UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

 

 

Pursuant to Section 13 or Section 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 16, 2018 (November 9, 2018)

 

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 Number)   (IRS Employer
Identification No.)

 

770 South Post Oak Lane
Suite 405
Houston, TX

(address of principal executive offices)

 

77056
(zip code)

 

(832) 562-3730

(Registrant’s telephone number, including area code)

 

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

 

¨ Written communication pursuant to Rule 425 under the Securities Act (17 UR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CPR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencements communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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  x

 

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.  ¨

  

 

 

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Introductory Note

 

On November 9, 2018 (the “ Closing Date ”), U.S. Well Services, Inc. (formerly Matlin & Partners Acquisition Corporation) (the “ Company ”) consummated the previously announced business combination with USWS Holdings LLC, a Delaware limited liability company (“ USWS Holdings ”), as contemplated in the previously announced Merger and Contribution Agreement, dated as of July 13, 2018, and amended on August 9, 2018, and further amended on November 2, 2018 (as amended, the “ Merger and Contribution Agreement ”), with MPAC Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“ Merger Sub ”), USWS Holdings, certain owners of equity interests in USWS Holdings (the “ Blocker Companies ”) and, solely for purposes described therein, the seller representative named therein. The transactions contemplated by the Merger and Contribution Agreement, including the merger of each Blocker Company into the Company (the “ Blocker Merger ”), the contribution by the Company to Merger Sub of all of its available funds (other than cash to be used to pay certain transaction expenses) and the issuance of shares of its Class A Common Stock, par value $0.0001 per share (the “ Class A Common Stock ”), and its Class B Common Stock, par value $0.0001 per share (the “ Class B Common Stock ”), and the merger of Merger Sub with and into USWS Holdings, are collectively referred to herein as the “ Business Combination .”

 

Following the completion of the Business Combination (the “ Closing ”), substantially all of the Company’s assets and operations are held and conducted by USWS Holdings and its subsidiaries, including U.S. Well Services, LLC (“ USWS ”), and the Company’s only assets are equity interests in USWS Holdings. The Company owns a majority of the economic and voting interests of USWS Holdings and is the sole manager of USWS Holdings.

 

In connection with the Closing, the Company changed its name from “Matlin & Partners Acquisition Corporation” to “U.S. Well Services, Inc.” Unless the context otherwise requires, “Matlin” or “MPAC” refers to the registrant prior to the Closing, and “we,” “us,” “our” and the “Company” refer to the registrant and its subsidiaries following the Closing.

 

The foregoing description of the Merger and Contribution Agreement is a summary only and is qualified in its entirety by reference to the Merger and Contribution Agreement, Amendment No. 1 to the Merger and Contribution Agreement and Amendment No. 2 to the Merger and Contribution Agreement, a copy of which is filed as Exhibit 2.1, Exhibit 2.2 and Exhibit 2.3, respectively, to this Current Report on Form 8-K. A more detailed description of the Business Combination and related transactions can be found in MPAC’s definitive proxy statement in connection with the solicitation of proxies from MPAC’s stockholders to approve the Business Combination and related transactions filed with the Securities and Exchange Commission (the “ SEC ”) on October 10, 2018 (the “ Proxy Statement ”).

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Amended and Restated Registration Rights Agreement

 

Concurrently with the Closing, the Company, Matlin & Partners Acquisition Sponsor LLC (“ Sponsor ”), the owners of equity interests in the Blocker Companies (the “ Blocker Stockholders ”), certain owners of equity interests in USWS Holdings other than the Blocker Companies (the “ Non-Blocker USWS Members ”), Crestview III USWS, L.P. (“ Crestview Investor I ”), Crestview III USWS TE, LLC (together with Crestview Investor I, “ Crestview ”), Joel Broussard, certain lenders (the “ Lenders ”) under USWS’ Amended and Restated Senior Secured Credit Agreement, dated as of February 2, 2017 (the “ Credit Agreement ”), and Piper Jaffray & Co. (“ Piper ”) entered into an amended and restated registration rights agreement (the “ A&R Registration Rights Agreement ”).

 

The A&R Registration Rights Agreement amends, restates and replaces the registration rights agreement entered into by and among MPAC, Sponsor, Cantor Fitzgerald & Co. and the holders named therein in connection with Matlin’s initial public offering, in order to provide substantially similar registration rights to each of Sponsor, the Blocker Stockholders, the Non-Blocker USWS Members, Crestview, Joel Broussard, the Lenders and Piper, pursuant to which the Company will be required to register for resale shares of Class A Common Stock held by those parties upon Closing or issuable upon the future exercise of private placement warrants or upon the future exchange of new units of USWS Holdings (“ New USWS Units ”) and shares of Class B Common Stock, as well as the private placement warrants held by certain of these parties, in each case held by them upon Closing (collectively, “ Registrable Securities ”).

 

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 The Company will be required, within 30 days after consummation of the Business Combination, to file a registration statement registering the resale of all of the Registrable Securities. In addition, if an underwritten offering is reasonably expected to result in gross proceeds of at least $25 million, (i) Sponsor will be entitled to demand three underwritten offerings, (ii) the Blocker Stockholders, the Non-Blocker USWS Members and the Lenders, collectively, will be entitled to demand five underwritten offerings and (iii) Crestview will be entitled to demand three underwritten offerings with respect to their Registrable Securities. The holders of Registrable Securities will also have certain “piggy-back” rights with respect to underwritten offerings initiated by the Company or our stockholders.

 

We will be required to bear all expenses incurred in connection with the filing of any such registration statements and any such offerings, other than underwriting discounts and commission on the sale of Registrable Securities and the fees and expenses of counsel to holders of Registrable Securities. The A&R Registration Rights Agreement also will include customary provisions regarding indemnification and contribution.

 

The A&R Registration Rights Agreement also provides that, subject to certain exceptions, the Blocker Stockholders, the Non-Blocker USWS Members and Piper will not transfer the shares of Class A Common Stock, New USWS Units or shares of Class B Common Stock issued to them in the Business Combination, as well as the shares of Class A Common Stock issuable upon exchange of such New USWS Units and shares of Class B Common Stock, prior to the first anniversary of the Closing Date, except that up to 50% of the shares of Class A Common Stock held or acquirable on exchange by each such person and its permitted transferees may be transferred in an underwritten public offering on or after the date that is 180 days after the Closing Date.

 

The foregoing description of the A&R Registration Rights Agreement is a summary only and is qualified in its entirety by reference to the A&R Registration Rights Agreement, a copy of which is filed as Exhibit 4.1 to this Current Report on Form 8-K.

 

Amended and Restated Limited Liability Company Agreement of USWS Holdings

 

At the Closing, the Company and the Non-Blocker USWS Members entered into an Amended and Restated Limited Liability Company Agreement of USWS Holdings (the “ A&R USWS LLC Agreement ”), which sets forth, among other things, the rights and obligations of the members of USWS Holdings. Under the A&R USWS LLC Agreement, the Company is the sole manager of USWS Holdings effective at Closing and will be able to control all of the day-to-day business affairs and decision-making of USWS Holdings without the approval of any member, unless otherwise stated in the A&R USWS LLC Agreement. For example, the sole manager cannot take any action that would result in the failure of USWS Holdings to be classified as a partnership for U.S. federal income tax purposes without the approval of the members. As the sole manager, the Company, through its officers and directors, will be responsible for all operational and administrative decisions of USWS Holdings and the day-to-day management of the business of USWS Holdings and its subsidiaries, including USWS.

 

The foregoing description of the A&R USWS LLC Agreement is a summary only and is qualified in its entirety by reference to the A&R USWS LLC Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

 

Amendment No. 2 to the Sponsor Agreement

 

On November 9, 2018, MPAC, USWS Holdings and Sponsor entered into Amendment No. 2 to the Sponsor Agreement (“ Amendment No. 2 ”). Amendment No. 2 amended the Sponsor Agreement, dated as of July 13, 2018 and amended on November 2, 2018 (as amended, the “ Sponsor Agreement ”) to further clarify that during the time that Sponsor’s certain Class A Common Stock shares are subject to certain transfer restrictions based on the Sponsor Agreement (the “ Conversion Shares ”), if the consideration in the Applicable Transaction (as defined in Amendment No. 2) consists solely of cash and the amount for which each share of Class A Common Stock is exchangeable is less than $12.00, then Sponsor will forfeit 1,000,000 Conversion Shares (the “ $12 Conversion Shares ”). If the consideration in the Applicable Transaction consists of cash and securities and/or other property and the value of the cash, securities and other property, if any, for which each share of Class A Common Stock is exchangeable is less than $12.00, as determined in good faith by the Company, the Company will receive and hold in escrow for the benefit of Sponsor any and all consideration in respect of the $12 Conversion Shares until such time as the value of such consideration, as determined in good faith by the Company, equals or exceeds $12.00 per share of Class A Common Stock.

 

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In addition, Amendment No. 2 imposed the above forfeiture and escrow provision on Sponsor with respect to an additional 609,677 Conversion Shares but at a consideration value per share of $13.50 rather than $12.00.

 

The foregoing description of Amendment No. 2 does not purport to be complete and is qualified in its entirety by the terms and conditions of Amendment No. 2, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K .

 

Indemnity Agreements

 

On the Closing Date, we entered into indemnity agreements with David J. Matlin, David L. Treadwell, Adam Klein, Eddie Watson, James Bold and Ryan Carroll, each of whom became or continued as a director of the Company at Closing, and Joel Broussard, Kyle O’Neill, Nathan Houston and Matthew Bernard, each of whom became an executive officer and/or director of the Company at Closing. Each indemnity agreement provides that, subject to limited exceptions, and among other things, we will indemnify the director or executive officer to the fullest extent permitted by law for claims arising in his or her capacity as our director or officer.

 

The foregoing descriptions of the indemnity agreements are a summary only and are qualified in their entirety by reference to the form of indemnity agreement, a copy of which is filed as Exhibit 10.5 to this Current Report on Form 8-K.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

The disclosure set forth under “Introductory Note” above is incorporated in this Item 2.01 by reference. The material provisions of the Merger and Contribution Agreement are described in the Proxy Statement, beginning on page 83 thereof, in the section entitled “Proposal No. 1—The Business Combination Proposal—The Merger and Contribution Agreement,” which is incorporated herein by reference.

 

The Business Combination was approved by MPAC’s stockholders at the special meeting in lieu of the 2018 annual meeting of stockholders (the “ Special Meeting ”). At the Special Meeting, 29,673,697 shares of Class A Common Stock and Class F Common Stock, par value $0.0001 per share (the “ Class F Common Stock ”), voting as a single class, were voted in favor of the proposal to approve the Business Combination, 600,100 shares of Class A Common Stock and Class F Common Stock, voting as a single class, were voted against the proposal, and there were no abstentions or broker non-votes. MPAC’s public stockholders had the opportunity, in connection with the Closing, to redeem shares of Class A Common Stock pursuant to the terms of MPAC’s amended and restated certificate of incorporation (the “ Charter ”), and public stockholders holding an aggregate of 28,856,991 shares of Class A Common Stock elected to have such shares redeemed for an aggregate amount of approximately $293.1 million. In addition, in connection with the Closing, Sponsor forfeited 2,975,000 shares of Class F Common Stock, pursuant to the Sponsor Agreement (such forfeiture, the “ Sponsor Forfeiture ”). In accordance with the Charter, the 5,150,000 shares of Class F Common Stock that remained outstanding following the Sponsor Forfeiture were converted into shares of Class A Common Stock on a one-for-one basis (the “ Class F Common Stock Conversion ”).

 

At Closing, pursuant to the terms of the Merger and Contribution Agreement:

 

  · MPAC issued to the Blocker Stockholders 13,532,331 shares of Class A Common Stock in exchange for their equity interest in the Blocker Companies;
  · MPAC and USWS Holdings issued to the Non-Blocker USWS Members 14,546,755 New USWS Units and 14,546,755 shares of Class B Common Stock;
  · MPAC issued to Piper 509,337 shares of Class A Common Stock in satisfaction of its fee for acting as financial advisor to USWS in connection with the Business Combination;

 

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  · MPAC issued to the Lenders an aggregate of 1,314,999 shares of Class A Common Stock as repayment for a portion of the loans outstanding under the Credit Agreement prior to Closing;
  · MPAC issued 20,250,000 shares of Class A Common Stock to Crestview (including 10,350,000 shares pursuant to a backstop commitment);
  · MPAC issued 4,500,000 shares of Class A Common Stock to certain other institutional investors (the “ PIPE Investors ”) that entered into subscription agreements with MPAC; and
  · MPAC issued 1,180,000 shares of Class A Common Stock to certain individuals, including (i) 650,000 shares of Class A Common Stock to the former Chief Executive Officer of USWS Holdings, who became the President and Chief Executive Officer of the Company at Closing, in satisfaction of a portion of a “change in control” bonus he was entitled to receive at Closing under his previously existing employment agreement with USWS Holdings and an employment agreement entered into by him with MPAC that became effective at Closing, and (ii) 530,000 shares of restricted Class A Common Stock, subject to the Vesting Conditions (as defined below), issued to certain members of management of USWS Holdings, each of whom became an officer of the Company or continued as a member of management of USWS Holdings at Closing.

 

As of the Closing Date and following the completion of the Business Combination, the ownership interests of the Company’s stockholders were as follows:

 

  · public stockholders owned 3,576,507 shares of Class A Common Stock, representing an approximate 7.1% economic interest and an approximate 5.5% voting interest;
  · Sponsor owned 5,216,502 shares of Class A Common Stock, representing an approximate 10.4% economic interest and an approximate 8.1% voting interest;
  · the Blocker Stockholders owned 13,532,331 shares of Class A Common Stock, representing an approximate 27.0% economic interest and an approximate 20.9% voting interest;
  · Crestview owned 20,250,000 shares of Class A Common Stock, representing an approximate 40.4% economic interest and an approximate 31.3% voting interest;
  · the Non-Blocker USWS Members owned 14,546,755 shares of Class B Common Stock, representing a 0.0% economic interest and an approximate 22.5% voting interest;
  · the PIPE Investors owned 4,500,000 shares of Class A Common Stock, representing an approximate 9.0% economic interest and an approximate 7.0% voting interest;
  · the Lenders owned 1,314,999 shares of Class A Common Stock, representing an approximate 2.6% economic interest and an approximate 2.0% voting interest;
  · Piper owned 509,337 shares of Class A Common Stock, representing an approximate 1.0% economic interest and an approximate 0.8% voting interest; and
  · all directors and executive officers as a group owned 1,180,000 shares of Class A Common Stock (including 530,000 restricted shares subject to the Vesting Conditions), representing an approximate 2.4% economic interest and an approximate 1.8% voting interest.

 

Prior to the Closing, MPAC was a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) with no operations, formed as a vehicle to effect a business combination with one or more operating businesses. After the Closing, the Company became a holding company whose assets primarily consist of interests in its subsidiaries, USWS Holdings and USWS. The following information is provided about the business of the Company reflecting the consummation of the Business Combination.

 

Cautionary Note Regarding Forward-Looking Statements

 

The Company makes forward-looking statements in this Current Report on Form 8-K. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements may include statements relating to:

 

· the benefits of the Business Combination;
· the future financial performance of the Company following the Business Combination;

 

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· the Company’s success in retaining or recruiting, or changes required in, our officers, key employees or directors;
· changes in the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans;
· changes in the future operating results of the Company;
· expansion plans and opportunities; and
· other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “will,” or similar expressions.

 

These forward-looking statements are based on information available as of the date of this Current Report on Form 8-K, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

  · the risk that the Business Combination disrupts our current plans and operations;
  · the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably;
  · costs related to the Business Combination;
  · changes in applicable laws or regulations;
  · fluctuations in the U.S. and/or global stock markets;
  · the possibility that the we may be adversely affected by other economic, business, and/or competitive factors; and
  · other risks and uncertainties set forth in the Proxy Statement in the section entitled “Risk Factors” beginning on page 34 of the Proxy Statement.

 

Business and Properties

 

The business and properties of USWS prior to the Business Combination are described in the Proxy Statement in the section entitled “Business of USWS” beginning on page 188, which is incorporated herein by reference. The business of MPAC prior to the Business Combination is described in the Proxy Statement in the section entitled “Business of MPAC” beginning on page 157, which is incorporated herein by reference.

 

Risk Factors

 

The risk factors related to the Company’s business and operations are described in the Proxy Statement in the section entitled “Risk Factors” beginning on page 34, which is incorporated herein by reference.

 

Selected Historical Financial Information of the Company

 

The selected historical financial information of USWS for the years ended December 31, 2017, 2016 and 2015, and the nine months ended September 30, 2018 and 2017 is set forth in Exhibit 99.1 hereto and is incorporated herein by reference.

 

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Unaudited Pro Forma Condensed Consolidated Combined Financial Information

 

The unaudited pro forma condensed consolidated combined financial information of MPAC for the year ended December 31, 2017 and the nine months ended September 30, 2018 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Management’s discussion and analysis of financial condition and results of operations of USWS for the nine months ended September 30, 2018 and 2017 and for the years ended December 31, 2017, 2016 and 2015 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information known to the Company regarding ownership of shares of voting securities of the Company, which consists of Class A Common Stock and Class B Common Stock, as of November 9, 2018:

 

  · each person who is known by the Company to own beneficially more than 5% of the outstanding shares of the Company’s voting securities;
  · each of the Company’s current executive officers and directors; and
  · all current executive officers and directors of the Company, as a group.

 

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security or has the right to acquire such securities within sixty (60) days, including options and warrants that are currently exercisable or exercisable within sixty (60) days.

 

The beneficial ownership of shares of voting stock of the Company is based on 64,626,431 shares of Class A Common Stock and Class B Common Stock issued and outstanding in the aggregate as of November 9, 2018.

 

Unless otherwise indicated, the Company believes that all persons named in the table below have sole voting and investment power with respect to all shares of voting stock beneficially owned by them.

 

Name and Address of Beneficial Owner(1)   Number
of Shares
    Percent  
5% Stockholders            
Matlin & Partners Acquisition Sponsor LLC(2)     9,341,502       13.6 %
Crestview(3)     23,875,000       35.0 %
Regiment Capital Special Situations Fund V, L.P.(4)     10,004,039       15.5 %
BlackRock, Inc.(5)     4,625,218       7.2 %
Millstreet Capital Management LLC(6)     3,586,535       5.5 %
Directors and Executive Officers                
Joel N. Broussard(7)     864,900       1.3 %
David J. Matlin            
David L. Treadwell            
Adam J. Klein            
Eddie Watson            
James S. Bold            
Ryan K. Carroll            
Kyle O’Neill            
Nathan Houston(8)     78,011       *  
Matthew Bernard(9)     143,300       *  
All directors and executive officers as a group
(10 individuals)(10)
    1,180,000       1.8 %

 

 

 

* Less than one percent.

 

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(1) Unless otherwise indicated, the business address of each of person listed in this table is c/o U.S. Well Services, Inc., 770 South Post Oak Lane, Suite 405, Houston, Texas 77056.

 

(2) Includes 4,125,000 shares of Class A Common Stock issuable upon exercise of warrants that will become exercisable 30 days after closing of the Business Combination. There are five managing principals of the board of managing principals of Sponsor, including Messrs. Matlin and Treadwell. Each managing principal has one vote, and the approval of three of the five members of the board of managing principals is required to approve an action of Sponsor. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting or dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. This is the situation with regard to Sponsor. Based upon the foregoing analysis, no individual managing principal of Sponsor exercises voting or dispositive control over any of the securities held by Sponsor, even those in which he directly holds a pecuniary interest. Accordingly, none of them is deemed to have or share beneficial ownership of such shares. The business address of Sponsor is 520 Madison Avenue, 35 th Floor, New York, New York 10022.

 

(3) Includes 3,625,000 shares of Class A Common Stock issuable upon exercise of warrants that will become exercisable 30 days after closing of the Business Combination and represents shares of Class A Common Stock held directly (or issuable upon exercise of warrants held directly) by Crestview III USWS, L.P. and Crestview III USWS TE, LLC, in each case for which Crestview Partners III GP, L.P. may be deemed to be the beneficial owner. Crestview Partners III GP, L.P. is the general partner of the investment funds which are direct or indirect members of Crestview. Decisions by Crestview Partners III GP, L.P. to vote or dispose of the interests held by Crestview requires the approval of a majority of the 9 members of its investment committee, which is composed of the following individuals: Barry S. Volpert, Thomas S. Murphy, Jr., Jeffrey A. Marcus, Robert J. Hurst, Richard M. DeMartini, Robert V. Delaney, Jr., Brian P. Cassidy, Alexander M. Rose and Adam J. Klein. None of the foregoing persons has the power individually to vote or dispose of any of such interests. Each of the foregoing individuals disclaims beneficial ownership of all such interests. The business address of each of the foregoing is c/o Crestview Advisors, L.L.C., 590 Madison Avenue, 36 th Floor, New York, New York.

 

(4) Regiment Capital Special Situations Fund V, L.P. (“ Fund V ”) is the holder of the shares reported herein. TCW Special Situations, LLC (“ TCW ”) is the sole investment manager to Fund V. Accordingly, TCW may be deemed to have or share beneficial ownership and have or share voting and dispositive power over the shares held by Fund V. The business address of Fund V and TCW is c/o TCW Direct Lending Group, 1251 Avenue of the Americas, Suite 4700, New York, New York 10020.

 

(5) The registered holders of the referenced shares are funds and accounts under management by investment adviser subsidiaries of BlackRock, Inc. (or wholly owned subsidiaries of such funds and accounts). BlackRock, Inc. is the ultimate parent holding company of such investment adviser entities. On behalf of such investment adviser entities, the applicable portfolio managers, as managing directors (or in other capacities) of such entities, and/or the applicable investment committee members of such funds and accounts, have voting and investment power over the shares held by the funds and accounts (or the wholly owned subsidiaries of such funds and accounts) which are the registered holders of the referenced shares. Such portfolio managers and/or investment committee members expressly disclaim beneficial ownership of all shares held by such funds and accounts (or such wholly owned subsidiaries). The address of such funds and accounts (and such wholly owned subsidiaries), such investment adviser subsidiaries and such portfolio managers and/or investment committee members is 55 East 52nd Street, New York, NY 10055.

 

(6) Consists of 474,700 shares held by Millstreet Credit Fund LP; 2,311,835 shares held by Mercer QIF Fund PLC – Mercer Investment Fund 1; and 800,000 shares held by Ronin Trading Europe LLP.  Millstreet Capital Management LLC (“ Millstreet Capital ”) is the Investment Manager and/or Sub-Investment Manager of the foregoing persons.  Accordingly, Millstreet Capital may be deemed to have or share beneficial ownership and have or share voting and dispositive power over the shares held by such persons.  The business address of each of the foregoing persons is c/o Millstreet Capital Management LLC, 399 Boylston Street, Suite 501, Boston, Massachusetts 02116.

 

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(7) Includes 214,900 restricted shares of Class A Common Stock which will vest in equal one-third increments on each of the first, second and third anniversaries of the Closing Date; provided, however, that: no restricted shares will vest on any such date unless the closing price per share of the Class A Common Stock on The Nasdaq Capital Market (“ Nasdaq ”) (or other principal stock exchange on which the Class A Common Stock is then listed for trading) has been $12.00 or greater for 20 trading days in any period of 30 consecutive trading days commencing after the Closing Date (the “ Trading Condition ”), and in the event that restricted shares do not vest on the applicable anniversary of the Closing Date because the Trading Condition has not then been satisfied, such restricted shares will vest upon the later satisfaction of the Trading Condition (but in no event before the applicable anniversary of the Closing Date on which such restricted shares are otherwise scheduled to vest) (the “ Vesting Conditions ”).

 

(8) Includes 71,600 restricted shares of Class A Common Stock subject to the Vesting Conditions.

 

(9) Consists of 143,300 restricted shares of Class A Common Stock subject to the Vesting Conditions.

 

(10) Includes 530,000 restricted shares of Class A Common Stock subject to the Vesting Conditions.

  

Directors

 

On the Closing Date, in connection with the Business Combination, the size of the Company’s board of directors (the “ Board ”) was increased from five members to seven members. Peter H. Schoels, Kenneth L. Campbell and Daniel W. Dienst each resigned as members of the Board. The resignations of Peter H. Schoels, Kenneth L. Campbell and Daniel W. Dienst were not a result of any disagreement with the Company. David J. Matlin and David L. Treadwell continued as Board members following the Business Combination.

 

At the Special Meeting, holders of Class A Common Stock and Class F Common Stock, voting as a single class, approved the election of seven individuals to the Board. Joel Broussard and James Bold were elected to serve as Class I directors, with terms expiring at the Company’s annual meeting of stockholders in 2019; Adam Klein and David J. Matlin were elected to serve as Class II directors, with terms expiring at the Company’s annual meeting of stockholders in 2020; and David L. Treadwell, Ryan Carroll and Eddie Watson were elected to serve as Class III directors, with terms expiring at the Company’s annual meeting of stockholders in 2021. Information with respect to each of the Company’s directors is set forth in the Proxy Statement in the section entitled “Officers and Directors of MPAC upon Consummation of the Business Combination” beginning on page 162, which is incorporated herein by reference.

 

Independence of Directors

 

Under the listing rules of Nasdaq, we are required to have a majority of independent directors serving on our Board. The Board has determined that David L. Treadwell, Adam Klein, Eddie Watson, James Bold and Ryan Carroll are independent within the meaning of Nasdaq Rule 5605(a)(2).

 

Committees of the Board of Directors

 

Following the Closing, the standing committees of the Board consist of an audit committee (the “ Audit Committee ”), a conflicts committee (the “ Conflicts Committee ”), a compensation committee (the “ Compensation Committee ”) and a nominating and corporate governance committee (the “ Nominating and Corporate Governance Committee ”). Each of the committees reports to the Board. The composition, duties and responsibilities of these committees are set forth below.

 

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Audit Committee

 

The principal functions of the Audit Committee are detailed in the Audit Committee’s charter, which is available on the Company’s website, and include:

 

  · the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent registered public accounting firm engaged by us ;
  · pre-approving all audit and non-audit services to be provided by the independent registered public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures ;
  · reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence ;
  · setting clear hiring policies for employees or former employees of the independent registered public accounting firm ;
  · setting clear policies for audit partner rotation in compliance with applicable laws and regulations ;
  · obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues ;
  · reviewing and approving any related party transaction in accordance with our policies with respect thereto; and
  · reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities .

 

Under the Nasdaq listing standards and applicable SEC rules, the Company is required to have at least three members of the Audit Committee, all of whom must be independent. Following the Closing, our Audit Committee consists of David L. Treadwell, Eddie Watson and James Bold, with Mr. Treadwell serving as the Chair. We believe that Messrs. Treadwell, Watson and Bold qualify as independent directors according to the rules and regulations of the SEC with respect to audit committee membership. We also believe that Mr. Treadwell qualifies as an “audit committee financial expert,” as such term is defined in Item 401(h) of Regulation S-K.

 

Compensation Committee

 

The principal functions of the Compensation Committee are detailed in the Compensation Committee’s charter, which is available on the Company’s website, and include:

 

  · reviewing and approving on an annual basis the corporate goals and objectives relevant to the Company’s Chief Executive Officer’s compensation, evaluating its Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of its Chief Executive Officer based on such evaluation;
  · reviewing and approving on an annual basis the compensation of all of the Company’s other senior officers;
  · reviewing on an annual basis the Company’s executive compensation policies and plans;
  · implementing and administering the Company’s incentive compensation equity-based remuneration plans;
  · assisting management in complying with the Company’s proxy statement and annual report disclosure requirements;
  · establishing and reviewing periodically policies and procedures with respect to perquisites;
  · if required, producing a report on executive compensation to be included in the Company’s annual proxy statement; and
  · reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

 

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Under the Nasdaq listing standards, the Company is required to have a Compensation Committee, all of the members of which must be independent. Following the Closing, our Compensation Committee consists of David Treadwell, Adam Klein and Ryan Carroll, with Mr. Treadwell serving as the Chair. We believe that Messrs. Treadwell, Klein and Carroll qualify as independent directors according to the rules and regulations of the Nasdaq with respect to compensation committee membership.

 

Nominating and Corporate Governance Committee

 

The principal functions of the Nominating and Corporate Governance Committee are detailed in the Nominating and Corporate Governance Committee’s charter, which is available on the Company’s website, and include:

 

  · assisting the Board in identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board;
  · recommending director nominees for election or for appointment to fill vacancies;
  · recommending the election of officer candidates;
  · monitoring the independence of Board members;
  · ensuring the availability of director education programs; and
  · advising the Board about appropriate composition of the Board and its committees.

 

The Nominating and Corporate Governance Committee also develops and recommends to the Board corporate governance principles and practices and assists in implementing them, including conducting a regular review of our corporate governance principles and practices. The Nominating and Corporate Governance Committee oversees the annual performance evaluation of the Board and the committees of the Board and makes a report to the Board on succession planning.

 

Following the Closing, our Nominating and Corporate Governance Committee consists of Adam Klein, David L. Treadwell and Ryan Carroll, with Mr. Klein serving as the Chair.

 

Executive Officers

 

In connection with and effective as of the Closing, David J. Matlin resigned as Matlin’s Chief Executive Officer, Greg Ethridge resigned as Matlin’s President, Rui Gao resigned as Matlin’s Chief Financial Officer and Robert H. Weiss resigned as Matlin’s Secretary and General Counsel. Also, in connection with the Closing, the following individuals were appointed by the Board as executive officers of the Company:

 

Name   Position
Joel Broussard   President, Chief Executive Officer and Director
Kyle O’Neill   Chief Financial Officer
Nathan Houston   Chief Operating Officer
Matthew Bernard   Chief Administrative Officer

 

Information with respect to Messrs. Broussard, O’Neill, Houston and Bernard is set forth in the Proxy Statement in the section entitled “Officers and Directors of MPAC upon Consummation of the Business Combination” beginning on page 162, which is incorporated herein by reference.

 

Indemnification of Directors and Executive Officers

 

On the Closing Date, we entered into indemnity agreements with David J. Matlin, David L. Treadwell, Adam Klein, Eddie Watson, James Bold and Ryan Carroll, each of whom became or continued as a director of the Company at Closing, and Joel Broussard, Kyle O’Neill, Nathan Houston and Matthew Bernard, each of whom became an executive officer and/or director of the Company at Closing. Each indemnity agreement provides that, subject to limited exceptions, and among other things, we will indemnify the director or executive officer to the fullest extent permitted by law for claims arising in his or her capacity as our director or officer.

 

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The foregoing descriptions of the indemnity agreements are a summary only and are qualified in their entirety by reference to the form of indemnity agreement, a copy of which is filed as Exhibit 10.5 to this Current Report on Form 8-K.

 

Director and Executive Officer Compensation

 

Pre-Closing Compensation of Executive Officers and Directors

 

The compensation of Matlin’s and USWS’ named executive officers and directors before the consummation of the Business Combination is set forth in the Proxy Statement in the section titled “Executive Compensation” beginning on page 166, which is incorporated herein by reference.

 

Post-Closing Compensation of Executive Officers and Directors

 

After the Closing, Joel Broussard will serve as President and Chief Executive Officer and Director of the Company, Kyle O’Neill will serve as Chief Financial Officer of the Company, Nathan Houston will serve as Chief Operating Officer of the Company and Matthew Bernard will serve as Chief Administrative Officer of the Company. With the exception of Messrs. Broussard, O’Neill, Houston and Bernard, no determinations regarding the compensation arrangements for the Company’s directors or executive officers have been made.

 

Pursuant to the terms of the Merger and Contribution Agreement, 530,000 shares of restricted Class A Common Stock, subject to the Vesting Conditions, were issued to certain members of management of USWS Holdings, each of whom became an officer of the Company or continued as a member of management of USWS Holdings at Closing. As part of the aforementioned 530,000 shares of restricted Class A Common Stock grant, Messrs. Broussard, Houston, and Bernard received 214,900, 71,600 and 143,300 shares, respectively.

 

Employment Agreements, Annual Base Salaries and Target Bonuses

 

On July 13, 2018, the Company entered into new employment agreements with each of Messrs. Broussard, O’Neill, Houston, and Bernard that became effective and superseded and replaced the original employment agreements entered into between USWS and each of Messrs. Broussard, Houston and Bernard, as of the Closing Date (the “ New Employment Agreements ”). Each New Employment Agreement generally provides for an initial term which will expire on (i) December 31, 2021 for Mr. Broussard, and (ii) December 31, 2020 for Messrs. O’Neill, Houston, and Bernard. After the initial term, the New Employment Agreements will renew for subsequent one (1) year periods, unless MPAC provides written notice of non-renewal at least sixty (60) days prior to the end of the then-current term. Each New Employment Agreement provides a general description of the Executive’s duties, positions, and responsibilities associated with his title.

 

The New Employment Agreements provide for base salaries of $800,000, $420,000, $450,000 and $390,000 per annum for Messrs. Broussard, O’Neill, Houston, and Bernard, respectively, which may be adjusted annually in the sole discretion of our board of directors but not reduced unless part of a general reduction in the Company’s compensation to other executives. In addition to base salary, for the period of January 1, 2018 to the Closing, Mr. Broussard’s New Employment Agreement provides for an annual bonus as set out in his original employment agreement calculated based on a percentage of Adjusted EBITDA (as defined therein) if certain Adjusted EBITDA performance levels are achieved. From the Closing Date until December 31, 2018, Mr. Broussard is eligible for a bonus under the USWS Annual Incentive Plan (the “ AIP ”) with a target percentage of 120% of base salary.

 

For the year ending December 31, 2018, Messrs. Houston’s and Bernard’s New Employment Agreements provide that they are eligible for an annual bonus under their original employment agreements with a target of 50% of base salary. For the year ending December 31, 2018, Mr. O’Neill’s bonus will be based on an annual target of 80% and prorated based on the number of weeks he was employed by MPAC during 2018.

 

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The New Employment Agreements for Messrs. Broussard, O’Neill, Houston, and Bernard also provide that they are eligible for annual bonuses under the AIP or a similar or replacement annual incentive plan adopted by our Board targeted at 120%, 80%, 100%, and 80% of their base salaries, respectively, for any periods after December 31, 2018.

