UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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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.
Introductory Note
As previously disclosed in the Current Report on Form 8-K filed by U.S. Well Services, Inc., a Delaware corporation (“USWS Inc.”), with the Securities and Exchange Commission (the “SEC”) on June 27, 2022, USWS Inc. entered into that certain Agreement and Plan of Merger (the “Merger Agreement”) by and among USWS Inc., ProFrac Holding Corp., a Delaware corporation (“ProFrac”), and Thunderclap Merger Sub I, Inc., a Delaware corporation and an indirect subsidiary of ProFrac (“Merger Sub”). On November 1, 2022, pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into USWS Inc. (the “Merger”), with USWS Inc. surviving the merger as the surviving corporation and wholly owned by Thunderclap Intermediate, Inc. (“Thunderclap Intermediate”), an indirect subsidiary of ProFrac (the “Surviving Company”).
Immediately following the consummation of the Merger, the newly constituted board of directors of the Surviving Company approved and recommended that Thunderclap Intermediate, the sole stockholder of the Surviving Company, approve a Certificate of Conversion and a Certificate of Formation to effect the conversion of the Surviving Company from a Delaware corporation to a Delaware limited liability company (the “Conversion”) and a change in the Surviving Company’s name to U.S. Well Services Holdings, LLC (the “USWS Holdings LLC”), which was subsequently approved by Thunderclap Intermediate. The Conversion was effective immediately following the consummation of the Merger pursuant to the filing of a Certificate of Conversion and a Certificate of Formation with the Secretary of State for the State of Delaware, which are filed as Exhibit 3.1 and Exhibit 3.2 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.
Immediately following the Conversion, Thunderclap Intermediate contributed all of the limited liability company interests in USWS Holdings LLC to ProFrac Holdings, LLC (“ProFrac Holdings”), a subsidiary of Parent (the “Initial Transfer”). Immediately following the Initial Transfer, ProFrac Holdings contributed all of the limited liability company interests in USWS Holdings LLC to ProFrac Holdings II, LLC a Texas limited liability company (“ProFrac Holdings II”), a wholly owned subsidiary of ProFrac Holdings (“Secondary Transfer”).
| Item 1.01 | Entry into a Material Definitive Agreement. |
Limited Liability Company Agreement
Immediately upon the effectiveness of the Conversion, USWS Holdings LLC and ProFrac Holdings II, its sole member, entered into the Limited Liability Company Agreement of USWS Holdings LLC (the “LLC Agreement”). The LLC Agreement sets forth the terms and conditions on which USWS Holdings LLC will be governed. The LLC Agreement vests ProFrac Holdings II complete authority and control over the management and business and affairs of USWS Holdings LLC. This summary does not purport to be complete and is qualified in its entirety by reference to the full text of the LLC Agreement, which is filed as Exhibit 3.3 to this Current Report on Form 8-K and incorporated herein by reference.
Master Reorganization Agreement
Immediately following the Secondary Transfer, USWS Holdings LLC entered into that certain Master Reorganization Agreement by and among USWS Holdings LLC, ProFrac Manufacturing, LLC, ProFrac Services, LLC, USWS Holdings LLC, U.S. Well Services, LLC, USWS Fleet 10, LLC and USWS Fleet 11, LLC (the “Reorganization Agreement”), whereby USWS Holdings LLC transferred certain assets to ProFrac Manufacturing, LLC and certain contracts to ProFrac Services, LLC. This summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Reorganization Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
The information set forth in the Introductory Note is incorporated herein by reference.
Conversion of USWS’ Securities
| • | At the effective time of the Merger (the “Effective Time”), each share of Class A Common Stock of USWS Inc., par value $0.0001 per share (the “USWS Common Stock”), was converted automatically into the right to receive 0.3366 (the “Exchange Ratio”) shares of Class A common stock of ProFrac, par value $0.01 per share (the “PFHC Common Stock”) (the “Merger Consideration”), as adjusted from the agreed upon Merger Agreement ratio of 0.0561 to account for the 1-for-6 reverse stock split implemented by USWS Inc. on August 4, 2022. |
| • | Immediately prior to the Effective Time: |
| • | each holder of Series A Redeemable Convertible Preferred Stock of USWS Inc., par value $0.0001 per share, (the “USWS Series A Preferred Stock”) had the option of converting such stock into shares of USWS Common Stock at the Merger Conversion Ratio (as defined in the Merger Agreement), and any shares of USWS Series A Preferred Stock not so converted at the Merger Conversion Ratio were automatically converted into shares of USWS Common Stock at the then-effective conversion rate as calculated pursuant to USWS Inc.’s Certificate of Designations (as defined in the Merger Agreement); and |
| • | each Equity Linked Convertible Note (as defined in the Merger Agreement) issued and outstanding at such time was automatically converted into a number of shares of USWS Common Stock equal to the quotient obtained by dividing (i) the amount of outstanding aggregate principal amount, plus accrued and unpaid interest, owing under such Equity Linked Convertible Note through July 9, 2022, by (ii) $7.32. |
| • | At the Effective Time, each February Term C Loan Warrant and March Term C Loan Warrant (as such terms are defined in the Merger Agreement) that was issued and outstanding immediately prior to the Effective Time (which was held by ProFrac pursuant to the Warrant Sale, as such term is defined and described below) was automatically canceled and ceased to exist and no consideration was delivered in exchange therefor. |
| • | The obligations of USWS Inc. under the Rollover Warrants were assumed by ProFrac and the Rollover Warrants now represent the right to receive upon valid exercise thereof shares of PFHC Common Stock equal to the product of (A) the number of shares of USWS Common Stock subject to such Rollover Warrant immediately prior to the Effective Time and (B) the Exchange Ratio. |
Conversion of USWS Inc.Stock-Based Awards
| • | At the Effective Time, each share of USWS Common Stock that was subject to vesting, repurchase, or other lapse of restrictions that was outstanding and unvested under USWS Inc.’s Amended and Restated 2018 Stock Incentive Plan (the “Company LTIP”) immediately prior to the Effective Time was, by virtue of the Merger and without any action on the part of the holder thereof, canceled in exchange for the right to receive the Merger Consideration and, in lieu of any fractional shares, cash. |
| • | Immediately prior to the Effective Time, each then-outstanding deferred stock unit or restricted stock unit, in each case representing a right to receive one share of USWS Common Stock granted under the Company LTIP (each, a “DSU”), was, by virtue of the Merger and without any action on the part of the holder thereof, canceled and converted into the right to receive the Merger Consideration and, in lieu of any fractional shares, cash. |
| • | Immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, (i) each then-outstanding Pool A Performance Award (as defined in the Merger Agreement) was canceled and converted into the right to receive (A) for recipients of Pool A Performance Awards who consented to the terms of that certain Amendment to Performance Awards included as an exhibit to the Merger Agreement (the “Award Amendment”), the Merger Consideration in an amount equal to the accumulated award value as of July 19, 2022 divided by $7.32, and (B) with respect to each Pool A Performance Award not amended by an Award Amendment, the Merger Consideration in an amount equal |
| to the accumulated award value as of the Effective Time divided by $7.32; and (ii) each then-outstanding Pool B Performance Award (as defined in the Merger Agreement) was canceled and converted into the right to receive (A) with respect to each Pool B Performance Award amended by an Award Amendment, the Merger Consideration in an amount equal to the accumulated award value as of July 19, 2022 divided by $6.468, and (B) with respect to each Pool B Performance Award not amended by an Award Amendment, the Merger Consideration in an amount equal to the accumulated award value as of the Effective Time divided by $6.468. |
Merger Consideration; Material Relationship
The value of the aggregate equity issued in connection with the Merger, based on the PFHC Common Stock 10-day VWAP as of October 31, 2022, is approximately $270 million. In addition, ProFrac is using cash to retire approximately $170 million of USWS Inc. debt, leaving approximately $35 million of various forms of equipment related financing outstanding, and is paying approximately $22 million in pre-payment penalties in connection with the consummation of the Merger.
