Exhibit 10.3

Execution Copy

FIRST AMENDMENT TO

ABL CREDIT AGREEMENT

THIS FIRST AMENDMENT TO ABL CREDIT AGREEMENT (this “Amendment”), dated as of
April 1, 2020, is by and among U.S. WELL SERVICES, LLC, a Delaware limited
liability company (the “Borrower”), each Guarantor (as defined in the below
referenced Credit Agreement) party hereto, U.S. WELL SERVICES, INC., a Delaware
corporation (“Parent”), each Lender (as defined in the below referenced Credit
Agreement) party hereto, and BANK OF AMERICA, N.A., as agent for the Lenders
(“Administrative Agent”), a Swing Line Lender and an L/C Issuer.

W I T N E S S E T H

WHEREAS, Borrower is a party to that certain ABL Credit Agreement, dated as
May 7, 2019 (as amended, restated, extended, supplemented or otherwise modified,
the “Credit Agreement”), among Borrower, the other Loan Parties party thereto,
the Administrative Agent and the Lenders;

WHEREAS, the Loan Parties have requested that the Lenders amend certain
provisions of the Credit Agreement to (i) extend the maturity date, and
(ii) make certain borrowing base and other modifications to the Credit
Agreement, subject to the terms and conditions contained herein; and

WHEREAS, the Lenders are willing to make such amendments to the Credit
Agreement, in accordance with and subject to the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT

1.1    Defined Terms. Any and all initially capitalized terms used in this
Amendment (including, without limitation, in the Recitals to this Amendment)
without definition shall have the respective meanings specified in the Credit
Agreement.

1.2    New Definitions. The following definitions are hereby added to
Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

“Base Rate FILO Loan” shall mean a FILO Loan that bears interest based on the
Base Rate.

“FILO Amount”: (a) the lesser of (i) $4,000,000 and (ii) 5% of the Value of
Eligible Accounts; provided, that, notwithstanding anything else contained
herein, commencing on the October 1, 2020, the amount set forth in clause (a)(i)
above and the percentage set forth in clause

 

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(a)(ii) above shall be reduced by $222,222 per month with respect to clause
(a)(i) and 0.278% per month with respect to clause (a)(ii) until reduced to zero
in each case.

“FILO Loan” has the meaning specified in Section 2.01.

“First Amendment Date” shall mean April 1, 2020.

“LIBOR FILO Loan” means a FILO Loan that bears interest based on LIBOR.

1.3    Amendment to Certain Definitions. The below definitions of set forth in
Section 1.01 of the Credit Agreement are hereby amended and restated in their
entirety to read as follows:

“Aggregate Commitments” means the Commitments of all the Lenders. As of the
Closing Date, the Aggregate Commitments were $75,000,000. As of the First
Amendment Date, the Aggregate Commitments are $60,000,000.

“Applicable Rate” means the applicable percentage per annum set forth below for
each fiscal quarter (each an “Applicable Quarter”) determined by reference to
the average daily Availability as a percentage of the Borrowing Base during the
fiscal quarter immediately preceding such Applicable Quarter (as to each
Applicable Quarter, the “Reference Quarter”) as determined by the Administrative
Agent based on the Borrowing Base Certificates delivered by the Borrower to the
Administrative Agent:

 

Applicable Rate

Pricing Level

     Average Daily
Availability as a
Percentage of the
Borrowing Base      LIBOR Rate
Revolving Credit
Loans (other than
FILO Loans) &
Letter of Credit Fee      Base Rate Loan
(Other than
FILO Loans)      LIBOR Rate
FILO Loan      Base Rate
FILO Loan 1      ³66%      2.00%      1.00%      3.50%      2.50% 2     
³33% but <66%      2.25%      1.25%      3.75%      2.75% 3      <33%      2.50%
     1.50%      4.00%      3.00%

Any increase or decrease in the Applicable Rate for any Applicable Quarter
resulting from a change in the average daily Availability for the applicable
Reference Quarter shall become effective as of the first day of the first
calendar month in the Applicable Quarter. If the Administrative Agent is unable
to calculate average daily Availability for any Reference Quarter due to the
Borrower’s failure to deliver any Borrowing Base Certificate when required
pursuant to Section 6.01(e), then, at the option of the Administrative Agent or
the

 

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Required Lenders, Pricing Level 3 shall apply during the Applicable Quarter
until the first day of the calendar month following delivery of such Borrowing
Base Certificate.