 

Mr. Broussard’s New Employment Agreement provides that he is entitled to receive an individual change in control bonus in the aggregate amount of $7.5 million as a result of the Closing, subject to the satisfaction of the vesting criteria set forth in his original employment agreement. As contemplated by the New Employment Agreement, this change in control bonus was paid to Mr. Broussard at Closing in the form of (i) 650,000 shares of Class A Common Stock, valued at $10.00 per share, and (ii) $1.0 million in cash.

 

The New Employment Agreements also provide for potential severance benefits in connection with certain terminations of employment. Please see the section titled “Executive Compensation – MPAC – Additional Narrative Disclosures – Potential Payments upon Termination or Change in Control” for additional details on these termination benefits on page 167 of the Proxy Statement, which is incorporated herein by reference.

 

The foregoing description of the New Employment Agreements is a summary only and is qualified in its entirety by reference to the New Employment Agreements, copies of which agreements with Messrs. Broussard, Bernard, Houston and O’Neill are filed, respectively, as Exhibits 10.6, 10.7, 10.8, and 10.9 to this Current Report on Form 8-K.

 

LTIP Awards

 

On November 2, 2018, the stockholders of the Company approved the U.S. Well Services, Inc. 2018 Long Term Incentive Plan (the “ LTIP ”), effective upon Closing. The description of the LTIP set forth in the Proxy Statement section titled “Proposal No. 4 – The LTIP Proposal” beginning on page 135 is incorporated herein by reference. A copy of the full text of the LTIP is filed as Exhibit 10.10 to this Current Report on Form 8-K.

 

The Company issued the following awards of shares of restricted Class A Common Stock under the LTIP on the Closing Date, subject to the executive’s continued employment and the Vesting Conditions to Messrs. Broussard, Houston and Bernard under the LTIP:

 

Name   Restricted Stock   
Joel Broussard    214,900    
Matthew Bernard    143,300    
Nathan Houston      71,600    

 

Director Compensation

 

Following the Closing, the Compensation Committee will determine the annual compensation to be paid to the members of the Board.

 

Certain Relationships and Related Party Transactions

 

Founder Shares

 

In March 2016, Sponsor purchased an aggregate of 7,187,500 shares of Class F Common Stock for an aggregate purchase price of $25,000. In May 2016, MPAC effectuated a 1.2-for-1 stock split in the form of a dividend, resulting in an aggregate of 8,625,000 founder shares outstanding. Sponsor subsequently forfeited an aggregate of 500,000 shares of Class F Common Stock for no consideration (which were cancelled) because the underwriter's over-allotment option was not exercised in full in connection with MPAC’s initial public offering.

 

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Private Placement Warrants

 

In March 2017, Sponsor purchased 14,500,000 private placement warrants for a purchase price of $0.50 per warrant in a private placement that occurred simultaneously with the closing of MPAC’s initial public offering. Each private placement warrant entitles the holder to purchase one-half of one share of our Class A Common Stock at $5.75 per share. The private placement warrants (including the Class A Common Stock issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by it until 30 days after the completion of MPAC’s initial business combination.

 

USWS Related Party Transaction

 

Information about related party transactions of USWS is set forth in the Proxy Statement in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of USWS – USWS Related Party Transaction” beginning on page 187, which is incorporated herein by reference.

 

Legal Proceedings

 

Information about legal proceedings of the Company is set forth in the Proxy Statement in the section entitled “Business of USWS – Legal Proceedings” beginning on page 199, which is incorporated herein by reference.

 

Company’s Common Equity and Related Stockholder Matters

 

MPAC

 

MPAC’s units, shares of Class A Common Stock and warrants were historically quoted on Nasdaq under the symbols “MPACU,” “MPAC” and “MPACW,” respectively. MPAC units commenced public trading on March 10, 2017, and the shares of Class A Common Stock and warrants each commenced separate trading on April 28, 2017.

 

On July 12, 2018, the trading date before the public announcement of the Business Combination, MPAC’s units, warrants and Class A Common Stock closed at $10.58, $0.70 and $9.92, respectively.

 

MPAC has not paid any cash dividends on the Class A Common Stock to date. Following completion of the Business Combination, the Board will consider whether or not to institute a dividend policy.

 

As of the Closing Date, there were 35 holders of record of the Class A Common Stock.

 

Following the closing of the Business Combination, the Class A Common Stock and warrants will continue to be listed on the Nasdaq under the new trading symbols of “USWS” and “USWSW,” respectively.

 

On November 9, 2018, in connection with the Closing, all of the units of the Company separated into their component parts of one share of Class A Common Stock and one warrant to purchase one-half of one share of Class A Common Stock, and the units ceased trading on Nasdaq.

 

  USWS

 

Historical market price information regarding USWS is not provided because there has been no public market for USWS’ equity securities. USWS has not made any cash distributions on their respective equity securities since September 17, 2018.

 

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Recent Sales of Unregistered Securities

 

In addition to the below, information about unregistered sales of MPAC’s equity securities is set forth in “Part II, Item 15. Recent Sales of Unregistered Securities” of MPAC’s Registration Statement on Form S-1 (File No. 333-216076) filed with the SEC on February 15, 2017.

 

Other Issuances Related to the Business Combination

 

In connection with the Closing, the Company issued (i) shares of Class A Common Stock and Class B Common Stock to the Blocker Stockholders and the Non-Blocker USWS Members, respectively, pursuant to the Merger and Contribution Agreement, (ii) shares of Class A Common Stock in connection with the Class F Common Stock Conversion and (iii) shares of Class A Common Stock to Crestview and the PIPE Investors pursuant to their respective subscription agreements, and (iv) shares of Class A Common Stock to Piper and the Lenders. The shares of Class A Common Stock and Class B Common Stock issued were not registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) or Section 3(a)(9) of the Securities Act.

 

Description of the Company’s Securities

 

After the Closing, the Company has authorized 440,000,000 shares of capital stock, consisting of (a) 430,000,000 shares of common stock, including (i) 400,000,000 shares of Class A Common Stock, (ii) 20,000,000 shares of Class B Common Stock, and (iii) 10,000,000 shares of Class F Common Stock, and (b) 10,000,000 shares of preferred stock. As of the Closing Date, there were: (a) 35 holders of record of Class A Common Stock and 50,079,676 shares of Class A Common Stock outstanding; (b) 20 holders of record of Class B Common Stock and 14,546,755 shares of Class B Common Stock outstanding; (c) no shares of Class F Common Stock outstanding; (d) no shares of preferred stock outstanding; and (e) four holders of the Company’s warrants and 48,000,000 warrants outstanding. All of the Company’s shares of Class F Common Stock that were not forfeited in connection with the Business Combination were converted into shares of Class A Common Stock on a one-for-one basis at Closing.

 

Class A Common Stock

 

Holders of the Class A Common Stock are entitled to one vote for each share held on all matters to be voted on by the Company’s stockholders. Holders of the Class A Common Stock and holders of the Class B Common Stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders, except as required by law. Unless specified in the Second Amended and Restated Charter (as defined below) (including any certificate of designation of preferred stock) or the bylaws of the Company, or as required by applicable provisions of the General Corporation Law of the State of Delaware or applicable stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders.

 

In the event of a liquidation, dissolution or winding up of the Company, the holders of the Class A Common Stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the Class A Common Stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the Class A Common Stock.

 

Class B Common Stock

 

In connection with the Business Combination and pursuant to the Merger and Contribution Agreement, the Non-Blocker USWS Members were issued New USWS Units and an equal number of shares of Class B Common Stock. The Non-Blocker USWS Members collectively own all of our outstanding shares of Class B Common Stock. Following the Closing, we expect to maintain a one-to-one ratio between the number of outstanding shares of Class B Common Stock and the number of New USWS Units held by persons other than the Company, so holders of New USWS Units (other than the Company) will have a voting interest in the Company that is proportionate to their economic interest in USWS Holdings. The Second Amended and Restated Charter established the terms of the Class B Common Stock.

 

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The Class B Common Stock are a newly issued class of our common stock, with a par value of $0.0001 per share. The Second Amended and Restated Charter provides that the number of authorized shares of Class B Common Stock is 20,000,000.

 

Shares of Class B Common Stock (i) may be issued only in connection with the issuance by USWS Holdings of a corresponding number of New USWS Units and only to the person or entity to whom such New USWS Units are issued and (ii) may be registered only in the name of  (a) a person or entity to whom shares of Class B Common Stock are issued as described above, (b) its successors and assigns, (c) their respective permitted transferees or (d) any subsequent successors, assigns and permitted transferees. A holder of shares of Class B Common Stock may transfer shares of Class B Common Stock to any transferee (other than the Company) only if, and only to the extent permitted by the A&R USWS Holdings LLC Agreement, such holder also simultaneously transfers an equal number of such holder’s New USWS Units to the same transferee in compliance with the A&R USWS Holdings LLC Agreement.

 

Holders of shares of our Class B Common Stock will vote together as a single class with holders of shares of our Class A Common Stock on all matters properly submitted to a vote of the stockholders. In addition, holders of shares of Class B Common Stock, voting as a separate class, will be entitled to approve any amendment, alteration or repeal of any provision of our Charter that would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B Common Stock.

 

Holders of Class B Common Stock will not be entitled to any dividends from MPAC and will not be entitled to receive any of our assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs.

 

Preferred Stock

 

Our Second Amended and Restated Charter authorizes 10,000,000 shares of preferred stock and provides that shares of preferred stock may be issued from time to time in one or more series. Our Board is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our Board is able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our Board to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred stock are being issued or registered in this offering.

 

Warrants

 

A description of the Company’s public stockholders’ warrants and the private place warrants is set forth in MPAC’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-216076) filed with the SEC on March 1, 2017 in the section titled “Description of Securities—Warrants—Public Stockholders’ Warrants” and “Description of Securities—Warrants—Private Placement Warrants” beginning on pages 121 and 124, respectively, which is incorporated herein by reference.

 

Financial Statements and Supplementary Data

 

The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference. 

 

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Item 3.02. Unregistered Sales of Equity Securities.

 

The information set forth under “Item 2.01. Completion of Acquisition or Disposition of Assets – Recent Sales of Unregistered Securities” is incorporated in this Item 3.02 by reference.

 

Item 5.01. Changes in Control of Registrant.

 

To the extent required, the information set forth under “Introductory Note” and “Item 2.01. Completion of Acquisition or Disposition of Assets” of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

The information set forth under “Item 2.01. Completion of Acquisition or Disposition of Assets – Directors” and “Item 2.01. Completion of Acquisition or Disposition of Assets – Executive Officers” of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On the Closing Date, MPAC’s Charter was amended and restated (as amended and restated, the “ Second Amended and Restated Charter ”) to, among other things:

 

· change MPAC’s name to “U.S. Well Services, Inc.”;
· create a new class of capital stock of MPAC designated as Class B Common Stock;
· increase the number of authorized shares of Class A Common Stock from 90,000,000 to 400,000,000 and the number of authorized shares of MPAC’s preferred stock, $0.0001 per share, from 1,000,000 to 10,000,000;
· change MPAC’s classified board of directors from two classes, with directors serving two-year terms, to three classes, with directors serving three-year terms;
· require a supermajority vote of MPAC stockholders for certain matters; and
· make certain other changes to the Charter, including the elimination of certain provisions related to MPAC’s initial business combination that are no longer relevant following the closing of the Business Combination.

 

A copy of the Second Amended and Restated Charter is filed with this Current Report on Form 8-K as Exhibit 3.1, and the foregoing description of the Second Amended and Restated Charter is qualified in its entirety by reference thereto.

 

Item 5.06. Change in Shell Company Status.

 

As a result of the Business Combination, which fulfilled the definition of an initial business combination as required by the Charter, the Company ceased to be a shell company, as defined in Rule 12b-2 of the Exchange Act, as of the Closing Date. The material terms of the Business Combination are described in the Proxy Statement in the section entitled “Proposal No. 1—The Business Combination Proposal” beginning on page 83, which is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(a) Financial Statements of Businesses Acquired

 

The unaudited financial statements of USWS for the nine months ended September 30, 2018 and 2017 are set forth in Exhibit 99.4 hereto and are incorporated herein by reference.

 

The audited financial statements of USWS for the years ended December 31, 2017, 2016 and 2015 are set forth in the Proxy Statement beginning on page Fin-51 and are incorporated herein by reference.

 

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(b) Pro Forma Financial Information

 

The unaudited pro forma condensed consolidated combined financial information of MPAC for the year ended December 31, 2017 and the nine months ended September 30, 2018 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

 

(d) Exhibits

 

Exhibit No. Description
2.1 Merger and Contribution Agreement, dated as of July 13, 2018, by and among Matlin & Partners Acquisition Corporation, MPAC Merger Sub LLC, USWS Holdings LLC, certain blocker companies named therein and, solely for purposes described therein, the seller representatives named therein (incorporated by reference to Exhibit 2.1 of MPAC’s Current Report on Form 8-K, filed with the SEC on July 16, 2018).
2.2 Amendment No. 1, dated as of August 9, 2018, to Merger and Contribution Agreement, dated as of July 13, 2018, by and among Matlin & Partners Acquisition Corporation, MPAC Merger Sub LLC, USWS Holdings LLC, certain blocker companies named therein and, solely for purposes described therein, the seller representatives named therein (incorporated by reference to Exhibit 2.1.1 of MPAC’s Quarterly Report on Form 10-Q, filed with the SEC on October 26, 2018).
2.3 Amendment No. 2, dated as of November 2, 2018, to Merger and Contribution Agreement, dated as of July 13, 2018, by and among Matlin & Partners Acquisition Corporation, MPAC Merger Sub LLC, USWS Holdings LLC, certain blocker companies named therein and, solely for purposes described therein, the seller representatives named therein (incorporated by reference to Exhibit 2.1 of MPAC’s Current Report on Form 8-K, filed with the SEC on November 5, 2018).
3.1* Second Amended and Restated Certificate of Incorporation of U.S. Well Services, Inc.
4.1* Amended and Restated Registration Rights Agreement, dated as of November 9, 2018, by and among U.S. Well Services, Inc., Matlin & Partners Acquisition Sponsor LLC, the Blocker Stockholders, certain Non-Blocker USWS Members, Crestview, the Lenders, Piper and Joel Broussard.
4.2 Warrant Agreement, dated March 9, 2017, by and between Continental Stock Transfer & Trust Company and Matlin & Partners Acquisition Corporation (incorporated by reference to Exhibit 4.1 of MPAC’s Current Report on Form 8-K, filed with the SEC on March 15, 2017).
10.1* Amended and Restated Limited Liability Company Agreement of USWS Holdings LLC, dated as of November 9, 2018.
10.2 Sponsor Agreement, dated as of July 13, 2018, by and among Matlin & Partners Acquisition Corporation, USWS Holdings LLC, Matlin & Partners Acquisition Sponsor LLC and, solely for purposes described therein, Cantor Fitzgerald & Co. (incorporated by reference to Exhibit 10.1 of MPAC’s Current Report on Form 8-K, filed with the SEC on July 16, 2018).
10.3 Amendment No. 1, dated November 2, 2018, to Sponsor Agreement, dated as of July 13, 2018, by and among Matlin & Partners Acquisition Corporation, USWS Holdings LLC, Matlin & Partners Acquisition Sponsor LLC and, solely for purposes described therein, Cantor Fitzgerald & Co. (incorporated by reference to Exhibit 10.1 of MPAC’s Current Report on Form 8-K, filed with the SEC on November 5, 2018).
10.4* Amendment No. 2, dated November 9, 2018, to Sponsor Agreement, dated as of July 13, 2018, by and among Matlin & Partners Acquisition Corporation, USWS Holdings LLC, Matlin & Partners Acquisition Sponsor LLC and, solely for purposes described therein, Cantor Fitzgerald & Co.
10.5* Form of Indemnity Agreement.
10.6* Employment Agreement, dated as of July 13, 2018, by and between U.S. Well Services, Inc. and Joel Broussard.
10.7* Employment Agreement, dated as of July 13, 2018, by and between U.S. Well Services, Inc. and Matt Bernard.
10.8* Employment Agreement, dated as of July 13, 2018, by and between U.S. Well Services, Inc. and Nathan Houston.
10.9* Employment Agreement, dated as of July 13, 2018, by and between U.S. Well Services, Inc. and Kyle O’Neill.
10.10* U.S. Well Services, Inc. Long Term Incentive Plan.

 

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10.11* Form of Restricted Stock Award Agreement under the U.S. Well Services, Inc. 2018 Long Term Incentive Plan.
21.1* Subsidiaries of the Registrant.
99.1* Selected Historical Financial Information of USWS for the three years ended December 31, 2017 and the nine months ended September 30, 2018 and 2017.
99.2* Unaudited pro forma condensed consolidated combined financial information of MPAC for the year ended December 31, 2017 and the nine months ended September 30, 2018.
99.3* Management’s Discussion and Analysis of Financial Condition and Results of Operations of USWS for the nine months ended September 30, 2018 and 2017, and for the years ended December 31, 2017, 2016 and 2015.
99.4* Unaudited financial statements of USWS for the nine months ended September 30, 2018 and 2017.

 

*Filed herewith.

 

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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.
     
Date:  November 16, 2018 By: /s/ Kyle O’Neill
    Name: Kyle O’Neill
    Title: Chief Financial Officer

 

 

 

     

 

Exhibit 3.1

 

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

U.S. WELL SERVICES, INC.

 

Article I.

NAME

 

The name of the Corporation is U.S. Well Services, Inc.

 

Article II.

PURPOSE

 

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL. In addition to the powers and privileges conferred upon the Corporation by law and those incidental thereto, the Corporation shall possess and may exercise all the powers and privileges that are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation, including, but not limited to, effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Corporation and one or more businesses (a “ Business Combination ”).

 

Article III.

REGISTERED AGENT

 

The address of the Corporation’s registered office in the State of Delaware is 251 Little Falls Drive, in the City of Wilmington, County of New Castle, State of Delaware, 19808, and the name of the Corporation’s registered agent at such address is Corporation Service Company.

 

Article IV.

CAPITALIZATION

 

Section 4.1.           Authorized Capital Stock . The total number of shares of all classes of capital stock, each with a par value of $0.0001 per share, which the Corporation is authorized to issue is 440,000,000 shares, consisting of (a) 430,000,000 shares of common stock (the “ Common Stock ”), including (i) 400,000,000 shares of Class A Common Stock (the “ Class A Common Stock ”), (ii) 20,000,000 shares of Class B Common Stock (the “ Class B Common Stock ”), and (iii) 10,000,000 shares of Class F Common Stock (the “ Class F Common Stock ”), and (b) 10,000,000 shares of preferred stock (the “ Preferred Stock ”).

 

Section 4.2.           Preferred Stock . The Board of Directors of the Corporation (the “ Board ”) is hereby expressly authorized to provide out of the unissued shares of 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, as shall be stated in the resolution or resolutions adopted by the Board providing for the issuance of such series and included in a certificate of designation (a “ Preferred Stock Designation ”) filed pursuant to the DGCL, and the Board is hereby expressly vested with the authority to the full extent provided by law, now or hereafter, to adopt any such resolution or resolutions.

 

 

 

 

Section 4.3.           No Class Vote on Changes in Authorized Number of Shares of Preferred Stock . Subject to the special rights of the holders of any series of Preferred Stock pursuant to the terms of this Second Amended and Restated Certificate, any Preferred Stock Designation or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL.

 

Section 4.4.           Common Stock .

 

(a)           Voting .

 

(i)          Except as otherwise required by law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), the holders of the Common Stock shall exclusively possess all voting power with respect to the Corporation.

 

(ii)         Except as otherwise required by law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), the holders of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders on which the holders of the Common Stock are entitled to vote.

 

(iii)        Except as otherwise required by law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), at any annual or special meeting of the stockholders of the Corporation, holders of the Class A Common Stock, holders of the Class B Common Stock and holders of the Class F Common Stock, voting together as a single class, shall have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders. Notwithstanding the foregoing, except as otherwise required by law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), holders of shares of any series of Common Stock shall not be entitled to vote on any amendment to this Second Amended and Restated Certificate (including any amendment to any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock or other series of Common Stock if the holders of such affected series of Preferred Stock or Common Stock, as applicable, are entitled exclusively, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Second Amended and Restated Certificate (including any Preferred Stock Designation) or the DGCL.

 

 

 

 

(b)           Class B Common Stock .

 

(i)           Certain Definitions . As used in this Second Amended and Restated Certificate:

 

(1)         “ USWS Holdings ” means USWS Holdings LLC, a Delaware limited liability, or any successor entities thereto;

 

(2)         “ LLC Agreement ” means the Amended and Restated Limited Liability Company Agreement of USWS Holdings, dated as of November 9, 2018, as such agreement may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time; and

 

(3)         “ Common Unit ” means a unit representing limited liability company interests in USWS Holdings and constituting a “Common Unit” as defined in the LLC Agreement as in effect on the effective date of this Second Amended and Restated Certificate.

 

(ii)          Permitted Owners . Shares of Class B Common Stock (1) may be issued only in connection with the issuance by USWS Holdings of a corresponding number of Common Units and only to the person or entity to whom such Common Units are issued and (2) may be registered only in the name of (A) a person or entity to whom shares of Class B Common Stock are issued in accordance with clause (1), (B) its successors and assigns, (C) their respective transferees permitted in accordance with Section 4.4(b)(v) or (D) any subsequent successors, assigns and permitted transferees (collectively, “ Permitted Class B Owners ”).

 

(iii)         Voting . Except as otherwise required by law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), for so long as any shares of Class B Common Stock shall remain outstanding, the Corporation shall not, without the prior vote or written consent of the holders of a majority of the shares of Class B Common Stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of this Second Amended and Restated Certificate, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other special rights of the Class B Common Stock. Any action required or permitted to be taken at any meeting of the holders of Class B Common Stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B Common Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class B Common Stock were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which minutes of proceedings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt written notice of the taking of corporate action without a meeting by less than unanimous written consent of the holders of Class B Common Stock shall, to the extent required by law, be given to those holders of Class B Common Stock who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders of Class B Common Stock to take the action were delivered to the Corporation.

 

 

 

 

(iv)         Dividends . Notwithstanding anything to the contrary in this Second Amended and Restated Certificate, other than as set forth in Section 4.(e) , dividends shall not be declared or paid on the Class B Common Stock.

 

(v)          Transfer of Class B Common Stock .

 

(1)         A holder of Class B Common Stock may transfer shares of Class B Common Stock to any transferee (other than the Corporation) only if, and only to the extent permitted by the LLC Agreement, such holder also simultaneously transfers an equal number of such holder’s Common Units to such transferee in compliance with the LLC Agreement. The transfer restrictions described in this Section 4.4(b)(v)(1) are referred to as the “ Restrictions .”

 

(2)         Any purported transfer of shares of Class B Common Stock in violation of the Restrictions shall be null and void. If, notwithstanding the Restrictions, a person shall, voluntarily or involuntarily, purportedly become or attempt to become the purported owner (“ Purported Owner ”) of shares of Class B Common Stock in violation of the Restrictions, then the Purported Owner shall not obtain any rights in and to such shares of Class B Common Stock (the “ Restricted Shares ”), and the purported transfer of the Restricted Shares to the Purported Owner shall not be recognized by the Corporation or its transfer agent (the “ Transfer Agent ”).

 

(3)         Upon a determination by the Board that a person has attempted or may attempt to transfer or to acquire Restricted Shares in violation of the Restrictions, the Board may take such action as it deems advisable to refuse to give effect to such transfer or acquisition on the books and records of the Corporation, including without limitation, to cause the Transfer Agent to record the Purported Owner’s transferor as the record owner of the Restricted Shares and to institute proceedings to enjoin or rescind any such transfer or acquisition.

 

 

 

 

(4)         The Board may, to the extent permitted by law, from time to time establish, modify, amend or rescind, by bylaw or otherwise, regulations and procedures that are consistent with the provisions of this Section 4.4(b)(v) for determining whether any transfer or acquisition of shares of Class B Common Stock would violate the Restrictions and for the orderly application, administration and implementation of the provisions of this Section 4.4(b)(v) . Any such procedures and regulations shall be kept on file with the Secretary of the Corporation and with the Transfer Agent and shall be made available for inspection by any prospective transferee and, upon written request, shall be mailed to holders of shares of Class B Common Stock.

 

(5)         The Board shall have all powers necessary to implement the Restrictions, including without limitation, the power to prohibit the transfer of any shares of Class B Common Stock in violation thereof.

 

(vi)         Exchange of Class B Common Stock . Shares of Class B Common Stock (together with the same number of Common Units) may be exchanged for shares of Class A Common Stock as provided in the LLC Agreement. The Corporation will at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of issuance upon exchange of shares of Class B Common Stock and Common Units for shares of Class A Common Stock pursuant to the LLC Agreement, such number of shares of Class A Common Stock that shall be issuable upon any such exchange pursuant to the LLC Agreement; provided that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of any such exchange pursuant to the LLC Agreement by delivering to the holder of the shares of Class B Common Stock and Common Units being exchanged (A) shares of Class A Common Stock held in treasury by the Corporation or (B) cash in lieu of shares of Class A Common Stock in the amount permitted by and provided in the LLC Agreement. All shares of Class A Common Stock that shall be issued upon any such exchange of shares of Class B Common Stock and Common Units pursuant to the LLC Agreement will, upon issuance in accordance with the LLC Agreement, be validly issued, fully paid and nonassessable.

 

(vii)        Restrictive Legend . All certificates or book entries representing shares of Class B Common Stock, as the case may be, shall bear a legend substantially in the following form (or in such other form as the Board may determine):

 

THE SECURITIES REPRESENTED BY THIS [CERTIFICATE][BOOK ENTRY] ARE SUBJECT TO THE RESTRICTIONS (INCLUDING RESTRICTIONS ON TRANSFER) SET FORTH IN THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION AND SHALL BE PROVIDED FREE OF CHARGE TO ANY STOCKHOLDER MAKING A REQUEST THEREFOR).

 

 

 

 

(viii)       Liquidation, Dissolution or Winding Up of the Corporation . The holders of Class B Common Stock shall not be entitled to receive any assets of the Corporation in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation.

 

(c)           Class F Common Stock .

 

(i)          Shares of Class F Common Stock shall be convertible into shares of Class A Common Stock on a one-for-one basis (the “ Initial Conversion Ratio ”) (A) at any time and from time to time at the option of the holder thereof and (B) automatically on the closing of the initial Business Combination.

 

(ii)         Notwithstanding the Initial Conversion Ratio, in the case that additional shares of Class A Common Stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Corporation’s initial public offering of securities (the “ Offering ”) and related to the closing of the initial Business Combination, all issued and outstanding shares of Class F Common Stock shall automatically convert into shares of Class A Common Stock at the time of the closing of the initial Business Combination at a ratio for which:

 

(1)         the numerator shall be equal to the sum of (A) 25% of all shares of Class A Common Stock issued or issuable (upon the conversion or exercise of any equity-linked securities or otherwise) by the Corporation, related to or in connection with the consummation of the initial Business Combination (excluding any securities issued or issuable to any seller in the initial Business Combination) plus (B) the number of shares of Class F Common Stock issued and outstanding prior to the closing of the initial Business Combination; and

 

(2)         the denominator shall be the number of shares of Class F Common Stock issued and outstanding prior to the closing of the initial Business Combination.

 

Notwithstanding anything to the contrary contained herein, (i) the foregoing adjustment to the Initial Conversion Ratio may be waived as to any particular issuance or deemed issuance of additional shares of Class A Common Stock or equity linked securities by the written consent or agreement of holders of a majority of the shares of Class F Common Stock then outstanding consenting or agreeing separately as a single class in the manner provided in Section 4.4(c)(iii) , and (ii) in no event shall the Class F Common Stock convert into Class A Common Stock at a ratio that is less than one-for-one.

 

 

 

 

The foregoing conversion ratio shall also be adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification or recapitalization of the outstanding shares of Class A Common Stock into a greater or lesser number of shares occurring after the original filing of this Second Amended and Restated Certificate without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalization of the outstanding shares of Class F Common Stock.

 

Each share of Class F Common Stock shall convert into its pro rata number of shares of Class A Common Stock pursuant to this Section 4.4(c) . The pro rata share for each holder of Class F Common Stock will be determined as follows: Each share of Class F Common Stock shall convert into such number of shares of Class A Common Stock as is equal to the product of one (1) multiplied by a fraction, the numerator of which shall be the total number of shares of Class A Common Stock into which all of the issued and outstanding shares of Class F Common Stock shall be converted pursuant to this Section 4.4(c) and the denominator of which shall be the total number of issued and outstanding shares of Class F Common Stock at the time of conversion.

 

(iii)         Voting . Except as otherwise required by law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), for so long as any shares of Class F Common Stock shall remain outstanding, the Corporation shall not, without the prior vote or written consent of the holders of a majority of the shares of Class F Common Stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of this Second Amended and Restated Certificate, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class F Common Stock. Any action required or permitted to be taken at any meeting of the holders of Class F Common Stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class F Common Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class F Common Stock were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which minutes of proceedings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt written notice of the taking of corporate action without a meeting by less than unanimous written consent of the holders of Class F Common Stock shall, to the extent required by law, be given to those holders of Class F Common Stock who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders of Class F Common Stock to take the action were delivered to the Corporation.

 

 

 

 

(d)           Dividends . Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock, the holders of the shares of Class A Common Stock and Class F Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board from time to time out of any assets or funds of the Corporation legally available therefor, and shall share equally on a per share basis in such dividends and distributions.

 

(e)           Class A Common Stock and Class B Common Stock . In no event shall the shares of either Class A Common Stock or Class B Common Stock be split, divided, or combined (including by way of stock dividend) unless the outstanding shares of the other class shall be proportionately split, divided or combined.

 

(f)           Liquidation, Dissolution or Winding Up of the Corporation . Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of shares of Class A Common Stock and Class F Common Stock (but not holders of shares of Class B Common Stock) shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Class A Common Stock (on an as converted basis with respect to the Class F Common Stock) held by them.

 

Section 4.5.           Rights and Options . The Corporation has the authority to create and issue rights, warrants and options entitling the holders thereof to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Board. The Board is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however , that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.

 

Article V.

BOARD OF DIRECTORS

 

Section 5.1.           Board Powers . The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition to the powers and authority expressly conferred upon the Board by statute, this Second Amended and Restated Certificate or the Amended and Restated Bylaws of the Corporation (“ Bylaws ”), the Board is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Second Amended and Restated Certificate, and any Bylaws adopted by the stockholders; provided, however , that no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.

 

 

 

 

Section 5.2.           Number, Election and Term .

 

(a)          The number of directors of the Corporation, other than those who may be elected by the holders of one or more series of the Preferred Stock voting separately by class or series, shall be fixed from time to time exclusively by the Board pursuant to a resolution adopted by a majority of the Board.

 

(b)          Subject to Section 5.5 , the Board shall be divided into three classes, as nearly equal in number as possible, and designated Class I, Class II and Class III. The Board is authorized to assign members of the Board already in office to Class I, Class II or Class III. The term of the initial Class I Directors shall expire at the first annual meeting of the stockholders of the Corporation following the effectiveness of this Second Amended and Restated Certificate; the term of the initial Class II Directors shall expire at the second annual meeting of the stockholders of the Corporation following the effectiveness of this Second Amended and Restated Certificate; and the term of the initial Class III Directors shall expire at the third annual meeting of the stockholders of the Corporation following the effectiveness of this Second Amended and Restated Certificate. At each succeeding annual meeting of the stockholders of the Corporation, beginning with the first annual meeting of the stockholders of the Corporation following the effectiveness of this Second Amended and Restated Certificate, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term or until the election and qualification of their respective successors in office, subject to their earlier death, resignation or removal. Subject to Section 5.5 , if the number of directors is changed, any increase or decrease shall be apportioned by the Board among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. Subject to the rights of the holders of one or more series of Preferred Stock, voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, the election of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. The Board is hereby expressly authorized, by resolution or resolutions thereof, to assign members of the Board already in office to the aforesaid classes at the time this Second Amended and Restated Certificate (and therefore such classification) becomes effective in accordance with the DGCL.

 

(c)          Subject to Section 5.5 hereof, a director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.

 

(d)          Unless and except to the extent that the Bylaws shall so require, the election of directors need not be by written ballot.

 

 

 

 

Section 5.3.           Newly Created Directorships and Vacancies . Subject to Section 5.5 hereof, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office for the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal. In the event of a vacancy on the Board, the remaining directors, except as otherwise provided by law, shall exercise the powers of the full Board until the vacancy is filled.

 

Section 5.4.           Removal . Subject to Section 5.5 hereof, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of at least sixty-six and two thirds (66⅔) percent of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. At least forty-five (45) days prior to any annual or special meeting of stockholders at which it is proposed that any director be removed from office, written notice of such proposed removal and the alleged grounds thereof shall be sent to the director whose removal will be considered at the meeting.

 

Section 5.5.           Preferred Stock — Directors . Notwithstanding any other provision of this Article V , and except as otherwise required by law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or series, to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Second Amended and Restated Certificate (including any Preferred Stock Designation) and such directors shall not be included in any of the classes created pursuant to this Article V unless expressly provided by such terms.

 

Article VI.

BYLAWS

 

In furtherance and not in limitation of the powers conferred upon it by law, the Board shall have the power and is expressly authorized to adopt, amend, alter or repeal the Bylaws. The affirmative vote of a majority of the Board shall be required to adopt, amend, alter or repeal the Bylaws. The Bylaws also may be adopted, amended, altered or repealed by the stockholders; provided, however , that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by this Second Amended and Restated Certificate (including any Preferred Stock Designation), the affirmative vote of the holders of at least sixty-six and two thirds (66⅔) percent of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal the Bylaws; and provided   further , however , that no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.

 

 

 

 

Article VII.

MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT

 

Section 7.1.           Meetings . Subject to the rights, if any, of the holders of any outstanding series of the Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by the Chairman of the Board, Chief Executive Officer of the Corporation, or the Board pursuant to a resolution adopted by a majority of the Board, and the ability of the stockholders to call a special meeting is hereby specifically denied. Except as provided in the foregoing sentence, special meetings of stockholders may not be called by another person or persons.

 

Section 7.2.           Advance Notice . Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.

 

Section 7.3.           Action by Written Consent . Except as may be otherwise provided for or fixed pursuant to this Second Amended and Restated Certificate (including any Preferred Stock Designation) relating to the rights of the holders of any outstanding series of Preferred Stock, subsequent to the consummation of the Offering, any action required or permitted to be taken by the stockholders of the Corporation must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to the Class B Common Stock and the Class F Common Stock, with respect to which action may be taken by written consent.