Dan Wilks and Farris Wilks, together with certain of their affiliates, (collectively, the “Wilks Parties”) collectively hold a controlling interest in ProFrac. Certain Wilks Parties also owned certain securities of USWS Inc., including Equity Linked Convertible Notes that converted immediately prior to the Effective Time, as described above. Upon the consummation of the Merger, the Wilks Parties received an aggregate of 4,138,596 shares of PFHC Common Stock as Merger Consideration, which, based on the PFHC Common Stock 10-day VWAP as of October 31, 2022, is approximately $86 million.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which was filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 24, 2022, which is incorporated herein by reference.
Warrant Sale
In connection with the Merger, the holders of the February Term C Loan Warrants and the March Term C Loan Warrants (as such terms are defined in the Merger Agreement) sold all of their respective February Term C Loan Warrants and March Term C Loan Warrants to ProFrac in exchange for an aggregate purchase price of $2,639,999.82 (the “Warrant Sale”).
| Item 3.01. | Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. |
The information set forth under Item 2.01is incorporated herein by reference.
At the Effective Time, in connection with the consummation of the Merger, USWS Inc. notified the NASDAQ Global Select Market (“NASDAQ”) that the Merger had been consummated and requested that the trading of shares of USWS Common Stock and USWS Inc.’s publicly traded Warrants on NASDAQ be suspended and that the listing of such shares of USWS Common Stock on NASDAQ be withdrawn. In addition, USWS Inc. requested that NASDAQ file with the SEC a notification on Form 25 to report the delisting of shares of USWS Common Stock from NASDAQ and to deregister shares of USWS Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in the Introductory Note is incorporated herein by reference.
On November 1, 2022, at the effective time of the Conversion (the “Conversion Effective Time”) and as a result of the Conversion, all outstanding shares of capital stock of the Surviving Company were cancelled and
USWS Holdings LLC issued a 100% membership interest in the USWS Holdings LLC to Thunderclap Intermediate as the initial sole member of USWS Holdings LLC, prior to the Initial Transfer. Such membership interest was issued in a transaction exempt from registration under Section 3(a)(9) of the Securities Act of 1933, as amended.
| Item 3.03 | Material Modification to Rights of Security Holders. |
The information set forth under Item 2.01, Item 3.01 and Item 5.01 incorporated herein by reference.
| Item 5.01 | Change in Control of Registrant |
The information set forth in the Introductory Note is incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements to Certain Officers. |
In accordance with the terms of the Merger Agreement, effective as of the Effective Time (i) Matthew D. Wilks became the sole director of the Surviving Company and (ii) Ladd Wilks, Lance Turner, Coy Randle and Robert Willette became the Chief Executive Officer, Chief Financial Officer, Chief Operations Officer and Chief Legal Officer of the Surviving Company, respectively (the “Surviving Company Officers”).
At the Conversion Effective Time, (i) the Surviving Company Officers ceased to be officers of the Surviving Company and Matthew D. Wilks, Lance Turner and Robert Willette became the President, Chief Financial Officer and Secretary of USWS Holdings LLC, respectively, and (ii) ProFrac Holdings II, pursuant to the LLC Agreement, was vested with the exclusive and complete authority to manage the operations of USWS Holdings LLC.
| Item 5.03 | Amendments to Certificate of Incorporation or Bylaws; Change in Fiscal Year. |
The information set forth in the Introductory Note is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| * | Filed herewith. |
| † | The schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of such schedules, or any section thereof, to the SEC upon request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| U.S. WELL SERVICES HOLDINGS, LLC | ||||||
| Date: November 7, 2022 | By: | /s/ Robert Willette | ||||
| Robert Willette | ||||||
| Secretary | ||||||
Exhibit 3.1
STATE OF DELAWARE
CERTIFICATE OF CONVERSION
FROM A CORPORATION TO A
LIMITED LIABILITY COMPANY PURSUANT TO
SECTION 18-214 OF THE LIMITED LIABILITY ACT
1.) The jurisdiction where the Corporation first formed is Delaware.
2.) The jurisdiction immediately prior to filing this Certificate is Delaware.
3.) The date the corporation first formed is March 10, 2016.
4.) The name of the Corporation immediately prior to filing this Certificate is U.S. Well Services, Inc.
5.) The name of the Limited Liability Company as set forth in the Certificate of Formation is U.S. Well Services Holdings, LLC.
