FILED: NEW YORK COUNTY CLERK 08/25/ :18 PM INDEX NO /2016 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 08/25/2016

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1 FILED: NEW YORK COUNTY CLERK 08/25/ :18 PM INDEX NO /2016 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 08/25/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK DCF CAPITAL, LLC, Index No.: v. US SHALE SOLUTIONS, LLC, Plaintiff, SUMMONS Date Filed and Purchased: August 25, 2016 Defendant. TO DEFENDANT: US SHALE 7620 WOODWAY DRIVE, SUITE 250 HOUSTON, TX YOU ARE HEREBY SUMMONED to answer the complaint of the plaintiff herein and to serve a copy of your answer on the plaintiff at the address indicated below within 20 days after service of this Summons (not counting the day of service itself), or within 30 days after service is complete if the Summons is not delivered personally to you within the State of New York. Should you fail to answer, a judgment will be entered against you by default for the relief demanded in the complaint. Plaintiff designates New York County as the place of trial. The basis of this designation is Plaintiff s members reside in New York County and Plaintiff s designation. Dated: August 25, 2016 REITLER KAILAS & ROSENBLATT LLC By: s/ Leo G. Kailas. Leo G. Kailas Brett Van Benthysen 885 Third Avenue, 20 th Floor New York, NY (212) lkailas@reitlerlaw.com bvanbenthysen@reitlerlaw.com Attorneys for Plaintiff DCF Capital, LLC 1 of 8

2 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK DCF CAPITAL, LLC, Index No.: Plaintiff, COMPLAINT v. US SHALE SOLUTIONS, LLC, Defendant. Plaintiff, DCF Capital, LLC ( DCF or Plaintiff ), by and through its attorneys Reitler Kailas & Rosenblatt LLC, for his Complaint against defendant US Shale Solutions, LLC, alleges as follows: THE PARTIES 1. Plaintiff DCF is a Delaware Limited Liability Company. The members of DCF are citizens of the State of New York. DCF is a privately owned hedge fund. 2. Defendant US Shale Solutions, LLC ( US Shale or Defendant ) is a Delaware Limited Liability Company. The members of US Shale consist of unincorporated associations. Upon information and belied, at least one of the members of US Shale is incorporated in the State of New York. JURISDICTION AND VENUE 3. This action was previously filed in the Southern District of New York but was voluntarily dismissed without prejudice on August 25, 2016 based on US Shale s counsel s representation that one of the members of the US Shale was a New York Limited Partnership. 4. This court has personal jurisdiction over US Shale because this case arises out of the transaction of business within the State of New York. 2 of 8

3 5. This court has personal jurisdiction over US Shale because this case arises out of a contract by which US Shale agreed to provide goods or services in the State of New York. 6. This court has personal jurisdiction over US Shale because the parties have consented to jurisdiction in New York. 7. Venue is proper in New York County pursuant to CPLR 503 because Plaintiff s members reside in New York County. Upon information and belief, at least one of the members of Defendant is incorporated in the State of New York. 8. Venue is proper in New York County pursuant to CPLR 503 because Plaintiff designates New York County as the place of trial. ALLEGATIONS COMMON TO ALL CAUSES OF ACTION 9. DCF brings this action against US Shale for breach of the Indenture Agreement dated August 19, 2014 (the Indenture ) for failing to accelerate repayment of US Shales 12.5% Senior Secured Notes due 2017 (the Notes ) owned by DCF. 10. Jefferies LLC is identified as the sole book-running manager in the Indenture ( Jefferies ). Jefferies is a Delaware LLC with its principal place of business on 520 Madison Ave, New York, NY In connection with the Indenture and the unit offering, US Shale hired attorneys in the New York office of Dechert LLP, located at 1095 Avenue of the Americas, New York, NY The offering memorandum prepared in connection with the Indenture states that the Units will be deposited with a custodian for, and registered in the name of, a nominee of The Depository Trust Company, New York, New York ( DTC ), as depository. 13. On August 19, 2014, DCF purchased 3,000 Units, with CUSIP 91733WAA0. Each Unit was comprised of a Note and Warrant. The purchase price for each Note was $97.00, 2 3 of 8

