As filed with the Securities and Exchange Commission on May 6, 2016
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
THE
SECURITIES ACT OF 1933
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
|
|
|
|
|
Delaware
|
|
1389
|
|
26-0287117
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(Primary Standard Industrial
Code Number)
|
|
(I.R.S. Employer
Identification Number)
|
14624 N. Scottsdale Rd., Suite 300
Scottsdale, Arizona 85254
(602) 903-7802
(Address,
Including Zip Code, and Telephone Number, including Area Code, of Registrants Principal Executive Offices)
Joseph M. Crabb
Executive Vice President & Chief Legal Officer
Nuverra Environmental Solutions, Inc.
14624 N. Scottsdale Rd., Suite 300
Scottsdale, Arizona 85254
(602) 903-7802
(Name,
Address, Including Zip Code, and Telephone Number, including Area Code, of Agent for Service)
Copy to:
Matthew M. Holman
Squire Patton Boggs (US) LLP
1 E. Washington Street, Suite 2700
Phoenix, Arizona 85004
(602) 528-4000
Approximate
date of commencement of proposed sale to the public:
From time to time after the effectiveness of the registration statement.
If any of
the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the Securities Act), check the following box.
x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
x
|
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
|
Calculation of Registration Fee
|
|
|
|
|
|
|
|
Title of Each Class of
Securities to be Registered
|
|
Amount
to be
Registered (1)
|
|
Proposed
Maximum
Aggregate
Offering Price (2)
|
|
Amount of
Registration Fee
|
Non-transferable subscription rights (3)
|
|
N/A
|
|
N/A
|
|
N/A (4)
|
Common Stock, $0.001 par value per share, underlying
subscription rights
|
|
19,531,250
|
|
5,371,093.75
|
|
$540.87
|
Total
|
|
19,531,250
|
|
5,371,093.75
|
|
$540.87
|
|
|
(1)
|
Pursuant to Rule 416 under the Securities Act of 1933, as amended (the Securities Act), this
registration statement also covers an indeterminate number of additional shares as may be issued as a result of adjustments by reason of any stock split, stock dividend, or similar transaction.
|
(2)
|
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the
Securities Act based on the average of high and low sale prices of the common stock, as quoted on the OTCQB U.S. Market on May 4, 2016.
|
(3)
|
We are granting for no consideration to our stockholders subscription rights to purchase shares of our common
stock. Our common stockholders will receive one subscription right for each share of common stock.
|
(4)
|
The non-transferable subscription rights are being issued without consideration. Pursuant to Rule 457(g), no
separate registration fee is payable with respect to the rights being offered hereby because the rights are being registered in the same registration statement as the securities to be offered pursuant to the rights.
|
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
PROSPECTUS
(Subject to Completion Dated May 6, 2016)
Nuverra Environmental Solutions, Inc.
19,531,250 shares of Common Stock
Subscription Rights to Purchase Shares of Common Stock
We are distributing, at no charge, to holders of our common stock, on a pro rata basis, non-transferable subscription rights to
purchase up to 19,531,250 shares of our common stock, which we refer to as subscription rights. You will receive one subscription right for each share of common stock owned at 5:00 p.m., New York City time, on
[ ], 2016, which we refer to as the record date. Each subscription right will entitle a holder to purchase one share
of our common stock at a subscription price of $0.256 per share, which we refer to as the offering price, provided that we will not issue any fractional shares in the rights offering and exercises of rights will be rounded down; we refer to this as
your subscription right.
You will not be entitled to exercise an over-subscription privilege to purchase
additional shares of common stock that may remain unsubscribed as a result of any unexercised subscription rights. We refer to the offering of our common stock through the subscription right as the rights offering.
The total gross proceeds from the shares offered in the rights offering will be approximately $5.0 million. The rights offering
will be fully backstopped by Mark D. Johnsrud, our Chairman and Chief Executive Officer, pursuant to which Mr. Johnsrud will receive a backstop fee of 5% payable in the form of additional common stock issued at $0.32 per share.
Mr. Johnsrud has deposited $5.0 million into escrow which shall be available to us if there are any shares remaining unpurchased after the exercise of the subscription rights and even if the conditions to the rights offering are not satisfied.
We are not requiring a minimum subscription to complete the rights offering. The price per share to be paid for shares of common stock acquired pursuant to the subscription rights is $0.256.
The subscription rights will expire if they are not exercised by 5:00 p.m., New York City time, on
[ ], 2016, unless we extend the rights offering period. We may extend the rights offering and the period for exercising your
subscription rights in our sole discretion.
You should carefully consider whether to exercise your subscription rights
before the expiration of the rights offering. All exercises of subscription rights are irrevocable, even if the rights offering is extended. We are not making any recommendation regarding your exercise of the subscription rights.
Our common stock is quoted on the OTCQB U.S. Market under the symbol NESC. The closing price of our common stock on
May 4, 2016 was $0.26 per share.
Our board of directors is making no recommendation regarding your exercise of the
Subscription Rights. You should carefully consider whether to exercise your subscription rights before the expiration date. You may not revoke or revise any exercises of subscription rights once made unless we terminate the rights offering.
Investing in our securities involves a high degree of risk. You should carefully review the risks and uncertainties
described under the heading
Risk Factors
beginning on page 7 of this prospectus and in any other document incorporated by reference herein or therein before you make an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is , 2016
TABLE OF CONTENTS
As permitted under the rules of the Securities and Exchange Commission, or the
SEC, this prospectus incorporates important business information about Nuverra Environmental Solutions, Inc. that is contained in documents that we file with the SEC, but that is not included in or delivered with this prospectus. You may
obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov, as well as from other sources. See Where You Can Find More Information and Incorporation of Certain Documents by
Reference in this prospectus.
- i -
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the
SEC). As permitted by the rules and regulations of the SEC, the registration statement filed by us includes additional information not contained in this prospectus. You may read the registration statement and the other reports we file
with the SEC at the SECs website or its offices described under the heading Where You Can Find More Information in this prospectus.
This prospectus and the documents incorporated by reference in this prospectus include important information about us, the
securities being offered and other information you should know before exercising the subscription rights. You should rely only on this prospectus and the information incorporated or deemed to be incorporated by reference in this prospectus. We have
not authorized anyone to provide you with information that is in addition to, or different from, that contained or incorporated by reference in this prospectus. If anyone provides you with different or inconsistent information, you should not rely
on it. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume
that the information contained or incorporated by reference in this prospectus is accurate as of any date other than as of the date of this prospectus, or in the case of the documents incorporated by reference, the date of such documents regardless
of the time of delivery of this prospectus or any issuance of our shares of common stock. Our business, financial condition, liquidity, results of operations and prospects may have changed since those dates.
We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to
any document that is incorporated by reference in this prospectus were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be
deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as
accurately representing the current state of our affairs.
Unless the context requires otherwise, all references in this
prospectus to Nuverra, the Company, we, our, us or Nuverra Environmental Solutions refer to Nuverra Environmental Solutions, Inc. and its subsidiaries.
- ii -
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including any information incorporated by reference herein, contains certain forward-looking
statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended (the Securities Act), and Section 21E of the United States Securities Exchange Act of 1934, as amended (the
Exchange Act), that involve many risks and uncertainties. These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be
forward-looking statements, including, but not limited to, statements regarding:
|
|
|
future financial performance and growth targets or expectations;
|
|
|
|
market and industry trends and developments, including the current decline in oil and natural gas prices;
|
|
|
|
the potential benefits of our completed and any future merger, acquisition, disposition, restructuring, and
financing transactions;
|
|
|
|
the expected timing for completion of the restructuring transactions described herein and in our other filings
with the SEC; and
|
|
|
|
the expected effect of the restructuring transactions.
|
You can identify these and other forward-looking statements by the use of words such as anticipates,
expects, intends, plans, predicts, believes, seeks, estimates, may, might, will, should, would,
could, potential, future, continue, ongoing, forecast, project, target or similar expressions, and variations or negatives of these words.
These forward-looking statements are based on information available to us as of the date of this prospectus and our current
expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. Future performance cannot be ensured,
and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include:
|
|
|
failure to complete all aspects of our restructuring transactions, including the note conversion, rights
offering and implementation of the management incentive plan;
|
|
|
|
financial results that may be volatile and may not reflect historical trends due to, among other things,
changes in commodity prices or general market conditions, acquisition and disposition activities, fluctuations in consumer trends, pricing pressures, changes in raw material or labor prices or rates related to our business and changing regulations
or political developments in the markets in which we operate;
|
|
|
|
risks associated with our indebtedness, including our ability to manage our liquidity needs and to comply with
covenants under our credit facilities, including the indentures governing our notes;
|
|
|
|
risks associated with our capital structure, including our ability to refinance or restructure our
indebtedness to access necessary funding under our existing or future credit facilities and to generate sufficient operating cash flow to meet our debt service obligations;
|
|
|
|
changes in customer drilling, completion and production activities and capital expenditure plans, including
impacts due to low oil and/or natural gas prices or the economic or regulatory environment;
|
|
|
|
difficulties in identifying and completing acquisitions and divestitures, and differences in the type and
availability of consideration or financing for such acquisitions and divestitures;
|
|
|
|
difficulties in completing any refinancing or restructuring transactions;
|
|
|
|
difficulties in successfully executing our growth initiatives, including difficulties in permitting, financing
and constructing pipelines and waste treatment assets and in structuring economically viable agreements with potential customers, joint venture partners, financing sources and other parties;
|
- iii -
|
|
|
our ability to attract, motivate and retain key executives and qualified employees in key areas of our
business;
|
|
|
|
fluctuations in prices, transportation costs and demand for commodities such as oil and natural gas;
|
|
|
|
risks associated with the operation, construction and development of saltwater disposal wells, solids and
liquids treatment assets, landfills and pipelines, including access to additional locations and rights-of-way, unscheduled delays or inefficiencies and reductions in volume due to micro- and macro-economic factors or the availability of less
expensive alternatives;
|
|
|
|
risks associated with our ability to collect outstanding receivables as a result of liquidity constraints on
our customers resulting from low oil and/or natural gas prices;
|
|
|
|
the availability of less favorable credit and payment terms due to the downturn in our industry and our
financial condition, including more stringent or costly payment terms from our vendors and additional requirements from sureties to collateralize our performance bonds with letters of credit, which may further constrain our liquidity and reduce
availability under our revolving credit facility;
|
|
|
|
risks associated with new technologies and the impact on our business;
|
|
|
|
the effects of competition in the markets in which we operate, including the adverse impact of competitive
product announcements or new entrants into our markets and transfers of resources by competitors into our markets;
|
|
|
|
changes in economic conditions in the markets in which we operate or in the world generally, including as a
result of political uncertainty;
|
|
|
|
reduced demand for our services due to regulatory or other influences related to extraction methods such as
hydraulic fracturing, shifts in production among shale areas in which we operate or into shale areas in which we do not currently have operations or the loss of key customers;
|
|
|
|
the impact of changes in laws and regulation on waste management and disposal activities, including those
impacting the delivery, storage, collection, transportation treatment and disposal of waste products, as well as the use or reuse of recycled or treated products or byproducts;
|
|
|
|
control of costs and expenses;
|
|
|
|
present and possible future claims, litigation or enforcement actions or investigations;
|
|
|
|
natural disasters, such as hurricanes, earthquakes and floods, or acts of terrorism, or extreme weather
conditions, that may impact our corporate headquarters, assets, including wells or pipelines, distribution channels, or which otherwise disrupt our or our customers operations or the markets we serve;
|
|
|
|
the threat or occurrence of international armed conflict;
|
|
|
|
the unknown future impact on our business from legislation and governmental rulemaking, including the
Affordable Care Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules to be promulgated thereunder;
|
|
|
|
risks involving developments in environmental or other governmental laws and regulations in the markets in
which we operate and our ability to effectively respond to those developments including laws and regulations relating to oil and natural gas extraction businesses, particularly relating to water usage, and the disposal, transportation and treatment
of liquid and solid wastes; and
|
|
|
|
other risks identified in this prospectus or referenced from time to time in our filings with the SEC.
|
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of
the date of this prospectus. Except as required by law, we do not undertake any obligation to update or release any revisions to these forward-looking statements to reflect any events or circumstances, whether as a result of new information, future
events, changes in assumptions or otherwise, after the date hereof.
- iv -
QUESTIONS AND ANSWERS RELATING TO THE RIGHTS OFFERING
The following are some of what we anticipate will be common questions about the rights offering. The answers are based on
selected information from this prospectus and the documents incorporated by reference herein. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you
may have about the rights offering. This prospectus and the documents incorporated by reference herein contain more detailed descriptions of the terms and conditions of the rights offering and provide additional information about us and our
business, including potential risks related to the rights offering, our common stock and our business.
What is the rights offering?
We are distributing, at no charge, to holders of our common stock, subscription rights to purchase shares of our common stock.
One right has been distributed for each share outstanding to record holders of our common stock as of the record date, [ ], 2016. Each subscription right
will entitle a holder to purchase one share of our common stock. The subscription rights will be evidenced by the rights certificates. The common stock to be issued in the rights offering, like our existing shares of common stock, will be traded on
the OTCQB U.S. Market (OTCQB) under the symbol NESC.
What is the subscription right?
The subscription right gives the holder the opportunity to purchase one share of our common stock for $0.256 per share. Only
subscription rights to purchase whole shares are exercisable, and no fractional shares will be issued. We have granted to you, as a stockholder of record as of 5:00 p.m., New York City time, on the record date, one right for each share of our common
stock you owned at that time. You may exercise the subscription right for any whole number of shares subject to the subscription right, or you may choose not to exercise any subscription rights.
In order to properly exercise your subscription right, you must deliver to the subscription agent the subscription payment and
a properly completed rights certificate, or if you hold your subscription rights through a broker, dealer, custodian bank or other nominee, which we generally refer to as a nominee, you should complete and return to your nominee the form
entitled Beneficial Owner Election or such other appropriate documents as are provided by your nominee related to your subscription right before the expiration of the rights offering.
If you hold your shares in the name of a nominee who uses the services of the Depository Trust Company, or DTC, DTC will issue
a number of subscription rights to your nominee equal to each share of our common stock you beneficially own on the record date. See The Rights OfferingMethod of Exercising Subscription RightsSubscription By Beneficial Owners
on page 20.
Will fractional subscription rights be issued?
No. We will not issue fractional subscription rights or cash in lieu of fractional shares underlying subscription rights.
Is there an over-subscription privilege?
No. You will not be entitled to an over-subscription privilege to acquire the shares remaining unpurchased after the expiration
of all subscription rights. Any shares remaining unpurchased after the exercise of the subscription rights will be purchased by the back stop purchaser.
- v -
Are there backstop purchasers?
Yes. The rights offering will be fully backstopped by Mark D. Johnsrud, the Companys Chairman and Chief Executive
Officer, pursuant to which Mr. Johnsrud will receive a backstop fee of 5% payable in the form of additional common stock of the Company issued at the Conversion Price (as defined herein). Mr. Johnsrud has deposited $5.0 million into
escrow, which shall be available to the Company if there are any shares remaining unpurchased after the exercise of the subscription rights and even if the conditions to the rights offering are not satisfied. For additional details, see
Prospectus SummaryRecent DevelopmentsRestructuring Transactions on page 1 and Restructuring Transactions on page 15.