IN WITNESS WHEREOF, the undersigned have executed this Certificate on the 1st day of November, A.D. 2022.
| By: | /s/ Matthew D. Wilks | |
| Authorized Person | ||
| Name: | Matthew D. Wilks | |
| Print or Type | ||
Exhibit 3.2
STATE of DELAWARE
LIMITED LIABILITY COMPANY
CERTIFICATE of FORMATION
| • | First: The name of the limited liability company is U.S. Well Services Holdings, LLC |
| • | Second: The address of its registered office in the State of Delaware is 1209 Orange Street in the City of Wilmington Zip Code 19801. |
| The name of its Registered agent at such address is The Corporation Trust Company. |
| • | Third: (Insert any other matters the members determine to include herein.) |
In Witness Whereof, the undersigned have executed this Certificate of Formation this 1st day of November, 2022.
| By: | /s/ Matthew D. Wilks | |
| Authorized Person(s) | ||
| Name: | Matthew D. Wilks | |
| Typed or Printed | ||
Exhibit 3.3
[Execution]
LIMITED LIABILITY COMPANY AGREEMENT
OF
U.S. WELL SERVICES HOLDINGS, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
This LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of U.S. WELL SERVICES HOLDINGS, LLC, a Delaware limited liability company (the “Company”), effective as of November, 1, 2022 (the “Effective Date”), is adopted, executed and agreed to by ProFrac Holdings II, LLC a Texas limited liability company (the “Member”).
RECITALS
WHEREAS, the Company was formed as a Delaware corporation on March 10, 2016 with the name U.S. Well Services, Inc.
WHEREAS, on June 21, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among ProFrac Holdings, Inc. (“Parent”), Company, and Thunderclap Merger Sub I, Inc., a Delaware corporation and an indirect subsidiary of the Company (“Merger Sub”), pursuant to which the Company would merge with and the Merger Sub with the Target surviving the merger as the surviving corporation and wholly owned by Thunderclap Intermediate, Inc. (“Intermediate”), an indirect subsidiary of Parent (the “Merger”).
WHEREAS, on November 1, 2022, the Merger was consummated and immediately thereafter, the Company converted to a Delaware limited liability company with the name U.S. Well Services Holdings, LLC pursuant to a certificate of conversion and accompanying Certificate of Formation filed with the State of Delaware on November 1, 2022 (the “Certificate”) in accordance with provisions of the Delaware Limited Liability Company Act (such statute and any successor statute, as amended from time to time, the “DLLCA”) (the “Conversion”).
WHEREAS, immediately following the Company’s conversion to a Delaware limited liability company, Intermediate contributed all of the limited liability company interests in the Company to ProFrac Holdings, LLC (“ProFrac Holdings”), a subsidiary of Parent (the “Initial Transfer”).
WHEREAS, immediately following the Initial Transfer, ProFrac Holdings contributed all of the limited liability company interests in the Company to the Member, a wholly owned subsidiary of ProFrac Holdings.
WHEREAS, Member desires to enter into this Agreement as of the Effective Date to provide for the management and conduct of the business and affairs of the Company.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Member, the Member hereby agrees as follows:
ARTICLE I
FORMATION AND PURPOSE
Section 1.1 Establishment of Limited Liability Company. On November 1, 2022, the Company was formed as a limited liability company under and pursuant to the provisions of the DLLCA. As of the date hereof, the Member is the sole member of the Company and shall continue to be the sole member of the Company.
Section 1.2 Name. The name of the Company is “U.S. WELL SERVICES HOLDINGS, LLC” and the business of the Company shall be conducted under that name or under any other name adopted by the Member from time to time in accordance with the DLLCA.
Section 1.3 Principal Place of Business of the Company. The principal place of business of the Company shall be located at such location as the Member, as a matter of discretion, may determine from time to time. The registered agent for the service of process and registered office of the Company shall be the person and location set forth in the Certificate filed with the office of the Secretary of State of the State of Delaware. The Member may, from time to time, change such registered agent and registered office by appropriate filings as required by law.
Section 1.4 Purpose. The purpose of the Company is engaging in all lawful acts or activities for which limited liability companies may be organized under the DLLCA.
Section 1.5 Duration. Unless the Company shall be earlier terminated in accordance with Article VI, it shall continue in existence in perpetuity.
Section 1.6 Other Activities of the Member. The Member may engage in or possess an interest in other business ventures of any nature, whether or not similar to or competitive with the activities of the Company.
Section 1.7 Federal Income Tax Status. The Company is disregarded as an entity separate from the Member for U.S. federal income tax purposes.
Section 1.8 Reorganization and Restructurings. The Company shall have the right and authority, with the consent of the Member, to reorganize and restructure as needed.
Section 1.9 Qualification in Other Jurisdictions. The Member shall have the authority to qualify the Company to do business in any foreign jurisdiction in which the conduct of the Company’s business or the Company’s ownership or leasing of property requires such qualification or makes such qualification, in the judgment of the Member, necessary or desirable.
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ARTICLE II
CAPITAL CONTRIBUTIONS
Section 2.1 Capital Contributions. The Member, as its initial contribution to the capital of the Company, has made the contributions as set forth on the books and records of the Company. The receipt by the Member from the Company of any distributions whatsoever (whether pursuant to Section 3.1 or otherwise and whether or not such distributions may be considered a return of capital) shall not increase the Member’s obligations under this Section 2.1.
Section 2.2 Additional Capital Contributions. The Member may, but shall not be required to, make additional capital contributions to the Company.
Section 2.3 Limitation of Liability of the Member. The Member shall not have any liability or obligation for any debts, liabilities or obligations of the Company, or of any agent or employee of the Company, beyond the Member’s initial capital contribution, except as may be expressly required by this Agreement or applicable law.
Section 2.4 Loans. If the Member makes any loans to the Company, or advances money on its behalf, the amount of any such loan or advance shall not be deemed an increase in, or contribution to, the capital contribution of the Member. Interest shall accrue on any such loan at an annual rate agreed to by the Company and the Member (but not in excess of the maximum rate allowable under applicable usury laws).
ARTICLE III
DISTRIBUTIONS
Section 3.1 Distributions. The Company shall make distributions of cash or other assets to the Member at the times and in the manner that the Member deems appropriate and as permitted by applicable law.