“Borrowing Base” means, on any date of determination, an amount equal to the
lesser of (a) the Aggregate Commitments; or (b) the sum, without duplication, of
the following:

 

  (i)

85% of the Value of Eligible Accounts,

 

  (ii)

plus the lesser of (A) 80% of the Value of Eligible Unbilled Accounts or (B)
$15,000,000,

 

  (iii)

plus the FILO Amount,

 

  (iv)

minus the Availability Reserve.

No Borrowing Base calculation shall include the ABL Priority Collateral acquired
in a Permitted Acquisition or otherwise outside the ordinary course of business
until completion of applicable field examinations reasonably satisfactory to
Administrative Agent (which shall not be included in the limits provided in
Section 6.10(b).

“LIBOR” means the per annum rate of interest (rounded up to the nearest 1/8th of
1%) determined by the Administrative Agent at or about 11:00 a.m. (London time)
two Business Days prior to an Interest Period, for a term equivalent to such
period, equal to the London interbank offered rate, or comparable or successor
rate approved by the Administrative Agent, as published on the applicable
Reuters screen page (or other commercially available source designated by the
Administrative Agent from time to time); provided that any comparable or
successor rate shall be applied by the Administrative Agent, if administratively
feasible, in a manner consistent with market practice; and provided further,
that if, for any Interest Period, the per annum rate of interest determined by
the Administrative Agent for the London interbank offered rate or any comparable
or successor rate is less than 1.0%, then LIBOR shall be 1.0%.

“Maturity Date” means (a) the earlier of April 1, 2025 and (b) the date that is
the 91st day prior to the maturity date of the Term Loan Indebtedness; provided,
however, that in each case, if such date is not a Business Day, the Maturity
Date shall be the next preceding Business Day.

“Measurement Period” means, (i) at any date of determination occurring on or
after the First Amendment Date and on or prior to March 31, 2021, the period
commencing on April 1, 2020 and ending on such date of determination, and
(ii) at any other date of determination, (a) the most recently completed four
fiscal quarters of Parent if a Monthly

 

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Financial Reporting Trigger Period is not then in effect and has not been in
effect for the preceding 30 days or (b) at any other time, the most recently
completed twelve calendar months.

“Weekly BBC Trigger Period” means (i) the period beginning on the First
Amendment Date and continuing until the Administrative Agent’s receipt of a
Borrowing Base Certificate for the month ended May 31, 2020 in accordance
herewith, and (ii) at all other times, the period (a) commencing on the day that
(I) an Event of Default occurs, or (II) for a period of 5 consecutive Business
Days, Availability is less than the greater of (x) 12.5% of the Borrowing Base
or (y) $9,375,000 and (b) continuing until, during each of the preceding 30
consecutive days, no Event of Default has existed and Availability has at all
times exceeded the greater of (i) 12.5% of the Borrowing Base and (ii)
$9,375,000.

1.4    Amendment to Section 2.01. Section 2.01 is hereby amended and restated in
its entirety as follows:

“2.01 The Loans. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a “Revolving Credit
Loan”) to the Borrower from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Lender’s Commitment; provided, however, that
after giving effect to any Revolving Credit Borrowing, (i) the Total
Outstandings shall not exceed the Borrowing Base and (ii) the aggregate
Outstanding Amount of the Revolving Credit Loans of any Lender, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations,
plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing
Line Loans shall not exceed such Lender’s Commitment. Notwithstanding anything
to the contrary in this Agreement, all Revolving Credit Loans outstanding from
and after the First Amendment Date up to the FILO Amount (until the FILO Amount
is $0) shall be deemed to be “FILO Loans”. Within the limits of the Borrowing
Base, and subject to the other terms and conditions hereof, the Borrower may
borrow under this Section 2.01, prepay under Section 2.05, and reborrow under
this Section 2.01. Revolving Credit Loans may be Base Rate Loans or LIBOR Loans,
as further provided herein; provided, however, any Revolving Credit Borrowings
made on the Closing Date or any of the three (3) Business Days following the
Closing Date shall be made as Base Rate Loans unless the Borrower delivers a
funding indemnity letter reasonably acceptable to the Administrative Agent not
less than three (3) Business Days prior to the date of such Revolving Credit
Borrowing.”

