8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): March 31, 2020

 

 

U.S. WELL SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-38025   81-1847117
(State or other jurisdiction
of incorporation)
  (Commission
File No.)
  (IRS Employer
Identification No.)

 

1360 Post Oak Boulevard

Suite 1800

Houston, Texas

  77056
(Address of principal executive offices)   (Zip Code)

(832) 562-3730

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Ticker Symbol(s)

 

Name of each exchange on which

registered

CLASS A COMMON STOCK

$0.0001, par value per share

  USWS   NASDAQ Capital Market
WARRANTS   USWSW   NASDAQ Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

Purchase Agreement

On March 31, 2020, U.S. Well Services, Inc. (the “Company”) entered into a Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (collectively, the “Purchasers”), pursuant to which the Company agreed to issue and sell in a private placement 21,000 shares of Series B Redeemable Convertible preferred stock, par value $0.0001 per share (the “Series B Preferred Shares”), for an aggregate purchase price of $21 million. On April 1, 2020, the Purchasers purchased the Series B Preferred Shares (the “Closing”). The Purchase Agreement contains customary representations, warranties and covenants of the Company and the Purchasers. Crestview III USWS, L.P. and Crestview III USWS TE, LLC, two of the Purchasers, are part of an affiliate group which held, prior to the issuance, an aggregate 36.67% ownership interest in the Company and is entitled to designate for nomination by the Company for election two directors to serve on the Company’s Board of Directors.

Certificate of Designations

In connection with the Closing and pursuant to the Purchase Agreement, the Company adopted and filed with the Secretary of State of the State of Delaware the Certificate of Designations of the Company (the “Certificate of Designations”) as an amendment to the Company’s Second Amended and Restated Certificate of Incorporation (as amended, the “Charter”) to authorize and establish the rights, preferences and privileges of the Series B Preferred Shares. The Series B Preferred Shares are a new class of equity interests that rank senior to the Class A Common Stock and Class B Common Stock, par value $0.0001 per share, respectively, and in parity with the Series A Redeemable Convertible preferred stock, par value $0.0001 per share, with respect to distributions. The Series B Preferred Shares will have only specified voting rights, including with respect to the issuance or creation of senior securities, amendments to the Charter that negatively impact the rights of the Series B Preferred Shares and the payment of dividends on, or repurchase or redemption of, Class A Common Stock.

Holders of the Series B Preferred Shares will receive distributions of 12.00% per annum on the then-applicable liquidation preference until May 24, 2021 and 16.00% per annum on the liquidation preference thereafter. Distributions are not required to be paid in cash and, if not paid in cash, will automatically accrue and be added to the liquidation preference.

The Company has the option, but no obligation, to redeem the Series B Preferred Shares for cash. If the Company notifies the holders that it has elected to redeem Series B Preferred Shares, a holder may instead elect to convert its shares at the ordinary conversion price, which shall initially be $0.308. The Series B Preferred Shares converted in response to a redemption notice will net settle for a combination of cash and Class A Common Stock.

Each holder of Series B Preferred Shares may convert all or any portion of its Series B Preferred Shares into Class A Common Stock based on the then-applicable liquidation preference, subject to anti-dilution adjustments, at any time, but not more than once per quarter, so long as any conversion is for at least $1 million based on the liquidation preference on the date of the conversion notice.

Following the eighteen-month anniversary of the Closing, the Company may cause the conversion of all or any portion of the Series B Preferred Shares into Class A Common Stock if (i) the closing price of the Class A Common Stock is greater than 130% of the conversion price for 20 days over any 30-day trading period; (ii) the average daily trading volume of the Class A Common Stock exceeded 250,000 for 20 days over any 30-day trading period; and (iii) the Company has an effective registration statement on file with the Securities and Exchange Commission covering resales of the underlying Class A Common Stock to be received upon such conversion.

Registration Rights Agreement

On April 1, 2020, in connection with the Closing and pursuant to the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers relating to the registration of the Class A Common Stock issuable upon conversion of the Series B Preferred Shares (the “Registrable Securities”). Pursuant to the Registration Rights Agreement, the Company is required, so long as it remains subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as

 

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amended (the “Exchange Act”), to use its commercially reasonable efforts to file a registration statement on or before August 1, 2020 (the “Initial Registration Statement”), and to cause the Initial Registration Statement to become effective no later than four months following the filing of the Initial Registration Statement. In the event that the Company ceases to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act prior to the filing of the Initial Registration Statement, the Registration Rights Agreement requires the Company to use its commercially reasonable efforts to file a registration statement within four months after the day it again becomes subject to Section 13 or 15(d) of the Exchange Act. In certain circumstances, including in the context of a future initial public offering following a period in which the Company has no longer been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and subject to customary qualifications and limitations, the holders of Registrable Securities will have piggyback registration rights on offerings of Class A Common Stock initiated by the Company, and selling Purchasers will have rights to request that the Company initiate up to two Underwritten Offerings (as defined in the Registration Rights Agreement) of Registrable Securities in any 365-day period.

Amendment to Term Loan Agreement

On April 1, 2020, the Company, U.S. Well Services, LLC (the “Borrower”), a subsidiary of the Company, and all of the other subsidiaries of the Company entered into a Second Amendment (the “Term Loan Amendment”) to the Senior Secured Term Loan Credit Agreement (the “Term Loan Facility”) with CLMG Corp., as administrative and collateral agent (the “Term Loan Agent”), and the lenders party thereto.

Pursuant to the Term Loan Amendment, the interest rate on amounts outstanding under the Term Loan Facility was reduced to 0.0% and scheduled principal amortization payments will be suspended for the period beginning April 1, 2020 and ending March 31, 2022. Beginning April 1, 2022, the Term Loan Facility, as amended by the Term Loan Amendment, will resume incurring interest at the applicable LIBOR rate, subject to a 2.0% floor, plus 8.25%, and scheduled principal amortization payments equal to 0.5% of the initial principal balance of the term loans will resume on a quarterly basis commencing June 30, 2022. Additionally, pursuant to the Term Loan Amendment, certain other covenants were amended including, but not limited to, covenants relating to collateral inspections and excess cash flow, and the maturity date for the Term Loan Facility was extended for 18 months to November 27, 2025.

In exchange for entering into the Term Loan Amendment, the lenders under the Term Loan Facility received an extension fee comprised of a $20 million cash payment, 1,050 shares of Series B Preferred Shares and 5,529,622 shares of Class A Common Stock of the Company.

Amendment ABL Credit Agreement

On April 1, 2020, the Company, the Borrower and all of the other subsidiaries of the Company entered into the First Amendment (the “ABL Amendment”) to the ABL Credit Agreement (the “ABL Facility”) with the lenders party thereto and Bank of America, N.A., as the administrative agent, swing line lender and letter of credit issuer.

Pursuant to the ABL Amendment, the aggregate revolving commitment under the ABL Facility was reduced from $75 million to $60 million, the maturity date was extended from May 7, 2024 to April 1, 2025, and the interest rate margin applicable to borrowings under the ABL Facility was increased by 0.50% per annum. In addition, the borrowing base under the ABL Facility was amended to include a FILO Amount (as defined in the ABL Amendment) which increases borrowing base availability by up to the lesser of (i) $4,000,000 and (ii) 5.0% of the value of eligible accounts receivable, subject to scheduled monthly reductions. Loans under the ABL Facility which are advanced in respect of the FILO Amount accrue interest at a rate that is 1.50% higher than the rate applicable to other loans under the ABL Facility, and may be repaid only after all other loans under the ABL Facility have been repaid.        

The foregoing descriptions of the Purchase Agreement, Certificate of Designations, Registration Rights Agreement, Term Loan Amendment and ABL Amendment do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements, which are filed herewith as Exhibit 10.1, Exhibit 3.1, Exhibit 4.1, Exhibit 10.2 and Exhibit 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

 

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Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information regarding the Term Loan Amendment and the ABL Amendment set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

 

Item 3.02

Unregistered Sale of Equity Securities.

The information regarding the private placement of Series B Preferred Shares and the issuance of Series B Redeemable Convertible preferred stock and Class A Common Stock to the lenders pursuant to the Term Loan Amendment set forth in Item 1.01 and Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. The private placement of the Series B Preferred Shares pursuant to the Purchase Agreement and of the Series B Preferred Shares and Class A Common Stock pursuant to the Term Loan Amendment were undertaken in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof.

 

Item 3.03

Material Modification to Rights of Security Holders.

The information set forth under Item 5.03 is incorporated by reference into this Item 3.03.

 

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

A summary of the rights, preferences and privileges of the Series B Preferred Shares and other material terms and conditions of the Certificate of Designations is set forth in Item 1.01 of this Current Report on Form 8-K, and is incorporated by reference into this Item 5.03.

The foregoing description of the Certificate of Designations does not purport to be complete and is qualified in its entirety by reference to the complete text of the Certificate of Designations, which is filed herewith as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

In connection with the Closing, the Company and USWS Holdings LLC (“Holdings”) entered into Amendment No. 2 (the “Amendment”), dated as of April 1, 2020, to the Amended and Restated Limited Liability Company Agreement of Holdings to provide for, among other things, the designation a new Series B preferred units of Holdings and the issuance of such Series B preferred units convertible into common units of Holdings in amounts which equal the number of Series B Preferred Shares issued by the Company to the Purchasers pursuant to the Purchase Agreement.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Amendment, which is filed herewith as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 7.01

Regulation FD Disclosure

On April 1, 2020, the Company issued a press release announcing the closing of the private placement of the Series B Preferred Shares and the entry into the Term Loan Amendment. The press release is filed as Exhibit 99.1 to this Form 8-K, and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the foregoing information, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information and Exhibit 99.1 be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The Series B Preferred Shares and the securities issued pursuant to the Term Loan Amendment are being offered in a private offering that is exempt from registration under the Securities Act, and may not be offered or sold in the United States absent such registration or an exemption from the registration requirements of the Securities Act. Neither this Current Report on Form 8-K nor Exhibit 99.1 incorporated herein by reference, constitutes an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.

 

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Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number

  

Description

  3.1    Certificate of Designations dated March 31, 2020, of U.S. Well Services, Inc.
  4.1    Registration Rights Agreement, dated April 1, 2020, by and among U.S. Well Services, Inc. and the Purchasers party thereto.
10.1    Purchase Agreement, dated March 31, 2020, by and among U.S. Well Services, Inc. and the Purchasers party thereto.
10.2    Second Amendment to the Senior Secured Term Loan Credit Agreement, dated April  1, 2020, among U.S. Well Services, LLC, U.S. Well Services, Inc., USWS Fleet 10, LLC, USWS Fleet 11, LLC, USWS Holdings LLC, CLMG Corp., as administrative agent and collateral agent, and the lender party thereto.
10.3    First Amendment to ABL Credit Agreement dated as of April  1, 2020, by and among U.S. Well Services, LLC, U.S. Well Services, Inc., USWS Fleet 10, LLC, USWS Fleet 11, LLC, USWS Holdings LLC, the lenders party thereto, and Bank of America, N.A., as administrative agent, lender, swing line lender and letter of credit issuer.
10.4    Amendment No. 2 to Amended and Restated Limited Liability Company Agreement of USWS Holdings LLC, dated April 1, 2020.
99.1    Press Release, dated as of April 1, 2020.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

U.S. WELL SERVICES, INC.

 

By:  

/s/ Kyle O’Neill

Name:   Kyle O’Neill
Title:   Chief Financial Officer

April 2, 2020

 

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EX-3.1

Exhibit 3.1

U.S. WELL SERVICES, INC.

 

 

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the General

Corporation Law of the State of Delaware

 

 

SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK

(Par Value $0.0001 Per Share)

U.S. Well Services, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), hereby certifies that, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the “Board of Directors”) by the Second Amended and Restated Certificate of Incorporation of the Corporation (as amended from time to time in accordance with its terms and the General Corporation Law, the “Certificate of Incorporation”), which authorizes the Board of Directors, by resolution, to provide out of the unissued shares of the preferred stock (the “Preferred Stock”) for one or more series of Preferred Stock and to establish from time to time the number of shares to be included in each such series and to fix the voting rights (if any), designations, powers, preferences and relative, participating, optional, special and other rights (if any) of each such series and any qualifications, limitations and restrictions thereof, and in accordance with the provisions of Section 151 of the General Corporation Law, the Board of Directors duly adopted on March 30, 2020 the following resolution:

RESOLVED, that the rights, powers and preferences, and the qualifications, limitations and restrictions, of the Series B Preferred Stock as set forth in the Certificate of Designations are hereby approved and adopted by the Board and Series B Preferred Stock is hereby authorized out of the Corporation’s authorized preferred stock, par value $0.0001 per share; and the form, terms and provisions of the Certificate of Designations are hereby approved, adopted, ratified and confirmed in all respects as follows:

 

1.

General.

(a)    The shares of such series shall be designated the Series B Redeemable Convertible Preferred Stock (hereinafter referred to as the “Series B Preferred Stock”). Concurrently with the adoption of this Certificate of Designations, the Board of Directors is authorizing warrants to acquire shares of Class A Common Stock (as defined below).

(b)    Each share of Series B Preferred Stock shall be identical in all respects with the other shares of Series B Preferred Stock.

(c)    The authorized number of shares of Series B Preferred Stock shall initially be 22,050, which number may from time to time be increased or decreased by resolution of the Board of Directors as permitted by the General Corporation Law.


(d)    For purposes of this Certificate of Designations, “Capital Stock” of any person means any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such person. The Series B Preferred Stock shall, with respect to dividend rights and rights upon a liquidation, winding-up or dissolution of the Corporation, rank:

(i)    senior to the Class A Common Stock, par value $0.0001 per share, of the Corporation (“Class A Common Stock”), the Class B Common Stock, par value $0.0001 per share, of the Corporation (“Class B Common Stock”), and any other class or series of Capital Stock of the Corporation, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series B Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Corporation (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such Capital Stock, the “Junior Stock”);

(ii)    on a parity with (A) the Corporation’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 (the “Series A Preferred Stock”), and (B) any class or series of Capital Stock of the Corporation, the terms of which provide that such class or series ranks on a parity with the Series B Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Corporation (collectively the Series A Preferred Stock and such Capital Stock, together with any warrants, rights, calls or options exercisable for or convertible into such Capital Stock, the “Parity Stock”); and

(iii)    junior to any class or series of Capital Stock of the Corporation (other than Class A Common Stock and Class B Common Stock), the terms of which expressly provide that such class or series ranks senior to the Series B Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Corporation (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such Capital Stock, the “Senior Stock”).

(e)    For purposes of this Certificate of Designations, the following terms have meanings set forth in the Section indicated:

 

Term

  

Section

ABL Credit Agreement    Section 7(n)
Authorized Share Amount    Section 5(a)
Board of Directors    Preamble
Business Day    Section 4(b)
Capital Stock    Section 1(d)
Certificate of Incorporation    Preamble
Change of Control    Section 8(b)(iv)
Change of Control Cash Redemption Amount    Section 8(b)(i)
Class A Common Stock    Section 1(d)(i)
Class B Common Stock    Section 1(d)(i)

 

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Term

  

Section

CoC Forced Conversion   

Section 7(d)

Section 8(b)(ii)

Section 8(b)(iii)

Conversion Notice    Section 7(a)
Conversion Price    Section 7(a)
Conversion Ratio    Section 7(a)
Corporation    Preamble
Corporation Event    Section 7(h)
Credit Facilities    Section 7(k)
Delisted Period    Section 7(b)
Dispute Notice    Section 8(b)(v)
Dividend Payment Date    Section 2(a)
Dividend Period    Section 2(a)
Fair Market Value    Section 8(b)(v)
FMV Determination Notice    Section 8(b)(v)
General Corporation Law    Preamble
Independent Appraiser    Section 8(b)(v)
Issuance Date    Section 2(a)
Issuer Conversion Notice    Section 7(b)
Issuer Forced Conversion    Section 7(b)
Junior Stock    Section 1(d)(i)
Liquidation    Section 3(a)
Liquidation Distribution    Section 3(a)
Liquidation Preference    Section 3(a)
Measurement Period    Section 7(b)
National Securities Exchange    Section 7(b)
Optional Holder Conversion    Section 7(a)
Parity Stock    Section 1(d)(ii)
Permitted Holder    Section 8(b)(iv)
PIK Accrual    Section 2(d)
Preferred Stock    Preamble
Redemption Notice    Section 8(a)
Redemption Price    Section 8(a)
Senior Stock    Section 1(d)(iii)
Series A Preferred Stock    Section 1(d)(ii)
Series B Dividend    Section 2(a)
Series B Dividend Rate    Section 2(a)
Series B Preferred Stock    Section 1(a)
Series B Representative    Section 8(b)(v)
Term Loan Credit Agreement    Section 7(k)

 

2.

Dividends.

(a)    Holders of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, and the Corporation shall pay, out of funds lawfully available therefor, cumulative dividends at the rate per share of Series B Preferred Stock equal to the Series B Dividend Rate (the “Series B Dividend”). The “Series B Dividend Rate” shall mean (i) for the

 

3


period commencing on the closing date of the issuance of the shares of Series B Preferred Stock (the “Issuance Date”) and ending on May 24, 2021, 12.00% per annum on the then-applicable Liquidation Preference (as defined herein) per share of Series B Preferred Stock, and (ii) from and after May 24, 2021, 16.00% per annum on the then-applicable Liquidation Preference per share of Series B Preferred Stock. The period from the Issuance Date to and including May 24, 2020 and each period from but excluding a Dividend Payment Date to and including the following Dividend Payment Date is herein referred to as a “Dividend Period.” “Dividend Payment Date” shall mean February 24, May 24, August 24 and November 24 of each year, commencing on May 24, 2020.

(b)    Series B Dividends shall be payable quarterly or in arrears at the Series B Dividend Rate and shall compound quarterly and accumulate, whether or not earned or declared, from the most recent date on which dividends have been paid, or, if no dividends have been paid, from the Issuance Date.

(c)    If a Series B Dividend is declared by the Board of Directors, then such Series B Dividend shall be paid in cash. The Board of Directors shall not be required to declare any Series B Dividends, and any declaration of a Series B Dividend shall be solely at the discretion of the Board of Directors of the Corporation.

(d)    If a cash dividend is not declared and paid in cash on a Dividend Payment Date, then in full discharge of any accrual of cash dividends for such Dividend Period, the Liquidation Preference of each outstanding share of Series B Preferred Stock, regardless of its date of issue, shall automatically increase on such Dividend Payment Date by an amount equal to the Series B Dividend Rate multiplied by the Liquidation Preference in effect immediately after the immediately prior Dividend Payment Date (or the Issuance Date in respect of the first Dividend Period) (such automatic increase, the “PIK Accrual”).

(e)    All cash dividends paid or declared for payment on a dividend payment date with respect to the Series B Preferred Stock and the Parity Stock shall be shared pro rata based on the then-current dividends due on shares of Series B Preferred Stock and (i) in the case of any series of non-cumulative Parity Stock, the aggregate of the current and unpaid dividends due on such series of Parity Stock, and (ii) in the case of any series of cumulative Parity Stock, the aggregate of the current and accumulated and unpaid dividends due on such series of Parity Stock.

(f)    Holders of Series B Preferred Stock shall fully participate, on an as-converted basis, in any dividends declared and paid or distributions on Class A Common Stock as if the Series B Preferred Stock were converted into shares of Class A Common Stock as of the record date for such dividend or distribution, at the Conversion Rate in effect on such record date.

 

3.

Liquidation.

(a)    Prior to conversion pursuant to Section 7, in the event of a liquidation (complete or partial), dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary (a “Liquidation”), after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of Series B Preferred Stock shall be entitled to receive, in respect of any shares of Series B Preferred Stock held by them, out of assets of the Corporation available for distribution to stockholders of the Corporation or their assignees, and subject to the

 

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rights of any outstanding shares of Senior Stock and before any amount shall be distributed to the holders of Junior Stock, a liquidating distribution (the “Liquidation Distribution”) in an amount equal to the greater of (i) the then-applicable Liquidation Preference, including, for the avoidance of doubt, any adjustment for a PIK Accrual, and (ii) the amount such holder of Series B Preferred Stock would have been entitled to receive had such holder converted its shares of Series B Preferred Stock into shares of Class A Common Stock at the then-applicable Conversion Ratio immediately prior to such Liquidation. The “Liquidation Preference” shall equal $1,000 per share of Series B Preferred Stock, which amount shall be adjusted as the result of any PIK Accrual and as otherwise set forth herein. If, upon a Liquidation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the then outstanding shares of Series B Preferred Stock and the holders of any shares of Parity Stock ranking on a parity with the Series B Preferred Stock with respect to any distribution of assets upon Liquidation are insufficient to pay in full the amount of all such Liquidation Preference payable with respect to the Series B Preferred Stock and any such Parity Stock, then the holders of Series B Preferred Stock and such Parity Stock shall share ratably in any distribution of assets in proportion to the full respective preferential amounts to which they are entitled.

(b)    The Corporation shall provide the holders of Series B Preferred Stock appearing on the stock books of the Corporation as of the date of such notice at the address of said holder shown therein with written notice of (i) any voluntary Liquidation promptly after such Liquidation has been approved by the Board of Directors and at least five (5) days prior to the effective date of such Liquidation and (ii) any involuntary Liquidation promptly upon the Corporation becoming aware of any instituted proceeding in respect thereof. Such notice shall state a distribution or payment date, the amount of the Liquidation Preference and the place where the Liquidation Preference shall be distributable or payable.

(c)    After the payment in cash or proceeds to the holders of shares of the Series B Preferred Stock of the full amount of the Liquidation Distribution with respect to outstanding shares of Series B Preferred Stock, the holders of outstanding shares of Series B Preferred Stock shall have no right or claim, based on their ownership of shares of Series B Preferred Stock, to the remaining assets of the Corporation, if any. Whenever any such distribution shall be paid in property other than cash, the value of such distribution shall be the fair market value of such property as determined in the good faith reasonable discretion of the Board of Directors or liquidating trustee, as the case may be.

 

4.

Voting.

(a)    General. Except as otherwise required by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designations, holders of Series B Preferred Stock shall not be entitled to any vote on matters submitted to the Corporation’s stockholders for approval. In any case in which the holders of the Series B Preferred Stock shall be entitled to vote pursuant to the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designations, each holder of Series B Preferred Stock entitled to vote with respect to such matter shall be entitled to one vote per share of Series B Preferred Stock.

 

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(b)    Protective Provisions. In addition to any vote required by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designations, for so long as any of the shares of Series B Preferred Stock shall remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, take any of the following actions, including whether by amendment, merger, consolidation or otherwise, without (in addition to any other vote required by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designations), the written consent or affirmative vote of the holders of at least sixty-five percent (65%) of the then outstanding shares of Series B Preferred Stock voting as a separate class to:

(i)    authorize or create, or increase the authorized amount of, or issue any class or series of Senior Stock, or reclassify or amend the provisions of any existing class of securities of the Corporation into shares of Senior Stock;

(ii)    authorize, create or issue any stock or debt instrument or other obligation that is convertible or exchangeable into shares of its Senior Stock (or that is accompanied by options or warrants to purchase such Senior Stock);

(iii)    amend, alter or repeal any provision of the Certificate of Incorporation or this Certificate of Designations, in either case, in a manner that adversely affects the rights, preferences, privileges or powers of the Series B Preferred Stock;

(iv)    declare or pay any dividends or other distributions in cash or property with respect to its Capital Stock (other than dividends or other distributions of cash or property paid on the Series B Preferred Stock or Parity Stock in accordance with their respective certificates of designation);

(v)    redeem, repurchase, recapitalize or acquire shares of its Class A Common Stock or other Junior Stock (other than with respect to customary repurchase rights or tax withholding arrangements with respect to equity awards or benefit plans and the exchange of outstanding warrants consistent with past practice or as contemplated by the Certificate of Incorporation as in effect on the date hereof with respect to the Class B Common Stock);

(vi)    redeem, repurchase, recapitalize or acquire shares of its Parity Stock other than (A) pro rata offers to purchase all, or a pro rata portion, of the Series B Preferred Stock and such Parity Stock, (B) as a result of a reclassification of Parity Stock for or into other Parity Stock, (C) the exchange or conversion of Parity Stock for or into other Parity Stock or Junior Stock, (D) the purchase of fractional interests in shares of Parity Stock pursuant to the conversion or exchange provisions of such Parity Stock or the security being converted or exchanged or (E) in accordance with mandatory redemption obligations set forth in their respective certificates of designation; or

(vii)    notwithstanding anything to the contrary herein, repurchase, recapitalize or acquire shares of its Capital Stock in a transaction that would be treated, in whole or in part, as a dividend for U.S. federal income tax purposes (unless such redemption, repurchase, recapitalization or acquisition, based on the Corporation’s reasonable determination, is an isolated transaction within the meaning of U.S. Treasury Regulations Section 1.305-3(b)(3) or is in connection with a Change of Control).

 

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If the Corporation shall propose to take any action enumerated above in clauses (i) through (vii) of this Section 4(b) then, and in each such case, the Corporation shall give notice of such proposed action to each holder of record of the shares of Series B Preferred Stock appearing on the stock books of the Corporation as of the date of such notice at the address of said holder shown therein. Such notice shall specify, inter alia (x) the proposed effective date of such action; (y) the date on which a record is to be taken for the purposes of such action, if applicable; and (z) the other material terms of such action. Such notice shall be given at least ten (10) calendar days prior to the applicable date or effective date specified above. For the purposes of this Certificate of Designations, “Business Day” shall mean each day that is not a Saturday, Sunday or other day on which banking institutions in Houston, Texas or New York, New York are authorized or required by law to close. If at any time the Corporation shall cancel any of the proposed actions for which notice has been given under this Section 4(b) prior to the consummation thereof, the Corporation shall give prompt notice of such cancellation to each holder of record of the shares of Series B Preferred Stock appearing on the stock books of the Corporation as of the date of such notice at the address of said holder shown therein. For the avoidance of doubt, if a holder of record of shares of Series B Preferred Stock does not respond to the aforementioned notice, such non-response shall in no way be deemed to constitute the written consent or affirmative vote of such holder regarding any of the aforementioned actions in this Section 4(b) or described within such notice.

 

5.

Reservation of Class A Common Stock.

(a)    At any time that any Series B Preferred Stock is outstanding, the Corporation shall from time to time take all lawful action within its control to cause the authorized capital stock of the Corporation to include a number of authorized but unissued shares of Class A Common Stock equal to the Conversion Ratio multiplied by the number of shares of outstanding Series B Preferred Stock, which equals 71,590,909 shares as of the date hereof (the “Authorized Share Amount”) (for the avoidance of doubt, taking into account any other obligations of the Corporation to reserve Class A Common Stock upon the conversion, exchange or exercise of other securities of the Corporation, including, without limitation, any warrants to acquire shares of Class A Common Stock, such that any other reservation may not be counted toward the reservation of Class A Common Stock hereunder).

(b)    If (i) the Class A Common Stock is listed on a national securities exchange and (ii) any shares of Class A Common Stock to be reserved for the purpose of conversion of the Series B Preferred Stock require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, then the Corporation shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

 

6.

Certificates.

(a)    The Series B Preferred Stock shall be evidenced by certificates in such form as the Board of Directors may approve and, subject to the satisfaction of any applicable legal, regulatory

 

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and contractual requirements, may be assigned or transferred in a manner identical to the assignment and transfer of other stock; unless and until the Board of Directors determines to assign the responsibility to another person, Continental Stock Transfer & Trust Company will act as the registrar and transfer agent for the Series B Preferred Stock. The certificates evidencing Series B Preferred Stock shall be separately identified and shall not bear the same CUSIP number as the certificates evidencing Class A Common Stock or Class B Common Stock, or any other security of the Corporation.

(b)    The certificate(s) representing the Series B Preferred Stock may be imprinted with a legend in substantially the following form:

“THE SECURITIES IDENTIFIED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.”

 

7.

Conversion.

(a)    Each holder of Series B Preferred Stock shall have the option from time to time, exercisable by delivery of written notice to the Corporation substantially in the form attached hereto as Annex A-1 (the “Conversion Notice”), to convert all or a portion of such holder’s shares of Series B Preferred Stock into Class A Common Stock at the Conversion Ratio (an “Optional Holder Conversion”); provided that the Corporation shall not be required to honor such request if (i) such holder has previously delivered a Conversion Notice, in respect of an Optional Holder Conversion, during the same fiscal quarter or (ii) such Optional Holder Conversion does not involve an underlying conversion value of Class A Common Stock of at least $1,000,000 based on the Liquidation Preference on the date of the Conversion Notice (unless such lesser amount relates to all of a holder’s and its affiliates’ Series A Preferred Stock). The “Conversion Ratio” means, for each share of Series B Preferred Stock, the quotient of (i) the Liquidation Preference as of the date of the conversion and (ii) the then applicable Conversion Price. The “Conversion Price” shall initially be $0.308, which may be adjusted from time to time as set forth herein.

(b)    Following the third anniversary of the Issuance Date, if (i) the closing price of the Class A Common Stock reported by the principal national securities exchange on which the Class A Common Stock is then listed for trading (the “National Securities Exchange”) is greater than one hundred thirty percent (130%) of the Conversion Price for twenty (20) trading days during any (30) consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Corporation provides the Issuer Conversion Notice as set forth below (the “Measurement Period”), (ii) the average daily trading volume of the Class A Common Stock on the National Securities Exchange exceeded 250,000 for twenty (20) trading days during the Measurement Period (including the last day of such period) and (iii) the Corporation has an effective registration statement on file with the Securities and Exchange Commission covering resales of the underlying Class A Common Stock to be received upon any such conversion, then the Corporation shall have the option from time to

 

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time, exercisable by delivery of written notice to the record holders of the shares of Series B Preferred Stock as of the date of such notice at the address of said holder shown on the stock books of the Corporation substantially in the form attached hereto as Annex A-2 (the “Issuer Conversion Notice”), to convert some or all of the outstanding shares of Series B Preferred Stock into Class A Common Stock at the Conversion Ratio (an “Issuer Forced Conversion”) on a date specified in the Issuer Conversion Notice that is no later than the second Business Day following such Issuer Conversion Notice. If the Corporation elects to cause less than all the outstanding shares of the Series B Preferred Stock to be converted, the Corporation shall select the Series B Preferred Stock to be converted from each holder of Series B Preferred Stock appearing on the stock books of the Corporation on a pro rata basis. This Section 7(b) shall have no force and effect during any period in which the Class A Common Stock is not listed on any national securities exchange (such time, a “Delisted Period”).

(c)    [Reserved.]

(d)    For so long as (x) the Term Loan Credit Agreement is in effect, upon the occurrence of a Change of Control prior to the one hundred eighty first (181st) day following the Term Loan Maturity Date (as defined in the Term Loan Credit Agreement in effect as of the date hereof) and prior to a Repayment Event (as defined in the Term Loan Credit Agreement) and (y) the ABL Credit Agreement is in effect, upon the occurrence of a Change of Control prior to the one hundred eighty first (181st) day following the Maturity Date (as defined in the ABL Credit Agreement in effect on the date hereof) and the repayment in full of the Obligations and termination of all Commitments (as each term is defined in the ABL Credit Agreement in effect as of the date hereof), the Corporation shall have the option, exercisable by delivery of an Issuer Conversion Notice at least one Business Day prior to such Change of Control, to convert on a date specified in such Issuer Conversion Notice no later than the second Business Day following such Issuer Conversion Notice some or all of the outstanding shares of Series B Preferred Stock into Class A Common Stock at the Conversion Ratio as of the date of such conversion (such a conversion, a “CoC Forced Conversion”); provided, however, that if in connection with the consummation of any CoC Forced Conversion pursuant to this Section 7(d) or Section 8(b)(ii) or Section 8(b)(iii) below the Conversion Ratio applicable to such conversion is less than the quotient of (i) the Liquidation Preference for such Series B Preferred Stock as of the date of such conversion and (ii) either (x) the volume-weighted average trading price of the Class A Common Stock on the National Securities Exchange for the thirty (30) trading day period (including the last day of such period) immediately preceding the date of such Issuer Conversion Notice or (y) if the CoC Forced Conversion occurs during a Delisted Period, then the Fair Market Value of the Class A Common Stock immediately preceding the date of such Issuer Conversion Notice, then in addition to any vote required by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designations, for so long as any of the shares of Series B Preferred Stock remain outstanding, the Corporation shall not take any affirmative action to approve or consummate such Change of Control without either the written consent or affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock voting as a separate class.

(e)    In the event a holder of shares of the Series B Preferred Stock has elected an Optional Holder Conversion pursuant to Section 7(a), or in the event the Corporation has elected an Issuer Forced Conversion pursuant to Section 7(b) above or a CoC Forced Conversion pursuant

 

9


to Section 7(d) above or Section 8(b)(ii) or Section 8(b)(iii), the Corporation shall deliver, no later than two Business Days following the conversion date, a number of shares of Class A Common Stock equal to the Conversion Ratio.

(f)    Any Class A Common Stock delivered as a result of conversion pursuant to this Section 7 shall be validly issued, fully paid and non-assessable, free and clear of any preemptive right, liens, claims, rights or encumbrances other than those arising under the General Corporation Law, the Amended and Restated Bylaws of the Corporation or, if a conversion occurs during a Delisted Period, transfer restrictions under the Securities Act and state securities laws. Immediately following the settlement of any conversion, if any, the rights of the holders of converted Series B Preferred Stock shall cease and the persons entitled to receive shares of Class A Common Stock upon the conversion of shares of Series B Preferred Stock shall be treated for all purposes as having become the owners of such shares of Class A Common Stock. Concurrently with such conversion, the converted shares of Series B Preferred Stock shall cease to be outstanding, shall be canceled and the shares of Series B Preferred Stock formerly designated pursuant to this Certificate of Designations shall be restored to authorized but unissued shares of Preferred Stock.

(g)    If, after the Issuance Date, the Corporation (i) makes a distribution on its Class A Common Stock in cash, securities (including Class A Common Stock) or other property or assets, (ii) subdivides or splits its outstanding Class A Common Stock into a greater number of Class A Common Stock, (iii) combines or reclassifies its Class A Common Stock into a smaller number of Class A Common Stock or (iv) issues by reclassification of its Class A Common Stock any securities (including any reclassification in connection with a merger, consolidation or business combination in which the Corporation is the surviving person or another constituent corporation is issuing equity securities in exchange for Class A Common Stock), then the Conversion Price in effect at the time of the record date for such distribution or of the effective date of such subdivision, split, combination, or reclassification shall be proportionately adjusted so that the conversion of the Series B Preferred Stock after such time shall entitle the holder to receive the aggregate number of Class A Common Stock (or shares of any securities into which such shares of Class A Common Stock would have been combined, consolidated, merged, reclassified or exchanged pursuant to clauses (iii) and (iv) above) that such holder would have been entitled to receive if the Series B Preferred Stock had been converted into Class A Common Stock immediately prior to such record date or effective date, as the case may be, and in the case of a merger, consolidation or business combination in which the Corporation is the surviving person or another constituent corporation is issuing equity securities in exchange for Class A Common Stock, the Corporation shall provide effective provisions to ensure that the provisions in this Certificate of Designations relating to the Series B Preferred Stock shall not be abridged or amended and that the Series B Preferred Stock shall thereafter retain the same powers, preferences and relative participating, optional and other special rights, and the qualifications, limitations and restrictions thereon, that the Series B Preferred Stock had immediately prior to such transaction or event either in the Corporation if the surviving corporation or in the constituent corporation. An adjustment made pursuant to this Section 7(g) shall become effective immediately after the record date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification (including any reclassification in connection with a merger, consolidation or business combination in which the Corporation is the surviving person or a constituent corporation) or split. Such adjustment shall be made successively whenever any event described above shall occur.

 

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(h)    At least fifteen (15) days prior to the consummation of any recapitalization, reorganization, consolidation, Change of Control, spin-off or other business combination (not otherwise addressed in Section 7(g) above) (a “Corporation Event”), the Corporation shall notify each holder of Series B Preferred Stock of such event (such notice to set forth in reasonable detail the material terms and conditions of such Corporation Event and the securities, cash or other assets, if any, which a holder of Series B Preferred Stock and Class A Common Stock (each on a per share basis) would receive upon the consummation of such event, to the extent known by the Corporation at the time); provided that the Corporation shall not be obligated to provide any holder with information that is otherwise not publicly available.

(i)    Notwithstanding any of the other provisions of this Section 7, no adjustment shall be made to the Conversion Price pursuant to Section 7(g) as a result of any of the following:

(i)    the grant of Class A Common Stock or options, warrants or rights to purchase Class A Common Stock to employees, officers or directors of the Corporation or its subsidiaries, under compensation plans and agreements approved in good faith by the Board of Directors; provided, that in the case of options, warrants or rights to purchase Class A Common Stock, the exercise price per Class A Common Stock shall not be less than the closing price of the Class A Common Stock (as reported by the National Securities Exchange) or, during a Delisted Period, the Fair Market Value, on the date such option, warrant or other right is issued;

(ii)    the issuance of any Class A Common Stock as all or part of the consideration to effect (A) the closing of any acquisition by the Corporation of assets of a third party in an arm’s-length transaction or (B) the consummation of a merger, consolidation or other business combination of the Corporation with another entity in which the Corporation survives and the Class A Common Stock remain outstanding to the extent such transaction(s) is or are validly approved by the vote or consent of the Board of Directors;

(iii)    without duplication of Section 7(i)(i) above, the issuance of options, warrants or other rights to purchase Class A Common Stock, or securities exercisable or convertible into or exchangeable for Class A Common Stock (or options, warrants or other rights to purchase any such securities that are exercisable or convertible into or exchangeable for Class A Common Stock, in each case, that are outstanding on the Issuance Date (including, for the avoidance of doubt, the warrants exercisable for Class A Common Stock outstanding on the Issuance Date)); and

(iv)    the issuance of securities for which an adjustment is made under another provision of this Section 7.

(j)    Upon any adjustment to the Conversion Price pursuant to this Section 7, the Corporation promptly shall deliver to each holder of Series B Preferred Stock a certificate signed by an appropriate officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Conversion Price then in effect following such adjustment.

 

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(k)    The Corporation shall pay any and all issue, documentary, stamp and other taxes, excluding any income, franchise, property or similar taxes, that may be payable in respect of any issue or delivery of Class A Common Stock on conversion of Series B Preferred Stock pursuant hereto. However, the holder of any Series B Preferred Stock shall pay any tax that is due because Class A Common Stock issuable upon conversion thereof are issued in a name other than such holder’s name.

(l)    No fractional Class A Common Stock shall be issued upon the conversion of any Series B Preferred Stock. All Class A Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series B Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional stock. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a Class A Common Stock, the Corporation shall not issue a fractional Class A Common Stock but shall round the fractional Class A Common Stock to the nearest whole Class A Common Stock (and a 0.5 of a share of Class A Common Stock shall be rounded up to the next higher share of Class A Common Stock).

(m)    The Corporation agrees that it will act in good faith to make any adjustment(s) required by this Section 7 equitably and in such a manner as to afford the holders of Series B Preferred Stock the benefits of the provisions hereof, and will not intentionally take any action to deprive such holders of the express benefit hereof.

(n)    Notwithstanding anything in this Section 7 to the contrary, if a proposed conversion would require approvals under, or conflict with, the terms of (i) the Senior Secured Term Loan Credit Agreement, dated May 7, 2019, by and among the Corporation, USWS Holdings, LLC, U.S. Well Services, LLC, the guarantors and initial lenders named therein and CLMG Corp, in effect as of the date hereof (the “Term Loan Credit Agreement”), or (ii) the terms of the ABL Credit Agreement dated as of May 7, 2019 among the Corporation, USWS Holdings, LLC, the lenders party thereto, Bank of America, N.A., as administrative agent, and the other parties thereto, in effect as of the date hereof (the “ABL Credit Agreement” and together with the Term Loan Credit Agreement, the “Credit Facilities”), such conversion shall be limited to the number of shares of Series B Preferred Stock that would not require any approvals or result in any conflicts.

 

8.

Redemption

(a)    Following eighteen (18) months after the Issuance Date, the Corporation has the option in its sole discretion, from time to time other than in connection with a Liquidation, to redeem all or a portion (but in no less than $1,000,000 increments based on the Liquidation Preference as of the date of the Redemption Notice (or such lesser amount to the extent the Redemption Notice relates to all of the outstanding shares of the Series B Preferred Stock)) of the then outstanding shares of Series B Preferred Stock, for an amount per share of Series B Preferred Stock equal to the Liquidation Preference as of the date of redemption (the “Redemption Price”), subject to a holder’s right to elect conversion set forth below. The Corporation may exercise its redemption option under this Section 8(a) by delivery of written notice to the holders of shares of

 

12


the Series B Preferred Stock in the form attached as Annex B (the “Redemption Notice”) , provided, however, that the holders of Series B Preferred Stock shall have five Business Days from the date of receipt of any such Redemption Notice to, in lieu of being paid the cash Redemption Price, elect to convert the shares of Series B Preferred Stock subject to such Redemption Note in accordance with Section 7(a). Such redemption shall be completed on a date specified in the Redemption Notice, which shall be not less than 10 and not more than 20 Business Days following the date of the Redemption Notice. If the Corporation redeems only a portion of the then outstanding shares of Series B Preferred Stock, the shares of Series B Preferred Stock subject to such redemption shall be allocated pro rata among the outstanding shares of Series B Preferred Stock.

(b)    Change of Control.

(i)    For so long as (x) the Term Loan Credit Agreement is in effect, upon the occurrence of a Change of Control prior to the one hundred eighty first (181st) day following the Term Loan Maturity Date (as defined in the Term Loan Credit Agreement in effect as of the date hereof) and prior to a Repayment Event (as defined in the Term Loan Credit Agreement) or (y) the ABL Credit Agreement is in effect, upon the occurrence of a Change of Control prior to the one hundred eighty first (181st) day following the Maturity Date (as defined in the ABL Credit Agreement in effect on the date hereof) and the repayment in full of the Obligations and termination of all Commitments (as each term is defined in the ABL Credit Agreement in effect as of the date hereof), at the option of the Corporation, either (A) the Corporation shall convert all or part of the outstanding Series B Preferred Stock pursuant to, and subject to any vote required by, Section 7(d) or (B) each holder of Series B Preferred Stock shall have their shares of Series B Preferred Stock redeemed in exchange for a cash payment per share of Series B Preferred Stock held by such holder equal to the greater of (1) the Liquidation Preference as of the date of such payment and (2) the amount such holder would have been entitled to receive in or as a result of such Change of Control pursuant to the applicable merger or other acquisition agreement if, immediately prior to the record date for payments relating to such Change of Control, such share of Series B Preferred Stock had been converted into a number of shares of Class A Common stock equal to the Conversion Ratio at such time (such cash payment, the “Change of Control Cash Redemption Amount”); provided, however, that if in connection with the determination and payment of any Change of Control Cash Redemption Amount pursuant to this Section 8(b)(i) or Section 8(b)(ii) or Section 8(b)(iii) below the Conversion Ratio applicable to such determination is less than the quotient of (i) the Liquidation Preference for such Series B Preferred Stock as of the date of such payment and (ii) either (x) the volume-weighted average trading price of the Class A Common Stock on the National Securities Exchange for the thirty (30) trading day period (including the last day of such period) immediately preceding the date of such payment or (y) if such Change of Control occurs during a Delisted Period, then the Fair Market Value of the Class A Common Stock immediately preceding the date of such payment, then in addition to any vote required by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designations, for so long as any of the shares of Series B Preferred Stock remain outstanding, the Corporation shall not take any affirmative action to approve or consummate such Change of Control without either the written consent or affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock voting as a separate class.