ARTICLE IV
MANAGEMENT OF THE COMPANY
Section 4.1 Managing Member. The Member shall have exclusive and complete authority and discretion to manage the operations and affairs of the Company as its managing member and to make all decisions regarding the business of the Company in such capacity. Any action taken by the Member in such capacity shall constitute the act of and serve to bind the Company. Persons dealing with the Company are entitled to rely conclusively on the power and authority of the Member as set forth in this Agreement. The Member shall have all rights and powers of a manager under the DLLCA, and shall have such authority, rights and powers in the management of the Company to do any and all other acts and things necessary, proper, convenient or advisable to effectuate the purposes of this Agreement. Any matter requiring the consent or approval of the Member pursuant to this Agreement may be taken without a meeting, without prior notice and without a vote, by a consent in writing, setting forth such consent or approval, and signed by the Member.
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Section 4.2 Officers.
(a) The Member may appoint one or more officers of the Company (each, an “Officer”). Two or more offices may be held by the same person. Each such Officer shall have delegated to him or her the authority and power to execute and deliver on behalf of the Company (and to cause the Company to perform) any and all such contracts, certificates, agreements, instruments and other documents, and to take any such action, as the Member deems necessary or appropriate, all as may be set forth in a written delegation of authority executed by the Member. The Officers shall serve at the pleasure of the Member, and the Member may remove any person as an Officer, appoint additional persons as Officers and add or remove from the delegation of authority of an Officer as the Member deems necessary or desirable.
(b) Any Officer may resign at any time by giving written notice of such resignation to the Member. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Member and the acceptance of such resignation shall not be necessary to make it effective. Any Person dealing with the Company may conclusively presume that an Officer specified in such a written delegation of authority (including this Agreement) who executes a contract, certificate, agreement, instrument or other document on behalf of the Company has the full power and authority to do so and each such document shall, for all purposes, be duly authorized, executed and delivered by the Company upon execution and delivery by such Officer. The Officers, to the extent of their powers set forth in this Agreement or otherwise vested in them by action of the Member not inconsistent with this Agreement, are agents of the Company for the purpose of conducting the business and affairs of the Company, and the actions of any Officer taken in accordance with such powers shall bind the Company and any third party dealing with such Officer shall be entitled to rely conclusively (without making inquiry of any kind) on any actions so taken as being properly authorized by the Company.
ARTICLE V
TRANSFER OF MEMBERSHIP INTERESTS
Section 5.1 General Restriction. “Membership Interests” shall mean the interest of the Member in the Company, inclusive of economic, management and voting rights (including, without limitation, the rights to participate in the management, to replace, appoint, direct, and substitute any of the managers or Officers of the Company, to share profits and losses, to receive, cause and declare distributions (liquidating or otherwise), and to receive allocations of income, gain, loss, deduction, credit or similar item) of the Member. The Member may transfer all or any portion of its Membership Interests in the Company at any time or from time to time, to the extent and in the manner provided in this Agreement and applicable law. In connection with a transfer by the Member of all of its Membership Interests in the Company, all rights of the Member hereunder shall be automatically transferred to the transferee.
Section 5.2 Pledges of Membership Interests. Notwithstanding anything contained in this Agreement to the contrary, the Member shall be permitted to pledge, hypothecate or mortgage any or all of its Membership Interests to any lender or any agent acting on such lenders’ behalf as collateral security for obligations of the Member and/or its affiliates pursuant to any financing agreement, note, pledge agreement or security agreement and consents to the exercise
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by such lender (or agent) under any such agreement of any of such lender’s (or agent’s) rights and remedies under such pledge or security agreement with no further action or approval required under this Agreement. No such lender (or agent) shall be liable for the obligations of the Member to make contributions to the Company. Notwithstanding anything contained herein to the contrary, the lender (or agent) shall have the right, as set forth in the applicable financing agreement, note, pledge agreement or security agreement, and without further approval of the Member, any manager or the Company and without becoming a Member, to exercise the membership voting rights of the Member granting such pledge, hypothecation or mortgage. Notwithstanding anything contained herein to the contrary, and without complying with any other requirements or procedures set forth in this Agreement, subject to the terms set forth in the applicable financing agreement, note, pledge agreement or security agreement, the lender (or agent) or transferee of such lender (or agent), as the case may be, shall have the right to become a Member under this Agreement and shall succeed to all of the economic, management and voting rights and powers (including, without limitation, the rights to participate in the management, to replace, appoint, direct, and substitute any of the managers or Officers of the Company, to share profits and losses, to receive, cause and declare distributions (liquidating or otherwise), and to receive allocations of income, gain, loss, deduction, credit or similar item) of the Member transferor under this Agreement without further approval of the Member, any manager or the Company, and the Member transferor shall automatically cease to be a Member and shall have no further rights or powers under this Agreement. No such pledge, hypothecation, mortgage, or transfer shall constitute an event of dissolution under any provision hereunder or otherwise. The provisions of this Section 5.2 shall be binding upon and inure to the benefit of such lender (or agent) or transferee of such lender (or agent), as the case may be, the parties hereto, each of their respective successors and assigns and any future Members, Officers, or managers and each of their respective successors and assigns.
Section 5.3 Article 8 Opt-Out. The Membership Interests of the Member are and at all times shall remain uncertificated (and any certificate purporting to evidence any Membership Interests shall be null and void ab initio). The Member elects that the Company opt out of the rules of Article 8 of the Uniform Commercial Code of the State of Texas (the “UCC”) and, accordingly, the Membership Interests in the Company are not and shall not at any time be considered or treated as “securities” or “investment property” (as such terms are defined in the UCC) and, instead, that Membership Interests in the Company be treated as general intangibles governed by the rules of Article 9 of the UCC. No Member, Officer, or manager of the Company will amend this Agreement to provide that the Membership Interests of the Member in the Company are “securities” or “investment property” or otherwise “opt in” to Article 8 of the UCC.”
Section 5.4 Transfer of Membership Interests. Upon a foreclosure, sale or other transfer of the Membership Interests in the Company pursuant to any financing agreement, note, pledge agreement or security agreement, in each case pursuant to which the Member has pledged its Membership Interests as collateral security for obligations of the Member and/or its affiliates, the holder of such Membership Interests shall, upon the execution of a counterpart to this Agreement, automatically be admitted as a member of the Company with all of the rights and obligations of the Member hereunder. The Company acknowledges that the pledge of the Membership Interests in the Company made by the Member in connection with any financing agreement, note, pledge agreement or security agreement shall be a pledge not only of profits and losses of the Company, but also a pledge of all rights and obligations of the member. Upon a foreclosure, sale or other transfer of the limited liability company interest of the Company pursuant to any financing
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agreement, note, pledge agreement or security agreement, the successor Member may transfer its interests in the Company. Notwithstanding any provisions contained herein to the contrary, the Member shall be permitted to pledge and, upon any foreclosure of such pledge (or any other sale or transfer of the Membership Interests in the Company in lieu of such foreclosure), to transfer to the secured party foreclosing on such interests (or to the purchaser or other transferee of the Membership Interests in lieu of such foreclosure) its rights and powers to manage and control the affairs of the Company pursuant and subject to the terms of any financing agreement, note, pledge agreement or security agreement.
