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EXHIBIT 99.9
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of September
14, 1998, among (i) the Lender Agent (for the benefit of the Lender Creditors),
(ii) the Interim Lender Agent (for the benefit of the Interim Lender Creditors),
(iii) Norwest Bank Texas, N.A., as collateral agent for the Lenders, (in such
capacity, the "Lender Collateral Agent"), (iv) Norwest Bank Texas, N.A., as
collateral agent for the Interim Lenders, (in such capacity, the "Interim Lender
Collateral Agent"), (v) Norwest Bank Texas, N.A., as collateral agent for the
Holders (in such capacity, the "Holder Collateral Agent"), and (vi) Key Energy
Group, Inc. and certain of its subsidiaries party hereto.
RECITALS
WHEREAS, Key Energy Group, Inc., a Maryland corporation (the
"Borrower"), the several banks and other financial institutions or entities
parties thereto (the "Lenders"), PNC National Bank, National Association, as
administrative agent for the Lenders (in such capacity, the "Lender Agent"), the
Lender Collateral Agent and PNC Capital Markets, Inc., as arranger (the "Lender
Arranger"; together with the Lenders and the Lender Agent, the "Lender
Creditors"), have entered into a Second Amended and Restated Credit Agreement of
even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, the Borrower, the several banks and other financial
institutions or entities parties thereto (the "Interim Lenders"), Xxxxxx
Commercial Paper Inc., as administrative agent for the Interim Lenders (in such
capacity, the "Interim Lender Agent") and Xxxxxx Brothers Inc., as arranger (the
"Interim Lender Arranger"; together with the Interim Lenders and the Interim
Lender Agent, the "Interim Lender Creditors") have entered into an Interim Loan
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Interim Loan Agreement");
WHEREAS, Xxxxxx Production Services, Inc. has issued 9-3/8% Notes to
the holders thereof (the "Holders") pursuant to the Indenture dated as of
February 20, 1997 among Xxxxxx, certain Subsidiaries of Xxxxxx and U.S. Trust
Company of Texas, N.A. (in such capacity, the "Xxxxxx Trustees"; together with
the Holders, the "Holder Creditors");
WHEREAS, pursuant to the Amended and Restated Master Guarantee and
Collateral Agreement of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Master Guarantee and Collateral
Agreement"), certain of the Borrower's subsidiaries (collectively, the
"Guarantors"; together with the Borrower, the "Grantors") have guaranteed the
payment in full of the Lender Obligations and, until the Merger Date (as defined
in the Credit Agreement), the Interim Lender Obligations (such guarantees, the
"Guarantees");
WHEREAS, pursuant to the Master Guarantee and Collateral Agreement,
each Grantor has granted to the Collateral Agent, as defined in the Master
Guarantee and Collateral Agreement (for the benefit of the Lender Creditors and,
to the extent set forth therein, the Interim Lender Creditors and the Holder
Creditors) a Lien on and security interest in certain of its assets and
properties to secure the Lender Obligations and, to the extent set forth
therein, the Interim Lender Obligations and the Holder Obligations (all as
defined in the Master Guarantee and Collateral Agreement);
WHEREAS, pursuant to the Mortgages and the Oil and Gas Mortgages (each
as defined in the Credit Agreement), the Grantors parties thereto have granted
and will grant to the Collateral Agent (for the benefit of the Lender Creditors
and, to the extent set forth therein, the Interim Lender Creditors and the
Holder Creditors, as the case may be) a Lien on and security interest in the
assets and properties covered thereby to secure the Lender Obligations and, to
the extent set forth therein, the Interim Lender Obligations and the Holder
Obligations; and
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WHEREAS, each of the Lender Agent and the Interim Lender Agent desires
to provide for its respective rights (and the rights of the Lenders and the
Interim Lenders, respectively) in the Collateral and certain collections from
the Grantors and appoint the Collateral Agent as the "collateral agent" as
provided for herein and the Grantors wish to agree to and acknowledge the
provisions contained herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1 Definitions of Certain Terms. As used herein, unless otherwise
defined herein, all terms defined in the Master Guarantee and Collateral
Agreement shall be used herein as therein defined, and the following terms shall
have the meanings set forth below:
"Actionable Event of Default": shall have the same meaning as
Applicable Event of Default under the Master Guarantee and Collateral
Agreement.
"Administrative Expenses": the unpaid costs and expenses of any sale or
sales of, and collections on, any Collateral or any other realization of
monies in respect thereof, the reasonable care and safekeeping of any
Collateral, and the payment of the unpaid indemnifications, costs and
expenses (including reasonable fees and disbursements of counsel employed by
the Collateral Agent and any unpaid costs and expenses incurred in
connection with the enforcement by the Collateral Agent of this Agreement),
fees and other compensation of the Collateral Agent provided for in and
under this Agreement.
