U.S. WELL SERVICES, INC. Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On
The Merger Agreement and the transactions contemplated thereby were unanimously
approved by the Board of Directors of the Company and the Board of Directors of
ProFrac on
Conversion of
Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein:
• At the effective time of the Merger (the "Effective Time"), each share of
Class A common stock of the Company, par value $0.0001 per share (the
"Company Common Stock") will be converted automatically into the right to
receive 0.0561 (the "Exchange Ratio") shares of Class A common stock of
ProFrac, par value $0.01 per share (the "PFHC Common Stock") (the "Merger
Consideration").
• The Company will take all requisite action so that, effective as of
immediately prior to the Effective Time:
• (i) each holder of Series A Redeemable Convertible Preferred Stock of
the Company, par value $0.0001 per share, (the "Company Series A
Preferred Stock") issued and outstanding at such time may convert such
stock into shares of Company Common Stock at the Merger Conversion
Ratio (as defined in the Merger Agreement), and (ii) any shares of
Company Series A Preferred Stock issued and outstanding immediately
prior to the Effective Time not so converted at the Merger Conversion
Ratio will automatically convert into shares of Company Common Stock
at the then-effective conversion rate as calculated pursuant to the
Company'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 will automatically
convert into a number of shares of Company 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 the date immediately prior to
the Closing Date, by (ii) $1.22 .
• 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) issued
and outstanding immediately prior to the Effective Time (which shall be
held by ProFrac pursuant to the Warrant Sale, as such term is defined and
described below) will be automatically canceled and will cease to exist
and no consideration will be delivered in exchange therefor.
• At the Effective Time, each SPAC Warrant, Series A Warrant, Placement
Agent Warrant and RDO Warrant (as such terms are defined in the Merger
Agreement) issued and outstanding immediately prior to the Effective Time
(collectively, the "Rollover Warrants"), in accordance with the terms of
such Rollover Warrants, will be canceled and converted into the right to
receive a warrant to purchase a number of shares of PFHC Common Stock
equal to (i) the number of shares of Company Common Stock underlying such
Rollover Warrant multiplied by (ii) the Exchange Ratio. The exercise
price of such Rollover Warrants will be the exercise price of such
Rollover Warrant divided by the Exchange Ratio.
Treatment of Company Stock-Based Awards
The Company will take all requisite action so that:
• at the Effective Time, each share of Company Common Stock subject to
vesting, repurchase, or other lapse of restrictions that is outstanding
and unvested under the Company's Amended and Restated 2018 Stock
Incentive Plan (the "Company LTIP") immediately prior to the Effective
Time will, by virtue of the Merger and without any action on the part of
the holder thereof, be canceled in exchange for the right to receive the
Merger Consideration and, in lieu of any fractional shares, cash.
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• 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 Company Common Stock granted under the Company LTIP
(each, a "DSU"), will, by virtue of the Merger and without any action on
the part of the holder thereof, be canceled and converted into the right
to receive the Merger Consideration and, in lieu of any fractional
shares, cash (treating such DSU in the same manner as if it were an
outstanding share of Company Common Stock for such purposes).
• 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) shall be canceled and converted into the right to receive
(A) for recipients of Pool A Performance Awards who consent 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 $1.22 , 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
$1.22 ; and (ii) each then-outstanding Pool B Performance Award (as
defined in the Merger Agreement) shall be 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
$1.078 , 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 $1.078 .
Merger Consideration; Material Relationship
Based on the closing price of PFHC Common Stock (as reported on the Nasdaq
Global Select Market) of
Representations, Warranties and Covenants
The parties to the Merger Agreement have made representations, warranties and covenants that are customary for transactions of this nature. The representations and warranties of the respective parties to the Merger Agreement will not survive the closing of the Merger.
The Merger Agreement includes customary covenants of the parties, including, among others, covenants (a) for the parties to conduct their respective businesses in the ordinary course during the interim period between the date of the execution of the Merger Agreement and the consummation of the Merger, (b) that the parties not engage in certain kinds of transactions during the interim period between the date of the execution of the Merger Agreement and the consummation of the Merger, (c) that ProFrac use commercially reasonable efforts to obtain and consummate a financing to fund the repayment in connection with the closing of the Merger of certain indebtedness of the Company and its subsidiaries as promptly as reasonably possible following the date of the Merger Agreement, (d) that the Company reasonably cooperate with such financing efforts and (d) providing for the Company and ProFrac to cooperate in the preparation, . . .
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers' Compensatory Arrangements of Certain
officers
As described above, in connection with the entry into the Merger Agreement the
Company entered into certain amendments to Pool A Performance Awards and Pool B
Performance Awards (the "Performance Award Amendments") with certain holders of
such awards, including
The foregoing description of the Performance Award Amendments does not purport to be complete and is qualified in its entirety by reference to the complete text of the form of Performance Award Amendment which is filed as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofJune 21, 2022 , by and amongU.S. Well Services, Inc. , ProFrac Holding Corp. andThunderclap Merger Sub I, Inc. * 10.1 Form of First Amendment to the Series A Certificate of Designations. 10.2 Form of First Amendment to Convertible Senior Secured (Third Lien) PIK Note. 10.3 Letter Agreement, datedJune 21, 2022 , by and among the Company, the other Loan Parties party thereto, and the Term Loan C Lenders party thereto 10.4 Form of Amendment to Performance Award Agreement. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
.* 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
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