TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)
This TENTH AMENDMENT dated as of December 13, 2001 (this "Amendment"),
to the Second Amended and Restated Credit Agreement, dated as of June 6, 1997,
as amended and restated through September 14, 1998, and as amended by the First
Amendment dated as of November 19, 1998, the Second Amendment dated as of
December 29, 1998, the Third Amendment dated as of April 8, 1999, the Fourth
Amendment dated as of April 15, 1999, the Fifth Amendment dated as of May 10,
1999, the Sixth Amendment dated as of July 14, 1999, the Seventh Amendment dated
as of March 1, 2000, the Eighth Amendment and Consent dated as of February 21,
2001 and the Ninth Amendment dated as of September 17, 2001 (the "Credit
Agreement"), among Key Energy Group, Inc. (now known as Key Energy Services,
Inc.), a Maryland corporation (the "Borrower"), the several Lenders from time to
time parties thereto, PNC Bank, National Association ("PNC"), as Administrative
Agent, Norwest Bank Texas, N.A., as Collateral Agent and PNC Capital Markets,
Inc., as Arranger.
RECITALS
A. Borrower desires to obtain the right to issue additional
senior unsecured notes and to otherwise amend the Credit Agreement.
B. On November 19, 2001, the Borrower repurchased approximately
$21,400,000 of the 1997 Convertible Subordinated Notes (the "November 2001
Note Repurchase").
C. Borrower desires to obtain the right to consummate the
Senior Subordinated Notes Clawback (as defined herein) out of the proceeds of
the December 2001 Equity Issuance (as defined herein).
D. Borrower has asked Lenders to amend the Credit Agreement to
(1) accommodate the issuance of additional senior unsecured notes, (2)
accommodate the Senior Subordinated Notes Clawback, and (3) make other
requested modifications.
The parties hereto hereby agree as follows:
Section 1. DEFINED TERMS. Unless otherwise defined
herein, terms which are defined in the Credit Agreement and used herein (and
in the recitals hereto) as defined terms are so used as so defined.
Section 2. AMENDMENT TO SECTION 1.1 [DEFINED TERMS].
Section 1.1 of the Credit Agreement is hereby amended to add the following
definitions in the appropriate alphabetical order:
"'DECEMBER 2001 EQUITY ISSUANCE': the issuance by
the Borrower of its common stock during December
2001 to one or more institutional investors or
investment bankers or in an underwritten public
offering.
"'FUTURE SENIOR NOTES INDENTURE': the indenture
pursuant to which the Borrower will issue the
Future Senior Notes which shall comply with the
requirements in Section 7.2(p).
"'FUTURE SENIOR NOTES': senior notes to be issued by
the Borrower in an aggregate principal amount not
to exceed $150,000,000, with a maturity of March 1,
2008 or later and with an interest rate not to
exceed 9.0%.
"'SENIOR SUBORDINATED NOTES CLAWBACK': the optional
redemption or purchase of approximately $35,400,000
principal amount of the Senior Subordinated Notes at
a redemption or purchase price of 114% of the
principal amount redeemed or repurchased.
Section 3. AMENDMENT TO SECTION 4.22 [INDENTURES].
Section 4.22 of the Credit Agreement is hereby amended by adding the following
clause (d):
"(d) The Future Senior Notes and the Future Senior Notes
Indenture will contain terms substantially similar to those
applicable to the 2001 Senior Notes or other terms reasonably
acceptable to the Administrative Agent. All Obligations of the
Borrower and the other Loan Parties under this Agreement, the
Notes and the other Loan Documents will not conflict with or
violate the terms of the Future Senior Notes Indenture and any
Loans made or hereafter made to the Borrower will be (i)
indebtedness permitted to be incurred under the Future Senior
Notes Indenture and (ii) "Permitted Debt" under the provisions
of the Future Senior Notes Indenture which correspond to
clause (i) of the second paragraph of Section 4.09 of the 2001
Senior Notes Indenture (permitting indebtedness under "Credit
Facilities" up to $250,000,000). All obligations of the
Borrower and the other Loan Parties under the Future Senior
Notes Indenture and related documents will not conflict with
or violate the terms of the Credit Agreement."
