false 0001670349 0001670349 2021-06-24 2021-06-24 0001670349 us-gaap:CommonClassAMember 2021-06-24 2021-06-24 0001670349 us-gaap:WarrantMember 2021-06-24 2021-06-24

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): June 24, 2021

 

 

U.S. WELL SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-38025   81-1847117

(State or other jurisdiction

of incorporation)

 

(Commission

File No.)

 

(IRS Employer

Identification No.)

 

1360 Post Oak Boulevard

Suite 1800

Houston, Texas

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

(832) 562-3730

(Registrant’s telephone number, including area code)

Not Applicable

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

 

 

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

 

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

 

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

 

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

 

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

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

 

Title of each class

 

Ticker

Symbol(s)

 

Name of each exchange

on which registered

CLASS A COMMON STOCK $0.0001, par value per share   USWS   NASDAQ Capital Market
WARRANTS   USWSW   NASDAQ Capital Market

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

Emerging growth company ☒

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

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

Purchase Agreement and Notes

On June 24, 2021, U.S. Well Services, Inc. (the “Company”) entered into a Note Purchase Agreement (the “Purchase Agreement”), by and among the Company, ProFrac Holdings, LLC, THRC Holdings, L.P., Crestview III USWS, Crestview III USWS TE, LLC (collectively, the “Initial Purchasers”), and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers (the “Notes Agent”), pursuant to which the Company issued and sold (a) an aggregate of $45,000,000 in principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes that are convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Class A Common Stock”), to certain Initial Purchasers for cash (the “Cash Notes”), (b) an aggregate of $20,000,000 in principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes to certain Initial Purchasers in exchange for shares of the Company’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), that are convertible into shares of Class A Common Stock (the “Exchange Notes” and together with the Cash Notes, the “Equity Linked Notes”), and (c) a 16.0% Convertible Senior Secured (Third Lien) PIK Notes in the principal amount of $22,500,000 that is convertible into a license agreement (the “License Linked Note”), which provides certain licensors a non-exclusive license to make and/or to offer to lease or to lease certain licensed products of the Company for three electric frac fleets (the “License Agreement”). The Purchase Agreement contemplates that, within 90 days of the Initial Equity Linked Notes Closing Date (as defined in the Purchase Agreement), the Company may issue and sell additional Cash Notes and/or Exchange Notes (collectively, the “Additional Notes”) to certain additional investors for cash or to participating holders of the Series A Preferred Stock, as applicable.

On June 25, 2021, the Company entered into a First Amendment to the Purchase Agreement (the “Purchase Agreement Amendment”) with AG Energy Funding, LLC (the “Additional Purchaser” and, together with the Initial Purchasers, the “Purchasers”) and the Notes Agent, pursuant to which it issued and sold Additional Notes as follows: (a) a $16.0% Convertible Senior Secured (Third Lien) PIK Note in the principal amount of $19,000,000 that is convertible into shares of Class A Common Stock (the “Additional Equity Note”) and (b) a 16.0% Convertible Senior Secured (Third Lien) PIK Note in the principal amount of $19,000,000 that is convertible into shares of Class A Common Stock in exchange for shares of Series A Preferred Stock (the “Additional Exchange Note” and, together with the Equity Linked Notes, the License Linked Note and the Additional Equity Note, the “Notes”).

The Notes bear interest at the rate of 16.0% per annum. Accrued and unpaid interest is calculated on the Notes on the last day of each March, June, September and December, commencing September 30, 2021, and will be added on such date to the unpaid principal balance of the Notes (rounded up to the nearest $1.00). Subject to the conversion of the Notes, the entire outstanding and unpaid principal balance of the Notes, plus any accrued and unpaid interest thereon, will be due and payable on June 5, 2026 in, with respect to the Equity Linked Notes, the Additional Equity Note and the Additional Exchange Note, shares of Class A Common Stock.

Each Note is convertible at the option of the Holder, with the Equity Linked Notes, the Additional Equity Note and the Additional Exchange Note being convertible into a number of shares of Class A Common Stock equal to the principal amount of such Note then outstanding plus accrued and unpaid interest through the conversion date divided by the then applicable conversion price, which is equal to $0.98 in the case of the Cash Notes, $2.00 in the case of the Exchange Notes and the Additional Exchange Note and $1.25 in the case of the Additional Equity Note, in each case subject to adjustment. Additionally, following the first anniversary of the date of the Purchase Agreement, and at any time in which there are no issued and outstanding shares of Series A Preferred Stock, if the twenty-day volume weighted average price of the Class A Common Stock is greater than $2.00 for ten trading days during any twenty consecutive trading day period, the Company may deliver a notice to the holder of a Note to convert such Note at the conversion prices set forth above.

The Notes are secured by a third priority security interest in the collateral that secures the Company’s obligations under the Term Loan Facility, which is substantially all of the Company’s assets other than certain permitted liens, and such third priority security interest is subject in all respects to an intercreditor agreement with the ABL Agent, the Term Loan Agent, and the Notes Agent.

 

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The Company intends to use the net proceeds from the issuance and sale of the Notes to pay the cash settlement amount under the Settlement Agreement (as described below) and for general corporate purposes, including growth capital.

The foregoing descriptions of the Purchase Agreement, the Notes and the Purchase Agreement Amendment, do not purport to be complete and are qualified in their entirety by reference to the complete text of the Purchase Agreement, the form of Cash Note, the form of Exchange Note, the form of License Linked Note and the Purchase Agreement Amendment, which are filed herewith as Exhibit 10.1, Exhibit 4.1, Exhibit 4.2, Exhibit 4.3 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

Registration Rights Agreement

On June 24, 2021, in connection with the issuance and sale of the Notes and pursuant to the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Initial Purchasers, and on June 25, 2021, in connection with the issuance and sale of the Additional Equity Note and the Additional Exchange Note, the Company entered into an amendment to the Registration Rights Agreement (the “Registration Rights Agreement Amendment”) with the Purchasers, relating to the registration of the Class A Common Stock issued or issuable upon conversion of the Equity Linked Notes, the Additional Equity Note, and the Additional Exchange Note, as well as any other Additional Notes that may be issued in the future (collectively, the “Registrable Securities”). Pursuant to the Registration Rights Agreement, the Company is required, so long as it remains subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to use its commercially reasonable efforts (i) to file a shelf registration statement (the “Initial Shelf Registration Statement”) on or before the Shelf Registration Filing Deadline (as defined in the Registration Rights Agreement), and to cause the Initial Shelf Registration Statement to become effective no later than four months following the filing of the Initial Shelf Registration Statement, and (ii) if, by the third anniversary (the “Renewal Deadline”) of the effective date of the Initial Shelf Registration Statement, any of the Registrable Securities remain unsold by any holder of the Registrable Securities, to file a new shelf registration statement (the “New Shelf Registration Statement”) covering the Registrable Securities included on the Initial Shelf Registration Statement and to cause the New Shelf Registration Statement to become effective within 180 days after the Renewal Deadline. In the event that the Company ceases to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act prior to the filing of the Initial Registration Statement, the Registration Rights Agreement requires the Company to use its commercially reasonable efforts to file a registration statement within four months after the day it again becomes subject to Section 13 or 15(d) of the Exchange Act. In certain circumstances, including in the context of a future initial public offering following a period in which the Company has no longer been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and subject to customary qualifications and limitations, the holders of Registrable Securities will have piggyback registration rights on offerings of Class A Common Stock initiated by the Company, and selling Purchasers will have rights to request that the Company initiate up to two underwritten offerings of Registrable Securities in any 365-day period.

The foregoing descriptions of the Registration Rights Agreement and the Registration Rights Agreement Amendment, do not purport to be complete and are qualified in their entirety by reference to the complete text of the Registration Rights Agreement and the Registration Rights Agreement Amendment, which are filed herewith as Exhibit 4.4 and Exhibit 4.5, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

Settlement Agreement

As previously disclosed, U.S. Well Services LLC (“USWS”), a subsidiary of the Company, was named a defendant in a case filed on January 14, 2019 in the Superior Court of Delaware (the “Court”) styled Smart Sand, Inc. v. U.S. Well Services LLC, C.A. 19C-01-144-PRW. On June 1, 2021, the Court ruled against USWS, found in favor of Smart Sand, Inc. (“Smart Sand”) on its clam for breach of contract, and, on June 17, 2021 entered judgment in favor of Smart Sand in the amount of $50,897,534.40 (the “Smart Sand Litigation”).

On June 28, 2021, USWS and the Company entered into a Settlement Agreement and Release (the “Settlement Agreement”) with Smart Sand, pursuant to which USWS, the Company and Smart Sand reached a settlement of all matters in dispute and potentially in dispute between them in the Smart Sand Litigation. Pursuant to the Settlement Agreement, USWS will pay $35,000,000 in cash to Smart Sand. In connection with the Settlement Agreement, the

 

3


parties have also entered into a right of first refusal agreement that grants to Smart Sand the right to participate in certain requests for proposal initiated by USWS (or its affiliates), and the right to match the terms of certain third party offers, related to the supply of frac sand in the continental United States for a period of 2 years. The parties to the Settlement Agreement also released each other from claims arising from or related to the Smart Sand Litigation or the final judgment of the Court.

The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Settlement Agreement, which is filed herewith as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.

Amendments to Credit Facilities

On June 24, 2021, the Company, USWS and the other subsidiaries of the Company party thereto (collectively, the “Term Loan Parties”) entered into a Consent and Fifth Amendment (the “Term Loan Amendment”) to the Senior Secured Term Loan Credit Agreement (as amended, amended and restated, supplemented, or otherwise modified, the “Term Loan Facility”) with CLMG Corp., as administrative and collateral agent (the “Term Loan Agent”), and the lenders party thereto (the “Term Loan Lenders”).

In addition, on June 24, 2021, the Company, USWS and the other subsidiaries of the Company party thereto (collectively, the “ABL Loan Parties”), entered into a Fourth Amendment and Limited Consent (the “ABL Amendment”) to the ABL Credit Agreement (as amended, amended and restated, supplemented, or otherwise modified, the “ABL Facility” and, together with the Term Loan Facility, the “Credit Facilities”) with Bank of America, N.A., as administrative agent and collateral agent (in such capacity, the “ABL Agent”), and the lenders party thereto (the “ABL Lenders”).

Each of the Credit Facilities was amended in order to (i) permit the incurrence of debt and liens in connection with the Purchase Agreement, Purchase Agreement Amendment, and the issuance of the Notes, and the documents and transactions contemplated thereby, and (ii) make certain modifications to each of the ABL Facility and the Term Loan Facility, in each case, on the terms and conditions set forth in the ABL Amendment and the Term Loan Amendment.

Pursuant to the Term Loan Amendment, the deferral period for interest on the term loans was shortened by three months, to January 1, 2022, and the term loans will resume incurring interest at the applicable benchmark rate, subject to a 2.0% floor, plus the applicable margin of 8.25% per annum, subject to the following exceptions. If on December 31, 2021, either:

 

  (i)

the outstanding principal amount of the term loans is equal to or less than $132,000,000 but greater than $110,000,000 then solely during the period between January 1, 2022 and March 31, 2022, the interest rate shall be 0.0% per annum; and

 

  (ii)

the outstanding principal amount of the term loans is equal to or less than $110,000,000 then solely during the period between January 1, 2022 and March 31, 2022, the interest rate shall be 0.0% and solely during the period between April 1, 2022 and December 31, 2022, the interest rate shall be 2.0% per annum (subject to the following sentence).

If on April 1, 2022, the outstanding principal amount of the term loans is equal to or less than $103,000,000 then solely during the period between April 1, 2022 and December 31, 2022, the interest rate shall be 1.0% per annum (notwithstanding preceding clause (ii) above).

Additionally, pursuant to the Term Loan Amendment, other covenants were amended including, but not limited to, certain covenants relating to collateral, mandatory prepayments, asset dispositions, and special purpose entities used for stand-alone equipment financings.

The foregoing descriptions of the Term Loan Amendment and ABL Amendment do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements, which are filed herewith as Exhibit 10.4 and Exhibit 10.5, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

 

4


Item 2.03

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

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

 

Item 3.02

Unregistered Sale of Equity Securities.

The information regarding the private placement of the Notes, and the Class A Common Stock issuable upon conversion thereof, pursuant to the Purchase Agreement and the Purchase Agreement Amendment set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. The private placement of the Notes pursuant to the Purchase Agreement and the Purchase Agreement Amendment was undertaken in reliance upon an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof.

 

Item 7.01

Regulation FD Disclosure

On June 28, 2021, the Company issued a press release announcing the closing of the private placement of the Notes, the entry into the Settlement Agreement and the ABL Amendment and Term Loan Amendment. The press release is filed as Exhibit 99.1 to this Current Report on Form 8-K, and is incorporated herein by reference.

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

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

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number

  

Description

4.1    Form of Cash Note (included as Exhibit B-1 to the Note Purchase Agreement filed as Exhibit 10.1).
4.2    Form of Exchange Note (included as Exhibit B-2 to the Note Purchase Agreement filed as Exhibit 10.1).
4.3    Form of License Linked Note (included as Exhibit B-3 to the Note Purchase Agreement filed as Exhibit 10.1).
4.4    Registration Rights Agreement, dated June 24, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto.
4.5    First Amendment to Registration Rights Agreement, dated June 25, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto.
10.1    Note Purchase Agreement, dated June 24, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto, and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers.

 

5


                
10.2    First Amendment to Note Purchase Agreement, dated June 25, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto, and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers
10.3    Settlement Agreement and Release by and among Smart Sand, Inc., U.S. Well Services, LLC and U.S. Well Services, Inc., dated June 28, 2021.
10.4    Consent and Fifth Amendment to the Senior Secured Term Loan Credit Agreement, dated June 24, 2021, among U.S. Well Services, LLC, U.S. Well Services, Inc., USWS Fleet 10, LLC, USWS Fleet 11, LLC, USWS Holdings LLC, CLMG Corp., as administrative agent and collateral agent, and the lenders party thereto.
10.5    Fourth Amendment and Limited Consent to ABL Credit Agreement dated as of June 24, 2021, by and among U.S. Well Services, LLC, U.S. Well Services, Inc., USWS Fleet 10, LLC, USWS Fleet 11, LLC, USWS Holdings LLC, the lenders party thereto, and Bank of America, N.A., as administrative agent, lender, swing line lender and letter of credit issuer.
10.6    Guarantee and Third Lien Collateral Agreement, dated as of June 24, 2021, among U.S. Well Services, Inc., U.S. Well Services LLC, USWS Holdings LLC, and the other grantors referred to therein, in favor of Wilmington Savings Fund Society, FSB, as notes agent.
10.7    Amended and Restated Intercreditor Agreement by and among Bank of America, N.A., CLMG Corp., Wilmington Savings Fund Society, FSB, and U.S. Well Services, LLC, dated June 24, 2021.
99.1    Press Release, dated as of June 28, 2021.

 

6


SIGNATURES

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

 

U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

Name:   Kyle O’Neill
Title:   Chief Financial Officer

June 28, 2021

 

7

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

by and among

U.S. WELL SERVICES, INC.

and

THE PURCHASERS PARTY HERETO


Table of Contents

 

ARTICLE I DEFINITIONS

     1  

Section 1.1

 

Definitions

     1  

Section 1.2

 

Registrable Securities

     4  

ARTICLE II REGISTRATION RIGHTS

     4  

Section 2.1

 

Shelf Registration

     4  

Section 2.2

 

Piggyback Registration

     6  

Section 2.3

 

Secondary Underwritten Offering

     8  

Section 2.4

 

Sale Procedures

     9  

Section 2.5

 

Cooperation by Holders

     13  

Section 2.6

 

Restrictions on Public Sale by Holders of Registrable Securities

     13  

Section 2.7

 

Expenses

     13  

Section 2.8

 

Indemnification

     14  

Section 2.9

 

Rule 144 Reporting

     16  

Section 2.10

 

Transfer or Assignment of Registration Rights

     17  

Section 2.11

 

Aggregation of Registrable Securities

     17  

Section 2.12

 

Going Dark Period

     17  

Section 2.13

 

IPO Registration

     17  

ARTICLE III MISCELLANEOUS

     18  

Section 3.1

 

Communications

     18  

Section 3.2

 

Successors and Assigns

     19  

Section 3.3

 

Assignment of Rights

     19  

Section 3.4

 

Recapitalization (Exchanges, etc. Affecting the Registrable Securities)

     19  

Section 3.5

 

Specific Performance

     19  

Section 3.6

 

Counterparts

     19  

Section 3.7

 

Headings

     20  

Section 3.8

 

Governing Law, Submission to Jurisdiction

     20  

Section 3.9

 

Waiver of Jury Trial

     20  

Section 3.10

 

Severability of Provisions

     20  

Section 3.11

 

Entire Agreement

     20  

Section 3.12

 

Term; Amendment

     20  

Section 3.13

 

No Presumption

     21  

Section 3.14

 

Obligations Limited to Parties to Agreement

     21  

Section 3.15

 

Interpretation

     21  

Section 3.16

 

No Inconsistent Agreements; Additional Rights

     21  

 

 

i


REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of June 24, 2021 by and between U.S. Well Services, Inc., a Delaware corporation (“USWS”), and the parties set forth on Schedule A hereto (each, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, this Agreement is made in connection with the closing of the issuance and sale of the Purchased Securities pursuant to the Note Purchase Agreement, dated as of June 24, 2021, by and between USWS and the Purchasers (the “Purchase Agreement”); and

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

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

ARTICLE I

DEFINITIONS

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

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

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

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

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

Commission” means the United States Securities and Exchange Commission.

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

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

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

 

1


Existing Preferred RRAs” means the Registration Rights Agreement of USWS, dated May 24, 2019, as amended as of the date hereof, and the Registration Rights Agreement of USWS, dated as of April 1, 2020, as amended as of the date hereof.

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

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

Holder” means the record holder of any Registrable Securities.

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

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

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

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

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

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

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

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

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

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

Purchased Securities” means the 16.0% Convertible Senior Secured (Third Lien) PIK Notes to be issued and sold to the Purchasers pursuant to the Purchase Agreement.

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

Registrable Securities” means, subject to Section 1.2 of this Agreement, (i) the shares of Class A Common Stock issued or issuable upon conversion of the Purchased Securities in accordance with the terms of the Purchased Securities, and (ii) any shares of Class A Common Stock issued as (or issuable upon the conversion, redemption or exercise of) any warrant, option, right or other security that is issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, any such shares of Class A Common Stock described in clause

 

2


(i) or the Purchased Securities. The number of Registrable Securities held by any Holder shall mean the number of Registrable Securities such Holder would hold after the full conversion, redemption or exercise of any security held by such Holder that is convertible into or redeemable or exercisable for Registrable Securities (including the Purchased Securities) and the value of such Registrable Securities for purposes of determining whether any threshold set forth in this Agreement shall be calculated by multiplying such fully diluted number of shares of Registrable Securities by the average of the closing price on each securities exchange or nationally recognized quotation system on which the Class A Common Stock is then listed for the ten (10) trading days preceding the date on which such value is being determined.

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

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

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

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

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

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

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

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

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

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

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

 

3


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

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

ARTICLE II

REGISTRATION RIGHTS

Section 2.1    Shelf Registration.

(a)    Shelf Registration. USWS shall use its commercially reasonable efforts to prepare and file an initial Shelf Registration Statement under the Securities Act covering 71,428,572 shares of the Registrable Securities on or before the Shelf Registration Filing Deadline. The initial Shelf Registration Statement shall allocate such Registrable Securities among the Holders on a pro rata basis. USWS shall use its commercially reasonable efforts to cause such initial Shelf Registration Statement to become effective no later than four months following the initial filing of a Shelf Registration Statement. USWS will use its commercially reasonable efforts to cause such initial Shelf Registration Statement filed pursuant to this Section 2.1(a) to be continuously effective under the Securities Act until the earliest of (i) all Registrable Securities covered by the Shelf Registration Statement have been distributed in the manner set forth and as contemplated in such Shelf Registration Statement, and (ii) there are no longer any Registrable Securities outstanding (the “Effectiveness Period”). Any Holder or Holders shall have the option and right from time to time, exercisable by delivering a written notice to USWS (a “Demand Notice”), to require registration of a minimum of $10 million of additional Registrable Securities not covered by a Shelf Registration Statement at the time of the Demand Notice. USWS shall use its commercially reasonable efforts to amend the initial Shelf Registration Statement or file a new Shelf Registration Statement, within 10 Business Days of the Demand Notice to include such additional Registrable Securities. USWS will use its commercially reasonable efforts to cause such amendment to the initial Shelf Registration Statement or subsequent Shelf Registration Statement, as applicable, to be continuously effective under the Securities Act during the Effectiveness Period. A Shelf Registration Statement filed pursuant to this Section 2.1(a) shall be on such appropriate registration form of the Commission as shall be selected by USWS. A Shelf Registration Statement when declared effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in

 

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the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made). As soon as practicable following the date that a Shelf Registration Statement becomes effective, but in any event within five (5) Business Days of such date, USWS shall provide the Holders with written notice of the effectiveness of a Shelf Registration Statement.

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

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

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

 

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Section 2.2    Piggyback Registration.

(a)    Participation. If at any time USWS proposes to file (i) at a time when USWS is not a WKSI, a registration statement and such Holder has not previously included its Registrable Securities in a Shelf Registration Statement contemplated by Section 2.1(a) of this Agreement that is currently effective, or (ii) a prospectus supplement to an effective “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act), so long as USWS is a WKSI at such time or, whether or not USWS is a WKSI, so long as the Registrable Securities were previously included in the underlying Shelf Registration Statement or are included in an effective Shelf Registration Statement, or in any case in which Holders may participate in such offering without the filing of a post-effective amendment, in each case, for the sale of Class A Common Stock in an Underwritten Offering for its own account and/or another Person, other than (a) a registration relating solely to employee benefit plans, (b) a registration relating solely to a Rule 145 transaction, or (c) a registration statement on any registration form which does not permit secondary sales, then USWS shall give not less than three (3) Business Days advance notice (including, but not limited to, notification by e-mail; such notice, a “Piggyback Notice”) of such proposed Underwritten Offering to each Holder that, together with its Affiliates, owns more than $5.0 million of Registrable Securities, and such notice shall offer such Holder the opportunity to participate in any Underwritten Offering and to include in such Underwritten Offering such number of Registrable Securities (the “Included Registrable Securities”) as each such Holder may request in writing (a “Piggyback Registration”); provided, however, that USWS (A) shall not be required to include the Registrable Securities of the Holders in such Registration if the Holders do not offer a minimum of $5.0 million of Registrable Securities, or (B) if USWS has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock in the Underwritten Offering, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.2(b). If USWS is not required to offer the opportunity for a Piggyback Registration in respect of a proposed Underwritten Offering as a result of the circumstance described in clause (B) of the proviso of the immediately preceding sentence, then USWS shall nevertheless be required to furnish to such Holders the Piggyback Notice in respect of such proposed Underwritten Offering, which notice shall describe USWS’s intention to conduct an Underwritten Offering and, if the determination described in clause (B) of the proviso of the immediately preceding sentence has been made at the time that the Piggyback Notice is required to be given by USWS, shall include notification that the Holders do not have the opportunity to include Registrable Securities in such Underwritten Offering because USWS has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock in the Underwritten Offering. If the circumstance described in clause (B) of the proviso of the immediately preceding sentence is made after the Piggyback Notice has been given, then USWS shall notify the Holders who were provided such Piggyback Notice (or if the two Business Day period referred to in the next sentence has lapsed, the Holders who have timely elected to include Registrable Securities in such offering) in writing of such circumstance and the aggregate number of Registrable Securities, if any, that can be included in such offering. Each Piggyback Notice shall be provided to Holders on a Business Day pursuant to Section 3.1 hereof and confirmation of receipt of such notice shall be requested in the notice. The Holder will have two Business Days after notice has been delivered to request in writing the inclusion of Registrable Securities in the Underwritten Offering. If no request for inclusion from a Holder is received within

 

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the specified time, such Holder shall have no further right to participate in such Piggyback Registration. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, USWS shall determine for any reason not to undertake or to delay such Underwritten Offering, USWS may, at its election, give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay in the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to USWS of such withdrawal up to and including the time of pricing of such offering. Any Holder may deliver written notice (a “Piggyback Opt-Out Notice”) to USWS requesting that such Holder not receive notice from USWS of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Piggyback Opt-Out Notice in writing. Following receipt of a Piggyback Opt-Out Notice from a Holder (unless subsequently revoked), USWS shall not be required to deliver any notice to such Holder pursuant to this Section 2.2(a) and such Holder shall no longer be entitled to participate in Underwritten Offerings by USWS pursuant to this Section 2.2(a), unless such Piggyback Opt-Out Notice is revoked by such Holder.

(b)    Priority of Piggyback Registration. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of shares of Class A Common Stock included in a Piggyback Registration advises USWS that the total shares of Class A Common Stock which the Selling Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the offering price, timing or probability of success of the distribution of the Class A Common Stock offered or the market for the Class A Common Stock, then the Piggyback Notice provided by USWS pursuant to Section 2.2(a) shall include notification of such determination or, if such determination is made after the Piggyback Notice has been given, then USWS shall furnish notice in writing (including by e-mail) to the Holders (or to those who have timely elected to participate in such Underwritten Offering), and the Class A Common Stock to be included in such Underwritten Offering shall include the number of shares of Class A Common Stock that such Managing Underwriter or Underwriters advises USWS can be sold without having such adverse effect, with such number to be allocated (i) if such Piggyback Registration was initiated by USWS, (A) first, to USWS, (B) second, pro rata among the Selling Holders and any other Persons who have been or after the date hereof are granted registration rights on parity (including pursuant to the Existing Preferred RRAs) with the registration rights granted under this Agreement (the “Other Holders”) who have requested participation in the Piggyback Registration (based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (1) the number of shares of Class A Common Stock proposed to be sold by such Selling Holder or such Other Holder in such offering; by (2) the aggregate number of shares of Class A Common Stock proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration), and (C) third, to any other holder of shares of Class A Common Stock with registration rights that are subordinate to the rights of the Holders hereunder and (ii) if such Piggyback Registration was not initiated by USWS, (A) first, to the Persons initiating such Registration, (B) second, pro rata among the Selling Holders and any Other Holders who have requested participation in the Piggyback Registration (based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (1) the number of shares of

 

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Class A Common Stock proposed to be sold by such Selling Holder or such Other Holder in such offering; by (2) the aggregate number of shares of Class A Common Stock proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration other than the Persons initiating such Registration), except that in the case of a Shelf Underwritten Offering (as defined in the Registration Rights Agreement of USWS dated November 9, 2018 (the “Existing RRA”)) the Holders shall only be permitted to participate in such Shelf Underwritten Offering after all of the securities that Other Holders have requested to be included in such Shelf Underwritten Offering pursuant to the Existing RRA have been so included, and (C) third, to any other holder of shares of Class A Common Stock with registration rights that are subordinate to the rights of the Holders hereunder.

Section 2.3    Secondary Underwritten Offering.

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

(b)    Notice to Holders. Not later than two (2) Business Days after receipt by USWS of the Selling Holder Election Notice, unless USWS determines in accordance with Section 2.1(c) to delay such Underwritten Offering (in which event USWS shall promptly notify the initiating Selling Holder in writing of such determination), then USWS shall provide written notice (including, but not limited to, notification by e-mail) to the other Holders of Registrable Securities of the Selling Holder’s intention to conduct an Underwritten Offering and such notice shall offer such other Holders the opportunity to participate in such Underwritten Offering and to include in such Underwritten Offering such number of Registrable Securities as each such Holder may request in writing. Each such other Holder will have five (5) Business Days after notice has been delivered to request in writing submitted to USWS the inclusion of Registrable Securities in the Underwritten Offering. If no request for inclusion from a Holder is received by USWS within the specified time, such Holder shall have no further right to participate in such Underwritten Offering. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, the Selling Holder giving the notice shall determine for any reason not to undertake or to delay such Underwritten Offering, such Selling Holder may, at its election, give written notice of such determination to USWS and USWS shall notify the other Holders and, (x) in the case of a determination not to undertake such

 

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Underwritten Offering, shall be relieved of its obligation to include Registrable Securities of any other Holder, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Registrable Securities of any other Holder for the same period as the delay in the Underwritten Offering. Any other Holder shall have the right to withdraw such Holder’s request for inclusion of such Holder’s Registrable Securities in such Underwritten Offering by giving written notice to USWS of such withdrawal up to and including the time of pricing of such offering. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of Registrable Securities under a Shelf Registration Statement advises USWS that the total amount of Registrable Securities which the Selling Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the offering price, timing or probability of success of the distribution of the Registrable Securities offered or the market for the Registrable Securities, then the Registrable Securities to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises USWS can be sold without having such adverse effect, with such number to be allocated pro rata among the Selling Holders and the other Holders who have requested participation in the Underwritten Offering (based, for each such Selling Holder or other Holder, on the percentage derived by dividing (A) the number of Registrable Securities proposed to be sold by such Selling Holder or such other Holder in such offering; by (B) the aggregate number of Registrable Securities proposed to be sold by all Selling Holders and all other Holders in such Underwritten Offering).

Section 2.4    Sale Procedures.

(a)    General Procedures. In connection with any Underwritten Offering (i) under Section 2.2 or Section 2.13 of this Agreement, USWS shall be entitled to select the Managing Underwriter or Underwriters, and (ii) under Section 2.3 of this Agreement, the Selling Holders shall be entitled to select the Managing Underwriter or Underwriters. In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder and USWS shall be obligated to enter into an underwriting agreement with the Managing Underwriter or Underwriters which contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of equity securities. No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, USWS to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. No Selling Holder shall be required to make any representations or warranties to or agreements with USWS or the underwriters other than representations, warranties or agreements regarding such Selling Holder’s ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by law. If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to USWS and the Managing Underwriter; provided, however, that such withdrawal must be made at least one Business Day prior to the time of pricing of such Underwritten Offering to be effective. No such withdrawal or

 

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abandonment shall affect USWS’s obligation to pay Registration Expenses. Upon the receipt by USWS of a written request from the Holders of at least $10.0 million dollars of Registrable Securities that are participating in any Underwritten Offering contemplated by this Agreement, USWS’s management shall be required to participate in a roadshow or similar marketing effort in connection with any Underwritten Offering.

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

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

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

(iii)    furnish to each Selling Holder (A) as far in advance as reasonably practicable before filing a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing such Shelf Registration Statement or such other registration statement and the prospectus included therein or any supplement or amendment thereto, and (B) such number of copies of such Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or other registration statement;

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

 

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

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

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

(viii)    in the case of an Underwritten Offering, furnish upon request, (A) an opinion of counsel for USWS, dated the effective date of the applicable registration statement or the date of any amendment or supplement thereto (other than any amendment or supplement resulting from the filing of a document incorporated by reference therein), preliminary or prospectus supplement, and a letter of like kind dated the date of the closing under the underwriting agreement, and (B) a “comfort” letter, dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified USWS’s financial statements included or incorporated by reference into the

 

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applicable registration statement, and each of the opinion and the “comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus included therein and any supplement thereto) and as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in underwritten offerings of securities, such other matters as such underwriters may reasonably request;

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

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

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

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

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

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

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

 

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

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

Section 2.7    Expenses.

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

(b)    Expenses. USWS will pay all reasonable Registration Expenses in connection with a Shelf Registration Statement, a Piggyback Registration, an IPO Registration

 

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

Section 2.8    Indemnification.

(a)    By USWS. In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, USWS will indemnify and hold harmless each Selling Holder thereunder, its directors, officers, employees, agents and managers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and its directors, officers, employees, agents and managers, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder or underwriter or controlling Person or directors, officers, employees, agents or managers may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in light of the circumstances under which such statement is made) contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person and each such director, officer, employee, agent or manager for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that USWS will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in writing specifically for use in the Shelf Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such director, officer, employee, agent, manager or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

(b)    By Each Selling Holder. Each Selling Holder agrees severally and not jointly to indemnify and hold harmless USWS, its directors, officers, employees and agents and each Person, if any, who controls USWS within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from USWS to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Shelf Registration Statement, any other registration statement contemplated by this Agreement or prospectus supplement relating to the Registrable Securities, or any amendment or supplement thereto; provided, however, that the

 

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liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification less the amount of any damages that such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

(c)    Notice. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.8(c) except to the extent that the indemnifying party is materially prejudiced by such failure. In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.8 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense and employ counsel reasonably satisfactory to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party or representation by both parties by the same counsel is otherwise inappropriate under the applicable standards of professional conduct, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, the indemnifying party shall not settle any indemnified claim without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, includes a complete release from liability of, and does not contain any admission of wrong doing by, the indemnified party.

(d)    Contribution. If the indemnification provided for in this Section 2.8 is held by a court or government agency of competent jurisdiction to be unavailable to USWS or any Selling Holder or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of USWS on the one hand and of such Selling Holder on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification less the amount of any damages that such Selling Holder has

 

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otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The relative fault of USWS on the one hand and each Selling Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this paragraph. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss which is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

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

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

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

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

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

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

 

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

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

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

Section 2.13    IPO Registration.IPO Registration Statement. At any time following a Going Dark Period, if USWS proposes to file a registration statement on Form S-1 or such other form under the Securities Act providing for the initial public offering of the Class A Common Stock (the “IPO Registration Statement”), USWS will notify in writing each Holder of the filing at least five (5) Business Days before the initial filing and afford each Holder an opportunity to include in the IPO Registration Statement all or any part of the Registrable Securities then held by such Holder; provided, however, that USWS shall not be required to include the Registrable Securities of the Holders in such Registration if the Holders do not offer a minimum of $5.0 million of Registrable Securities. Each Holder desiring to include in the IPO Registration Statement all or part of the Registrable Securities held by such Holder shall, within twenty (20) days after receipt of the above-described notice from USWS, so notify USWS in writing, and in such notice shall inform USWS of the number of Registrable Securities such Holder wishes to include in the IPO Registration Statement. Any election by any Holder to include any Registrable Securities in the IPO Registration Statement will not affect the inclusion of such Registrable Securities in the IPO Registration Statement until such Registrable Securities have been sold under the IPO Registration Statement.

(b)    Right to Terminate IPO Registration. USWS shall have the right to terminate or withdraw the IPO Registration Statement initiated by it and referred to in this Section 2.13(b) prior to the effectiveness of such Registration whether or not any Holder has elected to include

 

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

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

ARTICLE III

MISCELLANEOUS

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

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

(b)    If to USWS:

U.S. Well Services, Inc.