Section 5.5 Additional Issuances. Notwithstanding anything to the contrary contained herein, for so long as any amounts remain outstanding under any financing agreement, note, pledge agreement or security agreement, in each case, pursuant to which the Member has pledged its Membership Interests as collateral security for obligations of the Member and/or its affiliates, the Member shall not, without the prior written consent of the secured party thereunder, issue and shall not permit the issuance of, any additional Membership Interests of the Company other than its initial issuance of Membership Interests issued on or prior to the date of this Agreement, provided that additional Membership Interests of the Company may be issued, so long as such additional Membership Interests are pledged to the secured party under such financing agreement, note, pledge agreement or security agreement.
Section 5.6 Bankruptcy. Notwithstanding any other provision of this Agreement, (a) the bankruptcy or insolvency of the Member shall not cause the Member to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue without dissolution, and (b) the Member waives any right it might have to agree in writing to dissolve the Company upon the bankruptcy or insolvency of the Member, or the occurrence of an event that causes the Member to cease to be a member of the Company.
ARTICLE VI
DISSOLUTION AND LIQUIDATION
Section 6.1 Events Triggering Dissolution. The Company shall dissolve and commence winding up and liquidation upon the first to occur of any of the following:
| (a) | the written consent of the Member; or |
| (b) | the entry of a decree of judicial dissolution under the DLLCA. |
The Company shall not be dissolved for any other reason, including the Member becoming bankrupt or executing an assignment for the benefit of creditors.
Section 6.2 Liquidation. Upon dissolution of the Company in accordance with Section 6.1, the Company shall be wound up and liquidated by the Member or by a liquidating manager selected by the Member. The proceeds of such liquidation shall be applied and distributed in the following order of priority:
(a) to creditors, including the Member if it is a creditor, in the order of priority as established by law, in satisfaction of liabilities of the Company (whether by payment or the
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making of reasonable provision for payment thereof) other than liabilities for which reasonable provision for payment has been made and liabilities for distributions to the Member under the DLLCA; and then
(b) to the setting up of any reserves in such amount and for such period as shall be necessary to make reasonable provisions for payment of all contingent, conditional or unmatured claims and obligations known to the Company and all claims and obligations known to the Company but for which the identity of the claimant is unknown; and then
(c) to the Member, which liquidating distribution may be made to the Member in cash or in kind, or partly in cash and partly in kind.
Section 6.3 Certificate of Cancellation. Upon the dissolution of the Company and the completion of the liquidation and winding up of the Company’s affairs and business, the Member shall on behalf of the Company prepare and file a certificate of cancellation with the office of the Secretary of State of the State of Delaware, as required by the DLLCA. When such certificate is filed, the Company’s existence shall cease.
ARTICLE VII
ACCOUNTING AND FISCAL MATTERS
Section 7.1 Fiscal Year. The fiscal year of the Company shall be the calendar year.
Section 7.2 Method of Accounting. The Member shall select a method of accounting for the Company as deemed necessary or advisable and shall keep, or cause to be kept, full and accurate records of all transactions of the Company in accordance with sound accounting principles consistently applied.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Power to Indemnify in Actions, Suits or Proceedings. Subject to Section 8.6, the Company shall indemnify any Covered Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such Person is a Covered Person (each, a “Proceeding”), against any and all losses, claims, expenses (including attorneys’ fees), costs, liabilities, damages, judgments, fines and amounts paid in settlement actually and reasonably incurred by such Covered Person in connection with such Proceeding; provided, however, that such Covered Person shall not be indemnified by the Company if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which such Covered Person is seeking indemnification hereunder, and taking into account the acknowledgments and agreements set forth in this Agreement, such Covered Person committed bad faith, fraud or willful or intentional misconduct or criminal wrongdoing or, in the case of an Officer (in such Person’s capacity as such), such Officer did not meet the applicable standard of conduct under Section 8.9(d). Any indemnification provided hereunder shall be satisfied solely out of the assets of the Company (including available insurance coverage, if any),
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as an expense of the Company and, accordingly, no Covered Person shall be subject to personal liability by reason of these indemnification provisions. “Covered Person” means the Member and any of its or the Company’s directors, managers, officers (including, for the avoidance of doubt, Officers), employees, members, agents or representatives.
Section 8.2 Authorization of Indemnification. Except as provided in Section 8.3, any indemnification under this Article VIII (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of a Covered Person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 8.1. The determination of whether a Covered Person has met the standard of conduct that entitled it to indemnification hereunder shall be made by the Member. To the extent that a Covered Person has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 8.1, or in defense of any claim, issue or matter therein, he, she or it shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him, her or it in connection therewith, without the necessity of authorization in the specific case.
Section 8.3 Expenses Payable in Advance. Upon written request by a Covered Person, the Company shall pay reasonable expenses incurred (or reasonably expected to be incurred) by such Covered Person in defending or investigating a Proceeding in advance of (a) the final disposition of such Proceeding and (b) the determination of whether such Covered Person has met the standard of conduct that entitles such Covered Person to indemnification hereunder; provided, however, that prior to payment (or advancement) by the Company of any such expenses, the Covered Person shall provide an unsecured undertaking to the Company to repay all such amounts if it shall ultimately be determined that such Covered Person is not entitled to be indemnified by the Company as authorized by this Article VIII.
Section 8.4 Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any agreement, contract, or pursuant to the consent of the Member or the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, it being the policy of the Company that indemnification of the Persons specified in Section 8.1 shall be made to the fullest extent permitted by applicable law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any Person who is not specified in Section 8.1, but whom the Company has the power or obligation to indemnify under the provisions of the DLLCA or otherwise.