"Agreement": this Intercreditor Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Bankruptcy Event of Default": shall mean any Event of Default pursuant
to (a) clause (i), (ii) or (iii) of subsection 8(f) of the Credit Agreement
or (b) until the Merger Date clauses (i), (ii) or (iii) of subsection 7,1(f)
of the Interim Loan Agreement.
"Collateral": the assets and properties upon which a Lien is to be
granted pursuant to the Intercreditor Security Documents.
"Collateral Account": has the meaning as set forth in subsection 3.1.
"Creditors": the collective reference to (i) the Lender Creditors, (ii)
until the Merger Date, the Interim Lender Creditors and (iii) commencing on
the Merger Date and until the Holder Termination Date, the Holder Creditors.
"Directing Parties": with respect to the Intercreditor Security
Documents and all actions to be taken in connection therewith, the Required
Lenders (as defined in the Credit Agreement) and, until the Merger Date, the
Majority Lenders (as defined in the Interim Loan Agreement).
"Intercreditor Security Documents": the Master Guarantee and Collateral
Agreement, the Mortgages and the Oil and Gas Mortgages.
"Mortgages": the collective reference to the Mortgages (as defined in
the Credit Agreement) and the mortgages entered into by the Borrower
pursuant to the Interim Loan Agreement.
"Notice of Actionable Event of Default": a written notice delivered by
any of the Lender Agent, the Interim Lender Agent or the Borrower to the
Collateral Agent, stating that an Actionable Event of Default has occurred.
A Notice of Actionable Event of
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Default shall be deemed to have been given when the notice referred to in
the preceding sentence has actually been received by the Collateral Agent. A
Notice of Actionable Event of Default shall be deemed to have been rescinded
when, after a Notice of Actionable Event of Default (other than a Bankruptcy
Event of Default) has been given, the Collateral Agent has been instructed
by the Person giving such notice that there exists no Actionable Event of
Default (provided that, if the Notice of Actionable Event of Default was
sent by the Borrower, the Collateral Agent shall confirm the Borrower's
rescission of the same with the Lender Agent and, until the Merger Date, the
Interim Lender Agent), or when, after a Bankruptcy Event of Default, such
Bankruptcy Event of Default is no longer continuing. A Notice of Actionable
Event of Default shall be deemed to be outstanding at all times after such
notice has been given until such time, if any, as such notice has been
rescinded.
"Operative Documents": the collective reference to the Loan Documents
and the Interim Loan Documents.
"Representative Creditor": each of (i) the Lender Agent, (ii) until the
Merger Date, the Interim Lender Agent and (iii) commencing with the Merger
Date, the Xxxxxx Trustee and their respective successors and assigns.
1.2 Terms Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references in this Agreement
to designated Sections and other subdivisions, unless otherwise noted, are to
designated Sections and other subdivisions of this Agreement, and the words
"herein," "hereof," and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Section or other
subdivision. Except as otherwise indicated, all the agreements or instruments
herein defined or referred to shall mean such agreements or instruments as the
same may from time to time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the terms
thereof.
SECTION 2.
ACTS OF CREDITORS; AMOUNT OF OBLIGATIONS
2.1 Acts of Creditors. Any request, demand, authorization, direction,
notice, consent, waiver or other action permitted or required by this Agreement
to be given or taken by the Directing Parties may be, and at the request of the
Collateral Agent shall be, embodied in and evidenced by one or more instruments
reasonably satisfactory in form to the Collateral Agent and signed by or on
behalf of such Directing Parties and, except as otherwise expressly provided in
any such instrument, any such action shall become effective when such instrument
or instruments shall have been delivered to the Collateral Agent. The instrument
or instruments evidencing any action (and the action embodied therein and
evidenced thereby) are sometimes referred to herein as an "Act" of the persons
signing such instrument or instruments. The Collateral Agent shall be entitled
to rely absolutely upon an Act of the Directing Parties if such Act purports to
be taken by or on behalf of such Directing Parties, and nothing in this
subsection 2.1 or elsewhere in this Agreement shall be construed to require any
of the Directing Parties to demonstrate that it has been authorized to take any
action which it purports to be taking, the Collateral Agent being entitled to
rely conclusively, and being fully protected in so relying, on any Act of such
Person.
2.2 Determination of Amounts of Obligations. Whenever the Collateral
Agent is required to determine the existence or amount of any of the Obligations
or any portion thereof for any purposes of this Agreement, it shall be entitled
to make such determination on the basis of one or more certificates of the
Lender Agent (with respect to the Lender Obligations), the Interim Lender Agent
(with respect to the Interim Lender Obligations, or any of them) and the Xxxxxx
Trustee (with respect to Holder Obligations); provided, however, that if,
notwithstanding the request of the Collateral Agent, any Representative Creditor
shall fail or refuse within five Business Days of such request to certify as to
the existence or amount of any outstanding Obligations or any portion thereof
owed to it or any Person on whose behalf it acts thereunder, the Collateral
Agent shall be entitled to determine such existence or amount by such method as
the Collateral Agent may, in its sole discretion,
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determine, including by reliance upon a certificate of the Borrower; provided,
further, however, that, promptly following determination of any such amount
pursuant to the foregoing proviso, the Collateral Agent shall notify the
affected Representative Creditor of such determination and thereafter shall
correct any error that such Representative Creditor brings to the attention of
the Collateral Agent as promptly as practical, but in any event, within three
Business Days. The Collateral Agent may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and shall have no liability to the Borrower or any other
Grantor, any Representative Creditor or any other Person as a result of any
action taken by the Collateral Agent based upon such determination prior to
receipt of notice of any error in such determination.