1360 Post Oak Blvd., Suite 1800

Houston, Texas 77056

Attention: Kyle O’Neill

E-mail: KONeill@uswellservices.com

 

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

Porter Hedges LLP

Main St., 36th Floor

Houston, Texas 77002

Attention: Corey C. Brown

E-mail: cbrown@porterhedges.com

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

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

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

Section 3.4    Recapitalization (Exchanges, etc. Affecting the Registrable Securities). The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all shares of capital stock of USWS or any successor or assign of USWS (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, recapitalizations and the like occurring after the date of this Agreement.

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

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

 

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

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

Section 3.9    Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVE, AND AGREE TO CAUSE THEIR AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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

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

Section 3.12    Term; Amendment. This Agreement shall automatically terminate and be of no further force and effect on the date on which there are no Registrable Securities. This Agreement may be amended only by means of a written amendment signed by USWS and the

 

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Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.

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

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

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

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

[Signature Pages Follow]

 

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

 

USWS:
U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

Name:   Kyle O’Neill
Title:   Chief Financial Officer

[Signatures continue on following page.]

 

Signature Page to Registration Rights Agreement


PURCHASERS:
PROFRAC HOLDINGS, LLC
By:  

/s/ Matt Wilks

Name:   Matt Wilks
Title:   President and CFO
Address:
333 Shops Boulevard, Suite 301
Willow Park, TX 76087

Attention: Matthew D. Wilks; Robert J. Willette;

Brian L. Von Hatten

Email: matt.wilks@profrac.com; robert.willette@wilksbrothers.com; brian.vonhatten@profrac.com
with a copy to:
Alston & Bird LLP
Chase Tower
2200 Ross Avenue, Suite 2300
Dallas, TX 75201
Attention: Mitchell L. Griffith
Email: mitchell.griffith@alston.com

[Signatures continue on following page.]

 

Signature Page to Registration Rights Agreement


THRC HOLDINGS, LP
By:  

/s/ Matt Wilks

Name:   Matt Wilks
Title:   VP, Investments

 

Address:
THRC Holdings, LP
16858 IH 20
Cisco, TX 76437
Attention: Matthew D. Wilks; Robert Willette
Email: matt.wilks@profrac.com; robert.willette@wilksbrothers.com
with a copy to:
Alston & Bird LLP
Chase Tower
2200 Ross Avenue, Suite 2300
Dallas, TX 75201
Attention: Mitchell L. Griffith
Email: mitchell.griffith@alston.com

[Signatures continue on following page.]

 

Signature Page to Registration Rights Agreement


CRESTVIEW III USWS, L.P.

By: Crestview III USWS GenPar, LLC,

its general partner

By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

 

Address:
Crestview III USWS, L.P.
c/o Crestview Advisors, L.L.C.
590 Madison Avenue, 42nd Floor
New York, New York 10022
Attention: Adam J. Klein, Ross A. Oliver
E-mail: aklein@crestview.com;
roliver@crestview.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: E. Ramey Layne, Crosby Scofield
Email: rlayne@velaw.com; cscofield@velaw.com

[Signatures continue on following page.]

 

Signature Page to Registration Rights Agreement


CRESTVIEW III USWS TE, LLC
By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

 

Address:
Crestview III USWS TE, LLC
c/o Crestview Advisors, L.L.C.
590 Madison Avenue, 42nd Floor
New York, New York 10022
Attention: Adam J. Klein, Ross A. Oliver
E-mail: aklein@crestview.com;
roliver@crestview.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: E. Ramey Layne, Crosby Scofield
Email: rlayne@velaw.com; cscofield@velaw.com

[Signatures continue on following page.]

 

Signature Page to Registration Rights Agreement

Exhibit 4.5

Execution Version

FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

This FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT, dated as of June 25 2021 (this “Amendment”), is by and among U.S. WELL SERVICES, INC., a Delaware corporation (the “Company”), and each of the holders of registrable securities listed on the signature pages hereto (collectively, the “Holders”).

WHEREAS, on June 24, 2021, the Company entered into that certain Note Purchase Agreement (the “Note Purchase Agreement,”) with certain initial purchasers pursuant to which the Company sold on such date to such initial purchasers certain notes which are convertible into shares of Class A common stock, par value $0.0001 per share, of the Company;

WHEREAS, on June 24, 2021, the Company entered into a registration rights agreement with such initial purchasers (the “Registration Rights Agreement”) to provide certain registration and other rights for the benefit of the initial pursuant to the Note Purchase Agreement;

WHEREAS, on the date hereof, the Company issued and sold additional convertible notes to AG Energy Funding, LLC (“AG”);

WHEREAS, the Company desires to amend the Registration Rights Agreement in order for AG to join the Registration Rights Agreement as a “Holder” and to amend Section 2.1(a) of the Registration Rights Agreement;

WHEREAS, pursuant to Section 3.12 of the Registration Rights Agreement, the Registration Rights Agreement may be amended or modified by the Company and the holders of a majority of the Registrable Securities (as defined in the Registration Rights Agreement); and

WHEREAS, the Holders hold a majority of the Registrable Securities.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.    Amendment to Registration Rights Agreement. Section 2.1(a) of the Registration Rights Agreement is hereby amended and restated in its entirety and replaced with the following:

Shelf Registration. USWS shall use its commercially reasonable efforts to prepare and file an initial Shelf Registration Statement under the Securities Act covering 96,128,572 shares of the Registrable Securities on or before the Shelf Registration Filing Deadline. The initial Shelf Registration Statement shall allocate such Registrable Securities among the Holders on a pro rata basis. USWS shall use its commercially reasonable efforts to cause such initial Shelf Registration Statement to become effective no later than four months following the initial filing of a Shelf Registration Statement. USWS will use its commercially reasonable efforts to cause such initial Shelf Registration Statement filed pursuant to this Section 2.1(a) to be continuously effective under the Securities Act until the earliest of (i) all Registrable Securities covered by the Shelf Registration Statement have been distributed in the manner set forth and as contemplated in such Shelf Registration Statement, and (ii) there are no longer any Registrable Securities outstanding (the


Effectiveness Period”). Any Holder or Holders shall have the option and right from time to time, exercisable by delivering a written notice to USWS (a “Demand Notice”), to require registration of a minimum of $10 million of additional Registrable Securities not covered by a Shelf Registration Statement at the time of the Demand Notice. USWS shall use its commercially reasonable efforts to amend the initial Shelf Registration Statement or file a new Shelf Registration Statement, within 10 Business Days of the Demand Notice to include such additional Registrable Securities. USWS will use its commercially reasonable efforts to cause such amendment to the initial Shelf Registration Statement or subsequent Shelf Registration Statement, as applicable, to be continuously effective under the Securities Act during the Effectiveness Period. A Shelf Registration Statement filed pursuant to this Section 2.1(a) shall be on such appropriate registration form of the Commission as shall be selected by USWS. A Shelf Registration Statement when declared effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made). As soon as practicable following the date that a Shelf Registration Statement becomes effective, but in any event within five (5) Business Days of such date, USWS shall provide the Holders with written notice of the effectiveness of a Shelf Registration Statement.

2.    Joinder. AG hereby joins in, and agrees to be bound by, and each of the Company and the Holders hereby agrees that AG shall have the benefit of, all of rights and obligations under the Registration Rights Agreement as a holder of Registrable Securities.

3.    Effect of Amendment. This Amendment shall be construed in connection with and as part of the Registration Rights Agreement. Except as hereby expressly amended by this Amendment, all terms of the Registration Rights Agreement are hereby ratified and shall remain in full force and effect. None of the rights, interests and obligations existing and to exist under the Registration Rights Agreement are hereby released, diminished or impaired. The provisions of Section 3.8 and Section 3.9 of the Registration Rights Agreement captioned “Governing Law, Submission to Jurisdiction” and “Waiver of Jury Trial,” are incorporated herein by reference as though such provisions were fully set forth verbatim herein and shall apply to this Amendment mutatis mutandis.

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

[The remainder of this page is intentionally left blank.]

 

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

 

COMPANY:
U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

  Kyle O’Neill
  Chief Financial Officer

[Signatures continue on following page.]

Signature Page to First Amendment to Registration Rights Agreement


HOLDERS:
PROFRAC HOLDINGS, LLC
By:  

/s/ Matt Wilks

Name:   Matt Wilks
Title:   President and CFO
THRC HOLDINGS, LP
By:  

/s/ Matt Wilks

Name:   Matt Wilks
Title:   VP, Investments

[Signatures continue on following page.]

Signature Page to First Amendment to Registration Rights Agreement


CRESTVIEW III USWS, L.P.

By: Crestview III USWS GenPar, LLC,

its general partner

By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel
CRESTVIEW III USWS TE, LLC
By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

[Signatures continue on following page.]

Signature Page to First Amendment to Registration Rights Agreement


AG ENERGY FUNDING, LLC
By: Angelo, Gordon & Co., L.P., as its Manager
By:  

/s/ Todd Dittmann

Name:   Todd Dittmann
Title:       Authorized Person

 

Address:
AG ENERGY FUNDING, LLC
AG Energy Funding, LLC
245 Park Avenue, 26th Floor
New York, NY 10167
Attention: Chad Hanover
E-mail: chanover@angelogordon.com
with a copy (which shall not constitute notice) to:
Davis Polk & Wardell LLP
450 Lexington Ave
New York, NY 10017
Attention: Ray Ibrahim
Email: ray.ibrahim@davispolk.com

[Signatures continue on following page.]

Signature Page to First Amendment to Registration Rights Agreement

Exhibit 10.1

Execution Version

NOTE PURCHASE AGREEMENT

BY AND AMONG

U.S. WELL SERVICES, INC.,

THE PURCHASERS NAMED HEREIN,

AND

WILMINGTON SAVINGS FUND SOCIETY, FSB, AS NOTES AGENT

JUNE 24, 2021


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     2  

Section 1.1

 

Definitions

     2  

Section 1.2

 

Accounting Procedures and Interpretation

     9  

ARTICLE II SALE AND PURCHASE

     9  

Section 2.1

 

Sale and Purchase

     9  

Section 2.2

 

Private Placement

     10  

Section 2.3

 

Closings

     10  

Section 2.4

 

Form of Notes

     11  

Section 2.5

 

Ranking of the Notes; Subordination

     11  

Section 2.6

 

Nature of Purchasers’ Obligations and Rights

     12  

Section 2.7

 

Additional Purchasers

     12  

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     12  

Section 3.1

 

Corporate Existence

     12  

Section 3.2

 

Capitalization and Valid Issuance of Notes

     13  

Section 3.3

 

Company SEC Documents

     15  

Section 3.4

 

Operations in the Ordinary Course

     15  

Section 3.5

 

Litigation

     16  

Section 3.6

 

No Breach

     16  

Section 3.7

 

Authority and Enforceability

     17  

Section 3.8

 

Approvals

     17  

Section 3.9

 

Investment Company Status

     17  

Section 3.10

 

Offering

     17  

Section 3.11

 

Certain Fees

     18  

Section 3.12

 

Insurance

     18  

Section 3.13

 

No Side Agreements

     18  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

     19  

Section 4.1

 

Valid Existence

     19  

Section 4.2

 

Authority and Enforceability

     19  

Section 4.3

 

No Breach

     19  

Section 4.4

 

Certain Fees

     19  

Section 4.5

 

Investment Representations

     20  

Section 4.6

 

Short Selling

     22  

ARTICLE V POST-CLOSING COVENANTS

     22  

Section 5.1

 

Covenants of the Company

     22  

Section 5.2

 

Covenants of the Purchasers

     25  


TABLE OF CONTENTS

(cont’d)

 

         Page  

ARTICLE VI DEFAULTS AND REMEDIES

     26  

Section 6.1

 

Events of Default

     26

Section 6.2

 

Acceleration; Waiver of Past Defaults and Recission

     27

Section 6.3

 

Holders May File Proofs of Claim

     27

Section 6.4

 

Restoration of Rights and Remedies

     27

Section 6.5

 

Rights and Remedies Cumulative

     28

Section 6.6

 

Delay or Omission Not Waiver

     28

ARTICLE VII CLOSING CONDITIONS

     28

Section 7.1

 

Conditions to the Closing

     28

Section 7.2

 

Company Deliveries

     30

Section 7.3

 

Purchaser Deliveries

     31

ARTICLE VIII INDEMNIFICATION, COSTS AND EXPENSES

     31

Section 8.1

 

Indemnification by the Company

     31

Section 8.2

 

Indemnification by Purchasers

     32

Section 8.3

 

Conduct of Indemnification Proceedings

     32

ARTICLE IX REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES

     33

Section 9.1

 

Registration of Notes

     33

Section 9.2

 

Transfer and Exchange of Notes

     33

Section 9.3

 

Replacement of Notes

     35

ARTICLE X NOTES AGENT

     35

Section 10.1

 

Appointment and Authorization of the Administrative Agent

     35

Section 10.2

 

Rights as a Holder

     36

Section 10.3

 

Exculpatory Provisions

     36

Section 10.4

 

Lack of Reliance on the Notes Agent

     38

Section 10.5

 

Certain Rights of the Notes Agent

     39

Section 10.6

 

Reliance by the Notes Agent

     40

Section 10.7

 

Delegation of Duties

     40

Section 10.8

 

Costs and Expenses; Indemnification

     41

Section 10.9

 

Resignation by the Notes Agent

     43

Section 10.10

 

Collateral Matters

     44

Section 10.11

 

Intercreditor Agreements

     46

ARTICLE XI MISCELLANEOUS

     46

Section 11.1

 

Interpretation

     46

Section 11.2

 

Survival of Provisions

     46

Section 11.3

 

No Waiver; Modifications in Writing

     47

Section 11.4

 

Binding Effect; Assignment

     47

Section 11.5

 

Confidentiality and Non-Disclosure

     47

 

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TABLE OF CONTENTS

(cont’d)

 

         Page  

Section 11.6

 

Communications

     48  

Section 11.7

 

Removal of Legend

     48  

Section 11.8

 

Entire Agreement

     49  

Section 11.9

 

Governing Law and Venue; Waiver of Jury Trial; Waiver of Certain Damages

     49  

Section 11.10

 

Execution in Counterparts

     50  

Section 11.11

 

Obligations Limited to Parties to Agreement

     50  

Section 11.12

 

Remedies

     51  

 

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TABLE OF CONTENTS

(cont’d)

 

   Page
Schedules and Exhibits:   
Schedule 2.1 Purchasers and Notes Purchase Price   
Exhibit A – Registration Rights Agreement   
Exhibit B-1 – Form of Cash Note   
Exhibit B-2 – Form of Exchange Note   
Exhibit B-3 – Form of License Linked Note   
Exhibit C – Secretary’s Certificate   
Exhibit D-1 – Cross Receipt (Company)   
Exhibit D-2 – Cross Receipt (Purchaser)   
Exhibit E – License Agreement   

 

 

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NOTE PURCHASE AGREEMENT

This NOTE PURCHASE AGREEMENT, dated as of June 24, 2021 (this “Agreement”), is by and among U.S. WELL SERVICES, INC., a Delaware corporation (the “Company” or “USWS”), each of the purchasers named in Schedule 2.1 to this Agreement (each such purchaser, including any additional purchasers made a party to this Agreement and added to such Schedule, a “Purchaser” and, collectively, the “Purchasers”), and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers (in such capacity, “Notes Agent”).

WHEREAS, on June 17, 2021, U.S. Well Services, LLC, a Delaware limited liability company (“US LLC”) and a direct wholly-owned Subsidiary of USWS Holdings (as defined below), a wholly-owned Subsidiary of the Company suffered an adverse judgment in that certain lawsuit (the “Lawsuit”) filed on January 14, 2019 in the Superior Court of the State of Delaware (the “Court”) styled Smart Sand, Inc. v. U.S. Well Services LLC, C.A. No. N19C-01-144-PRW CCLD (the “Judgment”);

WHEREAS, in order to raise funds to settle the Lawsuit, to provide the cash deposit necessary to stay execution on the Judgment and/or for general corporate purposes, including growth capital, the Company desires to sell, and the Purchasers desire to purchase from the Company, (i) $45,000,000 in principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes to be sold for cash that will be convertible into shares of Class A Common Stock (each, a “Cash Note” and, collectively, the “Cash Notes”), (ii) subject to the conditions set forth herein, up to an aggregate of $20,000,000 in principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes issued to Purchasers in exchange for shares of Series A Preferred Stock that will be convertible into shares of Class A Common Stock (each, an “Exchange Note” and, collectively, the “Exchange Notes” and together with the Cash Notes and any Additional Notes, the “Equity Linked Notes”), and (iii) an aggregate of $22,500,000 in principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes that will be convertible into the License Agreement (the “License Linked Note”);

WHEREAS, from time to time from and after the date hereof until the date that is 90 days after the Initial Equity Linked Notes Closing Date (as defined below) (the “Offering Period”), the Company may issue up to an aggregate of $30,000,000 in principal amount of additional Cash Notes (each, an “Additional Cash Note” and, collectively, the “Additional Cash Notes”) and/or up to an aggregate of $5,000,000 in principal amount of additional Exchange Notes (each, an “Additional Exchange Note” and, collectively, the “Additional Exchange Notes” and together with the additional Cash Notes, the “Additional Notes”, and, together with the Cash Notes and/or Exchange Notes, as applicable, issued at the Initial Equity Linked Notes Closing and the License Linked Note, the “Notes”) to certain additional investors for cash or to participating holders of the Series A Preferred Stock; and

WHEREAS, contemporaneous with the consummation of the transactions contemplated under this Agreement, the Purchaser Parties will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit A (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights under the Securities Act and applicable state securities Laws.


NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1    Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

ABL Credit Agreement” means that certain ABL Credit Agreement dated as of May 7, 2019 among the Company, USWS Holdings, US LLC, the lenders party thereto, and Bank of America, N.A., as collateral agent and administrative agent, as the same may be amended, supplemented or otherwise modified from time to time.

Action” against a Person means any lawsuit, action, proceeding, investigation or complaint before any Governmental Authority, mediator or arbitrator.

Additional Cash Note” and “Additional Cash Notes” have the meaning specified in the recitals.

Additional Cash Notes Purchase Price” has the meaning specified in Section 2.1(c).

Additional Exchange Note” and “Additional Exchange Notes” have the meaning specified in the recitals.

Additional Exchange Notes Purchase Price” has the meaning specified in Section 2.1(c).

Additional Notes” has the meaning specified in the recitals.

Additional Notes Closing” has the meaning specified in Section 2.3(c).

Additional Notes Closing Date” has the meaning specified in Section 2.3(c).

Agent-Related Persons” means the Notes Agent, together with its Affiliates, and the officers, directors, employees, agents, attorney-in-fact, partners, trustees and advisors of such the Notes Agent and its Affiliates.

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

Agreement” has the meaning specified in the introductory paragraph.

 

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Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors as now or hereinafter constituted.

Board” means the board of directors of the Company.

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

Cash Note” and “Cash Notes” have the meaning specified in the recitals.

Cash Notes Purchase Price” has the meaning specified in Section 2.1(a).

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” has the meaning specified in Section 3.2(a).

Closing” means the Initial Equity Linked Notes Closing, the License Linked Note Closing or the Additional Notes Closings, as applicable.

Closing Date” means the Initial Equity Linked Notes Closing Date, the License Linked Note Closing Date or any Additional Notes Closing Date, as applicable.

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

Collateral” means the collateral described as such in the Security Documents.

Commission” means the United States Securities and Exchange Commission.

Company” or “USWS” has the meaning specified in the introductory paragraph.

Company Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).

Company Financial Statements” has the meaning specified in Section 3.3.

Company Indemnitee” has the meaning specified in Section 8.2.

Company Material Adverse Effect” means any material and adverse effect on (i) the assets, liabilities, financial condition, business or operations of the Company and its Subsidiaries, taken as a whole, other than those occurring as a result of general economic or financial conditions or other developments that are not unique to and do not have a material disproportionate impact on the Company and its Subsidiaries but also affect other Persons who participate in or are engaged in the lines of business of which the Company and its Subsidiaries

 

-3-


participate or are engaged, (ii) the ability of the Company and its Subsidiaries, taken as a whole, to carry out their businesses as of the date of this Agreement, (iii) the legality, validity or enforceability of any Transaction Document or (iv) the ability of the Company to consummate the transactions, or perform its obligations, under any Transaction Document on a timely basis.

Company SEC Documents” has the meaning specified in Section 3.3.

Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Rule 405 under the Securities Act) of the Company, after due inquiry.

Court” has the meaning specified in the recitals.

Credit Facilities” means all of the credit facilities established under the Term Loan Credit Agreement and the ABL Credit Agreement.

Custodian” means any receiver, trustee, assignee, liquidator, sequester or similar official under any Bankruptcy Law.

Delaware LLC Act” has the meaning specified in Section 3.2(d).

Disqualification Event” has the meaning specified in Section 3.10.

Equity Linked Notes” has the meaning specified in the recitals.

Event of Default” has the meaning specified in Section 6.1.

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

Exchange Note” and “Exchange Notes” have the meaning specified in the recitals.

Exchange Notes Purchase Price” has the meaning specified in Section 2.1(a).

Existing Security Agreement” means those certain guarantee and collateral agreements executed and delivered by the Company and the Guarantors party thereto in connection with the Term Loan Credit Agreement and ABL Credit Agreement, and as in effect on the date hereof.

GAAP” means generally accepted accounting principles in the United States of America in effect from time to time; provided, however, that for purposes of the Company Financial Statements prepared as of a certain date, GAAP referenced therein shall be GAAP as of the date of the Company Financial Statements.

Governmental Authority” includes the country, state, county, city and political subdivisions in which any Person or such Person’s Property is located or that exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authorities, stock exchanges and self-regulatory organizations that exercise valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority in this Agreement mean a Governmental Authority having jurisdiction over, where applicable, the Company, its Subsidiaries or any of their Property or any of the Purchasers.

 

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Guarantors” means USWS Holdings, US LLC, and any Subsidiary of the Company that is organized under the laws of the U.S. and that is also a subsidiary guarantor under the ABL Agreement and Term Loan Credit Agreement.

Holder” means a Purchaser or any subsequent transferee who is a registered holder of the Notes.

Initial Equity Linked Notes Closing” has the meaning specified in Section 2.3(a).

Initial Equity Linked Notes Closing Date” has the meaning specified in Section 2.3(a).

Institutional Accredited Investor” means an institutional “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act.

Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement to be entered into on the Initial Equity Linked Notes Closing Date by and among, Bank of America, N.A., as ABL Agent, CLMG Corp., as Term Loan Agent, Notes Agent, and US LLC, as the same may be amended, supplemented or otherwise modified from time to time.

Judgment” has the meaning specified in the recitals.

Law” or “Laws” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation.

Lawsuit” has the meaning specified in the recitals.

Letter Agreement” means that certain Letter Agreement executed as of June 24, 2021 by Crestview III USWS, L.P. and Crestview III USWS TE, LLC.

License Agreement” means that certain License Agreement providing the licensor a non-exclusive license to make and or to offer to lease or to lease certain licensed products for three (3) electric frac fleets substantially in the form attached to this Agreement as Exhibit E.

License Linked Note” has the meaning specified in the recitals.

License Linked Note Closing” has the meaning specified in Section 2.3(b).

License Linked Note Closing Date” has the meaning specified in Section 2.3(b).

License Linked Note Purchase Price” has the meaning specified in Section 2.1(b).

Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.

 

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LLC Units” has the meaning specified in Section 3.2(d).

Losses” has the meaning specified in Section 8.1.

Maturity Date” has the meaning specified in the Notes.

NASDAQ” means the NASDAQ Capital Market.

Notes” has the meaning specified in the recitals.

Notes Agent” has the meaning specified in the introductory paragraph.

Notes Agent Fee Letter” means that certain Collateral Agent Fee Letter, dated as of the date hereof, by and among the Notes Agent and the Company.

Note Obligations” means (i) all principal of, and interest on or in respect of (including, without limitation, any interest which accrues after the commencement of any proceeding under any Bankruptcy Law with respect to any of the Company, whether or not allowed or allowable as a claim in any such proceeding), the Notes, and (ii) all fees (including, without limitation, all fees pursuant to the Notes Agent Fee Letter), expenses, indemnification obligations and other amounts of whatever nature now or hereafter payable by the Company to the Holders and/or the Notes Agent, as applicable (including, without limitation, any amounts which accrue after the commencement of any proceeding under any Bankruptcy Law with respect to the Company, whether or not allowed or allowable as a claim in any such proceeding, and any enforcement or other costs incurred or associated with the Notes), pursuant to this Agreement or the other Transaction Documents.

Notes Purchase Price” means the Cash Notes Purchase Price, the Exchange Notes Purchase Price, the License Linked Note Purchase Price, the Additional Cash Notes Purchase Price or the Additional Exchange Notes Purchase Price, as applicable.

Notes Register” has the meaning specified in Section 9.1.

Offering Period” has the meaning specified in the recitals.

Organizational Documents” means, as the context requires, (i) the Second Amended and Restated Certificate of Incorporation of the Company and the Amended and Restated Bylaws of the Company, each as amended to date, and/or (ii) the certificate of formation and limited liability company agreement or other equivalent charter documents of the Company’s Subsidiaries, as amended to date.

Party” or “Parties” means the Company, the Notes Agent and the Purchasers, individually or collectively, as the case may be.

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

 

-6-


PIK Interest” has the meaning given to such term in the Notes.

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

Purchaser” or “Purchasers” has the meaning specified in the introductory paragraph.

Purchaser Indemnitee” has the meaning specified in Section 8.1.

Purchaser Material Adverse Effect” means any material and adverse effect on the ability of a Purchaser to consummate the transactions, or perform its obligations, under any Transaction Document on a timely basis.

Purchaser Party” or “Purchaser Parties” means the Company and the Purchasers, individually or collectively, as the case may be.

Registration Rights Agreement” has the meaning specified in the recitals.

Representatives” of any Person means the officers, members, managers, directors, employees, agents, legal counsel, accountants, financial advisors or any other representatives of such Person.

Requisite Holders” means, at any time and with respect to the Holders or the Holders of the Equity Linked Notes, as applicable, at least 50.1% in principal amount of such Notes at the time outstanding (which, for the avoidance of doubt, shall include any increase in the principal amount thereof in respect of PIK Interest).

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

Security Agreement” means that certain Guarantee and Third Lien Collateral Agreement executed by the Company and the Guarantors party thereto, as debtors, and the Notes Agent, as secured party, granting the Notes Agent for the ratable benefit of the Holders a Lien on and security interest in, substantially all of each debtor’s personal Property on substantially similar terms as the Existing Security Agreement (and in any event, on terms which are no more restrictive or burdensome for the Company and the Guarantors than the Existing Security Agreements, and as such Existing Security Agreements may be amended, restated or modified from time to time after the date hereof), and which Lien and security interest are subordinated to the rights and interests of the secured parties under the ABL Credit Agreement and the Term Loan Credit Agreement pursuant to the Intercreditor Agreement.

Security Documents” means the Intercreditor Agreement, the Security Agreement and all documents executed in connection therewith to create or perfect a Lien on the Collateral.

Series A Certificate of Designations” means that certain Certificate of Designations of the Series A Preferred Stock, dated May 24, 2019.

 

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

Series B Certificate of Designations” means that certain Certificate of Designations of the Series B Preferred Stock, dated March 31, 2020.

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

Series B Purchase Agreement” means that certain Purchase Agreement dated March 31, 2020 by and among the Company, the purchasers set forth therein and others.

Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

Significant Subsidiary” means any Subsidiary of the Company that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission, determined as of the date of the latest audited consolidated financial statements of the Company and its Subsidiaries.

Stated Maturity” means the Maturity Date as such term is defined in the Note.

Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests sufficient to elect at least a majority of its Board of Directors or other governing body or, if there are no such voting interests, 50% or more of the equity interests, of which is owned directly or indirectly by such first Person.

Term Loan Credit Agreement” means that certain Senior Secured Term Loan Credit Agreement dated May 7, 2019, among the Company, USWS Holdings, US LLC, the lenders party thereto, and CLMG Corp., as term loan collateral agent and as administrative agent, as the same may be amended, supplemented or otherwise modified from time to time.

Trading Market” means The NASDAQ Global Select Market, the NASDAQ, The New York Stock Exchange or the NYSE American (or any of their respective successors).

Transaction Documents” means, collectively, this Agreement, the Notes Agent Fee Letter, the Registration Rights Agreement, the Security Documents, the Letter Agreement, the Written Consent and Voting Agreement and any and all other material agreements or instruments executed and delivered by the Parties to evidence the execution, delivery and performance of this Agreement, and any amendments, supplements, continuations or modifications thereto.

Transfer Agent” means Continental Stock Transfer & Trust Company in its capacity as transfer agent for the Class A Common Stock.

US LLC” has the meaning specified in the recitals.

 

-8-


USWS Holdings” has the meaning specified in Section 3.2(d).

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

Warrants” has the specified in Section 3.2(b).

Written Consent and Voting Agreement” means that certain Written Consent and Voting Agreement executed as of June 24, 2021 by the Company and certain holders of the Series B Preferred Stock.

Section 1.2    Accounting Procedures and Interpretation. Unless otherwise specified in this Agreement, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters under this Agreement shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Purchasers under this Agreement shall be prepared, in conformity with GAAP applied on a consistent basis during the periods involved (except, in the case of unaudited financial statements, as permitted by Form 10-Q promulgated by the Commission) and in compliance as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto.

ARTICLE II

SALE AND PURCHASE

Section 2.1    Sale and Purchase. On the basis of the representations, warranties, agreements and covenants set forth in this Agreement and subject to the terms and conditions of this Agreement:

(a)    At the Initial Equity Linked Notes Closing, the Company hereby agrees to issue and sell to the applicable Purchasers, and each such Purchaser hereby agrees, to purchase from the Company, (i) the aggregate principal amount of Cash Note(s) set forth opposite such Purchaser’s name on Schedule 2.1 to this Agreement under the title “Principal Amount of Cash Notes” at the cash purchase price set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded” (such purchase price, the “Cash Notes Purchase Price”), and (ii) with respect to each Purchaser (or its designee) that (A) holds Series A Preferred Stock as of such date and (B) has agreed to a purchase Cash Note(s) as set forth in subsection (i) above, the aggregate principal amount of Exchange Notes set forth opposite such Purchaser’s name on Schedule 2.1 to this Agreement under the title “Principal Amount of Exchange Notes” in exchange for a number of shares of Series A Preferred Stock valued for purposes of such exchange at their liquidation preference as of the day immediately prior to such date as set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded” (such purchase price, the “Exchange Notes Purchase Price”); provided that the “Principal Amount of Exchange Notes” with respect to any such Purchaser shall not exceed the Cash Notes Purchase Price paid by such Purchaser under subsection (i) above;

 

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(b)    At the License Linked Note Closing, the Company hereby agrees to issue and sell to the applicable Purchaser, and such Purchaser hereby agrees, to purchase from the Company, the aggregate principal amount of the License Linked Note set forth opposite such Purchaser’s name on Schedule 2.1 to this Agreement under the title “Principal Amount of License Linked Note” at the purchase price set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded” (such purchase price, the “License Linked Note Purchase Price”); and

(c)    At each Additional Notes Closing, the Company hereby agrees to issue and sell to each additional Purchaser, and each additional Purchaser hereby agrees to purchase from the Company, (i) the aggregate principal amount of Cash Note(s) set forth opposite such Purchaser’s name on Schedule 2.1 to this Agreement (as such Schedule 2.1 is amended in connection with such Additional Notes Closing) under the title “Principal Amount of Additional Cash Notes”, at the purchase price set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded” (such purchase price, the “Additional Cash Notes Purchase Price”), and (ii) with respect to each such Purchaser (or its designee) that (A) holds Series A Preferred Stock as of such date and (B) has agreed to a purchase Additional Cash Note(s) as set forth in subsection (i) above, the aggregate principal amount of Additional Exchange Notes set forth opposite such Purchaser’s name on Schedule 2.1 to this Agreement under the title “Principal Amount of Additional Exchange Notes” in exchange for a number of shares of Series A Preferred Stock valued for purposes of such exchange at their liquidation preference as of the day immediately prior to such date as set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded” (such purchase price, the “Additional Exchange Notes Purchase Price”); provided that the “Principal Amount of Additional Exchange Notes” with respect to any such Purchaser shall not exceed the Additional Cash Notes Purchase Price paid by such Purchaser under subsection (i) above.

Section 2.2    Private Placement. The Notes will be sold to the Purchasers pursuant to the exemption from registration afforded by Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act and the rules and regulations of the Commission thereunder. Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Notes shall bear the legends applicable to each such Note as set forth in this Agreement.

Section 2.3    Closings.

(a)    With respect to each Purchaser of Equity Linked Notes as named in Schedule 2.1 to this Agreement as of the date hereof, the execution and delivery of the Transaction Documents to be delivered to or by such Purchasers, the delivery of the Equity Linked Notes to such Purchasers, the payment of the Cash Notes Purchase Price for each such Cash Notes and/or the Exchange Notes Purchase Price for each such Exchange Notes, as applicable, and the execution and delivery of all other instruments, agreements and other documents required by this Agreement for the issuance of such Equity Linked Notes (the “Initial Equity Linked Notes Closing”) shall take place on the date hereof (the date of such closing, the “Initial Equity Linked Notes Closing Date”) at the offices of Porter Hedges LLP, 1000 Main Street, 36th Floor, Houston, Texas 77002.

 

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(b)    With respect to the Purchaser of the License Linked Note as named in Schedule 2.1 to this Agreement as of the date hereof, the execution and delivery of the Transaction Documents to be delivered to or by such Purchaser, the delivery of the License Linked Note to such Purchaser, the payment of the License Linked Note Purchase Price by such Purchaser and the execution and delivery of all other instruments, agreements and other documents required by this Agreement for the issuance of such License Linked Note (the “License Linked Note Closing”) shall take place on the date hereof (the “License Linked Note Closing Date”) at the offices of Porter Hedges LLP, 1000 Main Street, 36th Floor, Houston, Texas 77002.

(c)    With respect to each Purchaser of Additional Notes as named in Schedule 2.1 to this Agreement (as such schedule may be amended from time to time during the Offering Period), the execution and delivery of the additional Transaction Documents to be delivered to or by such Purchaser, the delivery of Additional Notes to such Purchasers, the payment of the Additional Cash Notes Purchase Price for each such Additional Cash Note and/or the Additional Exchange Notes Purchase Price for each such Additional Exchange Note, as applicable, and the execution and delivery of all other instruments, agreements and other documents required by this Agreement for the issuance of any such Additional Notes (each, an “Additional Notes Closing”) shall take place on the date(s) agreed upon by both the Company and such Purchasers within the Offering Period (each, an “Additional Notes Closing Date”) at the offices of Porter Hedges LLP, 1000 Main Street, 36th Floor, Houston, Texas 77002.

Section 2.4    Form of Notes.

