Exhibit 10.4
CROSS-COLLATERALIZATION AND CROSS-GUARANTY AGREEMENT
This CROSS-COLLATERALIZATION AND CROSS-GUARANTY AGREEMENT (this
"Agreement"), dated as of January 19, 1996, is among The CIT Group/Credit
Finance, Inc. ("Lender"), Yale E. Key, Inc. ("Yale"), Key Energy Drilling, Inc.
d/b/a Xxxxx Xxxx Drilling ("Hurt"), Key Energy Group, Inc. ("Key"), WellTech,
Inc. ("WellTech"), and Xxxxxxx Production, Inc. ("BPI") (Yale, Hurt, Key,
WellTech and BPI are referred to each individually as a "Borrower" and
collectively as the "Borrowers").
A. Yale, Hurt and Key entered into that certain Second Amended and
Restated Loan and Security Agreement with Lender dated as of January 18, 1996
(the "Yale Loan Agreement").
B. WellTech and BPI entered into that certain Loan and Security
Agreement with Lender dated as of January 18, 1996 (the "WellTech Loan
Agreement"; the Original Loan Agreement, as defined in the Yale Loan Agreement
and the WellTech Loan Agreement, together with the Yale Loan Agreement and the
WellTech Loan Agreement as they may hereafter be modified or amended are
referred to collectively as the "Loan Agreements").
C. In accordance with the terms of the Loan Agreements, Lender has
agreed to make loans and other financial accommodations for the benefit of
Borrowers.
D. Key and Lender entered into that certain Stock Pledge Agreement
dated as of January 18, 1996 (the "Key Stock Pledge Agreement"), under which Key
pledged certain stock (the "Key Stock") described therein as security for the
obligations of the Borrowers under the Loan Agreements.
E. WellTech and Lender entered into that certain Stock Pledge Agreement
dated as of January 18, 1996 (the "WellTech Stock Pledge Agreement"), under
which WellTech pledged certain stock (the "WellTech Stock") described therein as
security for the obligations of the Borrowers under the Loan Agreement.
F. Yale, Hurt and WellTech have each agreed to execute certain deeds of
trust or mortgages (the "Mortgages") pledging as additional collateral certain
parcels of real estate located in various states (the "Real Estate").
G. Lender has conditioned its obligations under the Loan Agreements and
the other documents and instruments executed in connection therewith on the
execution of this Agreement by each of the Borrowers.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, each Borrower and Lender hereby
agree as follows:
Due to the close business and financial relationships between each and
all Borrowers, in consideration of the benefits which will accrue to each
Borrower, and as an inducement for and in consideration of Lender at any time
providing or extending loans, advances and other financial accommodations to all
Borrowers pursuant to the Loan Agreements, each Borrower hereby, irrevocably and
unconditionally, (a) guarantees and agrees to be liable for the prompt
indefeasible and full payment and performance of all revolving loans, term
loans, letters of credit, bankers' acceptances, merchandise purchase guaranties
or other guaranties or indemnities for each other Borrower's account and all
other obligations, liabilities and indebtedness of every kind, nature or
description owing by all other Borrowers to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, arising under
any of the Loan Agreements, whether now existing or hereafter arising, whether
arising during or after the initial or any renewal term of the Loan Agreements
or after the commencement of any case with respect to any Borrower under the
United States Bankruptcy Code or any similar statute, whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, original, renewed
or extended, and whether arising directly or howsoever acquired by Lender
including from any other entity outright, conditionally or as collateral
security, by assignment, merger with any other entity, participations or
interests of Lender in the obligations of any Borrower to others, by assumption,
operation of law, subrogation or otherwise, and (b) agrees to pay to Lender on
demand the amount of all expenses (including, without limitation, attorneys'
fees and legal expenses) incurred by Lender in connection with the preparation,
execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of each Borrower's obligations, liabilities and
indebtedness as aforesaid to Lender, Lender's rights in any collateral or under
this Agreement and all other Loan Agreements, or in any way involving claims by
or against Lender directly or indirectly arising out of or related to the
relationship between any Borrower and Lender, whether such expenses are incurred
before, during or after the initial or any renewal term of the Loan Agreements
or after the commencement of any case with respect to any Borrower under the
United States Bankruptcy Code or any similar statute (all of which being
collectively referred to herein as the "Guaranteed Obligations").