Section 4. AMENDMENT TO SECTION 7.1(c)
[CONSOLIDATED SENIOR LEVERAGE RATIO]. Section 7.1(c) of the Credit Agreement
is hereby amended and restated in its entirety as follows:
"(c) Consolidated Senior Leverage Ratio. As of any
fiscal quarter end of the Borrower or as of any date
on which an interim computation of this covenant is
required under the terms of this Agreement, permit
the Consolidated Senior Leverage Ratio to exceed 2.75
to 1.00."
Section 5. AMENDMENT TO SECTION 7.2 [LIMITATION ON
INDEBTEDNESS]. Section 7.2 of the Credit Agreement is hereby amended by
deleting the word "and" after the semicolon in paragraph (n), by
deleting the "." at the end of paragraph (o) and replacing it with ";
and", and by adding a new paragraph (p) as follows:
"(p) Indebtedness of Borrower and its Subsidiaries
under the Future Senior Notes, provided that prior to
the execution of the Future Senior Notes Indenture,
the Agent shall have received copies of such
indenture and all other documents governing the
Future Senior Notes Indenture and the Agent shall
have confirmed (such confirmation not to be
unreasonably withheld) that such indenture and
related documents contain terms substantially similar
to those applicable to the 2001 Senior Notes or
otherwise comply with Section 4.22; provided further,
that on the date of execution of the Future Senior
Notes Indenture and after giving effect to the
issuance of the Future Senior Notes (the amount of
which shall be included as Indebtedness in computing
the Consolidated Senior Leverage Ratio and other
covenants) the Borrower shall be in proforma
compliance with the covenants set forth in Section
7.1 of the Credit Agreement and the Borrower shall
promptly after such issuance, deliver to the Agent
and the Banks copies of the signed indenture and any
other documents requested by the Administrative
Agent."
Section 6. AMENDMENT TO SECTION 7.4
[LIMITATION ON GUARANTEE OBLIGATIONS]. Section 7.4 of the Credit Agreement is
hereby amended by deleting the word "and" after the semicolon at the end of
paragraph (g), by deleting the "." at the end of paragraph (h) and replacing
it with "; and", and by adding a new paragraph (i) as follows:
"(i) Guarantee Obligations of the Subsidiaries of the Borrower
with respect to the Future Senior Notes."
Section 7. AMENDMENT TO SECTION 7.5 [LIMITATION ON
FUNDAMENTAL CHANGES].
Section 7.5 of the Credit Agreement is hereby amended by deleting the word
"and" after the semicolon at the end of paragraph (d), by deleting the "." at
the end of paragraph (e) and replacing it with "; and", and by adding a new
paragraph (f) as follows:
"(f) any merger or consolidation consummated in connection
with a Permitted Acquisition."