(a)    The Cash Notes shall be substantially in the form included in Exhibit B-1, the Exchange Notes shall be substantially in the form included in Exhibit B-2 and the License Linked Note shall be in substantially in the form of Exhibit B-3 hereto, each of which is incorporated in and expressly made a part of this Agreement. The Notes may have notations, legends or endorsements required by Law. The Notes shall be in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof.

(b)    The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Agreement and the Company, by its execution and delivery of this Agreement, expressly agrees to such terms and provisions and agrees to be bound thereby. However, to the extent any Note conflicts with the express provisions of this Agreement, the provisions of this Agreement shall govern and be controlling.

Section 2.5    Ranking of the Notes; Subordination. The Company agrees and each Holder, by accepting a Note, agrees, that payments of the Note Obligations will be (i) junior and subordinated to the secured indebtedness under the Credit Facilities, to the extent of the value of the collateral securing the Credit Facilities, (ii) effectively senior to all unsecured indebtedness of the Company and the Guarantors to the extent of the value of the Collateral, (iii) senior in right of payment to any indebtedness of the Company that is expressly subordinated in right of payment to the Notes, and (iv) effectively subordinated to any existing or future indebtedness of the Company and the Guarantors that is secured by Liens on assets that do not constitute part of the Collateral securing the Notes to the extent of the value of such assets.

 

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Section 2.6    Nature of Purchasers Obligations and Rights. The respective obligations of each Purchaser under the Transaction Documents to which the Purchasers are party to are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under the Transaction Documents. The failure or waiver of performance under this Agreement by any Purchaser, or on its behalf, does not excuse performance by any other Purchaser. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by any Transaction Document. Except as otherwise provided in the Transaction Documents, each Purchaser shall be entitled to independently protect and enforce its rights, including the rights arising out of the Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. The decision of each Purchaser to purchase Notes pursuant to the Transaction Documents has been made by such Purchaser independently of any other Purchaser. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in the Notes or enforcing its rights under the Transaction Documents. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.

Section 2.7    Additional Purchasers. The Company may in its discretion add additional Purchasers to this Agreement with all the rights and obligations of a Purchaser if such additional Purchaser, if not already a party to this Agreement, shall have executed and delivered to the Company a joinder agreement in the form approved by the Company and such other documents or instruments as may be required in the Company’s reasonable judgment to effect such admission. The Company shall amend Schedule 2.1 to this Agreement to reflect the admission of any additional Purchaser or the purchase of Additional Notes by any existing Purchaser.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants (a) on and as of the date of this Agreement and each Closing Date, to Piper Sandler & Co., through its Simmons Energy division, in its capacity as the financial advisor to the Board for the offering contemplated hereby, (b) on and as of the date of this Agreement, to Notes Agent and (c) with respect to each Purchaser, on and as of the date such holder signs this Agreement and as of the applicable Closing Date upon which such Purchaser acquires Notes under the terms hereof:

Section 3.1    Corporate Existence. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and each of the Company’s Subsidiaries is an entity duly formed, validly existing and in good standing under the Laws of the jurisdiction under which it was formed. The Company and each of its Subsidiaries has all requisite power and authority to conduct its business as currently conducted and to own and lease its Property and other assets as now owned or leased, and has all material governmental licenses, authorizations, consents and approvals necessary to own its Property and

 

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to conduct its business as its business is currently conducted and as described in the Company SEC Documents, except where the failure to obtain such licenses, authorizations, consents and approvals could not reasonably be expected to have a Company Material Adverse Effect. The Company and each of its Subsidiaries is qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the nature of the business conducted by the Company or such Subsidiary makes such qualification necessary, except where the failure so to qualify could not reasonably be expected to have a Company Material Adverse Effect.

Section 3.2    Capitalization and Valid Issuance of Notes.

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

(b)    As of the date of this Agreement, the issued and outstanding corporate stock of the Company consists of 93,377,516 shares of Class A Common Stock issued and outstanding, 24,456,302 warrants to purchase shares of Class A Common Stock (the “Warrants”), including, (i) 19,167,417 warrants issued in connection with the Company’s initial public offering and (ii) 5,288,885 warrants issued in connection with the issuance of the Series A Preferred Stock, no shares of Class B Common Stock issued and outstanding, no shares of Class F Common Stock issued and outstanding, 50,000 shares of Series A Preferred Stock issued and outstanding and 21,038 shares of Series B Preferred Stock issued and outstanding. As of the date of this Agreement, all outstanding shares of Class A Common Stock, all outstanding Warrants and all outstanding shares of the Series A Preferred Stock and Series B Preferred Stock have been duly authorized and validly issued in accordance with the Organizational Documents and are fully paid and nonassessable.

(c)    As of the date of this Agreement, other than the Amended and Restated U.S. Well Services, Inc. 2018 Stock Incentive Plan, the Company has no equity compensation plans that contemplate the issuance of equity interests of the Company (or securities convertible into or exchangeable for equity interests of the Company). No indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which the Company stockholders may vote is issued or outstanding. Except for the Warrants, the Series A Preferred Stock, the Series B Preferred Stock and as contemplated by the Company’s Organizational Documents, the Series B Purchase Agreement and the USWS Holdings LLC Agreement, including the LLC Units, there are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, rights of first refusal, or other rights, convertible or exchangeable securities or written agreements obligating the Company or any of its Subsidiaries to issue, transfer or sell any equity interest in, the Company or securities convertible into or exchangeable for such equity interests, (ii) obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any equity

 

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interests of the Company or any such securities or agreements listed in clause (i) of this sentence or (iii) proxy agreements or voting trusts or similar agreements to which the Company or any of its Subsidiaries is a party with respect to the voting of the equity interests of the Company. Except as set forth in the Company SEC Documents or as contemplated by this Agreement, the Company has not entered into any agreements regarding the registration of any equity securities of the Company under the Securities Act.

(d)    As of the date of this Agreement, except as disclosed in the Company SEC Documents, neither the Company nor any of its Subsidiaries owns any shares of capital stock or other securities of, or interest in, any other Person, or is obligated to make any capital contribution to or any other investment in any other Person, other than with respect to the Company’s obligations under the USWS Holdings LLC Agreement. As of the date of this Agreement, the Company owns a sole managing member interest in USWS Holdings, LLC, a Delaware limited liability company (“USWS Holdings”), and 93,377,516 USWS Holdings Units (“LLC Units”); such sole managing member interest and LLC Units are duly authorized and validly issued in accordance with the USWS Holdings LLC Agreement and are fully paid (to the extent required under the USWS Holdings LLC Agreement) and non-assessable (except in the case except as such nonassessability may be affected by matters described in Sections 18-303, 18-607 and 18-804 of the Delaware Limited Liability Company Act (the “Delaware LLC Act”)) and such sole managing member interest and LLC Units are owned by the Company free and clear of all Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under the Credit Facilities, or the Organizational Documents of such Subsidiaries, as applicable). As of the date of this Agreement, USWS Holdings owns all of the shares of capital stock or other securities of, or interest in, each of its Subsidiaries, which are listed on Exhibit 21.1 to the Company’s most recent Annual Report on Form 10-K filing with the SEC.

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

(f)    The Notes being purchased by each of the Purchasers hereunder will be duly authorized by the Company pursuant to the Organizational Documents of the Company prior to the Closing and, when issued and delivered by the Company to such

 

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Purchaser against payment therefor in accordance with the terms of this Agreement and the terms of the Notes, will be validly issued, fully paid and non-assessable and will be free of preemptive rights or any Liens and restrictions on transfer, other than (i) restrictions on transfer under this Agreement and under applicable state and federal securities Laws and (ii) such Liens as are created by such Purchaser or its Affiliates.

(g)    The shares of Class A Common Stock issuable upon conversion of the Equity Linked Notes have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action. When issued and delivered to the Purchasers upon conversion of the Equity Linked Notes, all Class A Common Stock issued upon conversion of the Equity Linked Notes in compliance with the terms thereof will be validly issued in accordance with applicable Law and the Organizational Documents, fully paid and non-assessable and will be free of any and all Liens, other than such Liens as are created by the Purchasers, pre-emptive rights, rights of first refusal, subscription and similar rights and restrictions on transfer, other than restrictions on transfer under applicable state and federal securities Laws.

Section 3.3    Company SEC Documents. The Company has timely filed (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) or furnished with the Commission all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) that have been filed or were required to be filed or furnished by it under the Exchange Act or the Securities Act since December 31, 2020 (all such documents collectively, the “Company SEC Documents”). The Company SEC Documents, including any audited or unaudited financial statements and any notes thereto or schedules included therein (the “Company Financial Statements”), at the time filed or furnished (except to the extent corrected by a subsequently filed Company SEC Document filed prior to the date of this Agreement) (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, (iii) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, (iv) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission) and (v) fairly present (subject in the case of unaudited statements to normal, recurring and year-end audit adjustments) in all material respects the consolidated financial position of the business of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended. KPMG LLP is an independent registered public accounting firm with respect to the Company and has not resigned or been dismissed as independent registered public accountants of the Company as a result of or in connection with any disagreement with the Company on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

Section 3.4    Operations in the Ordinary Course. Except as set forth in or contemplated by the Company SEC Documents, since the date of the Company’s most recent Form 10-K filing with the Commission, the Company and its Subsidiaries have conducted their respective

 

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businesses in the ordinary course, consistent with past practice, and there has been no (a) acquisition or disposition of any material asset by the Company or any of its Subsidiaries or any contract or arrangement therefor, other than acquisitions or dispositions for fair value in the ordinary course of business, acquisitions or dispositions as disclosed in the Company SEC Documents or (b) material change in the Company’s accounting principles, practices or methods.

Section 3.5    Litigation. Except as set forth in the Company SEC Documents, there is no Action pending or, to the Company’s Knowledge, contemplated or threatened, against the Company or any of its Subsidiaries or any of their respective officers, directors or Properties, which (individually or in the aggregate) reasonably could be expected to have a Company Material Adverse Effect, or which challenges the validity of the Transaction Documents, or the right of the Company to enter into any of them, or to consummate the transactions contemplated hereby or thereby. The Company is not a party or subject to, and none of its assets is bound by, the provisions of any order, writ, injunction, judgment or decree of any Governmental Authority which could reasonably be expected to have a Company Material Adverse Effect. Except as disclosed in the Company SEC Documents, neither the Company nor any of its Subsidiaries, nor any director or officer thereof, is or since December 31, 2020, has been the subject of any Action involving a claim of violation of or liability under federal or state securities Laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge, there is not pending or contemplated, any investigation by the Commission involving the Company or any current director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any of its Subsidiaries under the Securities Act or the Exchange Act.

Section 3.6    No Breach. Neither the Company nor any of its Subsidiaries is in violation or default of any provision of its respective Organizational Documents, each as in effect immediately prior to the Closing. Neither the Company nor any of its Subsidiaries are in violation or default of any provision of any Law of any Governmental Authority having jurisdiction over the Company, any of its Subsidiaries or any of their respective assets or Properties which could reasonably be expected to have a Company Material Adverse Effect. The execution, delivery and performance by the Company of each Transaction Document to which it is a party and all other agreements and instruments in connection with the transactions contemplated by the Transaction Documents, and compliance by the Company with the terms and provisions hereof and thereof, do not and will not (i) violate any provision of any Law, governmental permit, determination or award applicable to the Company or any of its Subsidiaries or any of their respective Properties, (ii) conflict with or result in a violation of any provision of the Organizational Documents of the Company or any of the Company’s Subsidiaries, (iii) require any consent or approval which has not been obtained on or prior to the date hereof or notice under or result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under (A) any note, bond, mortgage, license, or loan or credit agreement to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective Properties may be bound or (B) any other agreement, instrument or obligation, or (iv) result in or require the creation or imposition of any Lien upon or with respect to any of the Properties now owned or hereafter acquired by the Company or any of its Subsidiaries, except in the cases of clauses (i) and (iii) where such violation, default, breach, termination, cancellation, failure to receive consent or approval, or acceleration with respect to the foregoing provisions of this Section 3.6 could not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

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Section 3.7    Authority and Enforceability. The Company has all necessary corporate power and authority to execute, deliver and perform its obligations under each Transaction Document to which it is a party and to consummate the transactions contemplated hereby or thereby, including the issuance, sale and delivery of the Notes and the issuance of the Class A Common Stock upon the conversion of the Equity Linked Notes. The execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby or thereby (including, without limitation, the issuance of the Notes and the issuance of the Class A Common Stock upon conversion of the Equity Linked Notes), have been duly authorized by all necessary action on its part and, when duly executed and delivered by the parties thereto in accordance with their terms, each of the Transaction Documents will constitute the legal, valid and binding obligations of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar Laws affecting creditors’ rights generally or by general principles of equity. Subject to the terms of the Letter Agremeent, the Purchasers and Lenders (each as defined in the Series B Purchase Agreement) have waived the preemptive rights granted to them under the terms of the Series B Purchase Agreement. No approval by the holders of the Class A Common Stock is required as a result of the Company’s issuance and sale of the Notes or the issuance of Class A Common Stock upon conversion of the Notes.

Section 3.8    Approvals. Except as contemplated by this Agreement or as required by the Commission in connection with the Company’s obligations under the Registration Rights Agreement, no authorization, consent, approval, waiver, license, qualification or written exemption from, nor any filing, declaration, qualification or registration with, any Governmental Authority or any other Person which has not been obtained on or prior to the date hereof is required in connection with the execution, delivery or performance by the Company of each of the Transaction Documents to which it is a party, except where the failure to receive such authorization, consent, approval, waiver, license, qualification or written exemption or to make such filing, declaration, qualification or registration could not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

Section 3.9    Investment Company Status. The Company is not, and immediately after receipt of payment for the Notes which are convertible into Class A Common Stock will not be, an “investment company,” an “affiliated person” of, “promoter” for or “principal underwriter” for, or an entity “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended, or the rules and regulations promulgated thereunder.

Section 3.10    Offering. Neither the Company nor, to the Company’s Knowledge, any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D of the Securities Act) in connection with the offer or sale of any of the Notes or the Class A Common Stock issuable upon conversion of the Equity Linked Notes. Assuming the accuracy of the representations and warranties of the Purchasers contained in this Agreement, the sale and issuance of the Notes or the Class A Common Stock issuable upon conversion of the Notes pursuant to this Agreement and the Notes are exempt from the

 

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registration requirements of the Securities Act. Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D of the Securities Act in connection with the offer and sale by the Company of the Notes or the Class A Common Stock issuable upon conversion of the Equity Linked Notes as contemplated by this Agreement and the Equity Linked Notes or (ii) cause the offering of the Notes or the Class A Common Stock issuable upon conversion of the Equity Linked Notes pursuant to this Agreement and the Equity Linked Notes to be integrated with prior offerings by the Company for purposes of any applicable Law, regulation or stockholder approval provisions. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s Knowledge, any Company Covered Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.

Section 3.11    Certain Fees. Except for the fees payable to Piper Sandler & Co., through its Simmons Energy division, in its capacity as the financial advisor to the Board, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission with respect to the sale of any of the Notes or the consummation of the transactions contemplated by the Transaction Documents. The Company agrees that it will indemnify and hold harmless each of the Purchasers from and against any and all claims, demands or liabilities for any fees, commissions or payments of the type contemplated by this Section 3.11 incurred by the Company or alleged to have been incurred by the Company in connection with the sale of the Notes or the consummation of the transactions contemplated by the Transaction Documents.

Section 3.12    Insurance. The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes to be prudent for its businesses. Neither the Company nor any of its Subsidiaries has received any notice of cancellation of any such insurance. The Company does not have any reason to believe that it or any of its Subsidiaries will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business as currently conducted without a significant increase in cost.

Section 3.13    No Side Agreements. Except for the Letter Agreement, the Written Consent and Voting Agreement and any confidentiality agreements that may have been entered into by and between such Purchaser and the Company or as set forth in the Company SEC Documents or public filings made by Purchaser with the Commission, there are no other agreements by, among or between such Purchaser and any of its Affiliates, on the one hand, and the Company or any of its Affiliates, on the other hand, with respect to the transactions contemplated hereby (other than the Transaction Documents), and there are no promises or inducements for future transactions by, among or between such Purchaser and any of its Affiliates, on the one hand, and the Company and any of its Affiliates, on the other hand.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

Each Purchaser, severally and not jointly, represents and warrants to the Company with respect to itself, on and as of the applicable Closing Date upon which such Purchaser acquires Notes under the terms hereof:

Section 4.1    Valid Existence. If an entity, such Purchaser is duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate, partnership or limited liability company (as applicable) power and authority to own or lease its Properties and carry on its business as currently conducted.

Section 4.2    Authority and Enforceability. Such Purchaser has all necessary corporate, partnership or limited liability company (as applicable) power and authority to execute, deliver and perform its obligations under each of the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby or thereby. The execution, delivery and performance by such Purchaser of each of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, have been duly authorized by all legal action on its part and, when duly executed and delivered by the parties thereto in accordance with their terms, each of the Transaction Documents to which such Purchaser is a party will constitute the legal, valid and binding obligations of such Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar Laws affecting creditors’ rights generally or by general principles of equity.

Section 4.3    No Breach. The execution, delivery and performance by such Purchaser of each of the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby or thereby will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which such Purchaser is a party or by which such Purchaser is bound or to which any of the Property of such Purchaser are subject, (ii) conflict with or result in any violation of the provisions of the organizational documents of such Purchaser, or (iii) violate any statute, order, rule or regulation of any Governmental Authority having jurisdiction over such Purchaser or the Property or assets of such Purchaser, except in the case of clauses (i) and (iii), for such conflicts, breaches, violations or defaults as could not reasonably be expected to have a Purchaser Material Adverse Effect.

Section 4.4    Certain Fees. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission payable by such Purchaser with respect to the purchase of any of the Notes or the consummation of the transactions contemplated by the Transaction Documents. Such Purchaser agrees that it will indemnify and hold harmless the Company from and against any and all claims, demands or liabilities for any fees, commissions or payments of the type contemplated by this Section 4.4 incurred by such Purchaser or alleged to have been incurred by such Purchaser in connection with the purchase of the Notes or the consummation of the transactions contemplated by the Transaction Documents.

 

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Section 4.5    Investment Representations.

(a)    Accredited Investor Status; Sophisticated Purchasers. Such Purchaser is an Institutional Accredited Investor and is able to bear the risk of its investment in the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes. Such Purchaser has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes, and has so evaluated the merits and risks of the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes.

(b)    Acquisition for Own Account. Such Purchaser is acquiring the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes pursuant to this Agreement for its own account (or for the accounts for which it is acting as investment advisor or manager) for investment purposes and not with a view toward, or for resale or transfer in connection with, the sale or distribution thereof within the meaning of the Securities Act that would be in violation of the Securities Act.

(c)    Information. Such Purchaser or its Representatives have been given access to and an opportunity to examine such documents, materials and information concerning the Company as such Purchaser deems to be necessary or advisable in order to reach an informed decision as to an investment in the Company, to the extent that the Company possesses such information, has carefully reviewed and understands these materials and has had answered to such Purchaser’s full satisfaction any and all questions regarding such information. Such Purchaser or its Representatives made such independent investigation of the Company, its management, and related matters as such Purchaser deems to be necessary or advisable in connection with the Notes and the Class A Common Stock issuable upon the conversion of the Notes, and is able to bear the economic and financial risk of the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes. Such Purchaser understands and acknowledges that its purchase of the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes involves a high degree of risk and uncertainty. Such Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its purchase of the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes.

(d)    Notes Not Registered. Such Purchaser has been advised by the Company and understands that (i) the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes are being privately placed by the Company pursuant to an exemption from registration provided under Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act and neither the offer nor sale of any Notes or the Class A Common Stock issuable upon the conversion of the Equity Linked Notes pursuant to this Agreement has been registered under the Securities Act or any state “blue sky” laws; (ii) the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes being acquired by such Purchaser pursuant to this Agreement and the Notes are characterized as “restricted securities” under the Securities Act

 

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inasmuch as they are being acquired by such Purchaser from the Company in a transaction not involving a public offering and, subject to such Purchaser’s rights under this Agreement, such Purchaser must continue to bear the economic risk of the investment in its Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes indefinitely unless the offer and sale of its Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes are subsequently registered under the Securities Act and all applicable state securities or “blue sky” laws or an exemption from such registration is available; (iii) it is not anticipated that there will be any public market for the Notes; (iv) a restrictive legend in the form set forth in Section 9.2(b) of this Agreement shall be placed on the certificates representing the Notes and a restrictive legend in the form set forth in Section 9.2(c) shall be placed on the certificates representing the Class A Common Stock issuable upon the conversion of the Equity Linked Notes; and (v) a notation shall be made in the appropriate records of the Company indicating that the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes are subject to restrictions on transfer.

(e)    No General Solicitation. Such Purchaser acknowledges and agrees that neither the Company nor any other Person offered to sell the Notes or the Class A Common Stock issuable upon conversion of the Equity Linked Notes to it by means of any form of general solicitation or advertising, including but not limited to: any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or any seminar or meeting whose attendees were invited by any general solicitation or general advertising. Such Purchaser further acknowledges and agrees that it was solicited or became aware of the investment in the Notes or the Class A Common Stock issuable upon conversion of the Equity Linked Notes either through (i) a substantive, pre-existing relationship with the Company, (ii) direct contact with the Company or its agents outside of any public offering effort, and/or (iii) through contacts by the Company not identified through any public offering.

(f)    No Side Agreements. Except for the Letter Agreement, the Written Consent and Voting Agreement and any confidentiality agreements that may have been entered into by and between such Purchaser and the Company or as set forth in the Company SEC Documents or public filings made by Purchaser with the Commission, there are no other agreements by, among or between such Purchaser and any of its Affiliates, on the one hand, and the Company or any of its Affiliates, on the other hand, with respect to the transactions contemplated hereby (other than the Transaction Documents), and there are no promises or inducements for future transactions by, among or between such Purchaser and any of its Affiliates, on the one hand, and the Company and any of its Affiliates, on the other hand.

(g)    Reliance Upon Purchaser’s Representations and Warranties. Such Purchaser understands and acknowledges that the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities Laws, and that the Company is relying upon the truth and accuracy of the

 

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representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth in this Agreement (i) in concluding that the offer and sale of the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes is a “private offering” and, as such, is exempt from the registration requirements of the Securities Act, and (ii) to determine the applicability of such exemptions in evaluating the suitability of such Purchaser to purchase the Notes and the Class A Common Stock issuable upon the conversion of the Equity Linked Notes.

(h)    Independent Investment Decision. Each Purchaser has made an independent investment decision with respect to this Agreement and the Notes, without reliance on any other Purchaser or its Affiliates, and is not acting in concert with respect to this Agreement or the Notes with any other Purchaser or its Affiliates. Other than the Transaction Documents, to each Purchaser’s knowledge, there are no agreements or understandings between (i) such Purchaser or any of its Affiliates and (ii) any other Purchaser or any of its Affiliates with respect to this Agreement or the Notes.

Section 4.6    Short Selling. Such Purchaser represents and warrants that it has not entered into any Short Sales of the Class A Common Stock owned by it between the time it first began discussions with the Company about the transactions contemplated by this Agreement and the date hereof.

ARTICLE V

POST-CLOSING COVENANTS

Section 5.1    Covenants of the Company. The Company hereby agrees with the Purchasers as set forth in this Section 5.1:

(a)    Taking of Necessary Action. The Company shall use its commercially reasonable efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable Law and regulations to consummate and make effective the transactions contemplated by this Agreement. Without limiting the foregoing, the Company will, and the Company shall cause each of its Subsidiaries to, use its commercially reasonable efforts to make all filings and obtain all consents of Governmental Authorities or other Persons that may be necessary or, in the reasonable opinion of the Requisite Holders of the Notes, advisable for the consummation of the transactions contemplated by the Transaction Documents.

(b)    Use of Proceeds. The Company shall use the proceeds from the sale of the Notes to finance the settlement of the Lawsuit, to fund the cash deposit necessary to stay execution on the Judgment and/or for general corporate purposes, including growth capital and to pay transaction expenses incurred in connection with this Agreement and the Notes; provided, however, the Company may only use the proceeds from the sale of the Notes for general corporate purposes only after it (i) has settled the Lawsuit or (b) funded the cash deposit necessary to stay execution on the Judgment and continues to work in good faith to settle the Lawsuit.

 

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(c)    Corporate Existence. So long as the Notes are outstanding, the Company shall not enter into a plan of liquidation or dissolution and shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, limited liability company or other existence of each of its Subsidiaries, in accordance with the respective Organizational Documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses, franchises and permits of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license, franchise or permit, or the corporate, limited liability company or other existence of any of its Subsidiaries, if (i) the Board shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes, or (ii) the effect of not preserving any such right, license, franchise or permit, or the corporate, limited liability company or other existence of any of its Subsidiaries, would not reasonably be expected to result in a Company Material Adverse Effect.

(d)    Financial Reporting.

(i)    So long as the Notes are outstanding, the Company will cause to be furnished to the Purchasers, all financial statements as are or would be required to be filed by the Company with the Commission as a reporting issuer under Section 13 or 15(d) of the Exchange Act.

(ii)    The Company shall be deemed to have furnished to the Purchasers the information referred to in Section 5.1(d)(i) if the Company has filed such financial statements with the Commission or has posted such information on the Company Website. For purposes of this Section 5.1(d)(ii), the term “Company Website” means the collection of web pages that may be accessed on the World Wide Web using the URL address http://www.uswellservices.com or such other address as the Company may from time to time designate in writing to the Purchasers.

(e)    Reservation and Listing of Class A Common Stock and Related Matters. So long as the Equity Linked Notes are outstanding, the Company shall take all action necessary to at all times have authorized and reserved for the purpose of issuance no less than the sum of the maximum number of shares of Class A Common Stock issuable upon conversion of the Equity Linked Notes then outstanding at the then applicable Conversion Price (as defined in the applicable Equity Linked Notes). So long as the Equity Linked Notes are outstanding, the Class A Common Stock shall be registered under the Exchange Act and the Company shall use its commercially reasonable efforts to maintain the listing of the Class A Common Stock on a Trading Market.

(f)    Securities Laws Disclosure.

(i)    The Company shall, by 5:30 p.m. (New York City time) on the fourth Business Day following the date hereof, file a Current Report on Form 8-K

 

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and press release disclosing the material terms of the transactions contemplated hereby, including this Agreement, the Notes and the Registration Rights Agreement as exhibits thereto. The Parties shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, provided, that consultation with the Notes Agent shall only be required in connection with any press release in which reference is made to the Notes Agent, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any such press release of any Purchaser, or without the prior consent of the Purchasers, with respect to any such press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by Law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.

(ii)    The Company shall timely file all required reports under Section 13 or 15(d) of the Exchange Act, as applicable. The Company understands and confirms that the Purchasers will rely on the foregoing covenant and the covenant in Section 5.1(d)(i) above in effecting transactions in securities of the Company.

(g)    Listing of Class A Common Stock. Beginning promptly following the date of this Agreement, the Company shall take all reasonable actions necessary to cause the Class A Common Stock issuable upon conversion of the Equity Linked Notes at the initial Conversion Price to be listed on the NASDAQ. Further, if the Company applies to have the Class A Common Stock traded on any other principal stock exchange or market, it shall include in such application the Class A Common Stock issuable upon conversion of the Equity Linked Notes at the then applicable Conversion Price and will take such other action as is necessary to cause such Class A Common Stock to be so listed.

(h)    Subsequent Equity Sales. The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined in Section 2 of the Securities Act) that will be integrated with the offer or sale of the Notes or the Class A Common Stock to be issued upon the conversion of the Equity Linked Notes in a manner that would require the registration under the Securities Act of the sale of the Notes to the Purchasers or the issuance of the Class A Common Stock upon conversion of the Equity Linked Notes.

(i)    Successor Corporation Substituted. So long as the Notes are outstanding, the Company shall not consolidate or merge, or sell, assign, transfer, convey or dispose of all or substantially all of its assets or the assets of the Company and its Subsidiaries taken as a whole, unless the surviving entity shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, conveyance or other disposition, the provisions of this Agreement referring to the “Company” shall refer instead to the surviving entity and not to the Company), and may exercise every right and power of, the Company under this Agreement with the same effect as if such surviving entity had been named as the Company herein. In any such

 

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event (other than any transfer by way of lease), the predecessor Company shall be released and discharged from all liabilities and obligations in respect of the Notes and this Agreement and the predecessor Company may be dissolved, wound up or liquidated at any time thereafter.

(j)    Collateral; Subsequently Acquired Subsidiaries. The complete payment and performance of this Agreement and the Notes shall be secured by the “Collateral” described as such in the Security Documents. The Company and each Guarantor shall execute all applicable Security Documents necessary to grant a security interest in all of the Collateral it owns to the extent permitted under the Intercreditor Agreement. Each Guarantor created or acquired after the Closing shall execute a joinder to the Security Agreement and to all applicable Security Documents necessary to grant a security interest in all of the Collateral it owns to the Notes Agent (for the ratable benefit of the Notes Agent and the Holders) to the extent permitted under the Intercreditor Agreement. In no event shall any terms or undertakings of the Company and the Guarantors in the Security Agreement be more restrictive or burdensome than the Existing Security Agreements as in effect on the date hereof, and as such Existing Security Agreements may be amended, restated or modified from time to time after the date hereof, or violate, conflict with or contravene any terms of the Intercreditor Agreement. In the event of a conflict between the Security Agreement and the Intercreditor Agreement, the terms of the Intercreditor Agreement shall prevail and control.

Section 5.2    Covenants of the Purchasers. Each of the Purchasers hereby agrees, severally and not jointly, with the Company as set forth in this Section 5.2:

(a)    Conditions Precedent. Each of the Purchasers shall use its commercially reasonable efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable Law and regulations to consummate and make effective the transactions contemplated by this Agreement; provided, however, that nothing contained in this Section 5.2(a) shall obligate any Purchaser to waive any right or condition under this Agreement.

(b)    Transfer Restrictions Regarding the Notes. Each Purchaser agrees not to offer, sell or otherwise transfer any Notes except to an Affiliate of such Purchaser or pursuant to an available exemption from the registration requirements of the Securities Act and, in each case, in compliance with any applicable securities Laws of any state of the United States and any other applicable jurisdiction and subject to the terms of this Agreement.

(c)    Short Selling Acknowledgement and Agreement. Each Purchaser understands and acknowledges, severally and not jointly with any other Purchaser, that the Commission currently takes the position that coverage of Short Sales of securities “against the box” prior to the effective date of a registration statement is a violation of Section 5 of the Securities Act. Each Purchaser agrees, severally and not jointly, that it will not engage in any Short Sales that result in the disposition of the Class A Common Stock acquired pursuant to a conversion of the Equity Linked Notes by the Purchaser until such time as the Shelf Registration Statement (as defined in the Registration Rights Agreement) is declared or deemed effective by the Commission.

 

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ARTICLE VI

DEFAULTS AND REMEDIES

Section 6.1    Events of Default. Each of the following shall constitute an “Event of Default”:

(a)    unless converted into Class A Common Stock pursuant to the terms of the Equity Linked Notes or into the License Agreement pursuant to the terms of the License Linked Notes, as applicable, the Company fails to pay any principal on any of the Notes when due and payable at its Stated Maturity, upon any required repayment, or upon declaration of acceleration or otherwise or the Company fails to pay when due any other Note Obliations;

(b)    the Company fails to comply with the obligation to convert the Notes into Class A Common Stock or the License Agreement, as applicable, in accordance with the terms of the Notes;

(c)    the Company fails to materially comply with the covenants of the Company set forth in Section 5.1 and such failure to comply shall continue unremedied for a period of 30 days after the Company has received notice thereof from the Notes Agent (at the direction of the Requisite Holders) or any Holder;

(d)    the Company breaches any representation and warranty set forth in Article III of this Agreement which would reasonably be expected to result in a Company Material Adverse Effect or would reasonably be expected to have a material adverse effect on the Notes or the License Agreement or Class A Common Stock issuable upon conversion of the Equity Linked Notes, as applicable;

(e)    the Company or a Significant Subsidiary: (i) commences a voluntary case or proceeding, (ii) applies for or consents to the entry of an order for relief against it in an involuntary case or proceeding, (iii) applies for or consents to the appointment of a Custodian of it or for all or substantially all of its assets; or (iv) makes a general assignment for the benefit of its creditors, in each case pursuant to or within the meaning of any Bankruptcy Law;

(f)    the Company files or enters into a plan of liquidation; or

(g)    a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any Significant Subsidiary debtor in an involuntary case or proceeding; (ii) appoints a Custodian of the Company or any Significant Subsidiary or a Custodian for all or substantially all of the assets of the Company or any Significant Subsidiary; or (iii) orders the liquidation of the Company or any Significant Subsidiary and the order or decree remains unstayed and in effect for 60 days.

 

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Section 6.2    Acceleration; Waiver of Past Defaults and Recission.

(a)    Subject to the terms of the Intercreditor Agreement, if any Event of Default (other than an Event of Default specified in Section 6.1(e), (f) or (g)) occurs and is continuing, then and in every such case the Requisite Holders may declare 100% of the principal amount plus accrued and unpaid interest on all the outstanding Notes (including but not limited to any outstanding accrued but not yet capitalized PIK Interest and all outstanding capitalized PIK Interest) to be due and payable immediately by notice in writing to the Company specifying the Event of Default(s). Upon any such declaration, all such outstanding Note Obligations shall become due and payable in cash on the Business Day following delivery of such notice in writing. Notwithstanding the foregoing, if an Event of Default in Section 6.1(e), (f) or (g) occurs with respect to the Company, all outstanding Note Obligations shall become due and payable immediately without further action, notice or declaration on the part of any Holder.

(b)    The Requisite Holders, by written notice to the Company and the Notes Agent, may (x) waive any past Event of Default and its consequences and (y) at any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained as hereinafter in this Article VI provided, rescind any such acceleration with respect to the Notes and its consequences, except, in each case, with respect to an Event of Default described in Section 6.1(a) or Section 6.1(b) (which, in each case shall require the approval of each Holder directly affected by such Event of Default), if: (i) such rescission will not conflict with any judgment or decree of a court of competent jurisdiction; and (ii) all existing Events of Default (other than the non-payment of any principal amount or interest or any other Note Obligation that became due solely by such declaration of acceleration) have been cured or waived.

Upon any such waiver, the Event of Default which has been waived shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured, for every other purpose of this Agreement; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent. No such rescission shall affect any subsequent default or impair any right consequent thereon. The Requisite Holders shall provide the Notes Agent a copy of each notice of an Event of Default promptly upon the delivery thereof to the Maker.

Section 6.3    Holders May File Proofs of Claim. Subject to the terms of the Intercreditor Agreement, the Holders and the Notes Agent are authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Holders of the Notes or the Notes Agent, as applicable, allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its Property and shall be entitled and empowered to collect, receive and distribute any money or other Property payable or deliverable on any such claims and any Custodian in any such judicial proceeding.