2.3 Restrictions on Actions. (a) Until the Merger Date has occurred, as
long as any Obligation is outstanding, the provisions of this Agreement shall,
notwithstanding the provisions of any other Operative Document, exclusively
govern the method by which any Creditor may exercise rights and remedies as to
the Collateral. Therefore, each Lender and Interim Lender shall, for the mutual
benefit of all Lender Creditors and Interim Lender Creditors (but not for the
benefit of any other Person), except as permitted under this Agreement: (i)
refrain from taking or filing any action, judicial or otherwise, to enforce any
rights or pursue any remedies in respect of the Collateral, except for
delivering notices hereunder; and (ii) subject to the second sentence of Section
4.2(b)(i), refrain from exercising any rights or remedies under the
Intercreditor Security Documents which may be exercisable as a result of an
Actionable Event of Default.
(b) Notwithstanding subsection 2.3(a), nothing shall prevent (i) any
Lender Creditor or any Interim Lender Creditor from exercising the rights and
remedies available to it under Section 8 of the Credit Agreement or under
Section 7.1 of the Interim Loan Agreement or from otherwise taking action,
judicial or otherwise, to collect past due amounts or enforce its rights under
and in accordance with the Loan Documents or the Interim Loan Documents, as
applicable (except for exercising any remedies in respect of the Collateral),
and (ii) any Lender Creditor or Interim Lender Creditor from raising any
defenses in any action in which it has been made a party defendant or has been
joined as a third party, except that the Collateral Agent may direct and control
any defense to the extent solely relating to the Collateral or any one or more
of the Intercreditor Security Documents, subject to and in accordance with the
provisions of this Agreement.
2.4 Perfection. Irrespective of the date, manner or order of perfection
of the security interests and Liens on the Collateral, and notwithstanding the
provisions of the Uniform Commercial Code or any applicable law or decision, as
among the Creditors, the priority of each Creditor with respect to the
Collateral shall be deemed to be equal.
SECTION 3.
PROCEEDS OF COLLATERAL;
PAYMENTS BY COLLATERAL AGENT
3.1 Collateral Account. On the Closing Date there shall be established
and, at all times thereafter until this Agreement shall have terminated, there
shall be maintained with the Lender Collateral Agent at the office of the Lender
Collateral Agent located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, a
collateral account, which shall be entitled the "Key Collateral Account" (the
"Collateral Account"). Upon an Actionable Event of Default, the Collateral Agent
shall deposit all amounts received by it in its capacity as Collateral Agent
(and not in any other capacity) in respect of the Collateral or, until the
Merger Date, pursuant to enforcement of the Guarantees, including all monies
received on account of any sale of or other realization upon any of the
Collateral pursuant to any Operative Document. All right, title and interest in
and to the Collateral Account shall vest exclusively in the Collateral Agent,
for the benefit of the applicable Creditors, and shall be held by the Collateral
Agent hereunder subject to the terms hereof. Neither the Borrower nor any other
Person shall have any rights with respect to the Collateral Account and the
Collateral Agent shall have exclusive dominion and control over the Collateral
Account and the monies deposited therein; provided that the Collateral Agent
shall at all times act in accordance with the provisions of this Agreement.
Monies deposited in the Collateral Account and all certificates and instruments
evidencing investments made with monies deposited in the Collateral Account
pursuant to subsection 3.4 hereof shall constitute security for (i) the Lender
Obligations, (ii) until the Merger Date has occurred, the Interim Lender
Obligations and (iii) commencing with the Merger Date and until the Holder
Termination Date, the Holder Obligations, and shall be applied or disbursed in
accordance with the
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terms of this Agreement.