 

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(ii)    Upon the occurrence of (A) a Change of Control prior to the one hundred eightieth (180th) day following the Term Loan Maturity Date but after a Repayment Event or (B) a Change of Control at least one hundred eighty (180) days after the Term Loan Maturity Date, each holder of shares of Series B Preferred Stock shall, subject to any vote required under Section 8(b)(i), have their shares of Series B Preferred Stock redeemed in exchange for a cash payment per share of Series B Preferred Stock held by such holder equal to the Change of Control Cash Redemption Amount; provided, however, that if such redemption occurs during a Delisted Period and if the consideration issued to holders of the Class A Common Stock upon a Change of Control consists solely of (I) cash, (II) equity that is listed on a national securities exchange, or (III) a combination thereof, then, at the option of the Corporation, either (x) the Corporation shall, subject to any vote required under Section 8(b)(i), redeem all shares of Series B Preferred Stock by paying each holder a cash payment per share of Series B Preferred Stock held by such holder equal to the Change of Control Cash Redemption Amount or, (y) the Series B Preferred Stock shall, as of immediately prior to such Change of Control, and subject to any vote required under Section 7(d), convert into a number of shares of Class A Common Stock equal to the Conversion Ratio at such time (such a conversion, a “CoC Forced Conversion”).

(iii)    When the Term Loan Credit Agreement is not in effect, upon the occurrence of a Change of Control, each holder of shares of Series B Preferred Stock shall, subject to any vote required under Section 8(b)(i), have their shares of Series B Preferred Stock redeemed in exchange for a cash payment per share of Series B Preferred Stock held by such holder equal to the Change of Control Cash Redemption Amount; provided, however, that if such redemption occurs during a Delisted Period and if the consideration issued to holders of the Class A Common Stock upon a Change of Control consists solely of (I) cash, (II) equity that is listed on a national securities exchange, or (III) a combination thereof, then, at the option of the Corporation, either (x) the Corporation shall, subject to any vote required under Section 8(b)(i), redeem all shares of Series B Preferred Stock by paying each holder a cash payment per share of Series B Preferred Stock held by such holder equal to the Change of Control Cash Redemption Amount or, (y) the Series B Preferred Stock shall, as of immediately prior to such Change of Control, subject to any vote required under Section 7(d), convert into a number of shares of Class A Common Stock equal to the Conversion Ratio at such time (such a conversion, a “CoC Forced Conversion”).

(iv)     (A) a “Change of Control” means (1) the consummation of any transaction by the Corporation the result of which is that any person, other than any Permitted Holder, becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the voting stock of the Corporation, measured by voting power rather than number of shares, units or the like; provided that a transaction in which the Corporation becomes a subsidiary of another person shall not constitute a Change of Control if, immediately following such transaction, the persons who were beneficial owners of the voting stock of the Corporation immediately prior to such transaction beneficially own, directly or indirectly, fifty percent (50%) or more of the total voting power of the voting stock of such other person of whom the Corporation has become a subsidiary or (2) the sale of all or substantially all of the Corporation’s assets; and (B) the “Permitted Holder” means any holder of shares of Series B Preferred Stock as of the Issuance Date and its affiliates.

 

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(v)    “Fair Market Value” means the fair market value of the Class A Common Stock, as determined in good faith by the Board of Directors. Notwithstanding Section 7(h), the Corporation shall provide notice of the Board of Directors’ determination (together with reasonably supporting documentation as to such determination) as to Fair Market Value to each holder of the then outstanding shares of Series B Preferred Stock at least thirty (30) Business Days in advance of any Change of Control transaction that occurs during a Delisted Period and in which Fair Market Value is used (a “FMV Determination Notice”). Notwithstanding anything to the contrary in this clause (v), if the holders of at least seventy-five percent (75%) of the then outstanding shares of Series B Preferred Stock provide a written consent disputing the Board of Directors’ Fair Market Value determination (a “Dispute Notice”) within five (5) Business Days following delivery of a FMV Determination Notice, the Board of Directors and a holder of Series B Preferred Stock designated as the representative of the then outstanding shares of Series B Preferred Stock (the “Series B Representative”) shall attempt to agree on the Fair Market Value in good faith; provided, however, that if the Board of Directors and the Series B Representative are unable to agree upon the Fair Market Value within five (5) Business Days after delivery of a Dispute Notice, the Board of Directors and the Series B Representative shall submit the dispute to an internationally recognized independent investment bank or valuation firm selected by the Series B Representative from three such investment banks or valuation firms proposed by the Corporation (the “Independent Appraiser”). The Independent Appraiser’s determination as to the Fair Market Value shall be final, binding and conclusive for all purposes. The holders of the then outstanding shares of Series B Preferred Stock shall bear one hundred percent (100%) of the fees and expenses of the Independent Appraiser through a reduction in the Liquidation Preference of each share of Series B Preferred Stock that shall be equal to the quotient of the fees and expenses of the Independent Appraiser divided by the number of then outstanding shares of Series B Preferred Stock; provided, however, that if the appraised Fair Market Value as determined by the Independent Appraiser exceeds one hundred twenty-five percent (125%) of the Fair Market Value determined by the Board of Directors, no adjustment to the Liquidation Preference shall be made, and the Corporation shall pay one hundred percent (100%) of the fees and expenses of the Independent Appraiser.

 

9.

Additional Procedures.

(a)    In connection with any conversion pursuant to Section 7 or redemption in accordance with Section 8, the holder of Series B Preferred Stock must surrender the certificates, if any, representing such shares of Series B Preferred Stock (or, if such certificate or certificates have been lost, stolen, or destroyed, a lost certificate affidavit and indemnity in form and substance reasonably acceptable to the Corporation), and deliver transfer instruments reasonably satisfactory to the Corporation, at the principal office of the Corporation (or such other place mutually acceptable to the holder of Series B Preferred Stock and the Corporation). Upon surrender of a certificate that is to be redeemed or converted in part pursuant to this Certificate of Designation, the Corporation shall execute and deliver to the holder of such certificate a new certificate representing the number of Series B Preferred Stock that are not so redeemed or converted.

 

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(b)    On the date of a conversion or redemption hereof, as applicable, with respect to any share of Series B Preferred Stock, certificates representing the number of shares of Class A Common Stock into which the applicable shares of Series B Preferred Stock are converted shall be promptly issued and delivered to the holder of Series B Preferred Stock thereof or such holder’s designee (or cash shall be paid to an account designated by such person) upon presentation and surrender of the certificate, if any, evidencing the Series B Preferred Stock (or, if such certificate or certificates have been lost, stolen, or destroyed, a lost certificate affidavit and indemnity in form and substance reasonably acceptable to the Corporation) to the Corporation and, if required, the furnishing of appropriate endorsements and transfer documents and the payment of all transfer and similar taxes, if any, allocable to such holder.

 

10.

No Other Rights.

The shares of Series B Preferred Stock shall not have any powers, designations, preferences or relative, participating, optional, or other special rights, nor shall there be any qualifications, limitations or restrictions or any powers, designations, preferences or rights of such shares, other than as set forth herein or in the Certificate of Incorporation, or as may be provided by law.

 

11.

Other Provisions.

(a)    The shares of Series B Preferred Stock shall not be subject to the operation of any retirement or sinking fund.

(b)    In case any one or more of the provisions contained in this Certificate of Designations shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. Furthermore, in lieu of any such invalid, illegal or unenforceable provision, there shall be added automatically as a part of this Certificate of Designations a provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible and be legal, valid and enforceable, unless the requisite parties separately agree to a replacement provision that is valid, legal and enforceable.

(c)    Any payments, issuances or distributions required to be made hereunder on any day that is not a Business Day shall be made on the next succeeding Business Day without interest or additional payment for such delay. All payments required hereunder shall be made by wire transfer of immediately available funds in United States Dollars to the holders in accordance with the payment instructions as such holders may deliver by written notice to the Corporation from time to time.

 

12.

Effective Date.

This Certificate of Designations shall become effective on March 31, 2020.

[The Remainder of this Page Intentionally Left Blank]

 

16


IN WITNESS WHEREOF, U.S. Well Services, Inc. has caused this Certificate of Designations to be duly executed this 30th day of March, 2020.

 

U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

  Kyle O’Neill
  Chief Financial Officer

[Signature Page to Certificate of Designations]


Annex A-1

Conversion Notice

The undersigned holder of Series B Preferred Stock hereby irrevocably elects to convert the number of shares of Series B Preferred Stock indicated below pursuant to Section 7(a) of the Certificate of Designations, represented by stock certificate No(s). [_____], into shares of Class A Common Stock at the Conversion Ratio. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designations of Series B Redeemable Convertible Preferred Stock, filed by U.S. Well Services, Inc. on March 31, 2020 (the “Certificate of Designations”).

Conversion Calculations:

Number of shares of Series B Preferred Stock owned prior to conversion: [_____]

Number of shares of Series B Preferred Stock to be converted: [_____]

Number of shares of Class A Common Stock to be issued: [_____]

Address for delivery of physical certificates: [_____]

 

[HOLDER]
By:  

 

Name:  

 

Title:  

 

Date:  

 


Annex A-2

Issuer Conversion Notice

U.S. Well Services, Inc., a Delaware corporation, hereby irrevocably elects to convert the number of shares of Series B Preferred Stock held by you indicated below, represented by stock certificate No(s). [_____], into shares of Class A Common Stock at the [Conversion Ratio]1 on the date set forth below pursuant to [Section 7(b)][Section 7(d)] of the Certificate of Designations. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designations of Series B Redeemable Convertible Preferred Stock, filed by U.S. Well Services, Inc. on March 31, 2020 (the “Certificate of Designations”).

Holder: [_____]

Conversion Calculations:

Number of Shares of Series B Preferred Stock owned by you prior to conversion: [_____]

Number of shares of Series B Preferred Stock owned by you to be converted: [_____]

 

U.S. WELL SERVICES, INC.
By:  

 

Name:  

 

Title:  

 

Date:  

 

 

1 

Insert if conversion is pursuant to Section 7(b).


Annex B

Redemption Notice

U.S. Well Services, Inc., a Delaware corporation, hereby irrevocably elects to redeem the number of shares of Series B Preferred Stock held by you indicated below, represented by stock certificate No(s). [_____], on the date set forth below. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designations of Series B Redeemable Convertible Preferred Stock, filed by U.S. Well Services, Inc. on March 31, 2020.

Holder: [_____]

Date of redemption: [_____]

Redemption Calculations:

Number of Shares of Series B Preferred Stock owned by you prior to redemption: [_____]

Number of shares of Series B Preferred Stock owned by you to be redeemed: [_____]

Redemption Price: [___]

Elect a Single Form of Payment of Redemption Price:

___ Cash (Cash payment to be made to you: [_____])

 

U.S. WELL SERVICES, INC.
By:  

 

Name:  

 

Title:  

 

Date:  

 

EX-4.1

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

by and among

U.S. WELL SERVICES, INC.

and

THE PURCHASERS PARTY HERETO

 


Table of Contents

 

ARTICLE I DEFINITIONS

     1  

Section 1.1

 

Definitions

     1

Section 1.2

 

Registrable Securities

     4

ARTICLE II REGISTRATION RIGHTS

     4  

Section 2.1

 

Shelf Registration

     4

Section 2.2

 

Piggyback Registration

     6

Section 2.3

 

Secondary Underwritten Offering

     8

Section 2.4

 

Sale Procedures

     9

Section 2.5

 

Cooperation by Holders

     13

Section 2.6

 

Restrictions on Public Sale by Holders of Registrable Securities

     13

Section 2.7

 

Expenses

     14

Section 2.8

 

Indemnification

     14

Section 2.9

 

Rule 144 Reporting

     16

Section 2.10

 

Transfer or Assignment of Registration Rights

     17

Section 2.11

 

Aggregation of Registrable Securities

     17

Section 2.12

 

Going Dark Period

     17

Section 2.13

 

IPO Registration

     17

ARTICLE III MISCELLANEOUS

     19  

Section 3.1

 

Communications

     19

Section 3.2

 

Successors and Assigns

     19

Section 3.3

 

Assignment of Rights

     19

Section 3.4

 

Recapitalization (Exchanges, etc. Affecting the Registrable Securities)

     19

Section 3.5

 

Specific Performance

     20

Section 3.6

 

Counterparts

     20

Section 3.7

 

Headings

     20

Section 3.8

 

Governing Law, Submission to Jurisdiction

     20

Section 3.9

 

Waiver of Jury Trial

     20

Section 3.10

 

Severability of Provisions

     21

Section 3.11

 

Entire Agreement

     21

Section 3.12

 

Term; Amendment

     21

Section 3.13

 

No Presumption

     21

Section 3.14

 

Obligations Limited to Parties to Agreement

     21

Section 3.15

 

Interpretation

     22

Section 3.16

 

No Inconsistent Agreements; Additional Rights

     22

 

i


REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of April 1, 2020 by and between U.S. Well Services, Inc., a Delaware corporation (“USWS”), and the parties set forth on Schedule A hereto (each, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, this Agreement is made in connection with the closing of the issuance and sale of the Purchased Securities pursuant to the (i) Purchase Agreement, dated as of March 31, 2020, by and between USWS and the Purchasers (the “Purchase Agreement”) and (ii) Second Amendment to Senior Secured Term Loan Credit Agreement, dated as of April 1, 2020, by and between USWS, the other loan parties party thereto and CLMG Corp. as administrative agent (the “Term Loan Amendment”);

WHEREAS, USWS has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchasers pursuant to the Purchase Agreement; and

WHEREAS, it is a condition to the obligations of the Purchasers and USWS under the Purchase Agreement that this Agreement be executed and delivered.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party hereto, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1    Definitions. The terms set forth below are used herein as so defined:

Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling,” “controlled by,” and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

Agreement” has the meaning specified therefor in the introductory paragraph.

Business Day” means any day other than a Saturday, Sunday, any federal legal holiday or day on which banking institutions in the State of New York or State of Texas are authorized or required by law or other governmental action to close.

Certificate of Designations” means the certificate of designations setting forth the terms of the Series B Preferred Stock.

Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of USWS.

 

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Commission” means the United States Securities and Exchange Commission.

Confidentiality Agreements” shall have the meaning set forth in the Purchase Agreement.

Effective Date” means the initial date of effectiveness of the Shelf Registration Statement.

Effectiveness Period” has the meaning specified therefor in Section 2.1(a) of this Agreement.

Existing Preferred RRA” means the Registration Rights Agreement of USWS, dated May 24, 2019.

Existing RRA” has the meaning specified therefor in Section 2.2(b).

Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

Going Dark Period” has the meaning specified therefor in Section 2.12.

Holder” means the record holder of any Registrable Securities.

Included Registrable Securities” has the meaning specified therefor in Section 2.2(a) of this Agreement.

IPO Registration Statement” has the meaning specified therefor in Section 2.13(a).

Law” shall have the meaning set forth in the Purchase Agreement.

Losses” has the meaning specified therefor in Section 2.8(a) of this Agreement.

Managing Underwriter” means, with respect to any Underwritten Offering, the left lead book running manager of such Underwritten Offering.

Other Holder” has the meaning specified in Section 2.2(b).

Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, or any other form of entity.

Piggyback Opt-Out Notice” has the meaning specified therefor in Section 2.2(a) of this Agreement.

Piggyback Registration” has the meaning specified therefor in Section 2.2(a) of this Agreement.

Purchase Agreement” has the meaning specified therefor in the Recitals of this Agreement.

 

2


Purchased Securities” means the Series B Preferred Stock to be issued and sold to the Purchasers pursuant to the Purchase Agreement and the Term Loan Amendment.

Purchaser” or “Purchasers” has the meaning set forth in the introductory paragraph of this Agreement.

Registration” means any registration pursuant to this Agreement, including pursuant to the Shelf Registration Statement, IPO Registration Statement or a Piggyback Registration.

Registrable Securities” means, subject to Section 1.2 of this Agreement, (i) the shares of Class A Common Stock issued or issuable upon conversion or redemption of the Purchased Securities in accordance with the terms of the Certificate of Designations. (ii) any shares of Class A Common Stock issued as (or issuable upon the conversion, redemption or exercise of any warrant, option, right or other security that is issued as (including any additional shares of Series B Preferred Stock)) a dividend or other distribution with respect to, or in exchange for or in replacement of, any such shares of Class A Common Stock described in clause (i) or the Purchased Securities and (iii) the Class A Common Stock to be issued pursuant to the Term Loan Amendment. The number of Registrable Securities held by any Holder shall mean the number of Registrable Securities such Holder would hold after the full conversion, redemption or exercise of any security held by such Holder that is convertible into or redeemable or exercisable for Registrable Securities (including the Purchased Securities) and the value of such Registrable Securities for purposes of determining whether any threshold set forth in this Agreement shall be calculated by multiplying such fully diluted number of shares of Registrable Securities by the average of the closing price on each securities exchange or nationally recognized quotation system on which the Class A Common Stock is then listed for the ten (10) trading days preceding the date on which such value is being determined.

Registration Expenses” has the meaning specified therefor in Section 2.7(a) of this Agreement.

Resale Opt-Out Notice” has the meaning specified therefor in Section 2.1(b) of this Agreement.

Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

Selling Expenses” has the meaning specified therefor in Section 2.7(a) of this Agreement.

Selling Holder” means a Holder who is selling Registrable Securities pursuant to a Registration.

Selling Holder Election Notice” has the meaning specified therefor in Section 2.3(a) of this Agreement.

Series B Preferred Stock” means the Series A Redeemable Convertible Preferred Stock of USWS and having the rights and obligations specified in the Certificate of Designations.

 

3


Shelf Registration Statement” means a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 of the Securities Act (or any similar provision then in force under the Securities Act).

Shelf Registration Filing Deadline” means, prior to a Going Dark Period, four months from the date of this Agreement, and, following a Going Dark Period, four months after the first day on which USWS becomes subject to Section 13 or 15(d) of the Exchange Act after a Going Dark Period.

Term Loan Amendment” has the meaning specified therefor in the Recitals of this Agreement.

Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement or IPO Registration Statement) in which Class A Common Stock is sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks.

USWS” has the meaning specified therefor in the introductory paragraph of this Agreement.

WKSI” means a well-known seasoned issuer (as defined in Rule 405 under the Securities Act).

Section 1.2    Registrable Securities. Any Registrable Security will cease to be a Registrable Security at the earliest of the following: (a) when a registration statement covering such Registrable Security has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) when such Registrable Security is held by USWS or one of its subsidiaries; (c) when such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities; and (d) the date on which such Registrable Security has been sold pursuant to any section of Rule 144 under the Securities Act (or any similar provision then in force under the Securities Act, “Rule 144”) or any other exemption from the registration requirements of the Securities Act as a result of which the legend on any certificate or book-entry notation representing such Registrable Security restricting transfer of such Registrable Security has been removed.

ARTICLE II

REGISTRATION RIGHTS

Section 2.1    Shelf Registration.

(a)    Shelf Registration. USWS shall use its commercially reasonable efforts to prepare and file an initial Shelf Registration Statement under the Securities Act covering 77,120,531 shares of the Registrable Securities on or before the Shelf Registration Filing Deadline. The initial Shelf Registration Statement shall allocate such Registrable Securities among the Holders on a pro rata basis. USWS shall use its commercially reasonable efforts to cause such initial Shelf Registration Statement to become effective no later than four months following the initial filing of a Shelf Registration Statement. USWS will use its commercially reasonable efforts

 

4


to cause such initial Shelf Registration Statement filed pursuant to this Section 2.1(a) to be continuously effective under the Securities Act until the earliest of (i) all Registrable Securities covered by the Shelf Registration Statement have been distributed in the manner set forth and as contemplated in such Shelf Registration Statement, and (ii) there are no longer any Registrable Securities outstanding (the “Effectiveness Period”). Any Holder or Holders shall have the option and right from time to time, exercisable by delivering a written notice to USWS (a “Demand Notice”), to require registration of a minimum of $10 million of additional Registrable Securities not covered by a Shelf Registration Statement at the time of the Demand Notice. USWS shall use its commercially reasonable efforts to amend the initial Shelf Registration Statement or file a new Shelf Registration Statement, within 10 Business Days of the Demand Notice to include such additional Registrable Securities. USWS will use its commercially reasonable efforts to cause such amendment to the initial Shelf Registration Statement or subsequent Shelf Registration Statement, as applicable, to be continuously effective under the Securities Act during the Effectiveness Period. A Shelf Registration Statement filed pursuant to this Section 2.1(a) shall be on such appropriate registration form of the Commission as shall be selected by USWS. A Shelf Registration Statement when declared effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made). As soon as practicable following the date that a Shelf Registration Statement becomes effective, but in any event within five (5) Business Days of such date, USWS shall provide the Holders with written notice of the effectiveness of a Shelf Registration Statement.

(b)    Resale Registration Opt-Out. At least five (5) Business Days before the initial filing of the Shelf Registration Statement required by Section 2.1(a), USWS shall provide advance written notice to each Holder that it plans to file a Shelf Registration Statement. Any Holder may deliver advance written notice (a “Resale Opt-Out Notice”) to USWS requesting that such Holder not be included in a Shelf Registration Statement prior to its initial filing. Following receipt of a Resale Opt-Out Notice from a Holder, USWS shall not be required to include the Registrable Securities of such Holder in such Shelf Registration Statement.

(c)    Delay Rights. Notwithstanding anything to the contrary contained herein, USWS may, upon written notice to any Selling Holder whose Registrable Securities are included in the Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus which is a part of the Shelf Registration Statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement) if (i) USWS is pursuing an acquisition, merger, reorganization, disposition or other similar transaction and USWS determines in good faith that USWS’s ability to pursue or consummate such a transaction would be materially and adversely affected by any required disclosure of such transaction in the Shelf Registration Statement or (ii) USWS has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of USWS, would materially and adversely affect USWS; provided, however, that in no event shall the Selling Holders be suspended from selling Registrable Securities pursuant to the Shelf Registration Statement for a period of sixty (60) consecutive days or an aggregate of one-hundred and twenty (120) days in any 365-day period. Upon disclosure of such information or the termination of the condition described above,

 

5


USWS shall provide prompt notice to the Selling Holders whose Registrable Securities are included in the Shelf Registration Statement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other actions necessary or appropriate to permit registered sales of Registrable Securities as contemplated in this Agreement.

(d)    Renewal. If, by the third anniversary (the “Renewal Deadline”) of the initial effective date of a Shelf Registration Statement filed pursuant to this Section 2.1, any of the Registrable Securities remain unsold by a Holder included on such Registration, USWS shall file, if it has not already done so and is eligible to do so, a new Shelf Registration Statement covering the Registrable Securities included on the prior Shelf Registration Statement and shall use its commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective within 180 days after the Renewal Deadline; and USWS shall take all other action necessary or appropriate to permit the public offering and sale of the Registrable Securities to continue as contemplated in the expired Shelf Registration Statement. References herein to Shelf Registration Statement shall include such new shelf registration statement.

Section 2.2    Piggyback Registration.

(a)    Participation. If at any time USWS proposes to file (i) at a time when USWS is not a WKSI, a registration statement and such Holder has not previously included its Registrable Securities in a Shelf Registration Statement contemplated by Section 2.1(a) of this Agreement that is currently effective, or (ii) a prospectus supplement to an effective “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act), so long as USWS is a WKSI at such time or, whether or not USWS is a WKSI, so long as the Registrable Securities were previously included in the underlying Shelf Registration Statement or are included in an effective Shelf Registration Statement, or in any case in which Holders may participate in such offering without the filing of a post-effective amendment, in each case, for the sale of Class A Common Stock in an Underwritten Offering for its own account and/or another Person, other than (a) a registration relating solely to employee benefit plans, (b) a registration relating solely to a Rule 145 transaction, or (c) a registration statement on any registration form which does not permit secondary sales, then USWS shall give not less than three (3) Business Days advance notice (including, but not limited to, notification by e-mail; such notice, a “Piggyback Notice”) of such proposed Underwritten Offering to each Holder that, together with its Affiliates, owns more than $5.0 million of Registrable Securities, and such notice shall offer such Holder the opportunity to participate in any Underwritten Offering and to include in such Underwritten Offering such number of Registrable Securities (the “Included Registrable Securities”) as each such Holder may request in writing (a “Piggyback Registration”); provided, however, that USWS (A) shall not be required to include the Registrable Securities of the Holders in such Registration if the Holders do not offer a minimum of $5.0 million of Registrable Securities, or (B) if USWS has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock in the Underwritten Offering, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.2(b). If USWS is not required to offer the opportunity for a Piggyback Registration in respect of a proposed Underwritten Offering as a result of the circumstance described in clause (B) of the proviso of the immediately preceding sentence, then USWS shall nevertheless be required to furnish to such Holders the Piggyback Notice in respect of such proposed Underwritten

 

6


Offering, which notice shall describe USWS’s intention to conduct an Underwritten Offering and, if the determination described in clause (B) of the proviso of the immediately preceding sentence has been made at the time that the Piggyback Notice is required to be given by USWS, shall include notification that the Holders do not have the opportunity to include Registrable Securities in such Underwritten Offering because USWS has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock in the Underwritten Offering. If the circumstance described in clause (B) of the proviso of the immediately preceding sentence is made after the Piggyback Notice has been given, then USWS shall notify the Holders who were provided such Piggyback Notice (or if the two Business Day period referred to in the next sentence has lapsed, the Holders who have timely elected to include Registrable Securities in such offering) in writing of such circumstance and the aggregate number of Registrable Securities, if any, that can be included in such offering. Each Piggyback Notice shall be provided to Holders on a Business Day pursuant to Section 3.1 hereof and confirmation of receipt of such notice shall be requested in the notice. The Holder will have two Business Days after notice has been delivered to request in writing the inclusion of Registrable Securities in the Underwritten Offering. If no request for inclusion from a Holder is received within the specified time, such Holder shall have no further right to participate in such Piggyback Registration. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, USWS shall determine for any reason not to undertake or to delay such Underwritten Offering, USWS may, at its election, give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay in the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to USWS of such withdrawal up to and including the time of pricing of such offering. Any Holder may deliver written notice (a “Piggyback Opt-Out Notice”) to USWS requesting that such Holder not receive notice from USWS of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Piggyback Opt-Out Notice in writing. Following receipt of a Piggyback Opt-Out Notice from a Holder (unless subsequently revoked), USWS shall not be required to deliver any notice to such Holder pursuant to this Section 2.2(a) and such Holder shall no longer be entitled to participate in Underwritten Offerings by USWS pursuant to this Section 2.2(a), unless such Piggyback Opt-Out Notice is revoked by such Holder.

(b)    Priority of Piggyback Registration. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of shares of Class A Common Stock included in a Piggyback Registration advises USWS that the total shares of Class A Common Stock which the Selling Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock offered or the market for the Class A Common Stock, then the Piggyback Notice provided by USWS pursuant to Section 2.2(a) shall include notification of such determination or, if such determination is made after the Piggyback Notice has been given, then USWS shall furnish notice in writing (including by e-mail) to the Holders (or to those who have timely elected to participate in such Underwritten

 

7


Offering), and the Class A Common Stock to be included in such Underwritten Offering shall include the number of shares of Class A Common Stock that such Managing Underwriter or Underwriters advises USWS can be sold without having such adverse effect, with such number to be allocated (i) if such Piggyback Registration was initiated by USWS, (A) first, to USWS, (B) second, pro rata among the Selling Holders and any other Persons who have been or after the date hereof are granted registration rights on parity (including pursuant to the Existing Preferred RRA) with the registration rights granted under this Agreement (the “Other Holders”) who have requested participation in the Piggyback Registration (based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (1) the number of shares of Class A Common Stock proposed to be sold by such Selling Holder or such Other Holder in such offering; by (2) the aggregate number of shares of Class A Common Stock proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration), and (C) third, to any other holder of shares of Class A Common Stock with registration rights that are subordinate to the rights of the Holders hereunder and (ii) if such Piggyback Registration was not initiated by USWS, (A) first, to the Persons initiating such Registration, (B) second, pro rata among the Selling Holders and any Other Holders who have requested participation in the Piggyback Registration (based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (1) the number of shares of Class A Common Stock proposed to be sold by such Selling Holder or such Other Holder in such offering; by (2) the aggregate number of shares of Class A Common Stock proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration other than the Persons initiating such Registration), except that in the case of a Shelf Underwritten Offering (as defined in the Registration Rights Agreement of USWS dated November 9, 2018 (the “Existing RRA”)) the Holders shall only be permitted to participate in such Shelf Underwritten Offering after all of the securities that Other Holders have requested to be included in such Shelf Underwritten Offering pursuant to the Existing RRA have been so included, and (C) third, to any other holder of shares of Class A Common Stock with registration rights that are subordinate to the rights of the Holders hereunder.

Section 2.3    Secondary Underwritten Offering.

(a)    S-3 Registration. In the event that a Selling Holder (together with any Affiliates that are Selling Holders) elects to dispose of Registrable Securities under the Shelf Registration Statement pursuant to an Underwritten Offering for its own account of at least $10.0 million, such Selling Holder shall give notice of such election in writing (including, but not limited to, notification by e-mail; such notice, the “Selling Holder Election Notice”) to USWS not less than twenty (20) Business Days before the date such Selling Holder intends for such Underwritten Offering to commence marketing (whether on a confidential basis or on a public basis); provided that USWS shall not be required to conduct more than two Underwritten Offerings pursuant to this Section 2.3 in any 365-day period pursuant to Selling Holder Election Notices. The Selling Holder Election Notice shall specify the number of Registrable Securities that the Selling Holder intends to offer in such Underwritten Offering and the expected commencement date thereof. USWS shall, at the request of such Selling Holder, enter into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.8, and shall take all such other reasonable actions as are requested by the Managing Underwriter in order to expedite or facilitate the disposition of the Registrable Securities.

 

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(b)    Notice to Holders. Not later than two (2) Business Days after receipt by USWS of the Selling Holder Election Notice, unless USWS determines in accordance with Section 2.1(c) to delay such Underwritten Offering (in which event USWS shall promptly notify the initiating Selling Holder in writing of such determination), then USWS shall provide written notice (including, but not limited to, notification by e-mail) to the other Holders of Registrable Securities of the Selling Holder’s intention to conduct an Underwritten Offering and such notice shall offer such other Holders the opportunity to participate in such Underwritten Offering and to include in such Underwritten Offering such number of Registrable Securities as each such Holder may request in writing. Each such other Holder will have five (5) Business Days after notice has been delivered to request in writing submitted to USWS the inclusion of Registrable Securities in the Underwritten Offering. If no request for inclusion from a Holder is received by USWS within the specified time, such Holder shall have no further right to participate in such Underwritten Offering. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, the Selling Holder giving the notice shall determine for any reason not to undertake or to delay such Underwritten Offering, such Selling Holder may, at its election, give written notice of such determination to USWS and USWS shall notify the other Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to include Registrable Securities of any other Holder, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Registrable Securities of any other Holder for the same period as the delay in the Underwritten Offering. Any other Holder shall have the right to withdraw such Holder’s request for inclusion of such Holder’s Registrable Securities in such Underwritten Offering by giving written notice to USWS of such withdrawal up to and including the time of pricing of such offering. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of Registrable Securities under a Shelf Registration Statement advises USWS that the total amount of Registrable Securities which the Selling Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the offering price, timing or probability of success of the distribution of the Registrable Securities offered or the market for the Registrable Securities, then the Registrable Securities to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises USWS can be sold without having such adverse effect, with such number to be allocated pro rata among the Selling Holders and the other Holders who have requested participation in the Underwritten Offering (based, for each such Selling Holder or other Holder, on the percentage derived by dividing (A) the number of Registrable Securities proposed to be sold by such Selling Holder or such other Holder in such offering; by (B) the aggregate number of Registrable Securities proposed to be sold by all Selling Holders and all other Holders in such Underwritten Offering).

Section 2.4    Sale Procedures.

(a)    General Procedures. In connection with any Underwritten Offering (i) under Section 2.2 or Section 2.13 of this Agreement, USWS shall be entitled to select the Managing Underwriter or Underwriters, and (ii) under Section 2.3 of this Agreement, the Selling Holders shall be entitled to select the Managing Underwriter or Underwriters. In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder and USWS shall be obligated to enter into an underwriting agreement with the Managing Underwriter or Underwriters which contains such representations, covenants,

 

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indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of equity securities. No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, USWS to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. No Selling Holder shall be required to make any representations or warranties to or agreements with USWS or the underwriters other than representations, warranties or agreements regarding such Selling Holder’s ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by law. If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to USWS and the Managing Underwriter; provided, however, that such withdrawal must be made at least one Business Day prior to the time of pricing of such Underwritten Offering to be effective. No such withdrawal or abandonment shall affect USWS’s obligation to pay Registration Expenses. Upon the receipt by USWS of a written request from the Holders of at least $10.0 million dollars of Registrable Securities that are participating in any Underwritten Offering contemplated by this Agreement, USWS’s management shall be required to participate in a roadshow or similar marketing effort in connection with any Underwritten Offering.

(b)    In connection with its obligations under this Article II, USWS will, as expeditiously as possible:

(i)    prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep a Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by a Shelf Registration Statement;

(ii)    if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from a Shelf Registration Statement and the Managing Underwriter at any time shall notify USWS in writing that, in the sole judgment of such Managing Underwriter, the inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of the Underwritten Offering of such Registrable Securities, USWS shall use its commercially reasonable efforts to include such information in the prospectus supplement;

(iii)    furnish to each Selling Holder (A) as far in advance as reasonably practicable before filing a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of

 

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distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing such Shelf Registration Statement or such other registration statement and the prospectus included therein or any supplement or amendment thereto, and (B) such number of copies of such Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or other registration statement;

(iv)    if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Shelf Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request, provided that USWS will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;

(v)    promptly notify each Selling Holder and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (A) the filing of a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus included therein or any amendment or supplement thereto (other than any amendment or supplement resulting from the filing of a document incorporated by reference therein), and, with respect to such Shelf Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (B) the receipt of any written comments from the Commission with respect to any filing referred to in clause (A) and any written request by the Commission for amendments or supplements to such Shelf Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;

(vi)    immediately notify each Selling Holder and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (A) the happening of any event as a result of which the prospectus contained in a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplemental amendment thereto, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (B) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (C) the receipt by USWS of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, USWS agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

 

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(vii)    upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

(viii)    in the case of an Underwritten Offering, furnish upon request, (A) an opinion of counsel for USWS, dated the effective date of the applicable registration statement or the date of any amendment or supplement thereto (other than any amendment or supplement resulting from the filing of a document incorporated by reference therein), preliminary or prospectus supplement, and a letter of like kind dated the date of the closing under the underwriting agreement, and (B) a “comfort” letter, dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified USWS’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus included therein and any supplement thereto) and as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in underwritten offerings of securities, such other matters as such underwriters may reasonably request;

(ix)    except during a Going Dark Period, otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

(x)    make available to the appropriate representatives of the underwriters access to such information and USWS personnel as is reasonable and customary to enable such parties and their representatives to establish a due diligence defense under the Securities Act; provided that USWS need not disclose any non-public information to any such representative unless and until such representative has entered into a confidentiality agreement with USWS;

(xi)    cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by USWS are then listed;

(xii)    use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of USWS to enable the Selling Holders to consummate the disposition of such Registrable Securities;

 

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(xiii)    provide a transfer agent and registrar for all Registrable Securities covered by such registration statement; and

(xiv)    enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities.

(c)    Each Selling Holder, upon receipt of notice from USWS of the happening of any event of the kind described in Section 2.4(b)(vi), shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.4(b)(vi) or until it is advised in writing by USWS that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by USWS, such Selling Holder will, or will request the Managing Underwriter or underwriters, if any, to deliver to USWS (at USWS’s expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus and any prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.

Section 2.5    Cooperation by Holders. USWS shall have no obligation to include Registrable Securities of a Holder in the Shelf Registration Statement, IPO Registration Statement or in an Underwritten Offering under Article II of this Agreement if such Selling Holder has failed to timely furnish such information which, in the opinion of counsel to USWS, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

Section 2.6    Restrictions on Public Sale by Holders of Registrable Securities. For a period of one year following the Effective Date, each Holder of Registrable Securities who is included in the Shelf Registration Statement agrees not to effect any public sale or distribution of the Registrable Securities during the forty-five (45) calendar day period beginning on the date of a prospectus supplement filed with the Commission with respect to the pricing of an Underwritten Offering, or other prospectus (including any free writing prospectus) containing the terms of the pricing of such Underwritten Offering; provided that (a) USWS gives written notice to such Holder of the date of the commencement and termination of such period with respect to any such Underwritten Offering and (b) the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers or directors or any other stockholder of USWS on whom a restriction is imposed; and provided further that this Section 2.6 shall only be applicable to Holders of Registrable Securities included in the Shelf Registration Statement who (together with their Affiliates that hold Registrable Securities) (y) own at least $5.0 million of Registrable Securities and (z) have not delivered (or delivered and subsequently revoked) a Piggyback Opt-Out Notice.

 

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Section 2.7    Expenses.

(a)    Certain Definitions. “Registration Expenses” means all expenses incident to USWS’s performance under or compliance with this Agreement to effect the registration of Registrable Securities in a Shelf Registration Statement pursuant to Section 2.1, a Piggyback Registration pursuant to Section 2.2, an Underwritten Offering pursuant to Section 2.3 or an IPO Registration Statement pursuant to Section 2.13 and the disposition of such securities, including, without limitation, all registration, filing, securities exchange listing and fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority, transfer taxes and fees of transfer agents and registrars, all word processing, duplicating and printing expenses, all roadshow expenses borne by it and the fees and disbursements of counsel and independent public accountants for USWS, including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance. Except as otherwise provided in Section 2.8 hereof, USWS shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder. In addition, USWS shall not be responsible for any “Selling Expenses,” which means all underwriting fees, discounts and selling commissions, transfer taxes and fees of counsel allocable to the sale of the Registrable Securities.

(b)    Expenses. USWS will pay all reasonable Registration Expenses in connection with a Shelf Registration Statement, a Piggyback Registration, an IPO Registration Statement or Underwritten Offering, whether or not any sale is made pursuant to such Shelf Registration Statement, Piggyback Registration or Underwritten Offering. Each Selling Holder shall pay its pro rata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder.

Section 2.8    Indemnification.

(a)    By USWS. In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, USWS will indemnify and hold harmless each Selling Holder thereunder, its directors, officers, employees, agents and managers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and its directors, officers, employees, agents and managers, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder or underwriter or controlling Person or directors, officers, employees, agents or managers may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in light of the circumstances under which such statement is made) contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will

 

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reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person and each such director, officer, employee, agent or manager for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that USWS will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in writing specifically for use in the Shelf Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such director, officer, employee, agent, manager or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

(b)    By Each Selling Holder. Each Selling Holder agrees severally and not jointly to indemnify and hold harmless USWS, its directors, officers, employees and agents and each Person, if any, who controls USWS within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from USWS to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Shelf Registration Statement, any other registration statement contemplated by this Agreement or prospectus supplement relating to the Registrable Securities, or any amendment or supplement thereto; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification less the amount of any damages that such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

(c)    Notice. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.8(c) except to the extent that the indemnifying party is materially prejudiced by such failure. In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.8 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense and employ counsel reasonably satisfactory to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party or representation by both parties by the same

 

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counsel is otherwise inappropriate under the applicable standards of professional conduct, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, the indemnifying party shall not settle any indemnified claim without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, includes a complete release from liability of, and does not contain any admission of wrong doing by, the indemnified party.

(d)    Contribution. If the indemnification provided for in this Section 2.8 is held by a court or government agency of competent jurisdiction to be unavailable to USWS or any Selling Holder or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of USWS on the one hand and of such Selling Holder on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification less the amount of any damages that such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The relative fault of USWS on the one hand and each Selling Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this paragraph. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss which is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

(e)    Other Indemnification. The provisions of this Section 2.8 shall be in addition to any other rights to indemnification or contribution which an indemnified party may have pursuant to law, equity, contract or otherwise.

Section 2.9    Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, USWS agrees to use its commercially reasonable efforts to:

(a)    Make and keep public information regarding USWS available, as those terms are understood and defined in Rule 144, at all times from and after the date hereof;

 

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(b)    File with the Commission in a timely manner all reports and other documents required of USWS under the Securities Act and the Exchange Act at all times from and after the date hereof;

(c)    So long as a Holder, together with its Affiliates, owns any Registrable Securities, (i) unless otherwise available at no charge by access electronically to the Commission’s EDGAR filing system (or any successor system), furnish to such Holder forthwith upon request a copy of the most recent annual or quarterly report of USWS, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration and (ii) to the extent accurate, furnish to such Holder upon reasonable request a written statement of USWS that it has complied with the reporting requirements of Rule 144; and

(d)    Provide opinion(s) of counsel as may be reasonably necessary in order for a Holder to avail itself of Rule 144 to allow such Holder to sell any Registrable Securities without registration, and remove, or cause to be removed, the notation of any restrictive legend on such Holder’s book-entry account maintained by USWS’s transfer agent, and bear all costs associated with the removal of such legend in USWS’s books.

Section 2.10    Transfer or Assignment of Registration Rights. The rights to cause USWS to register Registrable Securities granted to the Purchasers by USWS under this Article II may be transferred or assigned by each Purchaser to one or more transferee(s) or assignee(s) of such Registrable Securities or securities convertible, redeemable or exchangeable for Registrable Securities (including the Purchased Securities), in each case, who (a) (i) are Affiliates of such Purchaser, or (ii) hold, collectively with its or their Affiliates, after giving effect to such transfer or assignment, at least $10.0 million of Registrable Securities, and (b) who assume in writing responsibility for the obligations of such Purchaser under this Agreement with respect to the securities so transferred. USWS shall be given written notice prior to any said transfer or assignment, stating the name and address of each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned.

