EX-99.1

EX-99.1 2 d885884dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Execution Version


CITIGROUP GLOBAL MARKETS INC. 390 GREENWICH STREET NEW YORK, NEW YORK 10013	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANK OF AMERICA, N.A. ONE BRYANT PARK NEW YORK, NY 10036	WF INVESTMENT HOLDINGS, LLC WELLS FARGO SECURITIES, LLC 550 S. TRYON STREET, 6TH FLOOR CHARLOTTE, NC 28202

WELLS FARGO BANK, NATIONAL ASSOCIATION 1000 LOUISIANA ST., 9TH FLOOR HOUSTON, TX 77002	J.P. MORGAN SECURITIES LLC 383 MADISON AVENUE NEW YORK, NY 10179	JPMORGAN CHASE BANK, N.A. 270 PARK AVENUE NEW YORK, NY 10017

CAPITAL ONE SECURITIES, INC. CAPITAL ONE, N.A. 1000 LOUISIANA ST, SUITE 3950 HOUSTON, TX 77002	THE BANK OF NOVA SCOTIA 711 LOUISIANA STREET, SUITE 1400, HOUSTON, TEXAS, USA 77002	COMERICA BANK 5757 MEMORIAL DR., STE. 2 HOUSTON, TX 77007

	REGIONS CAPITAL MARKETS REGIONS BANK 1180 WEST PEACHTREE STREET NW, SUITE 1400, ATLANTA, GEORGIA 30309

March 4, 2015

C&J Energy Services, Inc.

3900 Rogerdale

Houston, TX 77042

Attention: Randall C. McMullen, Jr.

PROJECT NAVY

BACKSTOP COMMITMENT LETTER

Ladies and Gentlemen:

Reference is made (i) to the Amended and Restated Commitment Letter, dated as of July 15, 2014, among C&J Energy Services, Inc., a Delaware corporation (the “Company” or “you”), Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”), Bank of America, N.A. (“BofA”), WF Investment Holdings, LLC (“WF Investment”), Wells Fargo Securities, LLC (“WFS”), Wells Fargo Bank, National Association (“WF”), J.P. Morgan Securities LLC (“JPMS”), JPMorgan Chase Bank, N.A. (“JPMCB”), Capital One Securities, Inc. (“Capital One Securities”), Capital One, N.A. (“Capital One”), Regions Capital Markets, a division of Regions Bank (“RCM”), Regions Bank (“Regions”), Comerica Bank (“Comerica”) and The Bank of Nova Scotia (“BNS”); Citi (as defined below), together with MLPFS, BofA, WF Investment, WFS, WF and JPMS, Capital One Securities, Capital One, RCM, Regions, BNS, each a “Commitment Party” and collectively, the “Commitment Parties”, “we” or “us”), Amegy Bank National Association (“Amegy”), DNB Markets, Inc.

(“DNB Markets”) and DNB Capital LLC (“DNB”), as amended or otherwise modified, including by the Joinder to Amended and Restated Commitment Letter, dated August 19, 2014, and by Amendment No. 1 to the Amended and Restated Commitment Letter, dated November 19, 2014 (as so amended, together with all exhibits and annexes thereto, the “Existing Commitment Letter”), which amended and restated in its entirety the Commitment Letter, dated as of June 25, 2014, between the Company and Citigroup Global Markets Inc. (the “Original Commitment Letter”) and (ii) to the Second Amended and Restated Fee Letter, dated July 15, 2014 ( the “Existing Fee Letter”), among the Company and certain of the Commitment Parties, which amended and restated in its entirety the Amended and Restated Fee Letter, dated July 5, 2014.

You have further advised us that, upon the establishment of the Term B Facilities and the Revolving Credit Facility under the documentation contemplated by the Existing Commitment Letter (the “Proposed Credit Facilities”) and the initial fundings thereunder the Term Borrower intends to upsize such Term B Facilities as defined in the Existing Commitment Letter by obtaining additional commitments applicable thereto as contemplated hereunder (such additional commitments, the “Additional Term B Facilities Amount”) in an aggregate principal amount equal to $285,000,000 to be consummated by the execution of an amendment to the Proposed Credit Facilities in the form substantially as set forth on Exhibit C, the “Amendment”). Capitalized terms used herein or in the Term Sheets, but not defined herein or therein shall have the meanings assigned to them in the Existing Commitment Letter or, to the extent not defined therein, in the Summaries of Principal Terms and Conditions attached hereto as Exhibit A (the “Term Sheet”; this commitment letter, the Term Sheet, Exhibits B and C attached hereto and the Flex Letter, collectively, the “Commitment Letter”).