 

Article VIII.

LIMITED LIABILITY; INDEMNIFICATION

 

Section 8.1.            Limitation of Director Liability . A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended unless they violated their duty of loyalty to the Corporation or its stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal benefit from their actions as directors. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.

 

 

 

 

Section 8.2.           Indemnification and Advancement of Expenses .

 

(a)          To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ proceeding ”) by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (an “ indemnitee ”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred by such indemnitee in connection with such proceeding. The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by an indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition; provided , however , that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined that the indemnitee is not entitled to be indemnified under this Section 8.2 or otherwise. The rights to indemnification and advancement of expenses conferred by this Section 8.2 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Section 8.2(a) , except for proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board.

 

(b)          Any indemnification of a director or officer of the Corporation or advancement of expenses (including attorneys’ fees, costs and charges) under this Section 8.2 shall be made promptly, and in any event within forty-five days (or, in the case of an advancement of expenses, twenty days, provided that the director or officer has delivered the undertaking contemplated by Section 8.2(a) if required), upon the written request of the director or officer. If the Corporation denies a written request for indemnification or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within forty-five days (or, in the case of an advancement of expenses, twenty days, provided that the director or officer has delivered the undertaking contemplated by Section 8.2(a) if required), the right to indemnification or advancements as granted by this Section 8.2 shall be enforceable by the director or officer in the Court of Chancery of the State of Delaware, which shall be the sole and exclusive forums for any such action. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation to the maximum extent permitted by applicable law. It shall be a defense to any such action (other than an action brought to enforce a claim for the advancement of expenses where the undertaking required pursuant to Section 8.2(a) , if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the Corporation to the maximum extent permitted by law. Neither the failure of the Corporation (including its Board, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

 

 

 

 

(c)          The rights to indemnification and advancement of expenses conferred on any indemnitee by this Section 8.2 shall not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Second Amended and Restated Certificate, the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.

 

(d)          Any repeal or amendment of this Section 8.2 by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Second Amended and Restated Certificate inconsistent with this Section 8.2 , shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

 

(e)          For purposes of this Section 8.2 , references to the “Corporation” shall include, in addition to the resulting Corporation, any constituent Corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent Corporation, or is or was serving at the request of such constituent Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Section 8.2 with respect to the resulting or surviving Corporation as he or she would have with respect to such constituent Corporation if its separate existence had continued.

 

(f)          This Section 8.2 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.

 

 

 

 

Article IX.

CORPORATE OPPORTUNITY

 

To the extent allowed by law, the doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation or any of its officers or directors, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation will offer any such corporate opportunity of which he or she may become aware to the Corporation, except, the doctrine of corporate opportunity shall apply with respect to any of the directors or officers of the Corporation only with respect to a corporate opportunity that was offered to such person solely in his or her capacity as a director or officer of the Corporation and such opportunity is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation to pursue.

 

Article X.

AMENDMENT OF SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Second Amended and Restated Certificate (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in force that may be added or inserted, in the manner now or hereafter prescribed by this Second Amended and Restated Certificate and the DGCL; and, except as set forth in Article VIII , all rights, preferences and privileges of whatever nature herein conferred upon stockholders, directors or any other persons by and pursuant to this Second Amended and Restated Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article X . In addition to any other vote of holders of capital stock that is required by this Second Amended and Restated Certificate or by law, any amendment or repeal of Section 5.4 or Article VI shall require the affirmative vote of holders of at least sixty-six and two thirds (66 ⅔) percent of the voting power of the then outstanding shares of capital stock entitled to vote on such amendment or repeal.

 

Article XI.

EXCLUSIVE FORUM FOR CERTAIN LAWSUITS

 

Section 11.1.           Forum . Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Second Amended and Restated Certificate or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction.

 

 

 

 

Section 11.2.           Consent to Jurisdiction . If any action the subject matter of which is within the scope of Section 11.1 immediately above is filed in a court other than a court located within the State of Delaware (a “ Foreign Action ”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 11.1 immediately above (an “ FSC Enforcement Action ”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.

 

Section 11.3.           Severability . If any provision or provisions of this Article XI shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XI (including, without limitation, each portion of any sentence of this Article XI containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XI .

 

 

 

 

 

Exhibit 4.1

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of November 9, 2018, is made and entered into by and among U.S. Well Services, Inc., a Delaware corporation (formerly Matlin & Partners Acquisition Corporation) (the “ Company ”), the Initial Holders and each Person who becomes a party to this Agreement as a Holder after the date of this Agreement pursuant to Section 5.03 . This agreement amends, restates and replaces in its entirety that certain Registration Rights Agreement, dated March 9, 2017 (the “ Original Agreement ”), by and among the Company, Matlin & Partners Acquisition Sponsor LLC (“ Sponsor ”) and Cantor Fitzgerald & Co. (“ Cantor ” and, together with Sponsor, the “ Initial Investors ”). Capitalized terms used in this Agreement have the meanings given to them in Section 1.01 .

 

RECITALS

 

WHEREAS, in connection with the Company’s initial public offering (the “ IPO ”), the Company and the Initial Investors entered into the Original Agreement;

 

WHEREAS, prior to the Closing, Sponsor owns shares of Class F Common Stock acquired by it prior to the IPO, and, in connection with the Closing, such shares of Class F Common Stock, other than those being canceled in connection with the Closing pursuant to the Parent Sponsor Agreement, are being converted automatically, on a one-for-one basis, into shares of Class A Common Stock (the “ Sponsor Conversion Class A Shares ”) pursuant to the terms of the Company’s amended and restated certificate of incorporation;

 

WHEREAS, the Initial Investors purchased, in a private placement that was completed simultaneously with the consummation of the IPO, an aggregate of 15,500,000 warrants (the “ Private Placement Warrants ”), issued pursuant to that certain Warrant Agreement, dated as of March 9, 2017 (the “ Warrant Agreement ”), by and between the Company and Continental Stock Transfer and Trust Company, each exercisable for one-half of one share of Class A Common Stock (subject to adjustment as provided in the Warrant Agreement);

 

WHEREAS, this Agreement is being entered into pursuant to, and in connection with the Closing under, that certain Merger and Contribution Agreement, dated as of July 13, 2018 (as amended, the “ Merger and Contribution Agreement ”), by and among the Company, MPAC Merger Sub LLC, USWS Holdings LLC, a Delaware limited liability company (“ USWS ”), each of the Blocker Companies (as defined therein) and, solely for the purposes specified therein, the Seller Representative (as defined therein);

 

WHEREAS, pursuant to the terms of the Merger and Contribution Agreement and in connection with the Closing, on the date of this Agreement: (i) the Company is issuing to the Initial Class A Holders an aggregate of 13,532,331 shares of Class A Common Stock (together with any additional shares of Class A Common Stock issued to the Initial Class A Holders after the date hereof pursuant to Section 2.1(d) of the Merger and Contribution Agreement, the “ Blocker Merger Class A Shares ”), (ii) the Company is issuing to the Initial Unit Holders an aggregate of 14,546,755 shares of Class B Common Stock (together with any additional shares of Class B Common Stock issued to the Initial Unit Holders after the date hereof pursuant to Section 2.1(d) of the Merger and Contribution Agreement, the “ Company Merger Class B Shares ”), and (iii) USWS is issuing to the Initial Unit Holders an aggregate of 14,546,755 Common Units (together with any additional Common Units issued to the Initial Unit Holders after the date hereof pursuant to Section 2.1(d) of the Merger and Contribution Agreement, the “ Company Merger Units ”);

 

 

 

 

WHEREAS, each Common Unit, together with one share of Class B Common Stock, will be exchangeable by the holder thereof for one share of Class A Common Stock pursuant to and in accordance with the terms of the LLC Agreement;

 

WHEREAS, pursuant to the terms of the Crestview Subscription Agreement and in connection with the Closing: (i) the Company is issuing to the Initial Crestview Holders an aggregate of 20,250,000 shares of Class A Common Stock (the “ Crestview Class A Shares ”), and (ii) the Initial Investors are transferring to the Initial Crestview Holders an aggregate of 7,250,000 Private Placement Warrants (the “ Crestview Private Placement Warrants ”);

 

WHEREAS, in connection with the Closing, Cantor is transferring to Sponsor, (i) 66,502 shares of Class A Common Stock (together with the Sponsor Conversion Class A Shares, the “ Sponsor Class A Shares ”) and (ii) 532,258 Private Placement Warrants, constituting all of Cantor’s Private Placement Warrants other than those being transferred to the Initial Crestview Holders as described above;

 

WHEREAS, pursuant to the terms of the Merger and Contribution Agreement and the Employment Agreement dated as of July 13, 2018 by and between the Company and Joel Broussard (“ Broussard ”) and in connection with the Closing, the Company is issuing to Broussard 650,000 shares of Class A Common Stock (the “ CEO Bonus Class A Shares ”);

 

WHEREAS, pursuant to the terms of the Merger and Contribution Agreement and the Credit Agreement Consent and in connection with the Closing, the Company is issuing to the Initial Lender Holders an aggregate of 1,314,999 shares of Class A Common Stock (the “ Lender Class A Shares ”);

 

WHEREAS, pursuant to the terms of the Merger and Contribution Agreement and the Engagement Letter and in connection with the Closing, the Company is issuing to Piper Jaffray & Co. (“ Piper Jaffray ”) 509,337 shares of Class A Common Stock (the “ Piper Class A Shares ”);

 

WHEREAS, the Initial Holders and the Company desire to amend and restate, in its entirety, the Original Agreement to provide certain registration rights under the Securities Act to the Holders with respect to any Registrable Securities that any such Holders may hold from time to time; and

 

WHEREAS, pursuant to Section 5.5 of the Original Agreement, the Original Agreement may be amended upon the written consent of the Company and the requisite holders specified therein (which Sponsor represents), and such written consent is given by the execution and delivery of this Agreement by the Company and Sponsor.

 

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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Article I.
DEFINITIONS

 

Section 1.01 Definitions . As used in this Agreement:

 

Adoption Agreement ” means an Adoption Agreement in the form attached hereto as Exhibit A .

 

Affiliate ” means (a) as to any Person other than a natural person, any other Person who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person and (b) as to any natural person, (i) any Relative of such Person, (ii) any trust whose primary beneficiaries are one or more of such Person and such Person’s Relatives, (iii) the legal representative or guardian of such Person or any of such Person’s Relatives if one has been appointed and (iv) any other Person controlled by one or more of such Person and any Person referred to in clauses (i), (ii) or (iii) above. As used in this definition, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person. For the avoidance of doubt, for purposes of this Agreement, (a) (i) the Company, on the one hand, and the Holders, on the other hand, shall not be considered Affiliates and (ii) any fund, entity or account managed, advised or sub-advised, directly or indirectly, by a Holder or any of its Affiliates, shall be considered an Affiliate of such Holder and (b) with respect to any fund, entity or account managed, advised or sub-advised directly or indirectly, by any Holder or any of its Affiliates, the direct or indirect equity owners thereof, including limited partners of any Holder or any Affiliate thereof, shall be considered an Affiliate of such Holder.

 

Agreement ” has the meaning given to such term in the introductory paragraph of this Agreement.

 

Blocker Merger Class A Shares ” has the meaning given to such term in the Recitals.

 

Blocker Merger Consideration ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Broussard ” has the meaning given to such term in the Recitals.

 

Business Day ” shall mean any day other than Saturday, Sunday or a day on which banks in Houston, Texas are authorized or obligated to close.

 

Cantor ” has the meaning given to such term in the introductory paragraph of this Agreement.

 

CEO Bonus Class A Shares ” has the meaning given to such term in the Recitals.

 

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

 

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

 

Class F Common Stock ” means the Class F Common Stock, par value $0.0001 per share, of the Company.

 

Closing ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Commission ” means the Securities and Exchange Commission.

 

Common Units ” has the meaning given to such term in the LLC Agreement.

 

Company ” has the meaning given to such term in the introductory paragraph of this Agreement.

 

Company Merger Class B Shares ” has the meaning given to such term in the Recitals.

 

Company Merger Consideration ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Company Merger Units ” has the meaning given to such term in the Recitals.

 

Company Securities ” means, with respect to any Underwritten Offering, any shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) proposed to be included in such Underwritten Offering by the Company to be sold for the Company’s own account.

 

Credit Agreement Consent ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Crestview Class A Shares ” has the meaning given to such term in the Recitals.

 

Crestview Holders ” means the Initial Crestview Holders and any Holders to whom the rights of registration and other rights granted to the Initial Crestview Holders under this Agreement are transferred pursuant to Section 5.03 , including successive transferees of such rights pursuant to Section 5.03 .

 

Crestview Private Placement Warrants ” has the meaning given to such term in the Recitals.

 

Crestview Registrable Securities ” means (i) the Crestview Class A Shares, (ii) the Crestview Private Placement Warrants and (iii) the shares of Class A Common Stock issuable upon exercise of the Crestview Private Placement Warrants.

 

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Crestview Subscription Agreement ” means that certain Subscription Agreement, dated as of July 13, 2018, by and among the Company, the Initial Investors, the Initial Crestview Holders, Crestview Partners III (TE), L.P., a Cayman Islands exempt limited partnership, and Crestview Partners III Co-Investors, L.P., a Cayman Islands exempt limited partnership.

 

Engagement Letter ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

 

Exchange Class A Shares ” means the shares of Class A Common Stock issuable upon the exchange of Company Merger Units and Company Merger Class B Shares pursuant to the LLC Agreement.

 

Former USWS Owner ” means each of the Initial Class A Holders and Initial Unit Holders.

 

Former USWS Owner Holders ” means the Former USWS Holders and any Holders to whom the rights of registration and other rights granted to the Former USWS Owners under this Agreement are transferred pursuant to Section 5.03 , including successive transferees of such rights pursuant to Section 5.03 .

 

Former USWS Owner Registrable Securities ” means (i) the Blocker Merger Class A Shares and (ii) the Exchange Class A Shares.

 

Holder ” means each record holder of Registrable Securities; provided , that, for purposes of this definition and all other references in this Agreement to holding or owning Registrable Securities, (i) a record holder of Company Merger Units and Company Merger Class B Shares shall be deemed to be the record holder of the Registrable Securities issuable upon exchange of such Company Merger Units and Company Merger Class B Shares pursuant to the LLC Agreement and (ii) a record holder of Private Placement Warrants (including, for the avoidance of doubt, Crestview Private Placement Warrants) shall be deemed to be the record holder of the Registrable Securities issuable upon exercise of such Private Placement Warrants.

 

Indemnified Party ” has the meaning given to such term in Section 3.03 .

 

Indemnifying Party ” has the meaning given to such term in Section 3.03 .

 

Initial Class A Holders ” means the Persons entitled to receive the Blocker Merger Consideration pursuant to the Merger and Contribution Agreement.

 

Initial Crestview Holders ” means the Persons to whom the Crestview Class A Shares are issued or to whom the Crestview Private Placement Warrants are transferred in connection with the Closing pursuant to the Crestview Subscription Agreement.

 

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Initial Holders ” means the Initial Class A Holders, the Initial Unit Holders, Sponsor, the Initial Crestview Holders, Broussard, the Initial Lender Holders and Piper Jaffray.

 

Initial Investors ” has the meaning given to such term in the introductory paragraph.

 

Initial Lender Holders ” means the Persons entitled to receive the Lender Class A Shares pursuant to the Credit Agreement Consent.

 

Initial Unit Holders ” means the Persons entitled to receive the Company Merger Consideration pursuant to the Merger and Contribution Agreement.

 

IPO ” has the meaning given to such term in the Recitals.

 

Lender Class A Shares ” has the meaning given to such term in the Recitals.

 

Lender Holders ” means the Initial Lender Holders and any Holders to whom the rights of registration and other rights granted to the Initial Lender Holders under this Agreement are transferred pursuant to Section 5.03 , including successive transferees of such rights pursuant to Section 5.03 .

 

LLC Agreement ” means the Amended and Restated Limited Liability Company Agreement of USWS dated as of the date of this Agreement.

 

Lock-Up Expiration Date ” means the first anniversary of the date of this Agreement.

 

Lock-Up Restrictions ” has the meaning given to such term in Section 5.01(a) .

 

Losses ” has the meaning set forth in Section 3.01 .

 

Majority Holders ” means, at any time, the Holder or Holders of more than 50% of the Registrable Securities at such time.

 

Managing Underwriter ” means, with respect to any Underwritten Offering, the lead book-running manager(s) of such Underwritten Offering.

 

Maximum Number of Securities ” means, with respect to any Underwritten Offering, the maximum number of shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) that can be sold in such Underwritten Offering without materially adversely affecting the offering price, timing or the probability of success of such Underwritten Offering, as advised by the Managing Underwriter for such Underwritten Offering pursuant to Section 2.02(c) or Section 2.04(c) , as applicable.

 

Merger and Contribution Agreement ” has the meaning given to such term in the Recitals.

 

Minimum Number of Registrable Securities ” means (i) solely with respect to a Shelf Underwritten Offering Request made prior to the one-year anniversary of the date of this Agreement, 1 Registrable Security and (ii) in all other cases, 500,000 Registrable Securities; provided, however , that in each case such numbers of Registrable Securities shall be appropriately adjusted in connection with any event described in Section 6.05 .

 

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Opt-Out Notice ” has the meaning given to such term in Section 2.04(b) .

 

Original Agreement ” has the meaning given to such term in the introductory paragraph.

 

Other Securities ” means, with respect to any Underwritten Offering, any shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) requested to be included in such Underwritten Offering by any Person (other than a Holder) having contractual registration rights with respect to such Underwritten Offering.

 

Parent Sponsor Agreement ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Permitted Transferee ” means, with respect to any Holder, any Affiliate of such Holder, in each case provided that such Transferee has delivered to the Company a duly executed Adoption Agreement.

 

Person ” means any natural person, corporation, partnership, limited liability company, firm, association, trust, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

 

Piggybacking Holder ” has the meaning set forth in Section 2.04(a) .

 

Piggyback Underwritten Offering ” has the meaning set forth in Section 2.04(a) .

 

Piper Class A Shares ” has the meaning given to such term in the Recitals.

 

Piper Jaffray ” has the meaning given to such term in the Recitals.

 

Private Placement Warrants ” has the meaning given to such term in the Recitals.

 

Registrable Securities ” means (a) the Former USWS Owner Registrable Securities, (b) the Sponsor Registrable Securities, (c) the Crestview Registrable Securities, (d) the CEO Bonus Class A Shares, (e) the Lender Class A Shares, (f) the Piper Class A Shares and (g) any other equity security issued or issuable (including upon exercise of Private Placement Warrants) with respect to any Registrable Security by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however , that a Registrable Security shall cease to be a Registrable Security when: (i) a Registration Statement covering such Registrable Security has become effective under the Securities Act and such Registrable Security has been sold, transferred, disposed of or exchanged in accordance with such Registration Statement, (ii) such Registrable Security (or the Company Merger Unit and Company Merger Class B Share exchangeable for such Registrable Security) is disposed of under Rule 144 under the Securities Act (or any successor or similar rule adopted by the Commission then in effect) 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 (or such Company Merger Unit and Company Merger Class B Share) restricting transfer of such Registrable Security (or such Company Merger Unit and Company Merger Class B Share) has been removed, or (iii) such Registrable Security (or Company Merger Unit and Company Merger Class B Share exchangeable for such Registrable Security) has been sold or disposed of in a transaction in which the Transferor’s rights under this Agreement are not assigned to the Transferee pursuant to Section 5.03 ; and provided , further , that any security that has ceased to be a Registrable Security shall not thereafter become a Registrable Security and any security that is issued or distributed in respect of a security that has ceased to be a Registrable Security shall not be a Registrable Security.

 

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Registration Expenses ” means all expenses incurred by the Company in complying with Article II , including, without limitation, all registration and filing fees, printing expenses, road show expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the Financial Industry Regulatory Authority, Inc., and fees of transfer agents and registrars, but excluding any Selling Expenses.

 

Registration Statement ” means any registration statement of the Company filed or to be filed with the Commission under the Securities Act, including the related prospectus, amendments and supplements to such registration statement, and including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

 

Relative ” means, with respect to any natural person: (a) such Person’s spouse, (b) any lineal descendant, parent, grandparent, great grandparent or sibling of such Person or any lineal descendant of any such sibling (in each case whether by blood or legal adoption), and (c) the spouse of a Person described in clause (b) of this definition.

 

Requesting Holders ” has the meaning set forth in Section 2.02(a) .

 

Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time from time to time.

 

Selling Expenses ” means all (a) underwriting fees, discounts and selling commissions allocable to the sale of Registrable Securities, (b) transfer taxes allocable to the sale of the Registrable Securities, (c) costs or expenses related to any roadshows conducted in connection with the marketing of any Shelf Underwritten Offering, and (d) fees and expenses of counsel engaged by any Holders (subject to Article III ).

 

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

 

Shelf Piggybacking Holder ” has the meaning given to such term in Section 2.02(b) .

 

Shelf Registration Statement ” has the meaning given to such term in Section 2.01(a) .

 

Shelf Underwritten Offering ” has the meaning given to such term in Section 2.02(a) .

 

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Shelf Underwritten Offering Request ” has the meaning given to such term in Section 2.02(a) .

 

Sponsor ” has the meaning given to such term in the introductory paragraph of this Agreement.

 

Sponsor Class A Shares ” has the meaning given to such term in the Recitals.

 

Sponsor Conversion Class A Shares ” has the meaning given to such term in the Recitals.

 

Sponsor Holders ” means Sponsor and any Holders to whom the rights of registration and other rights granted to Sponsor under this Agreement are transferred pursuant to Section 5.03 , including successive transferees of such rights pursuant to Section 5.03 .

 

Sponsor Private Placement Warrants ” means the Private Placement Warrants other than the Crestview Private Placement Warrants.

 

Sponsor Registrable Securities ” means (i) the Sponsor Class A Shares, (ii) the Sponsor Private Placement Warrants and (iii) the shares of Class A Common Stock issuable upon exercise of the Sponsor Private Placement Warrants.

 

Suspension Period ” has the meaning given to such term in Section 2.03 .

 

Transfer ” means any offer, sale, pledge, encumbrance, hypothecation, entry into any contract to sell, grant of an option to purchase, short sale, assignment, transfer, exchange, gift, bequest or other disposition, direct or indirect, in whole or in part, by operation of law or otherwise. “Transfer,” when used as a verb, and “Transferee” and “Transferor” have correlative meanings.

 

Underwritten Offering ” means an offering (including an offering pursuant to the Shelf Registration Statement) in which shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) are sold to an underwriter on a firm commitment basis for reoffering to the public.

 

Underwritten Offering Filing ” means (a) with respect to a Shelf Underwritten Offering, a preliminary prospectus supplement (or prospectus supplement if no preliminary prospectus supplement is used) to the Shelf Registration Statement relating to such Shelf Underwritten Offering, and (b) with respect to a Piggyback Underwritten Offering, (i) a preliminary prospectus supplement (or prospectus supplement if no preliminary prospectus supplement is used) to an effective shelf Registration Statement (other than the Shelf Registration Statement) in which Registrable Securities could be included and Holders could be named as selling security holders without the filing of a post-effective amendment thereto (other than a post-effective amendment that becomes effective upon filing) or (ii) a Registration Statement (other than the Shelf Registration Statement), in each case relating to such Piggyback Underwritten Offering.

 

USWS ” has the meaning given to such term in the Recitals.

 

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Article II.
REGISTRATION RIGHTS

 

Section 2.01 Shelf Registration .

 

(a)          As soon as practicable after, but in any event within 30 days after, the date of this Agreement, the Company shall file a Registration Statement (such Registration Statement and any other Registration Statement contemplated by Section 2.01(b) or Section 2.01(c) , the “ Shelf Registration Statement ”) under the Securities Act to permit the public resale of all the Registrable Securities by the Holders from time to time as permitted by Rule 415 under the Securities Act (or any successor or similar rule adopted by the Commission then in effect) and shall use commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective as soon as practicable after the filing thereof. The Company shall notify the Holders of the effectiveness of the Shelf Registration Statement promptly after it becomes effective.

 

(b)          The Shelf Registration Statement shall be on Form S-3 or, if Form S-3 is not available, on such other form of registration statement as is then available to effect a registration for resale of the Registrable Securities; provided , however , that if the Company has filed the Shelf Registration Statement on Form S-1 and subsequently becomes eligible to use Form S-3 or any equivalent or successor form, the Company shall (i) file a post-effective amendment to the Shelf Registration Statement converting such Registration Statement on Form S-1 to a Registration Statement on Form S-3 or any equivalent or successor form or (ii) withdraw the Shelf Registration Statement on Form S-1 and file a subsequent Shelf Registration Statement on Form S-3 or any equivalent or successor form. The Shelf Registration Statement shall contain a prospectus in such form as to permit any Holder to sell such Registrable Securities pursuant to Rule 415 under the Securities Act (or any successor or similar rule adopted by the Commission then in effect) at any time beginning on the date the Shelf Registration Statement becomes effective and shall provide for the resale of the Registrable Securities pursuant to any method or combination of methods legally available to the Holders and requested by the Majority Holders.

 

(c)          The Company shall use commercially reasonable efforts to cause the Shelf Registration Statement to remain effective, and to be supplemented and amended to the extent necessary to ensure that the Shelf Registration Statement is available or, if not available, that another Shelf Registration Statement is available, for the resale of all the Registrable Securities by the Holders until all of the Registrable Securities have ceased to be Registrable Securities or the earlier termination of this Agreement (as to all Holders) pursuant to Section 6.01 .

 

(d)          When effective, the Shelf Registration Statement (including any 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 the Shelf Registration Statement, in the light of the circumstances under which such statements are made).

 

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Section 2.02 Shelf Underwritten Offerings .

 

(a)          In the event that any Holder or group of Holders elects to dispose of Registrable Securities under the Shelf Registration Statement pursuant to an Underwritten Offering and reasonably expects gross proceeds of at least $25 million from such Underwritten Offering, the Company shall, at the request (a “ Shelf Underwritten Offering Request ”) of such Holder or Holders (in such capacity, the “ Requesting Holders ”), enter into an underwriting agreement in a form as is customary in Underwritten Offerings of securities by the Company with the underwriter or underwriters selected pursuant to Section 2.02(d) and shall take all such other reasonable actions as are requested by the Managing Underwriter of such Underwritten Offering and/or the Requesting Holders in order to expedite or facilitate the disposition, subject to Section 2.02(c) , of such Registrable Securities and the Registrable Securities requested to be included by any Shelf Piggybacking Holder (a “ Shelf Underwritten Offering ”); provided, however , that the Company shall have no obligation to facilitate or participate in more than (i) one Shelf Underwritten Offering during any 180-day period or (ii) (A) a total of three Shelf Underwritten Offerings initiated by Requesting Holders who are Sponsor Holders, (B) a total of five Shelf Underwritten Offerings initiated by Requesting Holders who are Former USWS Owner Holders or Lender Holders or (C) a total of three Shelf Underwritten Offerings initiated by Requesting Holders who are Crestview Holders; provided further , that a Shelf Underwritten Offering that is commenced but terminated for any reason prior to the execution of an underwriting agreement with respect thereto will not be counted as a Shelf Underwritten Offering for purposes of the foregoing limitations on the number Shelf Underwritten Offerings.

 

(b)          If the Company receives a Shelf Underwritten Offering Request, it will give written notice of such proposed Shelf Underwritten Offering to each Holder (other than the Requesting Holders) that, together with such Holder’s Affiliates, holds at least the Minimum Number of Registrable Securities, which notice shall be held in strict confidence by such Holders and shall include the anticipated filing date of the related Underwritten Offering Filing and, if known, the number of shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) that are proposed to be included in such Shelf Underwritten Offering, and of such Holders’ rights under this Section 2.02(b) . Such notice shall be given promptly (and in any event at least five Business Days before the filing of the Underwritten Offering Filing or two Business Days before the filing of the Underwritten Offering Filing in connection with a bought or overnight Underwritten Offering); provided , that if the Shelf Underwritten Offering is a bought or overnight Underwritten Offering and the Managing Underwriter advises the Company and the Requesting Holders that the giving of notice pursuant to this Section 2.02(b) would adversely affect the offering, no such notice shall be required (and such Holders shall have no right to include Registrable Securities in such bought or overnight Underwritten Offering); and provided further , that the Company shall not so notify any such other Holder that has notified the Company (and not revoked such notice) requesting that such Holder not receive notice from the Company of any proposed Shelf Underwritten Offering. Each such Holder shall then have four Business Days (or one Business Day in the case of a bought or overnight Underwritten Offering) after the date on which the Holders received notice pursuant to this Section 2.02(b) to request inclusion of Registrable Securities in the Shelf Underwritten Offering (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder and such other information as is reasonably required to effect the inclusion of such Registrable Securities) (any such Holder making such request, a “ Shelf Piggybacking Holder ”). If no request for inclusion from a Holder is received within such period, such Holder shall have no further right to participate in such Shelf Underwritten Offering.

 

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(c)          If the Managing Underwriter of the Shelf Underwritten Offering shall advise the Company and the Requesting Holders in writing, with a copy to be provided upon request to any Shelf Piggybacking Holder, of its belief that the number of Registrable Securities requested to be included in such Shelf Underwritten Offering by the Requesting Holders and any Shelf Piggybacking Holders, together with any Other Securities or Company Securities requested or proposed to be included in such Shelf Underwritten Offering, exceeds the Maximum Number of Securities for such Shelf Underwritten Offering, then Registrable Securities, Other Securities and Company Securities shall be included in the Shelf Underwritten Offering, up to the Maximum Number of Securities (as set forth in such written advice from the Managing Underwriter), in the following priority:

 

(i)           first , the Registrable Securities requested to be included in such Shelf Underwritten Offering by the Requesting Holders and the Shelf Piggybacking Holders, pro rata among the Requesting Holders and the Shelf Piggybacking Holders based on the respective numbers of Registrable Securities that each requested be included); and

 

(ii)          second , to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), any Other Securities or Company Securities requested or proposed to be included in such Shelf Underwritten Offering allocated, as applicable, in accordance with the order of priority established in the agreement or agreements granting the registration rights with respect to any such Other Securities.

 

(d)          The Managing Underwriter and any other underwriters for any Shelf Underwritten Offering shall be selected by the Company; provided that the Managing Underwriter shall be reasonably acceptable to the Requesting Holders. The Requesting Holders shall determine the pricing of the Registrable Securities offered pursuant to any Shelf Underwritten Offering and the applicable underwriting discounts and commissions and determine the timing of any such Shelf Underwritten Offering, subject to Section 2.03 .

 

Section 2.03 Delay and Suspension Rights . Notwithstanding any other provision of this Agreement, the Company may (i) delay filing or effectiveness of the Shelf Registration Statement (or any amendment thereto) or effecting a Shelf Underwritten Offering or (ii) suspend the Holders’ use of any prospectus that is a part of the Shelf Registration Statement upon written notice to each Holder whose Registrable Securities are included in the Shelf Registration Statement ( provided that in no event shall such notice contain any material non-public information regarding the Company) (in which event such Holder shall discontinue sales of Registrable Securities pursuant to the Shelf Registration Statement but may settle any then-contracted sales of Registrable Securities), in each case for a period of up to 60 days, if the Company determines (A) that such delay or suspension is in the best interest of the Company and its stockholders generally due to a pending financing or other transaction involving the Company, including a proposed sale of Class A Common Stock by the Company for its own account, (B) that such registration or offering would render the Company unable to comply with applicable securities laws or (C) that such registration or offering would require disclosure of material information that the Company has a bona fide business purpose for preserving as confidential (any such period, a “ Suspension Period ”); provided , however , that in no event shall any Suspension Periods collectively exceed an aggregate of 120 days in any twelve-month period.

 

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Section 2.04 Piggyback Registration Rights .

 

(a)          Subject to Section 2.04(c) , if the Company at any time proposes to file an Underwritten Offering Filing for an Underwritten Offering of shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) for its own account or for the account of any other Persons who have or have been granted registration rights (a “ Piggyback Underwritten Offering ”), it will give written notice of such Piggyback Underwritten Offering to each Holder that, together with such Holder’s Affiliates, holds at least the Minimum Number of Registrable Securities, which notice shall be held in strict confidence by such Holders and shall include the anticipated filing date of the Underwritten Offering Filing and, if known, the number of shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) that are proposed to be included in such Piggyback Underwritten Offering, and of such Holders’ rights under this Section 2.04(a) . Such notice shall be given promptly (and in any event at least five Business Days before the filing of the Underwritten Offering Filing or two Business Days before the filing of the Underwritten Offering Filing in connection with a bought or overnight Underwritten Offering); provided , that if the Piggyback Underwritten Offering is a bought or overnight Underwritten Offering and the Managing Underwriter advises the Company that the giving of notice pursuant to this Section 2.04(a) would adversely affect the offering, no such notice shall be required (and such Holders shall have no right to include Registrable Securities in such bought or overnight Underwritten Offering). Each such Holder shall then have four Business Days (or one Business Day in the case of a bought or overnight Underwritten Offering) after the date on which the Holders received notice pursuant to this Section 2.04(a) to request inclusion of Registrable Securities in the Piggyback Underwritten Offering (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder and such other information as is reasonably required to effect the inclusion of such Registrable Securities) (any such Holder making such request, a “ Piggybacking Holder ”). If no request for inclusion from a Holder is received within such period, such Holder shall have no further right to participate in such Piggyback Underwritten Offering. Subject to Section 2.04(c) , the Company shall use its commercially reasonable efforts to include in the Piggyback Underwritten Offering all Registrable Securities that the Company has been so requested to include by the Piggybacking Holders; provided, however , that if, at any time after giving written notice of a proposed Piggyback Underwritten Offering pursuant to this Section 2.04(a) and prior to the execution of an underwriting agreement with respect thereto, the Company or such other Persons who have or have been granted registration rights, as applicable, shall determine for any reason not to proceed with or to delay such Piggyback Underwritten Offering, the Company shall give written notice of such determination to the Piggybacking Holders (which such Holders will hold in strict confidence) and (i) in the case of a determination not to proceed, shall be relieved of its obligation to include any Registrable Securities in such Piggyback Underwritten Offering (but not from any obligation of the Company to pay the Registration Expenses in connection therewith), and (ii) in the case of a determination to delay, shall be permitted to delay inclusion of any Registrable Securities for the same period as the delay in including the Company Securities or Other Securities, as applicable.