Section 2.11    Aggregation of Registrable Securities. All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. In addition, all other shares of Class A Common Stock held by a Person and for which such Person has similar registration rights pursuant to an agreement between such Person and USWS shall be aggregated together for the purpose of determining such Person’s rights under this Agreement solely as such shares relate to minimum quantity requirements contemplated herein; provided that, for the avoidance of doubt, such Class A Common Stock shall not otherwise be deemed Registrable Securities for any other purpose under this Agreement.

Section 2.12    Going Dark Period. Notwithstanding anything to the contrary in this Agreement, all rights and obligations under Section 2.1, Section 2.2 and Section 2.3 shall have no force and effect while USWS is not subject to Section 13 or 15(d) of the Exchange Act (“Going Dark Period”).

Section 2.13    IPO Registration.

 

 

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(a)    IPO Registration Statement. At any time following a Going Dark Period, if USWS proposes to file a registration statement on Form S-1 or such other form under the Securities Act providing for the initial public offering of the Class A Common Stock (the “IPO Registration Statement”), USWS will notify in writing each Holder of the filing at least five (5) Business Days before the initial filing and afford each Holder an opportunity to include in the IPO Registration Statement all or any part of the Registrable Securities then held by such Holder; provided, however, that USWS shall not be required to include the Registrable Securities of the Holders in such Registration if the Holders do not offer a minimum of $5.0 million of Registrable Securities. Each Holder desiring to include in the IPO Registration Statement all or part of the Registrable Securities held by such Holder shall, within twenty (20) days after receipt of the above-described notice from USWS, so notify USWS in writing, and in such notice shall inform USWS of the number of Registrable Securities such Holder wishes to include in the IPO Registration Statement. Any election by any Holder to include any Registrable Securities in the IPO Registration Statement will not affect the inclusion of such Registrable Securities in the IPO Registration Statement until such Registrable Securities have been sold under the IPO Registration Statement.

(b)    Right to Terminate IPO Registration. USWS shall have the right to terminate or withdraw the IPO Registration Statement initiated by it and referred to in this Section 2.13(b) prior to the effectiveness of such Registration whether or not any Holder has elected to include Registrable Securities in such Registration; provided, however, USWS must provide each Holder that elected to include any Registrable Securities in such IPO Registration Statement prompt written notice of such termination or withdrawal. Furthermore, in the event the IPO Registration Statement is not declared effective within one hundred twenty (120) days following the initial filing of the IPO Registration Statement, unless a road show for the Underwritten Offering pursuant to the IPO Registration Statement is actually in progress at such time or such IPO Registration Statement has been terminated or withdrawn pursuant to this Section 2.13(b), USWS shall promptly provide a new written notice to all Holders giving them another opportunity to elect to include Registrable Securities in the pending IPO Registration Statement. Each Holder receiving such notice shall have the same election rights afforded such Holder as described above in this Section 2.13.

(c)    Priority of Piggyback Registration. If the Managing Underwriter or Underwriters advises USWS that the total shares of Class A Common Stock which the Selling Holders and any other Persons intend to include in the IPO Registration Statement exceeds the number which can be sold in such offering without being likely to have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock offered or the market for the Class A Common Stock, then USWS shall furnish notice in writing (including by e-mail) to the Holders that elected to include any Registrable Securities in such IPO Registration Statement, and the Class A Common Stock to be included in such IPO Registration Statement shall include the number of shares of Class A Common Stock that such Managing Underwriter or Underwriters advises USWS can be sold without having such adverse effect, with such number to be allocated (i) first, to USWS, (ii) second, pro rata among the Selling Holders and any Other Holders who have requested participation in the IPO Registration Statement (based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (1) the number of shares of Class A Common Stock proposed to be sold by such Selling Holder or such Other Holder in such offering; by (2) the aggregate number of shares of Class A Common Stock proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration), and (iii) third, to any other holder of shares of Class A Common Stock with registration rights that are subordinate to the rights of the Holders hereunder.

 

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ARTICLE III

MISCELLANEOUS

Section 3.1    Communications. All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, facsimile, air courier guaranteeing overnight delivery or personal delivery to the following addresses:

(a)    If to a Purchaser, to such addresses indicated on Schedule A attached hereto.

(b)    If to USWS:

U.S. Well Services, Inc.

1360 Post Oak Blvd., Suite 1800

Houston, Texas 77056

Attention: Kyle O’Neill

E-mail: KONeill@uswellservices.com

with a copy (which shall not constitute notice) to:

Porter Hedges LLP

Main St., 36th Floor

Houston, Texas 77002

Attention: Corey C. Brown

Facsimile: (713) 226-6244

E-mail: cbrown@porterhedges.com

or, if to a transferee of a Purchaser, to the transferee at the address provided pursuant to Section 2.10 above. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified or registered mail, return receipt requested, or regular mail, if mailed; upon actual receipt of the facsimile copy or e-mail, if sent via facsimile or e-mail; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

Section 3.2    Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.

Section 3.3    Assignment of Rights. All or any portion of the rights and obligations of any Purchaser under this Agreement may be transferred or assigned by such Purchaser in accordance with Section 2.10 hereof.

Section 3.4    Recapitalization (Exchanges, etc. Affecting the Registrable Securities). The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and

 

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all shares of capital stock of USWS or any successor or assign of USWS (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, recapitalizations and the like occurring after the date of this Agreement.

Section 3.5    Specific Performance. Damages in the event of breach of this Agreement by a party hereto would be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives (a) any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief or that a remedy at law would be adequate and (b) any requirement under any law to post securities as a prerequisite to obtaining equitable relief. The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.

Section 3.6    Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

Section 3.7    Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

Section 3.8    Governing Law, Submission to Jurisdiction. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION. Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement or the Transactions shall be brought and determined by courts of the State of New York located in the Borough of Manhattan, City of New York and the federal courts of the United States of America located in the State of New York, Southern District, and each of the parties hereto irrevocably submits to the exclusive jurisdiction of such courts solely in respect of any legal proceeding arising out of or related to this Agreement.

Section 3.9    Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVE, AND AGREE TO CAUSE THEIR AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION

 

20


SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 3.10    Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

Section 3.11    Entire Agreement. This Agreement and the Purchase Agreement are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein or therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein with respect to the rights granted by USWS set forth herein or therein. This Agreement, the Purchase Agreement and the Confidentiality Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter.

Section 3.12    Term; Amendment. This Agreement shall automatically terminate and be of no further force and effect on the date on which there are no Registrable Securities. This Agreement may be amended only by means of a written amendment signed by USWS and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.

Section 3.13    No Presumption. In the event any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

Section 3.14    Obligations Limited to Parties to Agreement. Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Purchasers, Selling Holders, their respective permitted assignees and USWS shall have any obligation hereunder and that, notwithstanding that one or more of USWS and the Purchasers may be a corporation, partnership or limited liability company, no recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of USWS, the Purchasers, Selling Holders or their respective permitted assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise by incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of USWS, the Purchasers, Selling Holders or any of their respective assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member,

 

21


stockholder or Affiliate of any of the foregoing, as such, for any obligations of USWS, the Purchasers, Selling Holders or their respective permitted assignees under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any assignee of the Purchasers or a Selling Holder hereunder.

Section 3.15    Interpretation. Article and Section references in this Agreement are references to the corresponding Article and Section to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever any determination, consent or approval is to be made or given by a Purchaser under this Agreement, such action shall be in such Purchaser’s sole discretion unless otherwise specified.

Section 3.16    No Inconsistent Agreements; Additional Rights. If USWS hereafter enters into a registration rights agreement with a third party with terms more favorable than those set forth herein with respect to Holders of shares of Class A Common Stock, this Agreement shall, to the extent so requested by any such Holders, be amended so as to provide such Holders with substantially the same material terms as provided to such other third party.

[Signature Pages Follow]

 

22


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

Name:   Kyle O’Neill
Title:   Chief Financial Officer

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


CRESTVIEW III USWS, L.P.
By:   Crestview III USWS GenPar, LLC, its general partner
By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


CRESTVIEW III USWS TE, LLC
By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


LNV CORPORATION
By:  

/s/ Jacob Cherner

Name:   Jacob Cherner
Title:   Executive Vice President

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


LPP MORTGAGE, INC.
By:  

/s/ Jacob Cherner

Name:   Jacob Cherner
Title:   Executive Vice President

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


REGIMENT CAPITAL SPECIAL SITUATIONS FUND V., L.P.
By:  

/s/ Richard Miller

Name:   Richard Miller
Title:   Authorized Signatory

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


DAVID J MATLIN
By:  

/s/ David J Matlin

Name:   David J Matlin

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


PETER SCHOELS
By:  

/s/ Peter Schoels

Name:   Peter Schoels

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


GREENBLATT PARTNERS LP
By:  

/s/ Jeffrey Greenblatt

By:  

 

Name:  

 

Title:  

 

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


JASON CAPONE
By:  

/s/ Jason Capone

Name:   Jason Capone
[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


JAMES MCCARTNEY
By:  

/s/ James McCartney

Name:   James McCartney

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


KEN CAMPBELL
By:  

/s/ Ken Campbell

Name:   Ken Campbell

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


GREG ETHRIDGE
By:  

/s/ Greg Ethridge

Name:   Greg Ethridge

[Signatures continue on following page.]

 

[Signature Page to Registration Rights Agreement]


Schedule A

Purchasers

Crestview III USWS, L.P.

c/o Crestview Advisors, L.L.C.

590 Madison Avenue, 42nd Floor

New York, New York 10022

Attention: Adam J. Klein, Ross A. Oliver

E-mail: aklein@crestview.com; roliver@crestview.com

with a copy (which shall not constitute notice) to:

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attention: E. Ramey Layne, James M. Garrett

Email: rlayne@velaw.com; jgarrett@velaw.com

Crestview III USWS TE, LLC

c/o Crestview Advisors, L.L.C.

590 Madison Avenue, 42nd Floor

New York, New York 10022

Attention: Adam J. Klein, Ross A. Oliver

E-mail: aklein@crestview.com; roliver@crestview.com

with a copy (which shall not constitute notice) to:

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attention: E. Ramey Layne, James M. Garrett

Email: rlayne@velaw.com; jgarrett@velaw.com

Regiment Capital Special Situations Fund V, L.P.

c/o TCW Direct Lending Group

1251 Avenue of the Americas, Suite 4700

New York, NY 10020

Attention:    Richard Miller

E-mail:    richard.miller@tcw.com

David J Matlin

600 Fifth Avenue; 22nd Floor

New York, New York 10022

Peter Schoels

1025 Morse Blvd

West Palm Beach FL 33404

 

Schedule A


Greenblatt Partners LP

14 East 60th Street Suite 600

New York, NY 10022

Jason Capone

260 park avenue South; #9j

New York, New York 10010

James McCartney

95 Sebonac Road

South Hampton, NY 11968

Ken Campbell

16620 Parkland Dr.

Shaker Heights OH 44120

Tim O’Connor

1835 Port Carlow Place

Newport Beach CA 92660

Greg Ethridge

585 Weed Street

New Canaan, CT 06840

LNV Corporation

LPP Mortgage, Inc.

c/o CLMG Corp.

7195 Dallas Parkway

Plano, Texas 75024

Attention: James Erwin, President

E-mail: jerwin@clmgcorp.com

with a copy (which shall not constitute notice) to:

Melissa Cobb

SVP/Corporate Counsel

6000 Legacy Dr.

Plano, TX 75024

E-mail: MCobb@BealService.com

 

Schedule A

EX-10.1

Exhibit 10.1

PURCHASE AGREEMENT

among

U.S. WELL SERVICES, INC.,

THE PURCHASERS PARTY HERETO

and

(Solely for the purposes of Section 5.01)

LNV CORPORATION and LPP MORTGAGE, INC.


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     1

Section 1.01

  Definitions      1

Section 1.02

  Accounting Procedures and Interpretation      5

ARTICLE II AGREEMENT TO SELL AND PURCHASE

     6

Section 2.01

  Authorization of Sale of the Purchased Securities      6

Section 2.02

  Sale and Purchase      6

Section 2.03

  Closing      6

Section 2.04

  Conditions to Closing      6

Section 2.05

  USWS Deliveries      7

Section 2.06

  Purchasers’ Deliveries      8

Section 2.07

  Independent Nature of the Purchasers’ Obligations and Rights      8

Section 2.08

  Further Assurances      9

Section 2.09

  Use of Proceeds      9

ARTICLE III REPRESENTATIONS AND WARRANTIES AND COVENANTS RELATED TO USWS

     9

Section 3.01

  Corporate Existence      9

Section 3.02

  Capitalization and Valid Issuance of Purchased Securities      10

Section 3.03

  USWS SEC Documents      11

Section 3.04

  Operations in the Ordinary Course      12

Section 3.05

  Litigation      12

Section 3.06

  No Conflicts; Compliance with Laws      12

Section 3.07

  Authority, Enforceability      13

Section 3.08

  Approvals      13

Section 3.09

  Investment Company Status      13

Section 3.10

  Certain Fees      13

Section 3.11

  Books and Records; Sarbanes-Oxley Compliance      13

Section 3.12

  Listing and Maintenance Requirements      14

Section 3.13

  Insurance      14

Section 3.14

  Pre-Closing Covenants of USWS      14

Section 3.15

  Disclosure of Transactions      14

ARTICLE IV REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS

     14

Section 4.01

  Existence      14

Section 4.02

  Authorization, Enforceability      14

Section 4.03

  No Breach      15

Section 4.04

  Certain Fees      15

Section 4.05

  Unregistered Securities      15

Section 4.06

  Short Selling      16

Section 4.07

  Lock-Up Agreement      16

 

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ARTICLE V OTHER COVENANTS

     16

Section 5.01

  Preemptive Rights      16

Section 5.02

  Issuances of New Equity Securities      17

Section 5.03

  Amendments to Series A Preferred Stock and Preferred Warrants.      17

Section 5.04

  Director Designation Rights.      18

Section 5.05

  TCW Series B Preferred Voting.      18

ARTICLE VI INDEMNIFICATION, COSTS AND EXPENSES

     18

Section 6.01

  Indemnification by USWS      18

Section 6.02

  Indemnification by the Purchasers      19

Section 6.03

  Indemnification Procedure      19

Section 6.04

  Tax Treatment of Indemnification Payments      20

ARTICLE VII TERMINATION

     20

Section 7.01

  Termination      20

Section 7.02

  Certain Effects of Termination      21

ARTICLE VIII MISCELLANEOUS

     21

Section 8.01

  Expenses      21

Section 8.02

  Interpretation      21

Section 8.03

  Survival of Provisions      21

Section 8.04

  No Waiver; Modifications in Writing      22

Section 8.05

  Binding Effect; Assignment      22

Section 8.06

  Non-Disclosure      23

Section 8.07

  Communications      23

Section 8.08

  Removal of Legend      23

Section 8.09

  Entire Agreement      24

Section 8.10

  Governing Law; Submission to Jurisdiction      24

Section 8.11

  Waiver of Jury Trial      24

Section 8.12

  Execution in Counterparts      24

Section 8.13

  Recapitalizations, Exchanges, Etc. Affecting the Purchased Securities      25

Section 8.14

  Certain Tax Matters      25

SCHEDULE A – Schedule of Purchasers

EXHIBIT A – Form of Certificate of Designations for the Series B Preferred Stock

EXHIBIT B – Form of Registration Rights Agreement

 

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PURCHASE AGREEMENT

This PURCHASE AGREEMENT, dated as of March 31, 2020 (this “Agreement”), is entered into by and among U.S. Well Services, Inc., a Delaware corporation (“USWS”), each of the purchasers set forth on Schedule A hereto (the “Purchasers”), and, solely for the purposes of Section 5.01, LNV Corporation and LPP Mortgage, Inc. (collectively, the “Lenders”).

RECITALS:

WHEREAS, USWS desires to sell the Purchased Securities (as defined below) and the Purchasers desire to purchase from USWS the Purchased Securities, in accordance with the provisions of this Agreement;

WHEREAS, U.S. Well Services, LLC, a direct wholly-owned subsidiary of USWS Holdings (as defined below), a partially-owned subsidiary of USWS, has entered into the Term Loan Amendment (as defined below), providing for, among other things, the delivery of 1,050 shares of Series B Preferred Stock (as defined below) to the Lenders; and

WHEREAS, USWS has agreed to provide the Purchasers with certain registration rights with respect to the shares of Class A Common Stock underlying the Purchased Securities acquired pursuant hereto.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, USWS and each of the Purchasers, severally and not jointly, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01    Definitions. As used in this Agreement, the following terms have the meanings indicated:

Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling,” “controlled by” and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided however, that USWS and the Purchasers shall not be considered Affiliates for purposes of this Agreement.

Agreement” has the meaning set forth in the introductory paragraph of this Agreement.

Allocated Purchase Price” means with respect to each Purchaser, the dollar amount set forth opposite such Purchaser’s name under the heading “Allocated Purchase Price” on Schedule A hereto.

Basic Documents” means, collectively, this Agreement, the Certificate of Designations and the Registration Rights Agreement.

Board” means the board of directors of USWS.

 

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Business Day” means any day other than a Saturday, Sunday, any federal legal holiday or day on which banking institutions in the State of New York or State of Texas are authorized or required by Law or other governmental action to close.

Certificate of Designations” shall have the meaning specified in Section 2.04(b)(iii).

Class A Common Stock” means the Class A Common Stock, par value $0.0001 per share, of USWS.

Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, of USWS.

Class F Common Stock” shall have the meaning specified in Section 3.02(a).

CLMG Corp.” means CLMG Corp., a Texas corporation.

Closing” shall have the meaning specified in Section 2.03(a).

Closing Date” shall have the meaning specified in Section 2.03(b).

Code” means the Internal Revenue Code of 1986, as amended.

Conversion Shares” means the Class A Common Stock issuable upon conversion of the Series B Preferred Stock.

Credit Facilities” shall have the meaning specified in Section 3.02(d).

Crestview” means Crestview III USWS, L.P., a Delaware limited partnership, and Crestview III USWS TE, LLC, a Delaware limited liability company.

Delaware LLC Act” shall have the meaning specified in Section 3.02(d).

Delaware LP Act” shall have the meaning specified in Section 3.02(e).

Delaware Corporations Act” means the General Corporation Law of the State of Delaware.

Election Period” shall have the meaning specified in Section 5.01(b).

Eligible Purchaser” shall have the meaning specified in Section 5.01(a).

Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder.

Exempt Issuance” means any equity securities issued (i) in connection with any public offering pursuant to an effective registration statement under the Securities Act following which such securities are listed on the NASDAQ or any other national securities exchange, (ii) to any existing or prospective employee, advisor, consultant or director of USWS or any of its subsidiaries or upon the conversion or exercise of securities convertible into or containing options or rights to acquire equity securities pursuant to options or stock awards granted by the Board, including for the avoidance of doubt, any issuances pursuant to the USWS 2018 Stock Incentive Plan, in each case as incentive compensation for such employees, advisors, consultants or directors, (iii) as consideration to the seller for the acquisition of any Person by USWS or any of its subsidiaries by merger, amalgamation or purchase of substantially all of the

 

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assets or capital stock of such Person, (iv) in connection with any split, subdivision, dividend or distribution in respect of the Class A Common Stock, (v) to banks or similar financial institutions, equipment lessors or real property lessors pursuant to a debt financing, equipment leasing or real property leasing transaction in the ordinary course of business of USWS or any of its subsidiaries or any amendment to the definitive agreements related thereto, (vi) to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board, (vii) upon the conversion, exercise or exchange of any convertible security in accordance with its terms, including the Series A Preferred Stock, Series B Preferred Stock and Warrants, (viii) in connection with any exchange of Class B Common Stock, and a corresponding number of LLC Units, for shares of Class A Common Stock pursuant to the USWS Holdings LLC Agreement, or (ix) to any Eligible Purchaser under the terms of Section 5.01.

First Notice” shall have the meaning specified in Section 5.01(b).

GAAP” means generally accepted accounting principles in the United States of America.

Governmental Authority” means, with respect to a particular Person, any country, state, county, city and political subdivision in which such Person or such Person’s Property is located or which exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authority which exercises valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority herein with respect to USWS means a Governmental Authority having jurisdiction over USWS, its Subsidiaries or any of their respective Properties.

Indemnified Party” shall have the meaning specified in Section 6.03.

Indemnifying Party” shall have the meaning specified in Section 6.03.

Law” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law (including common law), rule or regulation.

Lien” means any mortgage, claim, encumbrance, pledge, lien (statutory or otherwise), security agreement, conditional sale or trust receipt or a lease, consignment or bailment, preference or priority, assessment, deed of trust, charge, easement, servitude or other encumbrance upon or with respect to any property of any kind.

LLC Units” shall have the meaning specified in Section 3.02(d).

Material Adverse Effect” means a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of USWS, the validity of the Purchased Securities or the legal authority or ability of USWS to perform in all material respects its obligations under this Agreement.

Matlin” means David J Matlin.

NASDAQ” means the NASDAQ Capital Market.

New Securities” means any preferred stock, Class A Common Stock, or security of USWS that is convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, Class A Common Stock.

Outside Date” shall have the meaning specified in Section 7.01(c).

 

3


Over-Allotment Amount” shall have the meaning specified in Section 5.01(b).

Permitted Transfer” means a Transfer of all or any portion of Purchased Securities to any Affiliate, any limited partner of a Purchaser or any of its Affiliates, or any managed account, investment fund, or other vehicle that is managed or sponsored by the manager or sponsor of a Purchaser, but only if the transferee, to the extent such transferee becomes a direct holder of any Purchased Securities, agrees in writing prior to such Transfer for the express benefit of USWS (with a copy thereof to be furnished to USWS) to be bound by the transferor’s obligations hereunder with respect to the applicable Purchased Securities.

Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization, government or any agency, instrumentality or political subdivision thereof or any other form of entity.

Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

Proposed Purchaser” shall have the meaning specified in Section 5.01(a).

Purchased Securities” means, with respect to each Purchaser, the number of shares of Series B Preferred Stock as set forth opposite such Purchaser’s name on Schedule A hereto.

Purchaser Lock-Up Period” shall have the meaning specified in Section 4.07.

Purchaser Related Parties” shall have the meaning specified in Section 6.01.

Purchasers” has the meaning set forth in the introductory paragraph of this Agreement.

Redemption Shares” means the Class A Common Stock issuable upon redemption of the Series B Preferred Stock.

Registration Rights Agreement” means the Registration Rights Agreement, to be entered into on the date hereof, between USWS and the Purchasers in substantially the form attached hereto as Exhibit B.

Representatives” means, with respect to a specified Person, the officers, directors, managers, employees, agents, counsel, accountants, investment bankers and other representatives of such Person.

Requesting Purchaser” shall have the meaning specified in Section 5.01(b).

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder.

Series A Certificate of Designations” shall have the meaning specified in Section 5.03.

Series A Preferred Stock” means the Series A Redeemable Convertible Preferred Stock having the terms set forth in that certain Certificate of Designations of the Corporation dated May 24, 2019.

Series B Preferred Stock” means the Series B Redeemable Convertible Preferred Stock having the terms set forth in the Certificate of Designations.

 

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Short Sales” means, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

Subsidiary” means, as to any Person, any corporation or other entity of which: (i) such Person or a Subsidiary of such Person is a general partner or manager; (ii) at least a majority of the outstanding equity interest having by the terms thereof ordinary voting power to elect a majority of the board of directors or similar governing body of such corporation or other entity (irrespective of whether or not at the time any equity interest of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries; or (iii) any corporation or other entity as to which such Person consolidates for accounting purposes.

TCW” means Regiment Capital Special Situations Fund V, L.P., a Delaware limited partnership.

Transfer” shall have the meaning specified in Section 4.07.

Term Loan Amendment” shall have the meaning specified in Section 2.09.

Term Loan Credit Agreement” shall have the meaning specified in Section 2.09.

Underlying Preferred Shares” shall have the meaning specified in Section 3.02(g).

USWS” has the meaning set forth in the introductory paragraph of this Agreement.

USWS Bylaws” shall have the meaning specified in Section 2.05(d).

USWS Charter” shall have the meaning specified in Section 2.04(b)(iii).

USWS Financial Statements” shall have the meaning specified in Section 3.03(a).

USWS Holdings” shall have the meaning specified in Section 3.02(d).

USWS Holdings LLC Agreement” means that certain Amended and Restated Limited Liability Company Agreement of USWS Holdings, LLC, dated as of November 9, 2018, as amended.

USWS Related Parties” shall have the meaning specified in Section 6.02.

USWS SEC Documents” shall have the meaning specified in Section 3.03(a).

Warrants” shall have the meaning specified in Section 3.02(b).

Section 1.02    Accounting Procedures and Interpretation. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all USWS Financial Statements and certificates and reports as to financial matters required to be furnished to the Purchasers hereunder shall be prepared, in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by Form 10-Q promulgated by the SEC) and in compliance as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto.

 

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ARTICLE II

AGREEMENT TO SELL AND PURCHASE

Section 2.01    Authorization of Sale of the Purchased Securities. USWS has authorized the issuance and sale to the Purchasers of the Purchased Securities on the terms and subject to the conditions set forth in this Agreement.

Section 2.02    Sale and Purchase. Subject to the terms and conditions hereof, USWS hereby agrees to issue and sell to each Purchaser, free and clear of any and all Liens (other than the transfer restrictions under applicable federal and state securities laws and other than those arising under the Certificates of Designations or the Delaware Corporations Act), and each Purchaser, severally and not jointly, hereby agrees to purchase from USWS, such number of Purchased Securities on such dates as set forth on Schedule A, and each Purchaser agrees to pay USWS its Allocated Purchase Price with respect to such Purchased Securities. For the avoidance of doubt, the Allocated Purchase Price shall be the consideration for all Purchased Securities to be acquired by the applicable Purchaser at the Closing (as defined below).

Section 2.03    Closing

(a)    Closing Location. Subject to the terms and conditions hereof, the consummation of the purchase and sale of the Purchased Securities hereunder (the “Closing”) shall take place remotely via overnight courier, electronic transmission of related documentation (such as by use of .pdf), on March 31, 2020 following the delivery, satisfaction or, to the extent permitted, waiver by the appropriate party of each of the items set forth in Sections 2.04, 2.05 and 2.06. Except as otherwise expressly provided herein, all proceedings to be taken and all documents to be executed and delivered by all the parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed to have been taken nor documents executed or delivered until all have been taken, executed and delivered.

(b)    General. The date of the Closing shall be the “Closing Date”.

Section 2.04    Conditions to Closing

(a)    Mutual Conditions. The respective obligations of each party to consummate the purchase and issuance and sale of the applicable Purchased Securities to be purchased and issued at the Closing shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by a particular party on behalf of itself in writing, in whole or in part, to the extent permitted by applicable Law):

(i)    no statute, rule, order, decree or regulation shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Authority which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated hereby or makes the transactions contemplated hereby illegal; and

(ii)    there shall not be pending any suit, action or proceeding by any Governmental Authority seeking to restrain, preclude, enjoin or prohibit the transactions contemplated by this Agreement.

(b)    Conditions of the Purchasers Obligations at Closing. The respective obligations of each Purchaser to consummate the purchase of the applicable Purchased Securities to be purchased at the Closing shall be subject to the satisfaction (or waiver by such Purchaser) on or prior to the Closing Date of each of the following conditions:

 

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(i)    the representations and warranties of USWS contained in this Agreement that are qualified by materiality or Material Adverse Effect shall be true and correct as of the Closing Date as if made on and as of the Closing Date and all other representations and warranties shall be true and correct in all material respects as of the Closing Date as if made on and as of the Closing Date (except that representations and warranties made as of a specific date shall be required to be true and correct in all material respects as of such date only);

(ii)    USWS and its Subsidiaries shall have performed and complied, in all material respects, with all of the covenants and agreements required to be performed and complied with by it hereunder on or prior to the Closing Date;

(iii)    USWS shall have adopted and filed with the Secretary of State of the State of Delaware the Certificate of Designations in the form attached hereto as Exhibit A (the “Certificate of Designations”), and the Certificate of Designations shall have become effective as an amendment to USWS’s Second Amended and Restated Certificate of Incorporation, as amended (the “USWS Charter”);

(iv)    USWS shall have delivered, or caused to be delivered, to the Purchasers, USWS’s closing deliveries described in Section 2.05;

(v)    USWS shall have filed with the NASDAQ a “Notification Form: Listing of Additional Shares” and supporting documentation, if required, related to the Underlying Preferred Shares (as defined below), the NASDAQ shall have not raised any objection with respect thereto and USWS shall have furnished to each of the Purchasers evidence of the filing thereof; and

(vi)    USWS, USWS Holdings and U.S. Well Services, LLC shall have executed the Term Loan Amendment on terms which are reasonably satisfactory to the Purchasers.

(c)    Conditions of USWSs Obligations at Closing. The obligation of USWS to consummate the sale of the Purchased Securities to be sold at Closing shall be subject to the satisfaction (or waiver by USWS) on or prior to the Closing Date of each of the following conditions:

(i)    the representations and warranties of each Purchaser contained in this Agreement that are qualified by materiality shall be true and correct as of the Closing Date as if made on and as of the Closing Date and all other representations and warranties shall be true and correct in all material respects as of the Closing Date as if made on and as of the Closing Date (except that representations and warranties made as of a specific date shall be required to be true and correct in all material respects as of such date only);

(ii)    each Purchaser shall have performed and complied, in all material respects, with all of the covenants and agreements required to be performed and complied with by such Purchaser on or prior to the Closing Date; and

(iii)    each Purchaser shall have delivered, or caused to be delivered, to USWS such Purchaser’s closing deliveries as described in Section 2.06 of this Agreement.

Section 2.05    USWS Deliveries. At the Closing, USWS shall deliver or cause to be delivered:

(a)    evidence of the Purchased Securities credited to book-entry accounts maintained by the transfer agent of USWS, to be followed, when commercially reasonable, by a certificate or certificates representing the Purchased Securities to be purchased and sold at the Closing and meeting the requirements of the Certificate of Designations, free and clear of any Liens, other than the transfer

 

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restrictions under applicable federal and state securities laws and other than those arising under the Certificate of Designations or the Delaware Corporations Act, registered in such names as each Purchaser shall have designated;

(b)    cross-receipts, dated as of the Closing Date, executed by USWS and delivered to each of the Purchasers certifying as to USWS’s receipt of payments of the Allocated Purchase Price;

(c)    an officer’s certificate, signed by (i) the Chief Executive Officer and (ii) the Chief Financial Officer of USWS, in their respective capacities as such, dated as of the Closing Date, stating that the conditions in Sections 2.04(a), 2.04(b)(i), 2.04(b)(ii), and 2.04(b)(iii) have been fully satisfied;

(d)    a certificate of the Secretary or Assistant Secretary of USWS, certifying as to and attaching (i) board resolutions authorizing the execution and delivery of the Basic Documents and the consummation of the transactions contemplated thereby, including the issuance of the Purchased Securities, (ii) the USWS Charter and all amendments thereto (including the Certificate of Designation), and USWS’s Amended and Restated Bylaws, as amended (the “USWS Bylaws”), (iii) the Certificate of Designations being in full force and effect and (iv) the incumbency of the officers authorized to execute the Basic Documents on behalf of USWS, setting forth the name and title and bearing the signature of each of such officers;

(e)    copies of the USWS Charter and all amendments thereto certified by the Secretary of State of the State of Delaware as of a recent date;

(f)    a certificate of the Secretary of State of the State of Delaware, dated as of a recent date, that USWS is in good standing in its jurisdiction of incorporation;

(g)    the Registration Rights Agreement in substantially the form attached hereto as Exhibit B, which shall have been duly executed by USWS; and

(h)    evidence of the issuance of Equity Securities (as defined in the USWS Holdings LLC Agreement) by USWS Holdings (including a copy of the Second Amendment to the USWS Holdings LLC Agreement) as required by Section 3.5(b) of the USWS Holdings LLC Agreement.

Section 2.06    Purchasers Deliveries.

(a)    Each of the Purchasers shall (i) pay to USWS its Allocated Purchase Price as of the Closing Date, such payments to be made by wire transfers of immediately available funds on the Closing Date to an account designated by USWS at least two (2) Business Days (or such shorter period of time as shall be agreeable by all parties hereto) prior to the Closing Date and (ii) deliver or cause to be delivered the Registration Rights Agreement in substantially the form attached hereto as Exhibit B, which shall have been duly executed by each Purchaser party thereto.

(b)    Each Purchaser shall deliver or cause to be delivered an officer’s certificate (or, if such Person is a natural Person, an individual certificate) from each Purchaser, dated as of the Closing Date, stating that the conditions applicable to such Purchaser in Sections 2.04(c)(i) and 2.04(c)(ii) have been fully satisfied.

Section 2.07    Independent Nature of the Purchasers Obligations and Rights. The obligations of each Purchaser under any Basic Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Basic Document. The failure or waiver of performance under any Basic

 

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Document of any Purchaser by USWS does not excuse performance by any other Purchaser and the waiver of performance of USWS by any Purchaser does not excuse performance by USWS with respect to each other Purchaser. Nothing contained herein or in any other Basic Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Basic Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Basic Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

Section 2.08    Further Assurances. From time to time after the date hereof, without further consideration, USWS and the Purchasers shall use their commercially reasonable efforts to take, or cause to be taken, all actions necessary or appropriate to consummate the transactions contemplated by this Agreement.

Section 2.09    Use of Proceeds. The proceeds from the sale of the Purchased Securities (net of the expenses related thereto) shall be used by USWS (or USWS Holdings or U.S. Well Services, LLC, as applicable) (a) to pay the extension fee and other costs and expenses associated with or required as a condition to, the amendment to USWS’s Senior Secured Term Loan Credit Agreement, dated May 7, 2019, by and among USWS Holdings, the guarantors and lenders named therein, and CLMG Corp. (such agreement, the “Term Loan Credit Agreement” and such amendment, the “Term Loan Amendment”) and (b) for general corporate purposes.

ARTICLE III

REPRESENTATIONS AND WARRANTIES AND

COVENANTS RELATED TO USWS

USWS represents and warrants to and covenants with each Purchaser and Piper Sandler & Co., through its Simmons Energy division, in its capacity as the financial advisor to the special committee of the Board for the offering contemplated hereby, as follows:

Section 3.01    Corporate Existence. USWS (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; and (b) has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use and operate its Properties and carry on its business as its business is now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect. Each of USWS’s Subsidiaries has been duly incorporated or formed, as the case may be, and is validly existing and in good standing under the laws of the state or other jurisdiction of its incorporation or organization, as the case may be, and has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use or operate its respective Properties and carry on its business as now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect. None of USWS nor any of its Subsidiaries are in default in the performance, observance or fulfillment of any provision of, in the case of USWS, the USWS Charter or the USWS Bylaws or, in the case of any Subsidiary of USWS, their respective certificate of incorporation, certification of formation, bylaws, limited liability company agreement or other similar organizational documents. Each of USWS and its Subsidiaries is duly qualified or licensed and in good standing as a foreign corporation, limited partnership or limited liability company, as applicable, and is authorized to do business in each jurisdiction in which the ownership or leasing of its respective Properties or the character of its respective operations makes such qualification necessary, except where the failure to obtain such qualification, license, authorization or good standing would not be reasonably likely to have a Material Adverse Effect.

 

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Section 3.02    Capitalization and Valid Issuance of Purchased Securities.

(a)    As of the date of this Agreement, the total number of shares of all classes of capital stock, each with a par value of $0.0001 per share, which USWS is authorized to issue is 440,000,000 shares, consisting of (i) 430,000,000 shares of common stock, including (A) 400,000,000 shares of Class A Common Stock, (B) 20,000,000 shares of Class B Common Stock, and (C) 10,000,000 shares of Class F Common Stock (the “Class F Common Stock”), and (ii) 10,000,000 shares of preferred stock.

(b)    As of the date of this Agreement, prior to the issuance and sale of the Purchased Securities at the Closing as contemplated hereby, the issued and outstanding corporate stock of USWS consists of 62,697,980 shares of Class A Common Stock issued and outstanding, 28,427,968 warrants to purchase shares of Class A Common Stock (the “Warrants”), including, (i) 25,494,635 warrants issued in connection with USWS’s initial public offering and (ii) 2,933,333 warrants issued in connection with the issuance of the Series A Preferred Stock (such warrants, the “Preferred Warrants”), 5,500,692 shares of Class B Common Stock issued and outstanding, no shares of Class F Common Stock issued and outstanding and 55,000 shares of Series A Preferred Stock issued and outstanding. As of the date of this Agreement, all outstanding shares of Class A Common Stock and Class B Common Stock, all outstanding Warrants and all outstanding shares of the Series A Preferred Stock have been duly authorized and validly issued in accordance with the USWS Charter and USWS Bylaws and are fully paid and nonassessable.

(c)    As of the date of this Agreement, other than the USWS 2018 Stock Incentive Plan, USWS has no equity compensation plans that contemplate the issuance of equity interests of USWS (or securities convertible into or exchangeable for equity interests of USWS). No indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which USWS stockholders may vote are issued or outstanding. Except for the Warrants, the Series A Preferred Stock, and as contemplated by the USWS Charter and the USWS Holdings LLC Agreement, including the Class B Common Stock and LLC Units (as defined below), there are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, rights of first refusal, or other rights, convertible or exchangeable securities or written agreements obligating USWS or any of its Subsidiaries to issue, transfer or sell any equity interest in, USWS or securities convertible into or exchangeable for such equity interests, (ii) obligations of USWS or any of its Subsidiaries to repurchase, redeem or otherwise acquire any equity interests of USWS or any such securities or agreements listed in clause (i) of this sentence or (iii) proxy agreements or voting trusts or similar agreements to which USWS or any of its Subsidiaries is a party with respect to the voting of the equity interests of USWS. Except as set forth in the USWS SEC Documents or as contemplated by this Agreement, USWS has not entered into any agreements regarding the registration of any equity securities of USWS under the Securities Act.

(d)    As of the date of this Agreement, except as disclosed in the USWS SEC Documents, neither USWS nor any of its Subsidiaries owns any shares of capital stock or other securities of, or interest in, any other Person, or is obligated to make any capital contribution to or any other investment in any other Person, other than with respect to USWS’s obligations under the USWS Holdings LLC Agreement. As of the date of this Agreement, USWS owns a sole managing member interest in USWS Holdings, LLC, a Delaware limited liability company (“USWS Holdings”), and 54,440,374 USWS Holdings Units (“LLC Units”); such sole managing member interest and LLC Units are duly authorized and validly issued in accordance with the USWS Holdings LLC Agreement and are fully paid (to the extent required under the USWS Holdings LLC Agreement) and non-assessable (except in the case except as such nonassessability may be affected by matters described in Sections 18-303, 18-607 and 18-804 of the Delaware Limited Liability Company Act (the “Delaware LLC Act”)) and such sole managing member

 

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interest and LLC Units are owned by USWS free and clear of all Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under (i) the Term Loan Credit Agreement and (ii) the ABL Credit Agreement dated as of May 7, 2019 among USWS, USWS Holdings, U.S. Well Services, LLC, the lenders party thereto, Bank of America, N.A., as administrative agent, and the other parties thereto (the facilities described in clauses (i) and (ii) above, collectively, the “Credit Facilities”), or the organizational documents of such Subsidiaries, as applicable). As of the date of this Agreement, USWS Holdings owns all of the shares of capital stock or other securities of, or interest in, each of its Subsidiaries, which are listed on Exhibit 21 to USWS’s most recent Form 10-K filing with the SEC.

(e)    As of the date of this Agreement, (i) all of the issued and outstanding equity interests of each of the Subsidiaries of USWS Holdings are owned, directly or indirectly, by USWS Holdings free and clear of any Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under the Credit Facilities or the organizational documents of such Subsidiaries, as applicable), and all such ownership interests have been duly authorized, validly issued and are fully paid (to the extent required in the organizational documents of such Subsidiaries, as applicable) and non-assessable (except as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP Act”) and Sections 18-303, 18-607 and 18-804 of the Delaware LLC Act) and (ii) except as disclosed in the USWS SEC Documents, neither USWS nor any of its Subsidiaries owns any shares of capital stock or other securities of, or interest in, any other Person, or is obligated to make any capital contribution to or any other investment in any other Person.

(f)    The Purchased Securities being purchased by each of the Purchasers hereunder will be duly authorized by USWS pursuant to the USWS Charter and the Certificate of Designations prior to the Closing and, when issued and delivered by USWS to such Purchaser against payment therefor in accordance with the terms of this Agreement and the terms of the Purchased Securities, will be validly issued, fully paid and non-assessable and will be free of preemptive rights or any Liens and restrictions on transfer, other than (i) restrictions on transfer under the Certificate of Designations or this Agreement and under applicable state and federal securities laws and (ii) such Liens as are created by such Purchaser or its Affiliates.

(g)    71,590,909 shares of Class A Common Stock, which are issuable upon conversion or redemption of the Series B Preferred Stock (the “Underlying Preferred Shares”) have been duly authorized and reserved pursuant to the USWS Charter and the Certificate of Designations and, upon issuance and delivery by USWS to such Purchaser in accordance with this Agreement and the terms of the Purchased Securities, will be duly authorized, validly issued, fully paid and non-assessable and will be free of any preemptive rights or any Liens and restrictions on transfer, other than (i) restrictions on transfer under the Certificate of Designations or this Agreement and under applicable state and federal securities laws and (ii) such Liens as are created by such Purchaser or its Affiliates.

Section 3.03    USWS SEC Documents.

(a)    Since December 31, 2019, USWS has filed with the SEC all forms, reports, schedules and statements required to be filed by it under the Exchange Act or the Securities Act (all such documents collectively the “USWS SEC Documents”). The USWS SEC Documents, including, without limitation, any audited or unaudited financial statements and any notes thereto or schedules included therein (the “USWS Financial Statements”), at the time filed (except to the extent corrected by a subsequently filed USWS SEC Document filed prior to the date hereof) (i) did not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein (in the light of the circumstances under which they were made) not misleading, (ii) complied in all material respects with the

 

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applicable requirements of the Exchange Act and the Securities Act, as applicable and (iii) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto.

(b)    The historical financial statements (including the related notes and supporting schedules) of USWS and its Subsidiaries included or incorporated by reference in the USWS SEC Documents comply as to form in all material respects with the requirements of Regulation S-X under the Securities Act and present fairly in all material respects the financial condition, results of operations and cash flows of the entities purported to be shown thereby, at the dates and for the periods indicated and have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved, except to the extent described therein.

(c)    KPMG LLP is an independent, registered public accounting firm with respect to USWS and has not resigned or been dismissed as independent public accountants of USWS as a result of or in connection with any disagreement with USWS on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. Except as disclosed in the USWS SEC Documents, since the date of the most recent balance sheet of USWS reviewed or audited by KPMG LLP, USWS has not been advised of (i) any significant deficiencies or material weakness in the design or operation of internal controls that are reasonably likely to adversely affect USWS’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in USWS’s internal controls over financial reporting.