Subject to the terms and conditions of this Commitment Letter, each of Citigroup Global Markets Inc. (“CGMI”), on behalf of itself, Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their affiliates as may be appropriate to consummate the transactions contemplated hereby (collectively, “Citi”), BofA, WF, WFIH, JPMCB, Capital One Securities, Capital One, RCM, Regions, Comerica and BNS is pleased to inform the Company of its several, but not joint, commitment to provide the percentage of the entire principal amount of the Additional Term B Facilities Amount as set forth on Schedule I hereto opposite such Commitment Party’s name. Upon the consummation of the Proposed Credit Facilities and the funding of the Bridge Loans on the Closing Date (as defined in the Existing Commitment Letter), the Company, on behalf of the Borrowers, and each of the Commitment Parties hereby commits to execute and deliver the Amendment, in accordance with its terms, and the Company, on behalf of the Borrowers, hereby agrees to borrow the aggregate principal amount of Additional Term B Facilities Amount as contemplated hereby on the terms set forth in Exhibit A herein and repay all outstanding amounts under, and terminate the Bridge Facility.

Section 1. Conditions Precedent. Each Commitment Party’s commitments and other obligations hereunder are subject solely to the satisfaction of the conditions set forth in this Section 1 and (a) the conditions set forth in the section entitled “Closing Conditions” in Exhibit A hereto, and (b) the conditions set forth in Exhibit B hereto and, upon satisfaction (or waiver by the Lead Arrangers) of such conditions, the initial funding of the Additional Term B Facilities Amount shall occur.

“Facilities Documentation” shall mean definitive documentation with respect to each of the Revolving Credit Facility and the Term B Facilities, including without limitation credit agreements (such credit agreement to be entered into pursuant to the Existing Commitment Letter, the “Proposed Credit Agreement”), security agreements, guarantees and other agreements incorporating substantially the terms and conditions outlined in the Existing Commitment Letter and otherwise reasonably satisfactory to the Commitment Parties and you.

Notwithstanding anything in this Commitment Letter (including the Term Sheet), the Existing Commitment Letter, the Existing Fee Letter, the Flex Letter, the Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, the terms of the Facilities Documentation shall be in a form such that they do not impair the availability of the Additional Term B Facilities on the Closing Date if the relevant conditions set forth in this Section 1, under the heading “Closing Conditions” in Exhibit A and the conditions set forth in Exhibit B are satisfied or otherwise waived.

Section 2. Commitment Termination. Each Commitment Party’s commitments and other obligations set forth in this Commitment Letter with respect to the Additional Term B Facilities Amount will terminate on the earliest to occur of (a) the earlier of (i) the fifth business day following the termination of the Merger Agreement pursuant to Section 8.1 of the Merger Agreement as in effect on June 25, 2014 and (ii) March 31, 2015, if the Merger shall not have been consummated on or prior to that date, (b) the consummation of an amendment or an amendment and restatement of the Existing Commitment Letter providing for an increase in the Term B Facilities in an aggregate principal amount equal to or greater than the aggregate principal amount of the Additional Term B Facility and the termination of the commitments in respect of the Bridge Facilities in their entirety, and (c) the consummation of the Merger without the funding of the Bridge Loans, unless in any case the Commitment Parties shall agree to an extension in writing. Notwithstanding the foregoing, the termination of the Commitment Parties’ commitment and other obligations hereunder will not affect Sections 3 through 9 (except, in the case of Section 3 hereof, with respect to the incorporation by reference of Section 3 of the Existing Commitment Letter), which provisions will survive any such termination; provided that your obligations under this Commitment Letter (other than your obligations with respect to (a) assistance to be provided in connection with the syndication thereof (including supplementing and/or correcting Information and Projections), (b) confidentiality of the Flex Letter and the contents thereof and (c) the Flex Letter) shall automatically terminate and be superseded by the provisions of the Additional Term B Facilities Amount Documentation to the extent covered thereby upon the initial funding thereunder, and you shall automatically be released from all liability in connection therewith at such time.

Each of the parties hereto agrees that this Commitment Letter is a binding and enforceable agreement with respect to the subject matter contained herein (except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law)), it being acknowledged and agreed that the commitments provided hereunder are subject solely to the conditions expressly stated herein. Each of the parties hereto agrees that the Amendment has been negotiated in good faith.

Section 3. Syndication; Indemnification; Costs and Expenses, etc. The terms of Sections 3, 5, 6 (without duplication), 7 and 8 of the Existing Commitment Letter are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

Notwithstanding anything to the contrary contained in this Commitment Letter, the Existing Commitment Letter, the Existing Fee Letter, the Flex Letter or any other agreement or undertaking concerning the financing of the Transactions to the contrary, (i) none of the foregoing (including your compliance with the terms of this Section 3) shall constitute a condition to the commitments of any Commitment Party to the Facilities hereunder or the funding or availability of the Facilities on the Closing Date and (ii) neither the commencement nor the completion of the syndication of the Facilities (including the Additional Term B Facility) shall constitute a condition to the commitments of any Commitment Party to the Facilities (including the Additional Term B Facility) hereunder or the funding or availability of the Facilities (including the Additional Term B Facility) on the Closing Date; provided that notwithstanding Section 7 below, the Company may disclose this Commitment Letter in one or more press releases or in one or more filings (including filings on Form 8-K) made with the Securities and Exchange Commission.

Section 4. Fees. In addition to the fees described in this Commitment Letter and the Existing Fee Letter, the Company will pay (or cause to be paid) the non-refundable fee (if any) set forth in the Flex Letter dated the date hereof (as amended or otherwise modified from time to time, the “Flex Letter”) between the Company and Commitment Parties. The terms of the Existing Fee Letter and the Flex Letter are acknowledged and agreed by each Commitment Party, are an integral part of the Commitment Parties’ commitments and other obligations hereunder and constitute part of this Commitment Letter for all purposes hereof.

Section 5. No Third Party Reliance, Not a Fiduciary, Etc. The agreements of each Commitment Party hereunder and of any Lender that issues a commitment to provide financing under the Additional Term B Facilities Amount are made solely for the benefit of the Company and may not be relied upon or enforced by any other person. The Company may not assign or delegate any of its rights or obligations hereunder without the Commitment Parties’ prior written consent (not to be unreasonably withheld or delayed) except to Red Lion or USAcq simultaneously with, or immediately prior to, the consummation of the Merger. This Commitment Letter may not be amended or modified, or any provision hereof waived, except by a written agreement signed by all parties hereto.

The Company hereby acknowledges that each Commitment Party is acting pursuant to a contractual relationship on an arm’s length basis, and the parties hereto do not intend that any Commitment Party act or be responsible as a fiduciary to the Company, its management, stockholders, creditors or any other person. The Company and each Commitment Party hereby expressly disclaim any fiduciary relationship and agrees they are each responsible for making their own independent judgments with respect to any transactions entered into between them. The Company also hereby acknowledges that no Commitment Party has advised or is advising the Company as to any legal, accounting, regulatory or tax matters, and that the Company is consulting its own advisors concerning such matters to the extent it deems appropriate.

The Company understands that each Commitment Party and its affiliates (such Commitment Party, together with its affiliates, being collectively, a “Group”) are engaged in a wide range of financial services and businesses (including investment management, financing, securities trading, corporate and investment banking and research). Members of each Group and businesses within each Group generally act independently of each other, both for their own account and for the account of clients. Accordingly, there may be situations where parts of a Group and/or their clients either now have or may in the future have interests, or take actions, that may conflict with the Company’s interests. For example, a Group may, in the ordinary course of business, engage in trading in financial products or undertake other investment businesses for their own account or on behalf of other clients, including without limitation, trading in or holding long, short or derivative positions in securities, loans or other financial products of the Company or its affiliates or other entities connected with the Additional Term B Facilities Amount or the transactions contemplated hereby.