Section 6.4    Restoration of Rights and Remedies. If any Holder has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then

 

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and in every such case the Company and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Holders shall continue as though no such proceeding had been instituted.

Section 6.5    Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by Law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at Law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 6.6    Delay or Omission Not Waiver. No delay or omission of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by Law to the Holders, subject to the terms of the Intercreditor Agreement and the rights of the Notes Agent under Section 10.1, may be exercised from time to time, and as often as may be deemed expedient, by the Holders, as the case may be. Holders cannot exercise rights and remedies on the Collateral, as the Notes Agent is vested with this right (at the direction at the Requisite Holders).

ARTICLE VII

CLOSING CONDITIONS

Section 7.1    Conditions to the Closing.

(a)    Mutual Conditions. The respective obligation of each Purchaser Party to consummate the purchase and issuance and sale of the Notes on any applicable Closing Date shall be subject to the satisfaction on or prior to such Closing Date of each of the following conditions (any or all of which may be waived by a particular Party on behalf of itself in writing, in whole or in part, to the extent permitted by applicable Law):

(i)    no Law shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Authority of competent jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement, the Transaction Documents, or makes the transactions contemplated by this Agreement or the Transaction Documents illegal; and

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

(b)    Each Purchaser’s Conditions. The respective obligation of each Purchaser to consummate the purchase of its Notes on any applicable Closing Date shall be subject to the satisfaction on or prior to such Closing Date, as applicable, of each of the following conditions (any or all of which may be waived by a particular Purchaser on behalf of itself in writing, in whole or in part, to the extent permitted by applicable Law):

(i)    the Company shall have performed and complied with the covenants and agreements contained in this Agreement in all material respects that are required to be performed and complied with by the Company on or prior to such Closing Date;

 

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(ii)    the representations and warranties of the Company contained in this Agreement that are qualified by materiality or Company Material Adverse Effect shall be true and correct when made and as of such Closing Date and all other representations and warranties shall be true and correct in all material respects when made and as of such Closing Date, in each case as though made at and as of such Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only);

(iii)    the Board shall have authorized and approved the issuance of the Notes, the entry into the License Agreement and the issuance of Class A Common Stock upon conversion of the Equity Linked Notes, as applicable;

(iv)    no Company Material Adverse Effect shall have occurred and be continuing;

(v)    the Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Notes and the issuance of Class A Common Stock upon conversion of the Equity Linked Notes in accordance with and subject to the terms thereof and the consummation of the other transactions contemplated by the Transaction Documents, all of which shall be in full force and effect;

(vi)    the Purchasers and the Notes Agent shall have received the Security Documents, each duly executed and delivered by the parties thereto;

(vii)    all Uniform Commercial Code financing statements or other required filings or notices deemed necessary or appropriate by Purchasers to perfect the Liens in favor of the Notes Agent arising under the Security Documents, duly authenticated and delivered by the applicable Note Parties, to be recorded with the appropriate filing offices; and

(viii)    the Company shall have delivered, or caused to be delivered, to the Purchasers at such Closing Date the Company’s closing deliveries described in Section 7.2 of this Agreement.

(c)    Company’s Conditions. The obligation of the Company to consummate the sale of the Notes to each of the applicable Purchasers on any applicable Closing Date shall be subject to the satisfaction on or prior to such Closing Date, as applicable, of the following conditions with respect to each Purchaser individually and not the Purchasers jointly (which may be waived by the Company or, in the case of clause (iv), the Notes Agent, in writing, in whole or in part, to the extent permitted by applicable Law):

(i)    such Purchaser shall have performed and complied with the covenants and agreements contained in this Agreement in all material respects that are required to be performed and complied with by that Purchaser on or prior to such Closing Date;

 

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(ii)    the representations and warranties of such Purchaser contained in this Agreement that are qualified by materiality or Purchaser Material Adverse Effect shall be true and correct when made and as of such Closing Date and all other representations and warranties shall be true and correct in all material respects when made and as of such Closing Date in each case as though made at and as of such Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only);

(iii)    such Purchaser shall have delivered, or caused to be delivered, to the Company at such Closing, its closing deliveries described in Section 7.3 of this Agreement; and

(iv)    all fees, costs and expenses, including, without limitation, legal fees and expenses, of the Notes Agent shall have been paid prior to, or on, such Closing Date.

Section 7.2    Company Deliveries. At each Closing, subject to the terms and conditions of this Agreement, the Company will deliver, or cause to be delivered, to each applicable Purchaser or, in the case of clause (g), the Notes Agent:

(a)    the applicable Notes to be delivered at such Closing, in the original principal amount as set forth under the heading “Principal Amount of Cash Notes”, “Principal Amount of Exchange Notes”, “Principal Amount of License Linked Note”, “Principal Amount of Additional Cash Notes” or “Principal Amount of Additional Exchange Notes”, as applicable, on Schedule 2.1 to this Agreement, by delivering certificates (bearing the legend set forth in Section 9.2(b)) evidencing such Notes at the Closing, all free and clear of any Liens, encumbrances or interests of any other party;

(b)    the Registration Rights Agreement in substantially the form attached to this Agreement as Exhibit A, which shall have been duly executed by the Company;

(c)    a certificate of the Secretary of the Company dated as of such Closing Date substantially in the form attached to this Agreement as Exhibit C;

(d)    a certificate dated as of a recent date of the Secretary of State of the State of Delaware with respect to the due organization and good standing in the State of Delaware of the Company;

(e)    a cross receipt, dated as of such Closing Date, executed by the Company and delivered to the Purchasers, certifying that the Company has received the applicable Notes Purchase Price with respect to the applicable Notes issued and sold to the Purchasers at such Closing, substantially in the form attached to this Agreement as Exhibit D-1;

 

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(f)    evidence of requisite consent from the lenders under the ABL Credit Agreement and Term Loan Credit Agreement allowing for the issuance of the Notes, entry into the Security Agreement, and the consummation of the transactions contemplated hereby; and

(g)    the Company shall have delivered to the Notes Agent the Notes Agent Fee Letter.

Section 7.3    Purchaser Deliveries. At each Closing, subject to the terms and conditions of this Agreement, each applicable Purchaser will deliver, or cause to be delivered, to the Company:

(a)    the Registration Rights Agreement in substantially the form attached to this Agreement as Exhibit A, which shall have been duly executed by such Purchaser;

(b)    with respect to any Cash Note or the License Linked Note, as applicable, delivered to such Purchaser at such Closing, payment of the applicable Notes Purchase Price for such Note(s) by wire transfer of immediately available funds to an account designated by the Company prior to 9:30 a.m., New York time, on the applicable Closing Date;

(c)    with respect to any Exchange Note delivered to such Purchaser at such Closing, the shares of Series A Preferred Stock comprising the applicable Exchange Notes Purchase Price or Additional Exchange Notes Purchase Price, as applicable, for such Note(s) by delivery to the Company at the address specified in Section 11.6 of this Agreement of the certificates for such shares, duly endorsed for transfer, or by transferring such share through the DTC via DWAC to the Company’s Transfer Agent in accordance with the instructions provided by such Transfer Agent prior to the applicable Closing Date; and

(d)    a cross receipt, dated as of such Closing Date, executed by such Purchaser and delivered to the Company, certifying that such Purchaser has received its Notes, substantially in the form attached to this Agreement as Exhibit D-2.

ARTICLE VIII

INDEMNIFICATION, COSTS AND EXPENSES

Section 8.1    Indemnification by the Company. The Company agrees to indemnify and hold the Purchasers, their Affiliates, and any of their respective Representatives, successors, stockholders and partners (each, a “Purchaser Indemnitee”) harmless from and against any and all losses, claims, damages and liabilities, joint or several (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, “Losses”), to which any Purchaser Indemnitee may become subject to the extent resulting from, due to or based upon Purchasers having entered into this Agreement or agreeing to purchase the Notes, the Company’s use of proceeds from the sale of the Notes pursuant to this Agreement and the issuance of the Notes or the Class A Common Stock issuable upon conversion of the Equity Linked Notes.

 

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Section 8.2    Indemnification by Purchasers. Each Purchaser severally and not jointly agrees to indemnify and hold the Company, its Affiliates, any of its or their Affiliates, and any of its or their respective Representatives, successors, stockholders and partners (each, a “Company Indemnitee”) harmless from and against any and all Losses to which any Company Indemnitee may become subject to the extent resulting from, due or are based upon (i) any inaccuracy in, breach of or failure to comply with, any representation, warranty, or covenant made to the Company in this Agreement or any Transaction Document by such Purchaser, or (ii) any information furnished by such Purchaser in writing to the Company expressly for use in any preliminary prospectus, prospectus or issuer free writing prospectus (as defined in Rule 433 of the Securities Act) relating thereto, any amendment or supplement thereto or any document incorporated by reference therein; provided that the liability of each Purchaser shall be in proportion to, and shall be limited to, such Purchaser’s Notes Purchase Price.

Section 8.3    Conduct of Indemnification Proceedings.

(a)    Any Person entitled to indemnification under this Article VIII shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided that the failure to give such notice shall not limit the rights of such Person or relieve the indemnifying party from any liability that it may have under Sections 8.1 and 8.2 above unless and only to the extent that failure to give such notice materially prejudices the indemnifying party; and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and any indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any Person entitled to indemnification under this Article VIII shall have the right to employ separate counsel and to participate in the defense of such claim at the expense of such indemnified person, unless (x) the indemnifying party has agreed to pay such fees or expenses or (y) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such Person. If such defense is not assumed by the indemnifying party when permitted under this Article VIII, the indemnified party shall be entitled to assume and control such defense and to settle and agree to pay in full such claim without the consent of the indemnifying party without prejudice to the ability of the indemnified party to enforce its claim for indemnification against the indemnifying party under this Article VIII.

(b)    Except as otherwise provided in the preceding paragraph, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent, which consent shall not be unreasonably withheld or delayed. If such defense is assumed by the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle or otherwise compromise the applicable claim (i) unless (A) such settlement or compromise contains a full and unconditional release of the indemnified party and (B) such settlement or compromise does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of the indemnified party or (ii) if such settlement or compromise provides for injunctive or other non-monetary relief, in each case, unless the indemnified party otherwise consents in writing. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and

 

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expenses of more than one (1) counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.

ARTICLE IX

REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES

Section 9.1    Registration of Notes. The Company shall keep at its principal executive office a register for the registration of issuances, transfers and exchanges of the Notes (the “Notes Register”). The Notes Register shall contain the names and addresses of the Holders and principal amounts, PIK Interest payments, and accrued and unpaid interest owing to each Holder pursuant to the terms hereof and under the Notes from time to time. The entries and calculations in the Notes Register shall be conclusive absent manifest error, and the Company and the Holders shall treat each person whose name is recorded in the Notes Register pursuant to the terms hereof as a Holder hereunder for all purposes of this Agreement. The Notes Register shall be available for inspection by any Holder at any reasonable time and from time to time upon reasonable prior notice.

Section 9.2    Transfer and Exchange of Notes. Upon request by a Holder of a Note, and such Holder’s compliance with the provisions of this Section 9.2, the Company shall register the transfer or exchange of the Note. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Company the Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Company duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide (i) an opinion of counsel to such Holder in a form reasonably satisfactory to the Company that registration of such transfer or exchange is not required under the Securities Act and (ii) any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 9.2. Each such new Note shall be payable to such Person as such Holder may request and shall be substantially in the form of note specified for the Notes hereunder. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon.

(a)    Limited Transferability of Notes. No Holder may offer, sell or otherwise transfer any Notes except to an Affiliate of such Holder or pursuant to an available exemption from the registration requirements of the Securities Act and, in each case, any applicable securities laws of any state of the United States and any other applicable jurisdiction and subject to the approval of the Company.

 

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(b)    Note Purchase Agreement Legend. Each Note (and all Notes issued in exchange therefor or substitution therefor) shall bear the legend in substantially the following form:

“THE NOTE REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO U.S. WELL SERVICES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

THE NOTES ARE SUBJECT IN ALL RESPECTS TO THE RESTRICTIONS IN THE NOTE PURCHASE AGREEMENT.”

(c)    Common Stock Legend. Until such time as the Class A Common Stock issuable upon conversion of the Equity Linked Notes has been registered pursuant to the provisions of the Securities Act, or the Class A Common Stock issuable upon conversion of the Equity Linked Notes is eligible for resale pursuant to Rule 144 promulgated under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Class A Common Stock issuable upon conversion of the Equity Linked Notes will bear the following restrictive legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT OR THE ISSUER HAS RECEIVED DOCUMENTATION REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER SUCH ACT.”

(d)    General Provisions Relating to Transfer and Exchange.

(i)    No service charge shall be made to the Holder for registration of the transfer or exchange of any Note, but the Company may require payment of a sum sufficient to cover any transfer tax or similar Governmental Authority charge payable in connection therewith.

(ii)    All Notes issued upon any registration of transfer or exchange in Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Agreement, as the Notes surrendered upon such registration of transfer or exchange. Notwithstanding the foregoing, no Holder of a Note shall be entitled to receive confidential information of the Company and its Subsidiaries prior to the entry by such Holder and the Company into a mutually agreeable confidentiality agreement with respect to such confidential information.

(iii)    Prior to due presentment for the registration of a transfer of any Note, the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and the Company shall not be affected by notice to the contrary.

 

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(iv)    All certifications, certificates and opinions of counsel required to be submitted to the Company pursuant to this Section 9.2 to effectuate a registration of transfer or exchange may be submitted by electronic transmission.

Section 9.3    Replacement of Notes. If any mutilated Note is surrendered to the Company, and the Company receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue a replacement Note. If required by the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Company to protect the Company and any authenticating agent from any loss that any of them may suffer if a Note is replaced. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Agreement equally and proportionately with all other Notes duly issued hereunder. The provisions of this Section 9.3 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

ARTICLE X

NOTES AGENT

Section 10.1    Appointment and Authorization of the Administrative Agent.

(a)    Each Holder hereby irrevocably appoints Wilmington Savings Fund Society, FSB, to act on its behalf as the Notes Agent hereunder and under the other Security Documents and authorizes the Notes Agent to take such actions on its behalf and to exercise such rights, remedies and powers as are delegated to Notes Agent by the terms hereof or thereof (including, without limitation, any subordination and intercreditor agreements), together with such rights, actions and powers as are reasonably incidental thereto. In furtherance of the foregoing, each of the Holders hereby irrevocably appoints and authorizes the Notes Agent to act as collateral agent of (and, in such capacity, to hold any security interest created by the Security Documents for and on behalf of or in trust for) such Holder for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Company or any Guarantor to secure any of the Note Obligations, and to take all other actions, exercise all powers and perform such duties as are delegated to the Notes Agent under the Security Documents, together with such powers and discretion as are reasonably incidental thereto. The Notes Agent (and any co-agents, sub-agents and attorneys-in-fact appointed by the Notes Agent pursuant to Section 10.7 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof), or for exercising any rights and remedies with respect thereto), shall be entitled to the benefits of all provisions of this Article X (including Section 10.7, as though such co-agents, sub-agents and attorneys-in-fact were the ”Notes Agent” under the Transaction Documents). Without limiting the generality of the foregoing, the Holders hereby expressly authorize the Notes Agent to execute any and all documents (including releases) with respect to the Collateral and the rights of the Notes Agent and the Holders with respect thereto (including the Intercreditor Agreement), as contemplated by and in

 

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accordance with the provisions of this Agreement and the Security Documents and acknowledge and agree that any such action by the Notes Agent or its sub-agent(s) shall bind the Holders. The provisions of this Article X (other than Sections 10.9, 10.10, and 10.11) are solely for the benefit of the Notes Agent and the Holders; neither the Company nor any Guarantor shall have rights as a third-party beneficiary of any such provision. Notwithstanding any provision to the contrary elsewhere in this Agreement or any other Transaction Documents, no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Transaction Document or otherwise exist against the Notes Agent.

Section 10.2    Rights as a Holder. Any Holder that is also serving as Notes Agent hereunder shall have the same rights and powers in its capacity as a Holder as any other Holder and may exercise the same as though it were not Notes Agent and the term “Holder” or “Holders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each Holder (if any) serving as Notes Agent hereunder in its individual capacity. Any such Person serving as Notes Agent and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Company or any Guarantor or other Affiliate thereof as if such Person were not Notes Agent hereunder and without any duty to account therefor to the Holders. The Holders acknowledge that, pursuant to such activities, Note Agent or its Affiliates may receive information regarding the Company or a Guarantor or any of their respective Affiliates (including information that may be subject to confidentiality obligations in favor of the Company, such Guarantor or such Affiliate) and acknowledge that the Notes Agent shall not be under any obligation to provide such information to them.

Section 10.3    Exculpatory Provisions. The Notes Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement and in the other Transaction Documents. Without limiting the generality of the foregoing, the Notes Agent:

(a)    shall not be subject to any fiduciary or other implied duties, regardless of whether a default or an Event of Default has occurred and is continuing and without limiting the generality of the foregoing, the use of the term “agent” herein and in the other Transaction Documents with reference to Notes Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law and instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties;

(b)    shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Transaction Documents that the Notes Agent is required to exercise as directed in writing by the Requisite Holders (or such other number or percentage of Holders as shall be expressly provided for herein or in the other Transaction Documents), provided that the Notes Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Notes Agent to liability or that is contrary to any Transaction Document or applicable Law; and

 

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(c)    shall not, except as expressly set forth herein and in the other Transaction Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company, any Guarantor or any of their respective Affiliates that is communicated to or obtained by any Person serving as Notes Agent or any of its Affiliates in any capacity.

Neither Notes Agent nor any of its Agent-Related Persons shall be liable for any action taken or not taken (including (i) the making of (or omitting to make) any determination, calculations, selection, request, appointment, instruction, direction, election or providing any approval or consent to enter into any amendments, modifications or supplements or otherwise in connection with any provisions of the Transaction Documents, (ii) the sending (or failure to send) any notice or the revocation (or failure to revoke) any notice, (iii) the exercise (or failure to exercise) of voting rights or powers, (iv) the filing or recording of any agreement, document or instrument (or the failure to file or records any agreement, document or instrument), (v) the exercise of any rights and remedies (and all actions incidental or related thereto), (vi) releasing, subordinating, and/or terminating any Lien or (vii) exercising any powers as the attorney-in-fact for the Company or any Guarantor) by it (i) with the consent or at the request of the Requisite Holders (or such other number or percentage of the Holders as shall be necessary, or as the Notes Agent shall believe in good faith shall be necessary or (ii) in the absence of its own gross negligence or willful misconduct as determined by the final and non-appealable judgment of a court of competent jurisdiction (provided, that no action taken or not taken in accordance with clause (i) of this sentence, shall be deemed to constitute gross negligence or willful misconduct), in each case, in connection with its duties expressly set forth herein. The Notes Agent not shall be deemed to have knowledge of any default or Event of Default unless and until notice describing such default or Event of Default is given to the Notes Agent by the Company or a Holder and expressly stating that such notice is a “notice of default”. In the event that the Notes Agent receives such a notice, the Notes Agent shall give notice thereof to the Holders. The Notes Agent shall take such action with respect to such default or Event of Default as shall be reasonably directed by the Requisite Holders (or, if so specified by this Agreement, all Holders or such number or percentage of the Holders as shall be necessary under the circumstances as provided for herein or in the other Transaction Documents); provided that unless and until the Notes Agent shall have received such direction, the Notes Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such default or Event of Default, in its sole discretion.

Neither Notes Agent nor Agent-Related Person shall be liable or responsible for, or have any duty to ascertain or inquire into, (i) any recital, statement, warranty or representation made in or in connection with this Agreement or any other Transaction Document, (ii) the contents of any certificate, report, instrument, statement or other document referred to or provided for in, or delivered to the Notes Agent or Holders hereunder or pursuant to the Transaction Documents or in connection herewith or in connection with the Transaction Documents or the transactions contemplated herein or therein, (iii) the performance or observance of any of the covenants, agreements, obligations, provisions or other terms or conditions set forth herein or therein or the occurrence of any default or Event of Default, (iv) the value, validity, enforceability, effectiveness, execution, collectability, sufficiency or genuineness of this Agreement, any other Transaction Document or any other agreement, certificate, instrument or document, or the creation, attachment, perfection and/or priority of any Lien created or purported to be created in

 

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the Collateral by the Security Documents and/or the filing of financing statements, continuation and/or amendment of any financing statements filed to perfect the Liens in the applicable Collateral (other than to the extent expressly directed by the Requisite Holders in writing), (v) the value or the sufficiency of any Collateral, (vi) the satisfaction of any condition set forth in Article VII or elsewhere herein or in any other Transaction Document, other than to confirm receipt of items expressly required to be delivered to the Notes Agent, (vii) the inspection of the properties, books or records of the Company or any Guarantor or any of their respective Affiliates, (viii) the financial condition or business affairs of the Company, any Guarantor or any other Person liable for the payment of any Notes Obligations (ix) the use of the proceeds of the Notes, or (x) to make any disclosures with respect to the foregoing or otherwise relating to the Company or any Guarantor unless expressly required herein. Anything contained herein to the contrary notwithstanding, the Notes Agent shall not have any liability arising from confirmations of the amount of outstanding of Notes or the component amounts thereof. Additionally, the Notes Agent shall not (i) be responsible or have any liability for, or have any duty to inquire into, monitor or enforce compliance with Article IX of this Agreement. or (ii) have any liability with respect to or arising out of any assignment or of any Note, or disclosure of confidential information to an assignee of a Note.

The duties of the Notes Agent shall be mechanical and administrative in nature; the Notes Agent shall not have by reason of this Agreement or any other Transaction Document a fiduciary relationship in respect of any Holder; and nothing in this Agreement or in any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Notes Agent any obligations in respect of this Agreement or any other Transaction Document except as expressly set forth herein or therein. Each Holder acknowledges, agrees and accepts the terms and conditions of each Transaction Document, including, without limitation, the Security Agreement and the Intercreditor Agreement, and authorizes and instructs the Notes Agent to execute and perform its obligations hereunder and under each other Transaction Document.

Section 10.4    Lack of Reliance on the Notes Agent. Each Holder expressly acknowledges that neither the Notes Agent nor any Agent-Related Person have made any representations or warranties to it and that no act by the Notes Agent hereafter taken, including any review of the affairs of the Company or any Guarantor or any of their respective Affiliates of such Person, shall be deemed to constitute any representation or warranty by Notes Agent to any Holder. Independently and without reliance upon the Notes Agent, each Holder, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition, affairs, business, operations, property, financial and other condition and creditworthiness of the Company and the Guarantors in connection with the purchase of the Notes and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of the Company and the Guarantors, based on such documents and information as such Holder has deemed appropriate, and, except as expressly provided in this Agreement, the Notes Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Holder with any credit or other information with respect thereto, whether coming into its possession before the purchase of the Notes or at any time or times thereafter. The Notes Agent shall not be (i) responsible to any Holder for (A) any recitals, statements, information, representations or warranties herein or in any other Transaction Document or other document, certificate, requests, instruments, statement or other writing delivered in connection herewith, with the Transaction Documents or the transactions

 

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contemplated herein or referenced or provided for herein or in the other Transaction Documents, (B) the execution, effectiveness, value, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement or any other Transaction Document or the financial condition of the Company or any of the Guarantors or (C) the attachment, creation and/or perfection of the Liens granted or purported to be granted in the Collateral pursuant to the Security Documents, the filing of financing statements or the continuation and/or amendment of any financing statements filed to perfect the Liens in the applicable Collateral (other than to the extent expressly directed by the Requisite Holders) or (ii) required to make (or otherwise be responsible to the Holders for making) any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Transaction Document, or the financial condition of the Company or any Guarantor, or the existence or possible existence of any default or Event of Default . Except for notices, reports and other documents expressly required to be furnished to the Holders by the Notes Agent hereunder, the Notes Agent shall not have any duty or responsibility to provide any Holder with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any the Company, any Guarantor or any of their respective Affiliates that may come into the possession of the Notes Agent or any Agent-Related Person.

Section 10.5    Certain Rights of the Notes Agent. The Notes Agent may request instructions from the Requisite Holders (or such greater percentage of Holders required) prior to taking any action or entering into any amendments, modifications or supplements, making any determination (including as to whether any agreement, document or instrument is in form and substance satisfactory to Notes Agent), making any calculation (which shall be computed by the Requisite Holders), sending any notice, revoking any notice, making a selection, request, election or appointment (including failing to make a selection, request, election or appointment), exercising any voting rights or powers (including failing to exercise any voting rights or powers), exercising any rights and remedies (and all actions incidental or related thereto), releasing, subordinating and/or terminating any Lien, exercising any powers as the attorney-in-fact for the Company or any Guarantor, providing any consent, approval, instruction or direction (including failing to provide any consent, approval, instruction or direction) or making (or failing to make) any filing or recording in connection with this Agreement or any of the other Transaction Documents and may refrain (and shall incur no liability from so refraining) from taking or omitting to take any act or making any such determination, calculation, selection, request, exercising such voting rights or powers or providing such notice, approval or consent or entering into any amendments, modifications or supplements until it receives such instruction (or calculation, as applicable) from the Requisite Holders (or such number or percentage of the Holders as shall be necessary under the circumstances as provided for herein or in the other Transaction Documents) and such additional indemnity from the Holders, in each case, as it deems reasonably appropriate (and until such instructions and indemnity, as applicable, are received, the Notes Agent shall act, or refrain from acting, as it deems advisable in its sole discretion) and the Notes Agent shall not incur liability to any Holder, the Company or any Guarantor by reason of so refraining. Without limiting the immediately preceding sentence, in no event shall the Notes Agent be required to enter into any extension or amendment to any Transaction Document without receiving direction from the requisite percentage of the applicable Holders. The Notes Agent shall in all cases be fully protected in acting, or in

 

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refraining from acting, under this Agreement and the other Transaction Documents in accordance with the request of the Requisite Holders (or such number or percentage of the Holders as shall be necessary under the circumstances as provided for herein or in the other Transaction Documents), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Holders and all future holders of the Notes. Without limiting the foregoing, no Holder shall have any right of action whatsoever against the Notes Agent as a result of the Notes Agent acting or refraining from acting hereunder or under any other Transaction Document in accordance with the instructions of the Requisite Holders (or such greater percentage of Holders required). Notwithstanding any other provisions set forth in this Agreement or any other Transaction Documents, the Notes Agent shall not be required to take any action that is in its opinion contrary to applicable Law (including, for the avoidance of doubt, any action that may be in violation of the automatic stay under any Bankruptcy Law (or similar laws)) or the terms of any of the Transaction Documents that would in its reasonable opinion subject it or any of its officers, employees or directors to personal liability. Each Holder, by delivering its signature page to this Agreement or the applicable transfer document in connection with the assignment of a Note and/or the purchase of the Notes, shall be deemed to have acknowledged receipt of, and consented to and approved, each Transaction Document and each other document required to be approved by the Notes Agent, Requisite Holders or Holders, as applicable, on the applicable Closing Date or as of the date of the purchase of such Note.

Section 10.6    Reliance by the Notes Agent. The Notes Agent shall be entitled to rely upon, and shall be fully protected in relying upon (and shall not be liable for so relying upon), any communication, request, instrument, note, consent, affidavit, letter, writing, resolution, notice, statement, certificate, e-mail or other electronic message, order, internet or intranet website posting, or other document (or writing), conversation or telephone message signed, sent or made (or authenticated) by (or, in the case of a conversation, with) any Person that the Notes Agent believed to be the proper Person, and, with respect to all legal matters (including all duties and obligations of Notes Agent hereunder and under the other Transaction Documents) pertaining to this Agreement and any other Transaction Document and its duties hereunder and thereunder, upon advice of legal counsel, independent accountants and other experts and professional advisors selected by the Notes Agent. The Notes Agent may deem and treat the Holder of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation, transfer thereof shall have been delivered with the Notes Agent. In determining compliance with any condition hereunder to the purchase of a Note by its terms must be fulfilled to the satisfaction of a Holder, the Notes Agent may presume that such condition is satisfactory to such Holder, unless the Notes Agent shall have received notice to the contrary from such Holder prior to the purchase of such Note. The Notes Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts or professional advisors selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants, professional advisors or experts.

Section 10.7    Delegation of Duties. The Notes Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Transaction Documents by or through any one or more of its agents, sub agents and/or attorneys in fact appointed by the Notes Agent. The Notes Agent and any such agent, sub agent or attorney in fact may perform

 

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any and all of its duties and exercise its rights and powers as are delegated to the Notes Agent, as applicable, together with such rights and powers as are reasonably incidental thereto, by or through their respective Agent-Related Persons. The exculpatory and indemnification provisions of this Article shall apply to any such agent, sub agent or attorney in fact and to the Agent-Related Persons of the Notes Agent and any such agent, attorney in fact or sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Notes Agent. The Notes Agent shall not be responsible for the negligence or misconduct of any agents, sub agents, attorney in fact or any of their respective Agent-Related Persons selected by it with reasonable care.

Section 10.8    Costs and Expenses; Indemnification.

(a)    The Company agrees to pay or reimburse the Notes Agent for all reasonable and documented out-of-pocket costs and expenses of the Notes Agent (promptly following a written demand therefor, together with backup documentation supporting such reimbursement request) incurred in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Transaction Documents and any amendment, waiver, consent, forbearance, modification or enforcement (whether through negotiations, legal proceedings or otherwise) of the provisions hereof and thereof (whether or not the transactions contemplated thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all reasonable and documented attorneys’ fees, costs and expenses and, if necessary, a single local counsel in each relevant jurisdiction, and (b) upon presentation of a summary statement, together with any supporting documentation reasonably requested by the Company, to pay or reimburse the Notes Agent, promptly following a written demand therefor for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights or remedies under this Agreement or the other Transaction Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Bankruptcy Law or other similar law, and including all reasonable and documented fees, costs and expenses of one counsel to the Notes Agent and one local counsel in each relevant jurisdiction. The agreements in this Section 10.8(a) shall survive the repayment of all Note Obligations.

(b)    The Company shall indemnify and hold harmless the Notes Agent its Agent-Related Persons (collectively, the “Agent Indemnitees”) from and against any and all losses, claims, damages, liabilities, obligations, penalties, actions, judgments, costs or expenses of whatsoever kind or nature (including attorney costs) to which any such Agent Indemnitee may become subject arising out of, resulting from or in connection with (but limited, in the case of legal fees and expenses, to the reasonable and documented out-of-pocket fees, disbursements and other charges of one counsel to all Agent Indemnitees taken as a whole and, if reasonably necessary, a single local counsel for all Agent Indemnitees taken as a whole in each relevant jurisdiction, and solely in the case of a conflict of interest, one additional counsel in each relevant jurisdiction to each group of affected Agent Indemnitees similarly situated taken as a whole) any (i) actual or threatened claim, litigation, investigation, proceeding or liabilities relating to the transactions contemplated hereby or under the other Transaction Documents or (ii) to the execution, delivery, enforcement, performance and administration (including the negotiation, execution, and delivery of any waivers, forbearances, amendments, supplements or modifications thereto) of this Agreement, the other Transaction Documents, in connection with

 

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the transactions contemplated hereunder or thereunder, the Notes or the use, or proposed use of the proceeds therefrom, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, litigation, investigation or proceeding), and regardless of whether any Agent Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided that such indemnity shall not, as to any Agent Indemnitee, be available to the extent that such losses, claims, damages, liabilities or expenses resulted from (x) the gross negligence or willful misconduct of such Agent Indemnitee as determined by a final, non-appealable judgment of a court of competent jurisdiction or (y) any dispute solely among Agent Indemnitees other than any claims against an Agent Indemnitee in its capacity or in fulfilling its role as an agent or any similar role under any Transaction Document and other than any claims arising out of any act or omission of the Company or any of its Affiliates (as determined by a final, non-appealable judgment of a court of competent jurisdiction). To the extent that the undertakings to indemnify and hold harmless set forth in this Section 10.8 may be unenforceable in whole or in part because they are violative of any applicable law or public policy, the Company shall contribute the maximum portion that they are permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Agent Indemnitees or any of them. No Agent Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement or any other Transaction Document (except to the extent such damages are found in a final non-appealable judgment of a court of competent jurisdiction to have resulted from the willful misconduct or gross negligence of such Agent Indemnitee), nor shall any Agent Indemnitee, the Company or any Guarantor have any liability for any special, punitive, indirect or consequential damages relating to this Agreement or any other Transaction Document or arising out of its activities in connection herewith or therewith (whether before or after a Closing Date) (other than, in the case of the Company or any Guarantor, in respect of any such damages incurred or paid by an Agent Indemnitee to a third party for which such Agent Indemnitee is otherwise entitled to indemnification pursuant to this Section 10.8). In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 10.8 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Company or any Guarantor, their respective directors, stockholders or creditors or an Agent Indemnitee or any other Person, whether or not any Agent Indemnitee is otherwise a party thereto and whether or not any of the transactions contemplated hereunder or under any of the other Transaction Documents is consummated.

(c)    To the extent the Agent Indemnitee is not reimbursed and indemnified by the Company, the Holders will reimburse and indemnify the Notes Agent or any other Agent-Related Person (in proportion to their respective “percentage” as used in determining the Requisite Holders for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred at any time by the Notes Agent or any other Agent-Related Person in performing its duties hereunder or under any other Transaction Document or in any way relating to or arising out of this Agreement or any other Transaction Document (including, without limitation, any indemnification provided by the Notes Agent under any Transaction Document); provided that no Holder shall be liable to an Agent Indemnitee for any portion of such liabilities, obligations, losses, damages, penalties, claims,

 

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actions, judgments, suits, costs, expenses or disbursements resulting from such Agent Indemnitee’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). In the case of any investigation, litigation or proceeding giving rise to any Indemnified Liabilities, this Section 10.8 applies whether any such investigation, litigation or proceeding is brought by any Holder or any other Person. Without limitation of the foregoing, each Holder shall reimburse the Notes Agent, as applicable, upon demand for its ratable share of any costs or out-of-pocket expenses (including attorneys’ fees, costs and expenses) incurred by the Notes Agent, as applicable, in connection with the preparation, execution, delivery, administration, modification, amendment, forbearance or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Transaction Document, or any document contemplated by or referred to herein or in any Transaction Document, or in connection with any transaction contemplated hereunder, or in connection with any action taken or omitted to be taken by Notes Agent or Agent-Related Person, as applicable, under or in connection with any of the foregoing including without limitation, exercising any of the Notes Agent’s powers, rights, and remedies and performing its duties hereunder and thereunder (or omitting to do the same), in each case, to the extent that the Notes Agent is not reimbursed for such expenses by or on behalf of the Company, provided that such reimbursement by the Holders shall not affect the Company’s continuing reimbursement obligations with respect thereto, provided further that the failure of any Holder to indemnify or reimburse the Notes Agent shall not relieve any other Holder of its obligation in respect thereof.    If any indemnity furnished to the Notes Agent for any purpose shall, in the opinion of the Notes Agent, be insufficient or become impaired, the Notes Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished.