Section 3.04    Operations in the Ordinary Course. Except as set forth in or contemplated by the USWS SEC Documents, since the date of USWS’s most recent Form 10-K filing with the SEC, USWS and its Subsidiaries have conducted their respective businesses in the ordinary course, consistent with past practice, and there has been no (a) acquisition or disposition of any material asset by USWS or any of its Subsidiaries or any contract or arrangement therefor, other than acquisitions or dispositions for fair value in the ordinary course of business, acquisitions or dispositions as disclosed in the USWS SEC Documents or (b) material change in USWS’s accounting principles, practices or methods.

Section 3.05    Litigation. Except as set forth in the USWS SEC Documents, there is no action, suit, or proceeding pending or, to USWS’s knowledge, threatened against or affecting any of USWS or its Subsidiaries or any of their respective officers, directors, properties or assets, which (a) questions the validity of this Agreement or the Basic Documents or the right of USWS to enter into this Agreement or the Basic Documents or the right to consummate the transactions contemplated by the Basic Documents or thereby or (b) individually or in the aggregate, would be reasonably likely to result in a Material Adverse Effect.

Section 3.06    No Conflicts; Compliance with Laws. The execution, delivery and performance by USWS of the Basic Documents and compliance by USWS with the terms and provisions hereof and thereof, and the issuance and sale by USWS of the Purchased Securities, does not and will not (a) assuming the accuracy of the representations and warranties of the Purchasers contained herein and their compliance with the covenants contained herein, violate any provision of any Law or permit having applicability to USWS or any of its Subsidiaries or any of their respective Properties, (b) conflict with or result in a violation or breach of any provision of the USWS Charter, the USWS Bylaws or other organizational documents of USWS or any organizational documents of any of USWS’s Subsidiaries, (c) require any consent, approval or notice under or result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any contract, agreement, instrument, obligation, note, bond, mortgage, license, loan or credit agreement to which USWS or any of its Subsidiaries is a party or by which USWS or any of its Subsidiaries or any of their respective

 

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Properties may be bound or (d) result in or require the creation or imposition of any Lien upon or with respect to any of the Properties now owned or hereafter acquired by USWS or any of its Subsidiaries, except in the case of clauses (a), (c) and (d) where any such conflict, violation, default, breach, termination, cancellation, failure to receive consent, approval or notice, or acceleration with respect to the foregoing provisions of this Section 3.06 would not be, individually or in the aggregate, reasonably likely to result in a Material Adverse Effect.

Section 3.07    Authority, Enforceability. USWS has all necessary corporate power and authority to execute, deliver and perform its obligations under the Basic Documents, and the execution, delivery and performance by USWS of the Basic Documents has been duly authorized by all necessary action on the part of USWS. All corporate action required to be taken by the USWS for the authorization, issuance, sale and delivery of the Purchased Securities, the execution, delivery and performance of the Basic Documents by the USWS, and the consummation of the transactions contemplated by the Basic Documents shall have been validly taken. This Agreement has been duly and validly authorized, executed and delivered by USWS and constitutes and, when executed and delivered by USWS the other Basic Documents will be duly and validly authorized, executed and delivered by USWS and will constitute the legal, valid and binding obligations of USWS, enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar laws affecting creditors’ rights generally or by general principles of equity and except as the rights to indemnification may be limited by applicable law. No approval from the holders of USWS’s Class A Common Stock, Class B Common Stock, Series A Preferred Stock or Warrants is required in connection with USWS’s issuance and sale of the Purchased Securities to the Purchasers.

Section 3.08    Approvals. Except for the approvals required by the SEC in connection with any registration statement filed under the Registration Rights Agreement and for approvals that have already been obtained, no authorization, consent, approval, waiver, license, qualification or written exemption from, nor any filing, declaration, qualification or registration with, any Governmental Authority or any other Person is required in connection with the execution, delivery or performance by USWS of any of the Basic Documents, except for (a) the filing of the Certificate of Designations in the office of the Secretary of State of Delaware or the filing with the SEC of a Current Report on Form 8-K and (b) where the failure to receive such authorization, consent, approval, waiver, license, qualification or written exemption from, or to make such filing, declaration, qualification or registration would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.

Section 3.09    Investment Company Status. USWS is not and, immediately after the sale of the Purchased Securities and the application of the net proceeds from such sale will not be, required to register as an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 3.10    Certain Fees. Except for the fees payable to Piper Sandler & Co., through its Simmons Energy division, in its capacity as the financial advisor to the special committee of the Board, no fees or commissions are or will be payable by USWS to brokers, finders or investment bankers with respect to the sale of any of the Purchased Securities or the consummation of the transactions contemplated by this Agreement. USWS agrees that it will indemnify and hold harmless each Purchaser from and against any and all claims, demands, or liabilities for broker’s, finder’s, placement, or other similar fees or commissions incurred by USWS or alleged to have been incurred by USWS in connection with the sale of the Purchased Securities or the consummation of the transactions contemplated by this Agreement.

Section 3.11    Books and Records; Sarbanes-Oxley Compliance. USWS makes and keeps accurate books and records. There is and has been no failure on the part of USWS or any of USWS’s directors or officers, in their capacities as such, to comply in all material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith.

 

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Section 3.12    Listing and Maintenance Requirements. As of the Closing, the Class A Common Stock is listed on the NASDAQ, and USWS has not received any notice of delisting that is in effect as of the date of this Agreement.

Section 3.13    Insurance. USWS and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged. USWS does not have any reason to believe that it or any Subsidiary will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

Section 3.14    Pre-Closing Covenants of USWS. From and after the date of this Agreement and until the Closing hereunder, USWS will use commercially reasonable efforts to conduct its business in the ordinary course of business, preserve intact its existence and business organization and goodwill and present business relationships with all material customers, suppliers, licensors, distributors and others having significant business relationships with USWS, to the extent such relationships are beneficial to the USWS and its business.

Section 3.15    Disclosure of Transactions. On or before 5:30 p.m., New York City time, on or before the fourth Business Day following the date of this Agreement, USWS shall issue a press release or file a Current Report on Form 8-K describing the terms and conditions of the transactions contemplated by this Agreement and the Basic Documents.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES AND

COVENANTS OF THE PURCHASERS

Each Purchaser, severally and not jointly, hereby represents and warrants and covenants to USWS as follows:

Section 4.01    Existence. Such Purchaser, if a non-natural Person, is duly organized and validly existing and in good standing under the laws of its state of formation, with all necessary power and authority to own properties and to conduct its business as currently conducted.

Section 4.02    Authorization, Enforceability. Such Purchaser has all necessary legal power and authority to enter into, deliver and perform its obligations under this Agreement and the Basic Documents to which such Purchaser is or will be a party. The execution, delivery and performance by such Purchaser of this Agreement and the Basic Documents to which such Purchaser is or will be a party and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary legal action, and no further consent or authorization of such Purchaser is required. This Agreement and the Basic Documents to which such Purchaser is or will be a party have been duly executed and delivered by such Purchaser and constitute or, when executed by such Purchaser, will constitute legal, valid and binding obligations of such Purchaser; provided that, the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity and except as the rights to indemnification may be limited by applicable law (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

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Section 4.03    No Breach. The execution, delivery and performance of this Agreement and the Basic Documents by such Purchaser and the consummation by such Purchaser of the transactions contemplated hereby or thereby will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which such Purchaser is a party or by which such Purchaser is bound or to which any of the property or assets of such Purchaser is subject, (b) if such Person is a non-natural Person, conflict with or result in any violation of the provisions of the organizational documents of such Purchaser or (c) violate any statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over such Purchaser or the property or assets of such Purchaser, except in the case of clauses (a) and (c), for such conflicts, breaches, violations or defaults as would not have a material adverse effect on the ability to consummate the transactions contemplated by this Agreement and the Basic Documents.

Section 4.04    Certain Fees. No fees or commissions are or will be payable by such Purchaser to brokers, finders or investment bankers with respect to the purchase of any of the Purchased Securities or the consummation of the transactions contemplated by this Agreement. Such Purchaser agrees, severally and not jointly with any other Purchaser, that it will indemnify and hold harmless USWS from and against any and all claims, demands or liabilities for broker’s, finder’s, placement, or other similar fees or commissions incurred by such Purchaser or alleged to have been incurred by such Purchaser in connection with the purchase of the Purchased Securities or the consummation of the transactions contemplated by this Agreement.

Section 4.05    Unregistered Securities.

(a)    Accredited Investor Status; Sophisticated Purchasers. Such Purchaser is an “accredited investor” within the meaning of Rule 501 under the Securities Act and is able to bear the risk of its investment in Purchased Securities, the Conversion Shares and the Redemption Shares. Such Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Purchased Securities, the Conversion Shares and the Redemption Shares.

(b)    Information. Such Purchaser and its Representatives have been furnished with all materials relating to the business, finances and operations of USWS that have been requested and materials relating to the offer and sale of the Purchased Securities that have been requested by such Purchaser and its Representatives. Such Purchaser and its Representatives have been afforded the opportunity to ask questions of USWS. Neither such inquiries nor any other due diligence investigations conducted at any time by any Purchaser and Representatives shall modify, amend or affect such Purchaser’s right (i) to rely on USWS’s representations and warranties contained in Article III above or (ii) to indemnification or any other remedy based on, or with respect to the accuracy or inaccuracy of, or compliance with, the representations, warranties, covenants and agreements in this Agreement, or any Basic Document. Such Purchaser understands that the purchase of the Purchased Securities involves a high degree of risk. Such Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Purchased Securities.

(c)    Cooperation. Such Purchaser shall cooperate reasonably with USWS to provide any information necessary for any applicable securities filings required to be made by USWS.

(d)    Legends. Such Purchaser understands that the Purchased Securities will bear a restrictive legend substantially in the form as set forth in the Certificate of Designations.

(e)    Purchase Representation. Such Purchaser is purchasing the Purchased Securities for its own account and not with a view to distribution in violation of any securities laws. Such Purchaser

 

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has been advised and understands that none of the Purchased Securities, the Conversion Shares or the Redemption Shares have been registered under the Securities Act or under the “blue sky” laws of any jurisdiction and may be resold only if registered pursuant to the provisions of the Securities Act (or if eligible, pursuant to the provisions of Rule 144 promulgated under the Securities Act or pursuant to another available exemption from the registration requirements of the Securities Act). Such Purchaser has been advised and understands that USWS, in issuing the Purchased Securities, is relying upon, among other things, the representations and warranties of such Purchaser contained in this Article IV in concluding that such issuance is a “private offering” and is exempt from the registration provisions of the Securities Act.

(f)    Rule 144. Such Purchaser understands that there is no public trading market for the Purchased Securities, that none is expected to develop and that the Purchased Securities must be held indefinitely unless and until the Purchased Securities, the Conversion Shares or the Redemption Shares, as applicable, are registered under the Securities Act or an exemption from registration is available. Such Purchaser has been advised of and is aware of the provisions of Rule 144 promulgated under the Securities Act.

(g)    Reliance by USWS. Such Purchaser understands that the Purchased Securities are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws and that USWS is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Purchased Securities, the Conversion Shares and the Redemption Shares.

Section 4.06    Short Selling. Such Purchaser has not engaged in any Short Sales involving Class A Common Stock owned by it between the time it first began discussions with USWS about the transaction contemplated by this Agreement and the date of execution of this Agreement.

Section 4.07    Lock-Up Agreement. Without the prior written consent of USWS, except in the case of a Permitted Transfer or as otherwise specifically provided in this Agreement, each Purchaser will not, during the period commencing on the date hereof and ending sixty (60) days after the date of the Closing (such period, the “Purchaser Lock-Up Period”) (a) offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Class A Common Stock or any of its Purchased Securities or (b) enter into any swap or other transaction or arrangement that transfers or that is designed to, or that might reasonably be expected to, result in the transfer to another, in whole or in part, any of the economic consequences of ownership of its Purchased Securities, whether any such transaction described in clause (a) or (b) above (any such transaction described in clauses (a) and (b), a “Transfer”) is to be settled by delivery of Class A Common Stock or such other securities, in cash or otherwise.

ARTICLE V

OTHER COVENANTS

Section 5.01    Preemptive Rights.

(a)    Except with respect to any Exempt Issuance, prior to USWS issuing any New Securities following the Closing to a proposed purchaser (the “Proposed Purchaser”), each Purchaser and Lender (together with its Affiliates) that continues to hold outstanding shares of Series B Preferred Stock at such time (each, an “Eligible Purchaser”) shall have the right to purchase the number of New Securities as provided in this Section 5.01.

 

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(b)    USWS shall give each Eligible Purchaser at least ten (10) Business Days’ prior notice (the “First Notice”) of any proposed issuance of New Securities, which notice shall set forth in reasonable detail the proposed terms and conditions thereof and shall offer to each Eligible Purchaser (or their designated Affiliates) the opportunity to purchase its Pro Rata Share (which Pro Rata Share shall be calculated as of the date of such notice) of the New Securities at the same price, on the same terms and conditions and at the same time as the New Securities are proposed to be issued by USWS. If any Eligible Purchaser wishes to exercise such Eligible Purchaser’s preemptive rights, such Eligible Purchaser must do so by delivering an irrevocable written notice to USWS within five (5) Business Days after delivery of the First Notice by USWS (the “Election Period”), which notice shall state the dollar amount of New Securities such Eligible Purchaser or its Affiliates (each a “Requesting Purchaser”) would like to purchase up to a maximum amount equal to such Eligible Purchaser’s Pro Rata Share of the total offering amount plus the additional dollar amount of New Securities such Requesting Purchaser would like to purchase in excess of its Pro Rata Share (the “Over-Allotment Amount”), if any, if other Eligible Purchasers do not elect to purchase their full Pro Rata Share of the New Securities. The rights of each Requesting Purchaser to purchase a dollar amount of New Securities in excess of each such Requesting Purchaser’s Pro Rata Share of the New Securities shall be based on the relative Pro Rata Shares of the New Securities of those Requesting Purchasers desiring Over-Allotment Amounts. For the purposes of this Section 5.01, references to “Pro Rata Share” shall refer to the percentage ownership that is obtained by dividing the number of shares of Class A Common Stock beneficially owned by the applicable Purchaser and its Affiliates on a fully-diluted basis by the total number of Class A Common Stock beneficially owned by all Purchasers and their Affiliates on a fully-diluted basis.

(c)    If not all of the New Securities are subscribed for by the Eligible Purchasers, taking into account any Over-Allotment Amounts, USWS shall have the right, but shall not be required, to issue and sell the unsubscribed portion of the New Securities to the Proposed Purchaser at any time during the ninety (90) day period following the termination of the Election Period pursuant to the terms and conditions set forth in the First Notice. USWS may, in its reasonable discretion, impose such other reasonable and customary terms and procedures such as setting a closing date, rounding the number of New Securities covered by this Section 5.01 to the nearest whole share and requiring customary closing deliveries in connection with any issuance subject to this Section 5.01.

Section 5.02    Issuances of New Equity Securities. For a period of six (6) months following the Closing Date, USWS shall not, and shall cause its Subsidiaries not to, without the prior written consent of Crestview and TCW, issue (a) any securities convertible into or exchangeable or exercisable for Class A Common Stock or (b) Class A Common Stock, in each case, at a purchase price, conversion price or exercise price, as the case may be, lower than $0.308. Notwithstanding anything to the contrary in this Agreement, this Section 5.02 shall not apply to (i) issuances of equity securities to a director, officer or employee of USWS or any of its Subsidiaries, including, for the avoidance of doubt, any issuances pursuant to the USWS 2018 Stock Incentive Plan, (ii) any exchange of Class B Common Stock, and a corresponding number of LLC Units, for shares of Class A Common Stock pursuant to the USWS Holdings LLC Agreement and (iii) issuances in connection with any consolidation, merger, division or other business combination of USWS.

Section 5.03    Amendments to Series A Preferred Stock and Preferred Warrants.

(a)    For a period of twenty-four (24) months following the Closing Date, USWS shall not, without prior written consent of TCW (a) amend, modify or waive any provision of that certain Certificate of Designations of the Series A Preferred Stock, dated May 24, 2019 (the “Series A Certificate of Designations”), in a manner that would reduce (or have the effect of reducing) the Conversion Price (as defined therein), or (b) amend, modify or waive any provision of that certain Preferred Warrant Agreement dated May 24, 2019 by and between USWS and Continental Stock Transfer & Trust Company in a manner that would reduce (or have the effect of reducing) the Warrant Price (as defined therein) of the Preferred Warrants issued thereunder.

 

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(b)    Without prior written consent of TCW, for as long as it is the “beneficial owner” under Rule 13d-3 under the Exchange Act of any shares of Series B Preferred Stock, and Matlin, for as long as he is the “beneficial owner” under Rule 13d-3 under the Exchange Act of any shares of Series B Preferred Stock, USWS, shall not initiate or take of any stockholder vote or similar action that would seek to modify the Authorized Share Amount as of the date hereof, except in connection with a Change of Control (other than a Change of Control arising solely due to the Class A Common Stock ceasing to be listed or quoted on National Securities Exchange). Capitalized terms used in this Section 5.03(b) but not defined in this Agreement shall have the meaning given to such term in the Series A Certificate of Designations.

Section 5.04    Director Designation Rights. Subject to the other provisions of this Section 5.04, for so long as TCW is the “beneficial owner” under Rule 13d-3 under the Exchange Act of any shares of Class A Common Stock, then the Board or a committee thereof will nominate, and USWS will use its commercially reasonable efforts to cause the stockholders to elect Ryan Carroll to the Board as a Class III Director at the 2021 annual or special meeting of the stockholders of USWS at which Class III Directors are to be elected to the Board; provided, however, that USWS shall not be bound by the foregoing provision on or after the date that Ryan Carroll ceases to be employed by TCW or its Affiliates. Nothing in this Section 5.04 shall be deemed to prohibit the Board or USWS from taking any action that at least a majority of the members of the Board determines in good faith may be necessary to (i) comply with any rule or regulation of the SEC or NASDAQ or (ii) comply with applicable law.

Section 5.05    TCW Series B Preferred Voting.

(a)    For all shares of Series B Preferred Stock beneficially owned by TCW, or over which TCW has voting control, TCW hereby irrevocably and unconditionally agrees with Crestview to provide its written consent or affirmative vote (or cause such written consent or affirmative vote to be provided) pursuant to Section 4 (Voting) of the Series A Certificate of Designations consistent with how Crestview or its Affiliates provides its written consent or affirmative vote on such matters.

(b)    TCW agrees that it will not transfer any of its shares of Series B Preferred Stock, whether to an Affiliate, a third party or otherwise, unless and until such transferee has agreed in writing to be bound by the provisions of this Section 5.05, by execution of a Joinder Agreement in a form reasonably agreed to between Crestview and TCW.

ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

Section 6.01    Indemnification by USWS. USWS agrees to indemnify each Purchaser and its Representatives (collectively, “Purchaser Related Parties”) from, and hold each of them harmless against, any and all losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them), whether or not involving a third party claim, as a result of, arising out of, or in any way related to (i) the failure of any of the representations or warranties made by USWS contained herein to be true and correct in all material respects as of the date hereof (except with respect to any provisions including the word “material,” “Material Adverse Effect” or words of similar import, with respect to which such representations and warranties must have been true and correct) or

 

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(ii) the material breach of any covenants of USWS contained herein, provided that, in the case of the immediately preceding clause (i), such claim for indemnification is made prior to the expiration of such representation or warranty; provided, however, that for purposes of determining when an indemnification claim has been made, the date upon which a Purchaser Related Party shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to USWS shall constitute the date upon which such claim has been made.

Section 6.02    Indemnification by the Purchasers. Each Purchaser agrees, severally and not jointly, to indemnify USWS and its respective Representatives (collectively, “USWS Related Parties”) from, and hold each of them harmless against, any and all losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them), whether or not involving a third party claim, as a result of, arising out of, or in any way related to (i) the failure of any of the representations or warranties made by such Purchaser contained herein to be true and correct in all material respects as of the date hereof or (ii) the material breach of any of the covenants of such Purchaser contained herein, provided that, in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty; provided, however, that for purposes of determining when an indemnification claim has been made, the date upon which a USWS Related Party shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to such Purchaser shall constitute the date upon which such claim has been made; provided, further, that the liability of such Purchaser shall not be greater in amount than such Purchaser’s Allocated Purchase Price.

Section 6.03    Indemnification Procedure. A claim for indemnification for any matter not involving a third party claim may be asserted by notice to the party from whom indemnification is sought; provided, however, that failure to so notify the indemnifying party shall not preclude the indemnified party from any indemnification which it may claim in accordance with this Article VI, except as otherwise provided in Sections 6.01 and 6.02. Promptly after any USWS Related Party or Purchaser Related Party (hereinafter, the “Indemnified Party”) has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”) written notice of such claim or the commencement of such action, suit or proceeding, but failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure. Such notice shall state the nature and the basis of such claim to the extent then known. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle such claim, it shall promptly after such determination, and in no event later than five (5) days, notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and/or the settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s possession or control relevant to the claim. Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement

 

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of such asserted liability; provided, however, that the Indemnified Party shall be entitled (i) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has, within ten (10) Business Days of when the Indemnified Party provides written notice of a claim, failed (x) to assume the defense or settlement of such claim and employ counsel or (y) to notify the Indemnified Party of such assumption or (B) if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may be reasonable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, then the Indemnified Party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of the Indemnified Party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, and does not contain any admission of wrong doing by, the Indemnified Party.

Section 6.04    Tax Treatment of Indemnification Payments. Any indemnification payments made under this Article VI shall be treated for all tax purposes as an adjustment to the relevant Purchaser’s Allocated Purchase Price except as otherwise required by applicable Law.

ARTICLE VII

TERMINATION

Section 7.01    Termination. This Agreement may be terminated at any time:

(a)    by mutual written consent of USWS and the Purchasers entitled to purchase a majority of the Purchased Securities as set forth on Schedule A;

(b)    by either USWS or the Purchasers if any court of competent jurisdiction in the United States or other United States Governmental Authority shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the transactions contemplated hereby and such order, decree, ruling or other action is or shall have become final and nonappealable;

(c)    by either USWS or any Purchaser if the Closing has not been consummated by April 15, 2020 (the “Outside Date”);

(d)    by USWS if (i) there shall have been a breach of any representation or warranty on the part of the Purchasers set forth in this Agreement or in any other Basic Document, or if any such representation or warranty of the Purchasers shall have become untrue, in either case such that the conditions set forth in Section 2.04(c) would be incapable of being satisfied by the Outside Date or (ii) there shall have been a breach in any material respect by the Purchasers of any of their respective covenants or agreements hereunder, and with respect to such clause (i) or (ii) the Purchasers have not cured such breach or inaccuracy within twenty (20) Business Days after receipt of written notice thereof from USWS; provided that USWS is not then in breach of any of its obligations hereunder; and

(e)    by any Purchaser if (i) there shall have been a breach of any representation or warranty on the part of USWS set forth in this Agreement or in any other Basic Document, or if any such representation or warranty of USWS shall have become untrue, in either case such that the conditions set forth in Section 2.04(b) would be incapable of being satisfied by the Outside Date or (ii) there shall have been a breach in any material respect by USWS of its covenants or agreements hereunder, and USWS has

 

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not cured such breach or inaccuracy within twenty (20) Business Days after receipt of written notice thereof from the Purchasers; provided that such Purchasers are not then in breach of any of their obligations hereunder.

Section 7.02    Certain Effects of Termination. If this Agreement is terminated by either USWS or the Purchasers as provided in Section 7.01, except as set forth in Section 8.03, this Agreement shall become null and void and have no further force or effect, but the parties shall not be released from any liability arising from or in connection with any breach hereof occurring prior to such termination.

ARTICLE VIII

MISCELLANEOUS

Section 8.01    Expenses. USWS hereby covenants and agrees to reimburse Crestview Advisors, L.L.C. for its reasonable and documented fees and expenses up to an aggregate amount of $300,000. All other costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing has occurred.

Section 8.02    Interpretation. Article, Section, Schedule and Exhibit references in this Agreement are references to the corresponding Article, Section, Schedule or Exhibit to this Agreement, unless otherwise specified. All Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof as if set forth in full herein and are an integral part of this Agreement. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. Whenever USWS has an obligation under the Basic Documents, the expense of complying with that obligation shall be an expense of USWS unless otherwise specified. Any reference in this Agreement to $ shall mean U.S. dollars. Whenever any determination, consent or approval is to be made or given by any Purchaser, such action shall be in such Purchaser’s sole discretion, unless otherwise specified in this Agreement. If any provision in the Basic Documents is held to be illegal, invalid, not binding or unenforceable, (i) such provision shall be fully severable and the Basic Documents shall be construed and enforced as if such illegal, invalid, not binding or unenforceable provision had never comprised a part of the Basic Documents, and the remaining provisions shall remain in full force and effect and (ii) the parties hereto shall negotiate in good faith to modify the Basic Documents so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to the Basic Documents, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. Any words imparting the singular number only shall include the plural and vice versa. The words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.

Section 8.03    Survival of Provisions. The representations and warranties set forth in Sections 3.02(e), 3.02(f), 3.02(g), 3.07, 3.08, 3.10, 4.02, 4.04 and 4.05 hereunder shall survive the execution and delivery of this Agreement indefinitely, and the other representations and warranties set forth herein shall survive for a period of six (6) months following the Closing Date regardless of any investigation made

 

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by or on behalf of USWS or the Purchasers. The covenants made in this Agreement or any other Basic Document shall survive the Closing and remain operative and in full force and effect regardless of acceptance of any of the Purchased Securities and payment therefor and repayment, conversion or repurchase thereof. Regardless of any purported general termination of this Agreement, the provisions of Article VI and all indemnification rights and obligations of USWS and the Purchasers thereunder, Section 7.02 and this Article VIII shall remain operative and in full force and effect as between USWS and the Purchasers, unless USWS and the Purchasers execute a writing that expressly (with specific references to the applicable Section or subsection of this Agreement) terminates such rights and obligations as between USWS and the Purchasers.

Section 8.04    No Waiver; Modifications in Writing.

(a)    Delay. No failure or delay on the part of any party in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.

(b)    Specific Waiver. Except as otherwise provided herein, no amendment, waiver, consent, modification or termination of any provision of this Agreement or any other Basic Document shall be effective unless signed by each of the parties hereto or thereto affected by such amendment, waiver, consent, modification or termination. Any amendment, supplement or modification of or to any provision of this Agreement or any other Basic Document, any waiver of any provision of this Agreement or any other Basic Document and any consent to any departure by USWS from the terms of any provision of this Agreement or any other Basic Document shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on USWS in any case shall entitle USWS to any other or further notice or demand in similar or other circumstances. Any investigation by or on behalf of any party shall not be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.

Section 8.05    Binding Effect; Assignment.

(a)    Binding Effect. This Agreement shall be binding upon USWS, each Purchaser and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.

(b)    Assignment of Purchased Securities. All or any portion of Purchased Securities purchased pursuant to this Agreement may be sold, assigned or pledged by the Purchasers, subject to compliance with applicable securities laws, Sections 4.05(f) and 4.06 hereof and the Registration Rights Agreement, and, except as provided in the Basic Documents, any such assignment shall not affect the rights of the Purchasers hereunder.

(c)    Assignment of Rights. Each Purchaser’s rights and obligations hereunder (including the right to seek indemnification) may be transferred or assigned in whole or in part by such Purchaser to any Affiliate of such Purchaser without the consent of USWS or the other parties hereto. Upon any such permitted transfer or assignment, references in this Agreement to the Purchasers (as they apply to the transferor or assignor, as the case may be) shall thereafter be deemed to include a reference to such transferee or assignee of such Purchaser unless the context otherwise requires. Without the written consent of USWS, which consent shall not be unreasonably withheld, no portion of the rights and obligations of

 

22


any Purchaser under this Agreement may be assigned or transferred by such Purchaser or such a transferee of Purchased Securities to a Person that is not an Affiliate of such Purchaser. No portion of the rights and obligations of USWS under this Agreement may be transferred or assigned without the prior written consent of the Purchasers, which consent shall not be unreasonably withheld.

Section 8.06    Non-Disclosure. USWS, its Subsidiaries and any of their respective Representatives shall disclose the identity of, or any other information concerning, any Purchaser or any of their Affiliates only after providing such Purchaser a reasonable opportunity to review and comment on such disclosure (with such comments being incorporated or reflected, to the extent reasonable, in any such disclosure); provided, however, that nothing in this Section 8.06 shall delay any required filing or other disclosure with the SEC, NASDAQ or any Governmental Authority or otherwise hinder USWS, their Subsidiaries or their Representatives’ ability to timely comply with all laws or rules and regulations of the SEC, NASDAQ or other Governmental Authority.

Section 8.07    Communications. All notices and demands provided for hereunder shall be (i) in writing and shall be given by registered or certified mail, return receipt requested, air courier guaranteeing overnight delivery or personal delivery and (ii) via e-mail, to the following addresses:

(a)    If to the Purchasers:

At such address indicated on Schedule A attached hereto.

(b)    If to the Lenders:

At such address indicated on the signature pages attached hereto.

(c)    If to USWS:

U.S. Well Services, Inc.

1360 Post Oak Boulevard, Suite 1800

Houston, Texas 77056

Attention: Kyle O’Neill

E-mail: koneill@uswellservices.com

with a copy (which shall not constitute notice) to:

Porter Hedges LLP

1000 Main St., 36th Floor

Houston, Texas 77002

Attention: Corey C. Brown

E-mail: cbrown@porterhedges.com

or to such other address as USWS or such Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified or registered mail, return receipt requested, or regular mail, if mailed; upon actual receipt if sent by overnight courier copy; when receipt is acknowledged, if sent via e-mail; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

Section 8.08    Removal of Legend. Each Purchaser may request USWS to remove the legend described in Section 4.05(d) from the certificates evidencing the Purchased Securities by submitting to USWS such certificates, together with an opinion of counsel to the effect that such legend is no longer required under the Securities Act or applicable state laws, as the case may be. USWS shall cooperate with reasonable requests of such Purchaser to effect the removal of such legend.

 

23


Section 8.09    Entire Agreement. This Agreement, the other Basic Documents and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or the other Basic Documents with respect to the rights granted by USWS or any of its Affiliates or the Purchasers or any of their Affiliates set forth herein or therein. This Agreement, the other Basic Documents and the other agreements and documents referred to herein or therein supersede all prior agreements and understandings between the parties with respect to such subject matter.

Section 8.10    Governing Law; Submission to Jurisdiction. This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the laws of the State of Delaware without regard to principles of conflicts of laws. Any action against any party relating to the foregoing shall be brought in any federal or state court of competent jurisdiction located within the State of Delaware, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Delaware over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

Section 8.11    Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 8.12    Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. A signed copy of this Agreement delivered by portable document format (PDF) or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement; provided, however, that each party hereto shall deliver an original signed copy of this Agreement executed by such party to any other party hereto promptly upon the request of any such other party.

 

24


Section 8.13    Recapitalizations, Exchanges, Etc. Affecting the Purchased Securities. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all equity interests of USWS or any successor or assign of USWS (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Purchased Securities.

Section 8.14    Certain Tax Matters.

(a)    USWS shall pay any and all documentary, stamp or similar issue or transfer tax due on (i) the issue of the Purchased Securities and (ii) the issue of shares of Class A Common Stock upon conversion or redemption of the Purchased Securities.

(b)    The Purchasers and USWS agree not to treat the Series B Preferred Stock (based on the terms as set forth in the Certificate of Designations) as “preferred stock” within the meaning of Section 305 of the Code and U.S. Treasury Regulation § 1.305-5 for U.S. federal income tax and withholding tax purposes and shall not take any position inconsistent with such treatment, including on any applicable U.S. federal income or state tax return or in connection with any audit or other proceeding, except as required by a final “determination” within the meaning of Section 1313(a) of the Code. USWS agrees that, provided that each Purchaser delivers to USWS a properly executed IRS Form W-9, or similar form sufficient to cause under current Law USWS (including any paying agent of USWS) to avoid a requirement to withhold on any payments or deemed payments to any such Purchaser, USWS (including any paying agent of USWS) will not withhold on any payments or deemed payments to any such Purchaser.

[Remainder of Page Left Intentionally Blank]

 

25


IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

 

U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

Name:   Kyle O’Neill
Title:   Chief Financial Officer

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


CRESTVIEW III USWS, L.P.
By:   Crestview III USWS GenPar, LLC,
  its general partner
By  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


CRESTVIEW III USWS TE, LLC
By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

[Signatures continue on following page.]

 

[Signature Page to Purchase Agreement]


REGIMENT CAPITAL SPECIAL SITUATIONS FUND V., L.P.
By:  

/s/ Richard Miller

Name:   Richard Miller
Title:   Authorized Signatory

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


DAVID J MATLIN
By:  

/s/ David J Matlin

Name:   David J Matlin

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


PETER SCHOELS
By:  

/s/ Peter Schoels

Name:   Peter Schoels

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


GREENBLATT PARTNERS LP
By:  

/s/ Jeffrey Greenblatt

By:  

 

Name:  

 

Title:  

 

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


JASON CAPONE
By:  

/s/ Jason Capone

Name:   Jason Capone

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


JAMES MCCARTNEY
By:  

/s/ James McCartney

Name:   James McCartney

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


KEN CAMPBELL
By:  

/s/ Ken Campbell

Name:   Ken Campbell

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


TIM O’CONNOR
By:  

/s/ Tim O’Connor

Name:   Tim O’Connor

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


GREG ETHRIDGE
By:  

/s/ Greg Ethridge

Name:   Greg Ethridge

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


Solely for the purposes of Section 5.01
LNV CORPORATION
By:  

/s/ Jacob Cherner

Name:   Jacob Cherner
Title:   Executive Vice President
LPP MORTGAGE, INC.
By:  

/s/ Jacob Cherner

Name:   Jacob Cherner
Title:   Executive Vice President
Address for Notice:
c/o CLMG Corp.
7195 Dallas Parkway
Plano, Texas 75024
Attention: James Erwin, President
E-mail: jerwin@clmgcorp.com
with a copy (which shall not constitute notice) to:
Melissa Cobb
SVP/Corporate Counsel
6000 Legacy Dr.
Plano, TX 75024
E-mail: MCobb@BealService.com

[Signatures continued on following page.]

 

[Signature Page to Purchase Agreement]


Schedule A

 

Purchaser

   Series B
Preferred
Stock
     Allocated
Purchase Price
 
Crestview III USWS, L.P.
c/o Crestview Advisors, L.L.C.
590 Madison Avenue, 42nd Floor
New York, New York 10022
Attention: Adam J. Klein, Ross A. Oliver
E-mail: aklein@crestview.com; roliver@crestview.com
     10,959      $ 10,959,306.91  

with a copy (which shall not constitute notice) to:

     

Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: E. Ramey Layne, James M. Garrett
Email: rlayne@velaw.com; jgarrett@velaw.com

     
Crestview III USWS TE, LLC
c/o Crestview Advisors, L.L.C.
590 Madison Avenue, 42nd Floor
New York, New York 10022
Attention: Adam J. Klein, Ross A. Oliver
E-mail: aklein@crestview.com; roliver@crestview.com
     541      $ 540,693.09  

with a copy (which shall not constitute notice) to:

     

Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: E. Ramey Layne, James M. Garrett
Email: rlayne@velaw.com; jgarrett@velaw.com

     

Regiment Capital Special Situations Fund V, L.P.

c/o TCW Direct Lending Group

1251 Avenue of the Americas, Suite 4700

New York, NY 10020

Attention: Richard Miller

E-mail: richard.miller@tcw.com

     6,500      $ 6,500,000.00  

 

Exhibit B-1


Purchaser

   Series B
Preferred
Stock
     Allocated
Purchase Price
 

David J Matlin

     1,878      $ 1,878,000  

600 Fifth Avenue; 22nd Floor

     

New York, New York 10022

     

Peter Schoels

     229      $ 229,000  

1025 Morse Blvd

     

West Palm Beach FL 33404

     

Greenblatt Partners LP

     500      $ 500,000  

14 East 60th Street Suite 600

     

New York, NY 10022

     

Jason Capone

     113      $ 113,000  

260 park avenue South; #9j

     

New York, New York 10010

     

James McCartney

     4      $ 4,000  

95 Sebonac Road

     

South Hampton, NY 11968

     

Ken Campbell

     113      $ 113,000  

16620 Parkland Dr.

     

Shaker Heights OH 44120

     

Tim O’Connor

     113      $ 133,000  

1835 Port Carlow Place

     

Newport Beach CA 92660

     

Greg Ethridge

     50      $ 50,000  

585 Weed Street

     

New Canaan CT 06840

     
  

 

 

    

 

 

 

Total

     21,000      $ 21,000,000.00  

 

Exhibit B-2

EX-10.2

Exhibit 10.2

EXECUTION VERSION

SECOND AMENDMENT TO

SENIOR SECURED TERM LOAN CREDIT AGREEMENT

This SECOND AMENDMENT TO THE SENIOR SECURED TERM LOAN CREDIT AGREEMENT, dated as of April 1, 2020 (this “Second Amendment”), is between U.S. WELL SERVICES, LLC, a Delaware limited liability company (the “Borrower”), U.S. WELL SERVICES, INC., a Delaware corporation (the “Parent”), USWS FLEET 10, LLC, a Delaware limited liability company (“USWS Fleet 10”), USWS FLEET 11, LLC, a Delaware limited liability company (“USWS Fleet 11”, together with USWS Fleet 10, the “Subsidiary Guarantors”), USWS HOLDINGS LLC, a Delaware limited liability company (“Holdings”, together with the Parent, the Borrower and the Subsidiary Guarantors, the “Loan Parties” and each a “Loan Party”), CLMG CORP., as administrative agent (together with its successors and assigns, the “Administrative Agent”), and CLMG CORP., as term loan collateral agent (together with its successors and assigns, the “Term Loan Collateral Agent” and, together with the Administrative Agent, the “Agents”). This Second Amendment is entered into with reference to the Original Credit Agreement referred to below. Capitalized terms used herein without definition shall have the meaning assigned to such terms in Section 1.01 of the Credit Agreement, and the interpretive provisions set forth in Section 1.04 of the Credit Agreement shall apply to this Second Amendment, mutatis mutandis, as if fully set forth herein.

RECITALS:

WHEREAS, reference is made to the Senior Secured Term Loan Credit Agreement, dated as of May 7, 2019, among the Parent, Holdings, the Borrower, the Subsidiary Guarantors, the Lenders, CLMG CORP., as Administrative Agent and Term Loan Collateral Agent (as amended, amended and restated, supplemented or otherwise modified from time to time (including pursuant to that certain First Technical Supplemental Amendment to the Senior Secured Term Loan Credit Agreement, entered into by, among others, the Parent, Holdings, the Borrower, and the Administrative Agent and Term Loan Collateral Agent, dated as of June 14, 2019 (the “First Amendment”)) prior to the Second Amendment Effective Date, the “Original Credit Agreement”);

WHEREAS, pursuant to this Second Amendment, the Borrower has requested, and the Administrative Agent and the Lenders have agreed, subject to the terms and conditions of this Second Amendment, to amend the Original Credit Agreement on the Second Amendment Effective Date, as specified in Section 1 below;

WHEREAS, pursuant to Section 9.01 of the Credit Agreement, certain amendments, waivers and consents set forth in this Second Amendment may be entered into only with the consent of each Lender;

WHEREAS, Parent has issued and sold certain shares of Series B Preferred Stock pursuant to a certain Purchase Agreement dated as of the date hereof, the proceeds of which will be used to fund the Extension Fee;

WHEREAS, the Borrower hereby requests, the Administrative Agent and each Lender has agreed, subject to the conditions precedent set forth herein, to enter into this Second Amendment;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

AGREEMENT:

Section 1.    Amendments To Credit Agreement. Pursuant to Section 9.01 of the Credit Agreement, each of the Lenders, the Administrative Agent, and each of the Loan Parties consents to the amendment of the Original Credit Agreement made as of the Second Amendment Effective Date to delete


the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit A hereto (the Original Credit Agreement as so amended, the “Credit Agreement”).

Section 2.    Definitions; Issuance of Shares; Representations and Warranties with Respect to the Series B Preferred Stock (as defined below) and Class A Common Stock (as defined below).

(a)    As used in this Second Amendment, the following terms shall have the following meanings:

Class A Common Stock” means the class A common stock of the Parent, par value $0.0001 per share.

Parent Common Shares” means 5,529,622 shares of the Class A Common Stock.

Parent Preferred Shares” means 1,050 shares of the Series B Preferred Stock.

Parent SEC Documents” means all forms, reports, registration statements, definitive proxy statements, schedules and other materials with the SEC required to be filed or furnished by it since December 31, 2018.

“Purchase Agreement” means the Purchase Agreement, dated as of the date hereof, by and among the Parent and the purchasers party thereto, pursuant to which such purchasers have purchased certain shares of Series B Preferred Stock.

“Securities Act” means the Securities Act of 1933, as amended.

Series B Preferred Stock” means the Series B Redeemable Convertible Preferred Stock of Parent, $0.0001 par value per share.

Transfer Agent” means Continental Stock Transfer & Trust Company or any successor transfer agent of Parent.

(b)    Parent hereby issues and sells to each Lender (i) the number of shares of Class A Common Stock set forth opposite such Lender’s name on Schedule 1 and (ii) the number of shares of Series B Preferred Stock set forth opposite such Lender’s name on Schedule 1.

(c)    Parent represents and warrants to each Lender that (i) the representations and warranties of Parent contained in the Purchase Agreement that are qualified by materiality or Material Adverse Effect (as defined in the Purchase Agreement) are true and correct as of the date hereof and (ii) all other representations and warranties of Parent contained in the Purchase Agreement are true and correct in all material respects as of the date hereof (except that such representations and warranties made as of a specific date shall be required to be true and correct in all material respects as of such date only). For the avoidance of doubt, the representations and warranties of Parent contained in the Purchase Agreement are incorporated herein by this reference for all purposes.