Why are we conducting the rights offering?
In response to our financial results and concerns about short- and long-term liquidity due to slowed customer activities as a
result of the current low commodity price environment for crude oil and natural gas, we reviewed various options to restructure our balance sheet to improve our overall capital structure. As a result, our Board of Directors (Board), with
assistance from our advisors, developed a comprehensive plan to restructure our outstanding indebtedness (the Restructuring). See Prospectus SummaryRecent DevelopmentsRestructuring Transactions on page 1 and
Restructuring Transactions on page 15. The rights offering is one of the conditions required to be completed in connection with the Restructuring and will provide the Company with additional equity capital and our stockholders with the
opportunity to purchase additional common stock.
How was the $0.256 per share subscription price determined?
As part of the Restructuring, the Company agreed that the offering price in the rights offering would be equal to a 20%
discount to the Conversion Price (as defined herein) of the Exchange Offer (as defined herein). Our Board considered a number of relevant factors when determining the offering price. See Determination of Offering Price on page 13 for
further discussion.
Am I required to exercise all of the subscription rights I receive in the rights offering?
No. You may exercise your subscription rights in full or in part, or you may choose not to exercise any subscription rights. If
you do not exercise your subscription right in full, your percentage ownership interest in our outstanding common stock may be diluted.
What will
happen if I choose not to exercise my subscription rights?
If you do not exercise any subscription rights, the number
of shares of our common stock you own will not change. Although your ownership interest could be diluted following the consummation of the rights offering, you can avoid such dilution by fully exercising your subscription right.
Are we requiring a minimum subscription to complete the rights offering?
No. There is no aggregate minimum we must receive to complete the rights offering.
Has our Board made a recommendation to our stockholders regarding the rights offering?
No. The Board is not making a recommendation regarding your exercise of the subscription rights. Stockholders who exercise
subscription rights risk investment loss on new money invested. We cannot predict the price at which our shares of common stock will trade, and therefore, we cannot assure you that the market price for our common stock will be above the subscription
price or that anyone purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price. You are urged to make your decision based on your own assessment of our business and the rights
offering. Please see Risk Factors beginning on page 7 for a discussion of some of the risks involved in investing in our common stock.
- vi -
How soon must I act to exercise my subscription rights?
The subscription rights may be exercised at any time beginning on the date of this prospectus and before the expiration of the
rights offering, which is [ ], 2016, at 5:00 p.m., New York City time. If you elect to exercise any subscription rights, the
subscription agent must actually receive all required documents and payments from you before the expiration of the rights offering. The expiration of the rights offering may be extended by the Company in its discretion.
When will I receive my subscription rights certificate?
Promptly after the date of this prospectus, a subscription rights certificate will be mailed to each registered holder of our
common stock as of the close of business on the record date, based on our stockholder registry maintained at the transfer agent for our common stock. That rights certificate will include subscription detail and election information for the
subscription rights. If you hold your shares of common stock in street name through a nominee, you will not receive an actual subscription rights certificate. Instead, as described in this prospectus, you must instruct your nominee
whether or not to exercise subscription rights on your behalf. If you wish to obtain a separate subscription rights certificate, you should promptly contact your nominee and request a separate subscription rights certificate. It is not necessary to
have a physical subscription rights certificate to elect to exercise your subscription rights if your shares are held by a nominee.
May I transfer my
subscription rights?
No. The subscription rights are not transferable.
Are there any conditions to completing the rights offering?
Yes. We are holding a Special Meeting of Stockholders on May 20, 2016, to approve an amendment to our Amended and Restated
Certificate of Incorporation, as amended (the Certificate of Incorporation), to increase the number of shares of common stock authorized for issuance. Completion of the rights offering is subject to the stockholders approval of the
amendment to the Certification of Incorporation to provide for the issuance of sufficient additional shares of common stock to complete the rights offering.
Can the rights offering be extended, canceled or amended?
Yes. We may cancel or amend the rights offering in our discretion. In addition, we may, in our discretion, extend the period
for exercising your subscription rights.
How do I exercise my subscription rights? What forms and payment are required to purchase shares of common
stock?
If you wish to participate in the rights offering, you must:
|
|
|
deliver payment to the subscription agent using the methods outlined in this prospectus before 5:00 p.m., New
York City time, on [ ], 2016; and
|
|
|
|
deliver a properly completed rights certificate to the subscription agent before 5:00 p.m., New York City
time, on [ ], 2016.
|
If you cannot deliver your rights certificate to the subscription agent before the expiration of the rights offering, you may
instead follow the guaranteed delivery procedures described under The Rights OfferingGuaranteed Delivery Procedures on page 23.
If you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you
requested is not specified in the forms, the payment received will be applied to exercise your subscription rights to the full extent possible based on the amount of the payment received and your relevant subscription right, as described in this
prospectus.
- vii -
Will our directors and officers participate in the rights offering?
All holders of our common stock as of the record date for the rights offering will receive, at no charge, the non-transferable
subscription rights to purchase shares of our common stock as described in this prospectus. To the extent that our directors and officers held shares of our common stock as of the record date, they will receive the subscription rights and, while
they are under no obligation to do so, will be entitled to participate in the rights offering.
All of our outstanding
equity awards to employees, officers and directors, including outstanding stock options, were issued pursuant to plans previously adopted by our Board. Holders of stock options, which will convert into common stock at some point in the future, will
not receive rights in connection with this rights offering.
When will I receive my new shares?
If you purchase shares of our common stock through the rights offering, you will receive your new shares as soon as practicable
after the closing of the rights offering.
After I send in my payment and rights certificate, may I cancel my exercise of subscription rights?
No. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be
unfavorable to the exercise of your subscription rights and even if the rights offering is extended. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a
subscription price of $0.256 per share.
What should I do if I want to participate in the rights offering but my shares are held in the name of my
broker, dealer, custodian bank or other nominee?
If you hold your shares of our common stock in the name of a nominee,
then this nominee is the record holder of the shares you own. The record holder must exercise the subscription rights on your behalf for the shares of our common stock you wish to purchase.
If you wish to participate in the rights offering and purchase shares of our common stock, please promptly contact your
nominee who is the record holder of your shares. We will ask your nominee to notify you of the rights offering. You should complete and return to your nominee that is the record holder of the shares you own the form entitled Beneficial Owner
Election. You should receive this form from your nominee that is the record holder of the shares you own with the other rights offering materials.
How many shares of our common stock will be outstanding after the rights offering?
As of the record date, we expect to have [ ] shares of
our common stock issued and outstanding. We will issue approximately 20,312,500 shares through the rights offering, which includes the backstop fee paid to Mr. Johnsrud in the form of common stock for the backstop obligations. As part of the
Restructuring, we will also convert the 9.875% Senior Notes due 2018 held by an entity controlled by Mr. Johnsrud, which were irrevocably tendered to the Company on April 15, 2016, to shares of our common stock at the Conversion Price (as
defined herein) upon stockholder approval of the amendment to our Certificate of Incorporation to increase the number of shares of common stock authorized for issuance (the Johnsrud Equity Conversion). Upon consummation of the Johnsrud
Equity Conversion and the rights offering and after giving effect to the other components of the Restructuring, as described herein, we expect to have approximately 176 million shares of outstanding common stock on a fully-diluted basis,
excluding shares issuable in connection with the management incentive plan contemplated by the Restructuring. See Prospectus SummaryRecent DevelopmentsRestructuring Transactions on page 1 and Restructuring
Transactions on page 15.
- viii -
How much money will the Company receive from the rights offering?
Due to the backstop provided by Mr. Johnsrud, we will receive an aggregate of approximately $5.0 million in gross proceeds
from the sale of shares of common stock whether or not the rights offering is fully subscribed by each stockholder.
Are there risks in exercising my
subscription rights?
Yes. The exercise of your subscription rights involves risks. Exercising your subscription rights
involves the purchase of shares of our common stock and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the headings Risk
Factors beginning on page 7 in this prospectus and in the documents incorporated by reference herein.
If full subscription requests are not
honored or the rights offering is not completed, will my subscription payment be refunded to me?
Yes. The subscription
agent will hold all funds it receives in a segregated bank account until completion of the rights offering. If there is any cutback in your subscription request (e.g., due to any computational or other error in a subscription request, or due to any
disqualification) or if the rights offering is terminated or otherwise is not completed, such subscription over-payment received by the subscription agent for requests that are not honored will be returned, without interest, as soon as practicable.
If you own shares in street name, it may take longer for you to receive payment because the subscription agent will return payments through the record holder of the shares.
When can I sell the shares of common stock I receive upon exercise of the subscription rights?
If you exercise your subscription rights, you will be able to resell the shares of common stock purchased by exercising your
subscription rights once your account has been credited with those shares, provided you are not otherwise restricted from selling the shares (for example, because you are an insider or affiliate of the Company or because you possess material
nonpublic information about the Company). Although we will endeavor to issue the shares as soon as practicable after completion of the rights offering, there may be a delay between the expiration date of the rights offering and the time that the
shares are issued. In addition, we cannot assure you that, following the exercise of your subscription rights, you will be able to sell your common stock at a price equal to or greater than the subscription price.
What fees or charges apply if I purchase shares of common stock?
We are not charging any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise
your subscription rights. If you hold your shares through a nominee and exercise your subscription rights through the record holder of your shares, you are responsible for paying any fees your nominee record holder may charge you.
What are the U.S. federal income tax consequences of exercising subscription rights?
For U.S. federal income tax purposes, we believe you generally should not recognize income or loss in connection with the
receipt or exercise of subscription rights. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition of our common
stock. For further information, please see Certain Material U.S. Federal Income Tax Consequences on page 26.
- ix -
To whom should I send my forms and payment?
If your shares are held in the name of a nominee, then you should send your rights certificate, election form (including
subscription request) and notice of guaranteed delivery (which we collectively refer to as subscription documents) and subscription payment to that nominee that is the record holder. If you are the record holder, then you should send
your subscription documents and subscription payment (other than wire transfers) to:
|
|
|
By regular mail:
|
|
By registered, certified or express mail, by overnight
courier or by personal delivery:
|
|
|
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
P.O. Box 2042
New York, New York 10272-2042
|
|
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219
|
You are solely responsible for completing delivery of your subscription documents and
subscription payment to the subscription agent or, if you are not a record holder, to your nominee. We urge you to allow sufficient time for delivery of your subscription materials to the subscription agent or your nominee.
Whom should I contact if I have other questions?
If you have other questions or need assistance, please contact the subscription agent, American Stock Transfer & Trust
Company, LLC, at (877) 248-6417 or (718) 921-8317.
- x -
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the
information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section describing the risks of investing in our common stock under the caption Risk Factors, and the
documents and financial statements incorporated by reference in the section entitled Incorporation of Certain Documents by Reference before making an investment decision. Some of the statements in this summary constitute forward-looking
statements. For more information, please see Cautionary Note Regarding Forward-Looking Statements.
Our Company
Nuverra is a leading provider of comprehensive, full-cycle environmental solutions to customers focused on the exploration,
development, and ongoing production of oil and natural gas from shale formations in the United States. We provide one-stop, total environmental solutions, including delivery, collection, treatment, recycling, and disposal of water, wastewater, waste
fluids, hydrocarbons, and restricted solids that are part of the drilling, completion, and ongoing production of shale oil and natural gas.
To meet our customers environmental needs, we utilize a broad array of assets to provide comprehensive environmental
solutions. Our logistics assets include trucks and trailers, temporary and permanent pipelines, temporary and permanent storage facilities, ancillary rental equipment, treatment and processing facilities, and liquid and solid waste disposal sites.
We provide a suite of solutions to customers who demand environmental compliance and accountability from their service providers.
We currently operate in select shale areas in the United States, including the predominantly oil-rich shale areas consisting
of the Bakken, Eagle Ford, and Permian Shale areas and the predominantly gas-rich Haynesville, Marcellus, and Utica areas. Our business serves customers seeking fresh water acquisition, temporary water transmission and storage, transportation,
treatment, recycling or disposal of liquid wastes, such as flowback and produced brine water, and solid wastes such as drill cuttings, and management of other environmental products in connection with shale oil and natural gas drilling completion
and production operations. Additionally, we rent equipment to customers, including providing for delivery and pickup.
Our
business is divided into three operating divisions: (1) the Northeast division comprising the Marcellus and Utica Shale areas, (2) the Southern division comprising the Haynesville, Eagle Ford, and Permian Basin Shale areas and (3) the
Rocky Mountain division comprising the Bakken Shale area.
General Company Information
Headquartered in Scottsdale, Arizona, Nuverra Environmental Solutions, Inc. was incorporated in Delaware on May 29, 2007
as Heckmann Corporation. On May 16, 2013, we changed our name to Nuverra Environmental Solutions, Inc. Our address is 14624 N. Scottsdale Road, Suite 300, Scottsdale, Arizona 85254, and our website is http://www.nuverra.com. The
content of our website is not a part of this prospectus.
Recent DevelopmentsRestructuring Transactions
Due to the difficult macro environment and the corresponding impact of the prolonged depression in oil and natural gas prices
that has continued to negatively affect us and others in our industry, we have experienced a decline in demand and pricing for our services. These factors, coupled with our large outstanding debt service obligations, have diminished our cash
position and capital resources and raised substantial doubt about our ability to continue as a going concern. In order to address short- and long-term liquidity needs, we undertook a strategic
- 1 -
review and assessment of our business and operations. We divested our industrial solutions business when we sold Thermo Fluids Inc. in the first half of 2015, in order to focus exclusively on our
core shale environmental solutions business. Further, we sought to maximize liquidity by implementing various cost-management initiatives, which included limiting our capital expenditures to only those deemed critical to our ongoing operations and
those necessary to support our key growth initiatives. In addition, we offset the cash impact of these expenditures by selling underutilized or non-core assets.
The worsening market environment and the continued decline in commodity prices have negatively affected our results from
operations, financial position and market prices for our securities, including our common stock. On January 19, 2016, the New York Stock Exchange (the NYSE) notified us that we were not in compliance with the continued listing
standard set forth in Section 802.01B of the NYSE Listed Company Manual due to our failure to maintain an average global market capitalization of at least $15.0 million over a consecutive 30-day trading period. As such, the NYSE informed us
that trading of our common stock would be suspended before the opening of trading on January 20, 2016, and that it initiated delisting procedures with respect to our common stock. Our common stock began trading on the OTCQB on January 20,
2016. On February 3, 2016, the NYSE filed a Form 25-NSE with the SEC, notifying the SEC of our removal from listing and registration on the NYSE.
In the first quarter of 2016, the lenders under our asset-based revolving credit facility (the Credit Facility)
completed their periodic redetermination of the orderly liquidation values of our eligible machinery and equipment. The redetermination resulted in an approximately $21 million decline in our borrowing base and availability under the Credit
Facility, which resulted in further tightening of our liquidity. While we were, and remain, in compliance with our existing debt arrangements, we recognized that absent an improvement in commodity prices or a reduction in our indebtedness and cash
interest expense, we may not be able to continue to make scheduled payments under our debt obligations, and in such event may need to seek relief under the U.S. Bankruptcy Code.