3.2 Application of Proceeds.
(a) General Application: Amounts on deposit in the Collateral Account
shall be applied:
First, to the payment of any Administrative Expenses;
Second, to the reimbursement of any Creditor for any and all losses
incurred resulting from any indemnity provided in accordance with subsection
4.4(d) or 4.7 by such Creditor;
Third, (to the extent not previously reimbursed), to the pro rata
payment of all Obligations that consist of costs and expenses incurred in
connection with the preservation, collection, enforcement or protection of
the rights in respect of the Collateral;
Fourth, to (i) the Lender Agent (for the benefit of the Lenders) in
payment of the unpaid principal of the Loans and the Reimbursement
Obligations, for the then undrawn and unexpired amount of the then
outstanding Letters of Credit and for all amounts then owing under the Hedge
Agreements (other than fees, expenses or interest), (ii) until the Merger
Date, to the Interim Lender Agent (for the benefit of the Interim Lenders)
in payment of the unpaid principal of the Interim Loans, and (iii)
commencing on the Merger Date, to the Xxxxxx Trustee (for the benefit of the
Holders) in payment of the unpaid principal of the Xxxxxx 9-3/8% Notes, such
amount in this clause Fourth to be shared pro rata in accordance with the
respective outstanding amounts thereof, until all such amounts are paid in
full;
Fifth, to (i) the Lender Agent (for the benefit of the Lenders) in
payment of all due and payable interest on the Loans and Reimbursement
Obligations, (ii) until the Merger Date, to the Interim Lender Agent (for
the benefit of the Interim Lenders) in payment of all due and payable
interest on the Interim Loans, and (iii) commencing on the Merger Date, to
the Xxxxxx Trustee (for the benefit of the Holders) in payment of all due
and payable interest on the Xxxxxx 9-3/8% Notes, such amounts in this clause
Fifth to be shared pro rata in accordance with the respective amounts
thereof, until all such amounts are paid in full;
Sixth, to the Lender Agent (for the benefit of the Lender Creditors) in
payment of all remaining Lender Obligations, (ii) until the Merger Date, to
the Interim Lender Agent (for the benefit of the Interim Lender Creditors)
in payment of all remaining Interim Lender Obligations, and (iii) commencing
on the Merger Date, to the Xxxxxx Trustee (for the benefit of the Holders)
in payment of all remaining Holder Obligations, such amounts in this clause
Sixth to be shared pro rata in accordance with the respective amounts
thereof, until all such amounts are paid in full; and
Seventh, the balance, if any, after all of the Obligations have been
satisfied and the Commitments terminated, to the Borrower or such other
Person as may be required by law.
3.3 Time of Payments. Unless the Collateral Agent shall have received
written instructions from the Lender Agent and the Interim Lender Agent as to
the times at which any amounts are to be distributed pursuant to subsection 3.2,
all distributions under subsection 3.2 shall be made at such times as the
Collateral Agent shall in its reasonable discretion determine to be as soon as
practicable.
3.4 Investment of Amounts in Collateral Account. Pending the
disbursement thereof pursuant to the terms of this Agreement, all amounts in the
Collateral Account shall (to the extent the Collateral Agent deems practical) be
invested by the Collateral Agent in Cash Equivalents. Any reduction in such
amounts so invested resulting from a reduction in the value of such Cash
Equivalents shall not be deemed to reduce any outstanding Obligations or to give
rise to any claim or right by any party. All such investments shall be evidenced
either (a) by negotiable certificates or instruments which are held by or for
the account of the Collateral Agent or (b) by book entries maintained in a state
in which the Collateral Agent may be granted by book entries a perfected
security interest in the securities relating thereto.
3.5 Amounts Held for Contingent Obligations. In the event any Lender
shall receive any
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moneys pursuant to subsection 3.2 in respect of the contingent portion of the
outstanding Obligations, then such Lender shall invest such moneys in Cash
Equivalents maturing within 90 days after they are acquired by such Lender and
shall hold all such amounts so distributable, and all such investments and the
net proceeds thereof, in trust until (i) all or part of such contingent claim
shall have become fixed, in which case such Lender shall apply to the payment of
such fixed claim from such investments and the proceeds thereof an amount equal
to such fixed claim, and shall promptly give notice thereof to the Borrower and
the Collateral Agent or (ii) all or part of such contingent claim shall have
been extinguished, whether as the result of an expiration without drawing of any
Letter of Credit, payment of amounts secured or covered by any Letter of Credit
other than by drawing thereunder, in which case such Lender, shall, as soon as
practicable thereafter, notify the Borrower and the Collateral Agent and shall
distribute from such investments, and the proceeds thereof, an amount equal to
the portion of contingent claim which has been extinguished together with
interest earned thereon from the date first invested until so distributed, to
the Collateral Agent for deposit in the Collateral Account and application in
accordance with the provisions of subsection 3.2.
SECTION 4.
CONCERNING THE COLLATERAL AGENT
4.1 Appointment of Collateral Agent. Each of the Lender Agent (on
behalf of the Lenders) and the Interim Lender Agent (on behalf of the Interim
Lenders) hereby appoints Norwest Bank Texas, N.A. to act as its Collateral Agent
pursuant to the terms of the Intercreditor Security Documents and this
Agreement, and Norwest Bank Texas, N.A. agrees to act as Collateral Agent for
the Representative Creditors, pursuant to the terms of the Intercreditor
Security Documents and this Agreement.
4.2 Duties.
(a) Notices to Representative Creditors. The Collateral Agent shall
promptly notify the Lender Agent and the Interim Lender Agent in the event it
shall receive any Notice of Actionable Event of Default or any Notice of
Actionable Event of Default shall be rescinded.