(d)    Each Lender represents and warrants to each Loan Party that it is (A) an experienced and knowledgeable investor, (B) able to bear the economic risks of the acquisition and ownership of shares of the Class A Common Stock and the Series B Preferred Stock, including the complete loss of such investment, and (C) is capable of evaluating (and has evaluated) the merits and risks of investing in shares of the Class A Common Stock and the Series B Preferred Stock and its acquisition and ownership thereof. The shares of Class A Common Stock and the Series B Preferred Stock received by the Lenders as part of the Extension Fee is being obtained by each Lender for its own account for investment


purposes, and not with a view to any distribution thereof in violation of any applicable securities laws. Each Lender understands and acknowledges that no federal or state agency has passed upon the merits or risks of the acquisition and ownership of the Class A Common Stock or the Series B Preferred Stock or made any finding or determination concerning the fairness or advisability of such acquisition and ownership. Each Lender understands and acknowledges that the acquisition and ownership of the Class A Common Stock and the Series B Preferred Stock involve risks, including those described in the Parent SEC Documents and each Lender has such knowledge, skill and experience in business, financial and investment matters that it is capable of evaluating the merits and risks of the acquisition and ownership of the Class A Common Stock and the Series B Preferred Stock. Each Lender has considered the suitability of the Class A Common Stock and the Series B Preferred Stock as an investment in light of its own circumstances and financial condition and is able to bear the risks associated with an investment in the Class A Common Stock and the Series B Preferred Stock, including the total loss of its investment. Each Lender is an “accredited investor,” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act. Each Lender acknowledges and understands that (A) the acquisition of neither the Class A Common Stock nor the Series B Preferred Stock has not been registered under the Securities Act in reliance on an exemption therefrom, and (B) that the shares of the Class A Common Stock and the Series B Preferred Stock will, upon their acquisition by the Lenders at Closing, be characterized as “restricted securities” under state and federal securities laws and may not be sold, transferred, offered for sale, pledged, hypothecated, or otherwise disposed of, except pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and in compliance with applicable state and federal securities laws.

(e)    No Lender, together with its Affiliates, beneficially owns (as contemplated by Rule 13d-3 of the Exchange Act) as of the date of this Agreement, 5% or more of the Parent’s issued and outstanding Class A Common Stock or securities convertible into Class A Common Stock.

(f)    Each Lender acknowledges and agrees that neither Parent nor any other Person offered to sell shares of the Class A Common Stock or the Series B Preferred Stock to it by means of any form of general solicitation or advertising. Each Lender further acknowledges and agrees that it was solicited or became aware of the investment in the Class A Common Stock and the Series B Preferred Stock through direct contact with Parent or its agents outside of any public offering effort.

Section 3.    Effectiveness. This Second Amendment shall become effective on and as of the first date (the “Second Amendment Effective Date”) on which the Administrative Agent determines in its sole and absolute discretion that the following conditions precedent have been satisfied:

(a)    the Administrative Agent shall have received on or before the Second Amendment Effective Date, duly executed copies of this Second Amendment by each party hereto (which may include a copy transmitted by PDF or other electronic method);

(b)    payment for the ratable benefit of the Lenders, of an extension fee (the “Extension Fee”) comprised of (a) a cash payment in the amount of twenty million dollars ($20,000,000); plus (b) the Parent Preferred Shares; plus (c) the Parent Common Shares, and the issuance of the Parent Preferred Shares, when issued and delivered, is validly issued, fully paid and non-assessable, and has the rights, preferences and priorities set forth in the Certificate of Designations of Series B Redeemable Convertible Preferred Stock and such issuance of the Parent Preferred Shares is not subject to any preemptive or similar rights, and which Parent Preferred Shares and Parent Common Shares shall be issued by the Parent to each Lender (in the amount of its ratable share) in book entry form and shall bear a restrictive legend on the books and records of the Transfer Agent;


(c)    the respective conditions set forth in Section 2.04(a) and Section 2.04(b) of the Purchase Agreement to the obligations of each party thereto to consummate the purchase and issuance and sale of the Series B Preferred Stock thereunder shall have been satisfied or waived (by each Lender) on or prior to the Second Amendment Effective Date;

(d)    immediately prior to and after giving effect to this Second Amendment, all representations and warranties of each Loan Party contained in Article IV of the Credit Agreement are true and correct in all material respects on and as of the date of this Second Amendment and the Second Amendment Effective Date as if made on and as of such date (or if stated to have been made at an earlier date, were true and correct in all material respects as of such earlier date) (except to the extent any such representation and warranty itself is qualified by “materiality”, “Material Adverse Effect” or similar qualifier, in which case, it shall be true and correct in all respects);

(e)    as of the date hereof, no Default or Event of Default has occurred and is continuing;

(f)    the Administrative Agent and the Lenders shall have been paid or reimbursed by the Borrower for all costs and expenses associated with the preparation, negotiation and execution of this Second Amendment and the other instruments and documents to be delivered hereunder and in connection with the transactions contemplated hereby (including, the reasonable, documented and out-of-pocket accrued and unpaid fees and expenses of counsel thereto to the extent invoiced at least one Business Day prior to the Second Amendment Effective Date);

(g)    the Borrower shall have made in full (and the Administrative Agent shall have received) all payments (including all Scheduled Amortization Payments (as defined in the Original Credit Agreement), interest, fees, costs and expenses) due under the Loan Documents prior to the Second Amendment Effective Date (without giving effect to any amendments to the Original Credit Agreement made as of such Second Amendment Effective Date); and

(h)    the Administrative Agent shall have received an opinion of counsel for the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent (including, without limitation, with respect to the enforceability of this Second Amendment ).

Section 4.    Effect On Loan Documents.

(a)    Reference to Credit Agreement. Upon and after the Second Amendment Effective Date, each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as modified by this Second Amendment.

(b)    Effect on Loan Documents. This Second Amendment shall constitute an amendment of the Credit Agreement made under and in accordance with the terms of Section 9.01 of the Credit Agreement. Except as specifically amended by this Second Amendment, the Loan Documents shall remain in full force and effect and the execution, delivery and performance of this Second Amendment shall not constitute a waiver of any other provision of, or operate as a waiver of any other right, power or remedy of any Agent or Lender under any of the Loan Documents. Except as expressly provided herein, each Loan Document is and shall remain unchanged and in full force and effect and nothing contained in this Second Amendment shall abrogate, prejudice, diminish or otherwise affect any powers, right, remedies or obligations of any Person arising before the date of this Second Amendment. This Second Amendment shall not constitute a novation of the obligations and liabilities of the parties under the Credit Agreement or the other Loan Documents as in effect on or prior to the Second Amendment Effective Date. Except as provided for herein and in the Credit Agreement nothing herein shall be deemed to entitle the Borrower to a further consent to, or a further waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances.


(c)    Designation as Loan Document. This Second Amendment shall constitute a Loan Document under the Credit Agreement.

Section 5.    Collateral Matters.

(a)    The Borrower and each Loan Party (each, a “Reaffirming Party”) hereby acknowledges that it (i) has reviewed the terms and provisions of this Second Amendment, (ii) consents to the amendments to the Credit Agreement effected pursuant to this Second Amendment and consents to the terms, conditions and other provisions of this Second Amendment, and (iii) consents to each of the transactions contemplated hereby.

(b)    Each Reaffirming Party (i) acknowledges and agrees that all pledges, grants of security interests and Liens and other obligations under the Security Agreement, the Mortgages, each Account Control Agreement, the other Term Loan Collateral Documents and the other Loan Documents to which such Loan Party is a party are reaffirmed and remain in full force and effect on a continuous basis, (ii) reaffirms each Lien granted by such Loan Party to the Administrative Agent and/or Term Loan Collateral Agent for the benefit of the Secured Parties, (iii) acknowledges and agrees that the grants of security interests and Liens by contained in the Security Agreement, the Mortgages, each Account Control Agreement and other Term Loan Collateral Documents are, and shall remain, in full force and effect on and after the date hereof, and (iv) confirms that each Loan Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents the payment and performance of all Obligations    (including all such Obligations as amended and reaffirmed pursuant to this Second Amendment) under each of the Loan Documents to which it is a party. Nothing in this Second Amendment shall constitute a new grant of security interest. Each Reaffirming Party hereby confirms that no additional filings or recordings need to be made, and no other actions need to be taken, by such Reaffirming Party as a consequence of this Second Amendment in order to maintain the perfection and priority of the security interests created by the Loan Documents to which it is a party.

(c)    Each Reaffirming Party acknowledges and agrees that each of the Loan Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its Obligations, payment obligations, guarantees, pledges, grants of security interests and other obligations, as applicable, under and subject to the terms of such Loan Documents shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Second Amendment or any of the transactions contemplated hereby.

(d)    Until a Repayment Event has occurred, each Loan Party will promptly upon the written request by any Agent, or any Lender through the Administrative Agent, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, mortgages, landlord waivers, estoppel and consent agreements of lessors, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments and amendments, modifications or supplements to any of the foregoing, in each case, as any Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable law, subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Term Loan Collateral Documents, and (iii) perfect and maintain the validity, effectiveness and priority of any of the Term Loan Collateral Documents and any of the Liens intended to be created thereunder.


(e)    All Obligations (as such Obligations may be modified by this Second Amendment on the Second Amendment Effective Date) shall continue to be valid, enforceable and in full force and effect and shall not be impaired, in any respect, by the effectiveness of this Second Amendment.

Section 6.    Representation and Warranties. Each Loan Party hereby represents and warrants to the Administrative Agent, Collateral Agent, and Lenders party hereto that:

(a)    the execution, delivery and performance by each Loan Party of this Second Amendment, and the consummation of the transactions contemplated hereby, are within such Loan Party’s corporate, limited liability company or limited partnership (as applicable) powers, have been duly authorized by all necessary corporate, limited liability company or limited partnership (as applicable) action, and do not (i) contravene such Loan Party’s bylaws, limited liability company agreement, limited partnership agreement or other constituent documents, (ii) violate in any material respect any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award applicable to or binding on it, (iii) conflict with or result in the breach of, or constitute a default or require any payment to be made under, a Contractual Obligation of any Loan Party (except to the extent such conflict, breach, default or payment could not reasonably be expected to have a Material Adverse Effect) or (iv) except for the Liens created under the Term Loan Collateral Documents or the ABL Collateral Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the Properties of any Loan Party;

(b)    no Governmental Authorization, and no notice to, filing with, or consent or approval of any other third party is required for the (i) due execution, delivery, recordation, filing or performance by any Loan Party of this Second Amendment to which it is or is to be a party, or for the consummation of the transactions contemplated hereby; (ii) perfection or maintenance of the Liens created under the Term Loan Collateral Documents (including the first priority nature thereof in respect of all Term Loan Priority Collateral and the second priority nature thereof in respect of all ABL Priority Collateral), or (iii) the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Term Loan Collateral Documents;

(c)    immediately prior to following the Second Amendment Effective Date, all representations and warranties of each Loan Party contained in Article IV of the Credit Agreement are true and correct in all material respects (except to the extent any such representation and warranty itself is qualified by “materiality”, “Material Adverse Effect” or similar qualifier, in which case, it shall be true and correct in all respects) on and as of the date of this Second Amendment as if made on and as of the date of this Second Amendment (or if stated to have been made at an earlier date, were true and correct in all material respects as of such earlier date); and

(d)    as of the date hereof, no Default or Event of Default has occurred and is continuing.

Section 7.    Extension Fee(a) . The Loan Parties, the Administrative Agent and each Lender expressly agree and acknowledge that: (i) the Extension Fee is reasonable and is the product of an arm’s length transaction between sophisticated business persons, ably represented by counsel; (ii) the Loan Parties have agreed to pay, and have made payment of such Extension Fee as specific consideration to the Lenders, and that there has been a course of conduct between the Loan Parties and the Lenders for such agreement to pay such Extension Fee; and (iii) the Loan Parties’ agreement to pay the Extension Fee as herein described is a material inducement to the Lenders to consummate the transactions described herein, and enter into this Second Amendment. The Loan Parties, the Administrative Agent and each Lender acknowledge and agree that at the time of issuance to the Lenders (x) the Parent Preferred Shares have an aggregate fair market value of $1,050,000, and (y) the Parent Common Shares have an aggregate fair market


value of $1,647,827.356, and the parties hereto agree that they shall report the fair market value of such shares for tax purposes consistently therewith.

Section 8.    Entire Agreement, etc.

(a)    This Second Amendment, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and oral, among the parties or any of them with respect to the subject matter hereof.

(b)    This Second Amendment may be executed by one or more of the parties to this Second Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Second Amendment signed by all the parties shall be maintained by the Administrative Agent. This Second Amendment may be executed and delivered by electronic transmission with the same force and effect as if the same was a fully executed and delivered original manual counterpart.

(c)    Section and Subsection headings in this Second Amendment are included herein for convenience of reference only and shall not constitute a part of this Second Amendment for any other purpose or be given any substantive effect.

(d)    Notwithstanding anything herein to the contrary, the ABL Secured Parties are not parties to the Credit Agreement and shall have no rights, liabilities or obligations in respect thereof.

(e)    In the event of any conflict between the provisions of this Second Amendment and the provisions of the Original Credit Agreement (as defined in the recitals hereto), the provisions of this Second Amendment and Exhibit A attached hereto shall govern and control.

Section 9.    Governing Law. This Second Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 10.    Waiver of Jury Trial. Each of the Loan Parties, the Agents and the Lenders irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Second Amendment or the actions of any Agent or any Lender in the negotiation, administration, performance or enforcement thereof.

Section 11.    Release. As a material inducement to the Administrative Agent to enter into this Second Amendment, the Borrower and the other Loan Parties, each for itself and on behalf of its respective owners, successors, assigns and legal representatives whether or not a party hereto (the Borrower, the other Loan Parties, such owners, successors, assigns and legal representatives being referred to herein collectively and individually, as “Obligors, et al”), automatically, and without further action by any person, hereby (A) fully, finally and completely, release and forever discharge each Secured Party, the Term Loan Collateral Agent, and the Administrative Agent, and their respective successors, assigns, affiliates, subsidiaries and parents (collectively, the “Lender Entities”), each of the officers, shareholders, directors, employees, attorneys and agents, past, present and future of the Lender Entities (collectively, the “Lender-related Parties”), and each of the respective heirs, predecessors, successors and assigns of each of the Lender Entities and the Lender-related Parties (collectively and individually, and together with the Lender Entities and the Lender Related Parties, “Lender, et al”) of and from any and all claims, controversies, disputes, liabilities, obligations, demands, damages, expenses (including, without limitation, reasonable attorneys’ fees), debts, liens, actions and causes of action of any and every nature whatsoever relating to the Loan Documents, and (B) waive and release any defence, right of counterclaim, right of set-off or deduction to the payment of the obligations which Obligors, et al now have or may claim to have against Lender, et al,


in the case of each of (A) and (B), arising out of, connected with or relating to any and all acts, omissions or events occurring prior to the execution of this Second Amendment.

[Signature pages follow]


IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

 

US WELL SERVICES, LLC, as Borrower
By: /s/ Kyle O’Neill                                                     
Name:   Kyle O’Neill
Title:   Chief Financial Officer
U.S. WELL SERVICES, INC., as Parent
By: /s/ Kyle O’Neill                                                     
Name:   Kyle O’Neill
Title:   Chief Financial Officer
USWS HOLDINGS LLC, as Holdings
By: /s/ Kyle O’Neill                                                     
Name:   Kyle O’Neill
Title:   Chief Financial Officer
USWS FLEET 10, LLC, as Subsidiary Guarantor
By: /s/ Kyle O’Neill                                                     
Name:   Kyle O’Neill
Title:   Chief Financial Officer
USWS FLEET 11, LLC, as Subsidiary Guarantor
By: /s/ Kyle O’Neill                                                     
Name:   Kyle O’Neill
Title:   Chief Financial Officer


CLMG CORP., as Administrative Agent
By: /s/ James Erwin                                         
Name:   James Erwin
Title:   President


CLMG CORP., as Term Loan Collateral Agent
By: /s/ James Erwin                                         
Name:   James Erwin
Title:   President


LNV CORPORATION, as Lender
By: /s/ Jacob Cherner                                                   
Name:   Jacob Cherner
Title:   Executive Vice President


LPP MORTGAGE, INC., as Lender
By: /s/ Jacob Cherner                                                   
Name:   Jacob Cherner
Title:   Executive Vice President


SCHEDULE 1

PARENT COMMON SHARES AND PARENT PREFERRED SHARES

 

Lender

   Shares of Class A Common Stock      Shares of Series B Preferred Stock  

LNV CORPORATION

     3,760,143        714  

LPP MORTGAGE, INC.

     1,769,479        336  
  

 

 

    

 

 

 

Total

     5,529,622        1,050  
  

 

 

    

 

 

 


EXHIBIT A

CREDIT AGREEMENT

(amendments to the Original Credit Agreement made pursuant to the Second Amendment on the Second Amendment Effective Date only)

[Attached]


EXECUTION VERSION

SENIOR SECURED TERM LOAN

CREDIT AGREEMENT

Dated as of May 7, 2019

Among

U.S. WELL SERVICES, INC.

as Parent

USWS HOLDINGS LLC

as Holdings

U.S. WELL SERVICES, LLC

as Borrower

and

THE SUBSIDIARY GUARANTORS NAMED HEREIN

as Guarantors

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

CLMG CORP.

as Term Loan Collateral Agent

and

CLMG CORP.

as Administrative Agent


T A B L E O F C O N T E N T S

 

Section        Page  
Article I DEFINITIONS AND ACCOUNTING TERMS      2  
SECTION 1.01.   Certain Defined Terms      2  
SECTION 1.02.   Computation of Time Periods      41  
SECTION 1.03.   Accounting Terms      41  
SECTION 1.04.   Other Definitional Provisions and Rules of Construction      42  
Article II AMOUNTS AND TERMS OF THE LOANS      43  
SECTION 2.01.   The Loans      43  
SECTION 2.02.   Making the Loans      44  
SECTION 2.03.   Repayment of Loans      46  
SECTION 2.04.   Prepayments      46  
SECTION 2.05.   Interest      49  
SECTION 2.06.   Fees      50  
SECTION 2.07.   Increased Costs, Etc.      52  
SECTION 2.08.   Payments and Computations      53  
SECTION 2.09.   Taxes      54  
SECTION 2.10.   Sharing of Payments, Etc      57  
SECTION 2.11.   Use of Proceeds      58  
SECTION 2.12.   Evidence of Debt      58  
SECTION 2.13.   Duty to Mitigate      58  
SECTION 2.14.   Accounts; Cash Waterfall.      59  
Article III CONDITIONS TO EFFECTIVENESS OF LENDING      65  
SECTION 3.01.   Conditions Precedent      65  
SECTION 3.02.   Conditions Precedent to Each Borrowing      71  
Article IV REPRESENTATIONS AND WARRANTIES      71  
SECTION 4.01.   Representations and Warranties      71  
Article V COVENANTS      81  
SECTION 5.01.   Affirmative Covenants      81  
SECTION 5.02.   Negative Covenants      93  
SECTION 5.03.   Reporting Requirements      105  
Article VI EVENTS OF DEFAULT      110  
SECTION 6.01.   Events of Default      110  
SECTION 6.02.   Application of Funds      115  
Article VII THE AGENTS      117  
SECTION 7.01.   Authorization and Action      117  
SECTION 7.02.   Administrative Agent’s Reliance, Etc      117  
SECTION 7.03.   Agents and Affiliates      118  
SECTION 7.04.   Lender Credit Decision      118  
SECTION 7.05.   Indemnification      118  
SECTION 7.06.   Successor Administrative Agent      119  
SECTION 7.07.   Term Loan Collateral Agent      120  
SECTION 7.08.   Secured Cash Management Agreements and Secured Hedge Agreements      120  
Article VIII [RESERVED]      121  

 

ii


Article IX MISCELLANEOUS    121  
SECTION 9.01.   AMENDMENTS, ETC      121  
SECTION 9.02.   Notices, Etc      123  
SECTION 9.03.   No Waiver; Remedies      124  
SECTION 9.04.   Costs and Expenses      125  
SECTION 9.05.   Right of Set-off      126  
SECTION 9.06.   Binding Effect      126  
SECTION 9.07.   Assignments and Participations      127  
SECTION 9.08.   Execution in Counterparts      131  
SECTION 9.09.   Confidentiality      131  
SECTION 9.10.   Marshalling; Payments Set Aside      132  
SECTION 9.11.   Patriot Act Notice      132  
SECTION 9.12.   Jurisdiction, Etc      132  
SECTION 9.13.   Governing Law      133  
SECTION 9.14.   Waiver of Jury Trial      133  
SECTION 9.15.   Limitation on Liability      133  
SECTION 9.16.   Acceptable Purchaser Schedule Updates      133  
SECTION 9.17.   No Advisory or Fiduciary Responsibility      134  
SECTION 9.18.   Acknowledgment and Consent to Bail-In of Affected Financial Institutions      134  
SECTION 9.19.   Recognition of the U.S. Special Resolution Regimes      135  
SECTION 9.20.   Intercreditor Agreement      136  
SECTION 9.21.   No Partnership, Etc      137  

 

iii


SCHEDULES     
Schedule I   -    Commitments and Lending Offices
Schedule II   -    Acceptable Purchasers
Schedule III   -    Approved Closing Growth Capital Expenditures
Schedule IV   -    Pending Litigation
Schedule 3.01(a)(iv)   -    Perfect by Filing
Schedule 3.01(a)(v)   -    Closing Date Landlord Waivers
Schedule 3.01(b)   -    Existing Debt
Schedule 4.01(b)   -    Loan Parties
Schedule 4.01(c)   -    Capital Structure
Schedule 4.01(e)   -    Governmental Approvals and Authorizations
Schedule 4.01(o)   -    Environmental Disclosure
Schedule 4.01(r)   -    Leased Real Property
Schedule 4.01(t)   -    Material Contracts
Schedule 4.01(v)   -    Existing Capitalized Leases; Existing Equipment Financings
Schedule 4.01(x)   -    Maintained Insurance
Schedule 4.01(y)   -    Intellectual Property
Schedule 4.01(aa)   -    Letter of Credit Rights
Schedule 4.01(bb)   -    Commercial Tort Claims
Schedule 4.01(cc)   -    Employment Contracts
Schedule 4.01(dd)   -    Affiliate Transactions
Schedule 4.01(ee)   -    Restrictive Agreements
Schedule 5.01(d)   -    Required Insurance
Schedule 5.02(k)   -    Equipment Finance SPVs
Schedule 6.01(q)   -    Frac Fleet 16 Agreement
Schedule 9.02   -    Notice Addresses
EXHIBITS     
Exhibit A-1   -    Form of Term Loan A Note
Exhibit A-2   -    Form of Term Loan B Note
Exhibit B   -    Form of Notice of Borrowing
Exhibit C   -    Form of Assignment and Acceptance
Exhibit D   -    [Reserved]
Exhibit E   -    Form of Solvency Certificate
Exhibit F   -    Form of Consent and Agreement for Material Contracts
Exhibit G   -    Form of Frac Fleet Maintenance Report
Exhibit H   -    Frac Fleet Preservation Program
Exhibit I   -    Form of Restoration Requisition
Exhibit J   -    Form of Schedule Purchaser Update Notice
Exhibit K   -    Form of Growth Capex Withdrawal Certificate
Exhibit L   -    Form of Secured Party Designation Notice
Exhibit M   -    Form of Insurance Payment Instruction Letter

 

iv


SENIOR SECURED TERM LOAN CREDIT AGREEMENT

SENIOR SECURED TERM LOAN CREDIT AGREEMENT, dated as of May 7, 2019, among U.S. WELL SERVICES, INC., a Delaware corporation (“Parent), USWS HOLDINGS LLC, a Delaware limited liability company (“Holdings), U.S. WELL SERVICES, LLC, a Delaware limited liability company (the “Borrower”), the Subsidiary Guarantors (as hereinafter defined), the Lenders (as hereinafter defined), CLMG CORP., a Texas corporation (“CLMG”), as term loan collateral agent (together with any successor term loan collateral agent appointed pursuant to Article VII, the “Term Loan Collateral Agent”) for the Term Loan Secured Parties (as hereinafter defined), and CLMG, as administrative agent (together with any successor administrative agent appointed pursuant to Article VII, the “Administrative Agent” and, together with the Term Loan Collateral Agent, the “Agents”) for the Lenders.

PRELIMINARY STATEMENTS:

(1)     The Borrower currently (i) operates twelve (12) Frac Fleets, including three (3) Electric Frac Fleets and nine (9) Diesel Frac Fleets, and (ii) has two (2) Electric Frac Fleets scheduled for delivery as of the date hereof on or before May 2019 and January 2020, respectively (collectively, the “Initial Frac Fleets”).

(2)     Prior to execution of this Agreement, the Borrower launched a competitive process to seek financing proposals from various financial institutions to finance the Loan Parties’ operations and capital expenditure requirements.

(3)    Following review of the proposals received, the Borrower has requested that the Lenders make term loans pursuant to (i) a Term Loan A Facility in an aggregate principal amount of $150,000,000 and (ii) a Term Loan B Facility in an aggregate principal amount of $100,000,000.

(4)    The proceeds of the Facilities shall be used (i) to repay and/or refinance all Existing Debt (other than Permitted Existing Debt) of the Loan Parties, (ii) fund the Initial Growth Capex Reserve Account, (iii) pay accrued expenses and accounts payable and (iv) pay transaction fees and expenses incurred in connection with each of the Facilities and the ABL Facility.

(5)    The Borrower and the Loan Parties have agreed to secure all of the Obligations of the Loan Parties under the Loan Documents by granting to the Term Loan Collateral Agent, for the benefit of the Secured Parties, (i) first priority Liens on the Term Loan Priority Collateral (as hereafter defined) and (ii) second priority Liens on the ABL Priority Collateral (as hereafter defined).

(6)    The Lenders have indicated their willingness to agree to make available the Facilities, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows:

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

Page 1 of 161


ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.    Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

ABL Agent” has the meaning specified in the Intercreditor Agreement.

ABL Collateral Documents” has the meaning specified in the Intercreditor Agreement.

ABL Credit Agreement” has the meaning specified in the Intercreditor Agreement.

ABL Facility” has the meaning specified in the Intercreditor Agreement.

ABL Loan Documents” has the meaning specified in the Intercreditor Agreement.

ABL Loans” has the meaning specified in the Intercreditor Agreement.

ABL Obligations” has the meaning specified in the Intercreditor Agreement.

ABL Priority Collateral” means has the meaning specified in the Intercreditor Agreement.

ABL Secured Parties” has the meaning specified in the Intercreditor Agreement.

Acceptable Landlord Waiver” shall mean a landlord, mortgagee or warehouseman agreement or waiver with terms reasonably acceptable to the Collateral Agent.

Acceptable Purchaser” means each Person set forth on Schedule II.

Accepting Lenders” has the meaning specified in Section 2.04(c).

Account Control Agreements” means the BAML DACA, the Beal DACAs, the Wells Fargo DACA, and any other deposit account control agreement in form and substance reasonably satisfactory to the Administrative Agent.

Accounts” means the Collateral Accounts, the Excluded Accounts and the Specified Distributable Cash Account.

Administrative Agent” has the meaning specified in the recital of parties to this Agreement.

Administrative Agent’s Account” means the account of the Administrative Agent specified by the Administrative Agent in writing to the Lenders from time to time.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

Page 2 of 161


Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

Affected Property” means any Collateral that has been damaged, destroyed or rendered unfit for normal use as a result of a Casualty Event or an Event of Eminent Domain.

Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote ten percent (10%) or more of the Voting Interests of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise.

Agent Parties” has the meaning specified in Section 9.02(c).

Agents” has the meaning specified in the recital of parties to this Agreement.

Agreement” means this Senior Secured Term Loan Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time.

Agreement Value” means, for each Hedge Agreement, on any date of determination, the amount, if any, that would be payable by any Loan Party to its counterparty to such Hedge Agreement in accordance with its terms as if an Early Termination Event (as defined in the Intercreditor Agreement) has occurred on such date of determination.

Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Loan Party or any of their respective Subsidiaries from time to time concerning or relating to bribery or corruption.

Anti-Terrorism Laws” means any of the following (a) the Anti-Terrorism Order, (b) the Terrorism Sanctions Regulations (Title 31 Part 595 of the US Code of Federal Regulations), (c) the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the US Code of Federal Regulations), (d) the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the US Code of Federal Regulations), (e) the Patriot Act, (f) all other present and future legal requirements of any Governmental Authority addressing, relating to, or attempting to eliminate, terrorist acts and acts of war, and (g) any regulations promulgated pursuant thereto or pursuant to any legal requirements of any Governmental Authority governing terrorist acts and acts of war.

Anti-Terrorism Order” means Section 1 of Executive Order 13224 of September 24, 2001, Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (Title 12, Part 595 of the US Code of Federal Regulations).

Applicable Margin” means 8.25% per annum.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

Page 3 of 161


Appraisal Report” means that certain appraisal report of the Appraiser entitled Oil and Gas Industry Equipment Appraisal Report – April 2019 (effective as of April 17, 2019).

Appraiser” means Great American Group Advisory & Valuation Services, L.L.C.

Approved AGCE Contract” means a binding contract among the Borrower and/or one of the Subsidiary Guarantors and an Approved AGCE Counterparty, which (a) prior to the Borrower’s or such Subsidiary Guarantor’s acquisition of the applicable Electric Frac Fleet, is reasonably expected to generate AGCE EBITDA in an amount not less than (i) $18,000,000 in the aggregate over the duration of such contract and (ii) $1,000,000 in each calendar month during the tenor thereof and (b) contains customary termination provisions that protect the Borrower and/or such Subsidiary Guarantor, as applicable, in case of cancellation. For purposes of this definition, “AGCE EBITDA” means the amount equal to expected revenues (based on contracted rates set forth in the applicable Approved AGCE Contract) less expected direct costs (based upon average historical costs demonstrated by Electric Frac Fleets operated by the Borrower and its Subsidiaries).

Approved AGCE Counterparty” means a Person who (or whose credit support provider under the applicable Approved AGCE Contract, including a parent guarantor) can reasonably be expected to fulfill its obligations under the applicable Approved AGCE Contract.

Approved Closing Growth Capital Expenditures” means the Growth Capital Expenditures described on Schedule III, subject to the individual cap on Growth Capital Expenditures relating to each Frac Fleet listed thereunder.

Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Approved Growth Capital Expenditures” means (i) Approved Closing Growth Capital Expenditures and (ii) any other Growth Capital Expenditures approved by the Lenders in their sole discretion.

Asset Sale” means the assignment, conveyance, license, lease, sale, sale and leaseback, transfer, or other disposition of any Property (including any sale of Equity Interests issued by the Borrower or any Subsidiary Guarantor and any sale of Intellectual Property) by any Person, provided that in no event shall the sale or issuance of Equity Interests of the Parent or Holdings constitute Asset Sales for purposes of this definition.

Asset Sale Proceeds” means, with respect to any Asset Sale, the Net Cash Proceeds payable to the Borrower or any Guarantor in connection with such Asset Sale.

Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.07 or by the definition of “Eligible Assignee”), and accepted by the Administrative Agent, in accordance with Section 9.07 and in substantially the form of Exhibit C hereto or any other form approved by the Administrative Agent.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

Page 4 of 161


Authority” has the meaning specified in Section 5.01(c)(iii).

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

BAML DACA” means the deposit account control agreement, dated the date hereof, between the Borrower, the Collateral Agent, the ABL Agent and Bank of America.

Bank of America” means Bank of America, N.A. or its successor.

Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.

Bankruptcy Law” means the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, general assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Beal DACAs” means (i) the deposit account control agreement, dated the date hereof, between the Borrower, the Collateral Agent, the ABL Agent and Beal Bank USA, and (ii) the deposit account control agreement, dated the date hereof, between the Borrower, the Collateral Agent and Beal Bank USA.

Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

Borrower” has the meaning specified in the recital of parties to this Agreement.

Borrowing” means a Term Loan A Borrowing or a Term Loan B Borrowing, as the context may require.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Budget” has the meaning specified in Section 5.03(d).

Burdensome Restrictions” means any consensual encumbrance or restriction of the type described in clause (a) or (b) of Section 5.02(q).

Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City or Las Vegas, Nevada, and, if the applicable Business Day relates to any Loans, on which dealings are carried on in the London interbank market.

Calendar Quarter” means a calendar quarter of any calendar year.

Called Amount” has the meaning specified in Section 2.06(c).

Call Premium” means any amount payable pursuant to Section 2.06(c).

Call Premium Period” means the period commencing on the Effective Date and continuing until the fourth anniversary of the Effective Date.

Capital Expenditures” means, for any Person for any period, the sum of, without duplication, all expenditures made, directly or indirectly, by such Person or any of its Subsidiaries during such period for equipment, fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person.

Capital Expenditures for Investment” means, in respect of any of the Loan Parties, the portions of such Loan Party’s Capital Expenditures that are not Approved Growth Capital Expenditures or Maintenance Capital Expenditures.

Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

Cash” means money, currency or a credit balance in any demand account or deposit account.

Cash Dominion Trigger Period” has the meaning specified in the ABL Credit Agreement.

Cash Equivalents” means any of the following: (a) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or obligations the timely payment of the principal of and interest on which are fully guaranteed by the United States of America; and (b) certificates of deposit fully insured by the Federal Deposit Insurance Corporation in national, state or foreign commercial banks whose outstanding long-term debt is rated at least “A” or the equivalent by S&P or Moody’s.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Cash Flow Payment Date” means the fifteenth (15th) Business Day following each Sweep Calculation Date, commencing with the Sweep Calculation Date occurring on August 31, 2019 and each Sweep Calculation Date thereafter until the occurrence of any Repayment Event.

Cash Management Agreement” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

Cash Management Bank” means any Person in its capacity as a party to a Cash Management Agreement that, (a) at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of a Lender, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Cash Management Agreement, in each case, in its capacity as a party to such Cash Management Agreement (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided, however, that for any of the foregoing to be included as a “Secured Cash Management Agreement” on any date of determination by the Administrative Agent, the applicable Cash Management Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

“Casualty Event” means a casualty event that causes all or a portion of the tangible Collateral to be damaged, destroyed or rendered unfit for normal use for any reason whatsoever, other than (a) ordinary use and wear and tear or (b) any Event of Eminent Domain.

CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time.

Change of Control” means, at any time, whether by, pursuant to, or as part of, a single transaction or event or series of transactions or events, (a) any “person” or “group” (within the meaning of Rule 13(d) of the Exchange Act and the rules of the Securities and Exchange Commission thereunder as in effect on the Effective Date) other than any member or combination of members of the Sponsor Group (i) shall have acquired ownership, directly or indirectly, beneficially or of record, of more than 50% on a fully diluted basis of the aggregate voting power represented by the issued and outstanding Equity Interests of the Parent, or (ii) shall have acquired direct or indirect control of Holdings or the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were not (x) directors of the Parent on the date of this Agreement or nominated or appointed by the board of directors of the Parent, (y) appointed by directors so nominated or appointed or (z) directors nominated or appointed by Crestview pursuant to that certain Subscription Agreement, dated July 13, 2018, entered into among the Parent, Crestview and certain other parties thereto (as in effect on the Effective Date), (c) Parent shall cease to own, free and clear of all Liens or other encumbrances, at least 70% on a fully diluted basis of the aggregate voting power represented by the issued and outstanding Equity Interests of Holdings, (d) Holdings shall cease to own, free and clear of all Liens (other than Liens permitted under Section 5.02(a)(i) and Section 5.02(a)(ii) or other encumbrances, at least 100% on a fully diluted basis of the aggregate voting power represented by the issued and outstanding Equity Interests in the Borrower, (e) a

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Disqualified Owner shall become a direct or indirect owner of a 50% or greater ownership interest in or otherwise control any Loan Party or (f) a “change of control” or any other comparable term under, and as defined in, any of the ABL Loan Documents shall have occurred, provided, that no Change of Control shall be deemed to have occurred in the circumstance set forth in clause (a) above if the proposed transferee of such beneficial interests is an Acceptable Purchaser, so long as such Acceptable Purchaser has provided a parent guarantee of the Obligations in form and substance, and from an entity the creditworthiness of which is, in each case acceptable to the Administrative Agent. For the purposes of this definition, “control” shall be defined to mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Borrower, whether through the ability to exercise voting power, contract or otherwise.

CLMG” has the meaning specified in the recital of parties to this Agreement.

Collateral” means all Equity Interests issued by the Borrower and its Subsidiaries and all other Property of the Loan Parties (other than the Equity Interests in the Parent and Holdings), whether now owned or hereafter acquired, other than Excluded Property.

Collateral Accounts” means the following special, segregated and irrevocable accounts (in each case pledged to the Secured Parties) in the form of deposit accounts in the name of the Borrower but, solely in the case of the Initial Growth Capex Reserve Account, the Reinvestment Account, the Loss Proceeds Account and the Prepayment Account, under the dominion and control of the Term Loan Collateral Agent, as set forth herein and otherwise in accordance with the applicable Account Control Agreement in respect of such Collateral Account:

(a)    Account No. 4001455469 entitled “USWS Initial Growth Capex Reserve Account” opened at Beal Bank USA in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Initial Growth Capex Reserve Account”);

(b)    Account No. 4001422654 entitled “USWS Reinvestment Account” opened at Beal Bank USA in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Reinvestment Account”);

(c)     Account No. 4001489846 entitled “USWS Loss Proceeds Account” opened at Beal Bank USA in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Loss Proceeds Account”);

(d)    Account No. 4001412578 entitled “USWS Prepayment Account” opened at Beal Bank USA in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Prepayment Account”);

(e)    Account No. 488073974950 entitled “USWS Collections Account” opened at Bank of America in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Collections Account”);

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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(f)     prior to the occurrence of the Discharge of ABL Obligations, Account No. 488073974947 entitled “USWS Revenue Account” opened at Bank of America in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 and, on and after the occurrence of the Discharge of ABL Obligations, an account entitled “USWS Revenue Account” opened at Beal Bank USA in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Revenue Account”);

(g)    Account No. 4971778865 entitled “Restricted Collections Account” opened at Wells Fargo Bank, N.A. in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Wells Fargo Collections Account”);

(h)     Account No. 4971778873 entitled “Operating Account” opened at Wells Fargo Bank, N.A. in the name of the Borrower pursuant to which funds shall be deposited and applied in accordance with Section 2.14 (the “Wells Fargo Revenue Account”).

Collateral Inspection Actions” has the meaning specified in Section 5.01(f)(ii).

Collateral Inspection Party” means any engineer, mechanic, technical personnel, consultant, inspector or other third party representative independently engaged by the Administrative Agent or the Lenders to perform the Collateral Inspection Actions.

Collateral Report” has the meaning specified in Section 5.01(f)(ii).

Collections” means all cash collections and other cash proceeds received on account of a right to payment for services rendered from or on behalf of the applicable account debtor.

Collections Account” has the meaning specified in the definition of “Collateral Accounts”.

Commercial Agreements” means, collectively, the contracts with Customers that relate to oil field services and related activities and to ancillary, supplementary and complementary lines of business and that provide any source of Revenue.

Commitment” means, the Term Loan A Commitment and the Term Loan B Commitment, as applicable.

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C § 1 et seq.), as amended from time to time, and any successor statute.

Communications” has the meaning specified in Section 9.02(b).

Competitor” means any Person (other than the Loan Parties, their Subsidiaries or their respective Affiliate) engaged primarily and actively in a business similar to the business of the Borrower.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Confidential Information” means information that any Loan Party or its respective Subsidiaries furnishes to any Agent or any Lender designated as confidential, but does not include any such information that is or becomes generally available to the public other than as a result of a breach by such Agent or any Lender of its obligations hereunder or that is or becomes available to such Agent or such Lender from a source other than a Loan Party or any of its Subsidiaries that is not, to the best of such Agent’s or such Lender’s knowledge, acting in violation of a confidentiality agreement with a Loan Party or its Subsidiaries.

“Consent and Agreement” means with respect to any Material Contract, a consent and agreement in favor of the Term Loan Collateral Agent (for the benefit of the Secured Parties) in substantially the form attached hereto as Exhibit F or otherwise in form and substance reasonably satisfactory to the Term Loan Collateral Agent and the Administrative Agent.

Consolidated” refers to the consolidation of accounts in accordance with GAAP.

Contractual Obligations” means, as applied to any Person, any provision of any Equity Interests issued by such Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which such Person is a party or by which it or any of its Properties is bound.

Crestview” means Crestview Partners III GP, L.P., Crestview III USWS, L.P. and Crestview III USWS TE, LLC.

Custodial Administration Agreement” means any custodial administration agreement in form and substance satisfactory to the Administrative Agent and entered into among the Servicer, the Term Loan Collateral Agent, the ABL Agent and the Loan Parties party thereto.

Customer” means the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with any Loan Party, pursuant to which such Loan Party is to deliver any Property or perform any services.

Debt” of any Person means, without duplication, (a) Debt for Borrowed Money of such Person, (b) all obligations of such Person for the deferred purchase price of Property or services (other than trade payables not overdue (unless being contested in good faith by appropriate proceedings for which reserves and other appropriate provisions, if any, required by GAAP shall have been made) by more than one-hundred and twenty (120) days incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property), (e) all obligations of such Person as lessee under Capitalized Leases, (f) all Disqualified Equity Interests in such Person, valued, as of the date of determination, at the greater of (i) the maximum aggregate amount that would be

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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payable upon maturity, redemption, repayment or repurchase thereof (or the value of Disqualified Equity Interests or Debt into which such Disqualified Equity Interests are convertible or exchangeable) and (ii) the maximum liquidation preference of such Disqualified Equity Interests, (g) all obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (h) all Guaranteed Debt of such Person, (i) all obligations under any earn-out (which for all purposes of this Agreement shall be valued at the maximum potential amount payable with respect to each such earn-out) and (j) all indebtedness and other payment obligations referred to in clauses (a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment obligations, not to exceed the value of the Property on which such Lien exists.

Debt for Borrowed Money” of any Person means, at any date of determination, the sum of (a) all items that, in accordance with GAAP, would be classified as indebtedness on a Consolidated balance sheet of such Person at such date, (b) all obligations of such Person under acceptance, letter of credit or similar facilities at such date and (c) all Synthetic Debt of such Person at such date.

Debt Proceeds” means, with respect to the incurrence or issuance of any Debt by the Borrower or any Guarantor (other than Permitted Debt), the Net Cash Proceeds payable to the Borrower, any Guarantor or any of their respective Subsidiaries in connection with such incurrence or issuance.

Declined Mandatory Prepayment Proceeds” has the meaning specified in Section 2.04(c).

Declining Lender” has the meaning specified in Section 2.04(c).

Default” means any Event of Default or any event that would constitute an Event of Default but for the passage of time or the requirement that notice be given or both.

Default Interest” has the meaning specified in Section 2.05(b).

Deferral Period” means the period commencing on April 1, 2020 and expiring on March 31, 2022.

Designated Leased Property” shall mean any real property leased or subleased by any Loan Party.

Diesel Frac Fleet” means a Frac Fleet whose primary drive train is powered by diesel generators.

Discharge of ABL Obligations” has the meaning specified in the Intercreditor Agreement.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Disqualified Equity Interest” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:

(a) matures or is mandatorily redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;

(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Debt or Equity Interests (other than solely for Qualified Equity Interests in such Person or cash in lieu of fractional shares of such Equity Interests); or

(c) is redeemable (other than solely for Qualified Equity Interests in such Person and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by the Parent or any Subsidiary, in either case, in whole or in part, at the option of the holder thereof;

in each case, on or prior to the date 180 days after the Maturity Date; provided that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” (or similar event, however denominated) shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after a Repayment Event and (ii) an Equity Interest in any Person that is issued to any employee or to any plan for the benefit of employees or by any such plan to such employees shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by such Person or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.