In response to our financial results and concerns about short- and long-term liquidity, we reviewed various options to
restructure our balance sheet to improve our overall capital structure. As a result, our Board, with assistance from our advisors, developed the Restructuring (as defined herein), intended to improve liquidity, defer cash interest expense, and
preserve value for holders of our common stock.
On March 11, 2016, we entered into a Restructuring and Support
Agreement (the Restructuring Support Agreement) with holders of more than 80% (the Supporting Holders) of our 9.875% Senior Notes due 2018 (the 2018 Notes) to implement a proposed debt restructuring and
recapitalization plan (the Restructuring).
In connection with the Restructuring, we consummated the following
financing transactions on or before April 15, 2016:
|
|
|
Amendment of the Credit Facility to (i) reduce the commitment from $125 million to $100 million,
(ii) amend certain rates and covenants, and (iii) permit the transactions contemplated by the Restructuring, among other amendments.
|
|
|
|
Pursuant to an exchange offer and consent solicitation (the Exchange Offer), the issuance to
tendering holders of the 2018 Notes of (i) $327,221,000 aggregate principal amount of new Second-Lien Notes due 2021 (the 2021 Notes) under a new indenture to those holders electing to exchange their 2018 Notes for 2021 Notes,
(ii) $908,000 in shares of common stock at a conversion price per share of $0.32 (the Conversion Price), which resulted in the issuance of 2,837,500 shares of common stock (the Exchange Offer Shares), to those holders
electing to exchange their 2018 Notes for our common stock, and (iii) 10-year penny warrants (the Exchange Warrants) to purchase 10% of the outstanding shares of common stock, on a fully diluted basis after taking into account the
common stock to be issued in connection with the Johnsrud Equity Conversion and the rights offering, and the issuance of the Exchange Offer Shares, subject only to dilution by the shares issued or to be issued in connection with a new management
incentive plan we expect to implement.
|
- 2 -
|
|
|
Entry into a new last out first lien term loan in the aggregate amount of $24.0 million (the Term
Loan) and in connection therewith issuance of 10-year penny warrants to the lenders under the Term Loan (the Term Loan Warrants and, together with the Exchange Warrants, the warrants) to purchase 5% of the outstanding
shares of the common stock, on a fully diluted basis after taking into account the common stock to be issued in connection with the Johnsrud Equity Conversion and the rights offering, and the issuance of the Exchange Offer Shares, subject only to
dilution by the shares issued or to be issued in connection with a new management incentive plan we expect to implement.
|
Pursuant to the Restructuring and subject to stockholder approval of the amendment to our Certificate of Incorporation to
increase the number of shares of common stock authorized for issuance, we also intend to consummate this rights offering and the Johnsrud Equity Conversion, pursuant to which:
|
|
|
Mark D. Johnsrud will be issued shares of our common stock at the Conversion Price in exchange for the
approximately $31.4 million principal amount of 2018 Notes owned by an entitled controlled by Mr. Johnsrud, which were irrevocably tendered to the Company on April 15, 2016.
|
- 3 -
The Rights Offering
The following summary describes the principal terms of the rights offering, but is not intended to be complete. See the
information under the heading The Rights Offering in this prospectus for a more detailed description of the terms and conditions of the rights offering.
Securities Offered
|
We are distributing, at no charge, to holders of our common stock, subscription rights to purchase up to 19,531,250 shares of our common
stock. You will receive a fixed number of subscription rights for each share of common stock owned at 5:00 p.m., New York City time, as of the record date set forth below.
|
Subscription Right
|
Each subscription right will entitle a holder to purchase one share of our common stock at a subscription price of $0.256 per share,
provided that no fractional shares will be issued in the rights offering and exercises of rights will be rounded down; we refer to this as your subscription right.
|
No Over-Subscription Privilege
|
You will not be entitled to exercise an over-subscription privilege to purchase additional shares of common stock that remain
unsubscribed as a result of any unexercised subscription rights
|
Record Date
|
5:00 p.m., New York City time, on
[ ], 2016.
|
Expiration of the Rights Offering
|
5:00 p.m., New York City time, on
[ ], 2016, unless extended by us in our discretion.
|
Subscription Price
|
$0.256 per share, payable in cash. To be effective, any payment related to the exercise of a right must be received by the subscription
agent before the expiration of the rights offering.
|
Use of Proceeds
|
We intend to use the entire net proceeds of this rights offering to pay down a portion of the outstanding balance under our Credit
Facility, which will then be available for further drawdowns, subject to any borrowing base limitations and compliance with other applicable terms and conditions of the Credit Facility.
|
Non-Transferability of Subscription Rights
|
The subscription rights are not transferable.
|
No Board Recommendation
|
We are making no recommendation regarding your exercise of the subscription rights. For an explanation of how the purchase price of the
subscription rights was determined, please see Determination of Offering Price on page 13 herein. You are urged to make your decision based on your own assessment of our business and the rights offering. Please see Risk
Factors beginning on page 7 for a discussion of some of the risks involved in investing in our common stock.
|
Conditions
|
We are not requiring a minimum subscription to complete the rights offering.
|
- 4 -
No Revocation By Holder
|
All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the
exercise of your subscription rights and even if the rights offering is extended. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a subscription price of
$0.256 per share.
|
U.S. Federal Income Tax Considerations
|
For U.S. federal income tax purposes, you generally should not recognize income or loss in connection with the receipt or exercise of
subscription rights. For further information, please see Certain Material U.S. Federal Income Tax Consequences.
|
Extension and Termination Rights
|
We may cancel or terminate the rights offering at any time in our discretion. In addition, we may extend the period for exercising your
subscription rights in our discretion. We may extend the expiration date of the rights offering by giving oral or written notice to the subscription agent on or before the scheduled expiration date. If we elect to extend the expiration of the rights
offering, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration date.
|
Procedures for Exercising Subscription Rights
|
To exercise your subscription rights, you must complete the subscription documents and deliver them to the subscription agent, American
Stock Transfer & Trust Company, LLC, or, if you not a record holder, to your nominee, together with full payment for all the subscription rights you elect to exercise under the subscription right. If regular mail is used to deliver the
subscription documents and payments, we recommend using registered mail, properly insured, with return receipt requested.
|
|
If you cannot deliver your rights certificate to the subscription agent before the expiration of the rights
offering, you may instead follow the guaranteed delivery procedures described under The Rights OfferingGuaranteed Delivery Procedures on page 23. In certain cases, a qualified designee of a record holder of subscription rights
may exercise subscription rights. See The Rights OfferingMethod of Exercising Subscription RightsSubscription by Registered Stockholders on page 19.
|
Subscription Agent
|
American Stock Transfer & Trust Company, LLC
|
Shares Outstanding as of the Record Date
|
[ ] shares of our common stock are issued and outstanding as of
the record date.
|
Shares Outstanding After Completion of the Rights Offering
|
We will issue approximately 20,312,500 shares of common stock in this rights offering, which includes the backstop fee paid to Mr.
Johnsrud in the form of common stock for the backstop obligations. Upon consummation of the Johnsrud Equity Conversion and the rights offering and after giving effect to the other components of the Restructuring, as described herein, we expect to
have approximately
|
- 5 -
|
176 million shares of outstanding common stock on a fully-diluted basis, excluding shares issuable in connection with the management incentive plan contemplated by the Restructuring. See
Prospectus SummaryRecent DevelopmentsRestructuring Transactions on page 1 and Restructuring Transactions on page 15.
|
Risk Factors
|
Investors considering making an investment by exercising subscription rights in the rights offering should carefully read and consider
the information set forth in Risk Factors beginning on page 7 of this prospectus, the documents incorporated by reference herein and the risks that we have highlighted in other sections of this prospectus.
|
Fees and Expenses
|
We will pay the fees and expenses related to the rights offering from the proceeds of the rights offering.
|
Market Symbol
|
Our common stock is traded on the OTCQB under the trading symbol NESC. The shares of common stock issued in the rights
offering will also be listed on the OTCQB under the same symbol. The subscription rights will not be listed for trading on the OTCQB or any other stock exchange or market.
|
- 6 -
RISK FACTORS
This section describes material risks to our businesses that currently are known to us. You should carefully consider all
of the information in this prospectus and each of the risks described below, together with the other information incorporated by reference in this prospectus, including the risk factors included in our Annual Report on Form 10-K for the year ended
December 31, 2015, as amended. Any of the following risks and those incorporated by reference could materially and adversely affect our business, financial condition and results of operations and the actual outcome of matters as to which
forward-looking statements are made in this prospectus. While we believe we have identified and discussed the material risks affecting our business, there may be additional risks and uncertainties that we do not currently know or that we do not
currently believe to be material that may adversely affect our business, financial condition and results of operations in the future.
Risks
Related to the Rights Offering
The market price of our common stock may decline before or after the subscription rights expire.
The market price of our common stock could be subject to wide fluctuations in response to numerous factors, many of which are
beyond our control. We cannot assure you that the market price of our common stock will not decline after you elect to exercise your subscription rights. If that occurs, you may have irrevocably committed to buy shares of our common stock in the
rights offering at a price greater than the prevailing market price, and could have an immediate unrealized loss. Moreover, we cannot assure you that following the exercise of your subscription rights you will be able to sell your common stock at a
price equal to or greater than the subscription price. Until shares are delivered upon expiration of the rights offering, you will not be able to sell the shares of our common stock that you purchase in the rights offering. Certificates representing
shares of our common stock purchased will be delivered as soon as practicable after expiration of the rights offering. We will not pay you interest on funds delivered to the subscription agent pursuant to the exercise of subscription rights.
The rights offering may cause the price of our common stock to decrease.
The announcement of the rights offering, the subscription price and the number of shares of our common stock we could issue if
the rights offering is completed could result in an immediate change in the trading price of our common stock. This change may continue after the completion of these transactions. If that occurs, your purchase of shares of our common stock in the
rights offering may be at a price greater than the prevailing trading price. Further, if a substantial number of subscription rights are exercised and the holders of the shares of our common stock received upon exercise of those subscription rights
choose to sell some or all of those shares, the resulting sales could depress the market price of our common stock.
The subscription price
determined for this offering is not necessarily an indication of the value of our common stock.
The subscription
price is not necessarily related to our book value, net worth or any other established criteria of value and may or may not be considered the fair value of our common stock to be offered in the rights offering. We cannot give any assurance that our
common stock will trade at or above the subscription price in any given time period.
Your percentage ownership in the Company may be diluted as a
result of this rights offering.
If you do not exercise your subscription rights or you exercise less than all of
your rights, and other stockholders fully exercise their rights or exercise a greater proportion of their rights than you exercise, you will suffer dilution of your percentage ownership of our common stock relative to such other stockholders. As of
the record date, there were [ ] shares of common stock outstanding. We will issue approximately 20,312,500 shares of common stock in this rights offering, which includes the backstop fee paid to
Mr. Johnsrud in the form of common stock for the backstop obligations.
- 7 -
We may withdraw or terminate the rights offering at any time and for any reason. If we cancel this
offering, neither we nor the subscription agent will have any obligation to you except to return your subscription payments.
We may withdraw or terminate the rights offering at our discretion. If we cancel the rights offering, neither the Company nor
the subscription agent will have any obligation to you with respect to the rights except to return any payment received by the subscription agent, without interest or penalty.
You may not revoke your exercise of any subscription rights, even if the rights offering is extended, and you could be committed to buying shares of our
common stock above the prevailing market price.
Once you exercise your subscription rights, you may not revoke the
exercise of such subscription rights. If we decide to extend the rights offering, you still may not revoke the exercise of your subscription rights. The public trading market price of our common stock may decline before the subscription rights
expire. If you exercise your subscription rights and, afterwards, the public trading market price of our common stock decreases below the subscription price, you will have committed to buying shares of our common stock at a price above the
prevailing market price. Our common stock is traded on OTCQB U.S. Market (OTCQB) under the symbol NESC, and the last reported sale price of our common stock on the OTCQB on May 4, 2016, was $0.26 per share. Following the
exercise of your subscription rights, you may be unable to sell your shares of our common stock at a price equal to or greater than the subscription price you paid for such shares, and you may lose all or part of your investment in our common stock.
If you do not act promptly and follow the subscription instructions, your exercise of subscription rights will be rejected.
Holders of subscription rights that desire to purchase shares of our common stock in the rights offering must act promptly to
ensure that all required forms and payments are actually received by the subscription agent before the expiration of the rights offering. If you are a beneficial owner of shares of our common stock, you must act promptly to ensure that your nominee
acts for you and that all required forms and payments are actually received by the subscription agent before the expiration of the rights offering. We are not responsible if your nominee fails to ensure that all required forms and payments are
actually received by the subscription agent before the expiration of the rights offering. If you fail to complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the subscription procedures that
apply to your exercise in the rights offering before the expiration of the rights offering, the subscription agent will reject your subscription or accept it only to the extent of the payment and documentation received. Neither we nor our
subscription agent undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription
exercise properly complies with the subscription procedures.
If you make payment of the subscription price by uncertified check, your check may not
clear in sufficient time to enable you to purchase shares of our common stock in this rights offering.
Any
uncertified check used to pay for shares of our common stock to be issued in this rights offering must clear before the expiration date of this rights offering, and the clearing process may require five or more business days. If you choose to
exercise your subscription rights, in whole or in part, and to pay for shares of our common stock by uncertified check and your check has not cleared before the expiration date of this rights offering, you will not have satisfied the conditions to
exercise your subscription rights and will not receive the shares of our common stock you wish to purchase.
The subscription rights are not
transferable.
The subscription rights granted to you are not transferable and, therefore, you may not sell,
transfer or assign your subscription rights to anyone. Because the subscription rights are not transferable, there is no way for you to directly realize any value associated with any attempted or purported transfer of the subscription rights. The
subscription rights will not be listed for trading on the OTCQB or any other stock exchange or market.
- 8 -
You may not be able to immediately resell any shares of our common stock that you purchase pursuant to the
exercise of subscription rights upon expiration of the rights offering.
If you exercise subscription rights, you
may not be able to resell the common stock purchased by exercising your subscription rights until you, or your nominee, if applicable, have received those shares. Moreover, you will have no rights as a stockholder in the shares of our common stock
you purchased in the rights offering until we issue the share certificates to you. Although we will endeavor to issue the shares of our common stock as soon as practicable after completion of the rights offering and after all necessary calculations
have been completed, there may be a delay between the expiration date of the rights offering and the time that the shares of our common stock are issued.
Risks Related to Our Common Stock
The completion
of our comprehensive plan to restructure our outstanding indebtedness, including the conversion of Mr. Johnsruds 2018 Notes to equity and this rights offering, will result in substantial dilution to our existing stockholders.
We have executed a plan to restructure our outstanding indebtedness. The plan to restructure our indebtedness, including the
conversion of Mr. Johnsruds 2018 Notes and this rights offering, will result in substantial dilution to our existing stockholders. As part of the exchange offer for our 9.875% Senior Notes due 2018 (the 2018 Notes), we will
convert approximately $31.4 million aggregate principal amount of the 2018 Notes, which were held by an entity controlled by Mr. Mark D. Johnsrud, our Chief Executive Officer and Chairman of the board of directors, for our common stock at
a conversion price per share of $0.32 (the Conversion Price). Mr. Johnsrud will receive approximately 98.3 million shares of common stock for the conversion of his 2018 Notes. We plan to issue approximately 20.3 million
shares of common stock in connection with this rights offering, which includes the backstop fee that will be paid to Mr. Johnsrud in the form of approximately 790 thousand shares of common stock. Both the conversion of
Mr. Johnsruds 2018 Notes to equity and this rights offering are subject to shareholder approval of amendments to our Amended and Restated Certificate of Incorporation, as amended, to provide for the issuance of sufficient additional
shares of common stock.