(b) Actions Under Security Documents. (i) The Collateral Agent shall
not be obligated to take any action under this Agreement or any of the
Intercreditor Security Documents except for the performance of such duties as
are specifically set forth herein or therein. Subject to the provisions of this
Section 4, the Collateral Agent shall take any action under or with respect to
the Intercreditor Security Documents which is requested by the Directing Parties
and which is not inconsistent with or contrary to the provisions of this
Agreement or the Intercreditor Security Documents. At any time when a Notice of
Actionable Event of Default shall have been given and shall be outstanding, the
Collateral Agent shall, subject in all cases to the provisions of this Section
4, exercise or refrain from exercising all such rights, powers and remedies as
shall be available to it under the Intercreditor Security Documents or any of
them in accordance with any written instructions received from the Directing
Parties. Absent written instructions from the Directing Parties, the Collateral
Agent may take, but shall have no obligation to take, any and all such actions
under the Intercreditor Security Documents or any of them or otherwise as it
shall deem to be in the best interests of the Creditors in order to maintain the
Collateral and protect and preserve the Collateral and the rights of the
Creditors; provided that, except as provided in paragraph (ii) below, in the
absence of written instructions (which may relate to the exercise of specific
remedies or to the exercise of remedies in general) from the Directing Parties
the Collateral Agent shall not foreclose any Lien on the Collateral or exercise
any other remedies available to it under any Intercreditor Security Documents
with respect to the Collateral or any part thereof. Absent contrary instructions
from the Directing Parties, the Collateral Agent shall take reasonable measures
to maintain the perfection of the security interests in the Collateral granted
pursuant to the Intercreditor Security Documents.
(ii) If the Collateral Agent has requested instructions from the
Directing Parties at a time when a Notice of Actionable Event of Default shall
be outstanding and the Directing Parties have not responded to such request
within 30 days thereafter, the Collateral Agent may take, but shall have no
obligation to take, any and all actions under the Intercreditor Security
Documents or any of them or otherwise, including foreclosure of any Lien or any
other exercise of remedies, as the Collateral Agent, in good faith, shall
determine to be in the interests of the Creditors and to maximize both the value
of the Collateral and the present value of
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the recovery by each of the Creditors of the outstanding Obligations owed to it;
provided, that, if instructions are thereafter received from the Directing
Parties, then the actions of the Collateral Agent shall be subject to subsection
4.2(b)(i)
4.3 Limitations on Responsibility of Collateral Agent. (a) The
Collateral Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties contained
herein or in any other Operative Document, except for those expressly made by it
herein. The Collateral Agent makes no representation as to the value or
condition of the Collateral or any part thereof, as to the title of the Grantors
to the Collateral, as to the security afforded by this Agreement or any
Intercreditor Security Document, except as expressly set forth in Section 5, as
to the validity, execution, enforceability, legality or sufficiency of this
Agreement or any other Operative Document, and the Collateral Agent shall incur
no liability or responsibility in respect of any such matters. The Collateral
Agent shall not be responsible for insuring the Collateral, for the payment of
taxes, charges, assessments or liens upon the Collateral or otherwise as to the
maintenance of the Collateral, except as provided in the Intercreditor Security
Documents or the immediately following sentence when the Collateral Agent has
possession of the Collateral. The Collateral Agent shall have no duty to the
Grantors or to any Creditor as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of the Collateral Agent or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto, except the duty to accord such of the
Collateral as may be in its possession at least that level of care as it accords
its own assets and the duty to account for monies received by it. The Collateral
Agent shall not be required to ascertain or inquire as to the performance by the
Borrower or the other Grantors of any of the covenants or agreements contained
herein or in the other Operative Documents. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken or omitted to be taken by any such person in connection with this
Agreement or any other Operative Document except for its or such person's own
gross negligence or wilful misconduct. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken by it or any such person in accordance with any notice given by the
Directing Parties. The Collateral Agent may execute any of the powers granted
under this Agreement or any of the Intercreditor Security Documents and perform
any duty hereunder or thereunder either directly or by or through agents or
attorneys-in-fact, and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care and
without gross negligence or wilful misconduct.
4.4 Reliance by Collateral Agent; Indemnity Against Liabilities; etc.
(a) The Collateral Agent may consult with counsel and shall be fully protected
in taking any action hereunder in accordance with any advice of such counsel.
The Collateral Agent shall have the right but not the obligation at any time to
seek instructions concerning the administration of this Agreement, the duties
created hereunder or the Collateral from any court of competent jurisdiction.
(b) The Collateral Agent shall be fully protected in relying upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document which it believes to be
genuine and to have been signed or presented by the proper party or parties. In
the absence of its gross negligence or wilful misconduct or actual notice to the
contrary, the Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificate or opinions furnished to the Collateral Agent in connection with
this Agreement.