4 for a total cost to DCF of $2,910, DCF booked the trade through Jefferies. 15. In February 2015, DCF completed two separate sales, each of 1,000 Units, leaving DCF with 1,000 Units worth approximately $1,000,000. No part of the instant claim relates to the Units sold in On February 17, 2015, the remaining Units held by DCF split into separate Notes, with CUSIP 91733WAC6, and Warrants, with CUSIP 91733W Pursuant to the terms of the Notes, interest payments were due on the first day of September and March, commencing March 1, On September 1, 2015, US Shale missed the scheduled interest payment on the 19. On or about January 1, 2016, US Shale completed a restructuring support agreement. In connection with the restructuring and in exchange for its Notes worth $1,000,000, DCF was offered newly issued second lien notes in the amount of $286, and Class A Common Stock of US Shale in the amount of $166, DCF did not participate in the restructuring and did not agree to exchange its 21. On March 1, 2016, US Shale missed another scheduled interest payment on the 22. US Shale s missed interest payments constituted separate Events of Default under the Indenture. 23. Under Section 6.01 of the Indenture, an Event of Default includes, but is not limited to: 3 4 of 8

5 (1) default for 30 days in the payment when due of interest, if any, on the Notes; (2) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on the 24. As a result of US Shale s missed interest payments, DCF was entitled to accelerate and receive immediate payment for the Section 6.02 Acceleration of the Indenture states as follows: In the case of an Event of Default specified in clause (8) or (9) of Section 6.01 hereof, with respect to the Company, any Restricted Subsidiary of the Company that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. (emphasis added) 25. DCF is the holder of at least 25% in the aggregate principal amount of the outstanding 26. On March 4, 2016, Jefferies, on behalf of DCF sent written notice to the trustee, which stated as follows: We hold on behalf of our client one million US dollars in principal of the SHALES 12.5% 2017 Notes (ISIN: US91733WAC64), making us holders of a majority of these outstanding Pursuant to the Events of Defaults and Remedies section on page 156 of the US Shales Solutions Offering Memorandum dated August 7, 2014 (attached): If any other Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. We would like to instruct Wilmington Trust, as the Trustee, to exercise its power to accelerate repayment of our Notes (including principal and interest) immediately. 27. Wilmington Trust, the trustee, did not comply with DCF s request and has not 4 5 of 8

6 accelerated repayment of the Notes owned by DCF. 28. In filing this suit, DCF has complied with Section 6.06 Limitation on Suits of the Indenture, which states as follows: No Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless: (1) such Holder has previously given the Trustee written notice that an Event of Default is continuing; (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with such request within 60 days after receipt of the request and the offer of security or indemnity; and (5) during such 60-day period, Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a written direction inconsistent with such request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. 29. DCF will provide, if requested, security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense related to the FIRST CAUSE OF ACTION (Breach of Contract against US Shale) 30. DCF incorporates paragraphs 1 through 29 as if fully set forth herein. 31. Under the terms of the Indenture, interest payments on the Notes were due to DCF on September 1, 2015 and March 1, US Shale failed to make interest payments on the Notes on those dates, which 5 6 of 8

7 constituted Events of Default under the terms of the Indenture. 33. In accordance with the Indenture, on March 4, 2016, DCF demanded that the trustee accelerate repayment of the Notes and cause the Notes to become due and payable immediately. 34. The trustee has refused DCF s demand and US Shale has not repurchased the 35. US Shale s failure to repurchase the Notes due and payable immediately upon request from DCF constitutes a breach of the Indenture. 36. US Shale s breach of the Indenture has caused damage to DCF, and DCF is entitled to recover from US Shale in an amount subject to proof at trial but in no amount less than $1,000,000, plus the outstanding interest due on the PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment as follows: a) Monetary damages that DCF has suffered to compensate DCF for US Shale s breach of the Indenture in an amount to be determined at the time of trial but no less than $1,000,000, plus the outstanding interest due on the Notes; b) Prejudgment and post judgement interest at the maximum legal rate; and c) Such other and further relief as to this Court seems just and proper. 6 7 of 8

8 DEMAND FOR JURY TRIAL Plaintiff demands a jury trial on all triable issues. Dated: August 25, 2016 REITLER KAILAS & ROSENBLATT LLC By: s/ Leo G. Kailas. Leo G. Kailas Brett Van Benthysen 885 Third Avenue, 20 th Floor New York, NY (212) lkailas@reitlerlaw.com bvanbenthysen@reitlerlaw.com Attorneys for Plaintiff DCF Capital, LLC 7 8 of 8