Our stockholders will suffer substantial dilution in their percentage ownership as a result of
the conversion of Mr. Johnsruds 2018 Notes to equity. In addition, stockholders who do not fully exercise their subscription rights in this rights offering, or exercise less than all of their rights, will suffer further dilution in their
percentage ownership of our common stock relative to such other stockholders who fully exercise their subscription rights or a greater proportion of their subscription rights.
We were delisted from the New York Stock Exchange, and there may be a limited trading volume for our common stock on the OTCQB.
In January 2016, our common stock was delisted from the New York Stock Exchange (NYSE). Our common stock currently
trades on the OTCQB under the symbol NESC, and there is a limited trading volume for our common stock. As a result, relatively small trades of our common stock may have a significant impact on the price of our common stock and, therefore, may
contribute to the price volatility of our common stock. Because of limited trading volume in our common stock and the price volatility of our common stock, you may be unable to sell your shares of common stock when you desire or at the price you
desire. The inability to sell your shares in a declining market because of such illiquidity or at a price you desire may substantially increase your risk of loss.
The delisting of our common stock from the NYSE could adversely affect institutional investor interest in holding or acquiring
our common stock and otherwise reduce the number of investors willing to hold or acquire our common stock. This could negatively affect our ability to raise capital necessary to maintain operations and service our debt. In addition, the delisting of
our common stock from the NYSE may cause a loss of confidence among our employees and customers and otherwise negatively affect our financial condition, results of operations and cash flows.
- 9 -
We do not now, and are not expected to in the foreseeable future, meet the
listing standards of the NYSE or any other national securities exchange. We presently anticipate that our common stock will continue to be quoted on the OTCQB. As a result of the limited trading volume for our common stock, investors may be unable
to sell shares of common stock at the times or in the quantities desired and, therefore, may be required to hold some or all of their shares for an indefinite period of time.
Our stock price may be volatile, which could result in substantial losses for investors in our securities.
The stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular
companies. These broad market fluctuations may adversely affect the trading price of our common stock.
The market price
of our common stock may also fluctuate significantly in response to the following factors, some of which are beyond our control:
|
|
|
variations in our quarterly operating results and changes in our liquidity position;
|
|
|
|
changes in securities analysts estimates of our financial performance;
|
|
|
|
inaccurate or negative comments about us on social networking websites or other media channels;
|
|
|
|
changes in market valuations of similar companies;
|
|
|
|
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint
ventures, capital commitments, new products or product enhancements, as well as our or our competitors success or failure in successfully executing such matters;
|
|
|
|
changes in the price of oil and natural gas;
|
|
|
|
loss of a major customer or failure to complete significant transactions; and
|
|
|
|
additions or departures of key personnel.
|
From the date of our initial public offering until our common stock was delisted in January 2016, our common stock traded on
the NYSE. The trading price of our common stock has ranged from a high of $104.40 on September 3, 2008, to a low of $0.13 on January 29, 2016. The last reported price of our common stock on the OTCQB on May 4, 2016, was $0.26 per
share.
We may issue a substantial number of shares of our common stock in the future and stockholders may be adversely affected by the issuance of
those shares.
We may raise additional capital or refinance or restructure our existing debt by issuing shares of
common stock, or other securities convertible into common stock, which will increase the number of shares of common stock outstanding and may result in substantial dilution in the equity interest of our current stockholders and may adversely affect
the market price of our common stock. We have previously issued 1.8 million shares of common stock at a total price of $80.1 million under a shelf registration statement on Form S-3 with the SEC and we could seek to issue new debt, equity and
hybrid securities in the future. In addition, we have issued shares of our common stock pursuant to private placement exemptions from Securities Act registration requirements, and may do so in connection with financings, acquisitions, the settlement
of litigation and other strategic transactions in the future. The issuance, and the resale or potential resale, of shares of our common stock could adversely affect the market price of our common stock and could be dilutive to our stockholders.
We currently do not intend to pay any dividends on our common stock.
We currently do not intend to pay any dividends on our common stock, and restrictions and covenants in our debt agreements may
prohibit us from paying dividends now or in the future. While we may declare dividends at some point in the future, subject to compliance with such restrictions and covenants, we cannot assure you that you will ever receive cash dividends as a
result of ownership of our common stock and any gains from investment in our common stock may only come from increases in the market price of our common stock, if any.
- 10 -
There is no assurance that an active public trading market in our common stock will be available.
There can be no assurance that an active public trading market for our common stock will be available or
sustained. If for any reason an active public trading market does not continue, purchasers of the shares of our common stock may have difficulty in selling their securities should they desire to do so and the price of our common stock may decline.
Future sales by us or our existing stockholders could depress the market price of our common stock.
If we or our existing stockholders sell a large number of shares of our common stock, the market price of our common stock
could decline significantly. Further, even the perception in the public market that we or our existing stockholders might sell shares of common stock could depress the market price of the common stock.
We are subject to anti-takeover effects of certain charter and bylaw provisions and Delaware law, as well as of our substantial insider ownership.
Provisions of our Amended and Restated Certificate of Incorporation, as amended (the Certificate of
Incorporation) and Second Amended and Restated Bylaws (the Bylaws) and Delaware law may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which you might
otherwise receive a premium for your shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our management and Board of Directors (Board). These provisions include:
|
|
|
authorizing the issuance of blank check preferred stock without any need for action by
stockholders;
|
|
|
|
establishing a classified Board, so that only approximately one-third of our directors are elected each year;
|
|
|
|
providing our Board the ability to set the number of directors and to fill vacancies on the Board occurring
between stockholder meetings;
|
|
|
|
providing that directors may only be removed for cause and only by the affirmative vote of the
holders of at least a majority in voting power of our issued and outstanding capital stock; and
|
|
|
|
limiting the ability of our stockholders to call special meetings
|
We are also subject to provisions of the Delaware corporation law that, in general, prohibit any business combination with a
beneficial owner of 15% or more of our common stock for three years following the date the beneficial owner acquired at least 15% of our stock, unless various conditions are met, such as approval of the transaction by our Board. Together, these
charter and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock.
The existence of the foregoing provisions and anti-takeover measures, as well as the significant amount of common stock
beneficially owned by our Chief Executive Officer and Chairman, Mr. Johnsrud, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company,
thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
- 11 -
USE OF PROCEEDS
We estimate that the aggregate proceeds from the rights offering, before deducting estimated offering expenses, will be
approximately $5.0 million. We intend to use the entire net proceeds of this rights offering to pay down a portion of the outstanding balance under our Credit Facility (as defined herein), which will then be available for further drawdowns, subject
to any borrowing base limitations and compliance with other applicable terms and conditions of the Credit Facility.
- 12 -
DETERMINATION OF OFFERING PRICE
As part of the Restructuring, the Company agreed that the offering price in the rights offering would be equal to a 20%
discount to a volume-weighted market-average price per share. The volume-weighted market-average price per share was based off of the Exchange Offer Conversion Price. Our Board considered a number of relevant factors when determining the offering
price. In considering the subscription price, our Board considered a number of factors, including the price at which our stockholders might be willing to participate in the rights offering, historical and current trading prices for our common stock,
the need for liquidity and capital to pay down the Credit Facility, and the desire to provide an opportunity to our stockholders to participate in the rights offering on a pro rata basis. In conjunction with its review of these factors, the Board
reviewed our history and prospects, including our prospects for future earnings and our current financial condition and regulatory status. The subscription price will not necessarily be related to our book value, net worth, or any other established
criteria of value and may or may not be considered the fair value of our common stock to be offered in the rights offering. You should not assume or expect that, after the rights offering, our common stock will trade at or above the subscription
price and we cannot assure you that our common stock will trade at or above the subscription price in any given time period. We also cannot assure you that you will be able to sell common stock purchased during the rights offering at a price equal
to or greater than the subscription price. Accordingly, we urge you to obtain a current quote for our common stock before exercising your subscription rights.
- 13 -
DILUTION
Purchasers of our common stock in the rights offering will experience an immediate and substantial dilution of the net
tangible book value of the shares purchased. At [ ], we had a net tangible book value of approximately $[ ], or
$[ ] per share of our common stock. We calculate net tangible book value per share by calculating the difference between the total assets less intangible assets and total liabilities, and dividing the
result by the number of shares of common stock outstanding. The following table illustrates this per-share dilution.
Pro
forma as adjusted net tangible book value dilution per share represents the difference between the amount per share of common stock in the rights offering and the pro forma net tangible book value per share of common stock immediately after the
completion of this offering as of [ ].
|
|
|
|
|
|
|
|
|
Subscription Price
|
|
|
|
|
|
$
|
|
|
Net tangible book value per share at
[ ] before the rights offering
|
|
$
|
|
|
|
|
|
|
Increase in pro forma as adjusted net tangible book value per share attributable to the rights
offering
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma as adjusted net tangible book value per share after giving effect to the rights
offering
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Dilution in pro forma as adjusted net tangible book value per share to purchasers in the rights
offering
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
- 14 -
RESTRUCTURING TRANSACTIONS
We are a leading provider of comprehensive, full-cycle environmental solutions to customers focused on the exploration,
development and ongoing production of oil and natural gas from shale formations in the United States. We provide one-stop, total environmental solutions, including delivery, collection, treatment, recycling, and disposal of water, wastewater, waste
fluids, hydrocarbons, and restricted solids that are part of the drilling, completion and ongoing production of shale oil and natural gas.
Due to the difficult macro environment and the corresponding impact of the prolonged depression in oil and gas prices that has
continued to negatively affect us and others in our industry, we have experienced a decline in demand and pricing for our services. These factors, coupled with our large outstanding debt service obligations, have diminished our cash position and
capital resources and raised substantial doubt about our ability to continue as a going concern. In order to address short-term liquidity needs, we undertook a strategic review and assessment of our business and operations. We divested our
industrial solutions business when we sold Thermo Fluids Inc. in the first half of 2015, in order to focus exclusively on our core shale environmental solutions business. Further, we sought to maximize liquidity by implementing various
cost-management initiatives, which included limiting our capital expenditures to only those deemed critical to our ongoing operations and those necessary to support our key growth initiatives. In addition, we offset the cash impact of these
expenditures by selling underutilized or non-core assets.
The worsening market environment and the continued decline in
commodity prices have negatively affected our results from operations, financial position and market prices for our securities, including our common stock. On January 19, 2016, the NYSE notified us that we were not in compliance with the
continued listing standard set forth in Section 802.01B of the NYSE Listed Company Manual due to our failure to maintain an average global market capitalization of at least $15.0 million over a consecutive 30-day trading period. As such, the
NYSE informed us that trading of our common stock would be suspended before the opening of trading on January 20, 2016, and that it initiated delisting procedures with respect to our common stock. Our common stock began trading on the OTCQB on
January 20, 2016. On February 3, 2016, the NYSE filed a Form 25-NSE with the SEC, notifying the SEC of our removal from listing and registration on the NYSE.
In the first quarter of 2016, the lenders under our asset-based revolving credit facility (the Credit Facility)
completed their periodic redetermination of the orderly liquidation values of our eligible machinery and equipment. The redetermination resulted in an approximately $21 million decline in our borrowing base and availability under the Credit
Facility, which resulted in further tightening of our liquidity. While we were, and remain, in compliance with our existing debt arrangements, we recognized that absent an improvement in commodity prices or a reduction in our indebtedness and cash
interest expense, we may not be able to continue to make scheduled payments under our debt obligations, and in such event may need to seek relief under the U.S. Bankruptcy Code.
In response to our financial results and concerns about short- and long-term liquidity, we reviewed various options to
restructure our balance sheet to improve our overall capital structure. As a result, our Board, with assistance from our advisors, developed the Restructuring (as defined herein), intended to improve liquidity, defer cash interest expense, and
preserve value for holders of our common stock.
Summary of the Restructuring
On March 11, 2016, we entered into a Restructuring and Support Agreement (the Restructuring Support Agreement)
with holders of more than 80% (the Supporting Holders) of our 2018 Notes to implement a proposed debt restructuring and recapitalization plan (the Restructuring).
- 15 -
Pursuant to the Restructuring, we consummated the following financing
transactions on or before April 15, 2016:
|
|
|
Amendment of the Credit Facility to (i) reduce the commitment from $125 million to $100 million,
(ii) amend certain rates and covenants, and (iii) permit the transactions contemplated by the Restructuring, among other amendments.
|
|
|
|
Pursuant to the Exchange Offer (as defined herein), the issuance to tendering holders of the 2018 Notes of
(i) $327,221,000 aggregate principal amount of new Second-Lien Notes due 2021 (the 2021 Notes) under a new indenture, (ii) $908,000 in shares of common stock at a conversion price per share of $0.32 (the Conversion
Price), which resulted in the issuance of 2,837,500 shares of common stock (the Exchange Offer Shares), and (iii) 10-year penny warrants (the Exchange Warrants) to purchase 10% of the outstanding shares of common
stock, on a fully diluted basis after taking into account the common stock to be issued in connection with the Johnsrud Equity Conversion (as defined herein) and the rights offering, and the issuance of the Exchange Offer Shares, subject only to
dilution by the shares issued or to be issued in connection with a new management incentive plan in form and substance acceptable to the Supporting Holders.
|
|
|
|
Entry into a new last out first lien term loan in the aggregate amount of $24.0 million (the Term
Loan) and in connection therewith issuance of 10-year penny warrants to the lenders under the Term Loan (the Term Loan Warrants and, together with the Exchange Warrants, the Warrants) to purchase 5% of the outstanding
shares of the common stock, on a fully diluted basis after taking into account the common stock to be issued in connection with the Johnsrud Equity Conversion (as defined herein) and this rights offering, and the issuance of the Exchange Offer
Shares, subject only to dilution by the shares issued or to be issued in connection with a new management incentive plan in form and substance acceptable to the Supporting Holders.
|
Pursuant to the Restructuring and subject to the approval by our stockholders of an amendment to our Certificate of
Incorporation to provide sufficient additional shares, we also intend to consummate this rights offering and the Johnsrud Equity Conversion (as defined herein).