(c) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Actionable Event of Default unless and until the Collateral Agent shall have
received a Notice of Actionable Event of Default. The Collateral Agent shall
have no obligation whatsoever either prior to or after receiving such a notice
to inquire whether an Actionable Event of Default has, in fact, occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any such notice so furnished to it.
(d) If the Collateral Agent has been requested to take any specific
action pursuant to any provision of this Agreement, the Collateral Agent shall
not be under any obligation to exercise any of the rights or powers vested in it
by this Agreement in the manner so requested unless it shall have been provided
indemnity satisfactory to it against the costs, expenses and liabilities which
may be incurred by it in compliance with such request or direction.
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4.5 Resignation or Removal of the Collateral Agent. The Collateral
Agent may at any time (a) by giving 30 days' prior written notice to the Lender
Agent and, prior to the Merger Date, the Interim Agent, resign and be discharged
from the responsibilities hereby created, or (b) if the Directing Parties
conclude that the Collateral Agent shall have acted under and in respect of this
Agreement in a manner which constitutes negligence or otherwise conclude in the
reasonable exercise of their business judgment that the Collateral Agent should
be removed, be removed from its position as Collateral Agent by the Directing
Parties, such resignation or removal to become effective upon the earlier of (x)
the acceptance of the appointment of a successor pursuant to the following
sentence or (y) the appointment of a successor by the Directing Parties and the
acceptance of such appointment by such successor. If no successor shall be
appointed and approved pursuant to clause (y) above within 30 days after the
date of any such resignation, the Collateral Agent may apply to any court of
competent jurisdiction to appoint a successor to act until a successor shall
have been appointed by the Directing Parties as above provided or may, on behalf
of the Representative Creditors, appoint a successor Collateral Agent. Any
successor Collateral Agent shall be a bank organized under the laws of the
United States or any State thereof, with an office in New York, New York, having
a combined capital and surplus of at least $500,000,000 that is authorized to
perform the functions of the Collateral Agent hereunder.
4.6 Expenses and Indemnification by Borrower. By its consent hereto,
each Grantor jointly and severally agrees (i) to reimburse the Collateral Agent,
on demand, for any reasonable expenses incurred by the Collateral Agent,
including reasonable counsel fees and compensation of agents, arising out of, in
any way connected with, or as a result of, the execution or delivery of this
Agreement or any related document or any agreement or instrument contemplated
hereby or thereby or the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder or in connection with the
enforcement or protection of the rights of the Collateral Agent and the
Creditors under this Agreement and the Intercreditor Security Documents and (ii)
to indemnify and hold harmless the Collateral Agent and its directors, officers,
employees and agents, on demand, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in its capacity as the
Collateral Agent or any of them in any way relating to or arising out of this
Agreement or any action taken or omitted by them under this Agreement; provided
that the Grantors shall not be liable to the Collateral Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Collateral Agent or any of its directors, officers,
employees or agents.
4.7 Expenses and Indemnification by Lenders and Interim Lenders. (a)
Each Lender and until the Merger Date each Interim Lender agrees (i) to
reimburse the Collateral Agent, on demand, in accordance with the provisions of
subsection 4.7(b), for any expenses referred to in subsection 4.6 which shall
not have been reimbursed by the Grantors or paid from the proceeds of Collateral
as provided herein and (ii) to indemnify and hold harmless the Collateral Agent
and its directors, officers, employees and agents, on demand, in the amount of
its pro rata share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements referred to in subsection 4.6, to the extent the same shall not
have been reimbursed by the Borrower or any other Grantor or paid from the
Proceeds of Collateral as provided herein; provided that no Lender or Interim
Lender shall be liable to the Collateral Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers, employees
or agents.
(b) The reimbursement and indemnification obligations of each Lender
and each Interim Lender shall be for the benefit of all Collateral Agents and
shall be several and pro rata, at any time to be based upon the Obligations owed
to each such Creditor at such time in relation to the aggregate Obligations then
outstanding, provided, that nothing in this subsection 4.7(b) shall be
interpreted in a manner to limit the indemnity provided to the Collateral Agent
by any Creditor pursuant to subsection 4.4(d).
SECTION 5.
REPRESENTATIONS AND WARRANTIES
The Collateral Agent, the Lender Agent and the Interim Lender Agent
each represents and
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warrants to the other parties hereto that (a) the execution, delivery and
performance of this Agreement (i) have been duly authorized by all requisite
corporate action on its part and (ii) will not contravene any provision of its
charter or by-laws or any order of any court or other Governmental Authority
having applicability to it or any applicable law, and (b) this Agreement has
been duly executed and delivered by it and constitutes its legal, valid,
enforceable and binding obligation.
SECTION 6.