 

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(b)          Each Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any Piggyback Underwritten Offering at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to the Company of its request to withdraw. Any Holder may deliver written notice (an “ Opt-Out Notice ”) to the Company requesting that such Holder not receive notice from the Company of any proposed Piggyback Underwritten Offering; provided , however , that such Holder may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from any Holder (unless subsequently revoked), the Company shall not, and shall not be required to, deliver any notice to such Holder pursuant to this Section 2.04 and such Holder shall no longer be entitled to participate in any Piggyback Underwritten Offering.

 

(c)          If the Managing Underwriter of the Piggyback Underwritten Offering shall advise the Company of its belief that the number of Registrable Securities requested to be included in such Piggyback Underwritten Offering, together with the number of Company Securities and Other Securities proposed or requested to be included in such Piggyback Underwritten Offering, exceeds the Maximum Number of Securities for such Piggyback Underwritten Offering, then Company Securities, Other Securities and Registrable Securities shall be included in the Piggyback Underwritten Offering, up to the Maximum Number of Securities (as set forth in such written advice from the Managing Underwriter), in the following priority:

 

(i)          If the Piggyback Underwritten Offering is initiated for the account of the Company:

 

(1)          first , all of the Company Securities proposed to be included therein;

 

(2)          second , to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (1), the Registrable Securities requested to be included by the Piggybacking Holders and any Other Securities requested to be included by Persons having rights of registration on parity with the Piggybacking Holders with respect to such offering, pro rata among the Piggybacking Holders and such other Persons based on the number of shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) each requested to be included; and

 

(3)          third , any Other Securities requested to be included by Persons having rights of registration that are subordinate to the rights of the Piggybacking Holders with respect to such offering.

 

(ii)         If the Piggyback Underwritten Offering is initiated for the account of any other Persons who have or have been granted registration rights:

 

(1)          first , all of the Other Securities requested to be included therein by such Persons;

 

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(2)          second , to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (1), the Registrable Securities requested to be included by the Piggybacking Holders and any Other Securities requested to be included by Persons (other than those for the account of which the Piggyback Underwritten Offering is initiated) having rights of registration on parity with the Piggybacking Holders with respect to such offering, pro rata among the Piggybacking Holders and such other Persons based on the number of shares of Class A Common Stock (or other equity securities of the same class as the Registrable Securities) each requested to be included; and

 

(3)          third , to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (1) and (2), any Company Securities proposed to be included and any Other Securities requested to be included by Persons (other than those for the account of which the Piggyback Underwritten Offering is initiated) having rights of registration that are subordinate to the rights of the Piggybacking Holders with respect to such offering, allocated, as applicable, in accordance with the order of priority established in the agreement or agreements granting the registration rights with respect to any such Other Securities.

 

(d)          The Company or the other Persons for the account of which the Piggyback Underwritten Offering is initiated, as applicable, shall select the underwriters in any Piggyback Underwritten Offering and shall determine the pricing of the shares of Class A Common Stock (or other securities of the same class as Registrable Securities) offered pursuant to any Piggyback Underwritten Offering, the applicable underwriting discounts and commissions and the timing of any such Piggyback Underwritten Offering.

 

Section 2.05 Participation in Underwritten Offerings .

 

(a)          In connection with any Underwritten Offering contemplated by Section 2.02 or Section 2.04 , the underwriting agreement into which each Selling Holder and the Company shall enter into shall contain such representations, covenants, indemnities (subject to Article III ) and other rights and obligations as are customary in Underwritten Offerings of securities by the Company. No Selling Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Selling Holder’s authority to enter into such underwriting agreement and to sell, and its ownership of, the securities being registered on its behalf, its intended method of distribution and any other representation required by law.

 

(b)          In connection with any Piggyback Underwritten Offering in which any Holder has the right to include Registrable Securities pursuant to Section 2.04 , such Holder agrees (A) to supply any information reasonably requested by the Company in connection with the preparation of a Registration Statement and/or any other documents relating to such registered offering and (B) to execute and deliver any agreements and instruments being executed by all holders on substantially the same terms reasonably requested by the Company or the Managing Underwriter, as applicable, to effectuate such registered offering, including, without limitation, underwriting agreements (subject to Section 2.05(a) ), custody agreements, lock-ups, “hold back” agreements pursuant to which such Holder agrees not to sell or purchase any securities of the Company for the same period of time following the registered offering as is agreed to by the Company and the other participating holders, powers of attorney and questionnaires.

 

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(c)          If the Company or Managing Underwriter, as applicable, requests that the Holders take any of the actions referred to in clause (B) of Section 2.05(b) , the Holders shall take such action promptly but in any event within three Business Days following the date of such request.

 

Section 2.06 Registration Procedures .

 

(a)          In connection with its obligations under this Article II , the Company will:

 

(i)          promptly prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement;

 

(ii)         furnish to each Selling Holder such number of conformed copies of such Registration Statement and of each such amendment and supplement thereto (in each case including without limitation all exhibits), such number of copies of the prospectus contained in such Registration Statement (including without limitation each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as such seller may reasonably request;

 

(iii)        if applicable, use commercially reasonable efforts to register or qualify all Registrable Securities and other securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as each seller thereof shall reasonably request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such seller, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (iii) be obligated to be so qualified or to consent to general service of process in any such jurisdiction;

 

(iv)         in connection with an Underwritten Offering, use all commercially reasonable efforts to provide to each Selling Holder a copy of any auditor “comfort” letters and customary legal opinions, in each case that have been provided to the Managing Underwriter in connection with the Underwritten Offering;

 

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(v)          promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement, as then in effect, 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 under which they were made, and at the request of any such seller promptly prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall 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 under which they were made;

 

(vi)         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, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, and shall furnish to each such seller at least the Business Day prior to the filing thereof a copy of any amendment or supplement to such Registration Statement or prospectus;

 

(vii)        provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement;

 

(viii)      cause all Registrable Securities covered by such Registration Statement to be listed on any securities exchange on which the Class A Common Stock is then listed; and

 

(ix)         enter into such customary agreements and take such other actions as the Holder or Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities.

 

(b)          Each Holder agrees by acquisition of such Registrable Securities that upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.06(a)(v) , such Holder will forthwith discontinue such Holder’s disposition of Registrable Securities pursuant to the Registration Statement until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.06(a)(v) as filed with the Commission or until it is advised in writing by the Company that the use of such Registration Statement may be resumed, and, if so directed by the Company, will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. The Company may provide appropriate stop orders to enforce the provisions of this Section 2.06(b) .

 

Section 2.07 Cooperation by Holders . The Company shall have no obligation to include Registrable Securities of a Holder in any Registration Statement or Underwritten Offering if such Holder has failed to timely furnish such information that the Company determines, after consultation with its counsel, is reasonably required in order for any registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

 

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Section 2.08 Restrictions on Public Sale by Holders . Each Holder agrees not to effect any public sale or distribution of Registrable Securities for a period of up to 90 days following completion of an Underwritten Offering of equity securities by the Company; provided that (a) the Company 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 of such public sale or distribution on the Company or on the officers or directors or any other shareholder of the Company on whom a restriction is imposed; provided further , that this Section 2.08 shall not apply to any Holder that, (i) together with such Holder’s Affiliates, holds less than 5% of the Company’s outstanding Class A Common Stock or (ii) has delivered (and not revoked) an Opt-Out Notice to the Company.

 

Section 2.09 Expenses . The Company shall be responsible for all Registration Expenses incident to its performance of or compliance with its obligations under this Article II . Each Selling Holder shall pay its pro rata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder.

 

Section 2.10 Other Registration Rights . From and after the date hereof, the Company shall not, without the prior written consent of the Majority Holders, enter into any agreement with any current or future holder of any securities of the Company that would allow such current or future holder to require the Company to include securities in any Underwritten Offering Filing on a basis other than pari passu with, or expressly subordinate to, the piggyback rights of the Holders hereunder; provided , that in no event shall the Company enter into any agreement that would permit another holder of securities of the Company to participate on a pari passu basis (in terms of priority of cut-back based on advice of underwriters) with the Holders in a Shelf Underwritten Offering.

 

Article III.
INDEMNIFICATION AND CONTRIBUTION

 

Section 3.01 Indemnification by the Company . The Company will indemnify and hold harmless each Selling Holder, its officers and directors and each Person (if any) that controls such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities, costs and expenses (including attorneys’ fees) (“ Losses ”) caused by, arising out of, resulting from or related to any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus, in the light of the circumstances under which such statement is made), provided, however , that such indemnity shall not apply to that portion of such Losses caused by, or arising out of, any untrue statement, or alleged untrue statement or any such omission or alleged omission, to the extent such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Holder expressly for use therein.

 

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Section 3.02 Indemnification by the Holders . Each Holder agrees to indemnify and hold harmless the Company, its officers and directors and each Person (if any) that controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Losses caused by, arising out of, resulting from or related to any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or prospectus relating to Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus, in the light of the circumstances under which such statement is made), only to the extent such statement or omission was made in reliance upon and in conformity with information furnished in writing by or on behalf of such Holder expressly for use in any Registration Statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus.

 

Section 3.03 Indemnification Procedures . In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to Section 3.01 or Section 3.02 , such Person (the “ Indemnified Party ”) shall promptly notify the Person against whom such indemnity may be sought (the “ Indemnifying Party ”) in writing (provided that the failure of the Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Article III , except to the extent the Indemnifying Party is actually prejudiced by such failure to give notice), and the Indemnifying Party shall be entitled to participate in such proceeding and, unless in the reasonable opinion of outside counsel to the Indemnified Party a conflict of interest between the Indemnified Party and Indemnifying Party may exist in respect of such claim, to assume the defense thereof jointly with any other Indemnifying Party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such Indemnified Party, and after notice from the Indemnifying Party to such Indemnified Party that it so chooses, the Indemnifying Party shall not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided , however , that (i) if the Indemnifying Party fails to assume the defense or employ counsel reasonably satisfactory to the Indemnified Party, (ii) if such Indemnified Party who is a defendant in any action or proceeding which is also brought against the Indemnifying Party reasonably shall have concluded that there may be one or more legal defenses available to such Indemnified Party which are not available to the Indemnifying Party or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct then, in any such case, the Indemnified Party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all Indemnified Parties in each jurisdiction, except to the extent any Indemnified Party or Parties reasonably shall have concluded that there may be legal defenses available to such party or parties which are not available to the other Indemnified Parties or to the extent representation of all Indemnified Parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct) and the Indemnifying Party shall be liable for any expenses therefor. No Indemnifying Party shall, without the written consent of the Indemnified Party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the Indemnified Party from all liability arising out of such action or claim and (B) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any Indemnified Party.

 

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Section 3.04 Contribution .

 

(a)          If the indemnification provided for in this Article III is unavailable to an Indemnified Party in respect of any losses, claims, damages or liabilities in respect of which indemnity is to be provided hereunder, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the fullest extent permitted by law contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of such party in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company (on the one hand) and an Holder (on the other hand) 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 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.

 

(b)          The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Article III were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 3.04(a) . The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in Section 3.04(a) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article III , no Holder shall be liable for indemnification or contribution pursuant to this Article III for any amount in excess of the net proceeds of the offering received by such Holder, less the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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 was not guilty of such fraudulent misrepresentation.

 

Article IV.
RULE 144

 

With a view to making available the benefits of certain rules and regulations of the Commission that may permit the resale of the Registrable Securities without registration, the Company agrees to use its commercially reasonable efforts to:

 

(a)          make and keep public information regarding the Company available, as those terms are understood and defined in Rule 144 under the Securities Act (or any successor or similar rule adopted by the Commission then in effect), at all times from and after the date hereof;

 

  20  

 

 

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

 

(c)          so long as a Holder owns any Registrable Securities, furnish (i) to the extent accurate, forthwith upon request, a written statement of the Company that it has complied with the reporting requirements of Rule 144 under the Securities Act (or any successor or similar rule adopted by the Commission then in effect) and (ii) unless otherwise available via the Commission’s EDGAR filing system, to such Holder forthwith upon request a copy of the most recent annual or quarterly report of the Company, 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.

 

Article V.
RESTRICTIONS ON TRANSFER; LEGENDS; TRANSFER OF RIGHTS

 

Section 5.01 Restrictions on Transfer .

 

(a)          Each of the Former USWS Owners and Piper Jaffray agrees that, prior to the Lock-Up Expiration Date, it will not directly or indirectly Transfer all or any part of, as applicable to such Former USWS Owner or Piper Jaffray, (i) its Blocker Merger Class A Shares, (ii) its Company Merger Units and Company Merger Class B Shares or the Exchange Class A Shares issued or issuable upon the exchange of its Company Merger Units and Company Merger Class B Shares, or (iii) the Piper Class A Shares, or any right or economic interest pertaining thereto, including the right to vote or consent on any matter or to receive or have any economic interest in the Company or USWS pursuant thereto (the foregoing restrictions are hereinafter referred to as the “ Lock-Up Restrictions ”).

 

(b)          Notwithstanding the foregoing, the Lock-Up Restrictions shall not apply to:

 

(i)          any Transfer to a Permitted Transferee;

 

(ii)         any exchange of Company Merger Units and Company Merger Class B Shares for Exchange Class A Shares pursuant to the terms of the LLC Agreement;

 

(iii)        any Transfer pursuant to any merger, consolidation or other business combination of the Company;

 

(iv)         any Transfer of Registrable Securities effected on or after the day that is 180 days after the date of this Agreement pursuant to an Underwritten Offering, provided , however , that the aggregate number of Registrable Securities transferred by each Holder that is a Former USWS Owner, Piper Jaffray or their respective Permitted Transferees pursuant to this clause (iv) shall not exceed 50% of the number of Registrable Securities held by such Holder on the date of this Agreement;

 

(v)          any Transfer by Piper Jaffray or its Permitted Transferees made with the prior approval of the board of directors of the Company (including at least one director who was initially designated by the Company to be a director of the Company upon the Closing), which approval may constitute approval of a specific Transfer or a more general full or partial waiver of the Lock-Up Restrictions; or

 

  21  

 

 

(vi)         any Transfer by a Former USWS Owner or its Permitted Transferees made with the prior approval of the board of directors of the Company (including at least one director who was initially designated by the Company to be a director of the Company upon the Closing) (subject to the terms of the Crestview Subscription Agreement), which approval may constitute approval of a specific Transfer or a more general full or partial waiver of the Lock-Up Restrictions.

 

Section 5.02 Share Legend . Until the Lock-Up Expiration Date, each certificate or book-entry notation representing Blocker Merger Class A Shares, Piper Class A Shares, Company Merger Units, Company Merger Class B Shares or Exchange Class A Shares shall bear a legend in substantially the following form (in addition to any legend related to restrictions on Transfer under applicable securities laws and, in the case of Company Merger Units and Company Merger Class B shares, as required by the LLC Agreement or the Company’s certificate of incorporation, as applicable):

 

THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO AN AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 9, 2018 BY AND AMONG U.S. WELL SERVICES, INC. AND THE HOLDERS PARTY THERETO.

 

Section 5.03 Transfer of Rights . The rights to registration and other rights under this Agreement may be assigned to a Transferee of Registrable Securities if (a) such Transferee is a Permitted Transferee or (b) such Transferee is acquiring at least the Minimum Number of Registrable Securities and such Transferee has delivered to the Company a duly executed Adoption Agreement.

 

Article VI.
MISCELLANEOUS

 

Section 6.01 Termination . This Agreement shall terminate, and the parties shall have no further rights or obligations hereunder on (a) the fifth anniversary of the date hereof or (b) as to any Holder, on such earlier date on which both (i) such Holder, together with such Holder’s Affiliates, owns less than 2,000,000 Registrable Securities and (ii) all Registrable Securities owned by such Holder and such Holder’s Affiliates may be sold without volume or manner of sale restrictions pursuant to Rule 144 under the Securities Act (or any successor or similar rule adopted by the Commission then in effect).

 

Section 6.02 Notices . Any notice or communication under this Agreement must be in writing and given by (a) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (b) delivery in person or by courier service providing evidence of delivery, or (c) transmission by hand delivery or email. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third Business Day following the date on which it is mailed, in the case of notices delivered by courier service or hand delivery, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) and in the case of email, when sent. Any notice or communication under this Agreement must be addressed:

 

  22  

 

 

(i)          if to the Company:

 

U.S. Well Services, Inc.

770 South Post Oak Lane, Suite 405

Houston, Texas 77056

Attn: Joel Broussard

Email: joelb@uswellservices.com

 

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

 

Winston & Strawn LLP
355 S Grand Ave, 33rd Floor
Los Angeles, CA 90071
Attn: Justin E. Rawlins
Email: jrawlins@winston.com

 

(ii)         if to any Holder, at such Holder’s address as set forth on the signature pages hereto or in its Adoption Agreement, as applicable.

 

Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective upon receipt of such notice as provided in this Section 6.01 .

 

Section 6.03 Binding Effect; Assignment; No Third-Party Beneficiaries . This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and each Holder and its successors and assigns. Except as provided in Section 5.03 , neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned or transferred, by operation of law or otherwise, by any Holder without the prior written consent of the Company. This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in Article III .

 

Section 6.04 Entire Agreement . This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties in connection therewith.

 

  23  

 

 

Section 6.05 Adjustments Affecting Registrable Securities . The provisions of this Agreement shall apply to any and all shares of capital stock of the Company or any successor or assignee of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution for the Registrable Securities, by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise in such a manner and with such appropriate adjustments as to reflect the intent and meaning of the provisions hereof and so that the rights, privileges, duties and obligations hereunder shall continue with respect to the capital stock of the Company as so changed.

 

Section 6.06 Counterparts . This Agreement may be executed in multiple counterparts (including electronic .pdf counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.

 

Section 6.07 Governing Law . 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.

 

Section 6.08 Venue and Jurisdiction; Waiver of Jury Trial .

 

(a)          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.

 

(b)          EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND WITH RESPECT TO ANY COUNTERCLAIM RELATED THERETO.

 

Section 6.09 Amendments and Modifications; Waiver . This Agreement may be amended or modified only by a written instrument duly executed by the Company and the Majority Holders; provided , however , that notwithstanding the foregoing, any such amendment or modification that adversely affects any Holder in a manner that is materially different from any other Holder shall require the consent of each Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

 

[SIGNATURE PAGES FOLLOW]

 

  24  

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.

 

 

COMPANY :

   
  U.S. WELL SERVICES, INC.
 

  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
    Title: President and Chief Executive Officer
   
 

Address for Notice:

   

770 S. Post Oak Lane

Suite 405

Houston, Texas 77056

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  HOLDERS:
   

MATLIN & PARTNERS ACQUISITION SPONSOR LLC

   
  By: /s/ David J. Matlin
    Name: David J. Matlin
    Title: Director
     
  Address for Notice:
   

Matlin & Partners Acquisition Sponsor LLC c/o MatlinPatterson Global Advisers LLC

520 Madison Avenue

35 th Floor

New York, New York 10022

Attention: Robert H. Weiss

Email:  weiss@matlinpatterson.com

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  Crestview III USWS, L.P.
   
  By: /s/ Ross A. Oliver
    Name: Ross A. Oliver
    Title: General Counsel
     
  Address for Notice:
   

Crestview Advisors, L.L.C.

667 Madison Avenue

10 th Floor

New York, New York 10065

Email: 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

   
  By: /s/ Ross A. Oliver
    Name: Ross A. Oliver
    Title: General Counsel
     
  Address for Notice:
   

Crestview Advisors, L.L.C.

667 Madison Avenue

10 th Floor

New York, New York 10065

Email: 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

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  OTHER MEMBERS:
 

 

ALJ BLOCKER LLC

   
  By: /s/ Ron D. Silverton
    Name: Ron D. Silverton
    Title: Authorized Signatory
     
  Address for Notice:
   

ALJ Blocker LLC

c/o ALJ Capital Management LLC

6300 Wilshire Blvd

Suite 700

Los Angeles, California 90048

Attention: Ron Silverton

Email: rsilverton@aljcapital.com

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  BKC ASW BLOCKER, INC.
   
  By: /s/ Michael Pungello
    Name: Michael Pungello
    Title: President
     
  Address for Notice:
   

BKC ASW Blocker, Inc.

c/o BlackRock Capital Investment Corporation

40 East 52 nd Street

New York, New York 10022

Attn: R. Marshall Merriman

Email: marshall.merriman@blackrock.com

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

c/o BlackRock, Inc.

Office of the General Counsel

40 East 52 nd Street

New York, New York 10022

Attention: David Maryles, Jennifer O’Neil, Joe Roy

Email: legaltransactions@blackrock.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  REGIMENT CAPITAL SPECIAL SITUATIONS FUND V, L.P.
   
  By: /s/ Richard Miller
    Name: Richard Miller
    Title: Authorized Signatory
     
  Address for Notice:
   

TCW

200 Clarendon Street

51 st Floor

Boston, Massachusetts 02116

Attention: Richard Miller

Email:  Richard.miller@tcw.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  REEF ROAD MASTER FUND LTD.
   
  By: /s/ Jeff Nusbaum
    Name: Jeff Nusbaum
    Title: Authorized Signatory
     
  Address for Notice:
   

Reef Road Master Fund Ltd.

c/o Reef Road Capital

5 Flower Farm Lane

Westport, Connecticut 06880

Email: jnoreefroadcap.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  SUNRISE PARTNERS LIMITED PARTNERSHIP
   
  By: /s/ Douglas W. Ambrose
    Name: Douglas W. Ambrose
   

Title: Executive Vice President of

Paloma Partners Management Company,

general partner of Sunrise Partners Limited Partnership

     
  Address for Notice:
   

Sunrise Partners Limited Partnership

c/o Paloma Partners Management Company

Two American Lane

Greenwich, Connecticut 06836

Attention: Douglas Ambrose

Email:  dambrose@paloma.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  CPTA MASTER BLOCKER, INC.
   
  By: /s/ Joseph B. Alala, III
    Name: Joseph B. Alala, III
    Title: President and Chief Executive Officer
     
  Address for Notice:
   

4201 Congress Street

Suite 360

Charlotte, North Carolina 28209

Attention: Randall Fontes

Email:  rfontes@capitalagroup.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  MILLSTREET CREDIT FUND LP
   
   

By: Millstreet Capital Partners LLC,

its General Partner

  By: /s/ Craig Kelleher
    Name: Craig Kelleher
    Title: Managing Member
     
  Address for Notice:
   

MILLSTREET CREDIT FUND LP

c/o Millstreet Capital Partners LLC

399 Boylston Street

Suite 501

Boston, Massachusetts 02116

Attention: Craig Kelleher

Email:  ckelleher@millstreet.com;
operations@millstreet.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  MERCER QIF FUND PLC – MERCER INVESTMENT FUND 1
   
   

By: Millstreet Capital Management LLC,

its Sub-Investment Manager

  By: /s/ Craig Kelleher
    Name: Craig Kelleher
    Title: Managing Member
     
  Address for Notice:
   

Millstreet Capital Management LLC

399 Boylston Street

Suite 501

Boston, Massachusetts 02116

Attention: Craig Kelleher

Email:  ckelleher@millstreet.com;
operations@millstreet.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  GUGGENHEIM PRIVATE DEBT FUND, LTD.
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  GUGGENHEIM ENERGY OPPORTUNITIES FUND, LP
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

    /s/ Nathan Houston
    Nathan Houston
     
  Address for Notice:
   

57 Coolspring Church Road

Mercer, Pennsylvania 16137

Attention: Nathan Houston

Email: nhouston@uswellservices.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  VERGER CAPITAL FUND LLC
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  GUGGENHEIM PRIVATE DEBT FUND NOTE ISSUER, LLC
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  GUGGENHEIM PRIVATE DEBT FUND, LLC
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  NZC GUGGENHEIM FUND LLC
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  NZC GUGGENHEIM FUND LIMITED
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  MAVERICK ENTERPRISES, INC.
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  GUGGENHEIM PRIVATE DEBT MASTER FUND, LLC
   
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact
     
  Address for Notice:
   

330 Madison Avenue

11 th Floor

New York, New York 10017

Attention: GI Legal – J. Carroll

Email: justin.carroll@guggenheimpartners.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  GCM GROVESNOR SPECIAL OPPORTUNITIES MASTER FUND, LTD.
   
   

By: GCM Fiduciary Services, LLC,

its Director

  By: /s/ Linda P. Mui
    Name: Linda P. Mui
    Title: Authorized Signatory
     
  Address for Notice:
   

900 North Michigan Avenue

Suite 1100

Chicago, Illinois 60611

Attention: Legal and Implementation

Email: legal@gcmlp.com; emm@gcmlp.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  VERITION MULTI-STRATEGY MASTER FUND LTD.
   
  By: /s/ William Anderson
    Name: William Anderson
    Title: Authorized Signatory
     
  Address for Notice:
   

One American Lane

Greenwich, Connecticut 06831

Attention: William Anderson

Email: wanderson@veritionfund.com; middleoffice@veritionfund.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  SOUTHPAW CREDIT OPPORTUNITY FUND (FTE) LTD.
   
   

By: Southpaw Asset Management LP,

its investment advisor

  By: /s/ Kevin Wyman
    Name: Kevin Wyman
   

Title: Managing Member of General Partner,

Southpaw Holdings LLC

     
  Address for Notice:
   

Southpaw Credit Opportunity Fund (FTE) Ltd.

c/o Southpaw Asset Management LP

2 Greenwich Office Park

1 st Floor West

Greenwich, Connecticut 06831

Attention: Michael Andersen

Email: mandersen@southpawasset.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  SOUTHPAW CREDIT OPPORTUNITY PARTNERS LP
   
  By: /s/ Kevin Wyman
    Name: Kevin Wyman
   

Title: Managing Member of General Partner,

Southpaw GP LLC

     
  Address for Notice:
   

Southpaw Credit Opportunity Partners LP

c/o Southpaw Asset Management LP

2 Greenwich Office Park

1 st Floor West

Greenwich, Connecticut 06831

Attention: Michael Andersen

Email: mandersen@southpawasset.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  ORB INVESTMENTS NO. 2, LLC
   
  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
    Title: Member
     
  Address for Notice:
   

P.O. Box 309

4535 Hwy 308

Raceland, Louisiana 70394

Attention: Joel N. Broussard

Email: joelb@uswellservices.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  ORB INVESTMENTS, LLC
   
  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
    Title: Member
     
  Address for Notice:
   

P.O. Box 309

4535 Hwy 308

Raceland, Louisiana 70394

Attention: Joel N. Broussard

Email: joelb@uswellservices.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  USWS MANAGEMENT COMPANY LLC
   
  By: /s/ Matthew J. Bernard
    Name: Matthew J. Bernard
    Title: Member
     
  Address for Notice:
   

770 S. Post Oak Lane

Suite 405

Houston, Texas 77056

Attention: Matthew J. Bernard

Email: mbernard@uswellservices.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

    /s/ Brian Stewart
    Brian Stewart
     
  Address for Notice:
   

5407 Regal Landing Drive

Kingwood, Texas 77345

Email: brstewart55@gmail.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  PNNT INVESTMENT HOLDINGS, LLC
   
  By: /s/ Arthur Penn
    Name: Arthur Penn
    Title: Chief Executive Officer
     
  Address for Notice:
   

PNNT Investment Holdings, LLC

590 Madison Avenue

15 th Floor

New York, New York 10022

Attention: PennantPark Investment Administration

Email: admin_ops@pennantpark.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  PENNANTPARK CREDIT OPPORTUNITIES FUND II, LP
   
  By: /s/ Arthur Penn
    Name: Arthur Penn
    Title: Chief Executive Officer
     
  Address for Notice:
   

PNNT Investment Holdings, LLC

590 Madison Avenue

15 th Floor

New York, New York 10022

Attention: PennantPark Investment Administration

Email: admin_ops@pennantpark.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  CAPITALSOUTH PARTNERS FUND II, LIMITED PARTNERSHIP
   
  By: /s/ John F. McGlinn
    Name: John F. McGlinn
    Title: Chief Operating Officer and Director
     
  Address for Notice:
   

CapitalSouth Partners Fund II, Limited Partnership

4201 Congress Street

Suite 360

Charlotte, North Carolina 28209

Attention: Randall Fontes

Email: rfontes@capitalagroup.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  CAPITALSOUTH PARTNERS SBIC FUND III, L.P.
   
  By: /s/ John F. McGlinn
    Name: John F. McGlinn
    Title: Chief Operating Officer and Director
     
  Address for Notice:
   

CapitalSouth Partners SBIC Fund III, L.P.

4201 Congress Street

Suite 360

Charlotte, North Carolina 28209

Attention: Randall Fontes

Email: rfontes@capitalagroup.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  PENNANTPARK SBIC LP
   
  By: /s/ Arthur Penn
    Name: Arthur Penn
    Title: Chief Executive Officer
     
  Address for Notice:
   

PennantPark SBIC LP

590 Madison Avenue

15 th Floor

New York, New York 10022

Attention: Michael Appelbaum

Email: appelbaum@pennantpark.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  SOUTHPAW CREDIT OPPORTUNITY MASTER FUND LP
   
  By: /s/ Kevin Wyman
    Name: Kevin Wyman
   

Title: Managing Member of General Partner,

Southpaw GP LLC

     
  Address for Notice:
   

Southpaw Credit Opportunity Master Fund LP

c/o Southpaw GP LLC

2 Greenwich Office Park

1 st Floor

Greenwich, Connecticut 06831

Attention: Ceki Aluf Medina

Email: cam@southpawassetmanagement.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  CM FINANCE SPV, LTD
   
  By: /s/ Rocco DelGuercio
    Name: Rocco DelGuercio
    Title: Chief Financial Officer
     
  Address for Notice:
   

CM Finance SPV, Ltd

601 Lexington Ave

26 th Floor

New York, New York 10022

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  PIPER JAFFRAY & CO.
   
  By: /s/ Andrew Schroeder
    Name: Andrew Schroeder
    Title: Managing Director
     
  Address for Notice:
   

Piper Jaffray & Co.

800 Nicollet Mall

Minneapolis, Minnesota 55402

Attention: James Martin

Email: james.m.martin@pjc.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

  BLACKROCK CAPITAL INVESTMENT CORPORATION
   
  By: /s/ Laurence Paredes
    Name: Laurence Paredes
    Title: General Counsel
     
  Address for Notice:
   

BlackRock Capital Investment Corporation

c/o BlackRock Capital Investment Corporation

40 East 52 nd Street

New York, New York 10022

Attention: Marshall Merriman

Email: marshall.merriman@blackrock.com

 

[Signature Page to Amended and Restated Registration Rights Agreement]

 

 

 

 

eXHIBIT a

 

ADOPTION AGREEMENT

 

This Adoption Agreement (“ Adoption Agreement ”) is executed by the undersigned transferee (“ Transferee ”) pursuant to the terms of the Amended and Restated Registration Rights Agreement, dated as of November 9, 2018, between U.S. Well Services, Inc. (formerly Matlin & Partners Acquisition Corporation) (the “ Company ”) and the Holders party thereto (as amended from time to time, the “ Registration Rights Agreement ”). Capitalized terms used and not otherwise defined in this Adoption Agreement have the meanings given to them in the Registration Rights Agreement.

 

By the execution of this Adoption Agreement, Transferee agrees as follows:

 

1.           Acknowledgement . Transferee acknowledges that Transferee is acquiring the securities indicated under Transferee’s signature below (the “ Acquired Securities ”) subject to the terms and conditions set forth in the Registration Rights Agreement.

 

2.           Agreement . Transferee (a) agrees that the Acquired Securities shall be bound by and subject to the terms of the Registration Rights Agreement, pursuant to the terms thereof, and (b) hereby adopts the Registration Rights Agreement with the same force and effect as Transferee were originally a party thereto.

 

3.            Joinder . The spouse of Transferee, if applicable, executes this Adoption Agreement to acknowledge its fairness and that it is in such spouse’s best interest, and to bind such spouse’s community interest, if any, in the Acquired Securities to the terms of the Registration Rights Agreement.