(d)    All amounts due under Section 10.8 shall be paid within twenty (20) Business Days after written demand therefor. The agreements in this Section 10.8 shall survive the resignation of the Notes Agent, the replacement of any Holder, and the repayment, satisfaction or discharge of all Note Obligations.

Section 10.9    Resignation by the Notes Agent. The Notes Agent may resign from the performance of all its functions and duties hereunder or under the other Transaction Documents at any time by giving 30 Business Days’ prior written notice to the Holders and the Company. If the Notes Agent is in material breach of its obligations hereunder as Notes Agent, then the Notes Agent may be removed as the Notes Agent at the reasonable request of the Requisite Holders.

Upon any such notice of resignation by, or notice of removal of, the Notes Agent, the Requisite Holders shall appoint a successor Notes Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Company, which acceptance shall not be unreasonably withheld or delayed (provided that the Company’s approval shall not be required if an Event of Default under Section 6.1(f) has occurred and is continuing).

If a successor Notes Agent shall not have been so appointed within such 30 Business Day period, the Notes Agent may (but shall not be obligated to) appoint a successor Notes Agent who shall serve as Notes Agent hereunder until such time, if any, as the Requisite Holders appoint a successor Notes Agent as provided above.

 

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If no successor Notes Agent has been appointed pursuant to the foregoing by the 30th Business Day after the date such notice of resignation was given by the Notes Agent or such notice of removal was given by the Requisite Holders or the Company, as applicable, the Notes Agent’s resignation or removal shall nonetheless become effective and the Requisite Holders shall thereafter perform all the duties of the Notes Agent hereunder or under any other Transaction Document until such time, if any, as the Requisite Holders appoint a successor Notes Agent as provided above. Upon the end of such 30 Business Day period, the retiring Notes Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents.

Upon the acceptance of a successor’s appointment as Notes Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired or removed) Notes Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Notes Agent prior to the effectiveness of such removal or resignation), the term “Notes Agent” shall mean such successor agent effective upon such appointment and approval, and the retiring (or retired or removed) Notes Agent shall be discharged from all of its duties and obligations hereunder or under the other Transaction Documents (if not already discharged therefrom as provided above in this Section 10.9) without any other or future act or deed on the part of such former Notes Agent or any of the parties to this Agreement or any Holders.

The fees payable by the Company to a successor Notes Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the resignation or removal of the Notes Agent hereunder, the provisions of this Article X and Section 10.8 shall continue in effect for the benefit of such Notes Agent, its sub-agents and its Agent-Related Persons in respect of any actions taken or omitted to be taken by any of them while Notes Agent was acting as Notes Agent.

Upon a resignation or removal of the Notes Agent pursuant to this Section 10.9, the Notes Agent (i) shall continue to be subject to any confidentiality provisions of the Transaction Documents and (ii) shall remain indemnified to the extent provided in this Agreement and the other Transaction Documents and the provisions of this Article X (and the analogous provisions of the other Transaction Documents) shall continue in effect for the benefit of the Notes Agent for all of its actions and inactions while serving as the Notes Agent.

Section 10.10    Collateral Matters. Each of the Holders hereby irrevocably authorize and instruct the Notes Agent to take the actions to be taken by them as set forth in the Security Documents.

Each Holder hereby agrees, that, except as otherwise set forth herein, any action taken by the Requisite Holders (or such greater percentage of Holders required) (or the Note Agent, at the direction of the Requisite Holders (or such greater percentage of Holders required)) in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Requisite Holders (or such greater percentage of Holders required) (or the Note Agent, at the direction of the Requisite Holders (or such greater percentage of Holders required)) of the powers set forth herein or therein, together with such other powers as are reasonably incidental

 

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thereto, shall be authorized and binding upon all of the Holders. The Notes Agent is hereby authorized on behalf of all of the Holders, without the necessity of any notice to or further consent from any Holder, from time to time prior to an Event of Default, (but shall have no obligation to do so prior to receiving written direction from the Requisite Holders) to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.

Upon request by the Notes Agent at any time, the Holders will confirm in writing the Notes Agent’s authority to release particular types or items of Collateral pursuant to this Section 10.10. In each case as specified in and subject to the provisions of this Section 10.10, the Notes Agent will (and each Holder irrevocably authorizes the Notes Agent to), at the Company’s expense, execute and deliver to the Company or any Guarantor, as applicable, such documents as such Person may reasonably request to evidence the release or subordination of such item of Collateral from the assignment and security interest granted under the Security Documents, or to evidence the release of such Guarantor from its obligations under the Security Agreement, in each case in accordance with the terms of the Transaction Documents and this Section 10.10.

The Notes Agent shall have no obligation whatsoever to the Holders or to any other Person to assure that the Collateral exists or is owned by the Company or any Guarantor or is cared for, protected or insured or that the Liens granted to the Notes Agent pursuant to any Security Document have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Notes Agent in this Section 10.10, or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Notes Agent shall have no duty unless and until expressly directed by Requisite Holders. The Notes Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence or collectability of the Collateral, the existence, priority or perfection of the Notes Agent’s Lien thereon, or any certificate prepared by the Company or any Guarantor in connection therewith, nor shall the Notes Agent be responsible or liable to the Holders for any failure to monitor or maintain any portion of the Collateral, Liens therein or financing statements filed in connection therewith.

Anything contained in any of the Transaction Documents to the contrary notwithstanding, the Company and the Notes Agent hereby agree that (i) no Person (other than the Notes Agent) shall have any right individually to realize upon any of the Collateral or to enforce the Security Agreement or the guaranty contained there, it being understood and agreed that all powers, rights and remedies hereunder and under any of the Transaction Documents may be exercised solely by the Notes Agent, as applicable, for the benefit of itself and the Holders in accordance with the terms hereof and thereof, and (ii) in the event of a foreclosure or similar enforcement action by the Notes Agent on any of the Collateral pursuant to a public or private sale or other disposition (including, without limitation, pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of Title 11 of the United States Code (the “Bankruptcy Code”) or other similar law), the Notes Agent (or any Holder, except with respect to a “credit bid” pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code), may be the purchaser or licensor of any

 

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or all of such Collateral at any such sale or other disposition and the Notes Agent, as agent for and representative of Holders (but not any Holder in its individual capacities) shall be entitled, upon instructions from Requisite Holders, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or disposition, to use and apply any of the Note Obligations as a credit on account of the purchase price for any collateral payable by the Notes Agent at such sale or other disposition.

Section 10.11    Intercreditor Agreements. Notwithstanding anything to the contrary in this Agreement or in any other Transaction Document: (a) the Liens granted to the Notes Agent in favor of itself and the Holders pursuant to the Transaction Documents and the exercise of any right related to any Collateral shall be subject, in each case, to the terms of the Intercreditor Agreement, (b) in the event of any conflict between the express terms and provisions of this Agreement or any other Transaction Document, on the one hand, and of the Intercreditor Agreement, on the other hand, the terms and provisions of the Intercreditor Agreement shall control, and (c) each Holder hereunder authorizes and instructs the Notes Agent to execute and perform its obligations under the Intercreditor Agreement (and any amendments, restatements, supplements or other modifications thereto approved in accordance with the terms thereof) on behalf of such Holder, and such Holder agrees to be bound by the terms thereof.

ARTICLE XI

MISCELLANEOUS

Section 11.1    Interpretation. Article, Section, Schedule and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever the Company has an obligation under the Transaction Documents, the expense of complying with such obligation shall be an expense of the Company unless otherwise specified. Whenever any determination, consent or approval is to be made or given by a Purchaser under this Agreement, such action shall be in such Purchaser’s sole discretion unless otherwise specified. If any provision in the Transaction Documents is held to be illegal, invalid, not binding or unenforceable, such provision shall be fully severable, and the Transaction Documents shall be construed and enforced as if such illegal, invalid, not binding or unenforceable provision had never comprised a part of the Transaction Documents, and the remaining provisions shall remain in full force and effect. The Transaction Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel and shall not be construed against the drafter.

Section 11.2    Survival of Provisions. The representations and warranties set forth in Sections 3.1, 3.2, 3.7, 3.9, 3.10, 3.11, 4.1, 4.2, 4.4 and 4.5 hereunder shall survive the execution and delivery of this Agreement indefinitely, and the other representations and warranties set forth in this Agreement either made as of the date of this Agreement or a Closing Date shall survive for a period of six (6) months following such date regardless of any investigation made by or on behalf of the Company or the Purchasers. Except as provided in Article V, the covenants made in this Agreement or any other Transaction Document shall survive the closing of the transactions contemplated herein and remain operative and in full force and effect regardless of acceptance of any of the Notes and payment therefor and repayment, conversion, exercise or repurchase thereof.

 

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Section 11.3    No Waiver; Modifications in Writing.

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

(b)    Specific Waiver. Except as set forth in Section 6.3 or as otherwise provided in this Agreement or the Registration Rights Agreement, no amendment, waiver, consent, modification or termination of any provision of this Agreement or any other Transaction Document shall be effective unless signed by each of the Parties or each of the original signatories thereto affected by such amendment, waiver, consent, modification or termination. Without limiting the foregoing, the consent of Notes Agent shall be required for any amendment, waiver, or consent affecting the rights, privileges, indemnities, duties or obligations of the Notes Agent hereunder or under any of the other Transaction Documents. Any amendment, supplement or modification of or to any provision of this Agreement or any other Transaction Document, any waiver of any provision of this Agreement or any other Transaction Document and any consent to any departure by the Company from the terms of any provision of this Agreement or any other Transaction Document shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on any Party in any case shall entitle any Party to any other or further notice or demand in similar or other circumstances.

Section 11.4    Binding Effect; Assignment.

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

(b)    Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as set forth in Section 9.2 or Section 10.9 hereof, neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Parties.

Section 11.5    Confidentiality and Non-Disclosure. Notwithstanding anything herein to the contrary, each Purchaser that has executed a confidentiality agreement in favor of the Company shall continue to be bound by such confidentiality agreement in accordance with its terms.

 

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Section 11.6    Communications. All notices and demands provided for under this Agreement and the Notes shall be in writing and shall be given by regular mail, registered or certified mail, return receipt requested, electronic mail, air courier guaranteeing overnight delivery or personal delivery to the following addresses:

(a)    If to any Purchaser, at its address as it appears on its signature page hereto,

(b)    If to the Notes Agent, at its address as it appears on its signature page hereto,

(c)    If to the Company:

U.S. Well Services, Inc.

1360 Post Oak Boulevard, Suite 1800

Houston, Texas 77056

Attention: Kyle O’Neill

E-mail: koneill@uswellservices.com

with a copy to:

Porter Hedges LLP

1000 Main Street, 36th Floor

Houston, Texas 77002

Attention: Corey Brown

Email: cbrown@porterhedges.com

Facsimile: (713) 228-1331

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

Section 11.7    Removal of Legend. The Company shall remove the legend described in Section 9.2(c) from the certificates evidencing the Class A Common Stock issued upon conversion of the Equity Linked Notes at any time following (x) the six-month anniversary of the applicable Closing Date on which such Notes were issued upon request of a Purchaser who is not an “affiliate” (as defined under Rule 144 of the Securities Act) of the Company at the time of such request or during the three months prior to such request, provided that the Company is in compliance with its disclosure requirements under applicable federal securities Laws as of such date and (y) after the twelve-month anniversary of such Closing Date upon request of a Purchaser who is not an “affiliate” (as defined under Rule 144 of the Securities Act) of the Company at the time of such request or during the three months prior to such request. The Company shall cooperate with such Purchaser to effect removal of such legend and shall deliver

 

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to the Transfer Agent irrevocable instructions that the Transfer Agent shall reissue a certificate representing shares of Class A Common Stock without legends upon receipt by such Transfer Agent of the legended certificates for such shares, together with (1) either a customary representation by the Purchaser that Rule 144 applies to the shares of Class A Common Stock represented thereby or (2) a statement by the Purchaser that such Purchaser has sold the shares of Class A Common Stock represented thereby in accordance with the plan of distribution contained in the registration statement filed pursuant to the Registration Rights Agreement, and (B) the Company shall use its reasonable best efforts to cause its counsel to deliver to the Transfer Agent one or more opinion letters to the effect that the removal of such legends in such circumstances may be effected under the Securities Act.

Section 11.8    Entire Agreement. The Transaction Documents, including all exhibits and schedules thereto, are intended by the Parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the Parties hereto and thereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein with respect to the rights granted by the Company or a Purchaser set forth herein or therein. The Transaction Documents supersede all prior agreements and understandings between the Parties with respect to such subject matter (other than nondisclosure and confidentiality agreements between the Company and the Purchasers signed in anticipation of an equity financing in the Company).

Section 11.9    Governing Law and Venue; Waiver of Jury Trial; Waiver of Certain Damages.

(a)    THIS AGREEMENT, THE NOTES AND ALL DISPUTES BETWEEN THE PARTIES UNDER OR RELATING TO THIS AGREEMENT, THE NOTES OR THE FACTS AND CIRCUMSTANCES LEADING TO ITS EXECUTION AND DELIVERY, WHETHER IN CONTRACT, TORT OR OTHERWISE, WILL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER STATE.

(b)    ANY ACTION, SUIT OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL ONLY BE BROUGHT IN ANY FEDERAL COURT LOCATED IN THE STATE OF NEW YORK OR ANY NEW YORK STATE COURT, AND EACH PARTY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (AND OF THE APPROPRIATE APPELLATE COURTS THEREFROM) IN ANY SUCH ACTION, SUIT OR PROCEEDING AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT OR THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM;

 

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PROVIDED, HOWEVER, THAT ANY ACTION, SUIT OR PROCEEDING, SEEKING TO ENFORCE A FINAL JUDGMENT RENDERED IN SUCH COURT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION. PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF ANY SUCH COURT. WITHOUT LIMITING THE FOREGOING, SERVICE OF PROCESS ON SUCH PARTY AS PROVIDED IN SECTION 11.6 SHALL BE DEEMED EFFECTIVE SERVICE OF PROCESS ON SUCH PARTY.

(c)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION OR DISPUTE DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL ACTIONS, SUITS AND PROCEEDINGS THAT RELATE TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY REPRESENTS AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND REPRESENTATIONS IN THIS SECTION 11.9. IN THE EVENT OF LITIGATION THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 11.10    Execution in Counterparts. This Agreement may be executed in any number of counterparts (including by .pdf or other electronic transmission) and by different Parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute the same Agreement.

Section 11.11    Obligations Limited to Parties to Agreement. Each of the Parties covenants, agrees and acknowledges that no Person other than the Purchasers (and their permitted assignees), the Notes Agent, and the Company shall have any obligation hereunder and that, notwithstanding that one or more of the Purchasers may be a corporation, partnership or limited liability company, no recourse under the Transaction Documents or under any documents or instruments delivered in connection therewith shall be had against any former, current or

 

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future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or the Company or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or the Company or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of the Purchasers and the Company under the Transaction Documents or any documents or instruments delivered in connection therewith or for any claim based on, in respect of or by reason of such obligation or its creation.

Section 11.12    Remedies. The Parties agree that money damages or another remedy at law would not be a sufficient or adequate remedy for any breach or violation of, or a default under, this Agreement by them and that, in addition to all other remedies available to them, each of them shall be entitled to an injunction restraining such breach, violation or default or threatened breach, violation or default and to any other equitable relief including, without limitation, specific performance without bond or other security being required.

[The remainder of this page is intentionally left blank.]

 

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

 

COMPANY:
U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

      Kyle O’Neill
      Chief Financial Officer

 

[Signatures continue on following page.]

Signature Page to Note Purchase Agreement


PURCHASERS:
PROFRAC HOLDINGS, LLC
By:  

/s/ Matt Wilks                                        

Name:   Matt Wilks
Title:   President and CFO
Address:
333 Shops Boulevard, Suite 301
Willow Park, TX 76087

Attention: Matthew D. Wilks; Robert J. Willette;

Brian L. Von Hatten

Email: matt.wilks@profrac.com; robert.willette@wilksbrothers.com; brian.vonhatten@profrac.com
with a copy to:
Alston & Bird LLP
Chase Tower
2200 Ross Avenue, Suite 2300
Dallas, TX 75201
Attention: Mitchell L. Griffith
Email: mitchell.griffith@alston.com

 

[Signatures continue on following page.]

Signature Page to Note Purchase Agreement


THRC HOLDINGS, LP
By:  

/s/ Matt Wilks                                        

Name:   Matt Wilks
Title:   VP, Investments

 

Address:
THRC Holdings, LP
16858 IH 20
Cisco, TX 76437
Attention: Matthew D. Wilks; Robert Willette
Email: matt.wilks@profrac.com; robert.willette@wilksbrothers.com
with a copy to:
Alston & Bird LLP
Chase Tower
2200 Ross Avenue, Suite 2300
Dallas, TX 75201
Attention: Mitchell L. Griffith
Email: mitchell.griffith@alston.com

 

[Signatures continue on following page.]

Signature Page to Note Purchase Agreement


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

/s/ Ross A. Oliver                                        

Name:   Ross A. Oliver
Title:   General Counsel
c/o Crestview Advisors, L.L.C.
590 Madison Avenue, 42nd Floor
New York, New York 10022
Attention: Adam J. Klein, Ross A. Oliver
E-mail: aklein@crestview.com;
roliver@crestview.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: E. Ramey Layne, Crosby Scofield
Email: rlayne@velaw.com; cscofield@velaw.com

 

[Signatures continue on following page.]

Signature Page to Note Purchase Agreement


CRESTVIEW III USWS TE, LLC
By:  

/s/ Ross A. Oliver                                        

Name:   Ross A. Oliver
Title:   General Counsel
c/o Crestview Advisors, L.L.C.
590 Madison Avenue, 42nd Floor
New York, New York 10022
Attention: Adam J. Klein, Ross A. Oliver
E-mail: aklein@crestview.com;
roliver@crestview.com
with a copy (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: E. Ramey Layne, Crosby Scofield
Email: rlayne@velaw.com; cscofield@velaw.com

 

[Signatures continue on following page.]

Signature Page to Note Purchase Agreement


NOTES AGENT:
WILMINGTON SAVINGS FUND SOCIETY, FSB
By:  

/s/ Geoffrey J. Lewis                    

Name:   /s/ Geoffrey J. Lewis
Title:   Vice President
Address:
500 Delaware Avenue
Wilmington, DE 19801
Attention: Patrick J. Healy
Facsimile: (302) 421-9137
Telephone: (302) 888-7420
Email: PHealy@wsfsbank.com
With a copy to:
Wilmington Savings Fund Society, FSB
500 Delaware Avenue
Wilmington, DE 19801
Attention: Geoffrey J. Lewis
Telephone: (302) 573-3218
Email: GLewis@wsfsbank.com
With a copy to (which shall not constitute notice):
Brown Rudnick LLP
One Financial Center
Boston, MA 02111
Attention: Tia C. Wallach
Telephone: (617) 856-8181
Email: twallach@brownrudnick.com

 

Signature page to Note Purchase Agreement


Exhibit B-1

FORM OF CASH NOTE

(see attached)


THE NOTE REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTUATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO U.S. WELL SERVICES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

THE NOTES ARE SUBJECT IN ALL RESPECTS TO THE RESTRICTIONS IN THE AGREEMENT (AS DEFINED BELOW).

THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AGREEMENT (AS AMENDED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME, THE “INTERCREDITOR AGREEMENT”) DATED AS OF JUNE 24, 2021, AMONG BANK OF AMERICA, N.A., AS ABL AGENT, CLMG CORP., AS TERM LOAN AGENT, NOTES AGENT, AND U.S. WELL SERVICES, LLC, TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY MAKER AND ITS SUBSIDIARIES PURSUANT TO (I) THAT CERTAIN SENIOR SECURED TERM LOAN CREDIT AGREEMENT DATED AS OF MAY 17, 2019 AMONG THE MAKER AND ITS SUBSIDIARIES PARTY THERETO, CMLG CORP., AS ADMINISTRATIVE AGENT AND TERM LOAN COLLATERAL AGENT, AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH TERM LOAN CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, AND (II) THAT CERTAIN ABL CREDIT AGREEMENT, DATED AS OF MAY 17, 2019, AMONG THE MAKER AND ITS SUBSIDIARIES PARTY THERETO, BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH ABL CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME; AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.

U.S. WELL SERVICES, INC.

CONVERTIBLE SENIOR SECURED (THIRD LIEN) PIK NOTE

 

$[        ]   [        ] [    ], 2021

1.    Principal Amount. For value received, U.S. WELL SERVICES, INC., a Delaware corporation (the “Maker”), promises to pay to the order of [                    ] (the “Payee”), the principal amount of [                    ] Dollars ($[        ]) and interest on the outstanding principal amount of this Convertible Senior Secured (Third Lien) PIK Note (this “Note”) in accordance with the terms of this Note. Capitalized terms used herein shall have the meanings assigned to them in the Agreement referred to below unless otherwise indicated.


2.    Interest. Interest shall begin to accrue on the unpaid principal balance of this Note, if any, commencing on the date hereof and continuing until repayment of this Note in full at the rate of sixteen percent (16%) per annum calculated on the basis of a 360 day year and actual days elapsed. Accrued and unpaid interest shall be calculated on this Note on the last day of each March, June, September and December, commencing September 30, 2021, and shall be added on such date to the unpaid principal balance of this Note (rounded up to the nearest $1.00) (the “PIK Interest”). PIK Interest, upon being added to the unpaid principal balance of this Note, shall no longer be deemed to be accrued and unpaid interest on the outstanding principal amount. References herein and in the Agreement to the “principal amount” of the Notes includes any increases in the principal amount of the outstanding Notes as a result of the PIK Interest. Accrued and unpaid interest on this Note shall also be due and payable on the Maturity Date under the terms set forth in Section 3.

3.    Maturity Date. Subject to the conversion of this Note pursuant to Section 6, the entire outstanding and unpaid principal balance of this Note, plus any accrued and unpaid interest thereon, shall be due and payable on June 5, 2026 (the “Maturity Date”) in a number of shares of Class A Common Stock equal to the quotient obtained by dividing (a) the amount of such outstanding principal and unpaid interest through the date immediately prior to the Maturity Date, by (b) either (i) the volume-weighted average trading price of the Class A Common Stock reported by the principal national securities exchange on which the Class A Common Stock is then listed for trading for the twenty (20) trading day period (including the last day of such period) immediately preceding the Maturity Date (“Twenty-Day VWAP”) or (ii) if the Maturity Date occurs during any period in which the Class A Common Stock is not listed on any national securities exchange (such time, a “Delisted Period”), then the Fair Market Value of a share Class A Common Stock as of May 1, 2026; provided, however, that if any Event of Default specified in Section 6.1(e), (f) or (g) under the Agreement occurs and is continuing on the Maturity Date, then payment shall be made in cash. For the purposes hereof, “Fair Market Value” means the fair market value of a share of the Class A Common Stock as determined in good faith by the Board. Notwithstanding the above, in the event the Board is obligated to made a determination of Fair Market Value under the terms of this Section 3 or Section 6(c), the Maker shall provide notice of the Board’s determination (together with reasonably supporting documentation as to such determination) as to Fair Market Value to the Payee at least fifteen (15) Business Days in advance of the Maturity Date or Change of Control, as applicable (a “FMV Determination Notice”), and, if the Requisite Holders of the Equity Linked Notes provide a written notice disputing the Board’s Fair Market Value determination (a “Dispute Notice”) within five (5) Business Days following delivery of a FMV Determination Notice, the Board and a Holder designated as the representative of the outstanding Equity Linked Notes, as selected by the Requisite Holders of the Equity Linked Notes (the “Note Holders’ Representative”) shall attempt to agree on the Fair Market Value in good faith; provided, however, that if the Board and the Note Holders’ Representative are unable to agree upon the Fair Market Value within five (5) Business Days after delivery of a Dispute Notice, the Board and the Note Holders’ Representative shall submit the dispute to an internationally recognized independent investment bank or valuation firm selected by the Note Holders’ Representative from three such investment banks or valuation firms proposed by the Maker (the “Independent Appraiser”). The


Independent Appraiser’s determination as to the Fair Market Value shall be final, binding and conclusive for all purposes. The Holders shall bear one hundred percent (100%) of the fees and expenses of the Independent Appraiser through a reduction in the outstanding principal balance and unpaid interest on the Equity Linked Notes allocated in accordance to such amounts owed per Equity Linked Note; provided, however, that if the appraised Fair Market Value as determined by the Independent Appraiser exceeds one hundred twenty-five percent (125%) of the Fair Market Value determined by the Board, the Maker shall pay one hundred percent (100%) of the fees and expenses of the Independent Appraiser. Notwithstanding anything to the contrary herein, in the event payment of this Note is in shares of Class A Common Stock, Maker shall deliver such shares no later than ten (10) Business Days following the final determination of the number of such shares to be delivered.

4.    No Prepayment or Redemption. Maker may not redeem or prepay all or any portion of this Note.

5.    Note Purchase Agreement. Maker issued this Note and each of the other Convertible Senior Secured (Third Lien) PIK Notes under a Note Purchase Agreement (the “Agreement”) dated as of June 24, 2021 (the “Agreement Date”), among Maker, the Payee and the other Holders, and Wilmington Savings Fund Society, FSB, as collateral agent (the “Notes Agent”). The terms of this Note and the other Convertible Senior Secured (Third Lien) PIK Notes include those stated in the Agreement. This Note and the other Convertible Senior Secured (Third Lien) PIK Note are subject to all such terms, and Holders are referred to the Agreement for a statement of such terms.

6.    Conversion.

(a)    Optional Conversion. At any time prior to the payment in full of all outstanding principal and interest owing under this Note, the Payee may elect to convert all or a portion of such outstanding principal and interest into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (i) the amount of such outstanding aggregate principal amount plus accrued and unpaid interest through the date immediately prior to the date of conversion, by (ii) the Conversion Price. The Payee may exercise this right by delivering written notice of such conversion to the Maker in the form attached as Annex A (the “Conversion Notice”) and tendering this Note to the Maker. Such conversion shall be completed on a date specified in the Conversion Notice, which shall be not less than 10 and not more than 20 Business Days following the date of the Conversion Notice, and at such closing, the Maker shall issue to the Payee the number of shares of Class A Common Stock set forth in the notice of conversion, as well as a replacement note representing the unconverted principal amount of any notes tendered, such replacement note to have the same terms and conditions as this Note. “Conversion Price” shall initially be $[        ]1, which may be adjusted from time to time as set forth herein.

(b)    Mandatory Conversion. Following the first anniversary of the date of the Agreement, and at any time in which there are no issued and outstanding shares of Series A

 

1 

The Conversion Price for the Equity Linked Notes will be $0.98 (the “Closing Date Price); provided that with respect to any Additional Cash Note(s), the Company and the applicable Purchaser may agree in connection with the issuance of such note to a Conversion Price for such note that is equal to or higher than the Closing Date Price.


Preferred Stock or Series B Preferred Stock, if the Twenty-Day VWAP is greater than $2.00 for ten (10) trading days during any twenty (20) consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Maker provides the Maker Conversion Notice as set forth below, then the Maker shall have the option from time to time, exercisable by delivery of written notice to the Payee substantially in the form attached hereto as Annex B (the “Maker Conversion Notice”), to convert all or a portion of the outstanding principal and interest then owing under this Note into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (A) the amount of such outstanding principal and interest owing through the date immediately prior to the date of conversion, by (B) the Conversion Price on a date specified in the Maker Conversion Notice that is no later than the second Business Day following such Maker Conversion Notice. For the avoidance of doubt, this Section 6(b) shall have no force and effect during any period in which the Class A Common Stock is not listed on any national securities exchange.

(c)    Change of Control Forced Conversion. In the event of a Change of Control, subject to the Payee’s right to convert this Note into Class A Common Stock pursuant to Section 6(a), the Maker shall have the option, exercisable by delivery of written notice to the Payee substantially in the form attached hereto as Annex C (the “CoC Conversion Notice”) at least fifteen (15) Business Day prior to such Change of Control, to either (i) in full satisfaction hereof pay to the Payee in cash the amount of the outstanding principal and accrued and unpaid interest on this Note through the date immediately prior to the date of such Change of Control or (ii) convert no later than the tenth Business Day following such Change of Control all of the outstanding principal and interest then owing under this Note into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (A) the amount of such outstanding principal and interest through the date immediately prior to the Change of Control, by (B) either (1) the Twenty-Day VWAP for the twenty (20) trading day period (including the last day of such period) immediately preceding such Change of Control or (2) if the Change of Control occurs during any Delisted Period, then the Fair Market Value of the Class A Common Stock as of the date of the CoC Conversion Notice. For the Purposes hereof, (a) a “Change of Control” means (i) the consummation of any transaction by the Maker the result of which is that any person, other than any Permitted Holder (as defined below), becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the voting stock of the Maker, measured by voting power rather than number of shares, units or the like; provided that a transaction in which the Maker becomes a subsidiary of another person shall not constitute a Change of Control if, immediately following such transaction, the persons who were beneficial owners of the voting stock of the Maker immediately prior to such transaction beneficially own, directly or indirectly, fifty percent (50%) or more of the total voting power of the voting stock of such other person of whom the Maker has become a subsidiary or (ii) the sale of all or substantially all of the Maker’s assets; and (b) the “Permitted Holder” means any original holder of Convertible Senior Secured (Third Lien) PIK Notes and its affiliates.

(d)    Adjustments to Conversion Price. If, after the date hereof, the Maker (i) makes a distribution on its Class A Common Stock in cash, securities (including Class A Common Stock) or other property or assets, (ii) subdivides or splits its outstanding Class A Common Stock into a greater number of Class A Common Stock, (iii) combines or reclassifies its Class A Common Stock into a smaller number of Class A Common Stock or (iv) issues by reclassification of its Class A Common Stock any securities (including any reclassification in


connection with a merger, consolidation or business combination in which the Maker is the surviving person or another constituent corporation is issuing equity securities in exchange for Class A Common Stock), then the Conversion Price in effect at the time of the record date for such distribution or of the effective date of such subdivision, split, combination, or reclassification shall be proportionately adjusted so that the conversion of the Note after such time shall entitle the Payee to receive the aggregate number of Class A Common Stock (or shares of any securities into which such shares of Class A Common Stock would have been combined, consolidated, merged, reclassified or exchanged pursuant to clauses (iii) and (iv) above) that Payee would have been entitled to receive if the Note had been converted into shares of Class A Common Stock immediately prior to such record date or effective date, as the case may be. An adjustment made pursuant to this Section 6(f) shall become effective immediately after the record date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification (including any reclassification in connection with a merger, consolidation or business combination in which the Corporation is the surviving person or a constituent corporation) or split. Such adjustment shall be made successively whenever any event described above shall occur.

(e)    Termination of Rights. Upon the issuance of shares of Class A Common Stock upon the conversion of any outstanding principal and interest owing under this Note, all rights of the Payee with respect to such principal and interest shall terminate.

7.    Share Limitations. Notwithstanding the provisions set forth in Section 3, Section 6 or anywhere else in this Note, (i) no shares of Class A Common Stock will be issued under this Note unless and until the Company shall have submitted a Listing of Additional Shares to the NASDAQ covering all the shares of Class A Common Stock issuable pursuant to this Note (the “Listing Application”) and NASDAQ shall have completed its review of, and approved, such listing application, (ii) no shares of Class A Common Stock will be issued under this Note to the extent such issuance would constitute a “change of control” under the Nasdaq’s listing rules (the “Change of Control Limitation”) or would be in excess of the number of shares of Class A Common Stock authorized and available for issuance under the Company’s charter (the “Charter Limitation”), and (iii) the total number of shares of Class A Common Stock that may be issued under the Equity Linked Notes at a price per share which is less than the Conversion Price, when combined with any other shares of Class A Common Stock which may be aggregated with such issuances under applicable NASDAQ rules for this purpose, will not exceed the number permitted under such applicable NASDAQ rules (the “Exchange Cap”), unless stockholder approval is obtained in order to comply with, satisfy or remove, as applicable, the Change of Control Limitation, the Charter Limitation, or the Exchange Cap, as applicable. The Exchange Cap will not apply to any issuance of shares of Class A Common Stock under this Note if the number of shares to be issued is calculated based on a value per share of Class A Common Stock that is equal to or greater than the Conversion Price. In the event that the Company is unable to issue shares of Class A Common Stock as a result of the NASDAQ not approving the Listing Application, the Change of Control Limitation, a Charter Limitation or the Exchange Cap, the Company will instead settle the conversion or payment due at Maturity in cash (but only to the extent necessary to not trigger a Change of Control Limitation, a Charter Limitation or the Exchange Cap, as applicable). To the extent shares of Class A Common Stock are to be issued pursuant to this Note and other Equity Linked Notes simultaneously and the Company is unable to issue shares of Class A Common Stock as a result of the Change of


Control Limitation, a Charter Limitation or the Exchange Cap and must instead settle the conversion or payment partially in cash, the allocation of Class A Common Stock and cash to be issued or paid shall be pro rata among the Payee and the holders of such other Equity Linked Notes.

8.    Collateral. The Note Obligations are secured by that certain collateral as set forth in that certain Guarantee and Third Lien Collateral Agreement dated June 24, 2021, by and among Maker and the subsidiaries of Maker party thereto, as grantors, and Notes Agent (as amended, restated or supplemented from time to time, the “Third Lien Security Agreement”). The Payee has agreed to and accepted the terms and conditions of the Third Lien Security Agreement and the Intercreditor Agreement and the performance by the Notes Agent of its respective obligations and the exercise of their respective rights thereunder and in connection therewith.

9.    Guarantees. The Note Obligations are guaranteed by U.S. Well Services, LLC, USWS Holdings LLC, USWS Fleet 10, LLC, USWS Fleet 11, LLC and by each of future wholly-owned subsidiaries of the Maker, under the terms of the Third Lien Security Agreement.

10.    Defaults and Remedies. The Agreement defines certain Events of Default. The Note Obligations may be accelerated following an Event of Default in the manner provided in the Agreement.

11.    Waiver of Notice. The Maker hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder.

12.    Officers and Directors Not Liable. In no event will any officer or director of the Maker be liable for any amounts due and payable pursuant to this Note.

13.    Applicable Law. THIS NOTE WILL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER STATE.

[Signature page follows]


IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of the day and year first above written.