In recognition of the foregoing, the Company agrees that no Group is required to restrict its activities as a result of this Commitment Letter and that each Group may undertake any business activity without further consultation with or notification to the Company. Neither this Commitment Letter nor the receipt by any Commitment Party of confidential information nor any other matter will give rise to any fiduciary, equitable or contractual duties (including without limitation, any duty of trust or confidence) that would prevent or restrict a Group from acting on behalf of other customers or for its own account. Furthermore, the Company agrees that no Group nor any member or business of any Group is under a duty to disclose to the Company or use on behalf of the Company any information whatsoever about or derived from those activities or to account for any revenue or profits obtained in connection with such activities. However, consistent with each Group’s long-standing policy to hold in confidence the affairs of its customers, no Group will use confidential information obtained from the Company except in connection with its services to, and its relationship with, the Company; provided, that each Group will be free to disclose information as provided in Section 7 of the Existing Commitment Letter.

Section 6. Governing Law, Etc. This Commitment Letter and any right, remedy, obligation, claim, controversy, dispute or cause of action (whether in contract, tort or otherwise) based upon, arising out of or relating to this Commitment Letter and the transactions contemplated hereby will be governed by, and construed in accordance with, the law of the State of New York without regard to conflicts of law principles that would lead to the application of laws other than the law of the State of New York. This Commitment Letter sets forth the entire agreement between the parties with respect to the matters addressed herein and supersedes all prior communications, written or oral, with respect hereto. This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, will be deemed to be an original and all of which, taken together, will constitute one and the same Commitment Letter. Delivery of an executed counterpart of a signature page to this Commitment Letter by telecopier will be as effective as delivery of an original executed counterpart of this Commitment Letter.

The parties hereto confirm that the Existing Commitment Letter remains in full force and effect and has not been amended or modified by this Commitment Letter in any respect; provided that the Lead Arrangers (as defined in the Existing Commitment Letter) and the Company agree that, without reducing their commitments under the Existing Commitment Letter, the contemplated purchase price reduction under the Merger Agreement pursuant to Amendment No. 1 dated February 5, 2015 will be implemented by reducing the drawings to be made under the Bridge Facility on the Closing Date to $250 million. The parties hereto acknowledge and agree that

pursuant to the Existing Commitment Letter, the Lead Arrangers, the Term Borrower and the Commitment Parties holding, in the aggregate, a majority of the commitments under the Facilities hereby exercise their right to reallocate $100 million of commitments under the Bridge Facility to the Term B Facilities.

Section 7. Waiver of Jury Trial. Each party hereto irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter or the transactions contemplated hereby or the actions of the parties hereto in the negotiation, performance or enforcement hereof.

Section 8. Consent to Jurisdiction, Etc. Each of the parties hereto irrevocably and unconditionally (i) agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or in equity, whether in contract, tort or otherwise, against any person arising out of or in any way relating to this Commitment Letter or the transactions contemplated hereby in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, (ii) to the fullest extent permitted by applicable law, submits to the exclusive jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or in such federal court, (iii) waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any such action, litigation or proceeding arising out of or relating to this Commitment Letter in any court referred to in this Section 8, (iv) waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action, litigation or proceeding in any such court and (v) consents to the service of any process, summons, notice or document in any such action, litigation or proceeding by registered mail addressed to such person at its address specified on the first page of this Commitment Letter. A final judgment in any such action, litigation or proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Section 9. Patriot Act Compliance. Each Commitment Party hereby notifies the Company that pursuant to the requirements of the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Commitment Party to identify the Company in accordance with the Patriot Act. In that connection, each Commitment Party may also request corporate formation documents, or other forms of identification, to verify information provided.

Please indicate the Company’s acceptance of the provisions hereof by signing the enclosed copy of this Commitment Letter and the Flex Letter and returning them to Mohammed Baabde, Citigroup Global Markets Inc., 390 Greenwich Street, New York, New York 10013 (fax: (646) 441-4554) at or before 11:59 p.m. (New York City time) on March 4, 2015, the time at which the commitments and other obligations of the Commitment Parties hereunder (if not so accepted or extended by the Commitment Parties prior thereto) will terminate. If the Company elects to deliver this Commitment Letter by telecopier, please arrange for the executed original to follow by next-day courier.

[Remainder of page intentionally left blank; signature pages follow.]


Very truly yours,

CITIGROUP GLOBAL MARKETS INC.

By		/s/ Scott Schlossel

Name:		Scott Schlossel
Title:		Managing Director