GENERAL INTERCREDITOR ARRANGEMENTS
6.1 Turnover of Collateral and Certain Payments. (a) If any Lender or
Interim Lender (i) acquires custody, control or possession of any Collateral or
Proceeds therefrom or (ii) receives any payment of the Obligations from the
Collateral or Proceeds thereof or, until the Merger Date, from enforcement of
the Guarantee, other than pursuant to the terms of this Agreement (an "Excess
Payment"), then such Creditor shall in each such case promptly cause such
Collateral or Proceeds to be delivered to or put in the custody, possession or
control of the Collateral Agent for disposition or distribution in accordance
with the provisions of this Agreement. Until such time as the provisions of the
immediately preceding sentence have been complied with, such Creditor shall be
deemed to hold such Collateral, proceeds or payments in trust for the parties
entitled thereto hereunder. Notwithstanding the foregoing, no Creditor shall be
required to deliver to or put in the custody, possession or control of the
Collateral Agent or to hold in trust as specified in the preceding sentence any
payment or prepayment of principal, interest, premium or fees received in
accordance with the terms of the Credit Agreement or the Interim Loan Agreement,
as applicable, prior to the Collateral Agent's receipt of a Notice of Actionable
Event of Default, or amounts paid pursuant to the provisions of Section 3 at any
time.
6.2 Setoffs. If any Creditor exercises any right of setoff or similar
right with respect to any assets (whether or not such assets shall constitute
Collateral) of the Borrower or any other Grantor for payment of any outstanding
Obligations, such Creditor may apply such amounts to such outstanding Obligation
arising under the Operative Documents, as applicable; provided, that any Lender
Creditor exercising such rights shall comply with the provisions of subsection
10.7 of the Credit Agreement and any Interim Lender Creditor exercising such
rights shall comply with the provisions of subsection 2.11 of the Interim Loan
Agreement.
SECTION 7.
MISCELLANEOUS
7.1 No Individual Action. No Creditor may require the Collateral Agent
to take or refrain from taking any action hereunder or under any of
Intercreditor Security Documents or with respect to any of the Collateral except
as and to the extent expressly set forth in this Agreement.
7.2 Successors and Assigns. (a) This Agreement shall be binding on and
inure to the benefit of the Collateral Agent, each of the Administrative Agent
and Interim Lender Agent and their respective successors and permitted assigns
(including any assignee of the Administrative Agent in accordance with the
Credit Agreement and any assignee of any Interim Lender Agent in accordance with
the Interim Loan Agreement). The rights and obligations of any Lender or Interim
Lender under this Agreement shall be assigned automatically, without the need
for the execution of any document or any other action, to, and the term "Lender"
or "Interim Lender" as used in this Agreement shall include, any assignee,
transferee or successor of such Creditor under the Credit Agreement or the
Interim Loan Agreement, as the case may be, in accordance with the terms of and
upon the effectiveness of an assignment pursuant to subsection 10.6 of the
Credit Agreement or subsection 6.1 of the Interim Loan Agreement, as the case
may be, and any such assignee, transferee or successor shall automatically
become a party to this Agreement. Each of the Lenders and the Interim Lenders
agrees that it shall deliver a complete copy of this Agreement to any potential
assignee, transferee or successor of such Lender or Interim Lender prior to the
execution of any such assignment. This Agreement is not intended to confer any
benefit on, or create any obligation of the Collateral Agent or any Creditor to,
the Borrower or any third party, including the Guarantors, even if such Person
acquires, by subrogation or otherwise, any interest of the Lenders or the
Interim Lenders in any of the Obligations or Collateral.
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7.3 Notices. Notices and other communications provided for herein or in
any related document shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telex, graphic scanning or other
telegraphic communications equipment of the sending party, as follows:
if to the Lender Agent: PNC Bank, National Association
One PNC Plaza, Third Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx Xxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: PNC Bank, National Association
One PNC Plaza, Fourth Floor Annex
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
if to the Interim
Lender Agent: Xxxxxx Commercial Paper Inc.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X'Xxxxx
Telecopy: (000) 000-0000
if to the Lender
Collateral Agent,
Interim Lender
Collateral Agent
and/or the Holder
Collateral Agent: Norwest Bank Texas, N.A., as Collateral Agent
pursuant to the Key Energy Group, Inc. Intercreditor
Agreement, dated as of September 14, 1998
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Mr. Xxxx XxXxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000]
if to any Grantor: Key Energy Group, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. XxXxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, graphic scanning or other telegraphic communications equipment of the
sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this subsection 7.3 or in accordance
with the latest unrevoked direction from such party given in accordance with
this subsection 7.3. Addresses of any party may be changed by written notice by
such party to the Collateral Agent.
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7.4 Termination. This Agreement shall terminate automatically upon the
earlier of (a) the Merger Date occurring and the Holder Termination Date and (b)
the indefeasible payment in full of the Obligations; provided, however, that
subsections 4.6, 4.7 and 7.5 of this Agreement shall survive, and remain
operative and in full force and effect, regardless of the termination of this
Agreement.