Section 8.5 Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, inure to the benefit of the heirs, executors and administrators of a Covered Person. Any amendment, modification or repeal of this Section 8.5 or any provision hereof shall be prospective only and shall not in any way affect the limitations on liability of the Covered Persons, or terminate, reduce or impair the right of any past, present or future Covered Person, under and in accordance with the provisions of this Article VIII as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
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Section 8.6 Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification, the Company shall not be obligated to indemnify any Covered Person in connection with (i) a proceeding (or part thereof) initiated by such Covered Person on behalf of such Covered Person unless such proceeding (or part thereof) was authorized or consented to by the Member or (ii) any proceeding (or part thereof) initiated by the Company, other than a proceeding brought in accordance with Subchapter X of Chapter 18 of the DLLCA against such Covered Person, unless such proceeding (or part thereof) was authorized or consented to by the Member. Nothing in this Section 8.6 shall be deemed to apply to any breach of any employment agreement, any noncompetition, non-solicitation and confidentiality agreement or any relationship or agreement between a Covered Person and the Company or any of its Affiliates or any Proceeding arising from any such breach.
Section 8.7 Indemnification of Employees and Agents. The Company may, to the extent authorized from time to time by the Member, provide rights to indemnification and the advancement of expenses to employees and agents of the Company or its Subsidiaries similar to those conferred in this Article VIII to Covered Persons.
Section 8.8 Severability. The provisions of this Article VIII are intended to comply with the DLLCA. To the extent that any provision of this Article VIII authorizes or requires indemnification or the advancement of expenses contrary to the DLLCA or the Certificate, the Company’s power to indemnify or advance expenses under such provision shall be limited to that permitted by the DLLCA and the Certificate and any limitation required by the DLLCA or the Certificate shall not affect the validity of any other provision of this Article VIII.
Section 8.9 Waiver of Members’ Fiduciary Duties; Limitation of Liability.
(a) The Member, in its capacity as a Member, shall not have any fiduciary or other duty to the Company or any other Person that is a party to or is otherwise bound by this Agreement; provided, however, that, to the extent required by the DLLCA, nothing in this Agreement shall be deemed to waive or modify the implied contractual covenant of good faith and fair dealing.
(b) To the maximum extent permitted by applicable law, whenever the Member, in its capacity as a Member, is permitted or required to make a decision or take an action or omit to take an action (including wherever in this Agreement that the Member is permitted or required to make, grant or take a determination, a decision, consent, vote, judgment or action at its “discretion,” “sole discretion” or under a grant of similar authority or latitude), the Member shall be entitled to consider only such interests and factors, including its own, as it desires, and shall have no duty or obligation to give any consideration to any other interest or factors whatsoever. To the maximum extent permitted by applicable law, the Member shall not be liable to the Company for losses sustained or liabilities incurred as a result of any act or omission (in relation to the Company, any transaction, any investment or any business decision or action, including for breach of duties including fiduciary duties) taken or omitted by the Member, unless there has been
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a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of such act or omission, and taking into account the acknowledgments and agreements set forth in this Agreement, the Member engaged in bad faith, fraud or willful or intentional misconduct or criminal wrongdoing; provided, however, that the foregoing shall not limit or otherwise affect the Member’s liability with respect to a breach of the express terms of this Agreement applicable to the Member.
(c) Each Covered Person may rely, and shall incur no liability in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, paper, document, signature or writing reasonably believed by it to be genuine, and may rely on a certificate signed by an officer, agent or representative of any Person in order to ascertain any fact with respect to such Person or within such Person’s knowledge, in each case unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of such reliance, action or inaction, such Covered Person committed bad faith, fraud or willful or intentional misconduct or criminal wrongdoing.
(d) Each Officer (in such Person’s capacity as an Officer) shall have such fiduciary duties that an officer of the Company would have if the Company were a corporation organized under the laws of the State of Delaware. To the maximum extent permitted by applicable law, no Officer (in such Person’s capacity as such) shall be liable to the Company or to the Member for losses sustained or liabilities incurred as a result of any act or omission (in relation to the Company, any transaction, any investment or any business decision or action, including for breach of duties including fiduciary duties) taken or omitted by such Officer (in such Person’s capacity as such), unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of such act or omission, and taking into account the acknowledgments and agreements set forth in this Agreement, such Officer (in such Person’s capacity as such) would have had such liability for such act or omission that an officer of the Company would have if the Company were a corporation organized under the laws of the State of Delaware.
(e) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, TO THE FULLEST EXTENT PERMITTED BY LAW, THE MEMBER (IN ITS CAPACITY AS A MEMBER) SHALL NOT BE LIABLE TO THE COMPANY OR TO ANY OTHER PERSON MAKING CLAIMS ON BEHALF OF THE FOREGOING FOR CONSEQUENTIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES, INCLUDING DAMAGES FOR LOSS OF PROFITS, LOSS OF USE OR REVENUE OR LOSSES BY REASON OF COST OF CAPITAL, ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE BUSINESS OF THE COMPANY OR ANY OF ITS CONTROLLED AFFILIATES, REGARDLESS OF WHETHER SUCH CLAIMS ARE BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, VIOLATION OF ANY APPLICABLE DECEPTIVE TRADE PRACTICES ACT OR SIMILAR LAW OR ANY OTHER LEGAL OR EQUITABLE DUTY OR PRINCIPLE, AND THE COMPANY HEREBY RELEASES THE MEMBER (IN ITS CAPACITY AS A MEMBER) FOR ANY SUCH DAMAGES.
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(f) Notwithstanding anything in this Agreement to the contrary, nothing in this Section 8.9 shall limit or waive any claims against, actions, rights to sue, other remedies or other recourse the Company, the Member or any other Person may have against any Officer for a breach of contract claim relating to any binding agreement, including this Agreement, any noncompetition, non-solicitation and confidentiality agreement and any employment agreement.
Section 8.10 Indemnitor of First Resort. As a result of agreements or obligations arising outside of this Agreement, it may be the case that certain of the Covered Persons (collectively, the “Member Indemnitees”) have certain rights to indemnification, advancement of expenses or insurance provided by the Member or certain of its Affiliates (collectively, the “Member Indemnitors”). However, regardless of whether or not there are any such rights to indemnification, advancement of expenses or insurance provided by any Member Indemnitor, (i) the Company is the indemnitor of first resort (i.e., the Company’s obligations to the Member Indemnitees are primary and any obligation of the Member Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any Member Indemnitee are secondary), (ii) the Company shall be required to advance the full amount of expenses incurred by the Member Indemnitees and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement (or any other agreement between the Company and the Member Indemnitees) and (iii) the Company hereby irrevocably waives, relinquishes and releases each of the Member Indemnitors from any and all claims against any of the Member Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. Regardless of any advancement or payment by the Member Indemnitors on behalf of any Member Indemnitee with respect to any claim for which a Member Indemnitee has sought indemnification from the Company, (A) the foregoing shall not be affected and (B) the Member Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Member Indemnitee against the Company.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Binding Effect. Except as otherwise provided in this Agreement to the contrary, this Agreement shall be binding upon and inure to the benefit of the Member and, subject to Article V, its successors and assigns.
