, payments and benefits provided for herein shall be subject to all applicable
taxes and withholdings. 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective
Date. 
  

			
	FLOTEK INDUSTRIES, INC.
		
	By:	 	 /s/Elizabeth T. Wilkinson

	Name:	 	 Elizabeth T. Wilkinson

	Title:	 	 Chief Financial Officer

			
	Date of Signature:	 	 5-20-19

  

			
	 /s/John W. Chisholm

	John W. Chisholm
	Date of Signature:	 	 5/20/19

  
 SIGNATURE PAGE TO EMPLOYMENT
AGREEMENT

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