  Signature :
   
   
  Address for Notice:

     
     
     
  Attention:    
  Email:    

 

 

Acquired Securities:

   
  Type (check applicable box):   Number:
  ¨ Sponsor Class A Shares    
  ¨ Sponsor Private Placement Warrants    
  ¨ Shares of Class A Common Stock issued on exercise of Sponsor Private Placement Warrants    
  ¨ Blocker Merger Class A Shares    
  ¨ Company Merger Units and Company Merger Class B Shares    
  ¨ Exchange Class A Shares    
  ¨ Crestview Class A Shares    
  ¨ Crestview Private Placement Warrants    
  ¨ Shares of Class A Common Stock issued on exercise of Crestview Private Placement Warrants    
  ¨ CEO Bonus Class A Shares    
  ¨ Lender Class A Shares    
  ¨ Piper Class A Shares    

 

 

 

 

 

Exhibit 10.1

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

USWS HOLDINGS LLC

 

DATED AS OF NOVEMBER 9, 2018

 

THE LIMITED LIABILITY COMPANY INTERESTS IN USWS HOLDINGS LLC HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS, AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE MANAGER AND THE APPLICABLE MEMBER. SUCH INTERESTS ALSO MAY BE SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO AN AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 9, 2018 BY AND AMONG U.S. WELL SERVICES, INC. AND THE HOLDERS PARTY THERETO. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH LIMITED LIABILITY COMPANY INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

 

 

 

 

TABLE OF CONTENTS

 

Article I DEFINITIONS 3
Section 1.1. Definitions 3
Section 1.2. Interpretive Provisions 15
     
Article II ORGANIZATION OF THE LIMITED LIABILITY COMPANY 15
Section 2.1. Formation 15
Section 2.2. Filings 15
Section 2.3. Amended and Restated Limited Liability Company Agreement 16
Section 2.4. Name 16
Section 2.5. Registered Office; Registered Agent 16
Section 2.6. Principal Place of Business 16
Section 2.7. Purpose; Powers 16
Section 2.8. Term 16
Section 2.9. Intent 16
     
Article III MEmbers; units; CAPITAL CONTRIBUTIONS 17
Section 3.1. Members 17
Section 3.2. Authorized Units; General Provisions With Respect to Units 17
Section 3.3. Voting Rights 18
Section 3.4. Transactions at Effective Time; Warrants; Capital Contributions 18
Section 3.5. Issuance of Additional Units or Interests; Exchanges and Repurchases; Recapitalizations 19
Section 3.6. Other Matters 21
Section 3.7. Exchange Right of Members 21
     
Article IV capital accounts; ALLOCATIONS OF PROFITS AND LOSSES 28
Section 4.1. Capital Accounts 28
Section 4.2. Profits and Losses 28
Section 4.3. Special Allocations 29
Section 4.4. Allocations for Tax Purposes in General 31
Section 4.5. Other Allocation Rules 31
     
Article V DISTRIBUTIONS 32
Section 5.1. Distributions 32
Section 5.2. Tax Distributions 33
Section 5.3. Distribution Upon Withdrawal 34
     
Article VI MANAGEMENT 34
Section 6.1. The Manager; Fiduciary Duties 34
Section 6.2. Officers 34
Section 6.3. Warranted Reliance by Officers on Others 35
Section 6.4. Indemnification 36
Section 6.5. Maintenance of Insurance or Other Financial Arrangements 36

 

  -i-  

 

 

Section 6.6. Election of Manager 37
Section 6.7 Resignation or Removal of Manager; Vacancy 37
Section 6.8. No Inconsistent Obligations 37
Section 6.9. Compensation; Certain Costs and Expenses 37
     
Article VII ROLE OF MEMBERS 38
Section 7.1. Rights or Powers 38
Section 7.2. Voting 38
Section 7.3. Various Capacities 39
Section 7.4. Withdrawal of PubCo 39
Section 7.5. Reclassification Events of PubCo 39
     
Article VIII TRANSFERS OF INTERESTS 40
Section 8.1. Restrictions on Transfer 40
Section 8.2. Notice of Transfer 40
Section 8.3. Transferee Members 41
Section 8.4. Legend 41
     
Article IX ACCOUNTING 41
Section 9.1. Books of Account 41
Section 9.2. Tax Elections 42
Section 9.3. Tax Returns 42
Section 9.4. Partnership Representative 42
Section 9.5. Withholding Tax Payments and Obligations 43
     
Article X DISSOLUTION AND TERMINATION 44
Section 10.1. Liquidating Events 44
Section 10.2. Bankruptcy 45
Section 10.3. Procedure 45
Section 10.4. Rights of Members 46
Section 10.5. Notices of Dissolution 46
Section 10.6. Reasonable Time for Winding Up 46
Section 10.7. No Deficit Restoration 46
Section 10.8. Distributions In Kind 46
     
Article XI GENERAL 47
Section 11.1. Amendments; Waivers 47
Section 11.2. Further Assurances 48
Section 11.3. Successors and Assigns 48
Section 11.4. Entire Agreement 48
Section 11.5. Rights of Members Independent 48
Section 11.6. Governing Law 48
Section 11.7. Jurisdiction and Venue 48
Section 11.8. Headings 49
Section 11.9. Counterparts 49
Section 11.10. Notices 49
Section 11.11. Representation By Counsel; Interpretation 49
Section 11.12. Severability 49
Section 11.13. Expenses 50
Section 11.14. No Third-Party Beneficiaries 50

 

  -ii-  

 

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

USWS HOLDINGS LLC

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as amended, supplemented or restated from time to time, this “ Agreement ”) of USWS Holdings LLC, a Delaware limited liability company (the “ Company ”), is made and entered into as of November 9, 2018, by and among the Company, U.S. Well Services, Inc., a Delaware corporation formerly known as Matlin & Partners Acquisition Corporation (“ PubCo ”), in its capacity as the initial Manager, and each Person who is or at any time becomes a Member in accordance with the terms of this Agreement and the Act. Capitalized terms used herein and not otherwise defined have the respective meanings set forth in Section 1.1 .

 

RECITALS

 

WHEREAS, the Company was formed under the laws of the State of Delaware upon the filing with the Secretary of State of the State of Delaware of a certificate of formation (as amended from time to time, the “ Certificate of Formation ”) on December 29, 2016;

 

WHEREAS, prior to the Effective Time, the operation and management of the Company is governed by the Limited Liability Company Agreement of USWS Holdings LLC dated as of February 2, 2017, as amended by the Amendment to the Limited Liability Company Agreement of USWS Holdings LLC dated as of July 13, 2018 (as so amended, the “ Existing LLC Agreement ”);

 

WHEREAS, PubCo, MPAC Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of PubCo (“ Merger Sub ”), the Company, the Blocker Companies and, solely for purposes described therein, the Seller Representative, entered into that certain Merger and Contribution Agreement dated as of July 13, 2018 (as amended prior to the Effective Time, the “ Merger and Contribution Agreement ”);

 

WHEREAS, pursuant to the Merger and Contribution Agreement and in connection with the Closing (as defined in the Merger and Contribution Agreement), on the date of this Agreement:

 

(a)          each of the Blocker Companies was merged with and into PubCo pursuant to the Blocker Merger, and, at the Blocker Merger Effective Time: (i) the separate existence of each of the Blocker Companies ceased; (ii) PubCo continued as the surviving corporation of the Blocker Merger; (iii) PubCo became the owner of the Old Units owned by each of the Blocker Companies immediately prior to the Blocker Merger Effective Time (such Old Units, the “ PubCo Acquired Old Units ”); and (iv) the Equity Securities of the Blocker Companies issued and outstanding immediately prior to the Blocker Merger Effective Time were converted into the right to receive, and PubCo issued to the owners of such Equity Interests, an aggregate of 13,532,331 shares of Class A Stock;

 

  - 1 -  

 

 

(b)          immediately following the Blocker Merger Effective Time, PubCo contributed to Merger Sub, as a capital contribution in respect of the limited liability company interests in Merger Sub held by PubCo (the “ Merger Sub Interests ”): (i) cash in the amount of $245,696,148.32; (ii) 14,546,755 shares of Class B Stock; and (iii) 1,824,336 shares of Class A Stock (collectively, the “ PubCo Contribution ”);

 

(c)          immediately following the PubCo Contribution, Merger Sub was merged with and into the Company pursuant to the Company Merger, and, at the Company Merger Effective Time: (i) the separate existence of Merger Sub ceased; (ii) the Company continued as the surviving limited liability company of the Company Merger; (iii) the Merger Sub Interests were converted into the right to receive, and the Company issued to PubCo, (A) 36,547,345 Common Units and (B) the Warrants; (iv) the PubCo Acquired Old Units were converted into an aggregate of 13,532,331 Common Units; (v) the Old Units issued and outstanding and held by the Continuing Members immediately prior to the Company Merger Effective Time (the “ Continuing Member Old Units ”) were converted into, in the aggregate, (A) 14,546,755 Common Units and (B) the right to receive from the Company the shares of Class B Stock contributed to Merger Sub by PubCo in the PubCo Contribution; and (vi) all Old Units issued and outstanding immediately prior to the Company Merger Effective Time, other than the PubCo Acquired Old Units and the Continuing Member Old Units, were canceled without conversion into Units or payment of any other consideration therefor; and

 

(d)          immediately following the Company Merger Effective Time: (i) the Company delivered to the Continuing Members the shares of Class B Stock contributed to Merger Sub by PubCo in the PubCo Contribution; and (ii) the Company delivered the shares of Class A Stock contributed to Merger Sub by PubCo in the PubCo Contribution to certain Persons in satisfaction of certain obligations owed by the Company or its Subsidiaries to such Persons.

 

WHEREAS, pursuant to the Merger and Contribution Agreement, the Existing LLC Agreement shall be amended and restated to be in the form of this Agreement effective as of the Company Merger Effective Time, and, accordingly, this Agreement amends, restates and supersedes the Existing LLC Agreement in its entirety as of the Effective Time.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows, effective as of the Effective Time:

 

  - 2 -  

 

 

Article I

 

DEFINITIONS

 

Section 1.1.           Definitions .  As used in this Agreement and the Schedules and Exhibits attached to this Agreement, the following definitions shall apply:

 

A&R Registration Rights Agreement ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Act ” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq., as amended from time to time (or any corresponding provisions of succeeding law).

 

Action ” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Entity.

 

Adjusted Capital Account Deficit ” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account at the end of any Fiscal Year, with the following adjustments:

 

(a)          credit to such Capital Account any amount that such Member is obligated to restore under Treasury Regulations Section 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant to the next to last sentences of the Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) after taking into account thereunder any changes during such Fiscal Year in Company Minimum Gain and in the minimum gain attributable to any Member Nonrecourse Debt; and

 

(b)          debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

 

This definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For these purposes, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; provided that, for purposes of this Agreement, (i) no Member shall be deemed an Affiliate of the Company or any of its Subsidiaries and (ii) none of the Company or any of its Subsidiaries shall be deemed an Affiliate of any Member.

 

Agreement ” has the meaning given to such term in the preamble to this Agreement.

 

  - 3 -  

 

 

Assumed Tax Liability ” means, with respect to any Member as of any Tax Distribution Date, an amount equal to the federal, state and local income taxes (including any applicable estimated taxes) that the Partnership Representative reasonably estimates in good faith would be due from such Member for all taxable periods (or portions thereof) of the Company ending on such Tax Distribution Date, (i) assuming such Member were an individual who earned solely the items of income, gain, deduction, loss, and/or credit allocated to such Member pursuant to Article IV for such taxable periods (or portions thereof), (ii) after taking proper account of loss carryforwards available to individual taxpayers resulting from losses allocated to the Members by the Company, to the extent not taken into account in prior taxable periods, and (iii) assuming that such Member is subject to tax at the Assumed Tax Rate. For purposes of determining the Assumed Tax Liability of any Member, (x) adjustments by reason of Section 734(b) of the Code shall be taken into account, (y) adjustments by reason of Section 743(b) of the Code shall be taken into account and (z) any items allocated to the Members pursuant to Section 704(c) of the Code and the Treasury Regulations promulgated thereunder shall not be taken into account.

 

Assumed Tax Rate ” means, for any taxable period, the highest marginal effective rate of federal, state and local income tax applicable to an individual resident in New York City (or, if higher, a corporation doing business in New York City) for such taxable period, determined by applying the rates applicable to ordinary income (in cases where taxes are being determined on ordinary income allocated to a Member) and capital gains (in cases where taxes are being determined on capital gains allocated to a Member), and by assuming that state and local income taxes are not deductible in computing a Member’s liability for federal income tax.

 

beneficially own ” and “ beneficial owner ” shall be as defined in Rule 13d-3 of the rules promulgated under the Exchange Act.

 

Black-Out Period ” means any “black-out” or similar period under PubCo’s policies covering trading in PubCo’s securities to which the applicable Exchanging Member is subject, which period restricts the ability of such Exchanging Member to immediately resell shares of Class A Common Stock to be delivered to such Exchanging Member in connection with an Exchange Notice.

 

Blocker Company ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Blocker Merger ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Blocker Merger Effective Time ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in Houston, Texas.

 

Call Election Notice ” has the meaning given to such term in Section 3.7(k) .

 

Capital Account ” means, with respect to any Member, the Capital Account maintained for such Member in accordance with Section 4.1 .

 

  - 4 -  

 

 

Capital Contributions ” means, with respect to any Member, the amount of cash and the initial Gross Asset Value of any property (other than cash) contributed to the Company by such Member. Any reference to the Capital Contributions of a Member will include the Capital Contributions made by a predecessor holder of such Member’s Units to the extent the Capital Contribution was made in respect of Units Transferred to such Member.

 

Cash Election ” has the meaning given to such term in Section 3.7(d) .

 

Cash Election Amount ” means, with respect to a particular Exchange, an amount of cash equal to the value of the shares of Class A Stock that would be received in such Exchange as of the date of receipt by the Company of the Exchange Notice with respect to such Exchange pursuant to Section 3.7 (the “ Valuation Date ”), decreased by any distributions received by the Exchanging Member with respect to the Common Units that are the subject of the Exchange following the date of receipt by the Company of the Exchange Notice where the record date for such distribution was after the date of receipt of such Exchange Notice. For this purpose, the value of a share of Class A Stock shall equal (i) the volume weighted average price of a share of Class A Stock for the ten trading days ending on the trading day prior to the Valuation Date or (ii) the Fair Market Value of such shares as of the Valuation Date.

 

Cash Election Notice ” has the meaning given to such term in Section 3.7(d) .

 

Certificate of Formation ” has the meaning given to such term in the recitals of this Agreement.

 

Change of Control Exchange Date ” has the meaning given to such term in Section 3.7(d) .

 

Class A Stock ” means, as applicable, (i) the Class A Common Stock, par value $0.0001 per share, of PubCo or (ii) following any consolidation, merger, reclassification or other similar event involving PubCo, any shares or other securities of PubCo or any other Person or cash or other property that becomes payable in consideration for the Class A Stock or into which the Class A Stock is exchanged or converted as a result of such consolidation, merger, reclassification or other similar event.

 

Class B Stock ” means, as applicable, (i) the Class B Common Stock, par value $0.0001 per share, of PubCo or (ii) following any consolidation, merger, reclassification or other similar event involving PubCo, any shares or other securities of PubCo or any other Person or cash or other property that becomes payable in consideration for the Class B Stock or into which the Class B Stock is exchanged or converted as a result of such consolidation, merger, reclassification or other similar event.

 

Code ” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law).

 

Commission ” means the U.S. Securities and Exchange Commission.

 

Common Unit ” means a Unit having the rights and obligations specified with respect to the Common Units in this Agreement.

 

Company ” has the meaning given to such term in the preamble to this Agreement.

 

  - 5 -  

 

 

Company Indemnitees ” has the meaning given to such term in Section 6.4.

 

Company Merger ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Company Merger Effective Time ” has the meaning given to such term in the Merger and Contribution Agreement.

 

Company Minimum Gain ” has the meaning of “partnership minimum gain” set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d). It is further understood that Company Minimum Gain shall be determined in a manner consistent with the rules of Treasury Regulations Section 1.704-2(b)(2), including the requirement that if the adjusted Gross Asset Value of property subject to one or more Nonrecourse Liabilities differs from its adjusted tax basis, Company Minimum Gain shall be determined with reference to such Gross Asset Value.

 

Continuing Member ” means each Member, other than PubCo, party to this Agreement at the Effective Time.

 

Continuing Member Old Units ” has the meaning given to such term in the recitals of this Agreement.

 

Contract ” means any written agreement, contract, lease, sublease, license, sublicense, obligation, promise or undertaking.

 

control ” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by Contract, credit arrangement or otherwise.

 

Credit Agreement ” means the Credit Agreement (as defined in the Merger and Contribution Agreement), as amended on or before the date hereof and as it thereafter may be amended, restated, modified, supplemented, renewed, refunded, replaced or refinanced from time to time.

 

Depreciation ” means, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, except that with respect to any property the Gross Asset Value of which differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted basis; provided, however , that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation with respect to such asset shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Partnership Representative.

 

Direct Exchange Right ” has the meaning given to such term in Section 3.7(j) .

 

  - 6 -  

 

 

DGCL ” means the General Corporation Law of the State of Delaware, as amended from time to time (or any corresponding provisions of succeeding law).

 

Effective Time ” means the Company Merger Effective Time.

 

Effective Time Capital Account Balance ” means, with respect to any Member, the positive Capital Account balance of such Member as of the Effective Time, the amount or deemed value of which is set forth on Exhibit A .

 

Effective Time Transactions ” has the meaning given to such term in Section 3.4(a) .

 

Eligible PubCo Offer Securities ” has the meaning given to such term in Section 3.7(l)) .

 

Equity Plan ” means any stock or equity purchase plan, restricted stock or equity plan or other similar equity compensation plan now or hereafter adopted by PubCo or any of its Subsidiaries.

 

Equity Securities ” means (a) with respect to a partnership, limited liability company or similar Person, any and all units, interests, rights to purchase, warrants, options or other equivalents of, or other ownership interests in, any such Person as well as debt or equity instruments convertible, exchangeable or exercisable into any such units, interests, rights or other ownership interests and (b) with respect to a corporation, any and all shares, interests, participation or other equivalents (however designated) of corporate stock, including all common stock and preferred stock, or warrants, options or other rights to acquire any of the foregoing, including any debt instrument convertible or exchangeable into any of the foregoing.

 

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

 

Exchange ” has the meaning given to such term in Section 3.7(a) .

 

Exchange Act ” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, as the same may be amended from time to time (or any corresponding provisions of succeeding law).

 

Exchange Date ” has the meaning given to such term in Section 3.7(f) .

 

Exchange Notice ” has the meaning given to such term in Section 3.7(c) .

 

Exchange Right ” has the meaning given to such term in Section 3.7(a) .

 

Exchanging Member ” has the meaning given to such term in Section 3.7(c) .

 

Existing LLC Agreement ” has the meaning given to such term in the recitals of this Agreement.

 

  - 7 -  

 

 

Fair Market Value ” means the fair market value of any property based on the amount the Company would receive in an all cash sale of such property in an arm’s-length transaction with an unaffiliated third party, with neither party having compulsion to buy or sell, consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of Fair Market Value, as such amount is determined by the Manager (or if pursuant to Article X, the Winding-Up Person) in its good faith judgment using information and data it deems to be pertinent.

 

Fiscal Year ” means the fiscal year of the Company, which shall end on December 31 of each calendar year unless, for federal income tax purposes, another taxable year is required. The Company shall have the same fiscal year for federal income tax purposes and for accounting purposes.

 

GAAP ” means generally acceptable accounting principles at the time.

 

Good Faith ” means a Person having acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal proceeding, having had no reasonable cause to believe such Person’s conduct was unlawful.

 

Governmental Entity ” means any federal, national, supranational, state, provincial, local, foreign or other government, governmental, stock exchange, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

 

Gross Asset Value ” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

 

(a)           the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross Fair Market Value of such asset as of the date of such contribution;

 

(b)           the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross Fair Market Values as of the following times: (i) the acquisition of an interest (or additional interest) in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution to the Company or in exchange for the performance of more than a de minimis amount of services to or for the benefit of the Company; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company; (iii) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)( g )(1); (iv) the acquisition of an interest in the Company by any new or existing Member upon the exercise of a noncompensatory option in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)( s ); or (v) any other event to the extent determined by the Partnership Representative to be permitted and necessary to properly reflect Gross Asset Values in accordance with the standards set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)( q ); provided, however , that adjustments pursuant to clauses (i), (ii) and (iv) above shall be made only if the Partnership Representative reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company. If any noncompensatory options are outstanding upon the occurrence of an event described in this paragraph (b)(i) through (b)(v), the Company shall adjust the Gross Asset Values of its properties in accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)( f )(1) and 1.704-1(b)(2)(iv)( h )(2);

 

  - 8 -  

 

 

(c)           the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross Fair Market Value of such asset on the date of such distribution;

 

(d)           the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( m ) and subsection (f)  in the definition of “Profits” or “Losses” below or Section 4.3(g) ; provided , however , that the Gross Asset Value of a Company asset shall not be adjusted pursuant to this subsection to the extent the Partnership Representative determines that an adjustment pursuant to subsection (b)  of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d) ; and

 

(e)           if the Gross Asset Value of a Company asset has been determined or adjusted pursuant to subsections (a) , (b)  or (d)  of this definition of Gross Asset Value, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits, Losses and other items allocated pursuant to Article IV .

 

Imputed Underpayment Amount ” has the meaning given to such term in Section 9.5(b) .

 

Indebtedness ” means (a) all indebtedness for borrowed money (including capitalized lease obligations, sale-leaseback transactions or other similar transactions, however evidenced), (b) any other indebtedness that is evidenced by a note, bond, debenture, draft or similar instrument, (c) notes payable and (d) lines of credit and any other agreements relating to the borrowing of money or extension of credit.

 

Interest ” means the entire interest of a Member in the Company, including the Units and all of such Member’s rights, powers and privileges under this Agreement and the Act.

 

Joinder ” means a joinder to this Agreement substantially in the form of Exhibit B to this Agreement.

 

Law ” means any federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code or order of any Governmental Entity.

 

Legal Action ” has the meaning given to such term in Section 11.7 .

 

Liability ” means any liability or obligation, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due, regardless of when asserted.

 

Liquidating Events ” has the meaning given to such term in Section 10.1 .

 

Loss ” means any and all losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including reasonable attorneys’ fees and expenses, but excluding any allocation of corporate overhead, internal legal department costs and other internal costs and expenses).

 

  - 9 -  

 

 

Majority Members ” means the members (which may include PubCo) holding not less than a majority of the Units then outstanding; provided , that if as of any date of determination, a majority of the Units are held by PubCo or any Affiliate controlled by PubCo, then “Majority Members” shall mean PubCo together with the Members holding at least a majority of the Units (excluding Units held by PubCo or its controlled Affiliates) then outstanding.

 

Manager ” has the meaning given to such term in Section 6.1(a) .

 

Material Subsidiary ” means any direct or indirect subsidiary of the Company that, as of the date of determination, represents more than (a) 50% of the consolidated tangible net assets of the Company or (b) 50% of the consolidated net income of the Company, before interest, taxes, depreciation and amortization (calculated in a manner substantially consistent with the similar definition under the Credit Agreement).

 

Member ” means any Person that executes this Agreement as a Member, and any other Person admitted to the Company as an additional or substituted Member, that has not made a disposition of such Person’s entire Interest.

 

Member Minimum Gain ” has the meaning ascribed to “partner nonrecourse debt minimum gain” set forth in Treasury Regulations Section 1.704-2(i).

 

Member Nonrecourse Debt ” has the meaning of “partner nonrecourse debt” set forth in Treasury Regulations Section 1.704-2(b)(4).

 

Member Nonrecourse Deductions ” has the meaning of “partner nonrecourse deductions” set forth in Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).

 

Merger and Contribution Agreement ” has the meaning given to such term in the recitals of this Agreement.

 

Merger Sub ” has the meaning given to such term in the recitals of this Agreement.

 

Merger Sub Interests ” has the meaning given to such term in the recitals of this Agreement.

 

National Securities Exchange ” means an exchange registered with the Commission under the Exchange Act.

 

Nonrecourse Deductions ” has the meaning given to such term in Treasury Regulations Section 1.704-2(b).

 

Nonrecourse Liability ” has the meaning given to such term in Treasury Regulations Section 1.704-2(b)(3).

 

Officer ” means each Person designated as an officer of the Company pursuant to and in accordance with the provisions of Section 6.2 , subject to any resolution of the Manager appointing such Person as an officer or relating to such appointment.

 

  - 10 -  

 

 

Old Units ” means Units, as such term is defined in the Existing LLC Agreement.

 

Partnership Representative ” means the “partnership representative” as defined in Code Section 6223(a) and as appointed in Section 9.4 .

 

Permitted Transferee ” means, with respect to any Member, (a) any Affiliate of such Member; (b) any successor entity of such Member; (c) by any Continuing Member to the holders of equity interests in such Continuing Member in connection with the dissolution of such Continuing Member; (d) a trust established by or for the benefit of a Member of which only such Member and his or her immediate family members are beneficiaries; (e) any Person established for the benefit of, and beneficially owned solely by, an entity Member or the sole individual direct or indirect owner of an entity Member; and (f) upon an individual Member’s death, an executor, administrator or beneficiary of the estate of the deceased Member.

 

Person ” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

 

Plan Asset Regulations ” means the regulations issued by the U.S. Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations, or any successor regulations as the same may be amended from time to time.

 

President and Chief Executive Officer ” has the meaning given to such term in Section 6.2(b) .

 

Prime Rate ” means, on any date of determination, a rate per annum equal to the rate of interest most recently published by The Wall Street Journal as the “prime rate” at large U.S. money center banks.

 

Proceeding ” has the meaning given to such term in Section 6.4 .

 

Profits ” or “ Losses ” means, for each Fiscal Year, an amount equal to the Company’s taxable income or loss for such Fiscal Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments (without duplication):

 

(f)            any income or gain of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss;

 

(g)           any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( i ), and not otherwise taken into account in computing Profits or Losses, shall be subtracted from such taxable income or loss;

 

  - 11 -  

 

 

(h)           in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b)  or (c)  or the definition of Gross Asset Value above, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of the Company asset) or an item of loss (if the adjustment decreases the Gross Asset Value of the Company asset) from the disposition of such asset and shall, except to the extent allocated pursuant to Section 4.3 , be taken into account for purposes of computing Profits or Losses;

 

(i)            gain or loss resulting from any disposition of Company assets with respect to which gain or loss is recognized for federal income tax purposes shall be computed with reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value;

 

(j)            in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation;

 

(k)           to the extent an adjustment to the adjusted tax basis of any asset pursuant to Code Section 734(b) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( m )(4), to be taken into account in determining Capital Account balances as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or an item of loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and

 

(l)            any items of income, gain, loss or deduction which are specifically allocated pursuant to the provisions of Section 4.3 shall not be taken into account in computing Profits or Losses for such Fiscal Year, but such items available to be specially allocated pursuant to Section 4.3 will be determined by applying rules analogous to those set forth in subparagraphs (a)  through (f)  above.

 

Property ” means all real and personal property owned by the Company from time to time, including both tangible and intangible property.

 

PubCo ” has the meaning given to such term in the preamble to this Agreement.

 

PubCo Acquired Old Units ” has the meaning given to such term in the recitals of this Agreement.

 

PubCo Change in Control ” shall be deemed to have occurred if or upon:

 

(m)          both the stockholders of PubCo and the board of directors of PubCo approve, in accordance with PubCo’s certificate of incorporation and applicable Law, the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of PubCo’s assets (determined on a consolidated basis), including the Equity Interests in the Company, to any Person or group (as such term is defined in Section 13(d)(3) of the Exchange Act), other than to any directly or indirectly wholly owned Subsidiary of PubCo, and such sale, lease or transfer is consummated;

 

  - 12 -  

 

 

(n)          both the stockholders of PubCo and the board of directors of PubCo approve, in accordance with PubCo’s certificate of incorporation and applicable Law, a merger or consolidation of PubCo with any other Person, other than a merger or consolidation which would result in the voting Equity Securities of PubCo outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting Equity Securities of the surviving entity) in excess of 50% of the total voting power represented by the voting Equity Securities of PubCo or such surviving entity outstanding immediately after such merger or consolidation, and such merger or consolidation is consummated; or

 

(o)          the acquisition, directly or indirectly, by any Person or group (as such term is defined in Section 13(d)(3) of the Exchange Act) (other than (a) a trustee or other fiduciary holding securities under an employee benefit plan of PubCo, or (b) a corporation or other entity owned, directly or indirectly, by all of the stockholders of PubCo in substantially the same proportions as their ownership of stock of PubCo) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) in excess of 50% of the aggregate voting power of the voting Equity Securities of PubCo; provided , that the board of directors of PubCo recommends or otherwise approves or determines that such acquisition is in the best interest of PubCo and its stockholders.

 

PubCo Common Stock ” means all classes and series of common stock of PubCo, including the Class A Stock and the Class B Stock.

 

PubCo Contribution ” has the meaning given to such term in the recitals of this Agreement.

 

PubCo Offer ” has the meaning given to such term in Section 3.7(l)) .

 

PubCo Warrants ” means the Warrants, as such term is defined in the PubCo Warrant Agreement.

 

PubCo Warrant Agreement ” means the Warrant Agreement dated as of March 9, 2017 by and between PubCo and Continental Stock Transfer & Trust Company, as warrant agent.

 

PubCo Warrant Price ” means the Warrant Price, as such term in defined in the PubCo Warrant Agreement.

 

Reclassification Event ” means any of the following: (i) any reclassification or recapitalization of PubCo Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination or any transaction subject to Section 3.5(d) ), (ii) any merger, consolidation or other combination involving PubCo, or (iii) any sale, conveyance, lease, or other disposal of all or substantially all the properties and assets of PubCo to any other Person, in each of clauses (i), (ii) or (iii), as a result of which holders of PubCo Common Stock shall be entitled to receive cash, securities or other property for their shares of PubCo Common Stock.

 

Regulatory Allocations ” is defined in Section 4.3(h) .

 

Retraction Notice ” has the meaning given to such term in Section 3.7(d) .

 

Revocation Notice ” is defined in Section 3.7(k) .

 

  - 13 -  

 

 

Securities Act ” means the Securities Act of 1933, and the rules and regulations promulgated thereunder, as the same may be amended from time to time (or any corresponding provisions of succeeding law).

 

Subsidiary ” means, with respect to any specified Person, any other Person with respect to which such specified Person (a) has, directly or indirectly, the power, through the ownership of securities or otherwise, to elect a majority of directors or similar managing body or (b) beneficially owns, directly or indirectly, a majority of such Person’s Equity Securities.

 

Tax Advance ” is defined in Section 5.2(b) .

 

Tax Advance Eligible Member ” means any Member (other than PubCo) that the Partnership Representative reasonably determines is not subject to Section 402 of the Sarbanes-Oxley Act of 2002.

 

Tax Distribution Date ” means any date that is two Business Days prior to the date on which estimated federal income tax payments are required to be made by calendar year corporate taxpayers and the due date for federal income tax returns of corporate calendar year taxpayers (without regard to extensions).

 

Transfer ” means, as a noun, any voluntary or involuntary, direct or indirect (whether through a change of control of the Transferor or any Person that controls the Transferor, the issuance or transfer of Equity Securities of the Transferor, by operation of Law or otherwise), transfer, sale, pledge or hypothecation or other disposition and, as a verb, voluntarily or involuntarily, directly or indirectly (whether through a change of control of the Transferor or any Person that controls the Transferor, the issuance or transfer of Equity Securities of the Transferor or any Person that controls the Transferor, by operation of Law or otherwise), to transfer, sell, pledge or hypothecate or otherwise dispose of. The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word “Transfer” shall have the correlative meanings.

 

Transfer Agent ” has the meaning given to such term in Section 3.7(c) .

 

Treasury Regulations ” means the regulations promulgated under the Code by the United States Department of the Treasury.

 

Underwritten Offering ” has the meaning given to such term in the A&R Registration Rights Agreement.

 

Unit ” means a unit representing a fractional part of the Interests of a Member and includes a Common Unit.

 

Unit Register ” has the meaning given to such term in Section 3.2(d) .

 

Valuation Date ” has the meaning given to such term in the definition of “Cash Election Amount.”

 

Warrant Exercise Price ” has the meaning given to such term in Section 3.4(b) .

 

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Warrants ” has the meaning given to such term in Section 3.4(a) .

 

Winding-Up Person ” has the meaning given to such term in Section 10.3(a) .

 

Withholding Payment ” has the meaning given to such term in Section 9.5(b) .

 

Section 1.2.           Interpretive Provisions . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

 

(a)          the terms defined in Section 1.1 have the meanings assigned to them in Section 1.1 and are applicable to the singular as well as the plural forms of such terms;

 

(b)          all accounting terms not otherwise defined herein have the meanings assigned under GAAP;

 

(c)          all references to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars and all payments hereunder shall be made in United States dollars;

 

(d)          when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;

 

(e)          whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”;

 

(f)          “or” is not exclusive;

 

(g)          pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms; and

 

(h)          the words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

Article II

ORGANIZATION OF THE LIMITED LIABILITY COMPANY

 

Section 2.1.            Formation . The Company has been formed as a limited liability company pursuant to the provisions of the Act by the filing of the Certificate of Formation in accordance with the Act.

 

Section 2.2.           Filings . The Members shall execute such further documents (including amendments to the Certificate of Formation) and take such further action as is appropriate to comply with the requirements of Law for the formation or operation of a limited liability company in Delaware and in all states and other jurisdictions where the Company may conduct its business.

 

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Section 2.3.           Amended and Restated Limited Liability Company Agreement . The Company, the Manager and the Members hereby execute this Agreement for the purpose of continuing the affairs of the Company and the conduct of its business in accordance with the provisions of the Act. The Company, the Manager and the Members hereby agree that during the term of the Company set forth in Section 2.8 , the rights and obligations of the Members and the Manager with respect to the Company will be determined in accordance with the terms and conditions of this Agreement and the Act. On any matter on which this Agreement is silent, the Act shall control. No provision of this Agreement shall be in violation of the Act and, to the extent any provision of this Agreement is in violation of the Act, such provision shall be void and of no effect to the extent of such violation without affecting the validity of the other provisions of this Agreement. Where the Act provides that a provision of the Act shall apply “unless otherwise provided in a limited liability company agreement” or words of similar effect, the provisions of this Agreement shall in each instance control. It is expressly agreed that this Agreement does not provide for contractual appraisal rights pursuant Section 18-210 of the Act.

 

Section 2.4.           Name . The name of the Company is “USWS Holdings LLC” and all business of the Company shall be conducted in such name or, in the discretion of the Manager, under any other name.

 

Section 2.5.           Registered Office; Registered Agent . The location of the registered office of the Company in the State of Delaware is 850 New Burton Road, Suite 201, City of Dover, County of Kent, 19904. The registered agent of the Company for service of process at such address is National Corporate Research, Ltd. The Manager may from time to time change the Company’s registered office and registered agent in the State of Delaware.

 

Section 2.6.           Principal Place of Business . The principal place of business of the Company shall be located in such place as is determined by the Manager from time to time.

 

Section 2.7.           Purpose; Powers . The nature of the business or purposes to be conducted or promoted by the Company is to engage in any lawful act or activity for which limited liability companies may be formed under the Act. The Company shall have the power and authority to take any and all actions and engage in any and all activities necessary, appropriate, desirable, advisable, ancillary or incidental to the accomplishment of the foregoing purpose.

 

Section 2.8.           Term . The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware in accordance with the Act and shall continue indefinitely. The Company may be dissolved and its affairs wound up only in accordance with Article X .

 

Section 2.9.           Intent . It is the intent of the Members that the Company be operated in a manner consistent with its treatment as a partnership for federal and applicable state income tax purposes. It is also the intent of the Members that the Company not be operated or treated as a partnership for purposes of Section 303 of the Federal Bankruptcy Code. None of the Company, the Manager or any Member shall take any action inconsistent with the express intent of the parties hereto as set forth in this Section 2.9 .