Exchange Offer
On
March 16, 2016, we commenced an exchange offer and consent solicitation (the Exchange Offer) for any and all outstanding 2018 Notes, with the exception of approximately $31.4 million principal amount of 2018 Notes owned by an entity
controlled by Mark D. Johnsrud, our Chairman and Chief Executive Officer (the Johnsrud Notes), for new 2021 Notes, Exchange Offer Shares, and Exchange Warrants. The Exchange Offer closed on April 15, 2016, with approximately 89% of
the holders of the 2018 Notes participating and we issued the Exchange Warrants to purchase 3,653,185 shares of common stock. The 2021 Notes contained the following material terms:
|
|
|
Maturity is on April 15, 2021;
|
|
|
|
The 2021 Notes are secured by a second-priority lien on the same collateral as the Credit Facility and the
Term Loan, each of which is secured by substantially all of our and our subsidiaries assets, whether now owned or hereafter acquired (collectively, the Collateral). The 2021 Notes rank equal in right of payment to all of our senior
indebtedness and senior to all of our subordinated indebtedness;
|
|
|
|
The 2021 Notes are guaranteed by our subsidiaries that guarantee the obligations under the Credit Facility and
the Term Loan;
|
|
|
|
Interest is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on
October 15, 2016, and will be payable as follows: (i) interest payable on or before October 15, 2016, will be paid in kind by increasing the principal amount payable and due at maturity at an annual rate of 12.5%; (ii) interest
payable after October 15, 2016, but on or before April 15, 2018, will be paid at an annual rate of 10.0% with 50% paid in kind and 50% in cash; and (iii) interest payable after April 15, 2018, will be paid in cash at an annual
rate of 10.0% until maturity; and
|
- 16 -
|
|
|
The 2021 Notes are subject to optional redemption and mandatory redemption provisions at redemption prices and
other terms and conditions set forth in the indenture governing the 2021 Notes.
|
First-Lien Term Loan
Concurrently with the closing of the Exchange Offer, we entered into a new Term Loan Credit Agreement (the Term Loan
Agreement), pursuant to which the lenders thereunder provided us with the Term Loan for $24 million. The proceeds of the Term Loan were applied to pay down a portion of the outstanding balance under the Credit Facility, and were reborrowed by
us to fund our semi-annual interest payment on April 15, 2016, under the 2018 Notes and pay transaction fees and expenses related to the Restructuring. The Term Loan matures on April 15, 2018, at which time we must repay the outstanding
principal amount of the Term Loan, together with interest accrued and unpaid thereon. Interest on the Term Loan accrues at a rate of 13.0% per annum to be paid in kind by increasing the principal amount payable thereunder and due at maturity;
however, if there is a Default (as defined in the Term Loan Agreement), the agent or lenders thereunder may increase the interest rate thereunder to 17.0% per annum. The Term Loan is secured by a first-priority lien on the Collateral, and is
guaranteed by our subsidiaries that guarantee the obligations under the Credit Facility and the 2021 Notes. Additionally, the lenders under the Term Loan received the Term Loan Warrants as a commitment fee for providing the Term Loan.
Amendment to Credit Facility
In contemplation of the Exchange Offer and the Term Loan, we amended the Credit Facility (the Credit Facility
Amendment). Among other terms and conditions, the Credit Facility Amendment amended the Credit Facility as follows:
|
|
|
Reduced the maximum revolver commitments from $125.0 million to $100.0 million;
|
|
|
|
Replaced the leverage ratio financial maintenance covenant with a new minimum EBITDA financial maintenance
covenant that will be tested monthly;
|
|
|
|
Amended the definition of EBITDA for purposes of the financial maintenance covenant to provide
allowances for certain unusual or non-recurring fees, costs and expenses;
|
|
|
|
Amended the definition of Borrowing Base (i) to set the eligible equipment advance rates
based on net book value at 60% and on Net Orderly Liquidation Value (as defined in the Credit Facility) at 80% and (ii) to cap Borrowing Base availability attributable to eligible equipment at 75%;
|
|
|
|
Increased the default rate upon the occurrence and continuation of an event of default from 2% to 4%;
|
|
|
|
Increased the applicable margin on LIBOR Rate and Base Rate Loans (each as defined in the Credit Facility) and
the unused line fee;
|
|
|
|
Eliminated our ability to voluntarily reduce the commitments without termination the Credit Facility;
|
|
|
|
Required us to apply proceeds from the Restructuring transactions and related agreements and from asset sales
to pay down the Credit Facility;
|
|
|
|
Amended the definition of Permitted Disposition to permit certain additional dispositions;
|
|
|
|
Amended certain definitions in connection with the Restructuring transactions, including Change of
Control, Permitted Indebtedness, and Permitted Liens; and
|
|
|
|
Prohibited us from optionally prepaying or acquiring other indebtedness, making any payment on subordinated
indebtedness, or amending certain agreements or documents.
|
In addition, we agreed to certain make-whole
fees that would be payable to the lenders under the Credit Facility upon early termination of the Credit Facility as a result of acceleration, bankruptcy or otherwise, unless amounts outstanding under the Credit Facility are paid in full.
- 17 -
Rights Offering
As part of the Restructuring, we are undertaking this rights offering in which each holder of common stock will be granted
subscription rights to purchase its pro rata share of $5.0 million of additional common stock exercisable at the offering price. The rights offering is fully backstopped by Mr. Johnsrud, pursuant to which Mr. Johnsrud will receive a
backstop fee of 5% payable in the form of additional common stock issued at the Conversion Price. In order to secure his backstop obligations, Mr. Johnsrud deposited the Escrowed Funds to a third party escrow account on April 15, 2016. The
proceeds from the rights offering will be applied to amounts outstanding under the Credit Facility, which amounts may be redrawn subject to the terms and conditions of the Credit Facility. We expect to complete the rights offering no later than the
second quarter of 2016, subject to approval of our stockholders to amend our Certificate of Incorporation to provide for the issuance of sufficient additional shares of common stock. We are holding a special meeting of stockholders on May 20,
2016, in order to approve this amendment to increase the authorized shares of common stock under our Certificate of Incorporation.
Equity Conversion
Subject to stockholder approval to our Certificate of Incorporation to provide for the issuance of sufficient
additional shares of common stock, the approximately $31.4 million principal amount of Johnsrud Notes will be exchanged for common stock at a conversion price equal to the Conversion Price. The Johnsrud Notes were canceled on the closing of the
Exchange Offer and, subject to approval of by our stockholders of an amendment to our Certificate of Corporation to provide sufficient additional shares, Mr. Johnsrud is entitled to receive 98,234,375 shares of common stock into which the
Johnsrud Notes are converted.
Management Incentive Plan
As part of the Restructuring, we will implement a Management Incentive Plan, in form and substance acceptable to the Supporting
Holders, that will provide for issuance of up to 5-10% of the outstanding common stock on a fully diluted basis (the MIP). The form of equity shall be stock options.
Effect of the Restructuring
Upon consummation of the Johnsrud Equity Conversion and the rights offering and after giving effect to the other components of
the Restructuring, we expect to have approximately 176 million shares of outstanding common stock on a fully-diluted basis, excluding shares issuable in connection with the management incentive plan contemplated by the Restructuring. The
issuance of a substantial number of additional shares of common stock in order to complete the Restructuring would have a dilutive effect on a stockholders voting power. In addition, the issuance of additional shares of common stock pursuant
to the Johnsrud Equity Conversion and the rights offering would decrease the percentage ownership of our existing stockholders and, depending upon the price at which such shares are issued and the market price of the shares, could be price dilutive
to our existing stockholders.
- 18 -
THE RIGHTS OFFERING
The Subscription Rights
We are distributing, at no charge, to holders of our common stock subscription rights to purchase shares of our common stock.
One right has been distributed for each share outstanding to record holders of our common stock as of the record date, [ ], 2016.
Each subscription right will entitle a holder to purchase one share of our common stock. The subscription rights will be evidenced by rights certificates. Subscription rights will entitle a holder to a subscription right.
Subscription Right
The subscription right gives the holder the opportunity to purchase one share of our common stock for $0.256 per share. Only
subscription rights to purchase whole shares are exercisable, and no fractional shares will be issued. We have granted to you, as a stockholder of record as of 5:00 p.m., New York City time, on the record date, one right for each share of our common
stock you owned at that time. You may exercise the subscription right for any whole number of shares subject to the subscription right, or you may choose not to exercise any subscription rights.
In order to properly exercise your subscription right, you must deliver to the subscription agent the subscription payment and
a properly completed rights certificate, or if you hold your subscription rights through a broker, dealer, custodian bank or other nominee, which we generally refer to as a nominee, you should complete and return to your nominee the form
entitled Beneficial Owner Election or such other appropriate documents as are provided by your record holder related to your subscription right before the expiration of the rights offering.
If you hold your shares in the name of a nominee who uses the services of DTC, DTC will issue a number of subscription rights
to your nominee equal to each share of our common stock you beneficially own on the record date. See The Rights OfferingMethod of Exercising Subscription RightsSubscription By Beneficial Owners on page 20.
No Over-Subscription Privilege
Holders of subscription rights will not have the opportunity to purchase shares that are not purchased by other holders of
subscription rights.
No Fractional Rights or Shares
We will not issue fractional subscription rights or cash in lieu of fractional shares underlying subscription rights.
Fractional shares of common stock resulting from the exercise of the subscription will be eliminated by rounding down in each case to the nearest whole share. American Stock Transfer & Trust Company, LLC, our subscription agent for the
rights offering, will determine the subscription right.
Method of Exercising Subscription Rights
The exercise of subscription rights is irrevocable and may not be cancelled or modified, even if the rights offering is
extended by us in our discretion. You may exercise your subscription rights as follows:
Subscription by Registered Stockholders
Holders of record of subscription rights may exercise subscription rights by properly completing and executing the rights
certificate together with any required signature guarantees and forwarding it, together with full subscription payment, to the subscription agent at the address set forth below under Subscription Agent, before the expiration of the
rights offering. Shares underlying subscription rights may be purchased and/or titled in the name of certain qualified designees of the holder of record of the subscription rights (e.g., an immediate family member, trust or tax-planning vehicle of
the holder of record; a corporate affiliate of the holder of record; or a charitable institution).
- 19 -
Subscription by Beneficial Owners
If you are a beneficial owner of shares of our common stock that are registered in the name of a nominee, or if you hold our
common stock certificates and would prefer to have an institution conduct the transaction relating to the subscription rights on your behalf, you should instruct your nominee to exercise your subscription rights and deliver all subscription
documents and payment on your behalf before 5:00 p.m., New York City time, on [ ], 2016, which is the expiration of the rights
offering. Your subscription rights will not be considered exercised unless the subscription agent receives from you or your broker, as the case may be, all of the required subscription documents and your full subscription payment for your
subscription prior to 5:00 p.m., New York City time, on [ ], 2016.
Subscription by DTC Participants
If your subscription rights are held of record through DTC, the exercise of your subscription rights may be made through the
facilities of DTC. In this case, you may exercise your subscription rights by instructing DTC (directly or through your broker) to transfer (1) your subscription rights from your account to the account of the subscription agent, together with
certification by DTC (on your behalf) as to the aggregate number of subscription rights you are exercising and the number of shares of our common stock you are subscribing for under your subscription right, and (2) your full subscription
payment for your subscription.
Payment Method
Payments must be made in full in U.S. currency by:
|
|
|
check or bank draft payable to American Stock Transfer & Trust Company, LLC drawn upon a U.S. bank;
|
|
|
|
wire transfer of immediately available funds to accounts maintained by the subscription agent.
|
Payment received after the expiration of the rights offering will not be honored, and the subscription
agent will return your payment to you, without interest, as soon as practicable. The subscription agent will be deemed to receive payment upon:
|
|
|
clearance of any uncertified check deposited by the subscription agent;
|
|
|
|
receipt by the subscription agent of any certified check bank draft drawn upon a U.S. bank; or
|
|
|
|
receipt of collected funds in the subscription agents account.
|
If you elect to exercise your subscription rights, we urge you to consider using a certified check or wire transfer of funds
to ensure that the subscription agent receives your funds before the expiration of the rights offering. If you send an uncertified check, payment will not be deemed to have been received by the subscription agent until the check has cleared, but if
you send a certified check bank draft drawn upon a U.S. bank or wire or transfer funds directly to the subscription agents account, payment will be deemed to have been received by the subscription agent immediately upon receipt of such
instruments or wire or transfer.
Any personal check used to pay for shares of our common stock must clear the appropriate
financial institutions prior to 5:00 p.m., New York City time, on [ ], 2016, which is the expiration of the rights offering. The
clearinghouse may require five or more business days. Accordingly, holders of subscription rights that wish to pay the subscription price by means of an uncertified personal check are urged to make payment sufficiently in advance of the expiration
of the rights offering to ensure such payment is received and clears by such date.
You should read the instruction letter
accompanying the rights certificate carefully and strictly follow it. DO NOT SEND RIGHTS CERTIFICATES OR PAYMENTS TO THE COMPANY. Except as described below under Guaranteed Delivery Procedures, we will not consider your subscription
received until the subscription agent has received delivery of a properly completed and duly executed rights certificate and payment of the full subscription amount. The risk of delivery of all documents and payments is borne by you or your nominee,
not by the subscription agent or us.
- 20 -
The method of delivery of rights certificates and payment of the subscription
amount to the subscription agent will be at the risk of the holders of subscription rights. If sent by mail, we recommend that you send those certificates and payments by overnight courier or by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to the subscription agent and clearance of payment before the expiration of the rights offering.
Unless a rights certificate provides that the shares of our common stock are to be delivered to the record holder of such
subscription rights or such certificate is submitted for the account of a bank or a broker, signatures on such rights certificate must be guaranteed by an eligible guarantor institution, as such term is defined in Rule 17Ad-15 of the
Exchange Act, subject to any standards and procedures adopted by the subscription agent. See Medallion Guarantee May Be Required.
Missing
or Incomplete Subscription Information
If you do not indicate the number of subscription rights being exercised, or
the subscription agent does not receive the full subscription payment for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised the maximum number of subscription rights that may be
exercised with the aggregate subscription payment you delivered to the subscription agent. If we do not apply your full subscription payment to your purchase of shares of our common stock, any excess subscription payment received by the subscription
agent will be returned, without interest, as soon as practicable.
Expiration Date and Extensions
The subscription period, during which you may exercise your subscription rights, expires at 5:00 p.m., New York City time, on
[ ], 2016, which is the expiration of the rights offering. If you do not exercise your subscription rights before that time, your
subscription rights will expire and will no longer be exercisable. We will not be required to issue shares of our common stock to you if the subscription agent receives your rights certificate or your subscription payment after that time, regardless
of when the rights certificate and subscription payment were sent, unless you send the documents in compliance with the guaranteed delivery procedures described below. The period for exercising your subscription rights may be extended by us in our
discretion. We may extend the expiration date of the rights offering by giving oral or written notice to the subscription agent on or before the scheduled expiration date. If we elect to extend the expiration of the rights offering, we will issue a
press release announcing such extension no later than 9:00 a.m., New York City time, on the next business day after the most recently announced expiration of the rights offering. We will extend the duration of the rights offering as required by
applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in this rights offering.
Withdrawal and Termination; Extension
We may cancel or terminate the rights offering, as determined by us in our discretion. The period for exercising your
subscription rights may be extended by us in our discretion.
Subscription Agent
The subscription agent for this offering is American Stock Transfer & Trust Company, LLC. The address to which
subscription documents and subscription payments (other than wire transfers) should be delivered is:
|
|
|
By regular mail:
|
|
By registered, certified or express mail, by overnight courier or by personal delivery:
|
|
|
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
P.O. Box 2042
New York, New York 10272-2042
|
|
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219
|
- 21 -
If you deliver subscription documents or subscription payments in a manner
different than that described in this prospectus, then we may not honor the exercise of your subscription rights.