 

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1.5    Amendment to Section 2.12 Section 2.12 is hereby amended by adding new
subsection (g) to read in its entirety as follows:

“(g) Payments with respect to FILO Loans. Notwithstanding anything to the
contrary in this Agreement, any payment in respect of Revolving Credit Loans
shall be applied first to the Revolving Credit Loans that are not FILO Loans
until repaid in full, and then applied to FILO Loans.”

1.6    Amendment to Article X. Article X is hereby amended by adding the
following Section 10.27 to read in its entirety as follows:

“10.27    Acknowledgement Regarding Supported QFCs.

To the extent that the Loan Documents provide support, through a guarantee or
otherwise, for any Swap Contract or any other agreement or instrument that is a
QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”),
the parties acknowledge and agree as follows with respect to the resolution
power of the Federal Deposit Insurance Corporation under the Federal Deposit
Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (together with the regulations promulgated thereunder, the “U.S.
Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit
Support (with the provisions below applicable notwithstanding that the Loan
Documents and any Supported QFC may in fact be stated to be governed by the laws
of the State of New York and/or of the United States or any other state of the
United States):

Covered Party. If a Covered Entity that is party to a Supported QFC (each, a
“Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, transfer of such Supported QFC and the benefit of such QFC Credit
Support (and any interest and obligation in or under such Supported QFC and such
QFC Credit Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective to the same
extent as the transfer would be effective under the U.S. Special Resolution
Regimes if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United
States or a state of the United States. If a Covered Party or BHC Act Affiliate
of a Covered Party becomes subject to a proceeding under a U.S. Special
Resolution Regime, Default Rights under the Loan Documents that might otherwise
apply to such Supported QFC or any QFC Credit Support that may be exercised
against such Covered Party are permitted to be exercised to no greater extent
than such Default Rights could be exercised under the U.S. Special Resolution
Regimes if the Supported QFC and Loan Documents were governed by the laws of the
United States or a state of the United States. Without limitation of the
foregoing, it is understood and agreed that rights

 

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and remedies of the parties with respect to a defaulting lender shall in no
event affect the rights of any Covered Party with respect to a Supported QFC or
any QFC Credit Support.

Definitions. As used in this Section, (a) “BHC Act Affiliate” means an
“affiliate,” as defined in and interpreted in accordance with 12 U.S.C. § 1841
(k); (b) “Default Right” has the meaning assigned in and interpreted in
accordance with 12 C.F.R. §§252.81 , 47.2 or 382.1, as applicable; and (c) “QFC”
means a “qualified financial contract,” as defined in and interpreted in
accordance with 12 U.S.C. § 5390 (c)(8)(D).”

1.7    Replacement of Schedule 1.01(a). Schedule 1.01(a) to the Credit Agreement
is hereby deleted and replaced with the Schedule 1.01(a) attached hereto.

1.8    Replacement of Schedule 1.01(c). Schedule 1.01(c) to the Credit Agreement
is hereby deleted and replaced with the Schedule 1.01(c) attached hereto.

1.9    Replacement of Schedule 10.02. Schedule 10.02 to the Credit Agreement is
hereby deleted and replaced with the Schedule 10.02 attached hereto.

1.10    Replacement of Exhibit J. Exhibit J to the Credit Agreement is hereby
deleted and replaced with the Exhibit J attached hereto.

ARTICLE II

CONDITIONS TO EFFECTIVENESS

2.1    Closing Conditions. This Amendment shall become effective as of the First
Amendment Date upon satisfaction of the following conditions (in each case, in
form and substance reasonably acceptable to the Administrative Agent):

(a)    Executed Amendment. The Administrative Agent shall have received a copy
of this Amendment duly executed by each of the Loan Parties, the Lenders and the
Administrative Agent.

(b)    Default. After giving effect to this Amendment, no Default or Event of
Default shall exist.

(c)    Fees and Expenses.

(i)    The Administrative Agent shall have received from the Borrower an
amendment fee in the amount provided in the Fee Letter, dated as of the date
hereof (the “First Amendment Fee Letter”), by and among the Loan Parties and the
Administrative Agent.

(ii)    The Administrative Agent shall have received from the Borrower such
other fees and expenses that are payable in connection with the consummation of
the transactions contemplated hereby.