 

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Article III

MEmbers; units; CAPITAL CONTRIBUTIONS

 

Section 3.1.           Members . The Continuing Members were previously admitted as Members in accordance with the terms of the Existing LLC Agreement. At the Effective Time, each Continuing Member shall remain a Member having the Interest represented by the Common Units into which the Continuing Member Old Units held by such Continuing Member were converted at the Company Merger Effective Time pursuant to the Company Merger. PubCo was admitted as a Member in accordance with the terms of the Existing LLC Agreement upon its acquisition of the PubCo Acquired Old Units at the Blocker Merger Effective Time. At the Effective Time, PubCo shall (a) remain a Member having the Interest represented by the Common Units into which the PubCo Acquired Old Units and the Merger Sub Interests were converted at the Company Merger Effective Time pursuant to the Company Merger and (b) become and be the initial Manager. At the Effective Time, each Person who was a Member in accordance with the terms of the Existing LLC Agreement and is not a Continuing Member or PubCo shall cease to be Member for all purposes of this Agreement and the Act. Exhibit A sets forth the Members and the number of Common Units held by each of them at the Effective Time.

 

Section 3.2.           Authorized Units; General Provisions With Respect to Units .

 

(a)          Interests in the Company shall be represented by Units, or such other Equity Securities of the Company, in each case as the Manager may establish in its discretion in accordance with the terms and subject to the restrictions hereof. At the Effective Time, the Common Units will constitute the sole class of authorized Units. Subject to the provisions of this Agreement, the Company shall be authorized to issue from time to time such number of Units and such other Equity Securities as the Manager shall determine in accordance with Section 3.5 . Each authorized Unit may be issued pursuant to such agreements and in exchange for such Capital Contributions or other consideration as the Manager shall approve, including pursuant to options and warrants. The Company may reissue any Units that have been repurchased or acquired by the Company.

 

(b)           Each outstanding Common Unit shall be identical (except with respect to vesting and as otherwise provided in this Agreement).

 

(c)           Initially, none of the Units will be represented by certificates. If the Manager determines that it is in the interest of the Company to issue certificates representing the Units, certificates will be issued and the Units will be represented by those certificates, and this Agreement shall be amended as necessary or desirable to reflect the issuance of certificated Units for purposes of the Uniform Commercial Code. Nothing contained in this Section 3.2(c) shall be deemed to authorize or permit any Member to Transfer its Units except as otherwise permitted under this Agreement.

 

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(d)          The Company shall maintain as part of its books and records a register (the “ Unit Register ”) with respect to all Units issued by the Company. The Unit Register shall set forth the name of each Member and the number of Units held by each Member. All Transfers of Units validly made in accordance with Article VIII shall be recorded in the Unit Register. The names of the Members and the number of Units held by each Member as they appear in the Unit Register shall be the official record of the Members for all purposes. Absent manifest error in the Unit Register, the Company shall be entitled to rely exclusively on record ownership of Units as shown in the Unit Register for all purposes and shall be entitled to recognize the registered holder of Units as shown in the Unit Register as the holder of record of such Units and the Member with respect to the Interest represented thereby for all purposes; provided, however , that the Company shall treat the record owner of any certificate representing Units as the holder of the Units evidenced thereby unless and until such Units have been Transferred in accordance with this Agreement. At the Effective Time, Exhibit A shall constitute the Unit Register. From and after the Effective Time, subject to the foregoing provisions of this Section 3.2(d) , the Company may maintain the Unit Register in such form as the Manager shall determine from time to time, and any changes in the information set forth in the Unit Register shall not require any amendment or other change to Exhibit A .

 

Section 3.3.           Voting Rights . No Member has any voting right except with respect to those matters specifically reserved for a Member vote under the Act and for matters expressly requiring the vote or approval of Members under this Agreement. Except as otherwise required by the Act, each Unit will entitle the holder thereof to one vote on all matters to be voted on by the Members. Except as otherwise expressly provided in this Agreement, the holders of Units having voting rights will vote together as a single class on all matters to be approved by the Members.

 

Section 3.4.           Transactions at Effective Time; Warrants; Capital Contributions .

 

(a)            Transactions at Effective Time . At the Effective Time and pursuant to the Company Merger: (i) the Continuing Member Old Units were converted into an aggregate of 14,546,755 Common Units, with the Continuing Member Old Units held by each Continuing Member being converted into the number of Common Units set forth for such Continuing Member on Exhibit A ; (ii) the Company delivered to each Continuing Member, out of the shares of Class B Stock contributed by PubCo to Merger Sub in the PubCo Contribution, a number of shares of Class B Stock equal to the number of Common Units into which such Continuing Member’s Continuing Member Old Units were converted pursuant to the Company Merger; (iii) the PubCo Acquired Old Units were converted into an aggregate of 13,532,331 Common Units; (iv) all Old Units issued and outstanding immediately prior to the Company Merger Effective Time, other than the PubCo Acquired Old Units and the Continuing Member Old Units, were canceled without conversion into Units or payment of any other consideration therefor; and (v) the Merger Sub Interest were converted into, and the Company shall issue to PubCo, (A) 36,547,345 Common Units and (B) 48,000,000 warrants to acquire Company Units as described in Section 3.4(b) (the “ Warrants ”). The Company and the Members agree that each of the foregoing (collectively, the “ Effective Time Transactions ”) shall be deemed to occur at the Effective Time, and, at the Effective Time, (i) the Common Units set forth each Member on Exhibit A are hereby issued to such Member and (ii) the Warrants are hereby issued to PubCo.

 

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(b)            Warrants . Each Warrant shall entitle PubCo to purchase one-half of one Common Unit for an exercise price of $5.75 per half Common Unit (subject to adjustment as described below, the “ Warrant Exercise Price ”). Warrants may only be exercised for a whole number of Units. Upon each exercise of PubCo Warrants, an identical number of Warrants shall automatically be exercised, and PubCo shall pay to the Company, as a Capital Contribution, the Warrant Exercise Price for such Warrants upon receipt by PubCo of the PubCo Warrant Price for the PubCo Warrants so exercised. Whenever the number of shares of Class A Stock purchasable upon the exercise of the PubCo Warrants or the PubCo Warrant Price is adjusted pursuant to the terms of the PubCo Warrant Agreement, a corresponding adjustment shall be made to the number of Common Units issuable upon exercise of the Warrants or the Warrant Exercise Price (or both), as applicable. For federal income tax purposes, the Company and the Members intend (i) to treat each Warrant as a “noncompensatory option” within the meaning of Treasury Regulations Sections 1.721-2(f) and 1.761-3(b)(2), and (ii) not to treat any Warrant as exercised and not to treat any Warrant as a partnership interest prior to the exercise of such Warrant pursuant to the PubCo Warrant Agreement in accordance with Treasury Regulations Section 1.761-3(a).

 

(c)            Capital Contributions . At the Effective Time, after giving effect to the Effective Time Transactions, each Member as of the Effective Time shall be deemed to have made Capital Contributions equal to such Member’s Effective Time Capital Account Balance set forth on Exhibit A . Except for PubCo as provided in Section 3.5 and Section 3.7 , no Member shall be required to make additional Capital Contributions.

 

Section 3.5.            Issuance of Additional Units or Interests; Exchanges and Repurchases; Recapitalizations .

 

(a)           From and after the Effective Time to the extent required by Section 3.5(b) , the Manager may authorize and create, and cause the Company to issue, additional Units or other Equity Securities in the Company (including creating preferred interests or other classes or series of securities having such rights, preferences and privileges as determined by the Manager) solely to the extent they are in the aggregate substantially equivalent to a class of Equity Securities of PubCo; provided that, following the Effective Time, in each case the Company shall not issue Equity Securities in the Company to any Person unless such Person shall have executed a Joinder and all other documents, agreements or instruments deemed necessary or desirable in the discretion of the Manager.

 

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(b)           If at any time after the Effective Time PubCo issues a share of its Class A Stock or any other Equity Security of PubCo (other than shares of Class B Stock), (i) the Company shall issue to PubCo one Common Unit (if PubCo issues a share of Class A Stock), or such other Equity Security of the Company (if PubCo issues Equity Securities other than Class A Stock) corresponding to the Equity Securities issued by PubCo, and with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of PubCo and (ii) the net proceeds received by PubCo with respect to the corresponding share of Class A Stock or other Equity Security, if any, shall be concurrently transferred to the Company; provided , however , that if PubCo issues any shares of Class A Stock in order to purchase or fund the purchase from a Member of a number of Common Units (and shares of Class B Stock) equal to the number of shares of Class A Stock so issued, then the Company shall not issue any new Common Units in connection therewith and PubCo shall not be required to transfer such net proceeds to the Company (it being understood that such net proceeds shall instead be transferred to such Member as consideration for such purchase). Notwithstanding the foregoing, this Section 3.5(b) shall not apply to (i) the issuance and distribution to holders of shares of PubCo Common Stock of rights to purchase Equity Securities of PubCo under a “poison pill” or similar shareholders rights plan (it being understood that upon exchange of Common Units for Class A Stock, such Class A Stock will be issued together with a corresponding right) or (ii) the issuance under the Equity Plans of any warrants, options or other rights to acquire Equity Securities of PubCo or rights or property that may be converted into or settled in Equity Securities of PubCo, but shall in the foregoing cases apply to the issuances of Equity Securities of PubCo in connection with the exercise or settlement of such rights, warrants, options or other rights or property. Except pursuant to Section 3.7 , (x) the Company may not issue any additional Units to PubCo or any of its Subsidiaries unless substantially simultaneously PubCo or such Subsidiary issues or sells an equal number of shares of PubCo’s Class A Stock to another Person, and (y) the Company may not issue any other Equity Securities of the Company to PubCo or any of its Subsidiaries unless substantially simultaneously PubCo or such Subsidiary issues or sells, to another Person, an equal number of shares of a new class or series of Equity Securities of PubCo or such Subsidiary with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of the Company. Notwithstanding anything contained herein to the contrary, the Company shall only be able to issue additional Units or other Equity Interests in the Company to Persons and on the terms and conditions provided for in Section 3.1 , Section 3.4 , or Section 3.5 .

 

(c)           Neither PubCo nor any of its Subsidiaries may redeem, repurchase or otherwise acquire (i) any shares of Class A Stock (including upon forfeiture of any unvested shares of Class A Stock) unless substantially simultaneously the Company redeems, repurchases or otherwise acquires from PubCo an equal number of Common Units for the same price per security or (ii) any other Equity Securities of PubCo unless substantially simultaneously the Company redeems, repurchases or otherwise acquires from PubCo an equal number of Equity Securities of the Company of a corresponding class or series with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of PubCo for the same price per security. Except pursuant to Section 3.7 , the Company may not redeem, repurchase or otherwise acquire (A) any Common Units from PubCo or any of its Subsidiaries unless substantially simultaneously PubCo or such Subsidiary redeems, repurchases or otherwise acquires an equal number of shares of Class A Stock for the same price per security from holders thereof, or (B) any other Equity Securities of the Company from PubCo or any of its Subsidiaries unless substantially simultaneously PubCo or such Subsidiary redeems, repurchases or otherwise acquires for the same price per security an equal number of Equity Securities of PubCo of a corresponding class or series with substantially the same rights to dividends and distributions (including distribution upon liquidation) and other economic rights as those of such Equity Securities of PubCo. Notwithstanding the foregoing, to the extent that any consideration payable by PubCo in connection with the redemption or repurchase of any shares of Class A Stock or other Equity Securities of PubCo or any of its Subsidiaries consists (in whole or in part) of shares of Class A Stock or such other Equity Securities (including, for the avoidance of doubt, in connection with the cashless exercise of an option or warrant), then the redemption or repurchase of the corresponding Common Units or other Equity Securities of the Company shall be effectuated in an equivalent manner.

 

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(d)          The Company shall not in any manner effect any subdivision (by any stock split, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, reclassification, recapitalization or otherwise) of the outstanding Units unless accompanied by an identical subdivision or combination, as applicable, of the outstanding PubCo Common Stock, with corresponding changes made with respect to any other exchangeable or convertible securities. PubCo shall not in any manner effect any subdivision (by any stock split, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, reclassification, recapitalization or otherwise) of the outstanding PubCo Common Stock unless accompanied by an identical subdivision or combination, as applicable, of the outstanding Units, with corresponding changes made with respect to any other exchangeable or convertible securities.

 

Section 3.6.           Other Matters .

 

(a)           No Member shall be entitled to demand or receive a return on or of its Capital Contributions or withdraw from the Company, except as expressly provided in this Agreement. Under circumstances requiring a return of any Capital Contributions, no Member has the right to receive property other than cash.

 

(b)           No Member shall receive any interest, salary, compensation, draw or reimbursement with respect to its Capital Contributions or its Capital Account, or for services rendered or expenses incurred on behalf of the Company or otherwise in its capacity as a Member, except as otherwise provided in or contemplated by this Agreement.

 

(c)           The Liability of each Member shall be limited as set forth in the Act and other applicable Law and, except as expressly set forth in this Agreement or required by Law, no Member (or any of its Affiliates) shall be personally liable, whether to the Company, to any of the other Members, to the creditors of the Company, or to any other third party, for any debt or Liability of the Company, whether arising in Contract, tort or otherwise, solely by reason of being a Member of the Company.

 

(d)           Except as otherwise required by the Act, a Member shall not be required to restore a deficit balance in its Capital Account, to lend any funds to the Company or to make any additional contributions or payments to the Company.

 

(e)           The Company shall not be obligated for the repayment of any Capital Contributions of any Member.

 

Section 3.7.             Exchange Right of Members .

 

(a)           Subject to Section 3.7(b) and to PubCo’s rights under Section 3.7(j) , each of the Members other than PubCo shall be entitled to exchange with the Company (an “ Exchange ”), at any time and from time to time, any or all of such Member’s Common Units (together with the transfer and surrender of an equal number of shares of Class B Stock) for an equivalent number (subject to adjustment as provided in Section 3.7(g) ) of shares of Class A Stock or, at the Company’s election made in accordance with Section 3.7(d) , cash equal to the Cash Election Amount calculated with respect to such Exchange (the “ Exchange Right ”). Upon the Exchange of all Common Units held by a Member, such Member shall, for the avoidance of doubt, cease to be a Member.

 

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(b)          Notwithstanding Section 3.7(a) :

 

(i)           no Member may exercise its Exchange Right with respect to any of its Common Units prior to the first anniversary of the date of this Agreement, except that on or after the date that is 180 days after the date of this Agreement, a Continuing Member (or its Permitted Transferee) may exercise its Exchange Right with respect to up to, in the aggregate for such Continuing Member and its Permitted Transferees, 50% of the number of Common Units held by such Continuing Member at the Effective Time solely in connection with an Underwritten Offering of the shares of Class A Stock issuable upon such Exchange; and

 

(ii)          no Member may exercise its Exchange Right with respect to less than 200,000 Common Units more frequently than on a quarterly basis, unless (A) such exercise of the Exchange Right is for all of the Common Units held by such Member or (B) the Manager, in its sole discretion, permits such Member to exercise the Exchange Right for a lesser number of Common Units.

 

(c)           In order to exercise the Exchange Right, a Member (the “ Exchanging Member ”) shall provide written notice (the “ Exchange Notice ”) to the Company and PubCo, stating (i) the number of Common Units (together with the transfer and surrender of an equal number of shares of Class B Stock) the Exchanging Member elects to have the Company redeem, and (ii) if the shares of Class A Stock to be received are to be issued other than in the name of the Exchanging Member, specifying the name(s) of the Person(s) in whose name or on whose order the shares of Class A Stock are to be issued. If the Common Units to be redeemed (or the shares of Class B Stock to be transferred and surrendered) are represented by a certificate or certificates, the Exchanging Member shall also present and surrender the certificate or certificates representing such Common Units and shares of Class B Stock during normal business hours at the principal executive offices of the Company, or if any agent for the registration or transfer of Class A Stock is then duly appointed and acting (the “ Transfer Agent ”), at the office of the Transfer Agent with respect to such Class A Stock. If required by PubCo, any certificate for Common Units and shares of Class B Stock surrendered in connection with an Exchange shall be accompanied by instruments of transfer, in form reasonably satisfactory to PubCo and the Transfer Agent, duly executed by the Exchanging Member or the Exchanging Member’s duly authorized representative. An Exchange Notice may specify that the Exchange is to be contingent (including as to timing) upon the consummation of a purchase by another Person (whether in a tender or exchange offer, an Underwritten Offering or otherwise) of the shares of Class A Stock for which the Common Units and shares of Class B Stock are redeemable, or contingent (including as to timing) upon the closing of an announced merger, consolidation or other transaction or event in which the shares of Class A Stock would be exchanged or converted or become exchangeable for or convertible into cash or other securities or property, provided that the foregoing shall not apply to any Exchange with respect to which the Company has made a valid Cash Election.

 

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(d)           Upon receipt of an Exchange Notice, the Company shall be entitled to elect (a “ Cash Election ”) to settle the Exchange by the delivery to the Exchanging Member, in lieu of the applicable number of shares of Class A Stock that would be received in such Exchange, an amount of cash equal to the Cash Election Amount for such Exchange. In order to make a Cash Election with respect to an Exchange, the Company must provide written notice (the “ Cash Election Notice ”) of such election to the Exchanging Member prior to 5:00 pm, Houston, Texas time, on the first Business Day after the date on which the Exchange Notice shall have been received by the Company and PubCo. If the Company fails to provide a Cash Election Notice prior to such time, it shall not be entitled to make a Cash Election with respect to such Exchange. The Exchanging Member may retract its Exchange Notice by giving written notice (the “ Retraction Notice ”) to the Company (with a copy to PubCo) at any time prior to 5:00 pm, Houston, Texas time, on the first Business Day after delivery of the Cash Election Notice. The timely delivery of a Retraction Notice shall terminate the Exchanging Member’s, the Company’s and PubCo’s rights and obligation under this Section 3.7 arising from the retracted Exchange Notice.

 

(e)           Notwithstanding anything to the contrary in Section 3.7(c) or Section 3.7(d) , in the event the Company fails to timely make the Cash Election in connection with an Exchange, an Exchanging Member shall be entitled, at any time prior to the consummation of the Exchange, to revoke its Exchange Notice or delay the consummation of an Exchange if any of the following conditions exists: (i) any registration statement pursuant to which the resale of the Class A Stock to be registered for such Exchanging Member at or immediately following the consummation of the Exchange shall have ceased to be effective pursuant to any action or inaction by the Commission or no such resale registration statement has yet become effective; (ii) PubCo shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such Exchange; (iii) PubCo shall have exercised its right to defer, delay or suspend the filing or effectiveness of the registration statement and such deferral, delay or suspension shall affect the ability of such Exchanging Member to have the resale of its Class A Stock registered at or immediately following the consummation of the Exchange; (iv) PubCo shall have disclosed to such Exchanging Member (after receiving consent of such Exchanging Member) any material non-public information concerning PubCo or its Subsidiaries, taken as a whole, the receipt of which results in the Exchanging Member being prohibited or restricted from selling Class A Stock at or immediately following the Exchange without disclosure of such information (and PubCo does not permit disclosure); (v) any stop order relating to the registration statement pursuant to which the Class A Stock was to be registered by such Exchanging Member at or immediately following the Exchange shall have been issued by the Commission; (vi) there shall be in effect an injunction, a restraining order or decree of any nature of any Governmental Entity that restrains or prohibits the Exchange; (vii) PubCo shall have failed to comply in all material respects with its obligations under the A&R Registration Rights Agreement, and such failure shall have affected the ability of such Exchanging Member to consummate the resale of the Class A Stock to be received upon such Exchange pursuant to an effective registration statement; or (viii) the Exchange Date would occur three (3) Business Days or less prior to, or during, a Black-Out Period; provided, further , that in no event shall the Exchanging Member seeking to delay the consummation of such Exchange and relying on any of the matters in clauses (i) through (ix) above have controlled or intentionally materially influenced any facts, circumstances or Persons in connection therewith (except in the good faith performance of his or her duties as an officer, employee or director or manager of PubCo or any of its Subsidiaries) in order to provide such Exchanging Member with a basis for such delay or revocation. If an Exchanging Member delays the consummation of an Exchange pursuant to this Section 3.7(e) , (A) the Exchange Date shall occur on the third Business Day following the date on which the conditions giving rise to such delay cease to exist (or such earlier date as PubCo, the Company and Exchanging Member may mutually agree in writing) and (B) notwithstanding anything to the contrary in Section 3.7(d) , the Exchanging Member may retract its Exchange Notice by giving a Retraction Notice to the Company (with a copy to PubCo) at any time prior to 5:00 pm, Houston, Texas time, on the first Business Day following the date on which the conditions giving rise to such delay cease to exist.

 

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(f)           If the Company has not made a valid Cash Election, then as promptly as practicable after the receipt of the Exchange Notice and the surrender to the Company of the certificate or certificates, if any, representing such Common Units and shares of Class B Stock (but in any event by the Exchange Date, as defined below), PubCo shall issue and contribute to the Company, and the Company shall deliver to the Exchanging Member, or on the Exchanging Member’s written order, the number of shares of Class A Stock issuable upon the Exchange (in book-entry or certificated form, as determined by PubCo, and with such legends as may be required in accordance with applicable Law), and the Company shall deliver such Common Units and shares of Class B Stock to PubCo in exchange for no additional consideration. If the Company has made a valid Cash Election, then as promptly as practicable after the receipt of the Exchange Notice (but in no event more than ten Business Days after receipt of the Exchange Notice), PubCo shall contribute to the Company the cash consideration the Exchanging Member is entitled to receive in the Exchange and, upon surrender to the Company of the certificate or certificates, if any, representing such Common Units and shares of Class B Stock, the Company shall deliver to the Exchanging Member as directed by the Exchanging Member by wire transfer of immediately available funds the Cash Election Amount payable upon the Exchange, and the Company shall deliver such Common Units and shares of Class B Stock to PubCo for no additional consideration. Each Exchange shall be deemed to have been effected on (i) (x) the Business Day after the date on which the Exchange Notice shall have been received by the Company, PubCo or the Transfer Agent, as applicable (subject to receipt by the Company, PubCo or the Transfer Agent, as applicable, within three Business Days thereafter of any required instruments of transfer as aforesaid) if the Company has not made a valid Cash Election with respect to such Exchange or (y) if the Company has made a valid Cash Election with respect to such Exchange, the first Business Day on which the Company has available funds to pay the Cash Election Amount (but in no event more than ten Business Days after receipt of the Exchange Notice), or (ii) such later date specified in or pursuant to the Exchange Notice (such date identified in clause (i) or (ii), as applicable, the “ Exchange Date ”). If the Company has not made a valid Cash Election, and the Person or Persons in whose name or the shares of Class A Stock shall be issuable upon such Exchange as aforesaid shall be deemed to have become, on the Exchange Date, the holder or holders of record of the shares represented thereby. Notwithstanding anything herein to the contrary and in addition to the rights set forth in Section 3.7(e) , unless the Company has made a valid Cash Election (and the Exchanging Member has failed to timely deliver a Retraction Notice in accordance with Section 3.7(d) ), any Exchanging Member may retract or amend an Exchange Notice, in whole or in part, prior to the effectiveness of the applicable Exchange, at any time prior to 5:00 p.m., Houston, Texas time, on the Business Day immediately preceding the Exchange Date (or any such later time as may be required by applicable Law) by delivery of a written notice of retraction to the Company (with a copy to PubCo), specifying (1) the numbers of the withdrawn Common Units and shares of Class B Stock (and the applicable certificate numbers therefor, if certificated), (2) if any, the number of Common Units and shares of Class B Stock as to which the Exchange Notice remains in effect and (3) if the Exchanging Member so determines, a new Exchange Date or any other new or revised information permitted in an Exchange Notice.

 

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(g)           If (i) there is any reclassification, reorganization, recapitalization or other similar transaction pursuant to which the shares of Class A Stock are converted or changed into another security, securities or other property, or (ii) PubCo shall, by dividend or otherwise, distribute to all holders of the shares of Class A Stock evidences of its Indebtedness or assets, including securities (including shares of Class A Stock and any rights, options or warrants to all holders of the shares of Class A Stock to subscribe for or to purchase or to otherwise acquire shares of Class A Stock, or other securities or rights convertible into, exchangeable for or exercisable for shares of Class A Stock) but excluding any cash dividend or distribution as well as any such distribution of Indebtedness or assets received by PubCo from the Company in respect of the Units, then upon any subsequent Exchange, in addition to the shares of Class A Stock or the Cash Election Amount, as applicable, each Member shall be entitled to receive the amount of such security, securities or other property that such Member would have received if such Exchange had occurred immediately prior to the effective date of such reclassification, reorganization, recapitalization, other similar transaction dividend or other distribution, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. For the avoidance of doubt, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the shares of Class A Stock are converted or changed into another security, securities or other property, or any dividend or distribution (other than an excluded dividend or distribution, as described above), this Section 3.7 shall continue to be applicable, mutatis mutandis, with respect to such security or other property.

 

(h)           PubCo shall at all times keep available, solely for the purpose of issuance upon an Exchange, such number of shares of Class A Stock that shall be issuable upon the Exchange of all outstanding Common Units and shares of Class B Stock; provided, that nothing contained herein shall be construed to preclude PubCo from satisfying its obligations with respect of an Exchange by delivery of shares of Class A Stock that are held in the treasury of PubCo. PubCo covenants that all shares of Class A Stock that shall be issued upon an Exchange shall, upon issuance thereof, be validly issued, fully paid and non-assessable. In addition, for so long as the shares of Class A Stock are listed on a National Securities Exchange, PubCo shall use its reasonable best efforts to cause all shares of Class A Stock issued upon an Exchange to be listed on such National Securities Exchange at the time of such issuance.

 

(i)            Unless otherwise required by applicable Law, each Exchange shall be treated for federal (and applicable state and local) income tax purposes as a taxable sale of the Exchanging Member’s Common Units (together with the same number of shares of Class B Stock) to PubCo in exchange for shares of Class A Stock or cash, as applicable. The issuance of shares of Class A Stock upon an Exchange shall be made without charge to the Exchanging Member for any stamp or other similar tax in respect of such issuance; provided , however , that if any such shares are to be issued in a name other than that of the Exchanging Member, then the Person or Persons in whose name the shares are to be issued shall pay to PubCo the amount of any tax that may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of PubCo that such tax has been paid or is not payable.

 

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(j)            Notwithstanding anything to the contrary in this Section 3.7 , but subject to Section 3.7(k) , an Exchanging Member shall be deemed to have offered to sell its Common Units and shares of Class B Stock set forth in the Exchange Notice to PubCo, and PubCo may, in its sole discretion, by means of delivery of Call Election Notices and/or Revocation Notices in accordance with, and subject to the terms of, this Section 3.7(j) and Section 3.7(k) , elect to purchase directly and acquire such Common Units and shares of Class B Stock on the Exchange Date by paying to the Exchanging Member (or, on the Exchanging Member’s written order, its designee) that number of shares of Class A Stock the Exchanging Member (or its designee) would otherwise receive pursuant to Section 3.7(a) or, at PubCo’s election, an amount of cash equal to the Cash Election Amount of such shares of Class A Stock (the “ Direct Exchange Right ”), whereupon PubCo shall acquire the Common Units and shares of Class B Stock offered for exchange by the Exchanging Member and shall be treated for all purposes of this Agreement as the owner of such Common Units and shares of Class B Stock. In the event PubCo shall exercise the Direct Exchange Right, each of the Exchanging Member, the Company and PubCo, as the case may be, shall treat the transaction between the Company and the Exchanging Member for federal income tax purposes as a sale of the Exchanging Member’s Common Units and shares of Class B Stock to PubCo.

 

(k)           PubCo may at any time in its sole discretion deliver written notice (a “ Call Election Notice ”) to each other Member setting forth its election to exercise its Direct Exchange Right as contemplated by Section 3.7(j) with respect to future Exchanges (without needing to provide further notice of its intention to exercise its Direct Exchange Right). Subject to the remainder of this Section 3.7(k) , a Call Election Notice will be effective until such time as PubCo amends such Call Election Notice with a superseding Call Election Notice or revokes such Call Election Notice by delivery of a written notice of revocation delivered to each other Member or, with respect to a particular Exchange, the Company exercises its Cash Election (a “ Revocation Notice ”). A Call Election Notice may be amended or revoked by PubCo at any time; provided that any Exchange Notice delivered by a Member will not, without such Member’s written consent, be affected by the subsequent delivery of a Revocation Notice or by a Call Election Notice that is not effective until after the Exchange Date. Following delivery of a Revocation Notice, PubCo may deliver a new Call Election Notice pursuant to this Section 3.7(k) . Any amendment of a Call Election Notice will not be effective until the Business Day after its delivery to each Member (other than PubCo). Each Call Election Notice shall specify the date from which it shall be effective (which shall be no earlier than the Business Day after delivery).

 

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(l)            In connection with a PubCo Change of Control, PubCo shall have the right to require each Member (other than PubCo) to effect an Exchange of some or all of such Member’s Common Units and a corresponding number of Class B Stock. Any Exchange pursuant to this Section 3.7(l) shall be effective immediately prior to the consummation of the PubCo Member Change of Control (and, for the avoidance of doubt, shall not be effective if such PubCo Change of Control is not consummated) (the “ Change of Control Exchange Date ”). From and after the Change of Control Exchange Date, (i) the Common Units and shares of Class B Stock subject to such Exchange shall be deemed to be transferred to PubCo on the Change of Control Exchange Date and (ii) such Member shall cease to have any rights with respect to such Common Units and shares of Class B Stock subject to such Exchange (other than the right to receive shares of Class A Common Stock pursuant to such Exchange). PubCo shall provide written notice of an expected PubCo Change of Control transaction to all Members within the earlier of (x) five Business Days following the execution of the definitive agreement with respect to such PubCo Change of Control and (y) 10 Business Days before the proposed date upon which the contemplated PubCo Change of Control is to be effected, indicating in such notice such information as may reasonably describe the PubCo Change of Control transaction, subject to applicable Law, including the date of execution of such definitive agreement or such proposed effective date, as applicable, the amount and type of consideration to be paid for shares of Class A Stock in the PubCo Change of Control, any election with respect to types of consideration that a holder of shares of Class A Stock, as applicable, shall be entitled to make in connection with such PubCo Change of Control, and the number of Common Units and shares of Class B Stock held by such Member that PubCo intends to require to be subject to such Exchange. Following the delivery of such notice and on or prior to the Change of Control Redemption Date, the Members shall take all actions reasonably requested by PubCo to effect such Exchange, including taking any action and delivering any document required pursuant to Section 3.7(a) and Section 3.7(c) to effect such Exchange.

 

(m)           In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to shares of Class A Stock (a “ PubCo Offer ”) is proposed by PubCo or is proposed to PubCo or its stockholders and approved by the board of directors of PubCo or is otherwise effected or to be effected with the consent or approval of the board of directors of PubCo, each Member (other than PubCo) shall be permitted to participate in such PubCo Offer by delivery of a contingent Exchange Notice in accordance with the last sentence of Section 3.7(c) with respect to its Common Units and shares of Class B Stock (other than with respect to any Common Units or shares of Class B Stock to which the Company exercised its right to require any such Member to effect an Exchange pursuant to Section 3.7(l) in connection with a PubCo Change of Control) (the “ Eligible PubCo Offer Securities ”). In the case of a PubCo Offer proposed by PubCo, PubCo will use its reasonable best efforts expeditiously and in good faith to take all such actions and do all such things as are necessary or desirable to enable and permit the Members to participate in such PubCo Offer with respect to such Eligible PubCo Offer Securities to the same extent or on an economically equivalent basis as the holders of shares of PubCo without discrimination; provided that, without limiting the generality of this sentence, PubCo will use its reasonable best efforts expeditiously and in good faith to ensure that such Members may participate in each such PubCo Offer with respect to such Eligible PubCo Offer Securities without being required to cause the Exchange of Common Units and shares of Class B Stock (or, if so required, to ensure that any such Exchange shall be effective only upon, and shall be conditional upon, the closing of such PubCo Offer and only to the extent necessary to tender or deposit to PubCo Offer in accordance with the last sentence of Section 3.7(c) , or, as applicable, to the extent necessary to exchange the Eligible PubCo Offer Securities being repurchased). For the avoidance of doubt, in no event shall Members (other than PubCo) be entitled to receive in such PubCo Offer aggregate consideration for each Common Unit and corresponding share of Class B Stock comprising the Eligible PubCo Offer Securities that is greater than the consideration payable in respect of each share of Class A Stock in connection with a PubCo Offer.

 

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(n)           No Exchange shall impair the right of the Exchanging Member to receive any distributions payable on the Common Units so redeemed in respect of a record date that occurs prior to the Exchange Date for such Exchange. For the avoidance of doubt, no Exchanging Member, or a Person designated by an Exchanging Member to receive shares of Class A Stock, shall be entitled to receive, with respect to the same fiscal quarter, distributions or dividends both on Common Units redeemed from such Exchanging Member and on shares of Class A Stock received by such Exchanging Member, or other Person so designated, if applicable, in such Exchange.

 

Article IV

 

capital accounts; ALLOCATIONS OF PROFITS AND LOSSES

 

Section 4.1.            Capital Accounts . A Capital Account shall be maintained for each Member in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv) and, to the extent consistent with such regulations, the other provisions of this Agreement. For this purpose, the Company may (in the discretion of the Partnership Representative), upon the occurrence of the events specified in Treasury Regulations Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in accordance with the rules of such Treasury Regulations and Treasury Regulations Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property. The Capital Account balance of each of the Members as of the Effective Time is its respective Effective Time Capital Account Balance set forth on Exhibit A . Thereafter, each Member’s Capital Account shall be (a) increased by (i) allocations to such Member of Profits pursuant to Section 4.2 and any other items of income or gain allocated to such Member pursuant to Section 4.3 , (ii) the amount of additional cash or the initial Gross Asset Value of any asset (net of any Liabilities assumed by the Company and any Liabilities to which the asset is subject) contributed to the Company by such Member, and (iii) any other increases allowed or required by Treasury Regulations Section 1.704-1(b)(2)(iv), and (b) decreased by (i) allocations to such Member of Losses pursuant to Section 4.2 and any other items of deduction or loss allocated to such Member pursuant to the provisions of Section 4.3 , (ii) the amount of any cash or the Gross Asset Value of any asset (net of any Liabilities assumed by the Company and any Liabilities to which the asset is subject) distributed to such Member, and (iii) any other decreases allowed or required by Treasury Regulations Section 1.704-1(b)(2)(iv). In the event of a Transfer of Units made in accordance with this Agreement, the Capital Account of the Transferor that is attributable to the Transferred Units shall carry over to the Transferee Member in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv)( l ).