Disqualified Institution” means, on any date, any Person that is a direct Competitor of the Borrower, which Person has been designated by the Borrower as a “Disqualified Institution” by written notice to the Administrative Agent and the Lenders not less than ten (10) Business Days prior to such date; provided that “Disqualified Institutions” shall exclude any (x) commercial bank organized under the laws of the United States or any State thereof that has a combined capital and surplus and undivided profits of $500,000,000 or more, and (y) pooled investment vehicle or entity (including any Affiliates) that is or would reasonably be recognized or categorized as an investment, private equity, debt, hedge, distressed debt fund by reputable institutions that are prominent participants in the financial markets.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Disqualified Owner” means any Person that, as of the date it first becomes a direct or indirect owner of membership interests in the Borrower: (i) is, or is an Affiliate of a Sanctioned Person or a Person that is, described by or designated in the Anti-Terrorism Order; (ii) is, or is an Affiliate of a Person that is, in violation of the Sanctions or Anti-Terrorism Laws; or (iii) has, or is an Affiliate of a Person that has, been convicted of money laundering (under 18 U.S.C. Sections 1956 or 1957), which conviction has not been overturned; provided, that a Person shall not be a Disqualified Owner if: (x) prior to the date that the Person first becomes a direct or indirect owner of membership interests in the Borrower the Borrower provides the Secured Parties with all documentation and other written information required under applicable “know your customer” and anti-money laundering rules, regulations and requirements (including the PATRIOT Act) in respect of such Person; and (y) as of the date the Person first becomes a direct or indirect owner of the membership interests in the Borrower, such Person has certified to the Administrative Agent that none of the criteria set forth in the foregoing clauses (i) through (iii) in this definition are applicable to such Person. For the avoidance of doubt, each Person that is a parent company of the Borrower on the Effective Date, and each wholly owned direct or indirect subsidiary thereof, shall not be a Disqualified Owner.

Distributable Cash” means, as of any date of determination, any amounts deposited in the Specified Distributable Cash Account.

Division” means the division of a limited liability company into two (2) or more limited liability companies pursuant to a “plan of division” or similar method within the meaning of the Delaware Limited Liability Company Act or similar statute in any other state.

Dollars” and the sign “$” mean the lawful currency of the United States of America.

DQ List” has the meaning specified in Section 9.07(m).

Early Termination Event” has the meaning specified in the Intercreditor Agreement.

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Effective Date” has the meaning specified in Section 3.01.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Electric Frac Fleet” means a Frac Fleet whose primary drive train is powered by a natural-gas combustion turbine.

Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d) any Person that is not a Disqualified Institution, and (e) any other Person (other than an individual) approved by the Administrative Agent (such approval not to be unreasonably withheld or delayed); provided, further, that no Loan Party or any of its Affiliates shall qualify as an Eligible Assignee under this definition.

Eminent Domain Proceeds” means, with respect to any Event of Eminent Domain, the Net Cash Proceeds payable to the Borrower or any Guarantor in connection with such Event of Eminent Domain.

Environmental Action” means any action, suit, demand, demand letter, claim, written notice of non-compliance or violation, written notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

Environmental Complaint” has the meaning specified in Section 5.01(c)(iii).

Environmental Consultant” means Terracon Consultants, Inc.

Environmental Law” means any common law or Federal, state or local statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction or decree relating to pollution or protection of the environment or, as such relates to exposure to Hazardous Materials, health, or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, Release, threatened Release or discharge of Hazardous Materials.

Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

Equipment Finance SPV” means each special purpose entity that is formed by the Borrower and wholly-owned by a Subsidiary Guarantor to enter into a Non-Lender Financed Capitalized Lease or Non-Lender Financed Equipment Financing.

Equipment Financings” means each financing obtained in the ordinary course of business which is secured solely by furnishings, fixtures and equipment acquired using the proceeds of such financing.

Equity Interests” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

Equity Issuance” means any sale or issuance of any Equity Interests by any Loan Party (other than any Equity Interests (including warrants) issued by any of the Guarantors to any other Loan Party).

Equity Issuance Proceeds” means the proceeds from any sale of Qualified Equity Interests of Parent or Holdings received by any Loan Party and from any cash capital contribution to any Loan Party from any other Person (other than a Loan Party or Subsidiary thereof).

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under common control with any Loan Party, within the meaning of Section 414 (b) or (c) of the Internal Revenue Code.

ERISA Event” means (a)(i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30 day notice requirement with respect to such event has been waived by the PBGC or (a)(ii) the requirements of Section 4043(b) of ERISA apply with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 303(k) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 206(g)(5) of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan.

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Eurocurrency Liabilities” has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

Eurodollar Rate” means, for any Interest Period in respect of a Loan, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upwards, if necessary, to the nearest one hundredth of one percent (1/100 of 1%)) equal to the London interbank offered rate administered by ICE Benchmark Administration (or any other person which takes over the administration of that rate) for deposits in U.S. Dollars displayed on the ICE LIBOR USD page (“ICE LIBOR”) as published by Bloomberg (or other commercially available source providing quotations of ICE LIBOR), as designated by the Administrative Agent from time to time, at approximately 11:00 A.M. (London time) on the Interest Rate Determination Date for such Interest Period, as the London interbank offered rate for deposits in Dollars with a maturity corresponding to the applicable Eurodollar Rate Period, by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period, as applicable; provided that the Eurodollar Rate shall in no event be less than two percent (2.00%) per annum at any time. If at any time the Administrative Agent reasonably determines that (i) adequate and reasonable means do not exist for ascertaining the Eurodollar Rate and such circumstances are unlikely to be temporary or (ii) such circumstances have not arisen but the supervisor for the administrator of the Eurodollar Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the Eurodollar Rate shall no longer be used for determining interest rates for loans, then the Eurodollar Rate shall mean the rate per annum equal to the highest of (a) the “Prime Rate” as reported by the Wall Street Journal in effect on such day less one percent (1.00%) and (b) the Federal Funds Rate in effect on such day plus one half of one percent (0.50%) (subject at all times to the requirement that such rate per annum shall not be less than two percent (2.00%)).

Eurodollar Rate Period” means, for any Interest Period in respect of a Loan, a period of three months.

Eurodollar Rate Reserve Percentage” means, for any Interest Period in respect of a Loan, the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Loans is determined) having a term equal to such Interest Period.

Event of Eminent Domain” means any action, series of actions, omissions or series of omissions by any Governmental Authority (a) by which such Governmental Authority appropriates, confiscates, condemns, expropriates, nationalizes, seizes or otherwise takes all or a material portion of the Property of any Loan Party (including any Equity Interests issued or owned by any Loan Party (other than Equity Interests issued by Parent or by Holdings to the extent not owned by Parent)), or (b) by which such Governmental Authority assumes custody or control of

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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the Property (other than immaterial portions of such Property) or business operations of any Loan Party or any Equity Interests issued or owned by any Loan Party (other than Equity Interests issued by Parent or by Holdings to the extent not owned by Parent).

Events of Default” has the meaning specified in Section 6.01.

Excess Cash Flow” means one hundred percent (100%) of the aggregate amount remaining on deposit in or credited to the Revenue Account after giving effect to the withdrawals, holdbacks and transfers prescribed pursuant to priorities first through ninth of the “Cash Waterfall” set forth in Section 2.14(c).

Excess Cash Flow Payment Amount” means, as of each Sweep Calculation Date, an amount equal to 100% of Excess Cash Flow

Excluded Account” means (a) the Payroll Account and (b) the Workers Compensation Account.

Excluded Property” has the meaning specified in the Term Loan Security Agreement.

Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty (or any guarantee of such Guarantor in

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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respect of any Swap Obligation under any Hedge Agreements) of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation or at any other time as is required for purposes of the Commodity Exchange Act or regulations. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

Excused Payment” means all amounts designated as Excused Payments under Section 5.02(e), Section 5.02(p) and Section 5.02(r).

Existing Capitalized Leases” means those certain Capitalized Leases set forth on Schedule 4.01(v) on the Effective Date.

Existing Debt” means the Debt of the Loan Parties outstanding immediately before the occurrence of the Effective Date and listed on Schedule 3.01(b).

Existing Equipment Financings” means those certain Equipment Financings set forth on Schedule 4.01(v) on the Effective Date.

Extension Fee” has the meaning given to such term in the Second Amendment Agreement.

Exit Fee” means any exit fee payable pursuant to Section 2.06(d).

Facility” means, each of the Term Loan A Facility and the Term Loan B Facility, as the context may require, and “Facilities” means, collectively the Term Loan A Facility and the Term Loan B Facility.

Federal Funds Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher one hundredth of one percent (1/100 of 1%)) equal to the weighted average of the rates on overnight federal funds transactions by depositary institutions, as determined in such manner as the Federal Reserve Bank of New York (the “NYFRB”) shall set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published for any day that is a Business Day, the Federal Funds Rate for such day shall be the average of the quotations for such day for such transactions received

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

Fee Letter” means the fee letter, dated as of the date hereof, between the Administrative Agent and the Borrower.

Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

Fiscal Year” means a fiscal year of the Borrower and its Subsidiaries ending on December 31 of each calendar year.

Force Majeure Event” shall mean acts, occurrences, events and conditions beyond the reasonable control of the party claiming relief on the basis of the occurrence of the Force Majeure Event which delays or renders impossible the performance of the Loan Parties of their obligations under this Agreement and which could not have been prevented or avoided by the Loan Parties through the exercise of due diligence, including acts of God, earthquakes, fires, floods, insurrection, terrorism, acts of war (whether declared or otherwise).

Frac Fleet” means each group consisting of fracking rigs, trucks, pumps, primary drive train for pumps (whether powered by diesel generators or natural-gas combustion turbines), a data van and other vehicles and equipment owned by one or more of the Loan Parties that, taken as a whole, (i) when deployed, is capable of providing a Customer with a typical level of hydraulic fracturing services in accordance with the applicable Commercial Agreement in any one location based upon historical operations of the Borrower and the Subsidiary Guarantors and (ii) represents, based on historical operations, on average, between 40,000 and 50,000 hydraulic horsepower.

Frac Fleet 16” has the meaning specified in Schedule III.

Frac Fleet Maintenance Report” means a monthly report substantially in the form of Exhibit G.

Frac Fleet Preservation Program” means the maintenance program that addresses the repair, maintenance and storage of each idle Frac Fleet as more particularly described in Exhibit H.

Fund” means any Person (other than an individual) that is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course.

Funds Flow Memorandum” shall mean the memorandum setting forth the flow of funds at closing and the funding of the Term A Loans and Term B Loans, as approved by the Administrative Agent, and a related letter of direction.

G&A Cap” means, for each Calendar Quarter following the Calendar Quarter ending on March 31, 2020, an amount of cash general and administrative costs

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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in an aggregate amount equal to (a) $24,000,000 at any time when the Initial Lenders and their respective Affiliates (and/or any commonly-owned Affiliates thereof) are “Lenders” hereunder, and (b) $30,000,000 at any time that the Initial Lenders and their respective Affiliates (and/or any commonly-owned Affiliates thereof) cease to be “Lenders” hereunder

, in each case of clause (a) and (b), per Calendar Quarter (calculated on a trailing 12 month basis) minus an amount equal to the aggregate cash general and administrative costs incurred by the Loan Parties during the three Calendar Quarters immediately preceding such Calendar Quarter, as increased by three percent (3%) per calendar year commencing in 2020; provided, that the G&A Cap shall exclude ( i) non-cash costs, ( ii) transaction costs attributable to the Facilities and incurred on or before the Effective Date, transaction costs incurred in connection with the Second Amendment Agreement and the related transactions consummated in connection therewith, and costs and expenses for the services of any Collateral Inspection Party (iii) restructuring fees associated with headcount reductions, ( iv) Public Company Operating Costs and ( v) other costs and expenses, in each case, as approved by the Lenders in their reasonable discretion; provided, further, that the G&A Cap shall exclude up to $1,000,000 in the aggregate in any fiscal year of extraordinary costs and unusual or non-recurring expenses.

GAAP” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied.

Governmental Authority” means any nation or government, any state, province, city, municipal entity or other political subdivision thereof, and any governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board, bureau or similar body, whether federal, state, provincial, territorial, local or foreign.

Governmental Authorization” means any authorization, approval, consent, franchise, license, covenant, order, ruling, permit, certification, exemption, notice, declaration or similar right, undertaking or other action of, to or by, or any filing, qualification or registration with, any Governmental Authority.

Growth Capex Withdrawal Certificate” means each withdrawal certificate delivered to the Agents substantially in the form of Exhibit K hereto.

Growth Capital Expenditures” means, in respect of the Borrower and/or any Subsidiary Guarantor, Capital Expenditures that are (a)(i) used to finance the acquisition of a new generation

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Electric Frac Fleet for which the Borrower or a Subsidiary Guarantor has entered into an Approved AGCE Contract and (a)(ii) made on any date on which (x) no existing, operational Electric Frac Fleet has been idle for more than three (3) calendar months and (y) not more than five (5) Diesel Frac Fleets have been idle for more than three (3) calendar months or (b) approved by the Required Lenders in their sole and absolute discretion.

Guaranteed Debt” means, with respect to any Person, any obligation or arrangement of such Person to guarantee or otherwise assure payment of any Debt (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement or (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor or (iii) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The amount of any Guaranteed Debt shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guaranteed Debt is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Guaranteed Debt) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder), as determined by such Person in good faith.

Guarantors” means Parent, Holdings, the Borrower and each Subsidiary Guarantor.

Guaranty” has the meaning specified in the Term Loan Security Agreement.

Hazardous Discharge” has the meaning specified in Section 5.01(c)(iii).

Hazardous Materials” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials and polychlorinated biphenyls and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant or which are regulated or can give rise to liability under any Environmental Law.

Hedge Agreements” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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(including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

Hedge Bank” means any Person in its capacity as a party to a Hedge Agreement that, (a) at the time it enters into an interest rate Hedge Agreement not prohibited under Article V, is a Lender or an Affiliate of a Lender, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Hedge Agreement not prohibited under Article V, in each case, in its capacity as a party to such Hedge Agreement (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided, in the case of a Secured Hedge Agreement with a Person who is no longer a Lender (or Affiliate of a Lender), such Person shall be considered a Hedge Bank only through the stated termination date (without extension or renewal) of such Secured Hedge Agreement and provided further that for any of the foregoing to be included as a “Secured Hedge Agreement” on any date of determination by the Administrative Agent, the applicable Hedge Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

Holdings” has the meaning specified in the recital of parties to this Agreement.

ICE LIBOR” has the meaning specified in the definition of “Eurodollar Rate”.

Incremental Facility” has the meaning specified in Section 2.01(c).

Indemnified Costs” has the meaning specified in Section 7.05(a).

Indemnified Party” has the meaning specified in Section 9.04(b).

Initial Frac Fleets” has the meaning specified in the recital of parties to this Agreement.

Initial Growth Capex Reserve Account” has the meaning specified in the definition of “Collateral Accounts”.

Initial Lenders” means the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the Initial Lenders.

Initial Operating Budget” has the meaning specified in Section 3.01(a)(xiii).

Initial Pledged Debt” has the meaning specified in the Term Loan Security Agreement.

Initial Pledged Equity” has the meaning specified in the Term Loan Security Agreement.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Initial Repair Completion Period” has the meaning specified in Section 5.01(i).

Inspection Fees Cap” has the meaning specified in Section 5.01(f)(iii).

Insufficiency” means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

Insurance Consultant” means Alliant Insurance Services, Inc.

Insurance Proceeds” means, with respect to any Casualty Event, the Net Cash Proceeds payable to the Borrower or any Guarantor from time to time with respect to such Casualty Event.

Intellectual Property” means property constituting under any applicable law a patent, patent application, registered copyright, copyright application for copyright registration, trademark, trademark application, service mark, trade name or trade secret. Patents and patent applications include any provisional and non-provisional applications, issued patents including those based on continuation, continuation-in-part, divisional and substitute applications, patents resulting from a reissue or reexamination proceeding, and any foreign equivalents and improvements thereof, and any claims for past and future infringements of the patents.

Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of May 7, 2019, by and among the Administrative Agent, the ABL Agent, the Loan Parties and the other Persons party thereto from time to time, as amended, restated, supplemented or otherwise modified from time to time.

Interest Payment Date” means, with respect to any Loan, the last day of each March, June, September and December; provided, that, in addition to the foregoing, in each case, each of (x) the date upon which the Loan has been paid in full (y) the Maturity Date, and (z) the Repayment Event, shall be deemed to be an “Interest Payment Date” with respect to any interest that has then accrued under this Agreement.

Interest Period” means, for each Loan, the period commencing on the date of such Loan and ending on the Interest Payment Date occurring at the end of second full Calendar Quarter following the date on which such Loan is made, and, thereafter, each Eurodollar Rate Period commencing on the day following the last day of the immediately preceding Interest Period, and ending on the last day of the period determined pursuant to the provisions below.

(a)    Interest Periods commencing on the same date shall be of the same duration;

(b)    whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day;

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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(c)    no Interest Period for a Loan may end later than the Maturity Date; and

(d)    whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.

Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

Investment” in any Person means any loan or advance to such Person, any purchase or other acquisition of any Equity Interests or Debt or the assets comprising a division or business unit or a substantial part or all of the business of such Person, any capital contribution to such Person or any other direct or indirect investment in such Person, including, without limitation, any acquisition by way of a merger or consolidation (or similar transaction) and any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (h) or (i) of the definition of “Debt” in respect of such Person.

Lenders” means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 9.07 for so long as such Person shall be a party to this Agreement.

Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.

Lien” means, with respect to any Property, (a) any mortgage, deed of trust, deed to secure debt, lien (statutory or otherwise), pledge, hypothecation, encumbrance, collateral assignment, charge or security interest in, on or of such Property, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing), relating to such Property, and (c) in the case of Equity Interests or debt securities, any purchase option, call or similar right or preferential arrangement of a third party with respect to such Equity Interests or debt securities. For the avoidance of doubt, “Lien” shall not include any netting or set-off arrangements under any Contractual Obligation (other than Contractual Obligations constituting Debt for Borrowed Money) otherwise permitted under the terms of the Loan Documents.

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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Liquidity Reserve Cap” means, as of any Sweep Calculation Date, an amount equal to $15,000,000.

Liquidity Reserves” means an aggregate amount not to exceed the Liquidity Reserve Cap then on deposit in or credited to the Revenue Account on any Sweep Calculation Date as such amount (and the usage thereof) is detailed in the Net Cash Flow Certificate delivered in accordance with Section 5.03(k) for each Cash Flow Payment Date. The amount of Liquidity Reserves on the Effective Date shall be $15,000,000.

Loan” means a Term A Loan or a Term B Loan.

Loan Documents” means (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Intercreditor Agreement, (e) the Term Loan Collateral Documents, (f) the Custodial Administration Agreement (if any), (g) the Fee Letter , (h) the Second Amendment Agreement, and (i) any other document that is executed in connection with the transactions contemplated herewith or therewith and is deemed in writing by the Borrower and the Administrative Agent to constitute a Loan Document, in each case, for clauses (a) through ( i), as amended, restated, supplemented or otherwise modified from time to time.

Loan Parties” means the Borrower and the Guarantors.

Loss Proceeds Account” has the meaning specified in the definition of “Collateral Accounts”.

Maintenance Capital Expenditures” means, in respect of the Borrower and/or any Subsidiary Guarantor, Capital Expenditures that are made (a) for the maintenance, repair, enhancement, or refurbishment of any of the equipment related to the Frac Fleets in accordance with applicable law and Prudent Industry Practice and (b) in the ordinary course of business and consistent with past practice of the Borrower.

Mandatory Repair Notification” has the meaning specified in Section 5.01(i).

Margin Stock” has the meaning specified in Regulation U.

Material Adverse Change” means, individually or in the aggregate,

 

  (a)

any Material Adverse Effect;

 

  (b)

any pending or threatened Event of Eminent Domain relating to any of the Collateral which, individually or in the aggregate, could reasonably be expected to impair Collateral with a value in excess of $5,000,000;

 

  (c)

the existence of any unrepaired damage to any of the Collateral in an aggregate amount in excess of $2,500,000;

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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  (d)

other than as set forth on Schedule IV, the existence of any litigation, which when taken in the context of the Loan Parties individually or in the aggregate, could reasonably be expected to result in liability in excess of $10,000,000; or

 

  (e)

any insolvency proceedings relating to any Loan Party or any of the Collateral, including any insolvency proceeding that is or may be pending or threatened.

Material Adverse Effect” means a material adverse effect on (a) the financial condition, business, results or operations of the Loan Parties, taken as a whole, (b) the rights, remedies or benefits of any Agent or the Lenders, taken as a whole, under any Loan Document, (c) the ability of the Loan Parties to perform their respective Obligations under the Loan Documents or (d) the validity, binding effect, enforceability or priority of the Liens and security interests granted to the Term Secured Parties under the Loan Documents.

Material Contract” means each of (a) the agreements listed on Schedule 4.1(t) and (b) any other Contractual Obligation entered into on or after the Effective Date (other than any Loan Document, any customer contract or any Contractual Obligation under other Permitted Debt) of any Loan Party for which breach, nonperformance or cancellation could reasonably be expected to have a Material Adverse Effect.

Maturity Date” means the earlier of (a) December 5, 2025 and (b) the date the Loans become due and payable pursuant to Section 6.01.

Minimum Frac Fleet Requirement” means, on any date of determination, that all Frac Fleets owned by the Loan Parties are (x) capable of being deployed or (y) being actively repaired and are capable of being deployed within 30 days of such date of determination, with each such Frac Fleet (a) being capable of providing a Customer with a typical level of hydraulic fracturing services in accordance with the applicable Commercial Agreement in any one location based upon historical operations of the Borrower and its Subsidiaries and (b) representing, on average, between 40,000 and 50,000 hydraulic horsepower.

Moody’s” means Moody’s Investors Service, Inc., and any successor thereto.

Mortgages” means any deed of trust, trust deed, mortgage, leasehold mortgage or leasehold deed of trust delivered from time to time after the date hereof pursuant to Section 5.01(j), in each case as amended.

Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA

 

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Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

Net Cash Flow Certificate” has the meaning specified in Section 5.03(k).

Net Cash Proceeds” means:

(a)    with respect to any Asset Sale, the excess, if any, of (i) the sum of Cash and Cash Equivalents received by any Loan Party in connection with such Asset Sale minus (ii) the sum of (A) the out of pocket costs, fees, commissions, premiums and expenses (including legal and accounting costs, fees and expenses and title and recording fees, costs and expenses) reasonably incurred directly or indirectly by any Loan Party in connection with such Asset Sale to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state and local taxes paid or reasonably estimated to be payable by any Loan Party in connection therewith to the extent such amounts were not deducted in determining the amount referred to in clause (i); and

(b)    with respect to the incurrence or issuance of any Debt for Borrowed Money by any Loan Party, the excess if any, of (i) the sum of the Cash and Cash Equivalents received by any Loan Party in connection with such incurrence or issuance minus (ii) the underwriting discounts and commissions or other similar payments, and other out of pocket costs, fees, commissions, premiums and expenses (including legal and accounting costs, fees and expenses and title and recording fees, costs and expenses) reasonably incurred directly or indirectly any Loan Party in connection with such incurrence or issuance to the extent such amounts were not deducted in determining the amount referred to in clause (i); and

(c)    with respect to any Equity Issuance, the excess of (i) the sum of the Cash and Cash Equivalents received by any Loan Party in connection with such sale or issuance minus (ii) the underwriting discounts and commissions or similar payments, and other out of pocket costs, fees, commissions, premiums and expenses (including legal and accounting costs, fees and expenses), reasonably incurred by any Loan Party in connection with such sale or issuance to the extent such amounts were not deducted in determining the amount referred to in clause (i);

(d)    with respect to any Event of Eminent Domain or Casualty Event, the excess, if any, of (i) the sum of Cash and Cash Equivalents received by any Loan Party in connection with such Event of Eminent Domain or Casualty Event minus (ii) the sum of (A) the out of pocket costs and expenses reasonably incurred by any Loan Party in connection with the collection, enforcement, negotiation, consummation, settlement, proceedings, administration or other activity related to the receipt or collection of the relevant proceeds to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state and local taxes reasonably estimated to be payable as a result of thereof to the extent such amounts were not deducted in determining the amount referred to in clause (i); and

 

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(e)    with respect to any termination of any Commercial Agreement, the excess, if any, of (i) the sum of Cash and Cash Equivalents received by any Loan Party in connection with such termination minus (ii) the sum of (A) the out of pocket costs and expenses reasonably incurred by any Loan Party in connection with the collection, enforcement, negotiation, consummation, settlement, proceedings, administration or other activity related to the receipt or collection of the relevant proceeds to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state and local taxes reasonably estimated to be payable as a result of thereof to the extent such amounts were not deducted in determining the amount referred to in clause (i),

provided that, any Net Cash Proceeds received in the form of Cash Equivalents by any Loan Party shall be converted to Cash prior to prepayment of the Loans in accordance with Section 2.04.

Non-Lender Financed Capitalized Leases” means Capitalized Leases of any Equipment Finance SPV as to which neither Borrower nor any of the Guarantors (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Debt) or (b) is directly or indirectly liable as a guarantor or otherwise.

Non-Lender Financed Equipment Financings” means Equipment Financings of any Equipment Finance SPV as to which neither Borrower nor any of the Guarantors (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Debt) or (b) is directly or indirectly liable as a guarantor or otherwise.

Non-Speculative Interest Rate Hedge Agreements” means, with respect to any Person, any interest rate Hedge Agreement the purpose of which is to hedge or mitigate the commercial risks of such Person and which covers a notional amount not to exceed at any time the outstanding principal amount of the Loans and is for a term that ends on or prior to the Maturity Date.

Note” means each Term Loan A Note and Term Loan B Note.

Notice of Borrowing” means a Notice of Borrowing, in substantially the form of Exhibit B hereto, given by the Borrower in accordance with Section 2.02.

NPL” means the National Priorities List under CERCLA.

O&M Costs” means, for any period, the sum, computed without duplication, of the following (in each case incurred by any Loan Party and not reimbursed by any other Person, except if the proceeds of such reimbursement are deposited into the Revenue Account): (a) direct expenses of administering and operating the Frac Fleets or the related yards where such Frac Fleets are stored and of maintaining the Frac Fleets and the related yards where such Frac Fleets are stored in good repair and operating condition (including routine operating and maintenance expenses, Maintenance Capital Expenditures, expenses under spare parts agreements, fuel costs, payments under leases and other costs of utilities, supplies, spare parts and other services), (b) insurance costs or surety bonds (including premiums and deductibles or costs associated with complying with any applicable insurance or bonding obligations under this Agreement), (c) costs, expenses

 

Senior Secured Term Loan Credit Agreement among U.S. Well Services, Inc., USWS Holdings LLC, U.S. Well Services, LLC, the Subsidiary Guarantors, the Initial Lenders, and CLMG Corp. dated as of May 7, 2019

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and fees attendant to obtaining and maintaining in effect any Governmental Authorization, (d) legal, accounting and other professional fees and expenses attendant to any of the foregoing items, (e) sale, franchise, margin, licensing, value-added, excise, real estate, use, property and other non-income state, local and federal taxes, (f) any Capital Expenditures for Investments, subject to the cap on such expenses set forth in Section 5.02(m)(iii), (g) payments on account of any Permitted Debt described in Sections 5.02(b)(v)(A), 5.02(b)(v)(B), and 5.02(b)(vi), (h) any ordinary course settlement payments in connection with Hedge Agreements entered into in accordance with the terms of the Loan Documents and (i) all other expenses, fees and costs incurred by any Loan Party, directly in connection with the ownership, operation, maintenance or administration of any Frac Fleet; provided that all of the foregoing costs and expenses shall be determined on a cash basis and shall not include depreciation, amortization and other non-cash items; provided, further, that “O&M Costs” shall not include: (A) payments of any kind during such period to the holders of Equity Interests of the Borrower or any Affiliate thereof (other than (x) to the Borrower or any Guarantor (other than Holdings or the Parent)), (y) to any Affiliate as payment of or reimbursement for costs that would be permitted to be paid by the Borrower or any Subsidiary Guarantor as O&M Costs if incurred or paid directly by the Borrower or (z) payments that are made in compliance with Section 5.01(i)), (B) payments of Capital Expenditures other than Maintenance Capital Expenditures and Capital Expenditures for Investments (subject to the cap on such expenses set forth in Section 5.02(m)(iii)), (C) amounts payable under the ABL Loan Documents, (D) Termination Payments of any kind, (E) payments to repair or restore Property during such period with Net Cash Proceeds attributable to any Casualty Event or Event of Eminent Domain, or (F) except as provided in clause (h), any payments or expenses related to any Debt for Borrowed Money or other Permitted Debt (including Debt under the ABL Credit Agreement).

Obligation” means all obligations of every nature of each Loan Party from time to time owed to any Agent (including former Agents) or any Lender from time to time outstanding hereunder and under the other Loan Documents or otherwise under any Loan, Secured Cash Management Agreement or Secured Hedge Agreement, including, without limitation, all principal and all interest, fees, premium, the Call Premium, the Exit Fee, the Yield Maintenance Fee, the Extension Fee, expenses, and other charges accrued or accruing (or which would, absent commencement of any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto, accrue) on or after the commencement of any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto at the rate provided for herein or the relevant Loan Document, whether or not such interest (including post-petition interest), fees, premium, Call Premium, Exit Fee, Yield Maintenance Fee, Extension Fee, expenses or other charges are allowed or allowable in any such bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto.

Ordinary Course Settlement Payments” means all regularly scheduled payments due under any Hedge Agreement from time to time, calculated in accordance with the terms of such Hedge Agreement, but excluding, for the avoidance of doubt any “settlement amounts” or “termination payments” due and payable under such Hedge Agreement.

Other Taxes” has the meaning specified in Section 2.09(b).

 

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Parent” has the meaning specified in the recital of parties to this Agreement.

Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.

Payroll Account” a zero balance deposit account exclusively used for tax withholding, payroll, payroll taxes, employee benefits (including workers’ compensation, unemployed insurance or other forms of governmental insurance or benefits).

PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

Perfect by Filing” means, with respect to any certificates of title, the (a) filing of required lien notation documentation with, and delivery of such certificate of title to, the relevant department of transportation, (b) acceptance thereof by such department of transportation and (c) payment of any fees in connection with the foregoing.

Permitted Debt” means Debt permitted under Section 5.02(b).

Permitted Encumbrances” has the meaning specified in the Mortgages.

Permitted Existing Debt” means the Debt of the Loan Parties outstanding immediately before the occurrence of the Effective Date and listed on Schedule 3.01(b) under the heading Permitted Existing Debt.

Permitted Liens” means (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b); (b) Liens imposed by or arising by operation of law, such as materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s and repairmen’s Liens and other similar Liens (i) for amounts that are not overdue or (ii) for amounts that are overdue that (A) do not materially adversely affect the use of the Property to which they relate or (B) are bonded or are being contested in good faith by appropriate proceedings for which reserves and other appropriate provisions, if any, required by GAAP shall have been made; (c) pledges or deposits in the ordinary course of business to secure obligations under workers’ compensation, unemployment insurance, social security legislation or other similar legislation or to secure public or statutory obligations or to secure a bond or letter of credit or similar instrument that is utilized to secure such obligations; (d) Liens on deposits (or pledges of deposit accounts or securities accounts containing such deposits) to secure the performance of bids, Material Contracts and other Contractual Obligations permitted under this Agreement, trade contracts and leases (other than Debt that is not Debt of the type described in clause (e) of the definition thereof), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, or to secure a bond or letter of credit or similar instrument that is utilized to secure such obligations, in an aggregate amount not to exceed $5,000,000; provided, this clause (d) shall not include any Lien described herein if any Event of Default has occurred and is continuing on the date such Lien is incurred; (e) Liens securing judgments (or the payment of money not

 

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constituting an Event of Default under Section 6.01(g)) or securing appeal or other surety bonds related to such judgments or to secure a bond or letter of credit or similar instrument that is utilized to secure such judgments; (f) Permitted Encumbrances; and (g) easements, rights-of-way, restrictions, encroachments and other minor defects or irregularities in title and any zoning or other similar restrictions to or vested in any governmental office or agency to control or regulate the use of any Real Property, that individually or in the aggregate do not materially adversely affect the value of said Real Property or materially impair the ability of the Loan Parties to operate the Real Property to which they relate in the ordinary course of business.

Permitted Tax Distributions” means dividends or other distributions paid from time to time (which may be estimated and paid no more frequently than quarterly) by Borrower to the holders of its Equity Interests (and, in turn, by such holders to the respective holders of their Equity Interests) not to exceed in the aggregate in any fiscal year an amount equal to the federal and state income taxes of the holders of Borrower’s Equity Interests which are attributable to the taxable income of Borrower and its Subsidiaries calculated based on good faith reasonable estimates.

Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

Plan” means a Single Employer Plan or a Multiple Employer Plan.

Plan of Reorganization” has the meaning specified in Section 9.07(l).

Platform” has the meaning specified in Section 9.02(b).

Pledged Debt” has the meaning specified in the Term Loan Security Agreement.

Prepayment Account” has the meaning specified in the definition of “Collateral Accounts”.

Prepayment Amount” has the meaning specified in Section 2.06(b).

Pro Rata Share” of any amount means, with respect to any Lender at any time and with respect to Facilities, the product of such amount times a fraction the numerator of which is the amount of Loans owed to such Lender under the Facilities at such time and the denominator of which is the aggregate amount of the Loans then outstanding and owed to all Lenders under the Facilities at such time.

Property” means any right or interest in or to any asset or property of any kind whatsoever (including Equity Interests), whether real, personal or mixed and whether intangible or tangible.

Prudent Industry Practice” means those practices, methods, equipment, specifications and standards of safety and performance, as are commonly used by oilfield services companies engaged primarily in hydraulic fracturing for oil and gas exploration and production in the United States as good, safe and prudent engineering practices would dictate in connection with the design,

 

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construction, operation, maintenance, repair, enhancement, refurbishment and use of a Frac Fleet and other equipment, facilities and improvements related thereto, with commensurate standards of safety, performance, dependability (including the implementation of procedures that shall not adversely affect the long term reliability of the Frac Fleet, in favor of short term performance), efficiency and economy, in each such case as the same may evolve from time to time, consistent with applicable law and considering the state in which a Person is located and the type and size of such Frac Fleet. “Prudent Industry Practice” as defined herein does not necessarily mean one particular practice, method, equipment specification or standard in all cases, but is instead intended to encompass a broad range of acceptable practices, methods, equipment specifications and standards.

Public Company Operating Costs” means audit, internal audit, and Sarbanes-Oxley related expenses, legal costs related to being a public company (including those related to securities law, filing review and other related expenses), legal costs related to intellectual property of any Loan Party as long as billed on an hourly basis, in an amount not to exceed $2,000,000 in any fiscal year, expenses related to tax consulting, transaction costs related to permitted equity offerings, in an amount not to exceed $750,000 in any fiscal year (such amount, the “Reimbursable Transaction Costs”), and fees and expenses related to public reporting obligations.

Qualified Equity Interest” of any Person means any Equity Interest in such Person other than any Disqualified Equity Interest.

Quarterly Inspection Cap” has the meaning specified in Section 5.01(f)(ii).

Quarterly Payment Date” means the last Business day of each Calendar Quarter, commencing with the second full Calendar Quarter following the Effective Date, until the occurrence of any Repayment Event, provided that, the first Quarterly Payment Date hereunder shall be January 15, 2020 (for amounts due during the period between the Effective Date and the end of the second full Calendar Quarter following the Effective Date).

Real Properties” means each item of Property listed on Schedules 4.01(q) and 4.01(r) hereto and any other real property subsequently acquired by any Loan Party covered by Section 5.01(j).

Receivable” means, as to each Loan Party, all of such Loan Party’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Loan Party by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Loan Party arising out of or in connection with the sale or lease of any property or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created.

Register” has the meaning specified in Section 9.07(d).

 

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Registered” means issued, registered, renewed or subject to a pending application with a Governmental Authority such as the United States Patent and Trademark Office, the United States Copyright Office or other similar Governmental Authority anywhere in the world.

Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

Reimbursable Transaction Costs” has the meaning specified in the defined term “Public Company Operating Costs”.

Reimbursed Transaction Costs” has the meaning specified in Section 5.01(o).

Release” has the meaning specified in CERCLA.

Relevant Repairs” has the meaning specified in Section 5.01(i).

Remaining Excused Amount” means, on any date of determination, $500,000 minus the aggregate amount of all Excused Payments made by any Loan Party since the Effective Date.

Remedial Action” means any response, remedial removal, or corrective action activity to clean up, detoxify, decontaminate, contain or otherwise remediate any Hazardous Material or to comply with any Environmental Laws and Environmental Permits, including any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Release or threatened Release of Hazardous Materials as required by Environmental Laws, Environmental Permits or any Governmental Authority.

Repaired Feasibly” means with respect to any equipment and machinery Collateral (other than equipment or machinery Collateral that is obsolete, not economic to repair and/or that individually or in the aggregate is not reasonably necessary for the continued operation of any Loan Party) which is subject to a Mandatory Repair Notice, that such equipment and machinery Collateral can be repaired or restored for useful operation in the Loan Parties’ business in a manner that is reasonably believed by the Collateral Inspection Party to be technically and economically feasible.

Repayment Event” means the satisfaction of the following conditions: (a) the repayment in full in Cash of all of the outstanding principal amount of the Loans and all other Obligations (except for indemnities and other obligations which by the express terms of the relevant Loan Documents survive the repayment of the Loans and the termination of the Commitments) due and payable under the Loan Documents and (b) the termination of all Commitments.

Required Aggregate Horsepower Amount” means, on any date of determination, an amount equal to (x) 575,000 hydraulic horsepower plus (y) 40,000 hydraulic horsepower for each additional Frac Fleet built or acquired by the Loan Parties following the Effective Date.

Required Lenders” means, at any time, Lenders owed or holding more than 50% of the aggregate principal amount of the Loans outstanding at such time.

 

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Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

Responsible Officer” means, as to any Person, any duly authorized and appointed officer of such Person, as demonstrated by a certificate of incumbency or other appropriate appointment or resolution, having actual knowledge of the matter in question.

Restoration Requisition” has the meaning specified in Section 2.14(e)(v).

Restricted Payment” has the meaning specified in Section 5.02(g).

Revenue” means, collectively, all contributions, distributions, dividends and other Cash and Cash Equivalents actually received by the Loan Parties (including the proceeds of all ABL Loans made pursuant to the ABL Loan Documents, proceeds of dispositions under Section 5.02(e) and proceeds transferred from the Collections Account) other than: (a) Collections (until (i) prior to the Discharge of ABL Obligations, such Collections are transferred to the Revenue Account or (ii) the date upon which the Discharge of ABL Obligations has occurred and at all times thereafter), (b) any Equity Issuance Proceeds (other than to the extent the Borrower elects to apply any portion thereof to the Revenue Account); (c) proceeds of any Debt permitted under Section 5.02(b)(vii); (d) proceeds of the Loans; (e) proceeds of Asset Sales with respect to property described in Section 5.02(e)(ii); and (f) transfers of Cash and Cash Equivalents among the Loan Parties either (i) to the extent not constituting Revenue when originally received by such Person (other than Collections, which shall be applied to the Revenue Account and be deemed revenues as required in this Agreement) or (ii) from the Collateral Accounts as permitted by Section 2.14, (in each case, whether in the form of, or resulting from, Investments, Asset Sales, Restricted Payments or otherwise).

Revenue Account” has the meaning specified in the definition of “Collateral Accounts”.

Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria).

Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions.

S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., and any successor thereto.

 

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Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.

Scheduled Amortization Payment” means each repayment of Loans made pursuant to Section 2.04(b)(i).

Scheduled Amortization Payment Date” means, with respect to any Loan, (a) March 31, 2020 and (b) thereafter, the last day of each March, June, September and December, commencing on June 30, 2022.

SEC” has the meaning specified in Section 5.03(n).

Second Amendment Agreement” means that certain Second Amendment to the Senior Secured Term Loan Credit Agreement, dated as of [•], 2020, entered into between the Loan Parties, the Lenders, the Term Loan Collateral Agent and the Administrative Agent.

Second Offer” has the meaning specified in Section 2.04(c).

Secured Bank Product Obligations” means all debt, obligations and other liabilities owing under Secured Cash Management Agreements and Secured Hedge Agreements; provided that Secured Bank Product Obligations of a Loan Party shall not include the Excluded Swap Obligations of such Loan Party.

Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between the Borrower or any Subsidiary and any Cash Management Bank which has delivered a Secured Party Designation Notice.

Secured Hedge Agreement” means any interest rate Hedge Agreement permitted under Section 5.02(l) that is entered into by and between the Borrower or any Subsidiary and any Hedge Bank which has delivered a Secured Party Designation Notice.

Secured Parties” means, collectively, the Administrative Agent, the Term Loan Collateral Agent, the Lenders, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Article VII, and the other Persons the Obligations owing to which are secured by the Collateral under the terms of the Term Loan Collateral Documents.

 

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Secured Party Designation Notice” means a notice from any Lender or an Affiliate of a Lender, substantially in the form of Exhibit L, (a) describing “a Secured Cash Management Agreement” or a “Secured Hedge Agreement” and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount and (b) agreeing to be bound by Section 7.08.

Servicer” means VINtek, Inc., a Pennsylvania corporation or any successor thereto and each party approved by the Borrower and the Administrative Agent.

Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

Solvent” and “Solvency” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature (taking into account reasonably anticipated prepayments and refinancings) and (c) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

Specified Distributable Cash Account” means the following deposit account in the name of the Borrower: (i) prior to the Discharge of ABL Obligations, Account No. 488073974976 entitled “USWS Specified Distributable Cash Account” opened at Bank of America in the name of the Borrower and (ii) on and after the Discharge of ABL Obligations, a deposit account entitled “USWS Specified Distributable Cash Account” opened at Beal Bank USA in the name of the Borrower, in each case, pursuant to which only (i) any Equity Issuance Proceeds, (ii) [Reserved], and (iii) amounts permitted to be transferred to the Borrower in accordance with Section 2.14(f)(ii) are deposited (and amounts constituting interest thereon).

Sponsor Group” means Crestview, Regiment Capital Special Situations Fund V, L.P., and David J. Matlin, together with their respective Affiliates.

Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency),

 

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(b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

Subsidiary Guarantor” means each of (i) USWS Fleet 10, LLC, a Delaware limited liability company and (ii) USWS Fleet 11, LLC, a Delaware limited liability company and any (iii) Subsidiary of the Borrower that is required to guaranty the Obligations pursuant to Section 5.02(k).

Swap Obligation means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act if, and to the extent that, all or a portion of any such obligation to pay or perform constitutes an Obligation hereunder or a Guaranteed Obligation under (and as defined in) the Term Loan Security Agreement.

Sweep Calculation Date” means the last day of each February, May, August, and November, commencing with the Sweep Calculation Date occurring on August 31, 2019 and each Sweep Calculation Date thereafter until the occurrence of any Repayment Event.

Sweep Period” means each three-month period as follows:

(i)    for any Sweep Calculation Date occurring on the last day of February, the period commencing on the first calendar day of December and ending on the last calendar day of February;

(ii)    for any Sweep Calculation Date occurring on the last day of May, the period commencing on the first calendar day of March and ending on the last calendar day of May;

(iii)    for any Sweep Calculation Date occurring on the last day of August, the period commencing on the first calendar day of June and ending on the last calendar day of August; and

(iv)    for any Sweep Calculation Date occurring on the last day of November, the period commencing on the first calendar day of September and ending on the last calendar day of November.

Synthetic Debt” means, with respect to any Person, without duplication of any clause within the definition of “Debt”, the principal amount of all (a) obligations of such Person under any lease that is treated as an operating lease for financial accounting purposes and a financing lease for tax purposes (i.e., a “synthetic lease”), (b) obligations of such Person in respect of transactions entered into by such Person, the proceeds from which would be reflected on the financial statements of such Person in accordance with GAAP as cash flows from financings at the time such transaction was entered into (other than as a result of the issuance of Equity Interests) and (c) obligations of such Person in respect of other transactions entered into by such Person that are not otherwise addressed in the definition of “Debt” or in clause (a) or (b) above that are

 

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intended to function primarily as a borrowing of funds (including, without limitation, any minority interest transactions that function primarily as a borrowing).

Taxes” has the meaning specified in Section 2.09(a).

Term A Loans” means any loan made by any Term Loan A Lender pursuant to this Agreement.

Term B Loans” means any loan made by any Term Loan B Lender pursuant to this Agreement.

Termination Payment” means any amount payable to or by any Loan Party in connection with a termination (whether as a result of the occurrence of an event of default or other termination event) of any Hedge Agreement; provided that for the avoidance of doubt, “Termination Payments” shall not include any Ordinary Course Settlement Payments due under any such Hedge Agreement.

Term Loan A Borrowing” means a borrowing consisting of simultaneous Term A Loans made by the Term Loan A Lenders on the Effective Date.

Term Loan A Commitment” means, (a) with respect to any Term Loan A Lender at any time, the amount set forth opposite its name on Schedule I hereto under the caption “Term Loan A Commitment” or, (b) with respect to any Term Loan A Lender that has entered into one or more Assignment and Acceptances, the amount set forth for such Term Loan A Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Term Loan A Lender’s “Term Loan A Commitment”, in each case, as such amount may be reduced at or prior to such time pursuant to Section 6.01

Term Loan A Facility” means, at any time, the aggregate amount of the Term Loan A Lenders’ Term Loan A Commitments at such time.

Term Loan A Lender” means, at any time, a Lender that has a Term Loan A Commitment or is owed any outstanding Term A Loans at such time.

Term Loan A Note” means a promissory note of the Borrower payable to the order of any Term Loan A Lender, in substantially the form of Exhibit A-1 hereto, evidencing the indebtedness of the Borrower to such Term Loan A Lender, as amended, restated, supplemented or otherwise modified from time to time.

Term Loan B Borrowing” means a borrowing consisting of simultaneous Term B Loans made by the Term Loan B Lenders on the Effective Date.

Term Loan B Commitment” means, (a) with respect to any Term Loan B Lender at any time, the amount set forth opposite its name on Schedule I hereto under the caption “Term Loan

 

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A Commitment” or, (b) with respect to any Term Loan B Lender that has entered into one or more Assignment and Acceptances, the amount set forth for such Term Loan B Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Term Loan B Lender’s “Term Loan B Commitment”, in each case, as such amount may be reduced at or prior to such time pursuant to Section 6.01

Term Loan B Facility” means, at any time, the aggregate amount of the Term Loan B Lenders’ Term Loan B Commitments at such time.

Term Loan B Lender” means, at any time, a Lender that has a Term Loan B Commitment or is owed any outstanding Term B Loans at such time.

Term Loan B Note” means a promissory note of the Borrower payable to the order of any Term Loan B Lender, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such Term Loan B Lender, as amended, restated, supplemented or otherwise modified from time to time.

Term Loan Collateral Agent” has the meaning specified in the recital of parties to this Agreement.

Term Loan Collateral Documents” means the Term Loan Security Agreement, the Mortgages, each Account Control Agreement, each Consent and Agreement, each of the collateral documents, instruments and agreements delivered pursuant to Section 5.01(j), and each other agreement (including intellectual property security agreements) that creates or purports to create a Lien in favor of the Term Loan Collateral Agent for the benefit of the Term Loan Secured Parties, in each case, as amended, restated, supplemented or otherwise modified from time to time.

Term Loan Obligations” has the meaning specified in the Intercreditor Agreement.

Term Loan Priority Collateral” has the meaning specified in the Intercreditor Agreement (it being understood and agreed that any time the ABL Credit Agreement is not in effect, the term “Term Loan Priority Collateral” shall mean all Collateral).

Term Loan Secured Parties” has the meaning specified in the Intercreditor Agreement.

Term Loan Security Agreement” means that certain Term Loan Collateral and Guaranty Agreement, dated as of May 7, 2019, by the Loan Parties in favor of the Term Loan Collateral Agent for the benefit of the Term Loan Secured Parties, as amended, restated, supplemented or otherwise modified from time to time.

Title Assets” means, collectively, each asset comprising Collateral owned by any Loan Party that requires a certificate of title for purposes of registration in the relevant jurisdiction and which assets are set forth on Schedule 3.01(a)(iv).

Trade Date” has the meaning specified in Section 9.07(j).

 

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UCC” means the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

Unused Capex Reserve Proceedshas the meaning specified in Section 2.14(f).

Unused Reinvestment Proceedshas the meaning specified in Section 2.14(h).

Vehicles” means all cars, trucks, trailers, construction and earth moving equipment and other vehicles that require a certificate of title/ownership of purpose of registration in the relevant jurisdiction, and in any event including the Vehicles listed on Schedule 3.01(a)(iv), and all tires and other appurtenances to any of the foregoing.

Voting Interests” means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

Wells Fargo Collections Account” has the meaning specified in the definition of “Collateral Accounts”.

Wells Fargo DACA” means the deposit account control agreement, dated the date hereof, between the Borrower, the Collateral Agent, the ABL Agent and Wells Fargo Bank, N.A..

Wells Fargo Revenue Account” has the meaning specified in the definition of “Collateral Accounts”.

Withdrawal Liability” has the meaning specified in Part I of Subtitle E of Title IV of ERISA.

Workers Compensation Account” a deposit account exclusively used for workers’ compensation benefits.

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down

 

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and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

Yield Maintenance” means any amount payable pursuant to Section 2.06(b).

Yield Maintenance Fee” means any yield maintenance fee payable pursuant to Section 2.06(b).

Yield Maintenance Period” means the period commencing on the Effective Date and continuing until the second anniversary of the Effective Date.

SECTION 1.02.    Computation of Time Periods. In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

SECTION 1.03.    Accounting Terms.

(a)    Generally. All accounting terms not specifically defined herein shall be construed in accordance with GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Debt of the Parent and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

(b)    Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any provision contained herein or any other Loan Document, any lease (or similar arrangement) that would have been characterized, classified or reclassified as an

 

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operating lease in accordance with GAAP prior to the date of the Parent’s adoption of ASC 842 (or any other ASC having a similar result or effect) (and related interpretations) (whether or not such lease was in effect on such date) shall not constitute an obligation under a Capital Lease, and any such lease shall be, for all purposes of this Agreement and the other Loan Documents, treated as though it were reflected on the Parent’s consolidated financial statements in the same manner as an operating lease would have been reflected prior to the Parent’s adoption of ASC 842.

(c)    Consolidation of Variable Interest Entities. All references herein to consolidated financial statements of the Parent and its Subsidiaries or to the determination of any amount for the Loan Parties and their Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Loan Parties is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

SECTION 1.04.    Other Definitional Provisions and Rules of Construction.

(a)    Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference.

(b)    References to “Sections” and “subsections” shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any references in this Agreement to “Articles” and/or “Sections” which make reference to any particular piece of legislation or statute, including without limitation, the Bankruptcy Code, ERISA and Internal Revenue Code shall, to the extent that the context implies a reference to any other similar or equivalent legislation as is in effect from time to time in any other applicable jurisdiction, mean the equivalent section in the applicable piece of legislation. Furthermore, where any such reference is meant to apply to such other similar or equivalent legislation where such other similar or equivalent legislation has parallel or like concepts, then such references shall import such parallel or like concepts from such other similar or equivalent legislation, as applicable.

(c)    The use in any of the Loan Documents of the word “include” or “including” shall not be construed to be limiting whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto.

(d)    Unless otherwise expressly provided herein or in the other Loan Documents, references in the Loan Documents to any agreement or contract shall be deemed to be a reference to such agreement or contract as amended, amended and restated, supplemented, replaced or otherwise modified from time to time in accordance with its terms and in compliance with the Loan Documents.

 

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ARTICLE II

AMOUNTS AND TERMS OF THE LOANS

SECTION 2.01.    The Loans.

(a)    The Term A Loans. Each Term Loan A Lender severally agrees, on the terms and conditions hereinafter set forth, to make a single advance to the Borrower on the Effective Date in an amount in Dollars not to exceed such Term Loan A Lender’s Term Loan A Commitment at such time. The Borrowing shall consist of Term A Loans made simultaneously by the Term Loan A Lenders ratably according to their Term Loan A Commitments. Term A Loan amounts repaid or prepaid may not be reborrowed.

(b)    Term B Loans. Each Term Loan B Lender severally agrees, on the terms and conditions hereinafter set forth, to make a single advance to the Borrower on the Effective Date in an amount in Dollars not to exceed such Term Loan B Lender’s Term Loan B Commitment at such time. The Borrowing shall consist of Term B Loans made simultaneously by the Term Loan B Lenders ratably according to their Term Loan B Commitments. Term B Loan amounts repaid or prepaid may not be reborrowed.

(c)    Incremental Loans. The Borrower may request that one or more incremental term loan facilities (each, an “Incremental Facility”) be added to the Facilities in the sole and absolute discretion of the Lenders; provided, that:

(i)    the Lenders, in their sole and absolute discretion, shall have agreed to participate in such Incremental Facility;

(ii)    no Default has occurred and is continuing, or would result from any Borrowing under such Incremental Facility or from the application of the proceeds therefrom;

(iii)    the representations and warranties contained in each Loan Document are true and correct in all material respects on and as of the date of such request and on and as of the date of any borrowing under such Incremental Facility, before and after giving effect to such borrowing and to the application of the proceeds therefrom, as though made on and as of such dates, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); provided, that if a representation and warranty is qualified as to materiality, with respect to such representation and warranty, the materiality qualifier set forth in this clause (c)(iii) shall be disregarded;

(iv)    subject to any changes acceptable to the Lenders in their sole and absolute discretion that are required to make the loans under the Incremental Facility fungible for U.S. tax purposes, the terms and conditions of the Incremental Facility shall be identical to those of the existing Facilities;

 

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(v)    any such Incremental Facility shall rank pari passu in right of payment and of security with the Facilities, and no Incremental Facility shall be secured by assets other than Collateral or guaranteed by Persons other than the Guarantors;

(vi)    any Incremental Facility shall be pari passu in right of payment and security and will share ratably in any voluntary or mandatory prepayments (other than Scheduled Amortization Payments) of the Facilities unless the Borrower and the lenders in respect of such Incremental Facility elect lesser payments, provided that, in connection with any such prepayment, any loans made under the Incremental Facility shall be paid after the Term A Loans and the Term B Loans. Each of the parties hereto hereby agrees that, notwithstanding anything to the contrary set forth in Section 9.01, this Agreement and the other Loan Documents may be amended pursuant to an amendment executed by the Loan Parties, the Administrative Agent and the Lenders providing an Incremental Facility, without the consent of any other Lender, to the extent reasonably required to effect such amendments to this Agreement (including necessary amendments to reflect the existence of a new Incremental Facility) and the other Loan Documents as may be necessary or appropriate, in the sole and absolute opinion of the Administrative Agent and the Borrower, to effect the provisions of Section 2.01(b), and the Lenders hereby expressly and irrevocably, for the benefit of all parties hereto, authorize the Administrative Agent to enter into such amendment. In connection with any such amendment, the Borrower shall deliver an opinion of counsel reasonably acceptable to the Administrative Agent (i) as to the enforceability of this Agreement (as amended), and such of the other Loan Documents (if any) as may be amended thereby and (ii) as to any other customary matters reasonably requested by the Administrative Agent.

(vii)    The Administrative Agent and each Lender shall have consented (not to be unreasonably withheld or delayed) to the lenders providing such Incremental Facility to the extent such consent, if any, would be required under Section 9.07 for an assignment of Loans or Commitments, as applicable, to such lender.

(viii)    Any loan amounts borrowed under any Incremental Facility that is repaid or prepaid may not be reborrowed.

SECTION 2.02.    Making the Loans.

(a)    The Term Loan A Borrowing consisting of Term A Loans advanced by the Term Loan A Lenders on the Effective Date shall be made following the issuance of a Notice of Borrowing, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Term Loan A Borrowing, by the Borrower to the Administrative Agent, which shall give to the Term Loan A Lenders prompt notice thereof by electronic communication. Each such Notice of Borrowing shall be by telephone, confirmed immediately in writing, or by electronic communication, in substantially the form of Exhibit B hereto, specifying therein the

 

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requested (i) date of such Term Loan A Borrowing (which shall be the Effective Date), and (ii) aggregate amount of such Term Loan A Borrowing. Each Term Loan A Lender shall, before 11:00 A.M. (New York City time) on the date of such Term Loan A Borrowing, make available for the account of its Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, its Pro Rata Share of the amount of such Term Loan A Borrowing in accordance with its Term Loan A Commitment under the Term Loan A Facility. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Borrower hereby directs the Administrative Agent to apply such funds as set forth in the Funds Flow Memorandum.

(b)    The Term Loan B Borrowing consisting of Term B Loans advanced by the Term Loan B Lenders on the Effective Date shall be made following the issuance of a Notice of Borrowing, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Term Loan B Borrowing, by the Borrower to the Administrative Agent, which shall give to the Term Loan B Lenders prompt notice thereof by electronic communication. Each such Notice of Borrowing shall be by telephone, confirmed immediately in writing, or by electronic communication, in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Term Loan B Borrowing (which shall be the Effective Date), and (ii) aggregate amount of such Term Loan B Borrowing. Each Term Loan B Lender shall, before 11:00 A.M. (New York City time) on the date of such Term Loan B Borrowing, make available for the account of its Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, its Pro Rata Share of the amount of such Term Loan B Borrowing in accordance with its Term Loan B Commitment under the Term Loan B Facility. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Borrower hereby directs the Administrative Agent to apply such funds as set forth in the Funds Flow Memorandum.

(c)    Any Notice of Borrowing delivered after the Effective Date shall be irrevocable and binding on the Borrower. The Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Loan to be made by such Lender as part of such Borrowing when such Loan, as a result of such failure, is not made on such date.

(d)    Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with Sections 2.02(a) or 2.02(b), as applicable, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to

 

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pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.05 to Loans comprising such Borrowing and (ii) in the case of such Lender, the Eurodollar Rate. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender’s Loan as part of such Borrowing for all purposes.

(e)    The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.

SECTION 2.03.    Repayment of Loans.

(a)    Term A Loans. The Borrower shall repay to the Administrative Agent for the ratable account of the Term Loan A Lenders on the Maturity Date the aggregate principal amount of the Term A Loans then outstanding, together with any accrued but unpaid interest thereon.

(b)    Term B Loans. The Borrower shall repay to the Administrative Agent for the ratable account of the Term Loan B Lenders on the Maturity Date the aggregate principal amount of the Term B Loans then outstanding, together with any accrued but unpaid interest thereon.

SECTION 2.04.    Prepayments.

(a)    Optional. The Borrower may, upon at least three (3) Business Days’ notice to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Loans in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid and the applicable Yield Maintenance Fee, Call Premium and Exit Fee (if any); provided, that each partial prepayment shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $500,000 in excess thereof. Each such prepayment of the Loans shall be applied, after payment of (A) accrued and unpaid interest to the date of such prepayment on the principal amount prepaid, (B) any amounts owing pursuant to Section 9.04(c), (C) any applicable Yield Maintenance Fee, (D) any applicable Call Premium, and (E) any applicable Exit Fee, in the order directed by the Borrower; provided that if an Event of Default has occurred and is continuing, each such prepayment of the Loans shall be applied in inverse order of maturity.

(b)    Mandatory.

(i)    Scheduled Amortization. On each Scheduled Amortization Payment Date, the Borrower shall prepay (A) an aggregate principal amount of the Term A Loans in an amount equal to one half of one percent (0.50%) of the sum of the initial principal amount

 

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of the Term A Loans advanced on the Effective Date and (B) an aggregate principal amount of the Term B Loans in an amount equal to one half of one percent (0.50%) of the sum of the initial principal amount of the Term B Loans advanced on the Effective Date.

(ii)    Unused Capex Reserve; Unused Reinvestment Account. On each date amounts are required to be released from the Initial Growth Capex Reserve Account for mandatory prepayment of the Loans in accordance with Section 2.14(f) or the Reinvestment Account for mandatory prepayment of the Loans in accordance with Section 2.14(i), the Borrower shall prepay an aggregate principal amount of the Loans in an amount equal to the proceeds required to be withdrawn from the Initial Growth Capex Reserve Account or the Reinvestment Account. Each such prepayment of the Loans shall be applied (i) to the scheduled principal payments of the Loans in inverse order of maturity in respect of each Facility and (ii) first, to the prepayment of Term A Loans in full in Cash, including the principal amount due on the Maturity Date and second, to the prepayment of Term B Loans in full in Cash, including the principal amount due on the Maturity Date.

(iii)    Excess Cash Flow. On each Cash Flow Payment Date (or such earlier date elected by the Borrower following any Sweep Calculation Date), subject to the terms of Section 2.04(c), the Borrower shall prepay an aggregate principal amount of the Loans in an amount equal to the Excess Cash Flow Payment Amount calculated for the Sweep Calculation Date occurring immediately prior to such Cash Flow Payment Date. Each such prepayment of the Loans shall be applied (i) to the scheduled principal payments of the Loans in inverse order of maturity in respect of each Facility and (ii) first, to the prepayment of Term A Loans in full in Cash, including the principal amount due on the Maturity Date and second, to the prepayment of Term B Loans in full in Cash, including the principal amount due on the Maturity Date.

(iv)    Loss Proceeds. Upon the occurrence of a Casualty Event or an Event of Eminent Domain, the Borrower shall prepay an aggregate principal amount of the Loans in an aggregate amount equal to the Net Cash Proceeds thereof; provided, the Net Cash Proceeds of the a Casualty Event or an Event of Eminent Domain shall not be required to be immediately prepaid in the event such proceeds are applied in accordance with Section 2.14(e). Each such prepayment of the Loans shall be applied (i) to the scheduled principal payments of the Loans in inverse order of maturity in respect of each Facility and (ii) first, to the prepayment of Term A Loans in full in Cash, including the principal amount due on the Maturity Date and second, to the prepayment of Term B Loans in full in Cash, including the principal amount due on the Maturity Date.

(v)    Termination Payments. Upon the termination, or the cancellation, of any Commercial Agreement, the Borrower shall prepay an aggregate principal to the Loans in an aggregate amount equal to the Net Cash Proceeds thereof. Each such prepayment of the Loans shall be applied (i) to the scheduled principal payments of the Loans in inverse order of maturity in respect of each Facility and (ii) first, to the prepayment of Term A Loans in full in Cash, including the principal amount due on the Maturity Date and second, to the prepayment of Term B Loans in full in Cash, including the principal amount due on the Maturity Date.

 

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(vi)    Asset Sales. Except in respect of Asset Sales of ABL Priority Collateral that are required to be applied to a mandatory prepayment of ABL Obligations under the ABL Credit Agreement, all Net Cash Proceeds up to $2,500,000 from Asset Sales shall be deposited pursuant to Section 2.14(b)(iv) (including, as applicable, pursuant to clause (y) thereof). At such time as Net Cash Proceeds deposited pursuant to Section 2.14(b)(iv) exceeds $2,500,000 in any given Fiscal Year and subject to the right of the Borrower to deposit such Asset Sale Proceeds into the Reinvestment Account in accordance with Section 2.14(b)(iv), the Borrower shall prepay an aggregate principal amount of the Loans in an aggregate amount equal to such excess Net Cash Proceeds. Each such prepayment of the Loans shall be applied (i) to the scheduled principal payments of the Loans in inverse order of maturity in respect of each Facility and (ii) first, to the prepayment of Term A Loans in full in Cash, including the principal amount due on the Maturity Date and second, to the prepayment of Term B Loans in full in Cash, including the principal amount due on the Maturity Date.

(vii)    Debt Proceeds. Upon the issuance of any Debt (other than Debt permitted to be incurred pursuant to Section 5.02(b)), the Borrower shall prepay an aggregate principal amount of the Loans in an aggregate amount equal to the Net Cash Proceeds thereof. Each such prepayment of the Loans shall be applied (i) to the scheduled principal payments of the Loans in inverse order of maturity in respect of each Facility and (ii) first, to the prepayment of Term A Loans in full in Cash, including the principal amount due on the Maturity Date and second, to the prepayment of Term B Loans in full in Cash, including the principal amount due on the Maturity Date.

(viii)    All prepayments under this clause (b) shall be made together with (A) accrued and unpaid interest to the date of such prepayment on the principal amount prepaid, (B) any amounts owing pursuant to Section 9.04(c), (C) any applicable Yield Maintenance Fee owed pursuant to Section 2.06(b), (D) any applicable Call Premium owed pursuant to Section 2.06(c) and (E) any applicable Exit Fee owed pursuant to Section 2.06(d).

(c)    Lenders Option to Decline Prepayment. Except as provided in the penultimate sentence of this Section 2.04(c), any Lender, at its option, may elect to accept or decline all or any portion of any prepayment of the Loans pursuant to Section 2.04(b). Subject to the immediately preceding sentence, upon each prepayment date set forth in Section 2.04(b) for any prepayment of Loans, the Borrower shall notify the Administrative Agent in writing of the amount that is available to prepay the Loans. Promptly after the date of receipt of such notice, the Administrative Agent shall provide written notice to the Lenders of the amount available to prepay the Loans. Any Lender accepting such prepayment (an “Accepting Lender”) and any Lender declining such prepayment (a “Declining Lender”) shall give written notice thereof to the Administrative Agent by 11:00 a.m. New York City time no later than two (2) Business Days after the date of such notice from the Administrative Agent (the “Initial Prepayment Acceptance

 

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Date”); any Lender that does not give such notice during such period shall be deemed to be an Accepting Lender. On the Initial Prepayment Acceptance Date, the Administrative Agent shall then provide written notice (the “Second Offer”) to the Accepting Lenders of the additional amount available (due to such Declining Lenders’ declining such prepayment) to prepay the Loans owing to such Accepting Lenders. Any Lender declining prepayment pursuant to such Second Offer shall give written notice thereof to the Administrative Agent by 11:00 a.m. New York City time no later than two (2) Business Days after the date of such notice of a Second Offer; any Lender that does not give such notice during such period shall be deemed to have accepted such prepayment offer. Amounts allocated to Accepting Lenders in accordance with the Initial Prepayment Acceptance Date and the Second Offer shall be applied in accordance with Section 2.04(b). Notwithstanding the above, if Lenders owed or holding more than 50% of the aggregate principal amount of the Loans outstanding at such time accept or are deemed to have accepted all or any portion of any prepayment offer pursuant to this Section 2.04(c), then all Lenders shall be deemed to have accepted such prepayment offer to the same. In the event any such proceeds are declined (such proceeds, “Declined Mandatory Prepayment Proceeds”), such Declined Mandatory Prepayment Proceeds shall be deposited as follows: (i) if such Declined Mandatory Prepayment Proceeds were in respect of a mandatory prepayment under Section 2.04(b)(ii) or Section 2.04(b)(iii), into the Specified Distributable Cash Account and (ii) if such Declined Mandatory Prepayment Proceeds were in respect of a mandatory prepayment under Section 2.04(b)(iv), Section 2.04(b)(v), Section 2.04(b)(vi) and Section 2.04(b)(vii), into the Reinvestment Account for application in accordance with Section 2.04(b)(viii).

SECTION 2.05.    Interest.

(a)    Interest.

(i)    Interest shall accrue on the unpaid principal amount of each Term A Loan and each Term B Loan owing to each Term Loan A Lender and Term Loan B Lender (as applicable) from the date of each such Term A Loan and Term B Loan until such principal amount shall be paid in full, at a rate per annum equal at all times during each Interest Period for each such Term A Loan and Term B Loan to the sum of (A) the Eurodollar Rate for such Interest Period for such Term A Loan and Term B Loan (as applicable) plus (B) the Applicable Margin; provided that, solely during the Deferral Period, the interest rate on the unpaid principal amount of each Term A Loan and each Term B Loan owing to each Term Loan A Lender and Term Loan B Lender (as applicable) shall be 0.0% per annum and no interest shall accrue on the unpaid principal amount of each Term Loan A and each Term Loan B (interest shall accrue and the interest rate shall resume at the rate stated in Section 2.05(a)(i) commencing on April 1, 2022 and at all times thereafter under this Agreement).

(ii)    Interest shall be payable in arrears on each Interest Payment Date.

(b)    Default Interest. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and upon the request of the Required Lenders shall, require that the Borrower pay interest at a rate per annum equal at all times to two percent (2.00%) per annum above the rate per annum required to be paid pursuant to Section 2.05(a)(i) (“Default Interest”) on:

 

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(i)    the aggregate outstanding principal amount of each Loan, and

(ii)    to the fullest extent permitted by applicable law, the amount of any interest, fee or other amount payable under this Agreement or any other Loan Document to any Agent or any Lender that is not paid when due, from the date such amount shall be due until such amount shall be paid in full,

in each case, payable in Cash either (x) on each Interest Payment Date following the occurrence and during the continuance of an Event of Default or (y) on demand; provided, however, that following the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Loans due and payable pursuant to the provisions of Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Administrative Agent. Payment or acceptance of the increased rates of interest provided for in this Section 2.05(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Administrative Agent or any Lender.

SECTION 2.06.    Fees.

(a)    Structuring Fee. The Borrower shall pay to the Administrative Agent such fees as the Administrative Agent and the Borrower shall agree, as further set forth in the Fee Letter with the Administrative Agent.

(b)    Yield Maintenance Fee.

(i)    Subject to clause (ii) below, in the event that (A) the Borrower makes any prepayment of Loans pursuant to Section 2.04(a), Section 2.04(b)(vi) or Section 2.04(b)(vii) or (B) the unpaid principal balance of any Loan is accelerated (whether by election or automatically) upon the occurrence of an Event of Default pursuant to Section 6.01 (including any acceleration upon the occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under the Bankruptcy Code or any other Bankruptcy Law, including, without limitation, upon the occurrence of an Event of Default pursuant to Section 6.01(f)), in each case during the Yield Maintenance Period (the principal amount of such prepayment or amount so accelerated being the “Prepayment Amount”), the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders, a Yield Maintenance Fee in an amount equal to the sum of the interest that would have been payable on the Prepayment Amount (in the absence of such prepayment or acceleration) at a rate per annum equal to the Applicable Margin (x) on all scheduled Interest Payment Dates falling after the date of prepayment or acceleration until the end of the Yield Maintenance Period and (y) if the last day of the Yield Maintenance Period is not an Interest Payment Date, on the last day of the Yield Maintenance Period.

 

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(ii)    Notwithstanding anything set forth in this Agreement, no Yield Maintenance Fee will be due during any time period that is not the Yield Maintenance Period; provided, however, that, in the event of an acceleration of the Facilities (whether by election or automatically) upon the occurrence of an Event of Default pursuant to Section 6.01 (including any acceleration upon the occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under the Bankruptcy Code or any other Bankruptcy Law, including, without limitation, upon the occurrence of an Event of Default pursuant to Section 6.01(f)), the Yield Maintenance Fee shall apply and shall be determined pursuant to clause (b)(i) above as if a prepayment occurred on the date of such acceleration.

(c)    Call Premium.

(i)    In addition to the amount of any applicable Yield Maintenance Fee during the Yield Maintenance Period, subject to clause (ii) below, in the event that (A) the Borrower makes any prepayment of Loans pursuant to Section 2.04(a) or Section 2.04(b)(vi) or Section 2.04(b)(vii) or (B) the unpaid principal balance of any Loan is accelerated (whether by election or automatically) upon the occurrence of an Event of Default pursuant to Section 6.01 (including any acceleration upon the occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under the Bankruptcy Code or any other Bankruptcy Law, including, without limitation, upon the occurrence of an Event of Default pursuant to Section 6.01(f)), in each case during the Call Premium Period (the principal amount of such prepayment or amount so accelerated being the “Called Amount”), the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders, a Call Premium in an amount equal to the product of the Called Amount and the applicable percentage set forth below under the caption “Call Premium Percentage”:

 

Date of Prepayment

   Call
Premium
Percentage
 

From Effective Date to second anniversary thereof

     1.00

From second anniversary of Effective Date to third anniversary thereof

     2.00

From third anniversary of Effective Date to fourth anniversary thereof

     1.00

(ii)    Notwithstanding anything set forth in this Agreement, no Call Premium will be due during any time period that is not the Call Premium Period; provided, however, that, in the event of an acceleration of the Facilities (whether by election or automatically) upon the occurrence of an Event of Default pursuant to Section 6.01 (including any acceleration upon the occurrence of an actual or deemed entry of an order

 

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for relief with respect to any Loan Party under the Bankruptcy Code or any other Bankruptcy Law, including, without limitation, upon the occurrence of an Event of Default pursuant to Section 6.01(f)), the Call Premium shall apply and shall be determined pursuant to clause (c)(i) above as if a prepayment occurred on the date of such acceleration.

(d)    Exit Fee. Upon the occurrence of any Repayment Event, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders, an Exit Fee in an amount equal to two percent (2.00%) of the sum of (i) the principal amount of Loans repaid or refinanced on such date and (ii) the aggregate principal amount of Loans repaid pursuant to Section 2.04(a) during the one hundred twenty (120) day period ending on the date of such Repayment Event.

(e)    Agents’ Fees. The Borrower shall pay to each Agent for its own account such fees as may from time to time be agreed between the Borrower and such Agent.

SECTION 2.07.    Increased Costs, Etc. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or of making, funding or maintaining Loans (excluding, for purposes of this Section 2.07, any such increased costs resulting from (x) Taxes or Other Taxes (as to which Section 2.09 shall govern) and (y) changes in the basis or rate of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender within 10 calendar days after receipt of an invoice from such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower by such Lender, shall be conclusive and binding for all purposes, absent manifest error.

(a)    If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender’s commitment to make Loans and other commitments of such type (or similar Guaranteed Debts), then, upon demand by such Lender or such corporation (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender within 10 calendar days after receipt of an invoice from such Lender from such Lender, additional amounts sufficient to compensate such Lender in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s commitment to make Loans. A certificate as to such amounts submitted to the Borrower by such Lender shall be conclusive and binding for all purposes, absent manifest error.

 

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SECTION 2.08.    Payments and Computations.

(a)    The Borrower shall make each payment hereunder and under the other Loan Documents, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.10), not later than 11:00 A.M. (New York City time) on the day when due in Cash in U.S. dollars to the Administrative Agent at the Administrative Agent’s Account in same day funds, with payments being received by the Administrative Agent after such time being deemed to have been received on the next succeeding Business Day. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, commitment fees, letter of credit fees or any other Obligation then payable hereunder and under the other Loan Documents to more than one Lender, to such Lenders for the account of their respective Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lenders and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender, to such Lender for the account of its Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date of such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the other Loan Documents in respect of the interest assigned thereby to the assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b)    Each Loan Party hereby authorizes each Lender and each of its Affiliates, if and to the extent any payment owed to such Lender is not made when due hereunder or under the other Loan Documents, to charge from time to time, to the fullest extent permitted by law, against any or all of such Loan Party’s accounts with such Lender or such Affiliate any amount so due.

(c)    All computations of interest based on the Eurodollar Rate and of commitment fees, letter of credit fees and other fees and commissions shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d)    Whenever any payment hereunder or under the other Loan Documents shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment or letter of credit fee or commission, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Loans to be made in the next following calendar month, such payment shall be made on the preceding Business Day.

(e)    Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has

 

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made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each such Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each such Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Eurodollar Rate.

(f)    If the Administrative Agent receives funds for application to the Obligations of the Loan Parties under or in respect of the Loan Documents under circumstances for which the Loan Documents do not specify the Loans to which, or the manner in which, such funds are to be applied, the Administrative Agent may, if no instructions with respect thereto are received from the Lenders upon request, but shall not be obligated to, elect to distribute such funds to each of the Lenders in accordance with such Lenders’ Pro Rata Share of the aggregate principal amount of all Loans outstanding at such time, in repayment or prepayment of such of the outstanding Loans or other Obligations then owing to such Lender, for application to such principal repayment installments thereof, as the Administrative Agent shall direct.

SECTION 2.09.    Taxes. (a) Any and all payments by any Loan Party to or for the account of any Lender or any Agent hereunder or under any other Loan Document shall be made, in accordance with Section 2.08 or the applicable provisions of such other Loan Document, if any, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and each Agent, (x) taxes that are imposed on its overall net income by the United States and taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Lender or such Agent, as the case may be, is organized (or any political subdivision thereof), has its Lending Office, has a permanent establishment or is engaged in business (other than the business that the Lender is engaged in solely by reason of the transactions contemplated by this Agreement), (y) any branch profits taxes imposed by the United States of America and (z) withholding taxes imposed under law in effect on the date hereof or at the time the Lender designates a new Lending Office, other than any new Lending Office designated at the written request of a Loan Party (in the case of a Lender that is not an Initial Lender, this clause (z) shall include taxes imposed under law in effect on the date such Lender becomes a Lender, except to the extent that the Lender’s predecessor would have been entitled to receive additional amounts under this Section 2.09(a)) and, in the case of each Lender, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Lender’s Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under any other Loan Document being hereinafter referred to as “Taxes”). If any Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any other Loan Document to any Lender or any Agent, (i) the sum payable by such Loan Party shall be increased as may be necessary so that after such Loan Party and the Administrative Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.09)

 

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such Lender or such Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make all such deductions and (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

(a)    In addition, each Loan Party shall pay any present or future stamp, documentary, excise, property (including intangible property, but with regard to all property taxes, only to the extent relating to property of a Loan Party) mortgage recording or similar taxes, charges or levies that arise from any payment made by such Loan Party hereunder or under any other Loan Documents or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement or the other Loan Documents (hereinafter referred to as “Other Taxes”).

(b)    The Loan Parties shall indemnify each Lender and each Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.09, imposed on or paid by such Lender or such Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date such Lender or such Agent (as the case may be) makes written demand therefor.

(c)    Within 30 days after the date of any payment of Taxes, the appropriate Loan Party shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment, to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent. In the case of any payment hereunder or under the other Loan Documents by or on behalf of a Loan Party through an account or branch outside the United States or by or on behalf of a Loan Party by a payor that is not a United States person, if such Loan Party determines that no Taxes are payable in respect thereof, such Loan Party shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.09, the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

(d)    Each Lender organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as reasonably requested in writing by the Borrower (but only so long thereafter as such Lender remains lawfully able to do so), provide each of the Administrative Agent and the Borrower with two original Internal Revenue Service Forms W-8BEN or W-8EC1 or (in the case of a Lender that has certified in writing to the Administrative Agent that it is not (i) a “bank” as defined in Section 881(c)(3)(A) of the Internal Revenue Code), (ii) a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of any Loan Party or (iii) a controlled foreign corporation related to any Loan Party (within the meaning of Section 864(d)(4) of the Internal

 

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Revenue Code), Internal Revenue Service Form W-8BEN, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or any other Loan Document or, in the case of a Lender that has certified that it is not a “bank” as described above, certifying that such Lender is a foreign corporation, partnership, estate or trust. As provided in Section 2.09(a), if the forms provided by a Lender at the time such Lender first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such forms; provided, however, that if, at the effective date of the Assignment and Acceptance pursuant to which a Lender becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) of this Section 2.09 in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service Form W-8BEN or W-8EC1 or the related certificate described above, that the applicable Lender reasonably considers to be confidential, such Lender shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information.

(e)    For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form, certificate or other document described in subsection (e) above (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring after the date on which a form, certificate or other document originally was required to be provided or if such form, certificate or other document otherwise is not required under subsection (e) above), such Lender shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.09 with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Loan Parties shall take such steps as such Lender shall reasonably request, at the Lender’s sole expense and as long as the Loan Parties determine that such steps will not, in the reasonable judgment of the Loan Parties, be disadvantageous to the Loan Parties, to assist such Lender to recover such Taxes.

(f)    Any Lender claiming any additional amounts payable pursuant to this Section 2.09 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. In addition, if a Lender determines, in such Lender’s sole discretion, that it has received a refund or credit in respect of any Taxes or Other Taxes as to which it has been indemnified pursuant to Section 2.09(c), or with respect to which additional amounts

 

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have been paid pursuant to Section 2.09(a), such Lender shall pay to the Borrower an amount equal to such refund (but such amount in no event to exceed the amount of any indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.09 with respect to the Taxes or Other Taxes giving rise to such refund) net of all out-of-pocket expenses of such Lender, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of such Lender, shall agree to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender in the event such Lender subsequently determines that such refund or credit is unavailable under applicable law or is otherwise required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require a Lender to rearrange its tax affairs or to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

SECTION 2.10.    Sharing of Payments, Etc. If any Lender shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07), (a) on account of Obligations due and payable to such Lender hereunder and under the other Loan Documents in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) on account of Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time, such Lender shall forthwith purchase from the other Lenders such interests or participating interests in the Obligations as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such other Lender shall repay to the purchasing Lender the purchase price to the extent of such Lender’s ratable share (according to the proportion of (i) the purchase price paid to such Lender to (ii) the aggregate purchase price paid to all Lenders) of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such other Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Loan Parties agree that any Lender so purchasing an interest or participating interest from another Lender pursuant to this Section 2.10 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Lender were the direct creditor of the Loan Parties in the amount of such interest or participating interest, as the case may be.

 

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SECTION 2.11.    Use of Proceeds. The proceeds of the Loans shall be available (and the Borrower agrees that it shall use such proceeds and Commitments), on the Effective Date, to (i) repay and/or refinance all Existing Debt (other than Permitted Existing Debt) of the Loan Parties, (ii) fund the Initial Growth Capex Reserve Account in an amount equal to $42,076,973.27 (which amounts shall be used solely to fund Frac Fleet 16), (iii) pay accrued expenses and accounts payable and (iv) pay transaction fees and expenses contemplated under the Facilities herein or under the ABL Facility.

SECTION 2.12.    Evidence of Debt. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Borrower agrees that upon written notice by any Lender to the Borrower (with a copy of such notice to the Administrative Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Loans owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender, with a copy to the Administrative Agent, a Term Loan A Notes and Term Loan B Notes, as applicable, in substantially the form of Exhibits A-1 and A-2 hereto, as applicable, payable to the order of such Lender in a principal amount equal to the Loans of such Lender. All references to the Notes in the Loan Documents mean the Notes, if any, to the extent issued hereunder.

(a)    The Register maintained by the Administrative Agent pursuant to Section 9.07(d) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder and, if appropriate, the Eurodollar Rate Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender’s share thereof.

(b)    Entries made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Administrative Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

SECTION 2.13.    Duty to Mitigate. In the event that any Lender demands payment of costs or additional amounts pursuant to Sections 2.07 or 2.09, the Borrower may, upon twenty (20) days’ prior written notice to such Lender and the Administrative Agent, elect to cause such Lender to assign its Loans and Commitments in full to one or more Persons selected by the Borrower so long as (i) each such Person satisfies the criteria of an Eligible Assignee and is reasonably

 

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satisfactory to the Administrative Agent, (ii) such Lender receives payment in full in Cash of the outstanding principal amount of all Loans made by it and all accrued and unpaid interest thereon and all other amounts due and payable to such Lender as of the date of such assignment (including, without limitation, amounts owing pursuant to Sections 2.07, 2.09 and 9.04) and (iii) each such assignee agrees to accept such assignment and to assume all obligations of such Lender hereunder in accordance with Section 9.07.

SECTION 2.14.    Accounts; Cash Waterfall.

(a)    Establishment of Collateral Accounts. On or prior to the Effective Date, the Borrower shall establish each of the Collateral Accounts and the Specified Distributable Cash Account.

(b)    Deposits into Collateral Accounts and the Specified Distributable Cash Account; Maintenance of Collateral Accounts and the Specified Distributable Cash Account. Until the occurrence of any Repayment Event, the Borrower shall, and shall cause each of its Subsidiaries to, deposit:

(i)    all Collections, promptly after receipt thereof, into the Collections Account for application in accordance with Section 2.14(h);

(ii)    all Revenues, promptly after receipt thereof, into the Revenue Account for application in accordance with Section 2.14(c);

(iii)    any Insurance Proceeds or Eminent Domain Proceeds, promptly after receipt thereof (in the exact form received (with any necessary endorsement)), into the Loss Proceeds Account for application in accordance with Section 2.14(e);

(iv)    any Asset Sale Proceeds (other than such Asset Sale Proceeds received in connection with Asset Sales of ABL Priority Collateral that are required to be applied as a mandatory prepayment of ABL Obligations under the ABL Credit Agreement), promptly after receipt thereof (in the exact form received (with any necessary endorsement)), into the Prepayment Account for application in accordance with Section 2.14(d), provided that (x) in the event the Borrower elects to apply such Asset Sale Proceeds to Approved Growth Capital Expenditures, such Asset Sale Proceeds may be deposited into the Reinvestment Account and (y) during each Fiscal Year, if such Asset Sale Proceeds, together with any other Asset Sale Proceeds applied in accordance with this clause (y), equal in the aggregate $2,500,000 or less, the Borrower may apply such proceeds to the Revenue Account;

(v)    any Debt Proceeds, promptly after receipt thereof (in the exact form received (with any necessary endorsement)), into the Prepayment Account for application in accordance with Section 2.04(b)(vii);

 

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(vi)    at the direction of the Borrower, any Equity Issuance proceeds, promptly after receipt thereof, into the Revenue Account for application in accordance with Section 2.14(c) or the Specified Distributable Cash Account (as applicable) for application in accordance with Section 2.14(h);

(vii)    any Reimbursed Transaction Costs into the Revenue Account for application in accordance with Section 2.14(c);

(viii)    on the Effective Date, an amount equal to $42,076,973.27 into the Initial Growth Capex Reserve Account in accordance with the Funds Flow Memorandum delivered on the Effective Date and approved by the Administrative Agent;

(ix)    any Declined Mandatory Prepayment Proceeds in accordance with Section 2.04(c); and

(x)    any unidentified funds or to the extent funds are received by the Borrower or any Guarantor and none of clauses (i) through (viii) above apply to such funds (other than, in each case, Distributable Cash), promptly after receipt thereof, into the Revenue Account for application in accordance with Section 2.14(c).