You
should direct any questions or requests for assistance concerning the method of subscribing for the shares of our common stock or for additional copies of this prospectus to the subscription agent, American Stock Transfer & Trust Company,
LLC, at (877) 248-6417 or (718) 921-8317.
Fees and Expenses
We will pay all fees charged by the subscription agent. You are responsible for paying any other commissions, fees, taxes or
other expenses incurred in connection with the exercise of the subscription rights.
Medallion Guarantee May Be Required
Your signature on each subscription rights certificate must be guaranteed by an eligible institution, such as a member firm of
a registered national securities exchange or a member of the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company having an office or correspondent in the United States, subject to standards and procedures adopted by
the subscription agent, unless:
|
|
|
your subscription rights certificate provides that shares are to be delivered to you as record holder of those
subscription rights; or
|
|
|
|
you are an eligible institution.
|
You can obtain a signature guarantee from a financial institutionsuch as a commercial bank, savings bank, credit union
or broker dealerthat participates in one of the Medallion signature guarantee programs. The three Medallion signature guarantee programs are the following:
|
|
|
Securities Transfer Agents Medallion Program (STAMP), whose participants include more than 7,000 U.S. and
Canadian financial institutions.
|
|
|
|
Stock Exchanges Medallion Program (SEMP), whose participants include the regional stock exchange member firms
and clearing and trust companies.
|
|
|
|
New York Stock Exchange Medallion Signature Program (MSP) whose participants include NYSE member firms.
|
If a financial institution is not a member of a recognized Medallion signature guarantee program, it
would not be able to provide signature guarantees. Also, if you are not a customer of a participating financial institution, it is likely the financial institution will not guarantee your signature. Therefore, the best source of a Medallion
Guarantee would be a bank, savings and loan association, brokerage firm or credit union with which you do business. The participating financial institution will use a Medallion imprint or stamp to guarantee the signature, indicating that the
financial institution is a member of a Medallion signature guarantee program and is an acceptable signature guarantor.
Notice to Nominees
If you are a nominee holder that holds shares of our common stock for the account of others on the record date, you should
notify the beneficial owners of the shares for whom you are the nominee of the rights offering as soon as possible to learn their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial
owner, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the appropriate rights certificate and submit it to the subscription agent with the
proper subscription payment. If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all beneficial owners in the aggregate otherwise would have been
entitled had they been direct holders of our common stock on the record date, provided that you, as a nominee record holder, make a proper showing to the subscription agent by submitting the form entitled Nominee Holder Certification,
which is provided with your rights offering materials. If you did not receive this form, you should contact the subscription agent to request a copy.
- 22 -
Beneficial Owners
If you are a beneficial owner of shares of our common stock or will receive your subscription rights through a nominee, we will
ask your nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need to have your nominee act for you. If you hold certificates of our common stock directly and would prefer to have your broker,
custodian bank or other nominee act for you, you should contact your nominee and request it to effect the transactions for you. To indicate your decision with respect to your subscription rights, you should complete and return to your nominee the
form entitled Beneficial Owner Election. You should receive this form from your nominee with the other rights offering materials. If you wish to obtain a separate subscription rights certificate, you should contact your nominee as soon
as possible and request that a separate subscription rights certificate be issued to you. You should contact your nominee if you do not receive this form, but you believe you are entitled to participate in the rights offering. We are not responsible
if you do not receive the form from your nominee or if you receive it without sufficient time to respond.
Guaranteed Delivery Procedures
If you wish to exercise subscription rights, but you do not have sufficient time to deliver the rights certificate evidencing
your subscription rights to the subscription agent before the expiration of the rights offering, you may exercise your subscription rights by the following guaranteed delivery procedures:
|
|
|
deliver to the subscription agent before the expiration of the rights offering the subscription payment for
each share you elected to purchase pursuant to the exercise of subscription rights in the manner set forth above under The Rights OfferingPayment Method on page 20;
|
|
|
|
deliver to the subscription agent before the expiration of the rights offering the form entitled Notice
of Guaranteed Delivery; and
|
|
|
|
deliver the properly completed rights certificate evidencing your subscription rights being exercised and the
form entitled Nominee Holder Certification, if applicable, with any required signatures guaranteed, to the subscription agent within three (3) business days following the date you submit your Notice of Guaranteed Delivery.
|
Your Notice of Guaranteed Delivery must be delivered in substantially the same form provided with the
Form of Instructions for Use of Nuverra Environmental Solutions, Inc. Subscription Rights Certificates, which will be distributed to you with your rights certificate. Your Notice of Guaranteed Delivery must include a signature guarantee
from an eligible institution, acceptable to the subscription agent. A form of that guarantee is included with the Notice of Guaranteed Delivery.
In your Notice of Guaranteed Delivery, you must provide:
|
|
|
the number of subscription rights represented by your rights certificate and the number of shares of our
common stock for which you are subscribing under your subscription right; and
|
|
|
|
your guarantee that you will deliver to the subscription agent a rights certificate evidencing the
subscription rights you are exercising within three (3) business days following the date the subscription agent receives your Notice of Guaranteed Delivery.
|
You may deliver your Notice of Guaranteed Delivery to the subscription agent in the same manner as your rights certificate at
the address set forth above under Subscription Agent.
The subscription agent will send you additional copies
of the form of Notice of Guaranteed Delivery if you need them. You should call the subscription agent at (877) 248-6417 or (718) 921-8317 to request additional copies of the form of Notice of Guaranteed Delivery.
- 23 -
Transferability of Subscription Rights
The subscription rights granted to you are not transferable and, therefore, you may not sell, transfer or assign your
subscription rights to anyone. The subscription rights will not be listed for trading on the OTCQB or any other stock exchange or market.
Validity of
Subscriptions
We will resolve all questions regarding the validity and form of the exercise of your subscription
rights, including time of receipt and eligibility to participate in the rights offering. In resolving all such questions, we will review the relevant facts, if necessary, consult with our legal advisors, and we may request input from the relevant
parties. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights
offering is extended. We will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be
unlawful. You must resolve any irregularities in connection with your subscriptions before the subscription period expires, unless waived by us in our sole discretion. Neither we nor the subscription agent will be under any duty to notify you or
your representative of defects in your subscriptions. A subscription will be considered accepted, subject to our right to withdraw or terminate the rights offering, only when a properly completed and duly executed rights certificate and any other
required documents and the full subscription payment have been received by the subscription agent. Our interpretations of the terms and conditions of the rights offering will be final and binding.
Escrow Arrangements; Return of Funds
The subscription agent will hold funds received in payment for shares of our common stock in a segregated account pending
completion of the rights offering. The subscription agent will hold this money in escrow until the rights offering is completed or is withdrawn and canceled. If the rights offering is canceled for any reason, all subscription payments received by
the subscription agent will be returned, without interest, as soon as practicable.
Stockholder Rights
You will have no rights as a holder of the shares of our common stock you purchase in the rights offering, if any, until
certificates representing the shares of our common stock are issued to you. You will have no right to revoke your subscriptions after you deliver your completed rights certificate, the full subscription payment and any other required documents to
the subscription agent.
Foreign Stockholders
We will not mail this prospectus or rights certificates to stockholders with addresses that are outside the United States. The
subscription agent will hold these rights certificates for their account. To exercise subscription rights, our foreign stockholders must notify the subscription agent prior to 11:00 a.m., New York City time, at least three business days before the
expiration of the rights offering and demonstrate to the satisfaction of the subscription agent that the exercise of such subscription rights does not violate the laws of the jurisdiction of such stockholder.
No Revocation or Change
Once you submit the form of rights certificate to exercise any subscription rights, you are not allowed to revoke or change the
exercise or request a refund of monies paid. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights offering is
extended. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at the subscription price.
- 24 -
Regulatory Limitation
We will not be required to issue to you shares of our common stock pursuant to the rights offering if, in our opinion, you are
required to obtain prior clearance or approval from any state or federal regulatory authorities to own or control such shares and if, at the time the rights offering expires, you have not obtained such clearance or approval.
U.S. Federal Income Tax Treatment of Rights Distribution
For U.S. federal income tax purposes, you generally should not recognize income or loss in connection with the receipt or
exercise of subscription rights. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition of our common stock. For
further information, please see Certain Material U.S. Federal Income Tax Consequences below.
No Recommendation to Holders of Subscription
Rights
We are making no recommendation regarding your exercise of the subscription rights. You are urged to make your
decision based on your own assessment of our business and the rights offering. Please see Risk Factors beginning on page 7 for a discussion of some of the risks involved in investing in our common stock through the rights offering
and in investing further in the Company.
- 25 -
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
This section describes certain material U.S. federal income tax consequences of the receipt and exercise or expiration of the
subscription rights acquired through the rights offering and the receipt, ownership and sale of shares of our common stock received upon exercise of the subscription right and, insofar as it relates to matters of federal income tax law and
regulations on legal conclusions with respect thereto, constitutes the opinion of our tax counsel, Squire Patton Boggs (US) LLP. This section is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the Code, the
Treasury Regulations promulgated under the Code, legislative history, judicial authority and published rulings, any of which may be changed, possibly retroactively, or interpreted differently by the U.S. Internal Revenue Service (which we refer to
as the IRS) or a court, so as to result in U.S. federal income tax consequences different from those discussed below. We have not sought, and will not seek, a ruling from the IRS regarding this rights offering. This section does not
address any tax consequences under foreign, state or local tax laws.
This section applies to you only if you are a U.S.
holder (as defined below), acquire your subscription rights in the rights offering and hold your common stock issued to you upon exercise of the subscription right as capital assets within the meaning of Section 1221 of the Code. This section
does not apply to you if you are not a U.S. holder or if you are a member of a class of holders subject to special rules, including financial institutions, regulated investment companies, real estate investment trusts, dealers in securities or
foreign currency, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations, insurance companies, persons liable for alternative minimum tax, holders of common stock as part of a
hedge, straddle, conversion, constructive sale or other integrated security transaction, and persons whose functional currency is not the U.S. dollar.
You are a U.S. holder for purposes of this discussion if you are a beneficial owner of subscription rights or
common stock and you are (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the
United Sates, any state thereof or the District of Columbia, (iii) an estate whose income is subject to U.S. federal income tax regardless of its source or (iv) a trust (a) if a U.S. court can exercise primary supervision over the
trusts administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (b) that has a valid election in effect to be treated as a U.S. person.
If an entity treated as a partnership for U.S. federal income tax purposes receives the subscription rights or holds the
common stock received upon exercise of the subscription rights, the tax treatment of a partner in such a partnership generally will depend upon the status of the partner and the activities of the partnership. Such a partner or partnership is urged
to consult its own tax advisor as to the U.S. federal income tax consequences of receiving or exercising the subscription rights and acquiring, holding and disposing of our common stock.
YOU ARE URGED, IN ANY EVENT, TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN INCOME AND
OTHER TAX CONSIDERATIONS APPLICABLE TO YOU WITH RESPECT TO THE RECEIPT, SALE OR EXERCISE OF SUBSCRIPTION RIGHTS AND THE RECEIPT, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.
Receipt, Exercise and Expiration of Subscription Rights; Tax Basis and Holding Period of Shares Received upon Exercise of Subscription Rights
Receipt of Subscription Rights
You should not recognize taxable income for U.S. federal income tax purposes upon the receipt of subscription rights in the
rights offering, and the following summary assumes you will qualify for such nontaxable treatment.
If, contrary to our
expectation, the rights offering were not to qualify as nontaxable to you, you would be treated as receiving a taxable distribution equal to the fair market value of the subscription rights on their distribution date. The distribution would be taxed
as a dividend to the extent made out of our current or
- 26 -
accumulated earnings and profits; any excess would be treated first as a return of your basis in your common stock and then as a capital gain. You would receive a basis in the rights equal to
their fair market value on the distribution date, and expiration of them would result in a capital gain or loss for you.
Tax Basis and Holding
Period in Subscription Rights
If the fair market value of the subscription rights you receive is less than 15% of
the fair market value of your common stock on the date you receive your subscription rights, your subscription rights will be allocated a zero tax basis for U.S. federal income tax purposes unless you elect to allocate tax basis between your
existing common stock and your subscription rights in proportion to the relative fair market values of the existing common stock and your subscription rights determined on the date of receipt of your subscription rights. If you choose to allocate
tax basis between your existing common stock and your subscription rights, you must make this election on a statement included with your tax return for the taxable year in which you receive your subscription rights. Such an election is irrevocable.
If the fair market value of your subscription rights is 15% or more of the fair market value of your existing common
stock on the date you receive your subscription rights, then you must allocate your tax basis in your existing common stock between your existing common stock and your subscription rights in proportion to the relative fair market values determined
on the date you receive your subscription rights. The fair market value of the subscription rights on the date the subscription rights will be distributed is uncertain, and we have not obtained, and do not intend to obtain, an appraisal of the fair
market value of the subscription rights on that date. In determining the fair market value of the subscription rights, you should consider all relevant facts and circumstances, including any difference between the subscription price of the
subscription rights and the trading price of our common stock on the date that the subscription rights are distributed, the length of the period during which the subscription rights may be exercised and the fact that the subscription rights are not
transferable.
Exercise or Expiration of Subscription Rights
You will not recognize any gain or loss upon the exercise of subscription rights received in the rights offering, and the tax
basis of the shares of our common stock acquired through exercise of the subscription rights will equal the sum of the subscription price for the shares and your tax basis, if any, in the subscription rights. The holding period for the shares of our
common stock acquired through exercise of the subscription rights will begin on the date the subscription rights are exercised.
If you allow subscription rights received in the rights offering to expire, you generally will not recognize any gain or loss
upon the expiration of the subscription rights. If you have tax basis in the subscription rights and you allow the subscription rights to expire, the tax basis of our common stock owned by you with respect to which such subscription rights were
distributed will be restored to the tax basis of such common stock immediately before the receipt of the subscription rights in the rights offering.
Sale of Shares of Our Common Stock and Receipt of Distributions on Shares of Our Common Stock
You will recognize capital gain or loss upon the sale of our common stock acquired through the exercise of subscription rights
in an amount equal to the difference between the amount realized and your tax basis in our common stock. The capital gain or loss will be long-term if your holding period in the shares is more than one year. Long-term capital gains recognized by
individuals currently are taxable at a maximum rate of 20%, although those gains may also be subject to the additional Medicare tax described below. Long-term capital gains recognized by corporations are taxable at ordinary corporate tax rates. If
you have held your shares of our common stock for twelve months or less, your capital gain or loss will be short-term. Short-term capital gains are taxed at the same maximum rate as ordinary income. Your ability to use any capital loss is subject to
certain limitations.
- 27 -
Distributions, if any, on shares of our common stock acquired through the
exercise of subscription rights will be taxable to you as a dividend to the extent of our current or accumulated earnings and profits at the time of the distribution. Dividends received by corporate holders of our common stock are taxable at
ordinary corporate tax rates subject to any applicable dividends-received deduction. Dividends received by noncorporate holders of our common stock are taxed at the holders capital gain tax rate (a maximum rate of 20%), provided that the
holder meets applicable holding period and other requirements, plus, in some cases, the additional Medicare tax discussed below. Any distributions in excess of our current and accumulated earnings and profits will be treated as a tax-free return of
basis, and any further distributions in excess of your tax basis in our common stock will be treated as gain from the sale or exchange of such common stock. Your tax basis in any property you receive as a distribution on shares of our common stock
will be the propertys fair market value (regardless of whether the distribution is treated as a dividend, as a tax-free return of basis or as gain from the sale or exchange of our common stock).