 

Section 4.2.            Profits and Losses . After giving effect to the allocations under Section 4.3 , Profits and Losses (and, to the extent determined by the Partnership Representative to be necessary and appropriate to achieve the resulting Capital Account balances described below, any allocable items of income, gain, loss, deduction or credit includable in the computation of Profits and Losses) for each Fiscal Year shall be allocated among the Members during such Fiscal Year in a manner such that, after giving effect to the special allocations set forth in Section 4.3 and all distributions through the end of such Fiscal Year, the Capital Account balance of each Member, immediately after making such allocation, is, as nearly as possible, equal to (i) the amount such Member would receive pursuant to Section 10.3(b) if all assets of the Company on hand at the end of such Fiscal Year were sold for cash equal to their Gross Asset Values, all Liabilities of the Company were satisfied in cash in accordance with their terms (limited with respect to each Nonrecourse Liability to the Gross Asset Value of the assets securing such Liability), and all remaining or resulting cash was distributed, in accordance with Section 10.3(b) , to the Members immediately after making such allocation, minus (ii) such Member’s share of Company Minimum Gain and Member Minimum Gain, computed immediately prior to the hypothetical sale of assets.

 

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Section 4.3.            Special Allocations .

 

(a)            Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Members on a pro rata basis in accordance with the number of Units owned by each Member.

 

(b)           Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(i). If more than one Member bears the economic risk of loss for such Member Nonrecourse Debt, the Member Nonrecourse Deductions attributable to such Member Nonrecourse Debt shall be allocated among the Members according to the ratio in which they bear the economic risk of loss. This Section 4.3(b) is intended to comply with the provisions of Treasury Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.

 

(c)           Except as otherwise provided in Treasury Regulation Section 1.704-2(f), notwithstanding any other provision of this Agreement to the contrary, if there is a net decrease in Company Minimum Gain during any Fiscal Year (or if there was a net decrease in Company Minimum Gain for a prior Fiscal Year and the Company did not have sufficient amounts of income and gain during prior Fiscal Years to allocate among the Members under this Section 4.3(c) ), each Member shall be specially allocated items of Company income and gain for such Fiscal Year in an amount equal to such Member’s share of the net decrease in Company Minimum Gain during such year (as determined pursuant to Treasury Regulations Section 1.704-2(g)(2)). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member in accordance with Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). This section is intended to constitute a minimum gain chargeback under Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

 

(d)           Except as otherwise provided in Treasury Regulation Section 1.704-2(i)(4), notwithstanding any other provision of this Agreement except Section 4.3(c) , if there is a net decrease in Member Minimum Gain during any Fiscal Year (or if there was a net decrease in Member Minimum Gain for a prior Fiscal Year and the Company did not have sufficient amounts of income and gain during prior Fiscal Years to allocate among the Members under this Section 4.3(d) ), each Member shall be specially allocated items of Company income and gain for such year in an amount equal to such Member’s share of the net decrease in Member Minimum Gain (as determined pursuant to Treasury Regulations Section 1.704-2(i)(4)). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This section is intended to constitute a partner nonrecourse debt minimum gain chargeback under Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

 

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(e)           Notwithstanding any provision hereof to the contrary except Section 4.3(c) and Section 4.3(d) , in the event any Member unexpectedly receives any adjustment, allocation or distribution described in paragraph (4), (5) or (6) of Treasury Regulations Section 1.704-1(b)(2)(ii)( d ), resulting in, or increasing, an Adjusted Capital Account Deficit for such Member, items of Company income and gain (consisting of a pro rata portion of each item of income, including gross income, and gain for the Fiscal Year) shall be specially allocated to such Member in an amount and manner sufficient to eliminate any Adjusted Capital Account Deficit of that Member as quickly as possible; provided that an allocation pursuant to this Section 4.3(e) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.3(e) were not in this Agreement. This Section 4.3(e) is intended to constitute a qualified income offset under Treasury Regulations Section 1.704-1(b)(2)(ii) (d) and shall be interpreted consistently therewith.

 

(f)            If any Member has an Adjusted Capital Account Deficit at the end of any Fiscal Year that is in excess of the sum of (i) the amount that such Member is obligated to restore and (ii) the amount that the Member is deemed to be obligated to restore pursuant to the penultimate sentence of Treasury Regulations Sections 1.704-2(g)(1) and (i)(5), that Member shall be specially allocated items of Company income, gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 4.3(f) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit in excess of such sum after all other allocations provided for in this Article IV have been made as if Section 4.3(e) and this Section 4.3(f) were not in this Agreement.

 

(g)          To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Sections 734(b) or 743(b) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( m )(2) or 1.704-1(b)(2)(iv) (m) (4), to be taken into account in determining Capital Accounts as a result of a distribution to any Member in complete liquidation of such Member’s Interest in the Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such item of gain or loss shall be allocated to the Members in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv) (m) (2) if such section applies or to the Member to whom such distribution was made if Treasury Regulations Section 1.704-1(b)(2)(iv) (m) (4) applies.

 

(h)          The allocations set forth in Section 4.3(a) through Section 4.3(g) (the “ Regulatory Allocations ”) are intended to comply with certain requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding any other provision of this Article IV (other than the Regulatory Allocations), the Regulatory Allocations (and anticipated future Regulatory Allocations) shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocation of other items and the Regulatory Allocations to each Member should be equal to the net amount that would have been allocated to each such Member if the Regulatory Allocations had not occurred. This Section 4.3(h) is intended to minimize to the extent possible and to the extent necessary any economic distortions which may result from application of the Regulatory Allocations and shall be interpreted in a manner consistent therewith.

 

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Section 4.4.            Allocations for Tax Purposes in General .

 

(a)           Except as otherwise provided in this Section 4.4 , each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such item is allocated under Section 4.2 and Section 4.3 .

 

(b)           In accordance with Code Section 704(c) and the Treasury Regulations thereunder (including the Treasury Regulations applying the principles of Code Section 704(c) to changes in Gross Asset Values) , items of income, gain, loss and deduction with respect to any Company property having a Gross Asset Value that differs from such property’s adjusted federal income tax basis shall, solely for federal income tax purposes, be allocated among the Members to account for any such difference using the “remedial method” under Treasury Regulations Section 1.704-3(d) or such other method or methods as determined by the Partnership Representative to be appropriate and in accordance with the applicable Treasury Regulations; provided, however , the Partnership Representative shall cause the Company to use the “traditional method” as described in Treasury Regulation Section 1.704-3(b) (including in connection with any “reverse 704(c) allocation”) that may be required in connection with a “book-up” of the Company’s assets in connection with the transactions contemplated by the Merger and Contribution Agreement.

 

(c)           Any (i) recapture of Depreciation or any other item of deduction shall be allocated, in accordance with Treasury Regulations Sections 1.1245-1(e) and 1.1254-5, to the Members who received the benefit of such deductions (taking into account the effect of allocations under Code Section 704(c)), and (ii) recapture of grants credits shall be allocated to the Members in accordance with applicable Law.

 

(d)           Allocations pursuant to this Section 4.4 are solely for purposes of federal, state and local taxes and shall not affect or in any way be taken into account in computing any Member’s Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this Agreement.

 

(e)           If, as a result of an exercise of a noncompensatory option to acquire an interest in the Company, a Capital Account reallocation is required under Treasury Regulations Section 1.704-1(b)(2)(iv)( s )(3), the Company shall make corrective allocations pursuant to Treasury Regulations Section 1.704-1(b)(4)(x).

 

Section 4.5.            Other Allocation Rules .

 

(a)          The Members are aware of the income tax consequences of the allocations made by this Article IV and the economic impact of the allocations on the amounts receivable by them under this Agreement. The Members hereby agree to be bound by the provisions of this Article IV in reporting their share of Company income and loss for income tax purposes.

 

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(b)          All items of income, gain, loss, deduction and credit allocable to an interest in the Company that may have been Transferred shall be allocated between the Transferor and the Transferee based on the portion of the Fiscal Year during which each was recognized as the owner of such interest; provided , however , that this allocation must be made in accordance with a method permissible under Code Section 706 and the Treasury Regulations thereunder; provided , further , however , with respect to the IRS Form 1065 (or similar state or local tax return) filed for the Tax year of the Company including the Company Merger, such tax return shall be prepared utilizing the “interim closing method” as if the Tax year ended on the Closing Date and “calendar day convention” (in each case, as defined in Treasury Regulation Section 1.706-4) as of the end of the day on which the Company Merger occurred.

 

(c)          The Members’ proportionate shares of the “excess nonrecourse liabilities” of the Company, within the meaning of Treasury Regulations Section 1.752-3(a)(3), shall be allocated to the Members in any manner determined by the Partnership Representative and permissible under the Treasury Regulations.

 

Article V

 

DISTRIBUTIONS

 

Section 5.1.            Distributions .

 

(a)           Distributions . To the extent permitted by applicable Law and hereunder, distributions to Members may be declared by the Manager out of funds legally available therefor in such amounts and on such terms (including the payment dates of such distributions) as the Manager shall determine using such record date as the Manager may designate; such distribution shall be made to the Members as of the close of business on such record date on a pro rata basis in accordance with the number of Units owned by each Member (except that repurchases or exchanges made in accordance with Section 3.5(c) or payments made in accordance with Section 6.4 need not be on a pro rata basis), in accordance with the number of Units owned by each Member as of the close of business on such record date; provided , however , that the Company shall have the obligation to make distributions as set forth in Section 5.2 and Section 6.4 ; and provided further that, notwithstanding any other provision herein to the contrary, no distributions shall be made to any Member to the extent such distribution would render the Company insolvent. For purposes of the foregoing sentence, insolvency means the inability of the Company to meet its payment obligations when due. Promptly following the designation of a record date and the declaration of a distribution pursuant to this Section 5.1 , the Manager shall give notice to each Member of the record date, the amount and the terms of the distribution and the payment date thereof.

 

(b)           Successors . For purposes of determining the amount of distributions, each Member shall be treated as having made the Capital Contributions and as having received the Distributions made to or received by its predecessors in respect of any of such Member’s Units.

 

(c)           Distributions In-Kind . Except as otherwise provided in this Agreement, any distributions may be made in cash or in kind, or partly in cash and partly in kind, as determined by the Manager. To the extent that the Company distributes property in-kind to the Members, the Company shall be treated as making a distribution equal to the Fair Market Value of such property for purposes of Section 5.1(a) and such property shall be treated as if it were sold for an amount equal to its Fair Market Value. Any resulting gain or loss shall be allocated to the Member’s Capital Accounts in accordance with Section 4.2 and Section 4.3 .

 

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Section 5.2.            Tax Distributions .

 

(a)           Prior to making distributions pursuant to Section 5.1 , on each Tax Distribution Date, the Company shall, subject to the availability of funds and to any restrictions contained in any agreement to which the Company is bound, make distributions to the Members on a pro rata basis in accordance with the number of Units owned by each Member, subject to Section 5.2(b) , in an amount sufficient to cause PubCo to receive a distribution equal to all of PubCo’s federal, state, local and non-U.S. tax liabilities during the Fiscal Year or other taxable period to which the tax-related distribution under this Section 5.2(a) relates.

 

(b)           If a Tax Advance Eligible Member has an Assumed Tax Liability at a Tax Distribution Date in excess of the sum of the cumulative amount of distributions made to such Member under Section 5.1 , Section 5.2(a) and advances made under this Section 5.2(b), in each case, in the relevant Fiscal Year or other taxable period, the Company shall, to the extent permitted by applicable Law, and subject to the legal availability of funds and any restrictions contained in any agreement to which the Company is bound, make advances to such Member in an amount equal to such excess (a “ Tax Advance ”). Any such Tax Advance shall be treated as an advance against and, thus, shall reduce (without duplication), any future distributions that would otherwise be made to such Member pursuant to Sections 5.1 and 10.3(b)(iii) . If there is a Tax Advance outstanding with respect to a Member (i) who elects to participate in an Exchange (including, for the avoidance of doubt, any sale of such Units pursuant to the Direct Exchange Right at the option of PubCo pursuant to Section 3.7(j) ) or (ii) who Transfers Units pursuant to the provisions of Article VIII , then in each case such Member shall indemnify and hold harmless the Company against such Tax Advance, and shall be required to promptly pay to the Company (but in all events within fifteen (15) days after the Exchange Date or Transfer date, as the case may be) an amount of cash equal to the proportionate share of such Tax Advance relating to its Units subject to the Exchange or Transfer (determined at the time of the Exchange or Transfer based on the number of Units subject to the Exchange or Transfer as compared to the total number of Units held by such Member), provided that, in the case of a Transfer described in clause (ii) , such Member shall not be required to pay such amount of cash equal to the proportionate share of such Tax Advance relating to its Units subject to the Transfer, if the transferee is either a Permitted Transferee or such Transfer is otherwise approved by the Manager and the transferee agrees to assume the Member’s obligation to repay to the Company such amount equal to the proportionate share of the Member’s existing Tax Advance relating to such Units subject to the Transfer, and such Member shall be relieved from any liabilities associated with and the obligation to repay its existing Tax Advance relating to such Units subject to the Transfer. The obligations of each Member pursuant to the preceding sentence shall survive the withdrawal of any Member or the transfer of any Member’s Units and shall apply to any current or former Member. For the avoidance of doubt, (i) any payment of a Tax Advance made by the Company pursuant to this Section 5.2(b) shall not reduce the Capital Account balance of the applicable Member and (ii) any repayment of a Tax Advance pursuant to the previous sentence shall not be treated as a Capital Contribution.

 

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Section 5.3.           Distribution Upon Withdrawal . No withdrawing Member shall be entitled to receive any distribution or the value of such Member’s Interest in the Company as a result of withdrawal from the Company prior to the liquidation of the Company, except as specifically provided in this Agreement.

 

Article VI

 

MANAGEMENT

 

Section 6.1.            The Manager; Fiduciary Duties .

 

(a)          The Company shall managed by a single manager (as such term is defined in the Act) (the “ Manager ”). Except as otherwise required by Law or for matters in which vote or approval of any Member is specifically required under this Agreement, (i) the Manager shall have full and complete charge of all affairs of the Company, (ii) the management and control of the Company’s business activities and operations shall rest exclusively with the Manager, and the Manager shall make all decisions regarding the business, activities and operations of the Company (including the incurrence of costs and expenses) in its sole discretion without the consent of any other Member and (iii) the Members (in their capacity as such) shall not participate in the control, management, direction or operation of the activities or affairs of the Company and shall have no power to act for or bind the Company.

 

(b)           The Manager may be any Person (other than a syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act) and may, but need not be, a Member. PubCo shall be the initial Manager as of the Effective Time and shall serve as the Manager from and after the Effective Time until a successor Manager is duly elected pursuant to Section 6.6 .

 

(c)           In connection with the performance of its duties as the Manager of the Company, the Manager acknowledges that it will owe to the Members the same fiduciary duties as it would owe to the stockholders of a Delaware corporation if it were a member of the board of directors of such a corporation and the Members were stockholders of such corporation. The parties acknowledge that PubCo, as the initial Manager and for so long as it continues to be the Manager, will take action through its board of directors, and that the members of PubCo’s board of directors will owe comparable fiduciary duties to the stockholders of PubCo.

 

Section 6.2.            Officers .

 

(a)           The Manager may appoint, employ or otherwise contract with any Person for the transaction of the business of the Company or the performance of services for or on behalf of the Company, and the Manager may delegate to any such Persons such authority to act on behalf of the Company as the Manager may from time to time deem appropriate.

 

(b)           The initial president and chief executive officer of the Company (the “ President and Chief Executive Officer ”) will be Joel Broussard.

 

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(c)           Except as otherwise set forth herein, the President and Chief Executive Officer will be responsible for the general and active management of the business of the Company and its Subsidiaries and will see that all orders of the Manager are carried into effect. The President and Chief Executive Officer will report to the Manager and have the general powers and duties of management usually vested in the office of president and chief executive officer of a corporation organized under the DGCL, subject to the terms of this Agreement, and will have such other powers and duties as may be prescribed by the Manager or this Agreement. The President and Chief Executive Officer will have the power to execute bonds, mortgages and other Contracts requiring a seal, under the seal of the Company, except where required or permitted by Law to be otherwise signed and executed, and except where the signing and execution thereof will be expressly delegated by the Manager to some other Officer or agent of the Company.

 

(d)           Except as set forth herein, the Manager may appoint Officers at any time, and the Officers may include one or more vice presidents, a secretary, one or more assistant secretaries, a chief financial officer, a general counsel, a treasurer, one or more assistant treasurers, a chief operating officer, an executive chairman, and any other officers that the Manager deems appropriate. Except as set forth herein, the Officers will serve at the pleasure of the Manager, subject to all rights, if any, of such Officer under any Contract of employment. Any individual may hold any number of offices, and an Officer may, but need not, be a Member of the Company. The Officers will exercise such powers and perform such duties as specified in this Agreement or as determined from time to time by the Manager.

 

(e)           Subject to this Agreement and to the rights, if any, of an Officer under a Contract of employment, any Officer may be removed, either with or without cause, by the Manager. Any Officer may resign at any time by giving written notice to the Manager. Any resignation will take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation will not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any Contract to which the Officer is a party. A vacancy in any office because of death, resignation, removal, disqualification or any other cause will be filled in the manner prescribed in this Agreement for regular appointments to that office.

 

Section 6.3.           Warranted Reliance by Officers on Others . In exercising their authority and performing their duties under this Agreement, the Officers shall be entitled to rely on information, opinions, reports, or statements of the following persons or groups unless they have actual knowledge concerning the matter in question that would cause such reliance to be unwarranted:

 

(a)           one or more employees or other agents of the Company or in subordinates whom the Officer reasonably believes to be reliable and competent in the matters presented; and

 

(b)           any attorney, public accountant, or other person as to matters which the Officer reasonably believes to be within such person’s professional or expert competence.

 

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Section 6.4.            Indemnification . Subject to the limitations and conditions provided in this Section 6.4 , each Person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or arbitrative (each, a “ Proceeding ”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact he, she or it, or a Person of which he, she or it is the legal representative, is or was a Member, the Manager or an Officer, in each case, shall be indemnified by the Company to the fullest extent permitted by applicable Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such Law permitted the Company to provide prior to such amendment) against all judgment, penalties (including excise and similar taxes and punitive damages), fines, settlement and reasonable expenses (including reasonable attorneys’ fees and expenses) actually incurred by such Person in connection with such Proceeding, appeal, inquiry or investigation, if such Person acted in Good Faith. Reasonable expenses incurred by a Person of the type entitled to be indemnified under this Section 6.4 who was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the Company in advance of the final disposition of the Proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined that he, she or it is not entitled to be indemnified by the Company. Indemnification under this Section 6.4 shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted pursuant to this Section 6.4 shall be deemed contract rights, and no amendment, modification or repeal of this Section 6.4 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings, appeals, inquiries or investigations arising prior to any amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Section 6.4 could involve indemnification for negligence or under theories of strict liability.

 

Section 6.5.            Maintenance of Insurance or Other Financial Arrangements . In compliance with applicable Law, the Company (with the approval of the Manager) may purchase and maintain insurance or make other financial arrangements on behalf of any Person who is or was a Member, employee or agent of the Company or the Manager, or at the request of the Company is or was serving as a manager, director, officer, employee or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, for any Liability asserted against such Person and Liability and expenses incurred by such Person in such Person’s capacity as such, or arising out of such Person’s status as such, whether or not the Company has the authority to indemnify such Person against such Liability and expenses.

 

Notwithstanding the foregoing and in addition to the foregoing, in accordance with Section 6.4 of the Merger and Contribution Agreement, all the rights and limitations to indemnification, exculpation, and advancement of expenses for acts or omissions occurring prior to the Company Merger Effective Time in favor of the current or former managers, directors, officers, members or employees of the Company Entities (as defined in the Merger and Contribution Agreement) existing immediately prior to the Company Merger Effective Time (collectively, the “ Company Indemnitees ”) as provided under the Existing LLC Agreement are hereby incorporated into this Agreement and shall survive and shall continue in full force and effect for a period of not less than six years after the date of this Agreement. This paragraph shall not be repealed, amended, waived or otherwise modify any such rights to indemnification, exculpation, and advancement of expenses in any manner that would adversely affect the rights of the Company Indemnitees.

 

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Section 6.6.            Election of Manager . Following the Effective Time, the Manager shall be elected annually by the Members in accordance with this Section 6.6 , and the Manager so elected shall serve as the Manager until a successor has been duly elected as the Manager in accordance with this Section 6.6 . Not more than one year after the later of (a) the Effective Time and (b) the last meeting of the Members or action by written consent of the Members at which or pursuant to which the Manager was elected in accordance with this Section 6.6 , the Manager at such time (or the Members if the Manager shall fail to take such action) shall either (i) call and hold a meeting of the Members for purposes of electing the Manager or (ii) seek written consents from the requisite Members to elect the Manager pursuant to Section 7.2(d) . A Person shall be elected as the Manager if the election of such Manager is approved by Members holding a majority of the outstanding Units by vote at a meeting held for such purpose or by action by written consent; provided , however , that if the Person so elected as the Manager was not the Manager immediately prior to such election, such election shall not be effective, and such Person shall not become the Manager, unless and until such Person has executed and delivered to the Company the written agreement of such Person to be bound by the terms of this Agreement applicable to the Manager, in form and substance reasonably satisfactory to the Manager serving immediately prior to such election or to the Members holding a majority of the outstanding Units.

 

Section 6.7.           Resignation or Removal of Manager; Vacancy . The Manager may resign as the Manager at any time and may be removed at any time, with our without cause, by the Members holding a majority of the outstanding Units by vote at a meeting of the Members held for such purpose or by action by written consent; provided , however , that no (i) such resignation or removal shall be effective until a successor Manager has been duly elected in accordance with Section 6.6 , and (ii) PubCo shall not resign as the Manager for so long as it is a Member. If for any reason a Manager ceases to serve as the Manager prior to the election of a successor Manager in accordance with Section 6.6 , PubCo shall automatically, and without any action of the Company or any Member, become the Manager and serve as the Manager until another Person is duly elected as the Manager in accordance with Section 6.6 .

 

Section 6.8.            No Inconsistent Obligations . The Manager represents that it does not have any Contracts, other agreements, duties or obligations that are inconsistent with its duties and obligations (whether or not in its capacity as Manager) under this Agreement and covenants that, except as permitted by Section 6.1 , it will not enter into any Contracts or other agreements or undertake or acquire any other duties or obligations that are inconsistent with such duties and obligations.

 

Section 6.9.           Compensation; Certain Costs and Expenses . The Manager shall not be compensated for its services as the Manager of the Company. The Company shall (i) pay, or cause to be paid, all costs, fees, operating expenses and other expenses of the Company (including the costs, fees and expenses of attorneys, accountants or other professionals and the compensation of all personnel providing services to the Company) incurred in pursuing and conducting, or otherwise related to, the activities of the Company, and (ii) in the sole discretion of the Manager, bear and/or reimburse the Manager for any costs, fees or expenses incurred by it in connection with serving as the Manager. To the extent that the Manager determines in good faith that such expenses are related to the business and affairs of the Manager that are conducted through the Company and/or its Subsidiaries (including expenses that relate to the business and affairs of the Company and/or its Subsidiaries and that also relate to other activities of the Manager), the Manager may cause the Company to pay or bear all expenses of the Manager, including, without limitation, costs of securities offerings not borne directly by the Members, board of directors’ compensation and meeting costs, cost of periodic reports to its stockholders, litigation costs and damages arising from litigation, accounting and legal costs and franchise taxes, provided that the Company shall not pay or bear any income tax obligations of the Manager.

 

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Article VII

 

ROLE OF MEMBERS

 

Section 7.1.            Rights or Powers . The Members, acting in their capacity as Members, shall not have any right or power to take part in the management or control of the Company or its business and affairs or to act for or bind the Company in any way. Notwithstanding the foregoing, the Members have all the rights and powers specifically set forth in this Agreement and, to the extent not inconsistent with this Agreement, in the Act. A Member, any Affiliate thereof or an employee, stockholder, agent, director or officer of a Member or any Affiliate thereof, may also be the Manager or an employee, or be retained as an agent of, the Company, the Manager or any of their respective Affiliates. The existence of these relationships and acting in such capacities will not result in the Member (in its capacity as such) being deemed to be participating in the control of the business of the Company or otherwise affect the limited liability of the Member. Except as specifically provided herein, a Member shall not, in its capacity as a Member, take part in the operation, management or control of the Company’s business, transact any business in the Company’s name or have the power to sign documents for or otherwise bind the Company

 

Section 7.2.            Voting .

 

(a)           Meetings of the Members may be called by the Manager and shall be called by the Manager upon the written request of Members holding at least 25% of the outstanding Units. Such request shall state the location of the meeting and the nature of the business to be transacted at the meeting. Written notice of any such meeting shall be given to all Members not less than two Business Days nor more than 30 days prior to the date of such meeting. Members may vote in person, by proxy or by telephone at any meeting of the Members and may waive advance notice of such meeting. Whenever the vote or consent of Members is permitted or required under this Agreement, such vote or consent may be given at a meeting of the Members or may be given in accordance with the procedure prescribed in this Section 7.2 . Except as otherwise expressly provided in this Agreement, the affirmative vote of the Members holding a majority of the outstanding Units shall constitute the act of the Members.

 

(b)           Each Member may authorize any Person or Persons to act for it by proxy on all matters in which such Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by such Member or its attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Member executing it.

 

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(c)           Each meeting of Members shall be conducted by an Officer designated by the Manager or such other individual person as the Manager deems appropriate.

 

(d)           Any action required or permitted to be taken by the Members may be taken without a meeting if the requisite Members whose approval is necessary consent thereto in writing.

 

Section 7.3.            Various Capacities . The Members acknowledge and agree that the Members or their Affiliates will from time to time act in various capacities, including as a Member and as the Partnership Representative.

 

Section 7.4.            Withdrawal of PubCo . PubCo shall not, by any means, withdraw as a Member or otherwise cease to be a Member except in compliance with this Section 7.4 . No withdrawal of PubCo as a Member or other cessation of PubCo to be a Member shall be effective unless (a) proper provision is made, in compliance with this Agreement, so that the obligations of PubCo and the rights of all Members under this Agreement and applicable Law remain in full force and effect, and (b) PubCo or its successor, as applicable, provides all other Members with contractual rights, directly enforceable by such other Members against PubCo or its successor, as applicable, to cause PubCo to comply with all PubCo’s obligations under this Agreement (including its obligations under Section 3.7 ) (other than in its capacity as Manager, if applicable).

 

Section 7.5.            Reclassification Events of PubCo . If a Reclassification Event occurs, the Manager and PubCo or its successor, as the case may be, shall, as and to the extent necessary, amend this Agreement in compliance with Section 11.1 , and enter into any necessary supplementary or additional agreements, to ensure that, following the effective date of the Reclassification Event: (i) upon any Exchange pursuant to Section 3.7 , the Exchanging Member shall be entitled to receive, for each Common Unit and share of Class B Stock subject to such Exchange, the same amount and same type of property, securities or cash (or combination thereof) that one share of Class A Stock becomes exchangeable for or converted into as a result of the Reclassification Event and (ii) PubCo or the successor to PubCo, as applicable, is obligated to deliver such property, securities or cash upon such Exchange. PubCo shall not consummate or agree to consummate any Reclassification Event unless the successor Person, if any, becomes obligated to comply with the obligations of PubCo (in whatever capacity) under this Agreement.

 

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Article VIII

 

TRANSFERS OF INTERESTS

 

Section 8.1.            Restrictions on Transfer .

 

(a)          Except as provided in Section 3.7 and except for the Transfers by a Member to Permitted Transferee, no Member shall Transfer all or any portion of its Interest without the prior written consent of the Manager in its sole discretion; provided , that, to the extent that the Manager determines in good faith that a proposed transfer would not have the effect contemplated by Section 8.1(b)(ii) and (iii) , then the Manager will not unreasonably withhold its consent to a transfer by any Member that holds at least 5% of the Units not held by PubCo and who intends, in connection with such proposed transfer, to transfer all or substantially all of the Units then held by such Member to any Person or group of Persons acting together that would constitute a “group” for purposes of Section 13(d) of the Exchange Act or any successor provisions thereto. If, notwithstanding the provisions of this Section 8.1(a) , all or any portion of a Member’s Interests are Transferred in violation of this Section 8.1(a) , involuntarily, by operation of Law or otherwise, then without limiting any other rights and remedies available to the other parties under this Agreement or otherwise, the Transferee of such Interest (or portion thereof) shall not be admitted to the Company as a Member or be entitled to any rights as a Member hereunder, and the Transferor will continue to be bound by all obligations hereunder, unless and until the Manager consents in writing to such admission, which consent shall be granted or withheld in the Manager’s sole discretion. Any attempted or purported Transfer of all or a portion of a Member’s Interests in violation of this Section 8.1(a) shall be null and void and of no force or effect whatsoever. For the avoidance of doubt, the restrictions on Transfer contained in this Article VIII shall not apply to the Transfer of any capital stock of PubCo; provided that no shares of Class B Stock may be Transferred unless a corresponding number of Units are Transferred therewith in accordance with this Agreement.

 

(b)          In addition to any other restrictions on Transfer herein contained, including the provisions of this Article VIII , in no event may any Transfer or assignment of Interests by any Member be made (i) to any Person who lacks the legal right, power or capacity to own Interests; (ii) if in the opinion of legal counsel or a qualified tax advisor to the Company such Transfer presents a material risk that such Transfer would cause the Company to cease to be classified as a partnership for federal income tax purposes or to be classified as a publicly traded partnership within the meaning of Section 7704(b) of the Code for federal income tax purposes; (iii) if such Transfer would cause the Company to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section 3 (14) of ERISA) or a “disqualified person” (as defined in Section 4975(e)(2) of the Code); (iv) if such Transfer would, in the opinion of counsel to the Company, cause any portion of the assets of the Company to constitute assets of any employee benefit plan pursuant to the Plan Asset Regulations or otherwise cause the Company to be subject to regulation under ERISA; (v) if such Transfer requires the registration of such Interests or any Equity Securities issued upon any exchange of such Interests, pursuant to any applicable federal or state securities Laws; or (vi) if such Transfer subjects the Company to regulation under the Investment Company Act or the Investment Advisors Act of 1940, each as amended (or any succeeding law).

 

Section 8.2.           Notice of Transfer . Other than in connection with Transfers made pursuant to Section 3.7 , each Member shall, after complying with the provisions of this Agreement, but in any event no later than three Business Days following any Transfer of Interests, give written notice to the Company of such Transfer. Each such notice shall describe the manner and circumstances of the Transfer.

 

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Section 8.3.           Transferee Members . A Transferee of Interests pursuant to this Article VIII shall have the right to become a Member only if (i) the requirements of this Article VIII are met, (ii) such Transferee executes a Joinder or another instrument reasonably satisfactory to the Manager agreeing to be bound by the terms and provisions of this Agreement and assuming all of the Transferor’s then existing and future Liabilities arising under or relating to this Agreement, (iii) such Transferee represents that the Transfer was made in accordance with all applicable securities Laws, (iv) the Transferor or Transferee shall have reimbursed the Company for all reasonable expenses (including attorneys’ fees and expenses) of any Transfer or proposed Transfer of a Member’s Interest, whether or not consummated and (v) if such Transferee or his or her spouse is a resident of a community property jurisdiction, then such Transferee’s spouse shall also execute an instrument reasonably satisfactory to the Manager agreeing to be bound by the terms and provisions of this Agreement to the extent of his or her community property or quasi-community property interest, if any, in such Member’s Interest. Unless agreed to in writing by the Manager, the admission of a Member shall not result in the release of the Transferor from any Liability that the Transferor may have to each remaining Member or to the Company under this Agreement (but only to the extent existing or relating to acts or omissions that existed on or prior to such admission date) or under any other Contract between the Manager, the Company or any of its Subsidiaries, on the one hand, and such Transferor or any of its Affiliates, on the other hand. Notwithstanding anything to the contrary in this Section 8.3 , and except as otherwise provided in this Agreement, following a Transfer by one or more Members (or a transferee of the type described in this sentence) to an Permitted Transferee of all or substantially all of their Interests, such transferee shall succeed to all of the rights of such Member(s) under this Agreement.

 

Section 8.4.            Legend . Each certificate representing a Unit, if any, will be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

 

THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.

 

THE TRANSFER AND VOTING OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF USWS HOLDINGS LLC DATED AS OF NOVEMBER 9, 2018, AMONG THE MEMBERS LISTED THEREIN AND THE MANAGER, AS IT MAY BE AMENDED, SUPPLEMENTED AND/OR RESTATED FROM TIME TO TIME, AND NO TRANSFER OF THESE SECURITIES WILL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER OF SUCH SECURITIES.”

 

Article IX

 

ACCOUNTING

 

Section 9.1.           Books of Account . The Company shall, and shall cause each Subsidiary to, maintain true books and records of account in which full and correct entries shall be made of all its business transactions pursuant to a system of accounting established and administered in accordance with GAAP, and shall set aside on its books all such proper accruals and reserves as shall be required under GAAP.

 

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Section 9.2.            Tax Elections . The Company shall make the following elections on the appropriate forms or tax returns:

 

(a)           to adopt the calendar year as the Company’s Fiscal Year, if permitted under the Code;

 

(b)           to adopt the accrual method of accounting for federal income tax purposes;

 

(c)           to elect to amortize the organizational expenses of the Company as permitted by Code Section 709(b);

 

(d)           to make an election described in Section 754 of the Code (which the Company shall ensure that it has in effect at all times); and

 

(e)           any other election the Partnership Representative may deem appropriate in its sole discretion.

 

Section 9.3.           Tax Returns . The Partnership Representative shall arrange for the preparation and timely filing of all income and other tax and informational returns of the Company. The Company shall use commercially reasonable best efforts to deliver, or cause to be delivered, within 90 days after the end of each of the Company’s Fiscal Year, to each Person who was a Member at any time during such Fiscal Year, all information reasonably necessary related to the Company for the preparation of such Person’s United States federal and applicable state income tax returns with respect to such Person’s Units.