(xi)    Notwithstanding any provision of this Section 2.14 to the contrary, assets credited to a Collateral Account or the Specified Distributable Cash Account may be invested, liquidated and reinvested in Cash and Cash Equivalents from time to time at the discretion of the Borrower so long as such assets remain credited to the applicable Collateral Account.

(c)    Withdrawals from the Revenue Account. Prior to the occurrence of any Repayment Event, all amounts in the Revenue Account shall be disbursed by the Borrower from time to time for application (or to make Investments in any Subsidiary permitted pursuant to Section 5.02(f)(i) to permit such Subsidiary to make any such application), to the extent available at the following times and in the following order of priority (with no payment referred to in each clause below being made until all amounts referred to in the clauses preceding it have been made):

(i)    First, as needed: when due and payable to pay the following (in each case, without duplication) in such order as the Borrower shall elect (and, except with respect to any overdue obligations, in such amounts as the Borrower shall elect): (A) cash general and administrative (G&A) costs (subject to the G&A Cap) and O&M Costs of the Borrower and its Subsidiaries and (B) Approved Growth Capital Expenditures (subject to (x) the caps on expenditures for each individual Frac Fleet set forth on Schedule III and, (y) in the case of any Approved Growth Capital Expenditures incurred in connection with Frac Fleet 16, solely to the extent the balance in the Initial Growth Capex Reserve Account is zero), provided that no payments in respect of any Debt for Borrowed Money shall be made pursuant to this priority first;

 

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(ii)    Second, as needed: when due and payable, to pay the administrative fees and expenses, indemnities and interest expenses and other costs and amounts (other than payments in respect of principal of the Loans) with respect to the ABL Facility;

(iii)    Third, as needed: when due and payable, to pay the administrative fees and expenses, indemnities, interest expenses and other costs and amounts (other than payments in respect of principal of the Loans) owing to any Agent or Lender pursuant to any Loan Document;

(iv)    Fourth, as needed: when due and payable, to make payments in respect of principal, interest and fees with respect to any Permitted Debt (other than Debt under the Loan Documents, any Termination Payments, any Non-Lender Financed Equipment Financings and any Non-Lender Financed Capitalized Leases);

(v)    Fifth, on each Quarterly Payment Date: when due and payable, pro rata, to pay any Scheduled Amortization Payment and any Termination Payment in connection with any Hedge Agreement set forth on Schedule 4.01(t) on the Effective Date or subsequently entered in accordance with the terms of Section 5.02(l);

(vi)    Sixth, on each Sweep Calculation Date, when due and payable, Permitted Tax Distributions and to make Restricted Payments permitted under Section 5.02(g)(iv), (v) or (vi), in each case subject to the amount specified therein;

(vii)    Seventh, at the option of the Borrower: to pay or to repay principal under the ABL Facility;

(viii)    Eighth, on each Sweep Calculation Date: at the Borrower’s election, a holdback amount to remain on deposit or credited to the Revenue Account in an amount that does not exceed the Liquidity Reserve Cap;

(ix)    [Reserved]; and

(x)    Tenth, on each Cash Flow Payment Date: to the Administrative Agent, to pay the Excess Cash Flow Payment Amount.

(d)    Withdrawals from the Prepayment Account. Prior to the occurrence of a Repayment Event, all amounts in the Prepayment Account shall be disbursed by the Borrower from time to time to the Administrative Agent for ultimate application to the prepayment of outstanding Term A Loans and Term B Loans, together with any interest, Yield Maintenance, Call Premium, Exit Fee or other amounts then due and payable in connection therewith, in accordance with the applicable provisions of Section 2.04(b);

 

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(e)    Withdrawals from the Loss Proceeds Account. Prior to the occurrence of a Repayment Event, all amounts in the Loss Proceeds Account in respect of any Casualty Event or Event of Eminent Domain shall be disbursed by the Borrower from time to time for application (or to make Investments permitted pursuant to Section 5.02(f)(i) in any Subsidiary to permit such Subsidiary, as the case may be, to make any such application) as follows:

(i)    subject to clause (iii) below, if the Borrower certifies to the Term Loan Collateral Agent that the Affected Property is not capable of being rebuilt, repaired, restored or replaced to permit operation of the relevant Frac Fleet or the Frac Fleets in accordance in all material respects with the terms of the Loan Documents, then upon delivery of such certificate to the Term Loan Collateral Agent, the Borrower shall transfer the amount of such Insurance Proceeds or Eminent Domain Proceeds (as applicable) to the Prepayment Account for further application in accordance with Section 2.04(b)(iv).

(ii)    Subject to clause (iii) below, if the Loan Parties determine not to rebuild, repair, restore or replace any Affected Property, the Borrower shall transfer the amount of such Insurance Proceeds or Eminent Domain Proceeds (as applicable) to the Prepayment Account for further application in accordance with Section 2.04(b)(iv).

(iii)    If the Loan Parties elect to rebuild, repair, restore or replace any Affected Property, then:

(A)    if the aggregate amount of Insurance Proceeds or Eminent Domain Proceeds, as the case may be, payable in respect of such Casualty Event or Event of Eminent Domain is less than or equal to $500,000, then the Borrower shall apply such Insurance Proceeds or Eminent Domain Proceeds, as applicable, to the payment of the cost of restoration or replacement of the Affected Property within twelve (12) months; or

(B)    if the aggregate amount of Insurance Proceeds or Eminent Domain Proceeds, as the case may be, payable in respect of such Casualty Event or Event of Eminent Domain is less than or equal to $10,000,000, then the Borrower shall apply such Insurance Proceeds or Eminent Domain Proceeds, as applicable, to the payment of the cost of restoration or replacement of the Affected Property within twelve (12) months; provided that the Agents shall have received from the Borrower within 120 days of such Casualty Event or Event of Eminent Domain, a certificate of the Borrower executed by a Responsible Officer of the Borrower (a “Repair Notice”) (1) setting forth in reasonable detail the nature of such restoration or replacement and the estimated cost and time to complete such restoration or replacement and (2) stating that (x) the proposed restoration or replacement is technologically and economically feasible and (y) the Insurance Proceeds or Eminent Domain Proceeds payable in connection with the related Casualty Event or Event of Eminent Domain, together with other resources available to the Borrower and the Guarantors in accordance with the terms of the Loan Documents, are sufficient to pay the estimated cost of completing such restoration or replacement; or

 

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(C)    if the aggregate amount of Insurance Proceeds or Eminent Domain Proceeds, as the case may be, payable in respect of any Casualty Event or Event of Eminent Domain (other than a Casualty Event or Event of Eminent Domain described in clause (iii)(A) above) is greater than $10,000,000, then no later than three months following receipt of such payment, the Borrower shall either (1) cause such amount to be transferred to the Prepayment Account for further application in accordance with Section 2.04(b)(iv) or (2) deliver to the Agents (x) a Repair Notice confirming the Borrower’s decision to apply such Insurance Proceeds or Eminent Domain Proceeds, as applicable, to the payment of the cost of restoration or replacement of the Affected Property and (y) an approval by an appraisal firm such as Great American confirming that the proposed replacement equipment is of similar quality and ability of the Affected Property as set forth in the related Repair Notice and that such restoration and replacement is technologically and economically feasible;

provided, that any amount deposited into the Loss Proceeds Account that is not applied by the Loan Parties in accordance with the terms of this Section 2.14(e) within twelve (12) months (subject to extension to eighteen (18) months in the event a Loan Party has entered into a binding contract to complete any Approved Growth Capital Expenditures), then the Borrower shall transfer such amounts to the Prepayment Account for further application in accordance with Section 2.04(b)(iv).

(iv)    Amounts held in the Loss Proceeds Account may be applied by the Borrower for the payment of the costs of rebuilding, restoration or repair of the Affected Property only as contemplated in this Section 2.14(e).

(v)    Before any withdrawal or transfer shall be made from the Loss Proceeds Account (other than any transfer to the Prepayment Account pursuant to this Section 2.14(e)), the Borrower shall deliver to the Agents with respect to each date on which it proposes to make a transfer from the Loss Proceeds Account (each such date, a “Disbursement Date”), a requisition from the Borrower substantially in the form attached hereto as Exhibit I (a “Restoration Requisition”), dated not more than three Business Days prior to such Disbursement Date, signed by an authorized representative of the Borrower.

(vi)    Upon completion of any rebuilding, restoration, repair or replacement of all or a portion of any Affected Property, the Borrower shall notify (in writing) the Agents of such completion, and the amount, if any, required in its reasonable opinion to be retained in the Loss Proceeds Account for the payment of any remaining costs of rebuilding, restoration, repair or replacement not then due and payable and for the payment of reasonable contingencies following completion of such rebuilding, restoration, repair or replacement (the “Remaining Repair Amounts”). Upon receipt of such notice by

 

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the Agents, the Borrower shall transfer the amount remaining in the Loss Proceeds Account in excess of the Remaining Repair Amounts and any other amounts to remain in the Loss Proceeds Account as stated in such notice, to the Persons identified by the Borrower in writing to the extent of any amounts which have been expended in connection with such rebuilding, restoration, repair or replacement and not previously reimbursed. If after giving effect to the foregoing, the amount remaining on deposit in the Loss Proceeds Account in excess of the Remaining Repair Amounts exceeds $100,000, the Borrower shall transfer all of such excess in the Loss Proceeds Account to the Prepayment Account for further application in accordance with Section 2.04(b)(iv). If such amount is equal to or less than $100,000, the Borrower shall transfer all of such amount in the Loss Proceeds Account to the Revenue Account for further application in accordance with Section 2.04(c). Thereafter, upon notice from the Borrower that payment of all costs of rebuilding, restoration, repair or replacement of any Affected Property has been made, the Borrower shall transfer any amounts remaining in the Loss Proceeds Account to the Revenue Account for further application in accordance with Section 2.04(c).

(f)    Withdrawals from the Initial Growth Capex Reserve Account.

(i)    Upon receipt of a Growth Capex Withdrawal Certificate, duly completed and duly executed by a Responsible Officer of the Borrower, specifying (A) an amount requested to be transferred from the Initial Growth Capex Reserve Account and (B) the items for which such amount is to be paid and the appropriate wire payment instructions, and (C) certifying that the payments to be made with such amount constitute payments of Approved Growth Capital Expenditures solely in connection with Frac Fleet 16 permitted to be paid in accordance with this Agreement, the Term Loan Collateral Agent shall transfer from the Initial Growth Capex Reserve Account to the Persons (and in accordance with the payment information) specified in such Growth Capex Withdrawal Certificate the amounts specified in such Growth Capex Withdrawal Certificate to be then due and payable.

(ii)    To the extent any funds deposited into the Initial Growth Capex Reserve Account shall not have been used within twelve (12) months following the date of such deposit (which period shall be increased to eighteen (18) months so long as a binding contract for a Growth Capital Expenditures shall have been entered into within such initial twelve (12) month period) (any such proceeds, the “Unused Capex Reserve Proceeds”), the Borrower shall apply such Unused Capex Reserve Proceeds to the prepayment of Loans in accordance with Section 2.04(b)(ii). In the event any Lenders decline such Unused Capex Reserve Proceeds in accordance with Section 2.04(c), the Borrower shall deposit any such declined amount in the Specified Distributable Cash Account.

(g)    Withdrawals from the Specified Distributable Cash Account. The Borrower shall be permitted to transfer funds in the Specified Distributable Cash Account as directed by the Borrower.

 

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(h)    Withdrawals from the Collections Account. Once each Business Day (or such shorter period, as elected by the Borrower), the Borrower shall transfer funds in the Collection Account to the Revenue Account.

(i)    Withdrawals from the Reinvestment Account.

(i)    Upon receipt of a Reinvestment Withdrawal Certificate, duly completed and duly executed by a Responsible Officer of the Borrower, specifying (A) an amount requested to be transferred from the Reinvestment Account and (B) the items for which such amount is to be paid and the appropriate wire payment instructions, and (C) certifying that the payments to be made with such amount constitute payments of Approved Growth Capital Expenditures permitted to be paid in accordance with this Agreement, the Term Loan Collateral Agent shall transfer from the Reinvestment Account identified in such Reinvestment Withdrawal Certificate to the Persons (and in accordance with the payment information) specified in such Reinvestment Withdrawal Certificate the amounts specified in such Reinvestment Withdrawal Certificate to be then due and payable.

(ii)    To the extent any funds deposited into the Reinvestment Account shall not have been used within twelve (12) months following the date of such deposit (which period shall be increased to eighteen (18) months so long as a binding contract for Approved Growth Capital Expenditures shall have been entered into within such initial twelve (12) month period) (any such proceeds, the “Unused Reinvestment Proceeds”), the Borrower shall apply such Reinvestment Proceeds to the prepayment of Loans in accordance with Section 2.04(b)(ii). In the event any Lenders decline such Unused Reinvestment Proceeds in accordance with Section 2.04(c), the Borrower shall deposit any such declined amount in the Specified Distributable Cash Account.

(j)    Exercise of Remedies. Notwithstanding any provision to the contrary contained in this Section 2.14, during the continuance of an Event of Default and the exercise of control over the Collateral Accounts by the Term Loan Collateral Agent pursuant to the Account Control Agreements, the Term Loan Collateral Agent shall apply amounts on deposit in the Collateral Accounts as provided in Article IV of the Intercreditor Agreement.

ARTICLE III

CONDITIONS TO EFFECTIVENESS OF LENDING

SECTION 3.01.    Conditions Precedent. Section 2.01 of this Agreement shall become effective on and as of the first date (the “Effective Date”) on which the Administrative Agent determines in its sole and absolute discretion that the following conditions precedent have been satisfied (and the obligation of any Lender to make a Loan hereunder is subject to the satisfaction of such conditions precedent before or concurrently with the Effective Date):

 

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(a)    The Administrative Agent shall have received on or before the Effective Date the following, each dated such day (unless otherwise specified) and in form and substance reasonably satisfactory to the Administrative Agent:

(i)    This Agreement, duly executed and delivered by the parties hereto.

(ii)    The Notes, duly executed and delivered by the Borrower and payable to the order of the Lenders.

(iii)    The Term Loan Security Agreement, duly executed by each Loan Party, together with:

(A)    confirmation reasonably satisfactory to the Administrative Agent that (1) certificates representing the Initial Pledged Equity referred to therein accompanied by undated membership interest powers or partnership interest powers, as applicable, executed in blank, and (2) instruments evidencing the Initial Pledged Debt referred to therein, indorsed in blank, in each case, have been delivered to the Term Loan Collateral Agent;

(B)    appropriately completed financing statements in form appropriate for filing under the UCC in the State of Delaware and each other jurisdiction the Term Loan Collateral Agent may request, covering the Collateral described in the Term Loan Security Agreement, provided that, the parties agree such financing statement shall be filed prior to any financing statement filed in connection with the ABL Loan Documents;

(C)    completed requests for information or similar search reports, dated on or before the Effective Date, listing all effective financing statements filed in the jurisdictions where the Loan Parties are incorporated or in which the Collateral is located that name any Loan Party as debtor, together with copies of such other financing statements;

(D)    true and complete copies of each Material Contract in existence on the Effective Date and listed on Schedule 4.01(t);

(E)    [Reserved]; and

(F)    evidence that all other actions that the Administrative Agent and the Term Loan Collateral Agent may deem reasonably necessary in order to perfect and protect the first priority Liens in all Term Loan Priority Collateral (except that Liens expressly permitted by Section 5.02(a), including the second priority Liens on the Term Loan Priority Collateral securing payment of the ABL Obligations, may exist), the second priority Liens in all ABL Priority Collateral and security interests created under the Term Loan Security Agreement has been taken.

 

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(iv)    The Administrative Agent shall have received certificates of title for each of the Title Assets owned by the Loan Parties listed under the headings “Titles held by US Bank,” “Titles Held by US Well Services” and “Title Documentation Held by US Well Services,” of Schedule 3.01(a)(iv) and any documentation required to name the Term Loan Collateral Agent as the Secured Party.

(v)     The Administrative Agent shall have received an Acceptable Landlord Waiver with respect to each Designated Leased Property set forth on Schedule 3.01(a)(v) subject to a lease containing terms that expressly prevent or hinder the removal of any Collateral by any Loan Party or the Administrative Agent.

(vi)    The Intercreditor Agreement, in form and substance satisfactory to the Administrative Agent, and duly executed by the Loan Parties and each other party thereto as of the Effective Date.

(vii)    The following:

(A)    The ABL Credit Agreement, duly executed and delivered by the Loan Parties, the lenders, each other lender party thereto, the ABL Agent and the other Persons party thereto,

(B)    the ABL Collateral Documents, duly executed by the applicable Loan Parties and the other Persons party thereto,

(C)    evidence from the lenders and the administrative agent under the ABL Credit Agreement authorizing the Administrative Agent (or its designee, including its counsel) to file UCC financing statements expressly specified in such authorization letter,

(viii)    Certified copies of the resolutions of the board of directors of the Parent and authorizations of the sole member or general partner, as applicable, of each other Loan Party, approving the Loan Documents to which it is or is to be a party and the transactions contemplated thereby, and of all documents evidencing other necessary organizational action and governmental and other third party approvals and consents, if any, with respect to the Loan Documents to which it is or is to be a party and the transactions contemplated thereby.

(ix)    A copy of a certificate of the Secretary of State of Delaware, dated reasonably near the Effective Date certifying (A) as to a true and correct copy of the certificate of formation or other constituent documentation, as the case may be, of such Loan Party, as applicable, and each amendment thereto on file in such Secretary’s office and (B) that (1) such amendments are the only amendments to such Loan Party’s certificate

 

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of formation or other constituent documents, as the case may be, on file in such Secretary’s office, (2) to the extent applicable, such Loan Party has paid all franchise taxes to the date of such certificate and (3) to the extent applicable, such Loan Party is duly formed and in good standing or presently subsisting under the laws of the State of Delaware.

(x)    A certificate of the Parent and each other Loan Party signed on behalf of such Person by a Responsible Officer, dated the Effective Date (the statements made in which certificate shall be true on and as of the Effective Date), certifying as to (A) the absence of any amendments to the certificate of formation or other constituent documentation, as the case may be, of such Person since the date of the Secretary of State’s certificate referred to in Section 3.01(a)(ix), (B) a true and correct copy of the bylaws, limited liability company agreement or other governing agreement, as the case may be, of such Person as in effect on the date on which the resolutions referred to in Section 3.01(a)(viii) were adopted and on the Effective Date, (C) the due formation and good standing or valid existence of such Person as a corporation, limited liability company or limited partnership, as the case may be, organized under the laws of the jurisdiction of its formation, and the absence of any proceeding for the dissolution or liquidation of such Person, and (D) the truth in all material respects of the representations and warranties contained in the Loan Documents as though made on and as of the Effective Date; provided, that if a representation and warranty is qualified as to materiality, with respect to such representation and warranty, the materiality qualifier set forth in this clause (D) shall be disregarded.

(xi)    In the case of the Parent, a certificate of the Parent, executed by an officer or a director of the Parent, in the case of each other Loan Party, a certificate of the sole member, general partner or other governing Person(s), as applicable, of such Loan Party, Parent or Holdings, executed by an officer or a director of such sole member, general partner or other governing Person(s), in each case, certifying the name and true signature of the authorized Person or representative of such Loan Party, Parent or Holdings, as applicable, authorized to sign each Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

(xii)    A certificate in substantially the form of Exhibit E, attesting to the Solvency of the Parent and its Subsidiaries on a Consolidated basis after giving effect to the Loan Documents and the transactions contemplated thereby, from its chief financial officer.

(xiii)    a certified copy of the operating budget for the Borrower and its Subsidiaries for the twelve (12) month period beginning on the Effective Date (the “Initial Operating Budget”).

(xiv)    A pro forma balance sheet of each of the Parent and its Subsidiaries, in each case on a Consolidated basis, as of the Effective Date after giving effect to the Loans and extensions of credit pursuant to this Agreement occurring on the Effective Date.

 

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(xv)    Copies of all certificates representing the policies, endorsements and other documents required under Section 5.01(d) to be in effect as of the Effective Date, accompanied by (A) a certificate of the Borrower signed by a Responsible Officer of the Borrower certifying that the copies of each of the policies, endorsements and other documents delivered pursuant to this Section 3.01(a)(xv) are true, correct and complete copies thereof, (B) letters from the Borrower’s insurance brokers or insurers, dated not earlier than fifteen (15) days prior to the Effective Date, stating with respect to each such insurance policy that (1) such policy is in full force and effect, (2) all premiums theretofore due and payable thereon have been paid and (3) the underwriters of such insurance have agreed that the policies, when issued, will contain the provisions required under Section 5.01(d) and (C) evidence in form and substance reasonably satisfactory to the Lenders confirming that such required insurance is in full force and effect in accordance with the terms of this Agreement.

(xvi)    An opinion of counsel for the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent (including, without limitation, with respect to the enforceability of this Agreement).

(b)    The Administrative Agent shall be satisfied that all Existing Debt (other than Permitted Existing Debt) has been (or is contemporaneously being) prepaid, redeemed or defeased in full or otherwise satisfied and extinguished, including all interest, fees and other amounts accrued and unpaid in accordance with the payoff and related payoff letter, and all commitments relating thereto are (or are contemporaneously being) terminated.

(c)    Before giving effect to the Loan Documents and the transactions contemplated thereby, there shall have occurred (other than as set forth on Schedule IV) (x) no Material Adverse Change or (y) no economic, legal or political developments, or developments in the monetary capital markets, in each case, having a Material Adverse Effect upon any Lender prior to the occurrence of the Effective Date, in the case of each of clauses (x) and (y), since December 31, 2018.

(d)    There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened in writing before any Governmental Authority that (i) other than as set forth on Schedule IV, could reasonably be expected to have a Material Adverse Effect or materially impair or interfere with the operations of any Loan Party or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated hereby.

(e)    Except for any Governmental Authorizations required in connection with the Lenders’ exercise of remedies under the Loan Documents, all Governmental Authorizations and third party consents and approvals necessary in connection with the Loan Documents and the transactions contemplated thereby or for the ownership and operation of the Frac Fleets shall have been obtained (without the imposition of any condition that is not acceptable to the Administrative Agent or the Lenders) and shall remain in effect.

 

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(f)    The Borrower shall have paid (or shall be contemporaneously paying from the proceeds of the Loans) all accrued fees of the Agents and the Lenders, and all accrued expenses of the Agents (including all reasonable and documented accrued fees and expenses of counsel to the Administrative Agent) and other compensation contemplated in connection with this Agreement and the Fee Letter, payable to the Administrative Agent and the Lenders in respect of the transactions contemplated by this Agreement.

(g)    The Administrative Agent shall be reasonably satisfied that the amount of committed financing available to the Borrower shall be sufficient to meet the ongoing financial needs of the Borrower and its Subsidiaries after giving effect to the Loan Documents and the transactions contemplated thereby.

(h)    An Appraisal Report, in form and substance satisfactory to the Administrative Agent, from the Appraiser.

(i)    The Administrative Agent shall have received (A) a report of the Insurance Consultant in respect to the Frac Fleets and the other property of the Loan Parties, (B) a report of the Environmental Consultant, in respect of the Frac Fleets and the other property of the Loan Parties and (C) a legal due diligence report of White & Case LLP, in each case satisfactory to the Lenders and upon which the Administrative Agent, the Term Loan Collateral Agent and each Lender shall be entitled to rely (in the case of clauses (A) and (B), together with a certificate from the Insurance Consultant and the Environmental Consultant (as applicable)) and in each case in form and substance satisfactory to the Lenders.

(j)    The Administrative Agent shall have received (a) a schedule setting forth each deposit and/or securities accounts of each Loan Party and setting forth the financial institution with which such account is maintained, the account number and the account balance (as of the Effective Date) for each such account, (b) a certificate from the Responsible Officer of the Borrower certifying as to the accuracy of the information set forth in such schedule, and (c) an Account Control Agreement in respect of each Collateral Account, in each case satisfactory to the Lenders, provided that in the case of the Initial Growth Capex Reserve Account, the Reinvestment Account, the Loss Proceeds Account and the Prepayment Account, such Account Control Agreements shall be a blocked account control agreement entered into with the Term Loan Collateral Agent.

(k)    (i) The Administrative Agent shall have received, at least five (5) days prior to the Effective Date, all documentation and other information regarding the Loan Parties requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested in writing of the Borrower at least ten (10) days prior to the Effective Date, and (ii) to the extent any Loan Party qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five (5) days prior to the Effective Date, any Lender that has requested, in a written notice to the Borrower at least ten (10) days prior to the Effective Date, a Beneficial Ownership Certification in relation to Loan Parties shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).

 

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(l)    The Administrative Agent shall have received such other statements, certificates, documents, approvals and legal opinions as such Person shall reasonably request.

SECTION 3.02.    Conditions Precedent to Each Borrowing. The obligation of each Lender to make a Loan on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the conditions precedent that on the date of such Borrowing the following statements shall be true and the Administrative Agent shall have received for the account of such Lender a certificate signed by a Responsible Officer of the Borrower, dated the date of such Borrowing, stating that (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that both on the date of such notice and on the date of such Borrowing such statements are true):

(a)    the representations and warranties contained in each Loan Document are true and correct in all material respects on and as of such date, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); provided, that if a representation and warranty is qualified as to materiality, with respect to such representation and warranty, the materiality qualifier set forth in this clause (a) shall be disregarded; and

(b)    no Default has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.    Representations and Warranties. Each Loan Party represents and warrants as follows:

(a)    Organization. It (i) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, (ii) is duly qualified and in good standing as a corporation, limited liability company or limited partnership, as applicable, in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed could not reasonably be expected to have a Material Adverse Effect and (iii) has all requisite corporate, limited liability company or partnership (as applicable) power and authority (including, without limitation, all Governmental Authorizations) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted.

 

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(b)    Entity Names and Principal Places of Business. Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Loan Parties and their respective Subsidiaries, showing the exact legal name of each Loan Party and its Subsidiaries, the jurisdiction of its formation, the address of its principal place of business, its U.S. taxpayer identification number and its status as a Loan Party. The copy of the charter, certificate of formation or certificate of limited partnership, as applicable, of each Loan Party and each amendment thereto provided pursuant to Section 3.01(a)(ix) is a true, correct and complete copy of each such document, each of which is valid and in full force and effect.

(c)    Capital Structure. Set forth on Schedule 4.01(c) hereto is a complete and accurate list of all Subsidiaries of Holdings and its Subsidiaries, showing as of the date hereof (as to each such Subsidiary), the number of shares, membership interests or limited partnership interests (as applicable) of each class of its Equity Interests authorized, and the number outstanding, on the date hereof and the percentage of each such class of its Equity Interests owned (directly or indirectly) by such Loan Party and the number of shares, membership interests or limited partnership interests (as applicable) covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding Equity Interests in each Subsidiary of Holdings and its Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Term Loan Collateral Documents, Liens permitted under Section 5.02(a)(ii) or Permitted Liens.

(d)    Authorization; Non-Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which it is or is to be a party, and the consummation of the transactions contemplated thereby, are within such Loan Party’s corporate, limited liability company or limited partnership (as applicable) powers, have been duly authorized by all necessary corporate, limited liability company or limited partnership (as applicable) action, and do not (i) contravene such Loan Party’s bylaws, limited liability company agreement, limited partnership agreement or other constituent documents, (ii) violate in any material respect any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award applicable to or binding on it, (iii) conflict with or result in the breach of, or constitute a default or require any payment to be made under, a Contractual Obligation of any Loan Party (except to the extent such conflict, breach, default or payment could not reasonably be expected to have a Material Adverse Effect) or (iv) except for the Liens created under the Term Loan Collateral Documents or the ABL Collateral Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the Properties of any Loan Party.

(e)    Licenses, Consents and Approvals.

(i)    No Governmental Authorization, and no notice to, filing with, or consent or approval of any other third party is required for (A) the due execution, delivery,

 

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recordation, filing or performance by any Loan Party of any Loan Document to which it is or is to be a party, or for the consummation of the transactions contemplated thereby, (B) the grant by any Loan Party of the Liens granted by it pursuant to the Term Loan Collateral Documents, (C) the perfection or maintenance of the Liens created under the Term Loan Collateral Documents (including the first priority nature thereof in respect of all Term Loan Priority Collateral and the second priority nature thereof in respect of all ABL Priority Collateral (except that Liens expressly permitted by Section 5.02(a), including first priority Liens on ABL Priority Collateral securing payment of the ABL Obligations and second priority Liens on Term Loan Priority Collateral security payment of the ABL Obligations, may exist)), or (D) the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Term Loan Collateral Documents, except for (1) those Governmental Authorizations, notices and filings set forth on Schedule 4.01(e), all of which except as set forth on Schedule 4.01(e) or that are otherwise a Governmental Authorization described in clauses (2) or (3) below (x) have been duly obtained, taken, given or made, (y) are in full force and effect, and (z) are free from conditions or requirements that have not been met or complied with or (2) those Governmental Authorizations, notices, filings with, or consents of, any other third party, the failure of which to obtain and maintain could not reasonably be expected to result in a Material Adverse Effect.

(ii)    No Governmental Authorization, and no notice to, filing with, or consent or approval of any Governmental Authority or any other third party is required in connection with the operation of the Frac Fleets in accordance with applicable law and as otherwise contemplated by this Agreement, except for (A) the Governmental Authorizations, notices and filings set forth on Schedule 4.01(e), all of which except as set forth on Schedule 4.01(e) (or that are otherwise a Governmental Authorization described in clause (B) below) (1) have been duly obtained, taken, given or made, (2) are in full force and effect and (3) are free from conditions or requirements that have not been met or complied with or (B) those Governmental Authorizations, notices, filings with or consents of any other third party, the failure of which to obtain and maintain could not reasonably be expected to result in a Material Adverse Effect.

(f)    Binding Agreement. This Agreement has been, and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party party thereto. This Agreement is, and each other Loan Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms.

(g)    Litigation. Other than as set forth on Schedule IV, there is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries, including any Environmental Action, pending or threatened in writing before any Governmental Authority or arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby.

 

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(h)    Financial Statements.

(i)    The Consolidated financial statements of the Parent and its Subsidiaries, including the balance sheet and related statements of income and cash flows for the Fiscal Year and Fiscal Quarter then ended, duly certified by a Responsible Officer of the Parent, in each case which have most recently been furnished to the Administrative Agent pursuant to Section 3.01 or Section 5.03, fairly present in all material respects, subject, in the case of any interim balance sheet and related statements of income and cash flows for the relevant three months then ended, to year-end audit adjustments, the financial condition of the Parent and its Subsidiaries as at the dates of such financial statements and the results of operations of the Parent and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP applied on a consistent basis.

(ii)    Other than as set forth on Schedule IV, since December 31, 2018, there has been no Material Adverse Change.

(iii)    The Consolidated forecasted balance sheet, statement of income and statement of cash flows of the Parent and its Subsidiaries and all other projections and forward-looking information delivered to the Administrative Agent pursuant to Section 3.01(a)(xiii) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower’s best estimate of its future financial performance.

(i)    Full Disclosure. As of the Effective Date, no written information, exhibit or report furnished by or on behalf of any Loan Party to any Agent or any Lender in connection with the negotiation and syndication of the Loan Documents or pursuant to the terms of the Loan Documents contained, when taken as a whole, and as of the date such information, exhibit or report (as applicable) was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not materially misleading in light of the circumstances under which such statements were made; provided, however, that, except as set forth herein, no representation or warranty is made with respect to any projections or other forward looking statements provided by or on behalf of any Loan Party or any of their Affiliates.

(j)    Margin Stock. No Loan Party is engaged in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of purchasing, buying or carrying Margin Stock, and no proceeds of any Loan will be used to purchase or carry any Margin Stock, to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or for any purpose which violates the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.

(k)    Investment Company Act. No Loan Party is an “investment company”, as defined in or subject to regulations under the Investment Company Act of 1940, as amended.

 

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(l)    Security Interest; Enforceable Obligations. All filings and other actions necessary to perfect and protect the security interest in the Collateral created under the Term Loan Collateral Documents have been duly made or taken and are in full force and effect, and the Term Loan Collateral Documents create in favor of the Term Loan Collateral Agent for the benefit of the Term Loan Secured Parties legal, valid, enforceable and, together with such filings and other actions, perfected (i) first priority Liens in all Term Loan Priority Collateral (except that Liens expressly permitted by Section 5.02(a), including second priority Liens on the Term Loan Priority Collateral securing payment of the ABL Obligations, may exist) and (ii) second priority Liens in all ABL Priority Collateral (except that Liens expressly permitted by Section 5.02(a), including first priority Liens on the ABL Priority Collateral securing payment of the ABL Obligations, may exist), securing the payment of the Term Loan Obligations. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the liens and security interests created or permitted under the Loan Documents.

(m)    Solvency. After giving effect to the Loan Documents and the transactions contemplated thereby, the Loan Parties are, on a Consolidated basis, Solvent.

(n)    ERISA Matters. (i) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan that has resulted in or is reasonably expected to result in a material liability of any Loan Party or any ERISA Affiliate.

(i)    Neither any Loan Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any material Withdrawal Liability to any Multiemployer Plan.

(ii)    Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a material Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA.

(o)    Environmental Matters.

(i)    Except as otherwise set forth on Part I of Schedule 4.01(o) hereto, each Loan Party and each of its Subsidiaries and each of the foregoing’s operations and properties comply with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, except for any such noncompliance, obligation or cost that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect and, to the best knowledge of each Loan Party, no circumstances exist that could (A) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could reasonably be expected to have a Material Adverse Effect or (B) cause any such property to be subject to any restrictions on ownership or transferability, or subject to any material Lien, under any Environmental Law.

 

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(ii)    Except as otherwise set forth on Part II of Schedule 4.01(o) hereto, none of the properties currently or formerly owned, leased or operated at by any Loan Party or any of its Subsidiaries is currently listed or proposed for listing on the NPL or on the Superfund Enterprise Management System or any analogous state or local list; there are no and never have been any underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries; there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries that requires abatement under any applicable Environmental Law; and Hazardous Materials have not been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries in a manner that would reasonably be expected to require any material investigation, cleanup, remediation or remedial action by any Loan Party under any applicable Environmental Law.

(iii)    Except as otherwise set forth on Part III of Schedule 4.01(o) hereto, no Loan Party or any of its Subsidiaries is undertaking or financing, required to undertake or finance, or has completed, either individually or together with other potentially responsible parties, any investigation or assessment, Remedial Action or remedial or response action relating to any actual or threatened Release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to any contractual agreement, the order of any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned, leased or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in liability to any Loan Party or any of its Subsidiaries except, in each case above, where any such investigation or assessment, Remedial Action or other remedial or response action or liability could not reasonably be expected to have a Material Adverse Effect.

(p)    Tax Matters. (i) Neither any Loan Party nor any of its Subsidiaries is party to any tax sharing agreement.

(i)    Each Loan Party and each of its Subsidiaries has filed, has caused to be filed or has been included in all tax returns (Federal, state, local and foreign) required to be filed, other than those tax returns where the failure to file such returns could not be reasonably expected to have a Material Adverse Effect or to result in a liability of such Loan Party and its Subsidiaries in an amount in excess of $5,000,000 at any time, and has paid all taxes shown thereon to be due, together with applicable interest and penalties (other than taxes contested in good faith by proper proceedings to the extent that adequate reserves are being maintained therefor in accordance with GAAP).

(ii)    No issues have been raised by the Internal Revenue Service in respect of federal income tax returns for years for which the expiration of the applicable

 

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statute of limitations has not occurred by reason of extension or otherwise that, in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(iii)    No issues have been raised by any state, local or foreign taxing authorities, in respect of the returns for years for which the expiration of the applicable statute of limitations has not occurred by reason of extension or otherwise, that, in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(q)    Owned Real Property. No Loan Party owns any real property.

(r)    Leased Real Property. Set forth on Schedule 4.01(r) hereto is a complete and accurate list of all leases of real property under which any Loan Party is the lessee, showing as of the date hereof the street address, county or other relevant jurisdiction, state, lessor and lessee thereof. Each such lease is the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms.

(s)    Compliance with Laws and Agreements; No Default or Event of Default; No Material Adverse Change; No Force Majeure Event.

(i)    Other than as set forth on Schedule IV, no Loan Party or any of its Subsidiaries is in violation of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which could reasonably be expected to have a Material Adverse Effect.

(ii)    No Default or Event of Default has occurred and is continuing.

(iii)    Other than as set forth on Schedule IV, no Material Adverse Change has occurred.

(iv)    No Force Majeure Event has occurred and is continuing.

(t)    Material Contracts; Hedge Agreements.

(i)    Each Material Contract (i) has been duly authorized, executed and delivered by all parties thereto, (ii) has not been amended or otherwise modified from the form previously delivered to the Administrative Agent except to the extent permitted under the terms of the Loan Documents and (iii) is in full force and effect and is binding upon and enforceable against each Loan Party party thereto in accordance with its terms, and to the best knowledge of the Loan Parties, there exists no default under any Material Contract by any party thereto.

(ii)    No Loan Party is party to any Hedge Agreement other than Hedge Agreements permitted under Section 5.02(l) and disclosed on Schedule 4.01(t).

 

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(iii)    All Material Contracts and Hedge Agreements, including all amendments thereto, to which any Loan Party is a party are set forth on Schedule 4.01(t).

(u)    Accounts. No Loan Party has any deposit or securities accounts other than (i) the Collateral Accounts, (ii) the Specified Distributable Cash Account and (iii) as otherwise permitted under the terms of the Loan Documents. Each Account Control Agreement required pursuant to the Loan Documents has been executed and delivered and is in full force and effect.

(v)    Existing Capitalized Leases; Existing Equipment Financings. Set forth on Schedule 4.01(v) hereto is a complete and accurate list of all Capitalized Leases and Equipment Financings, including all amendments thereto, to which any Loan Party is a party and in effect as of the Effective Date.

(w)    Regulatory Approvals. No approvals or authorizations from any Governmental Authority are required to be obtained by any Loan Party, any Agent or the Lenders with respect to the Loan Documents and the transactions contemplated thereby.

(x)    Business and Property of the Loan Parties; Insurance Matters.

(i)    Business. Upon and after the Effective Date, the Loan Parties and their respective Subsidiaries shall solely engage in the business relating to oil field services and related activities and ancillary, supplementary and complementary lines of business. On the Effective Date, the Loan Parties and their respective Subsidiaries, taken as a whole, will own all the property and possess all of the rights and consents necessary for the conduct of the business of the Loan Parties and their respective Subsidiaries, taken as a whole, except where such failure would not reasonably be expected to have a Material Adverse Effect.

(ii)    Frac Fleets. Each of the individual Frac Fleets that is deployed to service Customers as of the Effective Date is in good working order and condition and usable in the ordinary course of business. Each of the individual Frac Fleets that is idle as of the Effective Date is being maintained in accordance with the Frac Fleet Preservation Program. As of the Effective Date, (i) the aggregate horsepower of the Frac Fleets that are either ready for immediate deployment in accordance with the Frac Fleet Preservation Program or currently deployed meets or exceeds the Required Aggregate Horsepower Amount and (ii) the Frac Fleets satisfy the Minimum Frac Fleet Requirement.

(iii)    Insurance Matters.

(A)    The properties of each Loan Party and each of their respective Subsidiaries are insured pursuant to policies and other bonds that are valid and in full force and effect and that provide coverage as is customarily carried by companies engaged in similar businesses of the same size and character as its business and owning and operating similar properties in locations in which it operates.

 

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(B)    Each Loan Party and each of their respective Subsidiaries has obtained flood insurance for such structures and contents constituting Collateral located in a flood hazard zone pursuant to policies that are valid and in full force and effect, in accordance with applicable law and reasonably satisfactory to the Term Loan Collateral Agent.

(C)    Schedule 4.01(x) sets forth a description of all insurance maintained by or on behalf of the Loan Parties on the Effective Date.

(D)    As of the Effective Date, no Casualty Event has occurred and is continuing, except where such Casualty Event would not reasonably be expected to have a Material Adverse Effect.

(y)    Intellectual Property. All Registered Intellectual Property owned by any Loan Party or any of their respective Subsidiaries is set forth on Schedule 4.01(y). The Loan Parties and/or their respective Subsidiaries own or have rights or licenses to all Intellectual Property sufficient to conduct the business and operations as currently conducted or proposed to be conducted (as of the Effective Date), except as otherwise would not reasonably be expected to result in a Material Adverse Effect. All material Registered Intellectual Property owned by any Loan Party or any of their respective Subsidiaries is, to the knowledge of each Loan Party, valid and enforceable. There is no objection to or pending challenge to the validity or enforceability of any such owned material Registered Intellectual Property (other than with respect to pending applications in the ordinary course of prosecution before the United States Patent and Trademark Office or other applicable governmental authority) or, to the knowledge of any Loan Party, any licensed material Registered Intellectual Property. As of the Effective Date, no Loan Party is aware of any grounds for any such challenge to such owned or licensed Registered Intellectual Property, except as set forth in Schedule 4.01(y). Each item of material Intellectual Property owned by any Loan Party or any of their respective Subsidiaries is described on Schedule 4.01(y) and consists of material or property developed by or on behalf of such Loan Party or was lawfully acquired by such Loan Party or Subsidiary from the proper and lawful owner thereof, except as otherwise would not reasonably be expected to result in a Material Adverse Effect. Each Loan Party and of their respective Subsidiaries has taken commercially reasonable steps to maintain all owned Intellectual Property as to preserve the value thereof from the date of creation or acquisition thereof except as otherwise would not reasonably be expected to result in a Material Adverse Effect. With respect to all software used by any Loan Party or any of their respective Subsidiaries in the operation of any such Loan Party’s or Subsidiary’s business, as currently conducted, such Loan Party or Subsidiary owns, or possesses valid licenses or other rights to use all such software in all material respects. No Intellectual Property owned by any Loan Party or any of their respective Subsidiaries has been sold or licensed t