Section 8. Amendment to Section 7.8 [Limitation on Capital
Expenditures]. The fourth line of the grid contained in Section 7.8 of the
Credit Agreement which currently reads: "2002 $65,000,000" is hereby
amended to read as follows:
"2002 $80,000,000"
Section 9. Amendment to Section 7.10 [Limitation on Optional
Payments and Modifications of Debt Instruments and Organizational Documentation
etc.]. Section 7.10 of the Credit Agreement is hereby amended by:
(a) amending and restating in its entirety clause (a) to read
as follows:
"(a) Make any optional payment or optional prepayment on or
redemption or purchase of any material Indebtedness (other
than the Loans) or preferred Capital Stock including, without
limitation, the Convertible Subordinated Debentures, the 1997
Convertible Subordinated Notes, the Put Facility, the Xxxxxx
Notes, the Senior Subordinated Notes, the 2001 Senior Notes
and the Future Senior Notes," and
(b) amending and restating in its entirety clause (b)(i) to
read as follows:
"(i) the Put Facility (other than any such amendment,
modification or change to the terms of the Interim Loans such
that would satisfy in all respects the definition of `Senior
Subordinated Notes' contained in Section 1.1), the Senior
Subordinated Notes, the 2001 Senior Notes, the Future Senior
Notes or the Acquisition Documents without the consent of the
Required Lenders or", and
(c) deleting the last two sentences in the Section and
replacing it with the following:
"Notwithstanding anything to the contrary in this Section
7.10, the Borrower and any of its Subsidiaries may make or
cause to be made (i) the Senior Subordinated Notes Clawback;
provided, however, that the aggregate purchase price or
redemption price paid with respect to the Senior Subordinated
Notes purchased or redeemed in the Senior Subordinated Notes
Clawback shall not exceed the proceeds received by the Company
(after underwriting
discounts) in connection with the December 2001 Equity
Issuance; and (ii) any other payment, prepayment,
redemption, repurchase or defeasance of any Indebtedness at
any time, if, after giving effect to such payment,
prepayment, redemption, repurchase or defeasance, (1)
Consolidated Liquidity equals or exceeds $25,000,000, (2) no
Default or Event of Default has occurred and is continuing,
and (3) the Borrower is in compliance with Section 7.1. In
addition, the Borrower may make or cause to be made any
payment, prepayment, redemption, repurchase or defeasance of
(1) the 2001 Senior Notes upon the occurrence of a "Change
of Control" under and as defined in the 2001 Senior Note
Indenture, or (2) the Future Senior Notes upon the
occurrence of a "Change of Control" under and as defined in
the Future Senior Notes Indenture."
Section 10. AMENDMENT TO SECTION 7.14 [LIMITATION ON
NEGATIVE PLEDGE CLAUSES]. Section 7.14 of the Credit Agreement is hereby
amended by deleting the word "and" before "the 2001 Senior Notes" and
inserting a ",", and deleting the "." at the end of the Section and replacing
it with ", and (g) the Future Senior Notes."
Section 11. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall become effective on the date on which the following
conditions have occurred (the "Effective Date"):
(a) the Administrative Agent shall have received a copy of
this Amendment duly executed and delivered by a duly authorized officer
of the Borrower, the Required Lenders and the Administrative Agent;
(b) the Administrative Agent shall have received the
Acknowledgment and Consent, attached hereto as Exhibit A
[Acknowledgment and Consent], executed and delivered by a duly
authorized officer of each of the signatories thereto;
(c) no Default or Event of Default, other than those waived
under this Amendment, shall exist and be continuing after giving effect
to the November 2001 Note Repurchase; and
(d) the Administrative Agent shall have received such other
corporate documents and resolutions as the Administrative Agent may
reasonably request.
Section 13. MISCELLANEOUS.
(a) NO DEFAULTS. The Borrower represents and warrants to the
Administrative Agent and the Lenders that, by its execution and
delivery hereof to the Administrative Agent, as of the Effective Date,
after giving effect to this Amendment, and the November 2001 Note
Repurchase, no Default or Event of Default has occurred and is
continuing, and the representations and warranties made by the Borrower
and the other
Loan Parties in or pursuant to the Credit Agreement or any Loan
Documents are true and correct in all material respects on and as of
the Effective Date as if made on such date (except to the extent that
any such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were
true and correct in all material respects on and as of such earlier
date).
(b) CONTINUING EFFECT OF THE CREDIT AGREEMENT. This Amendment
shall not constitute an amendment or waiver of or consent to any
provision of the Credit Agreement not expressly referred to herein and
shall not be construed as an amendment, waiver or consent to any action
on the part of the Borrower that would require an amendment, waiver or
consent of the Agents or the Lenders except as expressly stated herein.
Except as expressly consented to hereby, the provisions of the Credit
Agreement and the other Loan Documents are and shall remain in full
force and effect.
(c) FEES AND EXPENSES. The Borrower agrees to pay or reimburse
the Administrative Agent on demand for all its reasonable out-of-pocket
costs and expenses incurred in connection with the preparation and
execution of this Amendment, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative
Agent.