 

Section 9.4.           Partnership Representative . PubCo shall act as the “partnership representative” within the meaning of Section 6223 of the Code (the “ Partnership Representative ”). The Partnership Representative shall be responsible for making all decisions, filing all elections and taking all other actions, in each case related to any audit, examination, litigation or other tax-related proceeding, or otherwise related to its role as “partnership representative” pursuant to Sections 6221 through 6231 of the Code, in its sole discretion. Each Member shall indemnify and reimburse the Company to the extent the Company is required to make any payment for taxes, interest, additions to tax or penalties or with respect to a Member’s share of any adjustment to income, gain, loss, deduction or credit as determined in the reasonable good faith discretion of the Partnership Representative. To the fullest extent permitted by applicable Law, a Member’s obligations under this Section 9.4 shall survive the dissolution, liquidation, termination and winding-up of the Company and shall survive, as to each Member, such Member’s withdrawal from the Company or termination of the Member’s status as a Member. Any reasonable, documented cost or expense incurred by the Partnership Representative in connection with the roles and responsibilities described in this Section 9.4 shall be borne by the Company. The Members agree to reasonably cooperate with the Company and the Partnership Representative as necessary to carry out the intent of this Section 9.4 .

 

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Section 9.5.            Withholding Tax Payments and Obligations .

 

(a)          If the Company receives proceeds in respect of which a tax has been withheld, the Company shall be treated as having received cash in an amount equal to the amount of such withheld tax, and, for all purposes of this Agreement but subject to Section 9.5(d) , each Member shall be treated as having received a distribution pursuant to Section 5.1 equal to the portion of the withholding tax allocable to such Member, as determined by the Partnership Representative in its discretion.

 

(b)          The Company is authorized to (i) withhold from distributions to a Member and to pay over to any Governmental Entity any amount required to be so withheld pursuant to the Code or any other federal, foreign, state, or local Law and (ii) make payments to any Governmental Entity with respect to any foreign, federal, state or local tax liability of a Member arising as a result of such Member’s interest in the Company (a “ Withholding Payment ”). A Withholding Payment shall include any “imputed underpayment” within the meaning of Code Section 6225 paid (or payable) by the Company as a result of an adjustment with respect to any partnership item, including any interest or penalties with respect to any such adjustment (collectively, an “ Imputed Underpayment Amount ”). The Partnership Representative shall reasonably determine the portion of any Imputed Underpayment Amount that is attributable to each Member (including a former Member and such former Member’s assignee(s) or transferee(s)). An Imputed Underpayment Amount shall include any “imputed underpayment” within the meaning of Code Section 6225 paid (or payable) by any entity treated as a partnership for federal income tax purposes in which the Company holds (or has held) a direct or indirect interest, other than through entities treated as corporations for federal income tax purposes, to the extent that the Company bears the economic burden of such amounts, whether by Law or agreement.

 

(c)           Neither the Company nor the Partnership Representative shall be liable for any excess taxes withheld in respect of any Member, and, in the event of overwithholding, a Member’s sole recourse shall be to apply for a refund from the appropriate Governmental Entity.

 

(d)           Any taxes or amounts withheld pursuant to this Section 9.5  shall be treated as if distributed to the relevant Member to the extent an amount equal to such withheld taxes or amounts would then be distributable to such Member, and, to the extent in excess of such distributable amounts, as a demand loan payable by the Member to the Company with interest at the Prime Rate in effect from time to time, compounded annually. The Partnership Representative may, in its sole discretion, either demand payment of the principal and accrued interest on such demand loan at any time, and enforce payment thereof by legal process, or may withhold from one or more distributions to a Member amounts sufficient to satisfy such Member’s obligations under any such demand loan.

 

(e)           If the Company is required by Law to make any payment to a Governmental Entity that is specifically attributable to a Member or a Member’s status as such (including federal withholding taxes, state personal property taxes, state unincorporated business taxes, or the portion of an Imputed Underpayment Amount attributable to such Member), then such Member shall indemnify and contribute to the Company in full for the entire amount of taxes paid (plus interest, penalties and related expenses if the failure of the Company to make such payment is due to the fault of the Member), which payment shall not be deemed a Capital Contribution for purposes of this Agreement.

 

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(f)           Without limiting the obligations of any Member pursuant to this Section 9.5 , the Partnership Representative may offset distributions to which a Member is otherwise entitled under this Agreement against such Member’s obligation to indemnify the Company under this Section 9.5(e) .

 

(g)           The obligations of each Member pursuant to this Section 9.5 shall survive the withdrawal of any Member or the transfer of any Member’s Units and shall apply to any current or former Member.

 

Article X

 

DISSOLUTION AND TERMINATION

 

Section 10.1.           Liquidating Events . The Company shall dissolve and commence winding up and liquidating upon the first to occur of the following (“ Liquidating Events ”):

 

(a)          The determination of the Manager to dissolve, wind up and liquidate the Company; provided, however, if such dissolution, wind up or liquidation is to be effective prior to the fifth Business Day after the first anniversary of date of this Agreement, such determination shall be approved by the Majority Members; provided , further , the Manager shall provide written notice to each of the Members not less than 15 days prior to commencing any such dissolution to provide the opportunity for any such Member to exercise its Exchange Right in advance of any such dissolution;

 

(b)          a dissolution of the Company under Section 18-801(4) of the Act; or

 

(c)          the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act.

 

The Members hereby agree that the Company shall not dissolve prior to the occurrence of a Liquidating Event and that no Member shall seek a dissolution of the Company, under Section 18-802 of the Act or otherwise, other than based on the matters set forth in subsections (a) and (b) above. If it is determined by a court of competent jurisdiction that the Company has dissolved prior to the occurrence of a Liquidating Event, the Members hereby agree to continue the business of the Company without a winding up or liquidation. In the event of a dissolution pursuant to Section 10.1(a) , the relative economic rights of each class of Units immediately prior to such dissolution shall be preserved to the greatest extent practicable with respect to distributions made to Members pursuant to Section 10.3 in connection with such dissolution, taking into consideration tax and other legal constraints that may adversely affect one or more parties to such dissolution and subject to compliance with applicable Laws and regulations, unless, with respect to any class of Units, holders of a majority of the Units of such class consent in writing to a treatment other than as described above.

 

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Section 10.2.           Bankruptcy . For purposes of this Agreement, the “bankruptcy” of a Member shall mean the occurrence of any of the following: (a) any Governmental Entity shall take possession of any substantial part of the property of that Member or shall assume control over the affairs or operations thereof, or a receiver or trustee shall be appointed, or a writ, order, attachment or garnishment shall be issued with respect to any substantial part thereof, and such possession, assumption of control, appointment, writ or order shall continue for a period of 90 consecutive days; or (b) a Member shall admit in writing of its inability to pay its debts when due, or make an assignment for the benefit of creditors; or apply for or consent to the appointment of any receiver, trustee or similar officer or for all or any substantial part of its property; or shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debts, dissolution, liquidation, or similar proceeding under the Laws of any jurisdiction; or (c) a receiver, trustee or similar officer shall be appointed for such Member or with respect to all or any substantial part of its property without the application or consent of that Member, and such appointment shall continue undischarged or unstayed for a period of 90 consecutive days or any bankruptcy, insolvency, reorganization, arrangements, readjustment of debt, dissolution, liquidation or similar proceedings shall be instituted (by petition, application or otherwise) against that Member and shall remain undismissed for a period of 90 consecutive days.

 

Section 10.3.           Procedure .

 

(a)          In the event of the dissolution of the Company for any reason, the Manager (or the Manager may appoint one or more Persons to act as liquidator, and shall appoint such a liquidator in the event the Manager is bankrupt) (as applicable, the “ Winding-Up Person ”) shall commence to wind up the affairs of the Company and to liquidate the Company’s investments. Subject to Section 10.4(a) , such Winding-Up Person shall have full right and unlimited discretion to determine in good faith the time, manner and terms of any sale or sales of the Property or other assets pursuant to such liquidation, having due regard to the activity and condition of the relevant market and general financial and economic conditions. The Members shall continue to share profits, losses and distributions during the Fiscal Year of dissolution and liquidation in the same manner and proportion as though the Company had not dissolved. The Company shall engage in no further business except as may be necessary, in the reasonable discretion of the Winding-Up Person to preserve the value of the Company’s assets during the Fiscal Year of dissolution and liquidation.

 

(b)           Following the payment of all expenses of liquidation and the allocation of all Profits and Losses as provided in Article IV , the proceeds of the liquidation and any other funds of the Company shall be distributed in the following order of priority:

 

(i)            First, to the payment and discharge of all of the Company’s debts and Liabilities to creditors (whether third parties or Members), in the order of priority as provided by Law, except any obligations to the Members in respect of their Capital Accounts;

 

(ii)           Second, to set up such cash reserves which the Manager reasonably deems necessary for contingent or unforeseen Liabilities or future payments described in Section 10.3(b)(i) (which reserves when they become unnecessary shall be distributed in accordance with the provisions of subsection (iii) , below); and

 

(iii)           Third, subject to Section 5.2(b) , the balance to the Members, pro rata in proportion to their respective Units.

 

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(c)           Except as provided in Section 10.4(a) , no Member shall have any right to demand or receive property other than cash upon dissolution and termination of the Company.

 

(d)           Upon the completion of the liquidation of the Company and the distribution of all Company funds, the Company shall terminate and the Winding-Up Person shall have the authority to execute and record a certificate of cancellation of the Company, as well as any and all other documents required to effectuate the dissolution and termination of the Company.

 

Section 10.4.           Rights of Members .

 

(a)           Each Member irrevocably waives any right that it may have to maintain an action for partition with respect to the property of the Company.

 

(b)           Except as otherwise provided in this Agreement, (i) each Member shall look solely to the assets of the Company for the return of its Capital Contributions, and (ii) no Member shall have priority over any other Member as to the return of its Capital Contributions, distributions or allocations.

 

Section 10.5.           Notices of Dissolution . In the event a Liquidating Event occurs or an event occurs that would, but for provisions of Section 10.1 , result in a dissolution of the Company, the Company shall, within 30 days thereafter, (a) provide written notice thereof to each of the Members and to all other parties with whom the Company regularly conducts business (as determined in the discretion of the Manager), and (b) comply, in a timely manner, with all filing and notice requirements under the Act or any other applicable Law.

 

Section 10.6.           Reasonable Time for Winding Up . A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets in order to minimize any losses that might otherwise result from such winding up.

 

Section 10.7.           No Deficit Restoration . No Member shall be personally liable for a deficit Capital Account balance of that Member, it being expressly understood that the distribution of liquidation proceeds shall be made solely from existing Company assets.

 

Section 10.8.           Distributions In Kind . Subject to the order of priorities in Section 10.3(b) , the Winding-Up Person may, in its sole discretion, distribute to the Members, in lieu of cash, either (i) all or any portion of the remaining Company assets in-kind in accordance with Section 10.3(b)(iii) , (ii) as tenants in common in accordance with the provisions of Section 10.3(b)(iii) , undivided interest in all or a portion of such Company assets or (iii) a combination of the foregoing. Any such distributions to the Members in kind shall be subject to (x) such conditions relating to the disposition and management of such assets as the Winding-Up Person deems reasonable and equitable and (y) the terms and conditions of any agreements governing such assets (or the operation of or holders thereof) as such time.

 

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Article XI

 

GENERAL

 

Section 11.1.           Amendments; Waivers .

 

(a)          The terms and provisions of this Agreement may be waived, modified or amended (including by means of merger, consolidation or other business combination to which the Company is a party) solely with the approval of the Manager; provided , that no amendment to this Agreement may:

 

(i)            modify the limited liability of any Member, or increase the Liabilities or obligations of any Member, in each case, without the consent of each such affected Member;

 

(ii)          materially alter or change any rights, preferences or privileges of any Interests in a manner that is different or prejudicial relative to any other Interests, without the approval of a majority in interest of the Members holding the Interests affected in such a different or prejudicial manner;

 

(iii)           materially alter or change any rights, preferences or privileges of any holder of a class of Interests in a manner that is different or prejudicial relative to any holder of the same class of Interests without the consent of the holder of such Interests affected in such a different or prejudicial manner;

 

(iv)         except to the extent required to give effect to any additional Units issued in accordance with this Agreement, modify in any material respect Section 3.2(a) or (b) , Section 3.5(a) or (b) , Section 3.7 , Article IV , Article V , Section 6.1(b) , Section 8.1(a) , Section 10.1 , or Section 10.3(b) without the approval of the Majority Members; provided , that solely for purposes of this Section 11.1(a)(iv) , the second reference to “a majority” in the definition of Majority Members shall be deemed to be thirty-three percent (33%); or

 

(v)          modify any of the terms and conditions of this Agreement which terms and conditions expressly require the approval or action of certain Persons without obtaining the consent of the requisite number or specified percentage of such Persons who are entitled to approve or take action on such matter.

 

(b)          Notwithstanding the foregoing subsection (a) , (i) the Manager, acting alone, may amend this Agreement to reflect the admission of new Members, Transfers of Interests, the issuance of additional Units or Equity Securities, as provided by the terms of this Agreement, and, subject to Section 11.1(a) , subdivisions or combinations of Units made in compliance with Section 3.5(d) , and (ii) the Manager and PubCo or its successor, as applicable, acting without any other Member, may amend this Agreement as and to the extent required by Section 7.5 .

 

(c)          No waiver of any provision or default under, nor consent to any exception to, the terms of this Agreement or any agreement contemplated hereby shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided.

 

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Section 11.2.           Further Assurances . Each party agrees that it will from time to time, upon the reasonable request of another party, execute such documents and instruments and take such further action as may be required to accomplish the purposes of this Agreement.

 

Section 11.3.           Successors and Assigns . All of the terms and provisions of this Agreement shall be binding upon the parties and their respective successors and assigns, but shall inure to the benefit of and be enforceable by the successors and assigns of any Member only to the extent that they are permitted successors and assigns pursuant to the terms hereof. No party may assign its rights hereunder except as herein expressly permitted.

 

Section 11.4.           Entire Agreement . This Agreement, together with all Exhibits and Schedules hereto and all other agreements referenced therein and herein, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth herein and therein.

 

Section 11.5.           Rights of Members Independent . The rights available to the Members under this Agreement and at Law shall be deemed to be several and not dependent on each other and each such right accordingly shall be construed as complete in itself and not by reference to any other such right. Any one or more and/or any combination of such rights may be exercised by a Member and/or the Company from time to time and no such exercise shall exhaust the rights or preclude another Member from exercising any one or more of such rights or combination thereof from time to time thereafter or simultaneously.

 

Section 11.6.           Governing Law . This Agreement, the legal relations between the parties and any Action, whether contractual or non-contractual, instituted by any party with respect to matters arising under or growing out of or in connection with or in respect of this Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware applicable to Contracts made and performed in such State and without regard to conflicts of law doctrines, except to the extent that certain matters are preempted by federal Law or are governed as a matter of controlling Law by the Law of the jurisdiction of organization of the respective parties.

 

Section 11.7.          Jurisdiction and Venue . The parties hereto hereby agree and consent to be subject to the jurisdiction of any federal court of the District of Delaware or the Delaware Court of Chancery over any action, suit or proceeding (a “ Legal Action ”) arising out of or in connection with this Agreement. The parties hereto irrevocably waive the defense of an inconvenient forum to the maintenance of any such Legal Action. Each of the parties hereto further irrevocably consents to the service of process out of any of the aforementioned courts in any such Legal Action by the mailing of copies thereof by registered mail, postage prepaid, to such party at its address set forth in this Agreement, such service of process to be effective upon acknowledgment of receipt of such registered mail. Nothing in this Section 11.7 shall affect the right of any party hereto to serve legal process in any other manner permitted by Law.

 

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Section 11.8.          Headings . The descriptive headings of the Articles, Sections and subsections of this Agreement are for convenience only and do not constitute a part of this Agreement.

 

Section 11.9.         Counterparts . This Agreement and any amendment hereto or any other agreement (or document) delivered pursuant hereto may be executed in one or more counterparts and by different parties in separate counterparts. All of such counterparts shall constitute one and the same agreement (or other document) and shall become effective (unless otherwise provided therein) when one or more counterparts have been signed by each party and delivered to the other party.

 

Section 11.10.        Notices . Any notice, request, demand or other communication required or permitted to be given or made under this Agreement shall be in writing and shall be (a) delivered personally, (b) transmitted by first class registered or certified mail, postage prepaid, return receipt requested, (c) delivered by prepaid overnight courier service or (d) delivered by e-mail of a PDF document, in each case, at the addresses set forth as follows:

 

if to the Company, the Manager or PubCo, addressed to it at:

 

c/o U.S. Well Services, Inc.

770 S. Post Oak Lane, Suite 405

Houston, Texas 77056

Attn: Joel Broussard

Email: joelb@uswellservices.com

 

; or, if to a Member other than PubCo, addressed to it at the address for such Member set forth in the Unit Register;

 

or, in each case to such other address or to such other Person as such party shall have last designated by such notice to the other parties. Notices shall be effective and deemed received (i) if delivered personally or sent by courier service, upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in the mail or the date of delivery as shown by the return receipt therefor, or (iii) on the date sent by e-mail if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient.

 

Section 11.11.          Representation By Counsel; Interpretation . The parties acknowledge that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of Law, or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived.

 

Section 11.12.          Severability . If any provision of this Agreement is determined to be invalid, illegal or unenforceable by any Governmental Entity, the remaining provisions of this Agreement, to the extent permitted by Law shall remain in full force and effect, provided, that the essential terms and conditions of this Agreement for all parties remain valid, binding and enforceable.

 

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Section 11.13.        Expenses . Except as otherwise provided in this Agreement or in the Merger and Contribution Agreement, each party shall bear its own expenses in connection with the transactions contemplated by this Agreement.

 

Section 11.14.        No Third-Party Beneficiaries . Except as expressly provided in Section 6.4 and Section 9.2 , nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto and their respective successors and permitted assigns, any rights or remedies under this Agreement or otherwise create any third party beneficiary hereto.

 

[Signatures pages follow]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed, or caused to be executed by its duly authorized represented, this Amended and Restated Limited Liability Company Agreement as of the day and year first above written.

 

  COMPANY:
   
  USWS HOLDINGS LLC
     
  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
   

Title: President and Chief Executive Officer

   
  PUBCO (in its capacity as a Member and as the initial Manager):
   
  U.S. WELL SERVICES, INC.
     
  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
   

Title: President and Chief Executive Officer

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  OTHER MEMBERS:
   
  ALJ BLOCKER LLC
     
  By: /s/ Ron D. Silverton
    Name: Ron D. Silverton
    Title: Authorized Signatory

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  BKC ASW BLOCKER, INC.
     
  By: /s/ Michael Pungello
    Name: Michael Pungello
    Title: President

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  CPTA MASTER BLOCKER, INC.
     
  By: /s/ Joseph B. Alala, III
    Name: Joseph B. Alala, III
   

Title: President and Chief Executive Officer

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  GUGGENHEIM ENERGY OPPORTUNITIES FUND, LP
     
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  GUGGENHEIM PRIVATE DEBT FUND NOTE ISSUER, LLC
     
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  GUGGENHEIM PRIVATE DEBT FUND, LLC
     
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  MAVERICK ENTERPRISES, INC.
     
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  MERCER QIF FUND PLC – MERCER INVESTMENT FUND 1
     
   

By: Millstreet Capital Management LLC,

its Sub-Investment Manager

  By: /s/ Craig Kelleher
    Name: Craig Kelleher
    Title: Managing Member

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  MILLSTREET CREDIT FUND LP
     
   

By: Millstreet Capital Partners LLC,

its General Partner

  By: /s/ Craig Kelleher
    Name: Craig Kelleher
    Title: Managing Member

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  NZC GUGGENHEIM FUND LLC
     
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  ORB INVESTMENTS NO. 2, LLC
     
  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
    Title: Member

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  ORB INVESTMENTS, LLC
     
  By: /s/ Joel N. Broussard
    Name: Joel N. Broussard
    Title: Member

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  PENNANTPARK CREDIT OPPORTUNITIES FUND II, LP
     
  By: /s/ Arthur Penn
    Name: Arthur Penn
    Title: Chief Executive Officer

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  PNNT INVESTMENT HOLDINGS, LLC
     
  By: /s/ Arthur Penn
    Name: Arthur Penn
    Title: Chief Executive Officer

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  SOUTHPAW CREDIT OPPORTUNITY PARTNERS LP
     
  By: /s/ Kevin Wyman
    Name: Kevin Wyman
   

Title: Managing Member of General Partner,

Southpaw GP LLC

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  USWS MANAGEMENT COMPANY LLC
   
  By: /s/ Matthew J. Bernard
    Name: Matthew J. Bernard
    Title: Member

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  VERGER CAPITAL FUND LLC
     
    By:  Guggenheim Partners Investment Management, LLC, as Manager
  By: /s/ Kevin M. Robinson
    Name: Kevin M. Robinson
    Title: Attorney-in-Fact

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  VERITION MULTI-STRATEGY MASTER FUND LTD.
     
  By: /s/ William Anderson
    Name: William Anderson
    Title: Authorized Signatory
   

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  /s/ Brian Stewart
   
  Brian Stewart

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

  /s/ Nathan Houston
   
  Nathan Houston

 

[Signature Page to the Amended and Restated Limited Liability Company Agreement]

 

 

 

 

EXHIBIT A

 

MEMBERS, EFFECTIVE TIME CAPITAL ACCOUNT BALANCE AND INTERESTS

 

 

Member*

  Effective Time Capital
Account Balance**
    Number of
Common Units
 
U.S. Well Services, Inc.           50,079,676  
BKC ASW Blocker, Inc.             4,359,535  
Millstreet Credit Fund LP             274,700  
Mercer QIF Fund PLC – Mercer Investment Fund 1             1,311,835  
USWS Management Company LLC             1,111,187  
Guggenheim Private Debt Fund Note Issuer, LLC             1,459,832  
Southpaw Credit Opportunity Partners LP             1,218,845  
PNNT Investment Holdings, LLC             1,188,368  
CPTA Master Blocker, Inc.             1,125,426  
ORB Investments, LLC             916,156  
Verition Multi-Strategy Master Fund Ltd.             647,727  
Guggenheim Energy Opportunities Fund, LP             263,705  
ORB Investments No. 2, LLC             269,182  
NZC Guggenheim Fund LLC             223,610  
PennantPark Credit Opportunities Fund II, LP             62,545  
ALJ Blocker LLC             48,028  
Maverick Enterprises, Inc.             25,839  
Verger Capital Fund LLC             12,949  
Guggenheim Private Debt Fund, LLC             10,308  
Brian Stewart             10,567  
Nathan Houston             6,411  
     
* The address for each Member as of the Effective Time (other than PubCo) is the address set forth in the Letter of Transmittal delivered by such Member to PubCo pursuant to the Merger and Contribution Agreement.
** Exhibit to be revised by the Manager to reflect Effective Time Capital Account Balances upon final determination following the Effective Time.

 

 

 

 

 

EXHIBIT B

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT, dated as of                     , 20         (this “ Joinder ”), is delivered pursuant to that certain Amended and Restated Limited Liability Company Agreement of USWS Holdings LLC (the “ Company ”), dated as of November 9, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Company Agreement ”). Capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Company Agreement.

 

1.           Joinder to the Company Agreement . Upon the execution of this Joinder by the undersigned and delivery hereof to the Manager, the undersigned hereby is and hereafter will be a Member under the Company Agreement and a party thereto, with all the rights, privileges and responsibilities of a Member thereunder. The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the Company Agreement as if it had been a signatory thereto as of the date thereof.

 

2.           Incorporation by Reference . All terms and conditions of the Company Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full.

 

3.           Address . All notices under the Company Agreement to the undersigned shall be direct to:

 

[Name]

 

[Address]

 

[City, State, Zip Code]

 

Attn:

 

Facsimile:

 

E-mail:

 

 

 

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and year first above written.

 

[NAME OF NEW MEMBER]
   
  By:  
     
  Name:  
     
  Title:  

 

Acknowledged and agreed  
   
as of the date first set forth above:  
   
[_______________], as Manager  

 

By:    
     
Name:    
     
Title:    

 

 

 

 

 

 

E xhibit 10.4

 

AMENDMENT NO. 2 TO sponsor agreement

 

This Amendment No. 2 to Sponsor Agreement (this “ Amendment ”), dated as of November 9, 2018, is made and entered into by and among Matlin & Partners Acquisition Corporation, a Delaware corporation (“ MPAC ”), USWS Holdings LLC, a Delaware limited liability company (“ USWS ”), and Matlin & Partners Acquisition Sponsor LLC, a Delaware limited liability company (“ Sponsor ”). Each capitalized term used and not otherwise defined in this Amendment has the meaning given to such term in that certain Sponsor Agreement, dated as of July 13, 2018, as amended on November 2, 2018 (the “ Sponsor Agreement ”), by and among MPAC, USWS, Sponsor and, solely for the purposes of Sections 7 through 12 thereof, Cantor Fitzgerald & Co. (“ Cantor ”).

 

recitals

 

WHEREAS, MPAC, USWS and Sponsor desire to amend the Sponsor Agreement as set forth in this Amendment; and

 

WHEREAS, pursuant to Section 12(c) of the Sponsor Agreement, the Sponsor Agreement may be amended by an instrument in writing signed on behalf of each of the Parties, which, for purposes of this Amendment, excludes Cantor because this Amendment does not amend any of the provisions of the Sponsor Agreement for the purposes of which Cantor is a party to the Sponsor Agreement.

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Amendments to Sponsor Agreement . Section 3(b) of the Sponsor Agreement is hereby amended as follows:

 

(a)         Clause (ii) thereof is amended and restated to read in its entirety as follows:

 

“(ii)         notwithstanding the expiration of the Founder Shares Lock-up Period pursuant to clause (A) or (B)(x) of paragraph 7(a) of the Letter Agreement or the expiration of the restrictions on Transfer set forth in clause (i) of this Section 3(b) , Sponsor will not Transfer 1,000,000 Conversion Shares (the “ $12.00 Conversion Shares ”) until the earlier of (1) the first date on which the VWAP has been equal to or greater than $12.00 (as adjusted pursuant to this Section 3(b) if applicable, the “ $12.00 Threshold ”) for at least 20 of the 30 consecutive Trading Days immediately preceding such date, and (2) the date specified in clause (B)(y) of paragraph 7(a) of the Letter Agreement; provided, that the $12.00 Conversion Shares will be subject to forfeiture by the Sponsor to MPAC for no consideration as follows, in each case subject to the last sentence of this Section 3(b) : (x) if the $12.00 Conversion Shares have not been released from the restrictions pursuant to clause (1) or (2) prior to the fifth anniversary of the Closing Date, then the Sponsor will forfeit 100% of the $12.00 Conversion Shares; and (y) in the case of clause (2), with respect to the applicable transaction contemplated by clause (B)(y) of paragraph 7(a) of the Letter Agreement (the “ Applicable Transaction ”), (aa), if the consideration in the Applicable Transaction consists solely of cash and the amount for which each share of Parent Class A Common Stock is exchangeable is less than $12.00, then the Sponsor will forfeit 100% of the $12.00 Conversion Shares; (bb) if the consideration in the Applicable Transaction consists of cash and securities and/or other property and the value of the cash, securities and other property (if any) for which each share of Parent Class A Common Stock is exchangeable is less than $12.00, as determined in good faith by MPAC, then, subject to clause (x), MPAC shall receive and hold in escrow for the benefit of the Sponsor any and all consideration in respect of the $12.00 Conversion Shares in such Applicable Transaction (and any future Applicable Transactions) until such time as the value of the cash, securities and other property (if any) for which each share of Parent Class A Common Stock was exchanged, as determined in good faith by MPAC, equals or exceeds $12.00, upon which time MPAC shall promptly release such consideration in its entirety to the Sponsor; and”

 

     

 

 

(b)          Clause (iii) thereof is amended and restated to read in its entirety as follows:

 

“(iii)        notwithstanding the expiration of the Founder Shares Lock-up Period pursuant to clause (A) or (B)(x) of paragraph 7(a) of the Letter Agreement or the expiration of the restrictions on Transfer set forth in clause (i) or clause (ii) of this Section 3(b) , Sponsor will not Transfer 609,677 Conversion Shares (the “ $13.50 Conversion Shares ”) until the earlier of (1) the first date on which the VWAP has been equal to or greater than $13.50 (as adjusted pursuant to this Section 3(b) if applicable, the “ $13.50 Threshold ”) for at least 20 of the 30 consecutive Trading Days immediately preceding such date, and (2) the date specified of an Applicable Transaction; provided, that the $13.50 Conversion Shares will be subject to forfeiture by the Sponsor to MPAC for no consideration as follows, in each case subject to the last sentence of this Section 3(b) : (x) if the $13.50 Conversion Shares have not been released from the restrictions pursuant to clause (1) or (2) prior to the fifth anniversary of the Closing Date, then the Sponsor will forfeit 100% of the $13.50 Conversion Shares; and (y) in the case of clause (2), with respect to an Applicable Transaction, (aa), if the consideration in the Applicable Transaction consists solely of cash and the amount for which each share of Parent Class A Common Stock is exchangeable is less than $13.50, then the Sponsor will forfeit 100% of the $13.50 Conversion Shares; (bb) if the consideration in the Applicable Transaction consists of cash and securities and/or other property and the value of the cash, securities and other property (if any) for which each share of Parent Class A Common Stock is exchangeable is less than $13.50, as determined in good faith by MPAC, then subject to clause (x), MPAC shall receive and hold in escrow for the benefit of the Sponsor any and all consideration in respect of the $13.50 Conversion Shares in such Applicable Transaction (and any future Applicable Transactions) until such time as the value of the cash, securities and other property (if any) for which each share of Parent Class A Common Stock was exchanged, as determined in good faith by MPAC, equals or exceeds $13.50, upon which time MPAC shall promptly release such consideration in its entirety to the Sponsor.”

 

- 2

 

 

(c) The following is added thereto as a new clause (iv) immediately following clause (iii):

 

“(iv) any forfeiture by the Sponsor to MPAC of Conversion Shares pursuant to this Section 3(b) shall be made for no consideration, and the Sponsor hereby grants to MPAC and any representative designated by MPAC without further action by the Sponsor a limited irrevocable power of attorney to effect such forfeiture(s) on behalf of the Sponsor, which power of attorney shall be deemed to be coupled with an interest.”

 

2.           Ratification of Sponsor Agreement; References . Except as expressly amended by this Amendment, all of the terms, conditions and other provisions of the Sponsor Agreement are hereby ratified and confirmed and shall continue to be in full force and effect in accordance with their respective terms. No reference to this Amendment need be made in any instrument or document making reference to the Sponsor Agreement, and any reference to the Sponsor Agreement in any such instrument or document shall be deemed to refer to the Sponsor Agreement as amended by this Amendment.

 

3.           Miscellaneous . All relevant provisions of Section 12 of the Sponsor Agreement shall apply to this Amendment to the same extent as if set forth herein, mutatis mutandis .

 

[Signature page follows]

 

- 3

 

 

IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment as of the date first above written.

 

  Matlin & Partners Acquisition Corporation
   
  By: /s/ David J. Matlin
  Name: David J. Matlin
  Title: Chief Executive Officer
   
  USWS Holdings LLC
   
  By: /s/ Joel N. Broussard
  Name: Joel N. Broussard
  Title: President & CEO
   
  Matlin & Partners Acquisition Sponsor LLC
   
  By: /s/ David J. Matlin
  Name: David J. Matlin
  Title: Director

 

Signature Page to Amendment No. 2 to Sponsor Agreement

 

 

 

Exhibit 10.5

 

INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT (this “ Agreement ”) is made as of November __, 2018, by and between U.S. Well Services, Inc., a Delaware corporation (the “ Company ”), and ____________________________ (“ Indemnitee ”).

 

RECITALS

 

WHEREAS , highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such corporations;

 

WHEREAS , the Board of Directors of the Company (the “ Board ”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Second Amended and Restated Certificate of Incorporation (the “ Charter ”) and the Bylaws of the Company (the “ Bylaws ”) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to applicable provisions of the Delaware General Corporation Law (“ DGCL ”). The Charter, Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification, hold harmless, exoneration, advancement and reimbursement rights;

 

WHEREAS , the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS , the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS , it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, hold harmless, exonerate and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so protected against liabilities;

 

 

 

 

WHEREAS , this Agreement is a supplement to and in furtherance of the Charter and Bylaws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

 

WHEREAS , Indemnitee may not be willing to serve as an officer or director, advisor or in another capacity without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified; and

 

NOW , THEREFORE , in consideration of the premises and the covenants contained herein and subject to the provisions of the letter agreement dated as of________________, 2018, the Company and Indemnitee do hereby covenant and agree as follows:

 

TERMS AND CONDITIONS

 

1.            SERVICES TO THE COMPANY . In consideration of the Company’s covenants and obligations hereunder, Indemnitee will serve or continue to serve as an officer, director, advisor, key employee or any other capacity of the Company, as applicable, for so long as Indemnitee is duly elected or appointed or retained or until Indemnitee tenders his resignation or until Indemnitee is removed. The foregoing notwithstanding, this Agreement shall continue in full force and effect after Indemnitee has ceased to serve as a director, officer, advisor, key employee or in any other capacity of the Company, as provided in Section 17. This Agreement, however, shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

 

2.            DEFINITIONS . As used in this Agreement:

 

(a)          References to “ agent ” shall mean any person who is or was a director, officer or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.

 

(b)          The terms “ Beneficial Owner ” and “ Beneficial Ownership ” shall have the meanings set forth in Rule 13d¬3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.

 

(c)          A “ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

 

(i)           Acquisition of Stock by Third Party . Any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (iii) of this definition;

 

2

 

 

(ii)          Change in Board of Directors . Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date hereof or whose election for nomination for election was previously so approved (collectively, the “ Continuing Directors ”), cease for any reason to constitute at least a majority of the members of the Board;

 

(iii)         Corporate Transactions . The effective date of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “ Business Combination ”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries (as defined below)) in substantially the same proportions as their ownership immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (2) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the surviving corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination;

 

(iv)         Liquidation . The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such stockholder approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions); or

 

(v)          Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or any successor rule) (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

3

 

 

(d)          “ Corporate Status ” describes the status of a person who is or was a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which such person is or was serving at the request of the Company.

 

(e)          “ Delaware Court ” shall mean the Court of Chancery of the State of Delaware.

 

Disinterested Director ” shall mean a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.

 

(f)          “ Enterprise ” shall mean the Company and any other corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent.