QUINTANA ENERGY SERVICES INC. FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Completion of Acquisition or Disposition of Assets, Creation of a Direct Financial Obligation or an Obligation

Edgar Glimpses |

Item 1.01 Entry into a Material Definitive Agreement.

Underwriting Agreement

On , Quintana Energy Services Inc., a Delaware corporation (the "Company") entered into an Underwriting Agreement (the "Underwriting Agreement") with Merrill Lynch, Pierce, Fenner & Smith Incorporated and Piper Jaffray & Co., as representatives of the several underwriters named therein (the "Underwriters"), relating to the offer and sale (the "Offering") of 9,259,259 shares (the "Firm Shares") of the Company's common stock, par value $0.01 per share (the "Common Stock") at a price to the public of $10.00 per share ($9.40 per share net of underwriting discounts and commissions). Pursuant to the Underwriting Agreement, the Company has granted the Underwriters a 30-day option to purchase up to an aggregate of 1,388,889 additional shares of Common Stock (the "Option Shares") if the Underwriters sell more than an aggregate of 9,259,259 shares of Common Stock. The material terms of the Offering are described in the prospectus, dated , (the "Prospectus"), filed by the Company with the Securities and Exchange Commission (the "Commission") on , pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"). The Offering is registered with the Commission pursuant to a Registration Statement on Form S-1, as amended (File No. 333-219837), initially filed by the Company on (the "Registration Statement").

The Underwriting Agreement contains customary representations and warranties, agreements and obligations, closing conditions and termination provisions. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the Underwriters may be required to make because of any of those liabilities.

The Offering closed on . The Company received proceeds from the Offering of approximately $82.7 million (net of underwriting discounts and commissions and estimated Offering expenses payable by the Company). As described in the Prospectus, the Company will use the net proceeds, along with borrowings under their New Credit Facility (as defined below), (i) to repay outstanding borrowings under the Company's $110.0 million revolving credit facility subject to a borrowing base (the "Revolving Credit Facility") between the Company, the lenders party thereto and ZA, N.A. DBA Amegy Bank, as administrative agent, and (ii) to repay $11.2 million outstanding borrowings and a prepayment fee of 3%, or approximately $1.5 million, under the Company's $40.0 million term loan (the "Term Loan") between the Company, Archer Holdco LLC ("Archer"), Robertson QES Investment LLC ("Robertson QES"), Geveran Investments Limited ("Geveran"), and Cortland Capital Market Services, LLC as administrative agent.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Underwriting Agreement, which is attached as Exhibit 1.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.

Relationships

As more fully described under the caption "Underwriting (Conflicts of Interest)" . . .

Item 1.02 Termination of a Material Definitive Agreement

On , in connection with the Reorganization (including the Term Loan Conversion), the consummation of the Offering (including the use of proceeds as described in "Use of Proceeds" in the Prospectus), and the entry into the Company's New Credit Facility, the Company terminated the Revolving Credit Facility and the Term Loan. The termination of the Term Loan was subject to a 3% prepayment penalty totaling approximately $1.5 million.

Item 2.01 Completion of Acquisition or Disposition of Assets.

Master Reorganization Agreement

On , the Company completed the reorganization transactions contemplated by the Master Reorganization Agreement. A description of the Master Reorganization Agreement and the




                                       5

--------------------------------------------------------------------------------

transactions contemplated thereby is provided above under Item 1.01 is incorporated in this Item 2.01 by reference. A copy of the Master Reorganization Agreement is attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated in this Item 2.01 by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement or a Registrant.

Concurrently with, and conditioned upon, the consummation of the Offering, the Company entered into a new senior secured asset-based revolving credit facility consisting of a maximum of $100.0 million of revolving credit commitments, subject to a borrowing base, with a swing line subfacility with a sublimit of $15.0 million and letter of credit subfacility with a sublimit of $20.0 million (the "New Credit Facility"). The New Credit Facility was entered into by the Company and certain other domestic subsidiaries of the Company (collectively, the "Borrowers") and is evidenced by a credit agreement dated as of , with Bank of America, N.A., as administrative agent, and certain other financial institutions party thereto. Pursuant to the New Credit Facility, the Company and the other Borrowers are entitled to borrow (and/or request letters of credit be issued) up to the amount of the borrowing base then in effect. The borrowing base is determined by the sum of a percentage of value of the Borrowers' billed accounts receivable, unbilled accounts receivable and inventory, subject to customary reserves and eligibility criteria. At no time will the aggregate maximum principal amount of revolving credit loans, swingline loans and the face amount of letters of credit under the New Credit Facility be permitted to exceed the lesser of the then effective borrowing base or $100.0 million, absent the Borrowers obtaining additional commitments from existing or new lenders. The Borrowers are permitted to increase the revolving credit commitments under the New Credit Facility by up to $50.0 million in the aggregate by obtaining revolving credit commitments from existing or new lenders, subject to certain conditions. As of the effective date of the New Credit Facility, the initial borrowing base was approximately $77.6 million and after giving effect to borrowings made on the effective date of the New Credit Facility, availability was approximately $60.8 million.

All of the obligations under the New Credit Facility are guaranteed by each of the Borrowers (as to the obligations of each of the other Borrowers) and by certain of the Borrowers' domestic restricted subsidiaries and secured by a first priority perfected security interest (subject to permitted liens) in substantially all of the personal property of the Borrowers and such subsidiary guarantors, excluding certain assets.

Loans to the Borrowers under the New Credit Facility may be base rate loans or LIBOR loans. The applicable margin for base rate loans varies from 1.50% to 2.00%, and the applicable margin for LIBOR loans varies from 2.50% to 3.00%, in each case depending on the Borrowers' average daily usage of the New Credit Facility during the preceding fiscal quarter. The Borrowers are permitted to repay any amounts borrowed prior to the maturity date without any premium or penalty other than customary LIBOR breakage costs.

In addition, a fee of either 0.50% or 0.625% (depending upon usage of the New Credit Facility) per annum is charged on the average daily unused portion of the revolving commitments. Such fee is payable quarterly in arrears.

The New Credit Facility contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions) and transactions with affiliates. Certain affirmative covenants, including certain reporting requirements and requirements to establish cash dominion accounts with the agent, are triggered by failing to maintain availability under the New Credit Facility at or above specified thresholds or by the existence of an event




                                       6

--------------------------------------------------------------------------------

of default under the New Credit Facility. Certain baskets and carve-outs from . . .

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth under Item 1.01 under "Master Reorganization Agreement" is incorporated by reference into this Item 3.02.

Item 3.03 Material Modification to Rights of Security Holders.

The information provided in Item 1.01 hereto under the headings "Equity Rights Agreement" and "Registration Rights Agreement" and in Item 5.03 hereto is incorporated by reference into this Item 3.03.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors;

Appointment of Certain Officers; Compensatory Arrangements of Certain

          Officers.


Election of Directors

In connection with the Offering, Rocky L. Duckworth and Dalton Boutté, Jr. were elected and D. Rogers Herndon, Corbin J. Robertson Jr., Dag Skindlo and Gunnar Eliasson were re-elected to our Board effective immediately prior to the effectiveness of our Registration Statement.

Messrs. Duckworth and Boutté will serve as members on the Company's audit committee, of which Mr. Duckworth will be the chairman. As chairman of the audit committee, Mr. Duckworth will receive an additional annual cash retainer of $15,000. As a member of the audit committee, Mr. Boutté will receive an additional annual cash retainer of $10,000.




                                       7

--------------------------------------------------------------------------------

Messrs. Duckworth and Boutté will serve as members on the Company's compensation committee, of which Mr. Boutté will be the chairman. As chairman of the compensation committee, Mr. Boutté will receive an additional annual cash retainer of $10,000. As a member of the compensation committee, Mr. Duckworth will receive an additional annual cash retainer of $5,000.

Further information regarding the compensation that Messrs. Robertson, Skindlo, Eliassen, Duckworth and Boutté will receive is contained in the section of the Prospectus entitled "Executive Compensation and Other Information-Director Compensation" and is incorporated herein by reference.

Except as disclosed in the Registration Statement and the Prospectus, there are no arrangements or understandings between Messrs. Herndon, Robertson, Skindlo, Eliassen, Duckworth and Boutté and any other person pursuant to which he was selected as a director. Messrs. Herndon, Robertson, Skindlo, Eliassen, Duckworth and Boutté have no family relationship with any director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer.

Pursuant to the Equity Rights Agreement described above, Messrs. Skindlo and Eliassen are Archer designees and Mr. Robertson is a Quintana Funds designee. In accordance with the Equity Rights Agreement, the Quintana Funds and Geveran each have the right to designate one additional member of the Board.

Indemnification Agreements

In connection with the Offering, the Company entered into Indemnification Agreements ("Indemnification Agreements") with each of the executive officers and directors of the Company. These Indemnification Agreements require the Company to indemnify these individuals to the fullest extent permitted under Delaware law against liability that may arise by reason of their service to the Company, and to advance certain expenses incurred as a result of any proceeding against them as to which they could be indemnified.

The foregoing description of the Indemnification Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Indemnification Agreements, which are attached as Exhibits 10.4 through 10.12 to this Current Report on Form 8-K and incorporated into this Item 5.02 by reference.

2018 Long Term Incentive Plan

Effective , the Board adopted the 2018 Plan to incentivize employees, officers, directors and other service providers of the Company and its affiliates. The 2018 Plan provides for the grant, from time to time, at the discretion of the Board or a committee thereof, of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards. Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the 2018 Plan, 3,300,000 shares of Common Stock have been reserved for issuance pursuant to awards under the 2018 Plan. Common stock subject to an award that expires or is canceled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the 2018 Plan. The 2018 Plan will be administered by the Board or a committee thereof.

The foregoing description of the 2018 Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the 2018 Plan, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated in this Item 5.02 by reference.




                                       8

--------------------------------------------------------------------------------

Legacy Plan

Effective , the Board assumed the Legacy Plan for employees of the Company and its affiliates who hold outstanding awards of phantom units in QES LP. In connection with the Reorganization described above, the such awards of phantom units were equitably adjusted and converted into rights to receive shares of Common Stock (or, if elected by the Board, cash equal to the fair market value thereof). The converted phantom unit awards are subject to the same vesting conditions applicable to the phantom unit awards immediately prior to the equitable adjustment and conversion. No further awards will be granted under the Legacy Plan.

The foregoing description of the Legacy Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Legacy Plan, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated in this Item 5.02 by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal

Year.

Second Certificate of Amendment to Certificate of Incorporation

Effective , prior to the closing of the Offering, the Company entered into the Second Amendment to the Certificate of Incorporation of the Company (the "Second Certificate of Amendment") in order to increase the number of authorized shares of Common Stock in connection with the Reorganization. The Second Certificate of Amendment was filed with the Secretary of State of the State of Delaware on .

The foregoing description is qualified in its entirety by reference to the full text of the Second Certificate of Amendment which is attached as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated in this Item 5.03 by reference.

Amended and Restated Certificate of Incorporation

Effective , immediately after the effectiveness of the Second Certificate of Amendment and prior to the closing of the Offering, the Company amended and restated its Certificate of Incorporation (as amended and restated, the "Certificate of Incorporation") to effect the Reverse Stock Split and include certain provisions applicable to public companies, which was filed with the Secretary of State of the State of Delaware on . A description of the Certificate of Incorporation is contained in the section of the Prospectus entitled "Description of Capital Stock" and is incorporated herein by reference.

The foregoing description and the description contained in the Prospectus are qualified in their entirety by reference to the full text of the Certificate of Incorporation, which is attached as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated in this Item 5.03 by reference.

Amended and Restated Bylaws

Effective , the Company amended and restated its Bylaws (as amended and restated, the "Bylaws"). A description of the Bylaws is contained in the section of the Prospectus entitled "Description of Capital Stock" and is incorporated herein by reference.

The foregoing description and the description contained in the Prospectus are qualified in their entirety by reference to the full text of the Bylaws, which are attached as Exhibit 3.3 to this Current Report on Form 8-K and are incorporated in this Item 5.03 by reference.




                                       9

--------------------------------------------------------------------------------

Item 9.01 Financial Statements and Exhibits.



(d)  Exhibits.



Exhibit
  No.                                    Description

 1.1         Underwriting Agreement, dated as of , by and among
           Quintana Energy Services Inc., Merrill Lynch, Pierce, Fenner & Smith
           Incorporated and Piper Jaffray  & Co., as representatives of the
           several underwriters named therein

2.1†† Master Reorganization Agreement, dated as of , by and

           among Quintana Energy Services Inc., Quintana Energy Services LP, QES
           Holdco LLC and the other parties named therein

 3.1         Second Certificate of Amendment to Certificate of Incorporation of
           Quintana Energy Services Inc.

 3.2         Amended and Restated Certificate of Incorporation of Quintana Energy
           Services Inc.

 3.3         Amended and Restated Bylaws of Quintana Energy Services Inc.

 4.1         Second Amended and Restated Equity Rights Agreement, dated
           , by and among Quintana Energy Services Inc. and the
           other parties named therein

 4.2         Registration Rights Agreement, dated , by and among
           Quintana Energy Services Inc. and the other parties named therein

10.1+        Quintana Energy Services Inc. 2018 Long Term Incentive Plan

10.2+        Quintana Energy Services Inc. Amended and Restated Long-Term
           Incentive Plan (also referred to as the QES Legacy Long-Term Incentive
           Plan)

10.3         Loan, Security and Guaranty Agreement, dated , by
           and among Quintana Energy Services Inc., Quintana Energy Services LP,
           the various borrowers thereto, Bank of America, N.A., as agent, joint
           lead arranger and sole bookrunner, ZB, N.A. DBA Amegy Bank, as joint
           lead arranger, and Citibank, N.A., as joint lead arranger

10.4+        Indemnification Agreement (D. Rogers Herndon)

10.5+        Indemnification Agreement (Christopher J. Baker)

10.6+        Indemnification Agreement (Keefer M. Lehner)

10.7+        Indemnification Agreement (Max L. Bouthillette)

10.8+        Indemnification Agreement (Dag Skindlo)

10.9+        Indemnification Agreement (Gunnar Eliassen)

10.10+       Indemnification Agreement (Rocky L. Duckworth)

10.11+       Indemnification Agreement (Dalton Boutté, Jr.)

10.12+       Indemnification Agreement (Corbin J. Robertson, Jr.)



+ Constitutes management contracts or compensatory plans or arrangements..

†† Schedules and similar attachments have been omitted pursuant to Item

    601(b)(2) of Regulation S-K. The registrant will furnish a supplemental copy
    of any omitted schedule or similar attachment to the Commission upon request.




                                       10

--------------------------------------------------------------------------------

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Margaux Resources Ltd.

Margaux Resources Ltd is a Calgary based resource company. The Company is focused on its Jersey Emeral Tungsten-Zinc property located in the southeast portion of British Columbia.