amended (the “Exchange Act”), to use its commercially reasonable efforts to file a registration statement on or before August 1, 2020 (the “Initial Registration Statement”), and to cause the Initial Registration Statement to become effective no later than four months following the filing of the Initial Registration Statement. In the event that the Company ceases to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act prior to the filing of the Initial Registration Statement, the Registration Rights Agreement requires the Company to use its commercially reasonable efforts to file a registration statement within four months after the day it again becomes subject to Section 13 or 15(d) of the Exchange Act. In certain circumstances, including in the context of a future initial public offering following a period in which the Company has no longer been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and subject to customary qualifications and limitations, the holders of Registrable Securities will have piggyback registration rights on offerings of Class A Common Stock initiated by the Company, and selling Purchasers will have rights to request that the Company initiate up to two Underwritten Offerings (as defined in the Registration Rights Agreement) of Registrable Securities in any365-day period.
Amendment to Term Loan Agreement
On April 1, 2020, the Company, U.S. Well Services, LLC (the “Borrower”), a subsidiary of the Company, and all of the other subsidiaries of the Company entered into a Second Amendment (the “Term Loan Amendment”) to the Senior Secured Term Loan Credit Agreement (the “Term Loan Facility”) with CLMG Corp., as administrative and collateral agent (the “Term Loan Agent”), and the lenders party thereto.
Pursuant to the Term Loan Amendment, the interest rate on amounts outstanding under the Term Loan Facility was reduced to 0.0% and scheduled principal amortization payments will be suspended for the period beginning April 1, 2020 and ending March 31, 2022. Beginning April 1, 2022, the Term Loan Facility, as amended by the Term Loan Amendment, will resume incurring interest at the applicable LIBOR rate, subject to a 2.0% floor, plus 8.25%, and scheduled principal amortization payments equal to 0.5% of the initial principal balance of the term loans will resume on a quarterly basis commencing June 30, 2022. Additionally, pursuant to the Term Loan Amendment, certain other covenants were amended including, but not limited to, covenants relating to collateral inspections and excess cash flow, and the maturity date for the Term Loan Facility was extended for 18 months to November 27, 2025.
In exchange for entering into the Term Loan Amendment, the lenders under the Term Loan Facility received an extension fee comprised of a $20 million cash payment, 1,050 shares of Series B Preferred Shares and 5,529,622 shares of Class A Common Stock of the Company.
Amendment ABL Credit Agreement
On April 1, 2020, the Company, the Borrower and all of the other subsidiaries of the Company entered into the First Amendment (the “ABL Amendment”) to the ABL Credit Agreement (the “ABL Facility”) with the lenders party thereto and Bank of America, N.A., as the administrative agent, swing line lender and letter of credit issuer.
Pursuant to the ABL Amendment, the aggregate revolving commitment under the ABL Facility was reduced from $75 million to $60 million, the maturity date was extended from May 7, 2024 to April 1, 2025, and the interest rate margin applicable to borrowings under the ABL Facility was increased by 0.50% per annum. In addition, the borrowing base under the ABL Facility was amended to include a FILO Amount (as defined in the ABL Amendment) which increases borrowing base availability by up to the lesser of (i) $4,000,000 and (ii) 5.0% of the value of eligible accounts receivable, subject to scheduled monthly reductions. Loans under the ABL Facility which are advanced in respect of the FILO Amount accrue interest at a rate that is 1.50% higher than the rate applicable to other loans under the ABL Facility, and may be repaid only after all other loans under the ABL Facility have been repaid.
The foregoing descriptions of the Purchase Agreement, Certificate of Designations, Registration Rights Agreement, Term Loan Amendment and ABL Amendment do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements, which are filed herewith as Exhibit 10.1, Exhibit 3.1, Exhibit 4.1, Exhibit 10.2 and Exhibit 10.3, respectively, to this Current Report on Form8-K and are incorporated herein by reference.
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