 

U.S. WELL SERVICES, INC.
By:  

 

Name:  

 

Title:  

 

Signature Page to Convertible Senior Secured (Third Lien) PIK Note


Annex A

Conversion Notice

The undersigned, the Payee, under that certain Convertible Senior Secured (Third Lien) PIK Note issued by U.S. Well Services, Inc., a Delaware corporation, on [            ], 2021 (the “Note”), hereby irrevocably elects to convert the amount indicated below of the Note on the date set forth below into shares of Class A Common Stock at the Conversion Price pursuant to Section 6(a) of the Note. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Date of conversion: [                    ]

Conversion Calculations:

Principal and accrued interest on the date immediately prior to conversion: $[        ]

Principal and accrued interest to be converted: $[        ]

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

Principal amount immediately after redemption: $[            ]

Address for delivery of physical certificates: [                    ]

 

PAYEE

 

By:  

 

Name:  

 

Title:  

 

Date:  

 


Annex B

Maker Conversion Notice

U.S. Well Services, Inc., a Delaware corporation, hereby irrevocably elects to convert the amount indicated below of the Convertible Senior Secured (Third Lien) PIK Note on the date set forth below into shares of Class A Common Stock at the Conversion Price pursuant to Section 6(b) of the Note. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Payee: [                    ]

Conversion Calculations:

Principal and accrued interest on the date immediately prior to conversion: $[        ]

Principal and accrued interest to be converted: $[        ]

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

Principal amount immediately after redemption: $[        ]

 

U.S. WELL SERVICES, INC.
By:  

                                                                  

Name:  

 

Title:  

 

Date:  

 


Annex C

CoC Conversion Notice

U.S. Well Services, Inc., a Delaware corporation, hereby notifies Payee that a Change of Control is expected to be consummated on or about [                    ], and, subject to the consummation of such Change of Control, elects to:

                    Satisfy the Convertible Senior Secured (Third Lien) PIK Note in Cash

                    Convert the Convertible Senior Secured (Third Lien) PIK Note into shares of Class A Common Stock pursuant to Section 6(c) of the Note.

Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Payee: [                    ]

Principal and accrued interest on the date immediately prior to the Change of Control: $[        ]

[Cash Payment: $[        ]]

[OR]

[Conversion Calculations:

[Twenty-Day VWAP: $[        ]]

[Fair Market Value: $[        ]]

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

 

U.S. WELL SERVICES, INC.
By:  

                                                             

Name:  

 

Title:  

 

Date:  

 


Exhibit B-2

FORM OF EXCHANGE NOTE

(see attached)


EXHIBIT B-2

THE NOTE REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTUATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO U.S. WELL SERVICES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

THE NOTES ARE SUBJECT IN ALL RESPECTS TO THE RESTRICTIONS IN THE AGREEMENT (AS DEFINED BELOW).

THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AGREEMENT (AS AMENDED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME, THE “INTERCREDITOR AGREEMENT”) DATED AS OF JUNE 24, 2021, AMONG BANK OF AMERICA, N.A., AS ABL AGENT, CLMG CORP., AS TERM LOAN AGENT, NOTES AGENT, AND U.S. WELL SERVICES, LLC, TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY MAKER AND ITS SUBSIDIARIES PURSUANT TO (I) THAT CERTAIN SENIOR SECURED TERM LOAN CREDIT AGREEMENT DATED AS OF MAY 17, 2019 AMONG THE MAKER AND ITS SUBSIDIARIES PARTY THERETO, CMLG CORP., AS ADMINISTRATIVE AGENT AND TERM LOAN COLLATERAL AGENT, AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH TERM LOAN CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, AND (II) THAT CERTAIN ABL CREDIT AGREEMENT, DATED AS OF MAY 17, 2019, AMONG THE MAKER AND ITS SUBSIDIARIES PARTY THERETO, BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH ABL CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME; AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.

U.S. WELL SERVICES, INC.

CONVERTIBLE SENIOR SECURED (THIRD LIEN) PIK NOTE

 

$[        ]    [        ] [    ], 2021

1.    Principal Amount. For value received, U.S. WELL SERVICES, INC., a Delaware corporation (the “Maker”), promises to pay to the order of [                    ] (the “Payee”), the principal amount of [                    ] Dollars ($[        ]) and interest on the outstanding principal amount of this Convertible Senior Secured (Third Lien) PIK Note (this “Note”) in accordance with the terms of this Note. Capitalized terms used herein shall have the meanings assigned to them in the Agreement referred to below unless otherwise indicated.


2.    Interest. Interest shall begin to accrue on the unpaid principal balance of this Note, if any, commencing on the date hereof and continuing until repayment of this Note in full at the rate of sixteen percent (16%) per annum calculated on the basis of a 360 day year and actual days elapsed. Accrued and unpaid interest shall be calculated on this Note on the last day of each March, June, September and December, commencing September 30, 2021, and shall be added on such date to the unpaid principal balance of this Note (rounded up to the nearest $1.00) (the “PIK Interest”). PIK Interest, upon being added to the unpaid principal balance of this Note, shall no longer be deemed to be accrued and unpaid interest on the outstanding principal amount. References herein and in the Agreement to the “principal amount” of the Notes includes any increases in the principal amount of the outstanding Notes as a result of the PIK Interest. Accrued and unpaid interest on this Note shall also be due and payable on the Maturity Date under the terms set forth in Section 3.

3.    Maturity Date. Subject to the conversion of this Note pursuant to Section 6, the entire outstanding and unpaid principal balance of this Note, plus any accrued and unpaid interest thereon, shall be due and payable on June 5, 2026 (the “Maturity Date”) in a number of shares of Class A Common Stock equal to the quotient obtained by dividing (a) the amount of such outstanding principal and unpaid interest through the date immediately prior to the Maturity Date, by (b) either (i) the volume-weighted average trading price of the Class A Common Stock reported by the principal national securities exchange on which the Class A Common Stock is then listed for trading for the twenty (20) trading day period (including the last day of such period) immediately preceding the Maturity Date (“Twenty-Day VWAP”) or (ii) if the Maturity Date occurs during any period in which the Class A Common Stock is not listed on any national securities exchange (such time, a “Delisted Period”), then the Fair Market Value of a share Class A Common Stock as of May 1, 2026; provided, however, that if any Event of Default specified in Section 6.1(e), (f) or (g) under the Agreement occurs and is continuing on the Maturity Date, then payment shall be made in cash. For the purposes hereof, “Fair Market Value” means the fair market value of a share of the Class A Common Stock as determined in good faith by the Board. Notwithstanding the above, in the event the Board is obligated to made a determination of Fair Market Value under the terms of this Section 3 or Section 6(c), the Maker shall provide notice of the Board’s determination (together with reasonably supporting documentation as to such determination) as to Fair Market Value to the Payee at least fifteen (15) Business Days in advance of the Maturity Date or Change of Control, as applicable (a “FMV Determination Notice”), and, if the Requisite Holders of the Equity Linked Notes provide a written notice disputing the Board’s Fair Market Value determination (a “Dispute Notice”) within five (5) Business Days following delivery of a FMV Determination Notice, the Board and a Holder designated as the representative of the outstanding Equity Linked Notes, as selected by the Requisite Holders of the Equity Linked Notes (the “Note Holders’ Representative”) shall attempt to agree on the Fair Market Value in good faith; provided, however, that if the Board and the Note Holders’ Representative are unable to agree upon the Fair Market Value within five (5) Business Days after delivery of a Dispute Notice, the Board and the Note Holders’ Representative shall submit the dispute to an internationally recognized independent investment bank or valuation firm selected by the Note Holders’ Representative from three such investment banks or valuation firms proposed by the Maker (the “Independent Appraiser”). The


Independent Appraiser’s determination as to the Fair Market Value shall be final, binding and conclusive for all purposes. The Holders shall bear one hundred percent (100%) of the fees and expenses of the Independent Appraiser through a reduction in the outstanding principal balance and unpaid interest on the Equity Linked Notes allocated in accordance to such amounts owed per Equity Linked Note; provided, however, that if the appraised Fair Market Value as determined by the Independent Appraiser exceeds one hundred twenty-five percent (125%) of the Fair Market Value determined by the Board, the Maker shall pay one hundred percent (100%) of the fees and expenses of the Independent Appraiser. Notwithstanding anything to the contrary herein, in the event payment of this Note is in shares of Class A Common Stock, Maker shall deliver such shares no later than ten (10) Business Days following the final determination of the number of such shares to be delivered.

4.    No Prepayment or Redemption. Maker may not redeem or prepay all or any portion of this Note.

5.    Note Purchase Agreement. Maker issued this Note and each of the other Convertible Senior Secured (Third Lien) PIK Notes under a Note Purchase Agreement (the “Agreement”) dated as of June 24, 2021 (the “Agreement Date”), among Maker, the Payee and the other Holders, and Wilmington Savings Fund Society, FSB, as collateral agent (the “Notes Agent”). The terms of this Note and the other Convertible Senior Secured (Third Lien) PIK Notes include those stated in the Agreement. This Note and the other Convertible Senior Secured (Third Lien) PIK Note are subject to all such terms, and Holders are referred to the Agreement for a statement of such terms.

6.    Conversion.

(a)    Optional Conversion. At any time prior to the payment in full of all outstanding principal and interest owing under this Note, the Payee may elect to convert all or a portion of such outstanding principal and interest into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (i) the amount of such outstanding aggregate principal amount plus accrued and unpaid interest through the date immediately prior to the date of conversion, by (ii) the Conversion Price. The Payee may exercise this right by delivering written notice of such conversion to the Maker in the form attached as Annex A (the “Conversion Notice”) and tendering this Note to the Maker. Such conversion shall be completed on a date specified in the Conversion Notice, which shall be not less than 10 and not more than 20 Business Days following the date of the Conversion Notice, and at such closing, the Maker shall issue to the Payee the number of shares of Class A Common Stock set forth in the notice of conversion, as well as a replacement note representing the unconverted principal amount of any notes tendered, such replacement note to have the same terms and conditions as this Note. “Conversion Price” shall initially be $2.00, which may be adjusted from time to time as set forth herein.

(b)    Mandatory Conversion. Following the first anniversary of the date of the Agreement, and at any time in which there are no issued and outstanding shares of Series A Preferred Stock or Series B Preferred Stock, if the Twenty-Day VWAP is greater than $2.00 for ten (10) trading days during any twenty (20) consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the


date on which the Maker provides the Maker Conversion Notice as set forth below, then the Maker shall have the option from time to time, exercisable by delivery of written notice to the Payee substantially in the form attached hereto as Annex B (the “Maker Conversion Notice”), to convert all or a portion of the outstanding principal and interest then owing under this Note into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (A) the amount of such outstanding principal and interest owing through the date immediately prior to the date of conversion, by (B) the Conversion Price on a date specified in the Maker Conversion Notice that is no later than the second Business Day following such Maker Conversion Notice. For the avoidance of doubt, this Section 6(b) shall have no force and effect during any period in which the Class A Common Stock is not listed on any national securities exchange.

(c)    Change of Control Forced Conversion. In the event of a Change of Control, subject to the Payee’s right to convert this Note into Class A Common Stock pursuant to Section 6(a), the Maker shall have the option, exercisable by delivery of written notice to the Payee substantially in the form attached hereto as Annex C (the “CoC Conversion Notice”) at least fifteen (15) Business Day prior to such Change of Control, to either (i) in full satisfaction hereof pay to the Payee in cash the amount of the outstanding principal and accrued and unpaid interest on this Note through the date immediately prior to the date of such Change of Control or (ii) convert no later than the tenth Business Day following such Change of Control all of the outstanding principal and interest then owing under this Note into a number of shares of Class A Common Stock equal to the quotient obtained by dividing (A) the amount of such outstanding principal and interest through the date immediately prior to the Change of Control, by (B) either (1) the Twenty-Day VWAP for the twenty (20) trading day period (including the last day of such period) immediately preceding such Change of Control or (2) if the Change of Control occurs during any Delisted Period, then the Fair Market Value of the Class A Common Stock as of the date of the CoC Conversion Notice. For the Purposes hereof, (a) a “Change of Control” means (i) the consummation of any transaction by the Maker the result of which is that any person, other than any Permitted Holder (as defined below), becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the voting stock of the Maker, measured by voting power rather than number of shares, units or the like; provided that a transaction in which the Maker becomes a subsidiary of another person shall not constitute a Change of Control if, immediately following such transaction, the persons who were beneficial owners of the voting stock of the Maker immediately prior to such transaction beneficially own, directly or indirectly, fifty percent (50%) or more of the total voting power of the voting stock of such other person of whom the Maker has become a subsidiary or (ii) the sale of all or substantially all of the Maker’s assets; and (b) the “Permitted Holder” means any original holder of Convertible Senior Secured (Third Lien) PIK Notes and its affiliates.

(d)    Adjustments to Conversion Price. If, after the date hereof, the Maker (i) makes a distribution on its Class A Common Stock in cash, securities (including Class A Common Stock) or other property or assets, (ii) subdivides or splits its outstanding Class A Common Stock into a greater number of Class A Common Stock, (iii) combines or reclassifies its Class A Common Stock into a smaller number of Class A Common Stock or (iv) issues by reclassification of its Class A Common Stock any securities (including any reclassification in connection with a merger, consolidation or business combination in which the Maker is the surviving person or another constituent corporation is issuing equity securities in exchange for Class A Common Stock), then the Conversion Price in effect at the time of the record date for


such distribution or of the effective date of such subdivision, split, combination, or reclassification shall be proportionately adjusted so that the conversion of the Note after such time shall entitle the Payee to receive the aggregate number of Class A Common Stock (or shares of any securities into which such shares of Class A Common Stock would have been combined, consolidated, merged, reclassified or exchanged pursuant to clauses (iii) and (iv) above) that Payee would have been entitled to receive if the Note had been converted into shares of Class A Common Stock immediately prior to such record date or effective date, as the case may be. An adjustment made pursuant to this Section 6(d) shall become effective immediately after the record date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification (including any reclassification in connection with a merger, consolidation or business combination in which the Corporation is the surviving person or a constituent corporation) or split. Such adjustment shall be made successively whenever any event described above shall occur.

(e)    Termination of Rights. Upon the issuance of shares of Class A Common Stock upon the conversion of any outstanding principal and interest owing under this Note, all rights of the Payee with respect to such principal and interest shall terminate.

7.    Share Limitations. Notwithstanding the provisions set forth in Section 3, Section 6 or anywhere else in this Note, (i) no shares of Class A Common Stock will be issued under this Note unless and until the Company shall have submitted a Listing of Additional Shares to the NASDAQ covering all the shares of Class A Common Stock issuable pursuant to this Note (the “Listing Application”) and NASDAQ shall have completed its review of, and approved, such listing application, (ii) no shares of Class A Common Stock will be issued under this Note to the extent such issuance would constitute a “change of control” under the Nasdaq’s listing rules (the “Change of Control Limitation”) or would be in excess of the number of shares of Class A Common Stock authorized and available for issuance under the Company’s charter (the “Charter Limitation”), and (iii) the total number of shares of Class A Common Stock that may be issued under the Equity Linked Notes at a price per share which is less than the Conversion Price, when combined with any other shares of Class A Common Stock which may be aggregated with such issuances under applicable NASDAQ rules for this purpose, will not exceed the number permitted under such applicable NASDAQ rules (the “Exchange Cap”), unless stockholder approval is obtained in order to comply with, satisfy or remove, as applicable, the Change of Control Limitation, the Charter Limitation, or the Exchange Cap, as applicable. The Exchange Cap will not apply to any issuance of shares of Class A Common Stock under this Note if the number of shares to be issued is calculated based on a value per share of Class A Common Stock that is equal to or greater than the Conversion Price. In the event that the Company is unable to issue shares of Class A Common Stock as a result of the NASDAQ not approving the Listing Application, the Change of Control Limitation, a Charter Limitation or the Exchange Cap, the Company will instead settle the conversion or payment due at Maturity in cash (but only to the extent necessary to not trigger a Change of Control Limitation, a Charter Limitation or the Exchange Cap, as applicable). To the extent shares of Class A Common Stock are to be issued pursuant to this Note and other Equity Linked Notes simultaneously and the Company is unable to issue shares of Class A Common Stock as a result of the Change of Control Limitation, a Charter Limitation or the Exchange Cap and must instead settle the conversion or payment partially in cash, the allocation of Class A Common Stock and cash to be issued or paid shall be pro rata among the Payee and the holders of such other Equity Linked Notes.


8.    Collateral. The Note Obligations are secured by that certain collateral as set forth in that certain Guarantee and Third Lien Collateral Agreement dated June 24, 2021, by and among Maker and the subsidiaries of Maker party thereto, as grantors, and Notes Agent (as amended, restated or supplemented from time to time, the “Third Lien Security Agreement”). The Payee has agreed to and accepted the terms and conditions of the Third Lien Security Agreement and the Intercreditor Agreement and the performance by the Notes Agent of its respective obligations and the exercise of their respective rights thereunder and in connection therewith.

9.    Guarantees. The Note Obligations are guaranteed by U.S. Well Services, LLC, USWS Holdings LLC, USWS Fleet 10, LLC, USWS Fleet 11, LLC and by each of future wholly-owned subsidiaries of the Maker, under the terms of the Third Lien Security Agreement.

10.    Defaults and Remedies. The Agreement defines certain Events of Default. The Note Obligations may be accelerated following an Event of Default in the manner provided in the Agreement.

11.    Waiver of Notice. The Maker hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder.

12.    Officers and Directors Not Liable. In no event will any officer or director of the Maker be liable for any amounts due and payable pursuant to this Note.

13.    Applicable Law. THIS NOTE WILL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER STATE.

[Signature page follows]


IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of the day and year first above written.

 

U.S. WELL SERVICES, INC.
By:  

                                          

Name:  

 

Title:  

 

 

 

Signature page to Convertible Senior Secured (Third Lien) PIK Note


Annex A

Conversion Notice

The undersigned, the Payee, under that certain Convertible Senior Secured (Third Lien) PIK Note issued by U.S. Well Services, Inc., a Delaware corporation, on [            ], 2021 (the “Note”), hereby irrevocably elects to convert the amount indicated below of the Note on the date set forth below into shares of Class A Common Stock at the Conversion Price pursuant to Section 6(a) of the Note. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Date of conversion: [                    ]

Conversion Calculations:

Principal and accrued interest on the date immediately prior to conversion: $[        ]

Principal and accrued interest to be converted: $[        ]

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

Principal amount immediately after redemption: $[        ]

Address for delivery of physical certificates: [                    ]

 

PAYEE

 

By:  

                                                                                   

Name:  

 

Title:  

 

Date:  

 


Annex B

Maker Conversion Notice

U.S. Well Services, Inc., a Delaware corporation, hereby irrevocably elects to convert the amount indicated below of the Convertible Senior Secured (Third Lien) PIK Note on the date set forth below into shares of Class A Common Stock at the Conversion Price pursuant to Section 6(b) of the Note. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Payee: [                    ]

Conversion Calculations:

Principal and accrued interest on the date immediately prior to conversion: $[        ]

Principal and accrued interest to be converted: $[        ]

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

Principal amount immediately after redemption: $[        ]

 

U.S. WELL SERVICES, INC.
By:  

                                          

Name:  

 

Title:  

 

Date:  

 


Annex C

CoC Conversion Notice

U.S. Well Services, Inc., a Delaware corporation, hereby notifies Payee that a Change of Control is expected to be consummated on or about [                    ], and, subject to the consummation of such Change of Control, elects to:

                    Satisfy the Convertible Senior Secured (Third Lien) PIK Note in Cash

                    Convert the Convertible Senior Secured (Third Lien) PIK Note into shares of Class A Common Stock pursuant to Section 6(c) of the Note.

Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Payee: [                    ]

Principal and accrued interest on the date immediately prior to the Change of Control: $[        ]

[Cash Payment: $[        ]]

[OR]

[Conversion Calculations:

[Twenty-Day VWAP: $[        ]]

[Fair Market Value: $[        ]]

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

 

U.S. WELL SERVICES, INC.
By:  

                                                              

Name:  

 

Title:  

 

Date:  

 


Exhibit B-3

FORM OF LICENSE LINKED NOTE

(see attached)


EXHIBIT B-3

THE NOTE REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTUATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO U.S. WELL SERVICES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

THE NOTES ARE SUBJECT IN ALL RESPECTS TO THE RESTRICTIONS IN THE AGREEMENT (AS DEFINED BELOW).

THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AGREEMENT (AS AMENDED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME, THE “INTERCREDITOR AGREEMENT”) DATED AS OF JUNE 24, 2021, AMONG BANK OF AMERICA, N.A., AS ABL AGENT, CLMG CORP., AS TERM LOAN AGENT, NOTES AGENT, AND U.S. WELL SERVICES, LLC, TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY MAKER AND ITS SUBSIDIARIES PURSUANT TO (I) THAT CERTAIN SENIOR SECURED TERM LOAN CREDIT AGREEMENT DATED AS OF MAY 17, 2019 AMONG THE MAKER AND ITS SUBSIDIARIES PARTY THERETO, CMLG CORP., AS ADMINISTRATIVE AGENT AND TERM LOAN COLLATERAL AGENT, AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH TERM LOAN CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AND (II) THAT CERTAIN ABL CREDIT AGREEMENT, DATED AS OF MAY 17, 2019, AMONG THE MAKER AND ITS SUBSIDIARIES PARTY THERETO, BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH ABL CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME; AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.

U.S. WELL SERVICES, INC.

CONVERTIBLE SENIOR SECURED (THIRD LIEN) PIK NOTE

 

$[        ]    June [    ], 2021

1.    Principal Amount. For value received, U.S. WELL SERVICES, INC., a Delaware corporation (the “Maker”), promises to pay to the order of [                    ] (the “Payee”), the principal amount of [                    ] Dollars ($[        ]) and interest on the outstanding principal amount of this Convertible Senior Secured (Third Lien) PIK Note (this “Note”) in accordance with the terms of this Note. Capitalized terms used herein shall have the meanings assigned to them in the Agreement referred to below unless otherwise indicated.


2.    Interest. Interest shall begin to accrue on the unpaid principal balance of this Note, if any, commencing on the date hereof and continuing until repayment of this Note in full at the rate of sixteen percent (16%) per annum calculated on the basis of a 360 day year and actual days elapsed. Accrued and unpaid interest shall be calculated on this Note on the last day of each March, June, September and December, commencing September 30, 2021, and shall be added on such date to the unpaid principal balance of this Note (rounded up to the nearest $1.00) (the “PIK Interest”). PIK Interest, upon being added to the unpaid principal balance of this Note, shall no longer be deemed to be accrued and unpaid interest on the outstanding principal amount. References herein and in the Agreement to the “principal amount” of the Notes includes any increases in the principal amount of the outstanding Notes as a result of the PIK Interest. Accrued and unpaid interest on this Note shall also be due and payable on the Maturity Date under the terms set forth in Section 3.

3.    Maturity Date. Subject to the conversion of this Note pursuant to Section 6, the entire outstanding and unpaid principal balance of this Note, plus any accrued and unpaid interest thereon, shall be due and payable in cash on June 5, 2026 (the “Maturity Date”).

4.    No Prepayment or Redemption. Maker may not redeem or prepay all or any portion of this Note.

5.    Note Purchase Agreement. Maker issued this Note and each of the other Convertible Senior Secured (Third Lien) PIK Notes under a Note Purchase Agreement (the “Agreement”) dated as of June 24, 2021, among Maker, the Payee and the other Holders, and Wilmington Savings Fund Society, FSB, as collateral agent (the “Notes Agent”). The terms of this Note and the other Convertible Senior Secured (Third Lien) PIK Notes include those stated in the Agreement. This Note and the other Convertible Senior Secured (Third Lien) PIK Note are subject to all such terms, and Holders are referred to the Agreement for a statement of such terms.

6.    Conversion. At any time prior to the payment in full of all outstanding principal and interest owing under this Note, either the Maker or the Payee may elect to convert all of such outstanding principal and interest into the License Agreement. Either party may exercise this right by delivering written notice of such conversion to the other party in the form attached as Annex A (the “Conversion Notice”) and, in the event the Payee is the electing party, the Payee shall tender this Note to the Maker with such notice. Such conversion shall be completed on a date specified in the Conversion Notice, which shall be not less than 10 and not more than 20 Business Days following the date of the Conversion Notice, and at such closing, the Maker shall execute and deliver to the Payee the License Agreement. Within four Business Days of its receipt of an executed License Agreement, the Payee shall countersign such License Agreement and deliver to the Maker a copy of such fully-executed License Agreement. Upon the execution by the Maker and the delivery to Payee of the License Agreement, all rights of the Payee with respect to the outstanding principal and interest owing under this Note shall terminate.


7.    Collateral. The Note Obligations are secured by that certain collateral as set forth in that certain Guarantee and Third Lien Collateral Agreement dated June 24, 2021, by and among Maker and the subsidiaries of Maker party thereto, as grantors, and Notes Agent (as amended, restated or supplemented from time to time, the “Third Lien Security Agreement”). The Payee has agreed to and accepted the terms and conditions of the Third Lien Security Agreement and the Intercreditor Agreement and the performance by the Notes Agent of its respective obligations and the exercise of their respective rights thereunder and in connection therewith.

8.    Guarantees. The Note Obligations are guaranteed by U.S. Well Services, LLC, USWS Holdings LLC, USWS Fleet 10, LLC, USWS Fleet 11, LLC and by each of future wholly-owned subsidiaries of the Maker, under the terms of the Third Lien Security Agreement.

9.    Defaults and Remedies. The Agreement defines certain Events of Default. The Note Obligations may be accelerated following an Event of Default in the manner provided in the Agreement.

10.    Waiver of Notice. The Maker hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder.

11.    Officers and Directors Not Liable. In no event will any officer or director of the Maker be liable for any amounts due and payable pursuant to this Note.

12.    Applicable Law. THIS NOTE WILL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER STATE.

[Signature page follows]


IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of the day and year first above written.

 

U.S. WELL SERVICES, INC.
By:  

                                                              

Name:  

 

Title:  

 

 

Signature page to Convertible Senior Secured (Third Lien) PIK Note


Annex A

Conversion Notice

The undersigned, under that certain Convertible Senior Secured (Third Lien) PIK Note issued by U.S. Well Services, Inc., a Delaware corporation, on June [    ], 2021 (the “Note”), hereby irrevocably elects to convert all of the outstanding principal and accrued interest on the License Linked Note into the License Agreement pursuant to Section 6 of the Note. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in the Note.

Date of conversion: [                    ]

 

ELECTING PARTY

 

By:  

                                          

Name:  

 

Title:  

 

Date:  

 

Exhibit 10.2

Execution Version

FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

This FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of June 25, 2021 (this “Amendment”), is by and among U.S. WELL SERVICES, INC., a Delaware corporation (the “Company”), each of the purchasers named in Schedule 2.1 to this Agreement (a “Purchaser” and, collectively, the “Purchasers”), and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers (in such capacity, “Notes Agent”).

WHEREAS, on June 24, 2021, the Company, the initial Purchasers named therein and the Notes Agent entered into that certain Note Purchase Agreement (the “Note Purchase Agreement,” capitalized terms used but not defined herein shall have the meanings assigned to them in the Note Purchase Agreement) pursuant to which the Company sold on such date to such initial Purchasers $45,000,000 in principal amount of Cash Notes, $20,000,000 in principal amount of Exchange Notes and $22,500,000 in principal amount of a License Linked Note and was further authorized to issue and sell during the Offering Period an additional $30,000,000 in principal amount of Additional Cash Notes and $5,000,000 in principal amount of Additional Exchange Notes;

WHEREAS, at a Closing to occur on the date hereof, the Company desires to issue and sell $19,000,000 in principal amount of Additional Cash Notes, with an initial Conversion Price of $1.25, and $19,000,000 in principal amount of Additional Exchange Notes to AG Energy Funding, LLC (“AG”), and AG desires to purchase such Notes (the “AG Notes”) from the Company and join the Note Purchase Agreement as a “Purchaser” in accordance with the terms and conditions of this Agreement and the Note Purchase Agreement; and

WHEREAS, in order to permit the sale of the AG Notes as contemplated above, the Company and the initial Purchasers desire to increase the principal amount of Additional Exchange Notes which may be issued and sold under the Note Purchase Agreement to $19,000,000.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.    Increase Offering of Additional Exchange Notes. The Parties hereby agree to increase the aggregate principal amount of Additional Exchange Notes which the Company may issue and sell under the Note Purchase Agreement to $19,000,000.

2.    Sale and Purchase. On the basis of the representations, warranties, agreements and covenants set forth in the Note Purchase Agreement and subject to the terms and conditions of this Amendment and the Note Purchase Agreement, at an Additional Notes Closing to occur on the date hereof, the Company hereby agrees to issue and sell to AG, and AG hereby agrees to purchase from the Company, (i) the aggregate principal amount of an Additional Cash Note set forth opposite such Purchaser’s name on Schedule 2.1 to the Amendment (which Schedule 2.1 shall amend Schedule 2.1 to the Note Purchase Agreement) be deemed under the title “Principal Amount of Additional Cash Notes”, at the purchase price set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded”, and (ii) the aggregate principal amount of an Additional Exchange Note set forth opposite such Purchaser’s name on Schedule 2.1


to this Amendment under the title “Principal Amount of Additional Exchange Notes” in exchange for a number of shares of Series A Preferred Stock valued for purposes of such exchange at their liquidation preference as of the day immediately prior to the date hereof as set forth opposite such Purchaser’s name on Schedule 2.1 under the title “Amount to be Funded”.

3.    Joinder. AG has received and read the Note Purchase Agreement and acknowledges that AG is acquiring Notes subject to the terms and conditions of the Note Purchase Agreement, excluding those terms and conditions which apply solely to the Initial Equity Linked Notes Closing on June 24, 2021 (collectively, the “Applicable Rights and Obligations”). AG hereby joins in, and agrees to be bound by, and each of the Company, the other Purchasers and the Notes Agent hereby agrees that AG shall have the benefit of, all of Applicable Rights and Obligations under the Note Purchase Agreement, to the same extent as if AG were an original party to the Note Purchase Agreement. Any notice required as permitted by the Note Purchase Agreement shall be given to AG at the address listed beneath AG’s signature below.

4.    Waiver. Each of Crestview III USWS, L.P. and Crestview III USWS TE, LLC hereby expressly and irrevocably waive any and all rights that they may have under the Series B Purchase Agreement or otherwise to receive notice of, or participate in, the issuance and sale of the Notes as provided by this Amendment or the Note Purchase Agreement, as amended.

5.    Effect of Amendment. This Amendment shall be construed in connection with and as part of the Note Purchase Agreement. Except as hereby expressly amended by this Amendment, all terms of the Note Purchase Agreement are hereby ratified and shall remain in full force and effect. None of the rights, interests and obligations existing and to exist under the Note Purchase Agreement are hereby released, diminished or impaired, and the Parties hereby reaffirm all covenants, representations and warranties of the Note Purchase Agreement as amended hereby. This Amendment (i) shall bind and benefit the Parties and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns; (ii) shall be modified or amended only in accordance with the terms of the Note Purchase Agreement; and (iii) embodies the entire agreement and understanding between the Parties with respect to modifications of instruments provided for herein and supersedes all prior conflicting or inconsistent agreements, consents and understandings relating to such subject matter. Article XI of the Note Purchase Agreement shall apply mutatis mutandis to this Amendment.

6.    Direction to Notes Agent. The Purchasers party hereto, constituting the Requisite Holders as of the date hereof, hereby direct the Notes Agent to execute and deliver this Amendment. The Company and the Purchasers hereto expressly agree and confirm the Notes Agent’s right to indemnification, as set forth in Article X of the Note Purchase Agreement, shall apply with respect to any and all losses, claims, liabilities costs and expenses that the Notes Agent suffers, incurs or is threatened with relating to actions taken or omitted by the Notes Agent in connection with this Amendment. The Company hereby confirms its obligations to pay all costs and expenses of the Notes Agent in accordance with Section 10.8 of the Note Purchase Agreement, in each case, incurred in connection with the preparation, negotiation and execution of this Amendment.

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

 

COMPANY:
U.S. WELL SERVICES, INC.
By:  

/s/ Kyle O’Neill

  Kyle O’Neill
  Chief Financial Officer

[Signatures continue on following page.]

 

Signature Page to First Amendment to Note Purchase Agreement


PURCHASERS:
PROFRAC HOLDINGS, LLC
By:  

/s/ Matt Wilks

Name:   Matt Wilks
Title:   President and CFO
THRC HOLDINGS, LP
By:  

/s/ Matt Wilks

Name:   Matt Wilks
Title:   VP, Investments

[Signatures continue on following page.]

 

Signature Page to First Amendment to Note Purchase Agreement


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

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel
CRESTVIEW III USWS TE, LLC
By:  

/s/ Ross A. Oliver

Name:   Ross A. Oliver
Title:   General Counsel

[Signatures continue on following page.]

 

Signature Page to First Amendment to Note Purchase Agreement


AG ENERGY FUNDING, LLC
By: Angelo, Gordon & Co., L.P., as its Manager
By:  

/s/ Todd Dittmann

Name:   Todd Dittmann
Title:   Authorized Person

[Signatures continue on following page.]

 

Signature Page to First Amendment to Note Purchase Agreement


NOTES AGENT:
WILMINGTON SAVINGS FUND SOCIETY, FSB, as Notes Agent
By:  

/s/ Geoffrey J. Lewis

Name:   Geoffrey J. Lewis
Title:   Vice President

 

Signature Page to First Amendment to Note Purchase Agreement

Exhibit 10.3

Execution Version

SETTLEMENT AGREEMENT AND RELEASE

by and among

SMART SAND, INC.

U.S. WELL SERVICES, LLC

and

U.S. WELL SERVICES, INC.

dated June 28, 2021


Table of Contents

 

         Page  

ARTICLE 1

  CERTAIN DEFINITIONS      2  

ARTICLE 2

  SETTLEMENT AND RELEASE      4  

ARTICLE 3

  REPRESENTATIONS AND WARRANTIES      6  

ARTICLE 4

  ADDITIONAL AGREEMENTS      10  

ARTICLE 5

  MISCELLANEOUS      10  

Exhibit A

 

Right of First Refusal Agreement

  


SETTLEMENT AGREEMENT AND RELEASE

This SETTLEMENT AGREEMENT AND RELEASE dated June 28, 2021 (this “Agreement”) is by and among Smart Sand, Inc. a Delaware corporation (“SSI”), U.S. Well Services, LLC, a Delaware limited liability company (“USWS”), and U.S. Well Services, Inc., a Delaware corporation (“USWI”). SSI, USWS and USWI are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

A.    WHEREAS, SSI and USWS were parties to a Master Product Purchase Agreement dated November 6, 2015, as amended effective May 1, 2016 (collectively the “PPA”), and a coterminous Railcar Usage Agreement (the “RUA” and collectively with the PPA, the “Agreements”);

B.    WHEREAS, on January 14, 2019, SSI filed a Complaint against USW in the Superior Court of the State of Delaware in and for New Castle County at C.A. No. 19C-01-144 CCLD, seeking monetary damages alleging, among other things, non-payment under the PPA and RUA, USWS then filed counterclaims, and the Parties amended the pleadings several times (the “Litigation”);

C.    WHEREAS, all claims were resolved following a trial in which the Court entered an Order of Final Judgment (the “Final Judgment”) in favor of SSI and against USWS in the principal amount of $50,897,534.40, plus post-judgment interest accruing at the rate of 5.25% per annum until the Final Judgment is paid in full;

D.    WHEREAS, both Parties have filed notices of appeal from the Final Judgment to the Supreme Court of Delaware; and

E.    WHEREAS, the Parties have reached a settlement of all matters in dispute or potentially in dispute between them, including without limitation all claims asserted in the Litigation.