Notice of acceptance of this Agreement, the making of loans, advances
and extensions of credit or other financial accommodations to, and the incurring
of any expenses by or in respect of, each Borrower, and presentment, demand,
protest, notice of protest, notice of nonpayment or default, notice of intent to
accelerate and notice of acceleration, and all other notices to which each
Borrower is or may be entitled are hereby waived. Each Borrower also waives
notice of, and hereby consents to, (i) any amendment, modification, supplement,
renewal, restatement or extensions of time of payment of or increase or decrease
in the amount of any of the Guaranteed Obligations or to the Loan Agreements and
any collateral, and the guarantee made herein shall apply to the Guaranteed
Obligations as so amended, modified, supplemented, renewed, restated or
extended, increased or decreased, (ii) the taking, exchange, surrender and
releasing of collateral or guarantees now or at any time held by or available to
Lender for the obligations of any Borrower or any other party at any time liable
for or in respect of the Guaranteed Obligations (individually, an "Obligor" and
collectively, the "Obligors"), (iii) the exercise of, or refraining from the
exercise of any rights against any Borrower, or any other Obligor or any
collateral, and (iv) the settlement, compromise or release of, or the waiver of
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any default with respect to, any Guaranteed Obligations. Each Borrower agrees
that the amount of the Guaranteed Obligations shall not be diminished and the
liability of such Borrower hereunder shall not be otherwise impaired or affected
by any of the foregoing.
No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations shall affect, impair or be a defense to this
Agreement, nor shall any other circumstance which might otherwise constitute a
defense available to, or legal or equitable discharge of any Borrower in respect
of any of the Guaranteed Obligations affect, impair or be a defense to the
obligations under this Agreement. Without limitation of the foregoing, the
liability of each Borrower hereunder shall not be discharged or impaired in any
respect by reason of any failure by Lender to perfect or continue perfection of
any lien or security interest in any collateral for the Guaranteed Obligations
or any delay by Lender in perfecting any such lien or security interest. As to
interest, fees and expenses, whether arising before or after the commencement of
any case with respect to Borrower under the United States Bankruptcy Code or any
similar statute, each Borrower shall be liable therefor, even if any other
Borrower's liability for such amounts does not, or ceases to, exist by operation
of law.
Payment of all amounts now or hereafter owed to any Borrower by any
other Borrower or any other Obligor is hereby subordinated in right of payment
to the indefeasible payment in full to Lender of the Guaranteed Obligations and
is hereby assigned to Lender as security therefor. Until such time as the
Guaranteed Obligations have been indefeasibly paid to Lender in full in cash or
by cashiers' or bank check or wire transfer, each Borrower hereby irrevocably
and unconditionally waives and relinquishes all surety defenses including, but
not limited to, all statutory, contractual, common law, equitable and all other
claims against each other Borrower, any collateral for the Guaranteed
Obligations or other assets of any Borrower or any other Obligor, for
subrogation, reimbursement, exoneration, contribution, indemnification, setoff
or other recourse in respect of sums paid or payable to Lender by any Borrower
hereunder, and each Borrower hereby further irrevocably and unconditionally
waives and relinquishes any and all other benefits which such Borrower might
otherwise directly or indirectly receive or be entitled to receive by reason of
any amounts paid by or collected or due from any other Borrower or any other
Obligor upon the Guaranteed Obligations or realized from their property.
EACH BORROWER HEREBY PLEDGES, ASSIGNS, AND GRANTS TO LENDER A SECURITY
INTEREST IN THE COLLATERAL DESCRIBED IN THE LOAN AGREEMENT TO WHICH IT IS A
PARTY TO SECURE ALL OF THE GUARANTEED OBLIGATIONS. IN ADDITION, THE STOCK AND
THE REAL ESTATE, AS WELL AS ANY OTHER PROPERTY, REAL OR PERSONAL, AT ANY TIME
NOW OR HEREAFTER PLEDGED TO LENDER BY ANY BORROWER SHALL SERVE AS COLLATERAL TO
SECURE THE GUARANTEED OBLIGATIONS.
In the event proceedings shall be instituted by or against any Borrower
or any other Obligor in bankruptcy or insolvency, or for reorganization,
arrangement, receivership, or the like, or if any Borrower or any other Obligor
calls a meeting of creditors or makes any assignment for the benefit of
creditors, or upon the occurrence of any event which constitutes a default or
event of default under the Loan Agreements, the liability of such Borrower for
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the entire Guaranteed Obligations shall, at the option of Lender, mature, even
if the liability of any other Borrower or any other Obligor therefor does not.
Each Borrower shall continue to be liable hereunder until one of
Lender's officers actually receives a written termination notice by certified
mail; but the giving of such notice shall not relieve such Borrower from
liability for any Guaranteed Obligations incurred before termination or for
post-termination collection expenses and interest pertaining to any Guaranteed
Obligations arising before termination.
Each Borrower agrees that this Agreement shall remain in full force and
effect or be reinstated, as the case may be, if at any time payment of any of
the Guaranteed Obligations is rescinded or otherwise restored by Lender to any
Borrower or to any other person who made such payment, or to the creditors or
creditors' representative of such Borrower or such other person.