Section 9.2 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.
Section 9.3 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.
Section 9.4 Amendment. The Member may amend this Agreement pursuant to a duly executed written instrument from time to time.
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Section 9.5 Construction. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine, and neuter. All references to Articles and Sections refer to articles and sections of this Agreement. All references to Schedules are to schedules attached to this Agreement, each of which is made a part of this Agreement for all purposes and all references to “including” shall be construed as meaning “including without limitation.” All references to dollars refer to United States dollars. All references to “federal” or “Federal” mean U.S. federal or U.S. Federal, respectively. The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular section or article in which such words appear. Unless the context requires otherwise, the word “or” shall not be exclusive. Unless the context requires otherwise, all references to laws, regulations, contracts, agreements and instruments refer to such laws, regulations, contracts, agreements and instruments as they may be amended from time to time, and references to particular provisions of laws or regulations include a reference to the corresponding provisions of any succeeding law or regulation. The Article, Section and Schedule titles and headings in this Agreement are inserted for convenience only and are not intended to be part of, or to affect the meaning or interpretation of this Agreement.
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The Member has signed this Agreement on and as of the date first set forth above.
| MEMBER: | ||
| PROFRAC HOLDINGS II, LLC | ||
| By: | /s/ Matthew D. Wilks | |
| Name: | Matthew D. Wilks | |
| Title: | President | |
LLC Agreement of U.S. Well Services Holdings, LLC
Exhibit 10.1
MASTER REORGANIZATION AGREEMENT
This Master Reorganization Agreement (this “Agreement”), dated as of November 1, 2022 (the “Effective Date”), is entered into by and among ProFrac Manufacturing, LLC, a Texas limited liability company (“ProFrac Manufacturing”), ProFrac Services, LLC, a Texas limited liability company (“ProFrac Services”), U.S. Well Services Holdings, LLC, a Delaware limited liability company (“U.S. Well Services Holdings”), USWS Holdings LLC, a Delaware limited liability company (“USWS Holdings”), U.S. Well Services, LLC, a Delaware limited liability company (“U.S. Well Services”), USWS Fleet 10, LLC, a Delaware limited liability company (“USWS Fleet 10”), and USWS Fleet 11, LLC, a Delaware limited liability company (“USWS Fleet 11”). Each of ProFrac Manufacturing, ProFrac Services, U.S. Well Services Holdings, USWS Holdings, U.S. Well Services, USWS Fleet 10, and USWS Fleet 11 is individually referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, on June 21, 2022, U.S. Well Services, Inc., ProFrac Holdings, Inc. (“Parent”) and Thunderclap Merger Sub I, Inc., an indirect subsidiary of Parent (“Merger Sub”) entered into that certain an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which U.S. Well Services, Inc. would merge with and the Merger Sub with U.S. Well Services, Inc. surviving the merger as the surviving corporation and wholly owned by Thunderclap Intermediate, Inc. (“Intermediate”), an indirect subsidiary of Parent (the “Merger”);
WHEREAS, on November 1, 2022, the Merger was consummated and promptly thereafter, U.S. Well Services, Inc. converted from a Delaware corporation into U.S. Well Services Holdings pursuant to a certificate of conversion and accompanying Certificate of Formation filed with the State of Delaware on November 1, 2022 (the “Certificate”) in accordance with provisions of the Delaware Limited Liability Company Act (the “Conversion”);
WHEREAS, immediately following the Conversion, Intermediate contributed all of the limited liability company interests in U.S. Well Services Holdings to ProFrac Holdings, LLC (“ProFrac Holdings”), a subsidiary of Parent (the “Initial Transfer”);
WHEREAS, immediately following the Initial Transfer, ProFrac Holdings contributed all of the limited liability company interests in U.S. Well Services Holdings to ProFrac Holdings II, LLC, a wholly owned subsidiary of ProFrac Holdings (the “Secondary Transfer”);
WHEREAS, following the Secondary Transfer, the Parties desire to enter into this Agreement to accomplish the reorganization of certain assets and liability among the related Parties.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
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ARTICLE 1
REORGANIZATION TRANSACTIONS
Section 1.1 Assets and Liabilities Contribution.
(a) Effective as of immediately following the Secondary Transfer, U.S. Well Services Holdings, USWS Holdings, U.S. Well Services, USWS Fleet 10, and USWS Fleet 11 (each a “USWS Member” and collectively “USWS”), shall and does hereby transfer and assign all right, title and interest in the assets of USWS, with the exception of those contracts discussed in Section 1.1(b), and those certain assets, liabilities, contracts, and rights discussed in Section 1.1(c), to ProFrac Manufacturing, and ProFrac Manufacturing shall and does hereby accept such transfer and assignment and undertake to perform and discharge any and all of the obligations associated therewith from and after such transfer and assignment that are attributable to the assets of USWS being contributed under this Section 1.1(a).
(b) Additionally, each USWS Member shall and does hereby transfer and assign all right, title and interest in the contracts of each such USWS Member, with the exception those assets discussed in Section 1.1(a), and those assets, liabilities, contracts, and rights discussed in Section 1.1(c), to ProFrac Services, and ProFrac Services shall and does hereby accept such transfer and assignment and assumes and undertakes to perform and discharge any and all of the obligations associated therewith from and after such transfer that are attributable to the contracts of USWS being contributed under this Section 1.1(b). Notwithstanding the foregoing or anything to the contrary herein, in the event that the transfer of any contract of any USWS Member requires the consent of the counter parties thereto prior to such transfer or would otherwise cause a default under, acceleration of rights or violation of such contract (each a “Restricted Contract”), such Restricted Contract shall not be transferred or assumed pursuant to the terms hereof until such time as the applicable USWS Member(s) has received the consent of the counterparties thereto or the applicable USWS Member(s) and ProFrac Services have otherwise agreed in writing to transfer such contract.