 

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(d)    Amendment to Term Loan Credit Agreement. The Administrative Agent shall
have received a copy of an amendment to the Term Loan Credit Agreement duly
executed by each of the Loan Parties, the lenders party thereto and the Term
Loan Agent, in form and substance reasonably satisfactory to the Administrative
Agent in its sole discretion.

(e)    Intentionally Omitted.

(f)    Equity Investment. The Administrative Agent shall have received evidence,
in form and substance reasonably satisfactory to the Administrative Agent in its
sole discretion, that the Borrower’s direct or indirect parent has received
Equity Proceeds from the issuance of Qualified Capital Stock on or about the
First Amendment Date resulting in Equity Proceeds, net of fees, costs and
expenses, of at least $20,000,000.

(g)    Secretary’s Certificate. The Administrative Agent shall have received a
certificate of the secretary or assistant secretary or similar officer of each
Loan Party dated the First Amendment Date and certifying that (i) no changes
have been made to the by-laws, limited partnership agreement, limited liability
company agreement or other equivalent governing document of each Loan Party
since the Closing Date, (ii) each Loan Party is authorized to execute, deliver
and perform under the Loan Documents as amended by this Amendment, (iii) no
changes have been made to the articles of incorporation, certificate of limited
partnership, certificate of formation or other equivalent governing document of
each Loan Party since the Closing Date, and (iv) to an attached copy of a
recently dated good standing certificate for each Loan Party from its state
organization.

(h)    Legal Opinion. The Administrative Agent shall have received an opinion of
Porter Hedges LLP, counsel for the Loan Parties dated the First Amendment Date
and addressed to the Administrative Agent and the Lenders which shall be in form
and substance reasonably satisfactory to the Administrative Agent.

(i)    Solvency Certificate. The Administrative Agent shall have received a
certificate from the Borrower attesting to the Solvency of each Material Loan
Party before and after giving effect to entering into this Amendment, the
transactions contemplated hereby and the payment of fees and expenses in
connection therewith, from its chief financial officer;

(j)    Officer’s Certificate. The Administrative Agent shall have received an
officer’s certificate executed by a Responsible Officer attesting that as of the
First Amendment Date the representations and warranties set forth in the Credit
Agreement are true and correct in all material respects (provided that any such
representations and warranties which are qualified by materiality, Material
Adverse Effect or similar language shall be true and correct in all respects
(after giving effect to such qualification)) as of such date, with the same
effect as

 

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though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects (provided that any such representations and warranties which are
qualified by materiality, Material Adverse Effect or similar language shall be
true and correct in all respects (after giving effect to such qualification)) as
of such earlier date).

ARTICLE III

MISCELLANEOUS

3.1    Amended Terms. On and after the First Amendment Date, all references to
the Credit Agreement in each of the Loan Documents shall hereafter mean the
Credit Agreement as amended by this Amendment. Except as specifically amended
hereby or otherwise agreed, the Credit Agreement is hereby ratified and
confirmed and shall remain in full force and effect according to its terms.

3.2    Representations and Warranties of Loan Parties. Each of the Loan Parties
represents and warrants as follows:

(a)    This Amendment has been duly executed and delivered by such Person and
constitutes such Person’s legal, valid and binding obligation, enforceable in
accordance with its terms, subject to (i) the effects of bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or other similar laws
affecting creditors’ rights generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (iii) implied covenants of good faith and fair dealing.

(b)    No action, consent or approval of, registration or filing with, or any
other action by, any Governmental Authority or any other Person is required in
connection with the execution, delivery or performance by such Person of this
Amendment, except for (a) the filing of Uniform Commercial Code financing
statements, (b) filings with the United States Patent and Trademark Office and
the United States Copyright Office, (c) recordation of any Mortgages (or
amendments thereto), (d) such as have been made or obtained and are in full
force and effect and (e) such actions, consents, approvals, registrations or
filings the failure to obtain or make which would not reasonably be expected to
have a Material Adverse Effect.

(c)    Immediately after giving effect to this Amendment, no event has occurred
and is continuing which constitutes a Default or an Event of Default.

3.3    Reaffirmation of Obligations. Each Loan Party hereby ratifies the Credit
Agreement and other Loan Documents and acknowledges and reaffirms (a) that it is
bound by all terms of the Credit Agreement and other Loan Documents applicable
to it and (b) that it is responsible for the observance and full performance of
its respective Obligations (to the extent specified in the Credit Agreement and
the other Loan Documents).