(d) COUNTERPARTS. This Amendment may be executed in any number
of counterparts (including by telecopy) by the parties hereto, each of
which counterparts when so executed shall be an original, but all
counterparts taken together shall constitute one and the same
instrument.
(e) GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.
[SIGNATURE PAGE 1 OF 6 TO TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KEY ENERGY SERVICES, INC. (formerly
known as Key Energy Group, Inc.)
By: /s/ XXXXXX X. XXXXXXXX
Title: Executive Vice President & CFO
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as Lender
By: /s/ XXXXXXX XXXXXXX
Title: Managing Director
[SIGNATURE PAGE 2 OF 6 TO TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)]
BANK POLSKA KASA OPIEKI S.A.,
PEKAO S.A. GROUP, NEW YORK
BRANCH
By:
Title:
[SIGNATURE PAGE 3 OF 6 TO TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)]
BANK LEUMI, USA
By:
Title:
[SIGNATURE PAGE 4 OF 6 TO TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)]
BEAR XXXXXXX INVESTMENT
PRODUCT INC.
By:
Title:
BEAR XXXXXXX CORPORATE
LENDING INC.
By:
Title:
[SIGNATURE PAGE 5 OF 6 TO TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)]
ML CLO XV PILGRIM AMERICA
(CAYMAN) LTD.
By: Pilgrim Investments, Inc.,
as its Investment Manager
By:
Title:
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.,
as its Investment Manager]
By:
Title:
[SIGNATURE PAGE 6 OF 6 TO TENTH AMENDMENT
(TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT)]
XXXXXX COMMERCIAL PAPER, INC.
By: /s/ XXXXXX XXXXXXXX
Title: Authorized Signatory
EXHIBIT A
ACKNOWLEDGMENT AND CONSENT
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned corporations, as a guarantor under
that certain Amended and Restated Master Guarantee and Collateral Agreement,
dated as of June 6, 1997, as amended and restated through September 14, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee"),
made by each of such corporations in favor of the Collateral Agent, acknowledges
the foregoing amendment and confirms and agrees that the Guarantee is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects and the Guarantee and all of the Collateral (as defined in the
Guarantee) do, and shall continue to, secure the payment of all of the
Obligations (as defined in the Guarantee) pursuant to the terms of the
Guarantee. Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement referred to in the Amendment
to which this Acknowledgment and Consent is attached.
YALE E. KEY, INC.
KEY ENERGY DRILLING, INC.
WELLTECH EASTERN, INC.
ODESSA EXPLORATION INCORPORATED
KALKASKA OILFIELD SERVICES, INC.
WELL-CO OIL SERVICE, INC.
XXXXXXX WELL SERVICE, INC.
XXXXXX WELL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
XXXXXXX TRUCKING CO., INC.
LANDMARK FISHING & RENTAL, INC.
XXXXXX WELL SERVICE, INC.
FRONTIER WELL SERVICE, INC.
KEY ROCKY MOUNTAIN, INC.
KEY FOUR CORNERS, INC.
XXXXX SERVICE CO.
XXXXX WELL SERVICE, INC.
XXXXX TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
XXXXXX WELL SERVICING, INC.
XXXXXX BROTHERS, INC.
X.X. XXXXXX WELL SERVICE COMPANY
KEY ENERGY SERVICES-SOUTH TEXAS, INC.
XXXXXX OILFIELD SERVICE & SUPPLY, INC.
WELLTECH MID-CONTINENT, INC.
XXXXXX PRODUCTION MANAGEMENT, INC.
XXXXXX PRODUCTION ACQUISITION CORP.
XXXXXX PRODUCTION XXXXXX, INC.
KEY ENERGY SERVICES-CALIFORNIA, INC.
By: /s/ XXXXXX X. XXXXXXXX
Title: Executive Vice President & CFO
XXXXXX PRODUCTION PARTNERS, L.P.
By: XXXXXX PRODUCTION
MANAGEMENT, INC.,
its sole general partner
By: /s/ XXXXXX X. XXXXXXXX
Title: Executive Vice President & CFO