(c) Specifically excluded from the contributions described in Section 1.1(a) and Section 1.1(b), are the assets, liabilities, contracts, and rights listed in Exhibit A to this Agreement, which such assets, liabilities, contracts and/or rights hereby remain with the subject USWS entity or entities unless the Parties otherwise agree in writing to subject any of the assets, liabilities, contracts or rights listed in Exhibit A to the provisions of Section 1.1(a) or 1.1(b) of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of All Parties. Each Party hereby, severally and not jointly with any other Party, represents and warrants to the other Parties as follows:
(a) Authority. Such Party has the requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution of this Agreement and the consummation of the transactions contemplated
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hereby have been duly and validly authorized by all required action on the part of such Party, and no other proceedings on the part of the Party are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby.
(b) Binding Effect. This Agreement has been duly executed and delivered by such Party, and assuming the due authorization, execution and delivery of this Agreement by the other Parties, this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms.
(c) Non-Contravention. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, do not and will not (i), if such Party is an entity, violate, conflict with or result in any breach of any provision of the organizational documents of the Party or (ii) violate any applicable law.
(d) Title To Purchased Assets/Assigned Contracts.
| (i) | If the Party is a Party transferring or assigning any of the assets, such Party owns or has the exclusive right to the applicable assets free and clear of all liens, encumbrances, security interests, equities, charges or claims. |
| (ii) | Each contract transferred and assigned hereby is valid and binding on, and enforceable against, the transferring USWS Member and each other party thereto in accordance with its terms and is in full force and effect. |
(e) Bankruptcy. There are no bankruptcy, reorganization, receivership or other insolvency type proceedings pending, being contemplated by or, to such Party’s knowledge, threatened against such Party.
(f) Litigation. No suit, action or litigation by any person by or before any tribunal or governmental authority is pending or, to such Party’s knowledge, threatened against such Party or its affiliates that would, individually or in the aggregate, reasonably be expected to have a material adverse effect upon the ability of such Party to perform its obligations hereunder or consummate the transactions contemplated hereby.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Headings; References; Interpretation. The heading references herein are for convenience purposes only, do not constitute a part of this Agreement, and shall not be deemed to limit or affect any of the provisions hereof. References to “Articles,” “Sections” or “Exhibits” means the Articles, Sections or Exhibits to this Agreement, as the case may be, except as may be otherwise specified. The Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. As used in this Agreement, (i) the words “hereof,” “herein,” “hereby,” “hereto” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement, (ii) the word “including,” and words of similar import, means “including, but not
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limited to” and “including, without limitation,” (iii) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (iv) the word “or” is not exclusive, and (v) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.
Section 3.2 Consents. To the extent required under law or the governing documents of any of the Parties, the Parties acknowledge that this Agreement constitutes the written consent of the relevant Parties to each of the agreements and transactions contemplated by this Agreement, including by each of the Parties in its capacity as an equity holder of any other Party.
Section 3.3 Further Assurances. From time to time after the Effective Date, and without any further consideration, the Parties agree to execute and deliver such documents, instruments and assurances of transfer, conveyance, assignment and assumption, and take such further actions as may reasonably be necessary or desirable to carry out and effectuate the provisions of this Agreement.
Section 3.4 Successors and Assigns; No Third Party Rights. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. This Agreement is not intended to, and does not, create rights in any other person, and no person is or is intended to be a third-party beneficiary of any of the provisions of this Agreement.
Section 3.5 Non-Recourse and Limitation of Liability. This Agreement shall be enforceable only against, and any action, liability, suit or proceeding based upon, arising under, out of or in connection with, or related in any manner to this Agreement or the transactions contemplated hereby shall be brought only against the Parties, and then only with respect to the specific obligations set forth in this Agreement applicable to such Party. No person or entity that is not a Party, including any past, present or future representative or affiliate of a Party or any affiliate of any of the foregoing (each, a “Nonparty Affiliate”), shall have any liability (whether in contract, tort, strict liability, at law, in equity or otherwise) for any actions, liabilities or other obligations arising under, out of or in connection with, or related in any manner to this Agreement or the transactions contemplated hereby. To the extent permitted by applicable law, each Party hereby (a) waives and releases all such actions, liabilities and other obligations against any such Nonparty Affiliates, (b) waives and releases any and all actions, liabilities, rights, remedies or demands that may otherwise be available to avoid or disregard the entity form of a Party or otherwise impose the liability of a Party on any Nonparty Affiliate, whether granted by law or based on theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization or otherwise, and (c) disclaims any reliance upon any Nonparty Affiliates with respect to the performance of this Agreement and any representation or warranty made in, in connection with or as an inducement hereto.
Section 3.6 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and, in the case of an amendment, signed by the Parties. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No failure or delay by any Party in exercising any right, remedy, power or privilege arising hereunder shall operate or be construed as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
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Section 3.7 Entire Agreement. This Agreement (including Exhibits) constitutes the entire agreement among the Parties with respect to the subject matter contained herein and therein and supersedes all prior and contemporaneous agreements and understandings, oral or written, with respect to such subject matters.
Section 3.8 Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Texas, without giving effect to the conflicts of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.8.
Section 3.9 Severability. If any term or provision of this Agreement, or the application thereof to any person or any circumstance, is invalid, illegal or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity, illegality or unenforceability, nor shall such invalidity, illegality or unenforceability in any jurisdiction affect the validity, legality or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 3.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement. A signed copy of this Agreement delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by each of the Parties as of the date first written above.
| PROFRAC MANUFACTURING, LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
| PROFRAC SERVICES, LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
| U.S. WELL SERVICES HOLDINGS, LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
| USWS HOLDINGS LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
| U.S. WELL SERVICES, LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
| USWS FLEET 10, LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
| USWS FLEET 11, LLC | ||
| By: | /s/ Robert J. Willette | |
| Name: | Robert J. Willette | |
| Title: | Secretary | |
EXHIBIT A
Excluded Assets, Liabilities, and/or Contracts
In accordance with the terms of the Agreement, the following are excluded from the contributions and transfers discussed within, and accomplished by, the Agreement unless otherwise agreed to in writing by the parties hereto:
| 1. | All Company Intellectual Property Rights (as defined in the Merger Agreement), including all litigation related thereto. |
A - 1