7.5 APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
7.6 Modification of Agreement. No modification or amendment of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by each party hereto (other than the Interim Loan
Agent after the Merger Date). No waiver of any provision of this Agreement and
no consent to any departure by any party hereto from the provisions hereof shall
be effective unless such waiver or consent shall be set forth in a written
instrument executed by the party against which it is sought to be enforced, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on any party hereto in
any case shall entitle such party to any other or further notice or demand in
the same, similar or other circumstances.
7.7 Waiver of Rights. Neither any failure nor any delay on the part of
any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, and a single or partial exercise thereof shall not
preclude any other or further exercise or the exercise of any other right, power
or privilege.
7.8 Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provision.
7.9 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
7.10 Section Headings. The Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
7.11 Complete Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior representations, negotiations, writings, memoranda and
agreements. To the extent any provision of this Agreement conflicts with any
other Operative Document, the provisions of this Agreement shall be controlling.
7.12 Applicability. (a) Anything herein, or in any other Operative
Document, or the Xxxxxx Indenture to the contrary notwithstanding, upon the
occurrence of the Merger Date and without the requirement of any further action
to be taken hereunder, the Interim Lender Creditors (including their successors
and assigns) will no longer be entitled to the benefits of this Agreement
including without limitation, the right to share in payments from Proceeds of
the Collateral or the Guarantee. The Interim Lender Collateral Agent is hereby
authorized and directed by the Interim Lender Creditors, on the occurrence of
the Merger Date, to execute such UCC-3 termination statements, Mortgage releases
or take such other action as may be necessary to terminate and release the Liens
provided for in the Intercreditor Security Documents in favor of the Lender
Collateral Agent for the benefit of the Interim Creditors. At the Borrower's
expense, the Interim Lender Agent shall promptly after the occurrence of the
Merger Date execute and deliver to the Collateral Agent such other documentation
as may be reasonably requested by the Collateral Agent or the Borrower in
connection with the foregoing terminations and releases. On the occurrence of
the Merger Date, the Holders will be entitled to the benefits of this Agreement
with respect to the Collateral (but not the Guarantee) until the earlier of (i)
the Collateral being
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released by the Collateral Agent or the payment in full of the Lender
Obligations and (ii) the Holder Termination Date. The Holder Collateral Agent is
hereby authorized, on the occurrence of the Holder Termination Date, to execute
such UCC-3 termination statements, Mortgage releases or take such other action
as may be necessary to terminate and release the Liens provided for in the
Intercreditor Security Documents in favor of the Holder Collateral Agent for the
benefit of the Holders.
(b) The rights granted to the Collateral Agent for the equal and
ratable benefit, effective on and after the Merger Date, of the Holder
Creditors, are solely derivative rights, and such rights exist and continue only
to the extent, and for so long as, the Lender Collateral Agent for benefit of
the Lenders, has any security interest, right, title or interest in the
Collateral. In the event that this Agreement is terminated in accordance with
its terms, the rights granted to the Collateral Agent for the equal and ratable
benefit, effective on and after the Merger Date, of the Holder Creditors, will
be automatically terminated without any further action.
7.13 Parties. Pursuant to Section 10.17 of the Credit Agreement, the
Lender Agent has been directed by all Lenders parties thereto to execute and
deliver this Agreement on their behalf, thereby constituting their assumption of
the rights and obligations of Lenders hereunder, and pursuant to Section 14.18
of the Interim Loan Agreement, the Interim Lender Agent has been directed by the
Interim Lenders party thereto to execute and deliver this Agreement on their
behalf, thereby constituting their assumption off the rights and obligations of
Interim Lenders hereunder.
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IN WITNESS WHEREOF, the Collateral Agent, the Lender Agent and the
Interim Lender Agent have caused this Agreement to be duly executed by their
duly authorized officers, all as of the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION, as
Lender Agent
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
XXXXXX COMMERCIAL PAPER INC., as
Interim Lender Agent
By: /s/ Xxxxxx Xxx
---------------------------------------
Name: Xxxxxx X. Xxx
Title: Authorized Signatory
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NORWEST BANK TEXAS, N.A., as
Lender Collateral Agent
By: /s/ Xxxx X. XxXxxxxx
---------------------------------------
Name: Xxxx X. XxXxxxxx
Title: Senior Vice President
NORWEST BANK TEXAS, N.A., as
Interim Lender Collateral Agent
By: /s/ Xxxx X. XxXxxxxx
---------------------------------------
Name: Xxxx X. XxXxxxxx
Title: Senior Vice President
NORWEST BANK TEXAS, N.A., as
Holder Collateral Agent
By: /s/ Xxxx X. XxXxxxxx
---------------------------------------
Name: Xxxx X. XxXxxxxx
Title: Senior Vice President
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KEY ENERGY GROUP, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
--------------------------------------------
Title: Executive Vice President
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.
MIDLAND ACQUISITION CORP.
XXXXXX OILFIELD SERVICE &
SUPPLY, INC.
WELLTECH MID-CONTINENT, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
-------------------------------------
Title: Vice President
of all the foregoing companies