Certain U.S. holders that are individuals, estates or trusts are subject to an additional 3.8% Medicare tax (which we refer to
as the additional Medicare tax) on investment income. For individual U.S. holders, the additional Medicare tax applies to the lesser of (1) net investment income and (2) the excess of modified adjusted gross
income over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). Net investment income generally equals the taxpayers gross investment income reduced by allocable deductions.
Investment income generally includes dividends and capital gains.
Information Reporting and Backup Withholding
You may be subject to information reporting or backup withholding with respect to dividend payments on or the gross proceeds
from the disposition of our common stock acquired through the exercise of subscription rights. Backup withholding may apply under certain circumstances if you (1) fail to furnish your social security or other taxpayer identification number,
which we refer to as a TIN, (2) furnish an incorrect TIN, (3) fail to report interest or dividends properly or (4) fail to provide a certified statement, signed under penalty of perjury, that the TIN provided is correct,
that you are not subject to backup withholding and that you are a U.S. person. Any amount withheld from a payment under the backup withholding rules is allowable as a credit against (and may entitle you to a refund with respect to) your U.S. federal
income tax liability, provided that the required information is furnished to the IRS. Certain persons are exempt from backup withholding, including corporations and financial institutions.
- 28 -
DESCRIPTION OF COMMON STOCK
The following summary describes the material terms of our common stock. This discussion does not purport to be complete and is
qualified in its entirety by our Certificate of Incorporation and our Bylaws and the applicable provisions of the Delaware General Corporation Law.
Authorized and Outstanding Capital Stock
Our Certificate of Incorporation authorizes the issuance of 51,000,000 shares of capital stock, consisting of 50,000,000 shares
of common stock, par value $0.001 per share, and 1,000,000 shares of preferred stock, par value $0.001 per share, of which 31,052,076 shares of common stock and no shares of preferred stock were issued and outstanding as of May 4, 2016. We
intend to hold a special meeting of stockholders on May 20, 2016, to seek stockholder approval of an amendment to our Certificate of Incorporation to provide for the issuance of additional shares of common stock to consummate the Johnsrud
Equity Conversion and the rights offering, in addition to potential future issuances. Following the special meeting of stockholders, assuming the stockholders approve the amendment to the Certificate of Incorporation, the Company will have the
authority to issue three hundred fifty-one million (351,000,000) shares of capital stock, consisting of (i) three hundred fifty million (350,000,000) shares of common stock, par value $0.001 per share (the common stock),
and (ii) one million (1,000,000) shares of preferred stock, par value $0.001 per share.
As of May 4, 2016,
we had outstanding awards under our 2009 Equity Incentive Plan, as amended, consisting of options to acquire 537,890 shares of common stock and 497,784 shares of restricted stock and restricted stock units.
General
Holders of
common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders. Our holders of common stock do not have cumulative voting rights. Holders of common stock will be entitled to receive ratably such dividends as
may be declared by the Board out of funds legally available therefor, which may be paid in cash, property, or in shares of the Companys capital stock. Upon liquidation, dissolution or winding up of the Company, either voluntarily or
involuntarily, the holders of common stock will be entitled to receive their ratable share of the net assets of the Company legally available for distribution after payment of all debts and other liabilities. There are no conversion, preemptive or
other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock.
Dividends
We have no current plans to pay dividends on common stock in the future. Furthermore, the terms of the Notes, the Term Loan and
the Credit Facility may restrict our ability to do so, and we expect that, if any of our existing credit facilities are refinanced, the amended credit agreements will have similar restrictions. Our other future indebtedness, if any, may also
restrict payment of dividends on common stock.
Limitation on Liability and Indemnification of Directors and Officers
Our Certificate of Incorporation and Bylaws limit our directors and officers liability to the fullest extent
permitted under Delaware General Corporation Law. Specifically, our directors and officers will not be liable for monetary damages for any breach of fiduciary duty by a director or officer, except for liability:
|
|
|
for any breach of the directors or officers duty of loyalty to us or our stockholders;
|
|
|
|
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
|
|
|
under Section 174 of the Delaware General Corporation Law;
|
|
|
|
for any transaction from which a director or officer derives an improper personal benefit; or
|
|
|
|
in connection with a proceeding that was not authorized or consented to by our Board.
|
- 29 -
If the Delaware General Corporation Law is amended to authorize corporate action
further eliminating or limiting the personal liability of directors or officers, then the liability of any of our directors or officers shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so
amended.
Staggered Board of Directors
Our Certificate of Incorporation provides that our Board is classified into three classes of directors of approximately equal
size. The directors in each class will serve for a three-year term, one class being elected each year by our stockholders. As a result, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at
two or more annual meetings.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our Bylaws contain advance notice provisions that a stockholder must follow if it intends to bring business proposals or
director nominations, as applicable, before a meeting of stockholders. These provisions may preclude our stockholders from bringing matters before the annual meeting of stockholders or from making nominations at the annual meeting of stockholders.
Delaware Anti-Takeover Law; Amended and Restated Certificate of Incorporation and Bylaws
We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers.
This section prevents certain Delaware corporations, under certain circumstances, from engaging in a business combination between the corporation and an interested stockholder within three years of the stockholder becoming an
interested stockholder. An interested stockholder is:
|
|
|
a stockholder who owns 15% or more of our outstanding voting stock; or
|
|
|
|
an affiliate or associate of the owner of 15% or more of our outstanding voting stock at any time within the
prior three-year period.
|
A business combination for Section 203 purposes includes a
merger, consolidation, sale or other disposition of our assets having an aggregate value equal to 10% or more of either (i) the aggregate market value of all the assets of the corporation determined on a consolidated basis or (ii) the
aggregate market value of all of our outstanding stock. However, the above provisions of Section 203 do not apply if:
|
|
|
our board of directors approves the transaction that made the stockholder an interested
stockholder, prior to the date of the transaction;
|
|
|
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, that
stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares; or
|
|
|
|
on or subsequent to the date of the transaction, the business combination is approved by our board of
directors and authorized at a meeting of its stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
|
This provision could prohibit or delay mergers or other change in control attempts, and thus may discourage attempts to
acquire us.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
Listing
Our common stock
is currently quoted on the OTCQB Market under the ticker symbol NESC.
- 30 -
PLAN OF DISTRIBUTION
As soon as practicable after the record date for the rights offering, we will distribute the subscription rights and rights
certificates to individuals who owned shares of our common stock at 5:00 p.m., New York City time, on [ ], 2016. If you wish to
exercise your subscription rights and purchase shares of our common stock, you should complete the rights certificate and return it with payment (other than wire transfers) for the shares to the subscription agent, Registrar and Transfer Company, at
the following address:
|
|
|
By regular mail:
|
|
By registered, certified or express mail, by overnight courier or by personal delivery:
|
|
|
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
P.O. Box 2042
New York, New York 10272-2042
|
|
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219
|
See The Rights OfferingMethod of Exercising Subscription Rights on page 19.
If you have any questions, you should contact the subscription agent, American Stock Transfer & Trust Company, LLC, at (877)-248-6417 or (718) 921-8317.
Other than as described herein, we do not know of any existing agreements between or among any stockholder, broker, dealer,
underwriter or agent relating to the sale or distribution of the underlying common stock.
- 31 -
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon for us by Squire Patton Boggs (US) LLP.
EXPERTS
The financial statements of Nuverra Environmental Solutions, Inc. and subsidiaries as of December 31, 2015, and for each
of the years ended in the three-year period ended December 31, 2015, and managements assessment of the effectiveness of internal control over financial reporting as of December 31, 2015, have been incorporated by reference in this
prospectus in reliance upon the reports of KPMG LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference, and upon the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 with the SEC under the Securities Act with respect to the shares of common
stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information included in the registration statement or the schedules, exhibits and amendments to the registration
statement. You should refer to the registration statement and its exhibits and schedules for further information. Statements made in this prospectus as to any of our contracts, agreements or other documents referred to are not necessarily complete.
In each instance, if we have filed a copy of such contract, agreement or other document as an exhibit to the registration statement, you should read the exhibit for a more complete understanding of the matter involved. Each statement regarding a
contract, agreement or other document is qualified in all respects by reference to the actual document. Certain information is also incorporated by reference into this prospectus as described under Incorporation of Certain Documents by
Reference.
You may read and copy information omitted from this prospectus but contained in the registration
statement at the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549 at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. In
addition, materials filed electronically with the SEC are available at the SECs website at http://www.sec.gov.
We
are subject to the information and periodic reporting requirements of the Exchange Act, and, in accordance therewith, file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other
information are available for inspection and copying at the Public Reference Room and website of the SEC referred to above. We also furnish our stockholders with annual reports containing our financial statements audited by an independent registered
public accounting firm and quarterly reports containing our unaudited financial information. We maintain a website at www.nuverra.com. You may access our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports, filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable after this material is electronically filed with, or furnished to,
the SEC. The reference to our website or web address does not constitute incorporation by reference of the information contained at that site.
- 32 -
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with it. This means that we can disclose information to
you by referring you to those documents. The documents that have been incorporated by reference are an important part of the prospectus, and you should review that information in order to understand the nature of any investment by you in our common
stock. We are incorporating by reference the documents listed below:
|
|
|
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as amended by Amendment
No. 1 on Form 10-K/A;
|
|
|
|
The description of our shares of common stock contained in our Form 8-A dated May 22, 2008;
|
|
|
|
Our Current Reports on Form 8-K filed on January 20, 2016, January 25,
2016, February 11, 2016, March 14, 2016, March 17, 2016, March 29, 2016, March 30, 2016, April 1, 2016, April 13, 2016, April 14, 2016, April 18, 2016 (as
amended by Form 8-K/A filed on April 19, 2016) and April 21, 2016; and
|
|
|
|
All documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
prior to the termination of the offering, shall be deemed to be incorporated by reference into this prospectus.
|
Upon request, we will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of
any or all of the reports or documents that have been incorporated by reference into this prospectus. If you would like a copy of any of these documents, at no cost, please write or call us at:
Nuverra Environmental Solutions, Inc.
14624 N. Scottsdale Rd., Suite 300
Scottsdale, Arizona 85254
(602)
903-7802
Attn: Executive Vice President and Chief Legal Officer
Any statement contained in a document which is incorporated by reference in this prospectus is automatically updated and
superseded if information contained in the prospectus modifies or replaces this information.
- 33 -
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table shows the costs and expenses, other than underwriting discounts and commissions, payable in connection with
the sale and distribution of the common stock being registered. All of these expenses will be paid by us. All amounts except for the SEC registration fee are estimated.
|
|
|
|
|
SEC registration fee
|
|
$
|
540.87
|
|
Accounting fees and expenses
|
|
$
|
*
|
|
Legal fees and expenses
|
|
$
|
*
|
|
Printing Costs
|
|
$
|
*
|
|
Filing costs and other miscellaneous fees and expenses
|
|
$
|
*
|
|
Total
|
|
$
|
*
|
|
* The estimated expenses are not presently known. To be
provided by amendment.
|
|
Item 14. Indemnification of Officers and Directors.
The Companys Amended and Restated Certificate of Incorporation, as amended (Certificate of Incorporation),
and Second Amended and Restated Bylaws provide for indemnification of agents including directors, officers and employees to the maximum extent allowed by Delaware law. The Companys Certificate of Incorporation requires indemnification of any
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 he or she is or was a
director, officer, employee or agent if the Board (or other committee or entity empowered to make such a determination) formally determines that he acted in good faith and in a manner reasonably deemed consistent with, or not opposed to, its best
interests. With respect to any criminal action or proceeding, the Board (or other committee or entity empowered to make such a determination) must formally determine that he or she had no reasonable cause to believe his conduct was unlawful. In the
case of any action, suit or proceeding by or in the right of the Company, no indemnification shall be made if such person is determined to be liable to the Company, unless and only to the extent that the court in which such proceeding was brought
determines upon application that such person is fairly and reasonably entitled to indemnity. To the extent that a director, officer, employee or agent has prevailed in defense of any such action, suit or proceeding, he or she shall be indemnified
against expenses (including attorneys fees and witness expenses) actually and reasonably incurred by him or her. The indemnification provided by the Companys Certificate of Incorporation is not exclusive of any other rights to which
those seeking indemnification may be entitled under any statute, bylaw, agreement, vote of uninvolved stockholders, directors or otherwise.
The Company has purchased and maintains insurance covering its directors, officers, employees and agents against any liability
asserted against any of them and incurred by any of them, whether or not the Company would have the power to indemnify them against such liability under the provisions of the Companys Certificate of Incorporation and applicable Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the Companys
directors, officers or controlling persons pursuant to the provisions described above, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission (the Commission) such indemnification is
against public policy as expressed in the Securities Act and is, therefore, unenforceable.
II-1
Item. 15. Recent Sales of Unregistered Securities.
Since May 6, 2013, we have issued the following securities that were not registered under the Securities Act:
|
|
|
On April 1, 2013, the Company entered into a stipulation of settlement with plaintiff and all defendants
in a stockholder derivative lawsuit related to the Companys acquisition of China Water & Drinks, Inc. that was filed in 2010 in the Superior Court of California, County of Riverside (
Hess v. Richard Heckmann et al
., Case No.
INC 10010407). The court entered a final order preliminarily approving the proposed of settlement, on June 24, 2013. Pursuant to that final order, and as part of the consideration paid to settle such lawsuit, in July 2013 the Company issued
558,660 shares of Company common stock to the plaintiffs attorneys, which shares are exempt from registration pursuant to Section 3(a)(10) of the Securities Act. The Company did not receive cash proceeds from the issuance of such shares.
|
|
|
|
On March 4, 2014, the Company entered into a stipulation of settlement to settle a securities class
action pending in the United States District Court for the District of Delaware as Case No. 1:10-cv-00378-LPS-MPT. The lawsuit relates to matters alleged to have occurred in connection with the acquisition by Heckmann Corporation of China Water
and Drinks, Inc. in 2008. The settlement was approved by the court on June 26, 2014, and became effective on August 27, 2014. Pursuant to the courts approval order, and as part of the consideration paid to settle such lawsuit, the
Company issued 282,663 shares of Company common stock to the plaintiffs attorneys on July 2, 2014, and issued 565,327 shares of Company common stock to the plaintiffs on August 27, 2014. The shares are exempt from registration
pursuant to Section 3(a)(10) of the Securities Act. The Company did not receive cash proceeds from the issuance of such shares.
|
|
|
|
On April 15, 2016, in connection with the closing of the Exchange Offer the Company issued $908,000 in
shares of common stock to tendering holders of 2018 Notes who elected to convert such notes for equity (the Equity Conversion). The shares of common stock were issued at a conversion price per share of $0.32 (the Conversion
Price), and resulted in the issuance of 2,837,500 shares of common stock. As part of the Exchange Offer, the Equity Conversion was conducted in accordance with, and the common stock was issued in reliance upon, an exemption from registration
under Section 3(a)(9) of the Securities Act.
|
|
|
|
On April 15, 2016, in connection with the closing of the Exchange Offer, the Company issued the Exchange
Warrants to holders of 2018 Notes tendered in the Exchange Offer. The Exchange Warrants entitle the holders to purchase approximately 10% of the Companys outstanding common stock on a fully diluted basis (after taking into account the common
stock issued as part of the Exchange Offer and the common stock to be issued to Mr. Johnsrud in exchange for the 2018 Notes held by his affiliate and to common stockholders, including Mr. Johnsrud, as part of a rights offering to be
undertaken by the Company), subject to adjustments contained therein. The Exchange Warrants are exercisable at any time, from time to time, at an exercise price of $0.01 per share and expire on April 15, 2026. The Exchange Offer was conducted
in accordance with, and the Exchange Warrants were issued in reliance upon, an exemption from registration under Section 3(a)(9) of the Securities Act.
|
|
|
|
On April 15, 2016, in connection with the execution of the Term Loan Agreement, the Company issued the
Term Loan Warrants to the lenders under the Term Loan Agreement as a commitment fee for providing the Term Loan. The Term Loan Warrants entitle holders to purchase approximately 5% of the Companys outstanding common stock on a fully diluted
basis (after taking into account the common stock issued as part of the Exchange Offer and the common stock to be issued to Mr. Johnsrud in exchange for the 2018 Notes held by his affiliate and to common stockholders, including
Mr. Johnsrud, as part of a rights offering to be undertaken by the Company), subject to adjustments contained therein. The Term Loan Warrants are exercisable at any time, from time to time, at an exercise price of $0.01 per share and expire on
April 15, 2026. The Term Loan Warrants were issued in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act.
|
II-2
Item 16. Exhibits and Financial Statement Schedules.