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, and for good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1

INTERPRETATION

Section 1.01    Certain Definitions. The following terms shall have the meanings set forth in this Section 1.01.

Affiliate” means a Person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with such Person (for purposes of this definition, the term “control, and the correlative meanings of the terms “controlled by” and “under common control with” as used with respect to any Person 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 or otherwise).


Bankruptcy Case” means (a) a voluntary bankruptcy case under the Federal Bankruptcy Code, (b) an involuntary bankruptcy case under the Federal Bankruptcy Code (an “Involuntary Bankruptcy Case”) that has not been dismissed (along with any adversary proceedings commenced thereunder) within 90 days after the involuntary petition date; provided, however, that any Involuntary Bankruptcy Case shall be at all times a Bankruptcy Case unless and until it is dismissed within 90 days after the involuntary petition date, or (c) any voluntary insolvency or similar proceeding under the laws of any State.

Claim” means any and all claims, demands, suits, actions, causes of action, grievances, liabilities, obligations, accounts, promises, damages, agreements, rights, debts and expenses (including claims for attorneys’ fees and costs), of every kind and nature whatsoever, either in law or in equity, whether contingent, matured or unmatured, known or unknown, suspected or unsuspected, foreseeable or unforeseeable, liquidated or unliquidated, and however arising or accruing including, without limitation, any claims arising under any federal, state, local or municipal law, common law or statute, whether arising in contract or in tort, and any claims arising under any other laws or regulations of any nature whatsoever.

Governing Documents” means, when used with respect to an entity, the documents governing the formation, operation and governance of such entity, including (i) in the instance of a corporation, the articles or certificate of incorporation and bylaws of such corporation, (ii) in the instance of a limited partnership, the certificate of formation and the limited partnership agreement, and (iii) in the instance of a limited liability company, the certificate of formation and limited liability company agreement.

Law” means, with respect to any person, any and all applicable law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, notice, or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a governmental entity that is binding upon or applicable to such person or its business, undertaking, property or securities.

Liens” means any lien, pledge, charge, option, hypothecation, mortgage, security interest, right of first refusal, right of first offer, prior assignment, license, sublicense or any other encumbrance of any kind or nature whatsoever, whether contingent or absolute.

Person” means an individual or corporation, partnership, trust, estate, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, governmental entity or other entity of any kind.

Subsidiary” means, with respect to any Person, any other Person of which at least a majority of (i) the securities or ownership interests of such other Person having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions or (ii) the equity or ownership interests of such other Person, in each case is directly or indirectly owned or controlled by such first Person and/or by one or more of its Subsidiaries.

 

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Section 1.02    Interpretation. When a reference is made in this Agreement to Articles, Sections or Exhibits, such reference is to an Article, Section, or Exhibit (as the case may be) of this Agreement, unless otherwise indicated. When a reference is made in this Agreement to a “party” or “parties”, such reference shall be to a party or parties to this Agreement, unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the word “include”, “includes” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation”. The use of any gender herein shall be deemed to be or include the other gender and the use of the singular herein shall be deemed to be or include the plural (and vice versa), wherever appropriate. The use of the words “hereof”, “herein”, “hereunder”, and words of similar import shall refer to this entire Agreement, and not to any particular Article, Section, subsection, clause, paragraph or other subdivision of this Agreement, unless the context clearly indicates otherwise.

ARTICLE 2

SETTLEMENT AND RELEASE

Section 2.01    Settlement. By executing below, the Parties hereby settle all matters in dispute or potentially in dispute between them, including without limitation, all Claims asserted in the Litigation. Concurrently with the execution and delivery of this Agreement, the Parties shall execute and deliver that certain Right of First Refusal Agreement in the form attached hereto as Exhibit A (the “ROFR Agreement”, and together with this Agreement, the “Transaction Documents”). Within one business day after the execution of the Transaction Documents, USWS shall withdraw its Notice of Appeal filed in the Litigation with the Supreme Court of the State of Delaware at C.A. No. 196,2021 (the “Notice of Appeal”) with prejudice and concurrently with the execution of the Transaction Documents, USWS shall make payment to SSI in the amount of $35,000,000.00 by wire transfer of immediately available funds (the “Payment”) to the account set forth below:

Within one business day after USWS’ withdrawal of the Notice of Appeal with prejudice, SSI shall withdraw its Notice of Cross Appeal filed in the Litigation with the Supreme Court of the State of Delaware at C.A. No. 196,2021 with prejudice.

SSI’s receipt of the Payment and USWS’ withdrawal of its Notice of Appeal with prejudice are conditions precedent to the effectiveness of this Agreement.

 

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Section 2.02    Releases.

(a)    Except for obligations arising under this Agreement or any of the Transaction Documents, USWS, on behalf of itself, its Subsidiaries, and each of their respective officers, directors, managers, employees, Affiliates, successors, and assigns (collectively, the “USWS Release Group Members” and individually a “USWS Release Group Member”), hereby fully, forever, irrevocably and unconditionally releases and discharges SSI, each of its Subsidiaries, and each of their respective officers, directors, managers, employees, Affiliates, successors, and assigns (collectively, the “SSI Released Parties” and individually a “SSI Released Party”) of and from any and all Claims, including but not limited to those arising from or related to the Litigation or the Final Judgment, that any USWS Release Group Member ever had, now has or may hereafter have or acquire, against any SSI Released Party for or by reason of any cause, matter or thing whatsoever, from the beginning of the world to the date hereof (collectively, the “USWS Released Claims).

(b)    Except for obligations arising under this Agreement or any of the Transaction Documents, USWI, on behalf of itself, its Subsidiaries, and each of their respective officers, directors, managers, employees, Affiliates, successors, and assigns (collectively, the “USWI Release Group Members” and individually a “USWI Release Group Member”), hereby fully, forever, irrevocably and unconditionally releases and discharges each SSI Released Party of and from any and all Claims, including but not limited to those arising from or related to the Litigation or the Final Judgment, that any USWI Release Group Member ever had, now has or may hereafter have or acquire, against any SSI Released Party for or by reason of any cause, matter or thing whatsoever, from the beginning of the world to the date hereof (collectively, the “USWI Released Claims”).

(c)    Except for obligations arising under this Agreement or any of the Transaction Documents, and subject to the provisos in this Section 2.02(c), SSI, on behalf of itself, its Subsidiaries, and each of their respective officers, directors, managers, employees, Affiliates, successors, and assigns (collectively, the “SSI Release Group Members” and individually a “SSI Release Group Member”), hereby fully, forever, irrevocably and unconditionally releases and discharges USWS, USWI, each of their respective Subsidiaries, and each of their respective officers, directors, managers, employees, Affiliates, successors, and assigns (collectively, the “USW Released Parties” and individually a “USW Released Party”) of and from any and all Claims, including but not limited to those arising from or related to the Litigation or the Final Judgment, that any SSI Release Group Member ever had, now has or may hereafter have or acquire, against any USW Released Party for or by reason of any cause, matter or thing whatsoever, from the beginning of the world to the date hereof (collectively, the “SSI Released Claims”); provided, however, that the release set forth in this Section 2.02(c) shall not become effective or enforceable until 91 days after SSI’s receipt of the Payment, provided that as of such time (i.e., within 91 days after SSI’s receipt of Payment) neither USWS, USWI, nor any of their respective Subsidiaries has become the subject of a Bankruptcy Case, but provided further, that in the event of an Involuntary Bankruptcy Case within such 91-day period, such release shall not become effective or enforceable unless and until such Involuntary Bankruptcy Case is dismissed (along with any adversary proceedings commenced thereunder) within 90 days after the involuntary petition date thereof.

 

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Section 2.03    Satisfaction of Final Judgment. SSI’s receipt of the Payment shall satisfy $35,000,000 of the Final Judgment upon receipt thereof but shall not satisfy the balance due under the Final Judgement; provided, however, that so long as neither USWS, USWI nor any of their respective Subsidiaries has become the subject of a Bankruptcy Case within 91 days after SSI’s receipt of the Payment, then (subject to the final provisos of Section 2.02(c) and 2.04) the release set forth in Section 2.02(c) shall then become effective and enforceable, and the Final Judgment shall then become fully and completely satisfied by SSI’s receipt of the Payment and the terms of this Agreement, and SSI shall direct the New Castle County Prothonotary to satisfy the Final Judgment in the Judgment Docket Section of the Superior Court. For the avoidance of doubt, unless and until 91 days after SSI’s receipt of the Payment in immediately available funds has passed without USWS, USWI or any of their respective Subsidiaries becoming the subject of a Bankruptcy Case, the Final Judgment shall remain in full force and effect and, except as otherwise set forth in Section 2.04, SSI will be entitled to pursue all rights and defenses arising under or with respect to the Final Judgment, including to assert an unsecured claim in the full amount of the Final Judgment, less any amount of the Payment ultimately retained by SSI.

Section 2.04    Forbearance. During the 91-day period after the receipt of the Payment, SSI hereby agrees, subject to the terms of this Agreement, to forbear from directly or indirectly taking any action to enforce, execute on, or domesticate the Final Judgment in any jurisdiction unless and until USWS, USWI or any of their respective Subsidiaries becomes, within 91 days after SSI’s receipt of the Payment, the subject of a Bankruptcy Case. For the avoidance of doubt, if neither USWS, USWI nor any of their respective Subsidiaries has become the subject of a Bankruptcy Case within 91 days after SSI’s receipt of the Payment, the Final Judgment shall then become fully satisfied by SSI’s prior receipt of the Payment and the terms of this Agreement as set forth in Section 2.03 of this Agreement; provided, however, that in the event of an Involuntary Bankruptcy Case within such 91-day period, the Final Judgment shall not become fully satisfied by SSI’s receipt of the Payment unless and until such Involuntary Bankruptcy Case is dismissed (along with any adversary proceedings commenced thereunder) within 90 days after the involuntary petition date thereof.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.01    Representations of U.S. Well Services, LLC.

(a)    Organization and Qualification. USWS is duly organized, validly existing and in good standing under the laws of Delaware and has all requisite entity power and authority to own and operate its business as presently conducted. USWS is duly qualified as a foreign entity to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except where the failure to be or have any of the foregoing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the legality, validity or enforceability of this Agreement or the other Transaction Documents.

 

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(b)    Authority. USWS has the requisite entity power and authority to execute and deliver each of the Transaction Documents, perform its obligations thereunder, and consummate the transactions contemplated by this Agreement. The execution and delivery by USWS of each of the Transaction Documents, the performance by USWS of its obligations thereunder, the transactions contemplated thereby, and all other necessary organizational action on the part of USWS have been duly authorized by the managers and or members of USWS, and no other entity proceedings on the part of USWS are necessary to authorize each of the Transaction Documents or the transactions contemplated thereby. Each of the Transaction Documents has been or will be duly and validly executed and delivered by USWS and, assuming that each has been duly authorized, executed and delivered by each counterparty thereto, each constitutes a legal, valid and binding obligation of USWS, in accordance with its terms.

(c)    Waivers or Consents under USWS Credit Facilities. Under that certain (i) ABL Credit Agreement dated as of May 7, 2019 by and among USWI, USWS, Bank of America, NA, as Administrative Agent (the “ABL Agent”), the lenders party thereto (the “ABL Lenders”), and the other parties thereto (as amended, restated or supplemented to date, the “ABL Credit Agreement”), or any other loan document executed and delivered by USWS to the ABL Agent or the ABL Lenders, each as amended, restated or supplemented to date (collectively, the “ABL Loan Documents”), and (ii) Senior Secured Term Loan Credit Agreement dated as of May 7, 2017 by and among USWI, USWS, CLMG Corp., as Administrative Agent (the “Term Loan Agent”) , the lenders party thereto (the “Term Loan Lenders”), and the other parties thereto (as amended, restated or supplemented to date, the “Term Loan Credit Agreement”), or any other loan document executed or delivered by USWS to the Term Loan Agent or the Term Loan Lenders, each as amended, restated or supplemented to date (collectively, the “Term Loan Documents”), USWS has obtained the requisite waivers, consents, and acknowledgements from the ABL Agent and ABL Lenders, as applicable, with respect to the ABL Loan Documents, and from the Term Loan Agent and Term Loan Lenders, as applicable, with respect to the Term Loan Documents, which authorize USWS to make the Payment, to execute, deliver and perform its obligations under the Transaction Documents, and to consummate the transactions contemplated by the Transaction Documents, fully executed copies of which have been delivered by USWS to SSI.

(d)    No Conflict; Required Filings and Consents. The execution and delivery by USWS of the Transaction Documents and the performance by USWS of its obligations thereunder will not: (i) conflict with the Governing Documents of USWS; (ii) violate any statute, Law, ordinance, rule or regulation applicable to USWS or any of the properties or assets of USWS; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of any obligation of USWS (including, but not limited to, the obligations of USWS under the ABL Loan Documents and the Term Loan Documents), or result in the creation or imposition of any Lien upon any properties, assets or business of USWS under any material contract or any order, judgment or decree to which USWS is a party or by which it or any of its assets or properties is bound or encumbered.

 

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(e)    Ownership of Claims and Indemnification. USWS has not previously sold, assigned, transferred, conveyed, hypothecated, encumbered, or otherwise disposed of any USWS Released Claim, and it is the sole owner of all of the USWS Released Claims.

Section 3.02    Representations of U.S. Well Services, Inc.

(a)    Organization and Qualification. USWI is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all requisite corporate power and authority to own and operate its business as presently conducted. USWI is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except where the failure to be or have any of the foregoing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the legality, validity or enforceability of this Agreement or the other Transaction Documents.

(b)    Authority. USWI has the requisite corporate power and authority to execute and deliver each of the Transaction Documents, perform its obligations thereunder, and consummate the transactions contemplated by this Agreement. The execution and delivery by USWI of each of the Transaction Documents, the performance by USWI of its obligations thereunder, the transactions contemplated thereby, and all other necessary corporate action on the part of USWI have been duly authorized by the Board of Directors of USWI, and no other corporate proceedings on the part of USWI are necessary to authorize each of the Transaction Documents or the transactions contemplated thereby. Each of the Transaction Documents has been or will be duly and validly executed and delivered by USWI and, assuming that each has been duly authorized, executed and delivered by each counterparty thereto, each constitutes a legal, valid and binding obligation of USWI, in accordance with its terms.

(c)    Waivers or Consents under USWI Credit Facilities. Under the (i) ABL Credit Agreement and ABL Loan Documents, and (ii) the Term Loan Agreement and Term Loan Documents, USWI has obtained the requisite waivers, consents, and acknowledgements from the ABL Agent and ABL Lenders, as applicable, with respect to the ABL Loan Documents, and from the Term Loan Agent and Term Loan Lenders, as applicable, with respect to the Term Loan Documents, which authorize USWI to make the Payment, to execute, deliver and perform its obligations under the Transaction Documents, and to consummate the transactions contemplated by the Transaction Documents, fully executed copies of which have been delivered by USWI to SSI.

(d)    No Conflict; Required Filings and Consents. The execution and delivery by USWI of the Transaction Documents and the performance by USWI of its obligations thereunder will not: (i) conflict with the Governing Documents of USWI; (ii) violate any statute, Law, ordinance, rule or regulation applicable to USWI or any of the properties or assets of USWI; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or permit the termination of

 

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any provision of, or result in the termination of, the acceleration of the maturity of any obligation of USWI (including, but not limited to, the ABL Loan Documents and the Term Loan Documents), or result in the creation or imposition of any Lien upon any properties, assets or business of USWI under any material contract or any order, judgment or decree to which USWI is a party or by which it or any of its assets or properties is bound or encumbered.

(e)    Ownership of Claims and Indemnification. USWI represents and warrants that it has not previously sold, assigned, transferred, conveyed, hypothecated, encumbered, or otherwise disposed of any USWI Released Claim, and it is the sole owner of all of the USWI Released Claims.

Section 3.03    Representations of Smart Sand, Inc.

(a)    Organization and Qualification. SSI is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all requisite corporate power and authority to own and operate its business as presently conducted. SSI is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except where the failure to be or have any of the foregoing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the legality, validity or enforceability of this Agreement or the other Transaction Documents.

(b)    Authority. SSI has the requisite corporate power and authority to execute and deliver each of the Transaction Documents, perform its obligations thereunder, and consummate the transactions contemplated by this Agreement. The execution and delivery by SSI of each of the Transaction Documents, the performance by SSI of its obligations thereunder, the transactions contemplated thereby, and all other necessary corporate action on the part of SSI have been duly authorized by the Board of Directors of SSI, and no other corporate proceedings on the part of SSI are necessary to authorize each of the Transaction Documents or the transactions contemplated thereby. Each of the Transaction Documents has been or will be duly and validly executed and delivered by SSI and, assuming that each has been duly authorized, executed and delivered by each counterparty thereto, each constitutes a legal, valid and binding obligation of SSI, in accordance with its terms.

(c)    No Conflict; Required Filings and Consents. Neither the execution and delivery by SSI of the Transaction Documents nor the performance by SSI of its obligations thereunder will: (i) conflict with the Governing Documents of SSI; (ii) violate any statute, Law, ordinance, rule or regulation applicable to SSI or any of the properties or assets of SSI; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of SSI, or result in the creation or imposition of any Lien upon any properties, assets or business of SSI under any material contract or any order, judgment or decree to which SSI is a party or by which it or any of its assets or properties is bound or encumbered.

 

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(d)    Ownership of Claims and Indemnification. SSI represents and warrants that it has not previously sold, assigned, transferred, conveyed, hypothecated, encumbered, or otherwise disposed of any SSI Released Claim, and it is the sole owner of all of the SSI Released Claims.

ARTICLE 4

ADDITIONAL AGREEMENTS

Section 4.01    Covenant Not to Sue. Except as set forth in Section 2.03 or Section 2.04, each Party agrees on behalf of itself, it Subsidiaries, and their respective officers, directors, managers, employees, agents, and Affiliates not to (i) commence any action or initiate any proceeding in any court, arbitration forum, or regulatory or administrative agency against any other Party or their respective officers, directors, managers, employees, agents, Affiliates on the basis of, or that is otherwise inconsistent with, any of the Claims released hereunder, including but not limited to filing any notice or cross notice of appeal with respect to the Litigation or (ii) directly or indirectly, induce, encourage or assist any other Person, or otherwise participate in the commencement, support or maintenance of any action, proceeding in any court, arbitration forum, or regulatory or administrative agency by any other Person against any other Party or their respective officers, directors, managers, employees, agents, Affiliates on the basis of, or that is otherwise inconsistent with, any of the Claims released hereunder.

ARTICLE 5

MISCELLANEOUS

Section 5.01    Consultation with Counsel. Each party hereto represents and warrants that it has consulted with legal counsel of its choosing before entering into this Agreement, it has read this Agreement, it knows and understands the contents of this Agreement, it executes this Agreement and the other Transaction Documents freely and voluntarily, and it is not relying on any promise or representation of any kind made to it, except as expressly stated in this Agreement or the ROFR Agreement.

Section 5.02    Further Assurances. At any time or from time to time after the date hereof, the Parties hereto agree to cooperate with each other and, at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as such other party may reasonably request in order to evidence or effectuate the actions and transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

Section 5.03    Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against any party unless such modification, amendment or waiver is approved in writing by each Party.

 

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The failure of any Party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such Party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

Section 5.04    Construction; Severability. This Agreement has been negotiated and drafted by the parties at arm’s-length. No provision or ambiguity in this Agreement shall be construed or interpreted against any party by virtue of its participation in the drafting of this Agreement. Whenever possible, each term or provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any term or provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or the validity of this Agreement in any other jurisdiction, and such term or provision shall be reformed, construed and enforced to the maximum extent permitted by applicable law or rule in such jurisdiction.

Section 5.05    Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, including the Exhibits and Schedules hereto and all Transaction Documents, embodies the complete agreement and understanding among the Parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, that may have related to the subject matter hereof in any way.

Section 5.06    Successors and Assigns. Neither this Agreement nor any of the rights or obligations under this Agreement shall be assigned, in whole or in part (except by operation of law pursuant to a merger whose purpose is not to avoid the provisions of this Agreement), by any party without the prior written consent of the other Parties hereto, and any purported assignment in violation hereof shall be null and void. Subject to the foregoing, this Agreement shall bind and inure to the benefit of and be enforceable by the Parties hereto and their respective successors and permitted assigns.

Section 5.07    Counterparts. This Agreement may be executed in separate counterparts and delivered electronically, each of which shall be an original and all of which taken together shall constitute one and the same agreement.

Section 5.08    Remedies.

(a)    Each Party hereto acknowledges that money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, each non breaching Party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof.

 

11


(b)    All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any Party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such Party.

Section 5.09    Consent to Jurisdiction. The Parties to this Agreement submit to the exclusive jurisdiction of the state courts in Delaware for the purpose of any dispute arising hereunder. The Parties waive any objections based on lack of jurisdiction over their person or property or based on forum non conveniens with respect to any application for such interim relief in the state courts in Delaware.

Section 5.10    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof.

 

12


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

 

U.S. WELL SERVICES, LLC
By:  

/s/ Joel Broussard

Name:   Joel Brousserd
Title:   President & Chief Executive Officer
U.S. WELL SERVICES, INC.
By:  

/s/ Joel Broussard

Name:   Joel Brousserd
Title:   President & Chief Executive Officer
SMART SAND, INC.
By:  

/s/ Lee E. Beckelman

Name:   Lee E. Beckelman
Title:   Chief Financial Officer

[Signature Page to Settlement Agreement and Release]

 

13


EXHIBIT A

RIGHT OF FIRST REFUSAL AGREEMENT

Attached.

 

14

Exhibit 10.4

Execution Version

CONSENT AND FIFTH AMENDMENT TO

SENIOR SECURED TERM LOAN CREDIT AGREEMENT

This CONSENT AND FIFTH AMENDMENT TO SENIOR SECURED TERM LOAN CREDIT AGREEMENT, dated as of June 24, 2021 (this “Fifth Amendment”), is made by and among U.S. Well Services, LLC, a Delaware limited liability company (the “Borrower”), U.S. Well Services, Inc., a Delaware corporation (the “Parent”), USWS Fleet 10, LLC, a Delaware limited liability company (“USWS Fleet 10”), USWS Fleet 11, LLC, a Delaware limited liability company (“USWS Fleet 11”, together with USWS Fleet 10, the “Subsidiary Guarantors”), USWS Holdings LLC, a Delaware limited liability company (the “Holdings”, together with the Parent, the Borrower and the Subsidiary Guarantors, the “Loan Parties” and each a “Loan Party”), CLMG Corp., as Administrative Agent (the “Administrative Agent”), CLMG Corp., as Term Loan Collateral Agent (the “Collateral Agent”, and together with the Administrative Agent, the “Agents”), and the Lenders (defined below) and is made with reference to the Credit Agreement (as defined below), and certain other financial institutions party thereto from time to time. Capitalized terms used herein without definition shall have the meaning assigned to such terms in the Credit Agreement.

RECITALS:

WHEREAS, reference is made to the Senior Secured Term Loan Credit Agreement, dated as of May 7, 2019, among the Parent, Holdings, the Borrower, the Subsidiary Guarantors, the lenders party thereto (the “Lenders”), CLMG CORP., as Administrative Agent and Term Loan Collateral Agent (as amended by the First Technical Supplemental Amendment thereto dated June 14, 2019, the Second Amendment thereto dated April 1, 2020, the Third Amendment thereto dated July 30, 2020 and the Fourth Amendment thereto dated November 12, 2020, and as may be further amended, supplemented, amended and restated or otherwise modified from time to time prior to the Fifth Amendment Effective Date, the “Original Credit Agreement”);

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

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

WHEREAS, Borrower has informed the Administrative Agent and Lenders that the Parent desires to enter into that certain note purchase agreement (the “Third Lien Notes Agreement”) dated of even date herewith among Parent, as issuer, certain purchasers party thereto, and Wilmington Savings and Fund Society, FSB, as collateral agent (in such capacity, “Notes Agent”), and certain other documents as set forth in Schedule 1 (the “Note Purchase Documents”) pursuant to which, among other things, the Parent has agreed to issue and the purchasers have agreed to purchase certain 16% Convertible Senior Secured (Third Lien) PIK Notes due 2026;

WHEREAS, Borrower has informed the Administrative Agent and Lenders that the Parent and Borrower intend to use the net proceeds received under the Initial Third Lien Notes (as defined in the Credit Agreement) to settle or provide the cash deposit necessary to stay execution and enforcement of the June 2021 Judgment (as defined in the Credit Agreement) as well as for general corporate purposes;

WHEREAS, the Loan Parties have requested that the Administrative Agent and Lenders (i) consent to the incurrence of debt and liens under the Note Purchase Documents and the consummation of the transactions contemplated by the Note Purchase Documents, and (ii) make certain modifications to the Credit Agreement, and the Agents and Lenders have agreed to the foregoing requests of the Loan Parties, in each case on the terms and conditions set forth herein;

 

Page 1


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

AGREEMENT:

SECTION 1.    AMENDMENTS TO CREDIT AGREEMENT.

Pursuant to Section 9.01 of the Credit Agreement, each of the Lenders, the Administrative Agent, and each of the Loan Parties consents to the amendment of the Original Credit Agreement made as of the Fifth Amendment Effective Date to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit A hereto (the Original Credit Agreement as so amended, the “Credit Agreement”).

SECTION 2.    CONSENT.

As of the Fifth Amendment Effective Date, and subject to the conditions set out in this Fifth Amendment, each of the Agents and Lenders hereby consents to the incurrence of debt offerings and granting of third ranking liens over certain of the Collateral pursuant to the Note Purchase Documents in the form attached hereto as Schedule 2, in each case, subject to the terms and conditions of the Credit Agreement.

SECTION 3.    CONDITIONS TO EFFECTIVENESS.

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

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

(b)    the Administrative Agent shall have received on or before the Fifth Amendment Effective Date, duly executed copies of the Intercreditor Agreement, in a form and substance satisfactory to the Administrative Agent, by each party thereto (which may include a copy transmitted by PDF or other electronic method);

(c)    the Administrative Agent shall have received on or before the Fifth Amendment Effective Date, duly executed copies of each of the Note Purchase Documents, in a form and substance satisfactory to the Administrative Agent, by each party thereto (which may include a copy transmitted by PDF or other electronic method);

(d)    the Administrative Agent shall have received on or before the Fifth Amendment Effective Date, duly executed copies of an amendment to the ABL Credit Agreement, in a form and substance satisfactory to the Administrative Agent, by each party thereto (which may include a copy transmitted by PDF or other electronic method);

(e)    payment by Borrower of a structuring fee to CSG Investment, Inc., in cash in the amount of three million dollars ($3,000,000) (the “Structuring Fee”);

 

Page 2


(f)    each of the respective conditions set forth in Section 2.3 of the Third Lien Notes Agreement to the obligations of each party thereto to consummate the transactions contemplated thereby on or prior to the Fifth Amendment Effective Date;

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

(h)    after giving effect to this Fifth Amendment, no Default or Event of Default has occurred and is continuing;

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

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

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

SECTION 4.    REPRESENTATION AND WARRANTY.

Each Loan Party hereby represents and warrants to the Administrative Agent, Collateral Agent, and Lenders party hereto that (i) after giving effect to this Fifth Amendment all representations and warranties of each Loan Party contained in Article IV of the Credit Agreement are true and correct in all material respects (except to the extent any such representation and warranty itself is qualified by “materiality”, “Material Adverse Effect” or similar qualifier, in which case, it shall be true and correct in all respects) on and as of the date of this Fifth Amendment as if made on and as of the date of this Fifth Amendment (or if stated to have been made at an earlier date, were true and correct in all material respects as of such earlier date); and (iii) as of the Fifth Amendment Effective Date, no Default or Event of Default has occurred and is continuing.

SECTION 5.    EFFECT ON AND RATIFICATION OF LOAN DOCUMENTS.

 

  (a)

Ratification of Transaction Documents. The Credit Agreement, Loan Documents and all related ancillary and collateral documentation shall remain in full force and effect and are hereby ratified, reaffirmed, and confirmed. In addition, all terms, conditions, covenants, representations and warranties contained in the Credit Agreement and other Loan Documents, and all rights of the Lenders and the Administrative Agent, shall remain in full force and effect, and all of the Obligation remains in full force and effect. Each of the Borrower and the other Loan Parties hereby confirms that no such party has any right of setoff, recoupment or other offset with respect to any of the Obligation.

 

Page 3


  (b)

Ratification of Term Loan Collateral Documents. Each of the Loan Parties party to the Term Loan Collateral Documents and the other Loan Documents (i) acknowledges and agrees that all of its pledges, grants of security interests and Liens and other obligations under the Term Loan Collateral Documents and the other Loan Documents to which it is a party are reaffirmed, and remain in full force and effect on a continuous basis, (ii) reaffirms (x) each Lien granted by it to the Administrative Agent and/or Collateral Agent for the benefit of the Secured Parties and (y) the guaranties made by it pursuant to the Loan Documents and such Liens and guaranties are, and shall remain in full force and effect on and after the Fifth Amendment Effective Date, and (iii) acknowledges and agrees that the grants of security interests and Liens by and the guaranties of the Loan Parties contained in the Term Loan Collateral Documents are, and shall remain, in full force and effect on and after the Fifth Amendment Effective Date.

 

  (c)

No Other Amendment or Waiver. Except as specifically set forth herein, the execution, delivery and performance of this Fifth Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under the Loan Documents. The waivers contained herein are each limited to the specific provisions and circumstances described and shall not be deemed to prejudice any rights not specifically addressed herein which any Agent or any Lender may now have or may have in the future under any Loan Document.

 

  (d)

Loan Documents. This Fifth Amendment shall be a Loan Document under the Credit Agreement.

SECTION 6.    STRUCTURING FEE.

The Loan Parties, the Administrative Agent and each Lender expressly agree and acknowledge that: (i) the Structuring Fee is reasonable and is the product of an arm’s length transaction between sophisticated business persons, ably represented by counsel; (ii) the Loan Parties have agreed to pay, and have made payment of such Structuring Fee as specific consideration to CSG Investments, Inc. and that there has been a course of conduct between the Loan Parties and the Lenders for such agreement to pay such Structuring Fee; and (iii) the Loan Parties’ agreement to pay the Structuring Fee as herein described is a material inducement to CSG Investments, Inc., to negotiate, structure and prepare the Lenders to consummate the transactions described herein, and enter into this Fifth Amendment.

SECTION 7.    RELEASE.

AS A MATERIAL INDUCEMENT TO THE LENDERS, THE COLLATERAL AGENT AND THE ADMINISTRATIVE AGENT TO ENTER INTO THIS FIFTH AMENDMENT, THE BORROWER AND EACH BORROWER-AFFILIATED SIGNATORY TO THIS FIFTH AMENDMENT, ON BEHALF OF ITSELF AND ITS OWNERS, SUCCESSORS, ASSIGNS, AFFILIATES AND LEGAL REPRESENTATIVES WHETHER OR NOT A PARTY HERETO (THE BORROWER, EACH SUCH BORROWER-AFFILIATED SIGNATORY TO THIS FIFTH AMENDMENT, SUCH OWNERS, SUCCESSORS, ASSIGNS, AFFILIATES AND LEGAL REPRESENTATIVES BEING REFERRED TO HEREIN COLLECTIVELY AND INDIVIDUALLY, AS “OBLIGORS, ET AL.”), AUTOMATICALLY, AND WITHOUT FURTHER ACTION BY ANY PERSON, HEREBY FULLY, FINALLY AND COMPLETELY RELEASE AND FOREVER DISCHARGE EACH LENDER, COLLATERAL AGENT AND ADMINISTRATIVE

 

Page 4


AGENT, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AFFILIATES, SUBSIDIARIES, PARENTS, OFFICERS, SHAREHOLDERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS, PAST, PRESENT AND FUTURE, AND THEIR RESPECTIVE HEIRS, PREDECESSORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY AND INDIVIDUALLY, “LENDER, ET AL.”) OF AND FROM ANY AND ALL CLAIMS, CONTROVERSIES, DISPUTES, LIABILITIES, OBLIGATIONS, DEMANDS, DAMAGES, EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES), DEBTS, LIENS, ACTIONS AND CAUSES OF ACTION OF ANY AND EVERY NATURE WHATSOEVER RELATING TO THE FACILITIES AND/OR THE LOAN DOCUMENTS, AND WAIVE AND RELEASE ANY DEFENSE, RIGHT OF COUNTERCLAIM, RIGHT OF SET-OFF OR DEDUCTION TO THE PAYMENT OF THE OBLIGATIONS WHICH OBLIGORS, ET AL. NOW HAVE OR MAY CLAIM TO HAVE AGAINST ANY LENDER, ET AL., IN EACH CASE ARISING OUT OF, CONNECTED WITH OR RELATING TO ANY AND ALL ACTS, OMISSIONS OR EVENTS OCCURRING PRIOR TO OR IN CONNECTION WITH THE EXECUTION OF THIS FIFTH AMENDMENT.

SECTION 8.    INDEMNIFICATION.

