Benzinga | Mar 29, 2021 04:04PM EDT

Flotek 8-K Shows Co.'s Chemistry Unit Delivered Notice Of Termination Of Supply Deal Between Co., Florida Chemical Co.

On March 26, 2021, Flotek Chemistry, LLC ("Flotek Chemistry"), a wholly-owned subsidiary of Flotek Industries, Inc. (the "Company"), delivered a notice of termination for the Supply Agreement (as amended, the "Supply Agreement") between Flotek Chemistry and Florida Chemical Company, LLC ("FCC") dated February 28, 2019. The termination notice cites FCC's refusal to allow Flotek Chemistry to exercise its contractual right to audit the books and records of FCC related to the cost of terpene purchased under the Supply Agreement.



Contemporaneously with the delivery of the notice of termination, Flotek Chemistry and the Company filed a lawsuit against Archer-Daniels-Midland, the parent company of FCC, and other parties, seeking damages related to the Supply Agreement.



The Company believes that, notwithstanding the termination of the Supply Agreement, it has sufficient terpene inventory and alternate terpene supply sources to meet its requirements for the foreseeable future. The Company does not expect that termination of the Supply Agreement will have a material effect on its operations or ability to meet customer needs.



The material terms of the Supply Agreement were previously described in the Company's Current Reports on Form 8-K filed on January 16, 2019 and March 3, 2020, and such descriptions are herein incorporated by reference. Such descriptions do not purport to be complete descriptions of the Supply Agreement and are qualified in their entirety by reference to the full text thereof, which have been filed as Exhibit 10.11 to the Company's Amendment No. 1 to the Annual Report on Form 10-K filed on March 16, 2020, and Exhibit 10.12 to the Company's Annual Report on Form 10-K filed on March 16, 2021, each of which is incorporated by reference herein.