Lender's books and records showing the account between Lender and each
Borrower shall be admissible in evidence in any action or proceeding as prima
facie proof of the items therein set forth, and any written statements rendered
by Lender to any Borrower, to the extent to which no written objection is made
within sixty (60) days after the date thereof, shall be considered correct and
be binding on Borrowers as an account stated for purposes of this Agreement.
No delay on Lender's part in exercising any rights hereunder or failure
to exercise the same shall constitute a waiver of such rights. No notice to, or
demand on, any Borrower shall be deemed to be a waiver of the obligation of such
Borrower to take further action without notice or demand as provided herein. No
waiver of any of Lender's rights hereunder, and no modification or amendment of
this Agreement, shall be deemed to be made by Lender unless the same shall be in
writing, duly signed on Lender's behalf, and each such waiver, if any, shall
apply only with respect to the specific instance involved and shall in no way
impair Lender's rights or the obligations of any Borrower to Lender in any other
respect at any other time.
This Agreement is binding upon each Borrower, its successors and
assigns and shall benefit Lender and its successors, endorsers, transferees and
assigns. All references to Borrower and Lender herein shall include their
respective successors and assigns. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE
OFFICE OF LENDER SET FORTH ABOVE IS LOCATED.
EACH BORROWER AND LENDER WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING INSTITUTED BY EITHER OR ANY OF THEM AGAINST THE OTHER WHICH
PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY ALLEGED TORTIOUS CONDUCT
BY ANY BORROWER OR LENDER, OR, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISING OUT
OF OR RELATED TO THE RELATIONSHIP BETWEEN BORROWERS AND LENDER. IN NO EVENT WILL
LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
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Each Borrower waives all rights to interpose any claims, deductions,
setoffs or counterclaims of any kind, nature or description in any action or
proceeding instituted by Lender with respect to this Agreement or any matter
arising herefrom or relating hereto, except compulsory counterclaims.
EACH BORROWER HEREBY IRREVOCABLY SUBMITS AND CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE
IN WHICH THE OFFICE OF LENDER DESIGNATED ABOVE IS LOCATED WITH RESPECT TO ANY
ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY MATTER ARISING
HEREFROM OR RELATING HERETO. ANY SUCH ACTION OR PROCEEDING COMMENCED BY ANY
BORROWER AGAINST LENDER WILL BE LITIGATED ONLY IN A FEDERAL COURT LOCATED IN THE
DISTRICT, OR A STATE COURT IN THE STATE AND COUNTY, IN WHICH THE OFFICE OF
LENDER SET FORTH ABOVE IS LOCATED AND EACH BORROWER WAIVES ANY OBJECTION BASED
ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE IN CONNECTION THEREWITH.
In any such action or proceeding, each Borrower waives personal service
of the summons and complaint or other process and papers therein and agrees that
any process or notice of motion or other application to any of said Courts or a
judge thereof, or any notice in connection with any proceedings hereunder may be
served (i) inside or outside such State by registered or certified mail, return
receipt requested, addressed to such Borrower at the address set forth below or
which such Borrower has previously advised Lender in writing and as indicated in
the records of Lender, and service or notice so served shall be deemed complete
five (5) days after the same shall have been posted or (ii) in such other manner
as may be permissible under the rules of said Courts.
If the Merger (as defined in the WellTech Loan Agreement) has not
occurred on or prior to April 30, 1996 and WellTech and BPI indefeasibly pay to
Lender all obligations due to Lender under the WellTech Loan Agreement, in cash,
by cashier's or bank check or wire transfer, then upon Lender's receipt of such
indefeasible payment, this Agreement shall terminate with respect to WellTech's
and BPI's obligations to collateralize and guaranty borrowings and obligations
of the other Borrowers and with respect to the other Borrowers' obligations to
collateralize and guaranty borrowings and obligations of WellTech and BPI, and
WellTech and BPI shall no longer be included in the definition of "Borrowers" or
be a "Borrower" hereunder.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
This Agreement may be executed in any number of counterparts, and by
the Lender and the Borrowers in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same agreement.
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IN WITNESS WHEREOF, each party hereto has executed and delivered this
Agreement on the day and year first above written.
"BORROWERS":
KEY ENERGY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: President
YALE E. KEY, INC.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
KEY ENERGY DRILLING, INC. D/B/A XXXXX XXXX
DRILLING
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
WELLTECH, INC.
By: /s/ X. Xxxxxx Xxxxxxx
Name: X. Xxxxxx Xxxxxxx
Title: Vice President
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XXXXXXX PRODUCTION, INC.
By: /s/ X. Xxxxxx Xxxxxxx
Name: X. Xxxxxx Xxxxxxx
Title: Vice President
"LENDER":
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
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