WITHOUT LIMITING ANY OF THE AGENT’S OR LENDERS’ RIGHTS, OR THE LOAN PARTIES’ OBLIGATIONS, UNDER SECTION 9.04 OF THE CREDIT AGREEMENT (WHICH THE BORROWER AND THE OTHER LOAN PARTIES HEREBY RATIFY, REITERATE AND RECONFIRM), THE LOAN PARTIES HEREBY AGREE TO INDEMNIFY, DEFEND AND SAVE AND HOLD HARMLESS EACH AGENT, EACH LENDER, EACH OF THEIR AFFILIATES AND THE RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, TRUSTEES, AGENTS AND ADVISORS OF EACH OF THE FOREGOING (EACH, AN “INDEMNIFIED PARTY”) FROM AND AGAINST, AND SHALL PAY ON DEMAND, ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE FEES AND EXPENSES OF COUNSEL) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION OR PROCEEDING OR PREPARATION OF A DEFENSE IN CONNECTION THEREWITH) THIS FIFTH AMENDMENT, AND/ OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

SECTION 9.    LIMITATION ON LIABILITY.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND NOTWITHSTANDING ANY OTHER PROVISION OF THIS FIFTH AMENDMENT OR THE OTHER LOAN DOCUMENTS: (A) NONE OF THE ADMINISTRATIVE AGENT, THE LENDERS OR ANY INDEMNIFIED PARTY SHALL BE LIABLE TO ANY PARTY FOR ANY INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THEIR RESPECTIVE ACTIVITIES RELATED TO THIS FIFTH AMENDMENT, THE OTHER LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY, THE LOANS, OR OTHERWISE IN CONNECTION WITH THE FOREGOING; (B) WITHOUT LIMITING THE FOREGOING, NONE OF THE ADMINISTRATIVE AGENT, THE LENDERS OR ANY INDEMNIFIED PARTY SHALL BE SUBJECT TO ANY EQUITABLE REMEDY OR RELIEF, INCLUDING SPECIFIC PERFORMANCE OR INJUNCTION ARISING OUT OF OR RELATING TO THIS FIFTH AMENDMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED THEREBY; (C) NONE OF THE ADMINISTRATIVE AGENT, THE LENDERS OR ANY INDEMNIFIED PARTY SHALL HAVE ANY LIABILITY TO THE LOAN

 

Page 5


PARTIES, FOR DAMAGES OR OTHERWISE, ARISING OUT OF OR RELATING TO THIS FIFTH AMENDMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED THEREBY UNTIL THE EFFECTIVE DATE HAS OCCURRED; AND (D) IN NO EVENT SHALL LENDERS’ LIABILITY TO THE LOAN PARTIES EXCEED ACTUAL DIRECT DAMAGES INCURRED BY THE LOAN PARTIES OF UP TO $10,000,000 IN THE AGGREGATE.

SECTION 10.    GOVERNING LAW.

THIS FIFTH AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS FIFTH AMENDMENT (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 11.    WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS FIFTH AMENDMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION AND EXECUTED BY EACH OF THE PARTIES HERETO, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF LITIGATION, THIS FIFTH AMENDMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

SECTION 12.    COUNTERPARTS.

This Fifth Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart to this Fifth Amendment by facsimile transmission or electronic transmission in “.pdf” format shall be as effective as delivery of a manually signed original.

SECTION 13.    MISCELLANEOUS.

This Fifth Amendment, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other

 

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prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof. Capitalized terms defined herein in the preliminary statements and/or recitals shall be incorporated as if set out in full in the operative provisions hereunder. Section 1.04 of the Credit Agreement is hereby incorporated herein as if set out in full hereunder, mutatis mutandis.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be duly executed by their respective authorized officers as of the day and year first written above.

 

U.S. WELL SERVICES, LLC, as Borrower
By:  

/s/ Kyle O’Neill

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

 

Page 8


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

 

Page 9


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

 

Page 10


Acknowledged and agreed as of the day and year first written above:

 

LNV Corporation, as Lender
By:  

/s/ Jacob Cherner

Name:   Jacob Cherner
Title:   Executive Vice President

 

Page 11


Acknowledged and agreed as of the day and year first written above:

 

LPP Mortgage, Inc., as Lender
By:  

/s/ Jacob Cherner

Name:   Jacob Cherner
Title:   Executive Vice President

 

Page 12


EXHIBIT A

CREDIT AGREEMENT (amendments to the Original Credit Agreement made pursuant to the Fifth Amendment on the Fifth Amendment Effective Date only)

 

Page 13


EXECUTION VERSION

(As amended by Fifth Amendment dated June 24, 2021)

SENIOR SECURED TERM LOAN

CREDIT AGREEMENT

Dated as of May 7, 2019

Among

U.S. WELL SERVICES, INC.

as Parent

USWS HOLDINGS LLC

as Holdings

U.S. WELL SERVICES, LLC

as Borrower

and

THE SUBSIDIARY GUARANTORS NAMED HEREIN

as Guarantors

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

CLMG CORP.

as Term Loan Collateral Agent

and

CLMG CORP.

as Administrative Agent


TABLE OF CONTENTS

 

Section        Page  

Article I DEFINITIONS AND ACCOUNTING TERMS

     2  

SECTION 1.01.

 

Certain Defined Terms

     2  

SECTION 1.02.

 

Computation of Time Periods

     40  

SECTION 1.03.

 

Accounting Terms

     40  

SECTION 1.04.

 

Other Definitional Provisions and Rules of Construction

     40  

Article II AMOUNTS AND TERMS OF THE LOANS

     41  

SECTION 2.01.

 

The Loans

     41  

SECTION 2.02.

 

Making the Loans

     43  

SECTION 2.03.

 

Repayment of Loans

     44  

SECTION 2.04.

 

Prepayments

     49  

SECTION 2.05.

 

Interest

     49  

SECTION 2.06.

 

Fees

     51  

SECTION 2.07.

 

Increased Costs, Etc.

     53  

SECTION 2.08.

 

Payments and Computations

     53  

SECTION 2.09.

 

Taxes

     55  

SECTION 2.10.

 

Sharing of Payments, Etc.

     57  

SECTION 2.11.

 

Use of Proceeds

     58  

SECTION 2.12.

 

Evidence of Debt

     58  

SECTION 2.13.

 

Duty to Mitigate

     59  

SECTION 2.14.

 

Accounts; Cash Waterfall

     59  

Article III CONDITIONS TO EFFECTIVENESS OF LENDING

     65  

SECTION 3.01.

 

Conditions Precedent

     65  

SECTION 3.02.

 

Conditions Precedent to Each Borrowing

     70  

Article IV REPRESENTATIONS AND WARRANTIES

     71  

SECTION 4.01.

 

Representations and Warranties

     71  

Article V COVENANTS

     80  

SECTION 5.01.

 

Affirmative Covenants

     80  

SECTION 5.02.

 

Negative Covenants

     93  

SECTION 5.03.

 

Reporting Requirements

     107  

Article VI EVENTS OF DEFAULT

     112  

SECTION 6.01.

 

Events of Default

     112  

SECTION 6.02.

 

Application of Funds

     117  


Article VII THE AGENTS

     118  

SECTION 7.01.

 

Authorization and Action

     118  

SECTION 7.02.

 

Administrative Agent’s Reliance, Etc.

     119  

SECTION 7.03.

 

Agents and Affiliates

     119  

SECTION 7.04.

 

Lender Credit Decision

     120  

SECTION 7.05.

 

Indemnification

     120  

SECTION 7.06.

 

Successor Administrative Agent

     121  

SECTION 7.07.

 

Term Loan Collateral Agent

     121  

SECTION 7.08.

 

Secured Cash Management Agreements and Secured Hedge Agreements

     122  

Article VIII [RESERVED]

     122  

Article IX MISCELLANEOUS

     122  

SECTION 9.01.

 

Amendments, Etc.

     122  

SECTION 9.02.

 

Notices, Etc.

     124  

SECTION 9.03.

 

No Waiver; Remedies

     126  

SECTION 9.04.

 

Costs and Expenses

     126  

SECTION 9.05.

 

Right of Set-off

     127  

SECTION 9.06.

 

Binding Effect

     128  

SECTION 9.07.

 

Assignments and Participations

     128  

SECTION 9.08.

 

Execution in Counterparts

     132  

SECTION 9.09.

 

Confidentiality

     132  

SECTION 9.10.

 

Marshalling; Payments Set Aside

     133  

SECTION 9.11.

 

Patriot Act Notice

     133  

SECTION 9.12.

 

Jurisdiction, Etc.

     133  

SECTION 9.13.

 

Governing Law

     134  

SECTION 9.14.

 

Waiver of Jury Trial

     134  

SECTION 9.15.

 

Limitation on Liability

     134  

SECTION 9.16.

 

Acceptable Purchaser Schedule Updates

     134  

SECTION 9.17.

 

No Advisory or Fiduciary Responsibility

     134  

SECTION 9.18.

 

Acknowledgment and Consent to Bail-In of Affected Financial Institutions

     135  

SECTION 9.19.

 

Recognition of the U.S. Special Resolution Regimes

     136  

SECTION 9.20.

 

Intercreditor Agreement

     137  

SECTION 9.21.

 

No Partnership, Etc.

     137  


SCHEDULES

 

Schedule I

  -  

Commitments and Lending Offices

Schedule II

  -  

Acceptable Purchasers

Schedule III

  -  

Approved Closing Growth Capital Expenditures

Schedule IV

  -  

Pending Litigation

Schedule V

  -  

CARES Act Loan Collateral

Schedule 3.01(a)(iv)

  -  

Perfect by Filing

Schedule 3.01(a)(v)

  -  

Closing Date Landlord Waivers

Schedule 3.01(b)

  -  

Existing Debt

Schedule 4.01(b)

  -  

Loan Parties

Schedule 4.01(c)

  -  

Capital Structure

Schedule 4.01(e)

  -  

Governmental Approvals and Authorizations

Schedule 4.01(o)

  -  

Environmental Disclosure

Schedule 4.01(r)

  -  

Leased Real Property

Schedule 4.01(t)

  -  

Material Contracts

Schedule 4.01(v)

  -  

Existing Capitalized Leases; Existing Equipment Financings

Schedule 4.01(x)

  -  

Maintained Insurance

Schedule 4.01(y)

  -  

Intellectual Property

Schedule 4.01(aa)

  -  

Letter of Credit Rights

Schedule 4.01(bb)

  -  

Commercial Tort Claims

Schedule 4.01(cc)

  -  

Employment Contracts

Schedule 4.01(dd)

  -  

Affiliate Transactions

Schedule 4.01(ee)

  -  

Restrictive Agreements

Schedule 5.01(d)

  -  

Required Insurance

Schedule 5.02(k)

  -  

Equipment Finance SPVs

Schedule 6.01(q)

  -  

Frac Fleet 16 Agreement

Schedule 9.02

  -   Notice Addresses

EXHIBITS

 

Exhibit A-1

  -  

Form of Term Loan A Note

Exhibit A-2

  -  

Form of Term Loan B Note

Exhibit B

  -  

Form of Notice of Borrowing

Exhibit C

  -  

Form of Assignment and Acceptance

Exhibit D

  -  

[Reserved]

Exhibit E

  -  

Form of Solvency Certificate

Exhibit F

  -  

Form of Consent and Agreement for Material Contracts

Exhibit G

  -  

Form of Frac Fleet Maintenance Report

Exhibit H

  -  

Frac Fleet Preservation Program

Exhibit I

  -  

Form of Restoration Requisition

Exhibit J

  -  

Form of Schedule Purchaser Update Notice

Exhibit K

  -  

Form of Growth Capex Withdrawal Certificate

Exhibit L

  -  

Form of Secured Party Designation Notice

Exhibit M

  -  

Form of Insurance Payment Instruction Letter

Exhibit N

  -  

Form of License Agreement

Exhibit O

  -  

Form of Settlement Agreement


SENIOR SECURED TERM LOAN CREDIT AGREEMENT

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

PRELIMINARY STATEMENTS:

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

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

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

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

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

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

 

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

1.

DEFINITIONS AND ACCOUNTING TERMS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Additional ProFrac Licensing Transactions means up to 17 Additional Licenses (as defined in the Form License Agreement) constituting ProFrac Licensing Transactions.

Additional Third Lien Notes” means 16% Convertible Senior Secured (Third Lien) PIK Notes due 2026 issued by Parent under the Third Lien Notes Agreement as “Additional Cash Notes” or “Additional Exchange Notes” each as defined in the Third Lien Notes Agreement on the Fifth Amendment Effective Date.

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

 

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

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

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

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

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

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

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

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

Allowable Uses means the “Allowable Uses of Covered Loans” set forth in Section 7(a)(36)(F) of the Small Business Act, as in effect on July 30, 2020.

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

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

 

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

Applicable Margin” means 8.25% per annum.

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

Benchmark Rate” means a rate per annum equal to (a) the Federal Funds Rate then in effect plus (b) 0.35%. For purposes of this Agreement, the Benchmark Rate hereunder shall in no event be less than two percent (2.00%) per annum.

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

CARES Act means The Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended from time to time, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule, or regulation of the CARES Act shall be deemed to include any corresponding provisions of future law.

CARES Act Collateral Proceeds” has the meaning given to such term in Section 5.02(e).

CARES Act Collateral Proceeds Shortfall” means, with respect to each asset constituting Pre-Release CARES Act Collateral, an amount equal to fifty percent (50%) of the difference of (x) the amount set forth on Schedule V for such asset minus (y) the amount of CARES Act Collateral Proceeds received by the Borrower or any other Loan Party upon the sale or other disposition of such asset constituting Pre-Release CARES Act Collateral.

 

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CARES Act Collateral Release Date” has the meaning given to such term in Section 5.02(e)(x)(F).

CARES Act Lender” means Greater Nevada Credit Union, and its successors and assigns.

CARES Act Loan” means the loan made pursuant to the “Business and Industry CARES Act Program” of the CARES Act to the Borrower under that certain Business Loan Agreement dated November 12, 2020, executed by the Borrower, Holdings, and Parent, as co-borrowers and made payable to Greater Nevada Credit Union, as lender, providing for loans in the original principal amount of equal to $25,000,000.00 in aggregate and secured by CARES Act Loan Collateral.

CARES Act Loan Account” a deposit account opened and maintained at Greater Nevada Credit Union, exclusively used for depositing the proceeds of the CARES Act Loan and making payments under the CARES Act Loan.

CARES Act Loan Collateral” means (i) the Pre-Release CARES Act Collateral and (ii) on and after the first CARES Act Collateral Release Date, any Post-Release CARES Act Collateral and, in the case of each of clause (i) and (ii), any proceeds or products of such collateral.

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

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

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

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

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

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

 

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Agent, the applicable Cash Management Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

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

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

Change of Control” means, at any time, whether by, pursuant to, or as part of, a single transaction or event or series of transactions or events, (a) any “person” or “group” (within the meaning of Rule 13(d) of the Exchange Act and the rules of the Securities and Exchange Commission thereunder as in effect on the Effective Date) other than any member or combination of members of the Sponsor Group (i) shall have acquired ownership, directly or indirectly, beneficially or of record, of more than 50% on a fully diluted basis of the aggregate voting power represented by the issued and outstanding Equity Interests of the Parent, or (ii) shall have acquired direct or indirect control of Holdings or the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were not (x) directors of the Parent on the date of this Agreement or nominated or appointed by the board of directors of the Parent, (y) appointed by directors so nominated or appointed or (z) directors nominated or appointed by Crestview pursuant to that certain Subscription Agreement, dated July 13, 2018, entered into among the Parent, Crestview and certain other parties thereto (as in effect on the Effective Date), (c) Parent shall cease to own, free and clear of all Liens or other encumbrances, at least 70% on a fully diluted basis of the aggregate voting power represented by the issued and outstanding Equity Interests of Holdings, (d) Holdings shall cease to own, free and clear of all Liens (other than Liens permitted under Section 5.02(a)(i) and Section 5.02(a)(ii)) or other encumbrances, at least 100% on a fully diluted basis of the aggregate voting power represented by the issued and outstanding Equity Interests in the Borrower, (e) a Disqualified Owner shall become a direct or indirect owner of a 50% or greater ownership interest in or otherwise control any Loan Party or (f) a “change of control” or any other comparable term under, and as defined in, any of the ABL Loan Documents shall have occurred, provided, that no Change of Control shall be deemed to have occurred in the circumstance set forth in clause (a) above if the proposed transferee of such beneficial interests is an Acceptable Purchaser, so long as such Acceptable Purchaser has provided a parent guarantee of the Obligations in form and substance, and from an entity the creditworthiness of which is, in each case acceptable to the Administrative Agent. For the purposes of this definition, “control” shall be defined to mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Borrower, whether through the ability to exercise voting power, contract or otherwise.

Claim Proceeds” has the meaning specified in Section 2.04(b)(v).

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

Debt” of any Person means, without duplication, (a) Debt for Borrowed Money of such Person, (b) all obligations of such Person for the deferred purchase price of Property or services (other than trade payables not overdue (unless being contested in good faith by appropriate proceedings for which reserves and other appropriate provisions, if any, required by GAAP shall have been made) by more than one-hundred and twenty (120) days incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property), (e) all obligations of such Person as lessee under Capitalized Leases, (f) all Disqualified Equity Interests in such Person, valued, as of the date of determination, at the greater of (i) the maximum aggregate amount that would be payable upon maturity, redemption, repayment or repurchase thereof (or the value of Disqualified Equity Interests or Debt into which such Disqualified Equity Interests are convertible or exchangeable) and (ii) the maximum liquidation preference of such Disqualified Equity Interests, (g) all obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (h) all Guaranteed Debt of such Person, (i) all obligations under any earn-out (which for all purposes of this Agreement shall be valued at the maximum potential amount payable with respect to each such earn-out) and (j) all indebtedness and other payment obligations referred to in clauses (a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment obligations, not to exceed the value of the Property on which such Lien exists.

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

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

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

Effective Date” has the meaning specified in Section 3.01.

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

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

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

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

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

Environmental Consultant” means Terracon Consultants, Inc.

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

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

 

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

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

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

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

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

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

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

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

 

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(g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 206(g)(5) of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan.

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

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

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

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

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

Excess Settlement Proceeds means an amount determined by subtracting $20,000,000 from an amount obtained by subtracting the aggregate amount required to be paid by the Borrower or any Loan Party under the relevant settlement agreement from the greater of (x) $48,000,000 and (y) the aggregate amount of Judgment Appeal Account Proceeds that are released and returned to the Borrower or any Loan Party.

Excluded Accounts” means (a) the Payroll Account; (b) the Workers Compensation Account; (c) the CARES Act Loan Account; and the (d) Judgment Appeal Account.

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

Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty (or any guarantee of such Guarantor in respect of any Swap Obligation under any Hedge Agreements) of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time

 

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the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation or at any other time as is required for purposes of the Commodity Exchange Act or regulations. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

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

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

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

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

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

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

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

Federal Funds Rate” means for any day of determination, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher one hundredth of one percent (1/100 of 1%)) equal to the weighted average of the rates on overnight federal funds transactions by depositary institutions, as such rate is displayed on the FEDL01 Index Page of Bloomberg L.P. (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time in its reasonable discretion) at approximately 11:00 a.m. New York City time on such day; provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day, (ii) if no such rate is so published for any day that is a Business Day, the Federal Funds Rate for such day shall be the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. The Federal Funds Rate shall be determined on the Fifth Amendment Effective Date and, thereafter, on the first Business Day of each Fiscal Quarter commencing with the first Business Day of the Fiscal Quarter beginning July 1, 2021. Once the Federal Funds Rate is determined as of a particular day in accordance with the immediately preceding sentence, it shall remain in effect until the next redetermination date therefor as set forth herein.

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

 

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Fifth Amendment” means the Consent and Fifth Amendment to the Senior Secured Term Loan Credit Agreement, dated June 24, 2021, among the Loan Parties, the Agents and the Lenders.

Fifth Amendment Effective Date” means June 24, 2021.

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

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

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

Form License Agreement” means a license agreement in substantially in the form attached as Exhibit N to this Credit Agreement.

Fourth Amendment means the Fourth Amendment to the Senior Secured Term Loan Credit Agreement, dated November 12, 2020, among the Loan Parties, the Agents and the Lenders.

Fourth Amendment Effective Date” means November 12, 2020.

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

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

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

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

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

 

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

G&A Cap” means, for each Calendar Quarter following the Calendar Quarter ending on March 31, 2020, an amount of cash general and administrative costs in an aggregate amount equal to (a) $24,000,000 at any time when the Initial Lenders and their respective Affiliates (and/or any commonly-owned Affiliates thereof) are “Lenders” hereunder, and (b) $30,000,000 at any time that the Initial Lenders and their respective Affiliates (and/or any commonly-owned Affiliates thereof) cease to be “Lenders” hereunder, in each case of clause (a) and (b), per Calendar Quarter (calculated on a trailing 12 month basis) minus an amount equal to the aggregate cash general and administrative costs incurred by the Loan Parties during the three Calendar Quarters immediately preceding such Calendar Quarter, as increased by three percent (3%) per calendar year commencing in 2020; provided, that the G&A Cap shall exclude (i) non-cash costs, (ii) transaction costs attributable to the Facilities and incurred on or before the Effective Date, transaction costs incurred in connection with the Second Amendment Agreement and the related transactions consummated in connection therewith, and costs and expenses for the services of any Collateral Inspection Party (iii) restructuring fees associated with headcount reductions, (iv) Public Company Operating Costs and (v) other costs and expenses, in each case, as approved by the Lenders in their reasonable discretion; provided, further, that the G&A Cap shall exclude up to $1,000,000 in the aggregate in any fiscal year of extraordinary costs and unusual or non-recurring expenses.

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

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

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

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

Growth Capital Expenditures” means, in respect of the Borrower and/or any Subsidiary Guarantor, Capital Expenditures that are (a)(i) used to finance the acquisition of a new generation Electric Frac Fleet for which the Borrower or a Subsidiary Guarantor has entered into an Approved

 

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

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

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

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

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

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

Hedge Agreements” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any

 

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form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

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

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

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

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

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

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

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

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

Initial ProFrac Licensing Transactions means the three (3) Initial Licenses (as defined in the Form License Agreement) constituting ProFrac Licensing Transactions.

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

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

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

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

Initial Third Lien Notes” means the 16% Convertible Senior Secured (Third Lien) PIK Notes due 2026 issued by Parent under the Third Lien Notes Agreement on the “Initial Equity Linked Notes Closing Date” and the “License Linked Note Closing Date” each as defined in the Third Lien Notes Agreement as in effect on the Fifth Amendment Effective Date.

 

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

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

Insurance Consultant” means Alliant Insurance Services, Inc.

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

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

Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, dated as of June 24, 2021, by and among the Administrative Agent, the ABL Agent, Third Lien Agent, the Borrower and the other Persons party thereto from time to time, as amended, restated, supplemented or otherwise modified from time to time.

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

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

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

“Judgment Appeal Account” means the bank account(s) directed by the court in the SND Lawsuit to hold the funds to stay enforcement of the June 2021 Judgment while the June 2021 Judgment is on appeal (including an account held by the registrar of the court).

 

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Judgment Appeal Account Proceeds the funds on deposit and held in the Judgment Appeal Account.

June 2021 Judgment means that certain Order of Final Judgment entered into on June 17, 2021, by the Superior Court of the State of Delaware in the SND Lawsuit.

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

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

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

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

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

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

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

Loan Parties” means the Borrower and the Guarantors.

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

 

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

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

Margin Stock” has the meaning specified in Regulation U.

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

(a)    any Material Adverse Effect;

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

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

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

(e)    any insolvency proceedings relating to any Loan Party or any of the Collateral, including any insolvency proceeding that is or may be pending or threatened.

Material Adverse Effect” means a material adverse effect on (a) the financial condition, business, results or operations of the Loan Parties, taken as a whole, (b) the rights, remedies or benefits of any Agent or the Lenders, taken as a whole, under any Loan Document, (c) the ability of the Loan Parties to perform their respective Obligations under the Loan Documents or (d) the validity, binding effect, enforceability or priority of the Liens and security interests granted to the Term Secured Parties under the Loan Documents.

Material Contract” means each of (a) the agreements listed on Schedule 4.1(t) and (b) any other Contractual Obligation entered into on or after the Effective Date (other than any Loan Document, any customer contract or any Contractual Obligation under other Permitted Debt) of any Loan Party for which breach, nonperformance or cancellation could reasonably be expected to have a Material Adverse Effect.

Maturity Date” means the earlier of (a) December 5, 2025 and (b) the date the Loans become due and payable pursuant to Section 6.01.

Minimum Frac Fleet Requirement” means, on any date of determination, that all Frac Fleets owned by the Loan Parties are (x) capable of being deployed or (y) being actively repaired and are capable of being deployed within 30 days of such date of determination, with each such

 

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Frac Fleet (a) being capable of providing a Customer with a typical level of hydraulic fracturing services in accordance with the applicable Commercial Agreement in any one location based upon historical operations of the Borrower and its Subsidiaries and (b) representing, on average, between 40,000 and 50,000 hydraulic horsepower.

MG Finance Lease Agreement” means that certain Master Lease Agreement No. CW/1288-1, entered into on or around January 25, 2019, by and between the Parent, as lessee, and M/G Finance Co., Ltd., as lessor, pursuant to which certain assets set forth in Schedule V are leased to Parent.

Moody’s” means Moody’s Investors Service, Inc., and any successor thereto.

Mortgages” means any deed of trust, trust deed, mortgage, leasehold mortgage or leasehold deed of trust delivered from time to time after the date hereof pursuant to Section 5.01(j), in each case as amended.

Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

Net Cash Flow Certificate” has the meaning specified in Section 5.03(k).

Net Cash Proceeds” means:

(a)    with respect to any Asset Sale, the excess, if any, of (i) the sum of Cash and Cash Equivalents received by any Loan Party in connection with such Asset Sale minus (ii) the sum of (A) the out of pocket costs, fees, commissions, premiums and expenses (including legal and accounting costs, fees and expenses and title and recording fees, costs and expenses) reasonably incurred directly or indirectly by any Loan Party in connection with such Asset Sale to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state and local taxes paid or reasonably estimated to be payable by any Loan Party in connection therewith to the extent such amounts were not deducted in determining the amount referred to in clause (i); and

(b)    with respect to the incurrence or issuance of any Debt for Borrowed Money by any Loan Party, the excess if any, of (i) the sum of the Cash and Cash Equivalents received by any Loan Party in connection with such incurrence or issuance minus (ii) the underwriting discounts and commissions or other similar payments, and other out of pocket costs, fees, commissions, premiums and expenses (including legal and accounting costs, fees and expenses and title and recording fees, costs and expenses) reasonably incurred directly or indirectly any Loan Party in connection with such incurrence or issuance to the extent such amounts were not deducted in determining the amount referred to in clause (i); and

 

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(c)    with respect to any Equity Issuance, the excess of (i) the sum of the Cash and Cash Equivalents received by any Loan Party in connection with such sale or issuance minus (ii) the underwriting discounts and commissions or similar payments, and other out of pocket costs, fees, commissions, premiums and expenses (including legal and accounting costs, fees and expenses), reasonably incurred by any Loan Party in connection with such sale or issuance to the extent such amounts were not deducted in determining the amount referred to in clause (i);

(d)    with respect to any Event of Eminent Domain or Casualty Event, the excess, if any, of (i) the sum of Cash and Cash Equivalents received by any Loan Party in connection with such Event of Eminent Domain or Casualty Event minus (ii) the sum of (A) the out of pocket costs and expenses reasonably incurred by any Loan Party in connection with the collection, enforcement, negotiation, consummation, settlement, proceedings, administration or other activity related to the receipt or collection of the relevant proceeds to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state and local taxes reasonably estimated to be payable as a result of thereof to the extent such amounts were not deducted in determining the amount referred to in clause (i); and

(e)    with respect to any termination of any Commercial Agreement, the excess, if any, of (i) the sum of Cash and Cash Equivalents received by any Loan Party in connection with such termination minus (ii) the sum of (A) the out of pocket costs and expenses reasonably incurred by any Loan Party in connection with the collection, enforcement, negotiation, consummation, settlement, proceedings, administration or other activity related to the receipt or collection of the relevant proceeds to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state and local taxes reasonably estimated to be payable as a result of thereof to the extent such amounts were not deducted in determining the amount referred to in clause (i),

provided that, any Net Cash Proceeds received in the form of Cash Equivalents by any Loan Party shall be converted to Cash prior to prepayment of the Loans in accordance with Section 2.04.

Non-Lender Financed Capitalized Leases” means Capitalized Leases of any Equipment Finance SPV as to which neither Borrower nor any of the Guarantors (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Debt) or (b) is directly or indirectly liable as a guarantor or otherwise.

Non-Lender Financed Equipment Financings” means Equipment Financings of any Equipment Finance SPV as to which neither Borrower nor any of the Guarantors (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Debt) or (b) is directly or indirectly liable as a guarantor or otherwise.

Non-Speculative Interest Rate Hedge Agreements” means, with respect to any Person, any interest rate Hedge Agreement the purpose of which is to hedge or mitigate the commercial risks of such Person and which covers a notional amount not to exceed at any time the outstanding principal amount of the Loans and is for a term that ends on or prior to the Maturity Date.

 

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Note” means each Term Loan A Note and Term Loan B Note.

Notice of Borrowing” means a Notice of Borrowing, in substantially the form of Exhibit B hereto, given by the Borrower in accordance with Section 2.02.

NPL” means the National Priorities List under CERCLA.

O&M Costs” means, for any period, the sum, computed without duplication, of the following (in each case incurred by any Loan Party and not reimbursed by any other Person, except if the proceeds of such reimbursement are deposited into the Revenue Account): (a) direct expenses of administering and operating the Frac Fleets or the related yards where such Frac Fleets are stored and of maintaining the Frac Fleets and the related yards where such Frac Fleets are stored in good repair and operating condition (including routine operating and maintenance expenses, Maintenance Capital Expenditures, expenses under spare parts agreements, fuel costs, payments under leases and other costs of utilities, supplies, spare parts and other services), (b) insurance costs or surety bonds (including premiums and deductibles or costs associated with complying with any applicable insurance or bonding obligations under this Agreement), (c) costs, expenses and fees attendant to obtaining and maintaining in effect any Governmental Authorization, (d) legal, accounting and other professional fees and expenses attendant to any of the foregoing items, (e) sale, franchise, margin, licensing, value-added, excise, real estate, use, property and other non-income state, local and federal taxes, (f) any Capital Expenditures for Investments, subject to the cap on such expenses set forth in Section 5.02(m)(iii), (g) payments on account of any Permitted Debt described in Sections 5.02(b)(v)(A), 5.02(b)(v)(B), and 5.02(b)(vi), (h) any ordinary course settlement payments in connection with Hedge Agreements entered into in accordance with the terms of the Loan Documents and (i) all other expenses, fees and costs incurred by any Loan Party, directly in connection with the ownership, operation, maintenance or administration of any Frac Fleet; provided that all of the foregoing costs and expenses shall be determined on a cash basis and shall not include depreciation, amortization and other non-cash items; provided, further, that “O&M Costs” shall not include: (A) payments of any kind during such period to the holders of Equity Interests of the Borrower or any Affiliate thereof (other than (x) to the Borrower or any Guarantor (other than Holdings or the Parent)), (y) to any Affiliate as payment of or reimbursement for costs that would be permitted to be paid by the Borrower or any Subsidiary Guarantor as O&M Costs if incurred or paid directly by the Borrower or (z) payments that are made in compliance with Section 5.01(i), (B) payments of Capital Expenditures other than Maintenance Capital Expenditures and Capital Expenditures for Investments (subject to the cap on such expenses set forth in Section 5.02(m)(iii)), (C) amounts payable under the ABL Loan Documents, (D) Termination Payments of any kind, (E) payments to repair or restore Property during such period with Net Cash Proceeds attributable to any Casualty Event or Event of Eminent Domain, or (F) except as provided in clause (h), any payments or expenses related to any Debt for Borrowed Money or other Permitted Debt (including Debt under the ABL Credit Agreement).

Obligation” means all obligations of every nature of each Loan Party from time to time owed to any Agent (including former Agents) or any Lender from time to time outstanding hereunder and under the other Loan Documents or otherwise under any Loan, Secured Cash

 

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Management Agreement or Secured Hedge Agreement, including, without limitation, all principal and all interest, fees, premium, the Call Premium, the Exit Fee, the Yield Maintenance Fee, the Extension Fee, expenses, and other charges accrued or accruing (or which would, absent commencement of any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto, accrue) on or after the commencement of any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto at the rate provided for herein or the relevant Loan Document, whether or not such interest (including post-petition interest), fees, premium, Call Premium, Exit Fee, Yield Maintenance Fee, Extension Fee, expenses or other charges are allowed or allowable in any such bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto.

Ordinary Course Settlement Payments” means all regularly scheduled payments due under any Hedge Agreement from time to time, calculated in accordance with the terms of such Hedge Agreement, but excluding, for the avoidance of doubt any “settlement amounts” or “termination payments” due and payable under such Hedge Agreement.

Other Taxes” has the meaning specified in Section 2.09(b).

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

Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.

Payroll Account” a zero balance deposit account exclusively used for tax withholding, payroll, payroll taxes, employee benefits (including workers’ compensation, unemployed insurance or other forms of governmental insurance or benefits).

PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

Perfect by Filing” means, with respect to any certificates of title, the (a) filing of required lien notation documentation with, and delivery of such certificate of title to, the relevant department of transportation, (b) acceptance thereof by such department of transportation and (c) payment of any fees in connection with the foregoing.

Permitted Debt” means Debt permitted under Section 5.02(b).

Permitted Encumbrances” has the meaning specified in the Mortgages.

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

Permitted Liens” means (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b); (b) Liens imposed by or arising by operation of law, such as materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s and repairmen’s Liens and other similar Liens (i) for amounts that are not overdue or (ii) for

 

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amounts that are overdue that (A) do not materially adversely affect the use of the Property to which they relate or (B) are bonded or are being contested in good faith by appropriate proceedings for which reserves and other appropriate provisions, if any, required by GAAP shall have been made; (c) pledges or deposits in the ordinary course of business to secure obligations under workers’ compensation, unemployment insurance, social security legislation or other similar legislation or to secure public or statutory obligations or to secure a bond or letter of credit or similar instrument that is utilized to secure such obligations; (d) Liens on deposits (or pledges of deposit accounts or securities accounts containing such deposits) to secure the performance of bids, Material Contracts and other Contractual Obligations permitted under this Agreement, trade contracts and leases (other than Debt that is not Debt of the type described in clause (e) of the definition thereof), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, or to secure a bond or letter of credit or similar instrument that is utilized to secure such obligations, in an aggregate amount not to exceed $5,000,000; provided, this clause (d) shall not include any Lien described herein if any Event of Default has occurred and is continuing on the date such Lien is incurred; (e) Liens securing judgments (or the payment of money not constituting an Event of Default under Section 6.01(g)) or securing appeal or other surety bonds related to such judgments or to secure a bond or letter of credit or similar instrument that is utilized to secure such judgments; (f) Permitted Encumbrances; and (g) easements, rights-of-way, restrictions, encroachments and other minor defects or irregularities in title and any zoning or other similar restrictions to or vested in any governmental office or agency to control or regulate the use of any Real Property, that individually or in the aggregate do not materially adversely affect the value of said Real Property or materially impair the ability of the Loan Parties to operate the Real Property to which they relate in the ordinary course of business.

Permitted Tax Distributions” means dividends or other distributions paid from time to time (which may be estimated and paid no more frequently than quarterly) by Borrower to the holders of its Equity Interests (and, in turn, by such holders to the respective holders of their Equity Interests) not to exceed in the aggregate in any fiscal year an amount equal to the federal and state income taxes of the holders of Borrower’s Equity Interests which are attributable to the taxable income of Borrower and its Subsidi