 

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3.4    Loan Document. This Amendment shall constitute a Loan Document under the
terms of the Credit Agreement.

3.5    Expenses. The Borrower agrees to pay all reasonable costs and expenses of
the Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including without limitation the reasonable fees and
expenses of the Administrative Agent’s legal counsel, in each case in accordance
with Section 10.04 of the Credit Agreement.

3.6    Further Assurances. The Loan Parties agree to promptly take such action,
upon the request of the Administrative Agent, as is necessary to carry out the
intent of this Amendment, in each case to the extent required by Section 6.15 of
the Credit Agreement.

3.7    Entirety. This Amendment and the other Loan Documents embody the entire
agreement among the parties hereto and supersede all prior agreements and
understandings, oral or written, if any, relating to the subject matter hereof.

3.8    Counterparts; Telecopy. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. Delivery of an
executed counterpart to this Amendment by telecopy or other electronic means
shall be effective as an original and shall constitute a representation that an
original will be delivered.

3.9    No Actions, Claims, Etc. As of the date hereof, each of the Loan Parties
hereby acknowledges and confirms that it has no knowledge of any actions, causes
of action, claims, demands, damages and liabilities of whatever kind or nature,
in law or in equity, against the Administrative Agent, the Lenders, or the
Administrative Agent’s or the Lenders’ respective officers, employees,
representatives, agents, counsel or directors arising from any action by such
Persons, or failure of such Persons to act under the Credit Agreement on or
prior to the date hereof.

3.10    GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

3.11    Successors and Assigns. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.

3.12    General Release. In consideration of the Administrative Agent’s
willingness to enter into this Amendment, on behalf of the Lenders, each Loan
Party hereby releases and forever discharges the Administrative Agent, Swing
Line Lender, the Lenders and the Administrative Agent’s, the Swing Line Lender’s
and each Lender’s respective predecessors, successors, assigns, officers,
managers, directors, employees, agents, attorneys, representatives, and
affiliates (hereinafter all of the above collectively referred to as the “Bank
Group”), from any and all claims, counterclaims, demands, damages,
debts, suits, liabilities, actions and causes of action of any nature
whatsoever,

 

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including, without limitation, all claims, demands, and causes of action for
contribution and indemnity, whether arising at law or in equity, whether known
or unknown, whether liability be direct or indirect, liquidated or
unliquidated, whether absolute or contingent, foreseen or unforeseen, and
whether or not heretofore asserted, which any Loan Party may have or claim to
have against any of the Bank Group in any way related to or connected with the
Loan Documents and the transactions contemplated thereby; provided that the
foregoing general release shall not be a release of any claim against any member
of the Bank Group which arises from the gross negligence of willful misconduct
of such member of the Bank Group.

3.13    Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The
jurisdiction, service of process and waiver of jury trial provisions set forth
in Sections 10.14 and 10.15 of the Credit Agreement are hereby incorporated by
reference, mutatis mutandis.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly
executed on the date first above written.

 

BORROWER:     U.S. WELL SERVICES, LLC     By:  

/s/ Kyle O’Neill

    Name:   Kyle O’Neill     Title:   Chief Financial Officer PARENT:     U.S.
WELL SERVICES, INC.     By:  

/s/ Kyle O’Neill

    Name:   Kyle O’Neill     Title:   Chief Financial Officer GUARANTORS:    
USWS FLEET 10, LLC     By:  

/s/ Kyle O’Neill

    Name:   Kyle O’Neill     Title:   Chief Financial Officer     USWS FLEET 11,
LLC     By:  

/s/ Kyle O’Neill

    Name:   Kyle O’Neill     Title:   Chief Financial Officer     USWS HOLDINGS
LLC     By:  

/s/ Kyle O’Neill 0.5

    Name:   Kyle O’Neill     Title:   Chief Financial Officer

 

 

(Signature Page to First Amendment to ABL Credit Agreement)

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BANK OF AMERICA, N.A.,

as Administrative Agent, a Lender, an L/C Issuer and a Swing Line Lender

 

By:  

/s/ Ajay Jagsi

Name:   Ajay Jagsi Title:   Vice President

 

(Signature Page to First Amendment to ABL Credit Agreement)