See the Exhibit Index on the page immediately preceding the Signature Page for a list of exhibits filed as part of this
registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
1. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
2. For the purpose of determining any
liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial
bona fide
offering thereof.
3. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final adjudication of such issue.
4. The
undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plans annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
5. The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription
period, to set forth the results of the subscription offer, the amount of unsubscribed securities, and the terms of any subsequent reoffering thereof. If any public offering is to be made on terms differing from those set forth on the cover page of
the prospectus, a post-effective amendment will be filed to set forth the terms of such offering.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale, State of Phoenix, on May 6, 2016.
|
|
|
Nuverra Environmental Solutions, Inc.
|
|
|
By:
|
|
/s/ Mark D.
Johnsrud
|
|
|
|
Name:
|
|
Mark D. Johnsrud
|
Title:
|
|
Chief Executive Officer,
|
|
|
President and Chairman
|
POWER OF ATTORNEY
We, the undersigned directors and officers of Nuverra Environmental Solutions, Inc., a Delaware corporation (the
Company), do hereby constitute and appoint Mark D. Johnsrud and Joseph M. Crabb, and each and either of them, our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, to do any and all acts
and things in our names and on our behalf in our capacities as directors and/or officers and to execute any and all instruments for us and in our name in the capacities indicated below, which said attorneys and agents may deem necessary or advisable
to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this registration statement, including without limitation any and
all amendments (including post-effective amendments) and supplements hereto; and we hereby ratify and confirm all that said attorneys and agents, or either of them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons in the
capacities and on the dates indicated.
|
|
|
|
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
/s/ Mark D. Johnsrud
Mark D. Johnsrud
|
|
Chief Executive Officer,
Chairman and Director
(Principal
Executive Officer and Principal Financial Officer)
|
|
May 6, 2016
|
|
|
|
/s/ Stacy W. Hilgendorf
Stacy W. Hilgendorf
|
|
Vice President and Corporate Controller
(Principal Accounting Officer)
|
|
May 6, 2016
|
|
|
|
/s/ William M. Austin
William M. Austin
|
|
Director
|
|
May 6, 2016
|
|
|
|
/s/ Edward A. Barkett
Edward A. Barkett
|
|
Director
|
|
May 6, 2016
|
|
|
|
/s/ Tod C. Holmes
Tod C. Holmes
|
|
Director
|
|
May 6, 2016
|
|
|
|
/s/ R. Dan Nelson
R. Dan Nelson
|
|
Director
|
|
May 6, 2016
|
II-4
|
|
|
|
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
/s/ Alfred E. Osborne, Jr.
Alfred E. Osborne, Jr.
|
|
Director
|
|
May 6, 2016
|
|
|
|
/s/ J. Danforth Quayle
J. Danforth Quayle
|
|
Director
|
|
May 6, 2016
|
|
|
|
/s/ Robert B. Simonds
Robert B. Simonds
|
|
Director
|
|
May 6, 2016
|
II-5
|
|
|
Exhibit
Number
|
|
Description
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to Amendment No. 2 to
Heckmann Corporations Registration Statement on Form S-1 filed with the SEC on September 4, 2007)
|
|
|
3.1A
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit
3.1 to Heckmann Corporations Current Report on Form 8-K filed with the SEC on November 5, 2008)
|
|
|
3.1B
|
|
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated herein by reference to
Exhibit 3.1B to Heckmann Corporations Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on March 14, 2011)
|
|
|
3.1C
|
|
Third Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated herein by reference to
Exhibit 3.1C to the Companys Registration Statement on Form S-4 filed with the SEC on May 23, 2013)
|
|
|
3.1D
|
|
Fourth Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated herein by reference to
Exhibit 3.1 to Companys Current Report on Form 8-K filed with the SEC on December 3, 2013)
|
|
|
3.2
|
|
Amended and Restated Bylaws (incorporated herein by reference to Amendment No. 4 to Heckmann Corporations
Registration Statement on Form S-1 filed with the SEC on October 26, 2007)
|
|
|
3.2A
|
|
First Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2A to the Companys Quarterly Report
on Form 10-Q filed with the SEC on November 9, 2010)
|
|
|
3.2B
|
|
Second Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.1 to the Companys Current Report on
Form 8-K filed with the SEC on April 7, 2011)
|
|
|
4.1
|
|
Specimen Certificate for shares of common stock, $.001 par value per share, of Nuverra Environmental Solutions, Inc.
(incorporated herein by reference to Exhibit 4.1 to the Companys Annual report on Form 10-K filed with the SEC on March 10, 2014)
|
|
|
4.2**
|
|
Form of Subscription Rights Certificate
|
|
|
5.1**
|
|
Legal Opinion of Squire Patton Boggs (US) LLP
|
|
|
10.1
|
|
Amended and Restated Credit Agreement, dated February 3, 2014, by and among the Company, as borrower; Wells Fargo Bank,
National Association, a national banking association, as administrative agent; Wells Fargo, Bank of America, N.A., a national banking association, and RBS Citizens, N.A., a national banking association, as joint lead arrangers; Wells Fargo, Bank of
America and RBS Citizens, as joint book runners; Bank of America and RBS Citizens, as co-syndication agents; and Wells Fargo, Bank of America and Citizens Bank of Pennsylvania, as lenders (incorporated herein by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed with the SEC on February 7, 2014)
|
|
|
10.1A
|
|
Joinder and First Amendment to Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association,
as agent for the Lenders, the Lenders party thereto, Nuverra Environmental Solutions, Inc., a Delaware corporation, Capital One Business Credit Corporation and CIT Finance LLC (incorporated herein by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed with the SEC March 24, 2014)
|
|
|
10.1B
|
|
Amended and Restated Guaranty and Security Agreement, dated February 3, 2014, by and among the Company, Heckmann
Environmental Services, Inc., Thermo Fluids Inc., Heckmann Water Resources Corporation, Heckmann Water Resources (CVR), Inc., 1960 Well Services, LLC, HEK Water Solutions, LLC, Appalachian Water Services, LLC, Badlands Power Fuels LLC, Badlands
Power Fuels, LLC, Landtech Enterprises, LLC, Badlands Leasing, LLC, Ideal Oilfield Disposal, LLC; and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed
with the SEC on February 7, 2014)
|
II-6
|
|
|
Exhibit
Number
|
|
Description
|
|
|
10.1C
|
|
Intercompany Subordination Agreement, dated February 3, 2014, by and among the Company, Heckmann Environmental Services,
Inc., Thermo Fluids Inc., Heckmann Water Resources Corporation, Heckmann Water Resources (CVR), Inc., 1960 Well Services, LLC, HEK Water Solutions, LLC, Appalachian Water Services, LLC, Badlands Power Fuels LLC, Badlands Power Fuels, LLC, Landtech
Enterprises, LLC, Badlands Leasing, LLC and Ideal Oilfield Disposal, LLC; and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed with the SEC on February 7,
2014)
|
|
|
10.1D
|
|
Patent Security Agreement, dated February 3, 2014, by and between the Company and Wells Fargo Bank, National Association
(incorporated herein by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K filed with the SEC on February 7, 2014)
|
|
|
10.1E
|
|
Second Amendment, Consent and Release to Amended and Restated Credit Agreement dated April 13, 2015, by and among the
Company, the Agent and the Lenders (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on April 14, 2015)
|
|
|
10.1F
|
|
First Amendment to Amended and Restated Guaranty and Security Agreement dated April 13, 2015, by and among the Company,
certain subsidiaries of the Company named therein, as grantors, and the Agent (incorporated herein by reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K
filed with the SEC on April
14, 2015)
|
|
|
10.1G
|
|
Fourth Amendment, Consent and Release to Amended and Restated Credit Agreement dated November 2, 2015, by and among the
Company, the Agent and the Lenders (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on November 5, 2015)
|
|
|
10.1H
|
|
Second Amendment to Amended and Restated Guaranty and Security Agreement dated November 2, 2015, by and among the Company,
certain subsidiaries of the Company named therein, as grantors, and the Agent (incorporated herein by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed with the SEC on November 5, 2015)
|
|
|
10.1I
|
|
Consent and Fifth Amendment to Amended and Restated Credit Agreement, dated March 10, 2016, by and among Wells Fargo Bank,
National Association, the Lenders named therein, and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on March 14, 2016)
|
|
|
10.1J
|
|
Third Amendment to Amended and Restated Guaranty and Security Agreement, dated March 10, 2016, by and among Nuverra
Environmental Solutions, Inc., certain subsidiaries of Nuverra Environmental Solutions, Inc. named therein, and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K
filed with the SEC on March 14, 2016)
|
|
|
10.1K
|
|
Sixth Amendment to Amended and Restated Credit Agreement, dated March 24, 2016, by and among Wells Fargo Bank, National
Association, the Lenders named therein, and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on March 29, 2016)
|
|
|
10.1L
|
|
Seventh Amendment to Amended and Restated Credit Agreement, dated April 15, 2016, by and among Wells Fargo Bank, National
Association, the lenders named therein, and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.8 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.2
|
|
Heckmann Corporation 2009 Equity Incentive Plan (incorporated herein by reference to Appendix B to the Registrants
Definitive Proxy Statement on Schedule 14A filed with the SEC on March 27, 2012)
|
II-7
|
|
|
Exhibit
Number
|
|
Description
|
|
|
10.3
|
|
First Amendment of the Heckmann Corporation 2009 Equity Incentive Plan (incorporated herein by reference to Appendix A to
the Registrants Definitive Proxy Statement on Schedule 14A filed with the SEC on March 27, 2012)
|
|
|
10.4
|
|
Second Amendment to the Nuverra Environmental Solutions, Inc. 2009 Equity Incentive Plan (incorporated herein by reference
to Exhibit 10.1 the Companys Current Report on Form 8-K filed with the SEC May 8, 2014)
|
|
|
10.5
|
|
Executive Employment Agreement, dated November 30, 2012, between Heckmann Corporation and Mark D. Johnsrud (incorporated
herein by reference to Exhibit 10.4 to Heckmann Corporations Current Report on Form 8-K filed with the SEC on December 6, 2012)
|
|
|
10.5A
|
|
First Amendment to Executive Employment Agreement, dated January 25, 2016, between the Nuverra Environmental Solutions,
Inc. and Mark D. Johnsrud (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on January 25, 2016)
|
|
|
10.6**
|
|
Employment Agreement, dated February 5, 2016, between Nuverra Environmental Solutions, Inc. and Joseph M.
Crabb
|
|
|
10.7
|
|
Term Loan Credit Agreement, dated as of April 15, 2016, by and among Wilmington Savings Fund Society, FSB, as
administrative agent, the lenders identified therein, and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.7A
|
|
Guaranty and Security Agreement, dated as of April 15, 2016, among Nuverra Environmental Solutions, Inc., the other
Grantors party thereto, Wilmington Savings Fund Society, FSB, as administrative agent, and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed with the SEC
on April 21, 2016)
|
|
|
10.7B
|
|
Intercompany Subordination Agreement, dated as of April 15, 2016, among Nuverra Environmental Solutions, Inc., the other
Obligors party thereto, and Wilmington Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.7B
|
|
Trademark Security Agreement, dated as of April 15, 2016, between Nuverra Environmental Solutions, Inc. and Wells Fargo
Bank, National Association (incorporated herein by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.7C
|
|
Security Agreement, dated as of April 15, 2016, among Nuverra Environmental Solutions, Inc., the other Grantors party
thereto and Wilmington Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.5 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.7D
|
|
Intercompany Subordination Agreement, dated as of April 15, 2016, among Nuverra Environmental Solutions, Inc., the other
Obligors party thereto, and Wilmington Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.6 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.7E
|
|
Trademark Security Agreement, dated as of April 15, 2016, between Nuverra Environmental Solutions, Inc. and Wilmington
Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.7 to the Companys Current Report on Form 8-K filed with the SEC on April 21, 2016)
|
|
|
10.8
|
|
Stockholders Agreement, dated as of November 30, 2012, between Heckmann Corporation and Mark D. Johnsrud
(incorporated herein by reference to Exhibit 10.2 to Heckmann Corporations Current Report on Form 8-K filed with the SEC on December 6, 2012)
|
|
|
10.8A
|
|
First Amendment to Stockholders Agreement, dated as of March 10, 2014, between Nuverra Environmental Solutions, Inc.
and Mark D. Johnsrud (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC March 10, 2014)
|
II-8
|
|
|
Exhibit
Number
|
|
Description
|
|
|
10.9
|
|
Second Amended and Restated Executive Employment Agreement, dated November 9, 2011, between Heckmann Corporation and Brian
R. Anderson (incorporated herein by reference to Exhibit 10.2 to Heckmann Corporations Current Report on Form 8-K filed with the SEC on November 9, 2011)
|
|
|
21.1
|
|
Subsidiaries of Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 21.1 to the
Companys Annual Report on Form 10-K filed with the SEC on March 14, 2016)
|
|
|
23.1**
|
|
Consent of KPMG LLP
|
|
|
24.1*
|
|
Power of Attorney of Officers and Directors of the Company (set forth on the signature page)
|
|
|
99.1**
|
|
Form of Instructions for Use of Nuverra Environmental Solutions, Inc. Subscription Rights Certificates
|
|
|
99.2**
|
|
Form of Letter to Stockholders Who Are Record Holders
|
|
|
99.3**
|
|
Form Letter to Brokers and Other Nominee Holders
|
|
|
99.4**
|
|
Form of Letter to Brokers and Other Nominee Holders
|
|
|
99.5**
|
|
Form of Beneficial Owner Election Form
|
|
|
99.6**
|
|
Form of Nominee Holder Certification
|
**
|
To be filed by amendment
|
II-9