Exhibit 10.1
THIRD MODIFICATION OF WAIVER
AND
FOURTH AMENDMENT TO CREDIT
AGREEMENT
(TO FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT)
THIS THIRD MODIFICATION OF WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT (the
“Amendment”) is dated as of March 30, 2005 and is made
by and among KEY ENERGY SERVICES, INC., a Maryland corporation (the
“Borrower”), each of the GUARANTORS (as defined in the
Credit Agreement), the LENDERS (as defined in the Credit
Agreement), PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
(the “Administrative Agent”), PNC CAPITAL MARKETS,
INC., and WELLS FARGO BANK, NATIONAL ASSOCIATION
(successor-by-merger to Wells Fargo Bank Texas, National
Association), as the Co-Lead Arrangers, and CALYON NEW YORK BRANCH
(successor by merger to CREDIT LYONNAIS NEW YORK BRANCH), as the
Syndication Agent (the “Syndication Agent”), JPMORGAN
CHASE BANK, N.A. and COMERICA BANK, as the Co-Documentation Agents
(the “Co-Documentation Agents”).
GENERAL RECITALS
WHEREAS , the Borrower, the Guarantors, the Lenders, the
Administrative Agent and the other parties hereto are parties to
that certain Fourth Amended and Restated Credit Agreement, dated as
of June 7, 1997, as amended and restated through
November 10, 2003, and as amended by that certain Waiver And
First Amendment To Credit Agreement (the “Waiver and First
Amendment”) dated as of April 5, 2004, that Modification
of Waiver and Second Amendment to Credit Agreement (the
“Modification of Waiver”) dated August 31, 2004 and
that Second Modification of Waiver and Third Amendment to Credit
Agreement (the “Second Modification of Waiver”) dated
December 17, 2004 (and as hereafter amended, restated, supplemented
or modified, the “Credit Agreement”);
WHEREAS , the Lenders and Borrower desire to modify
certain provisions of the Waiver and First Amendment as previously
modified by the Modification of Waiver and the Second Modification
of Waiver; and
WHEREAS , except as otherwise provided in this
Amendment, capitalized terms used herein shall have the meanings
given to them in the Credit Agreement, as amended by this
Amendment, and all references to Sections in this Amendment which
do not refer to a specific document shall be deemed to refer to the
Credit Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto,
in consideration of their mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:
1.
Modification of Waiver And First
Amendment.
(a)
Modification of Recitals (Section
1(a) of Waiver and First Amendment).
1.
Paragraph 3 of Section 1(a)
(Recitals) of the Waiver and First Amendment is hereby amended and
restated to read as follows:
“3.
As a result of the Restatements, the
Loan Parties: (1) could not finalize and deliver their Annual
Financial Statements for their fiscal year ending December 31, 2003
(the “2003 Annual Statements”), and expect that they
will not be able to finalize their Annual Financial Statements for
their fiscal year ending December 31, 2004 (the “2004 Annual
Statements”), by the due dates therefor under Section 7.3.2
of the Credit Agreement and (2) could not finalize and deliver
their Quarterly Financial Statements for their fiscal quarters
ending March 31, 2004 (the “March 31, 2004 Quarterly
Statements”), June 30, 2004 (the “June 30, 2004
Quarterly Statements”) or September 30, 2004 (the
“September 30, 2004 Quarterly Statements”), and expect
that they will not be able to finalize and deliver their Quarterly
Financial Statements for their fiscal quarters ending March 31,
2005 (the “March 31, 2005 Quarterly Statements”), and
June 30, 2005 (the “June 30, 2005 Quarterly
Statements”) by the due dates therefor under Section 7.3.1 of
the Credit Agreement.”
2.
Paragraphs 5 and 6 of Section 1(a)
(Recitals) of the Waiver and First Amendment are hereby amended and
restated to read as follows:
“5.
As a result of the Restatements, the
Borrower was not able to file its Annual Reports on Form 10-K for
2003 (the “2003 Form 10-K”) or its Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 2004 (the
“March 2004 10-Q”), June 30, 2004 (the “June 2004
10-Q”) and September 30, 2004 (the “September 2004
10-Q”), and is unlikely to file its Annual Report on Form
10-K (the “2004 Form 10-K”), or its Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 31, 2005 (the
“March 2005 10-Q”) and June 30, 2005 (the “June
2005 10-Q”), in a timely manner. That failure might be
deemed a violation of Law as contemplated by Sections 5.1.19 and
7.1.9 of the Credit Agreement.
6.
Unless waived, failure to complete
the 2003 Form 10-K, the 2004 Form 10-K, the March 2004 10-Q, the
June 2004 10-Q, the September 2004 10-Q, the March 2005 10-Q and
the June 2005 10-Q, and to deliver copies of the same to the
trustees under the 6 3/8% Notes Indenture and the 8 3/8% Notes
Indenture and the holders of the notes issued thereunder in a
timely manner has constituted, or will constitute, an event which,
with the giving of notice and the passage of 60 days after the
giving of such notice as provided in such Indentures, will
constitute an Event of Default under such Indentures which will
then permit the acceleration of the indebtedness outstanding
thereunder. Section 8.1.5 of the Credit Agreement provides
that the occurrence of a default or event of default under the
terms of any other agreement involving borrowed money or the
extension of credit or any other Indebtedness under
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which any Loan Party or Subsidiary
of any Loan Party may be obligated as a borrower or guarantor in
excess of $20,000,000 in the aggregate, will constitute an Event of
Default under the Credit Agreement if such breach, default or event
of default consists of the failure to pay (beyond any period of
grace permitted with respect thereto, whether waived or not) any
Indebtedness when due (whether at stated maturity, by acceleration
or otherwise) or if such breach or default permits or causes the
acceleration of Indebtedness .”
(b)
Modification of Waivers (Section
1(b) of Waiver and First Amendment).
Section 1(b) (Waivers and Agreement)
of the Waiver and First Amendment is hereby amended and restated to
read as follows:
“(b) Waivers and
Agreement .
Subject to the agreements and
conditions set forth in Section 1(c) [Agreements] and Section 2
[Amendments] of this Amendment, and the other terms of this
Amendment, the Lenders hereby waive (i) the requirement that the
Loan Parties deliver, on the due dates therefor under Section 7 of
the Credit Agreement, the 2003 Annual Statements, the March 31,
2004 Quarterly Statements, the June 30, 2004 Quarterly Statements,
the September 30, 2004 Quarterly Statements, the 2004 Annual
Statements, the March 31, 2005 Quarterly Statements, and the June
30, 2005 Quarterly Statements, and the Compliance Certificates
which are due concurrently with the delivery of such statements,
(ii) the provisions of Sections 5.1.19 and 7.1.9 of the Credit
Agreement to the extent the failure to file the 2003 Form 10-K, the
2004 Form 10-K, the March 2004 10-Q, the June 2004 10-Q, the
September 2004 10-Q, the March 2005 10-Q and the June 2005 10-Q in
a timely manner constitutes a violation of the representations,
warranties and covenants contained in Sections 5.1.19 and 7.1.9 of
the Credit Agreement, and (iii) the provisions of Section 5.1.9 and
Section 7.1.7 of the Credit Agreement to the extent the
Restatements cause the financial statements of the Borrower and its
consolidated Subsidiaries not to meet the requirements of Section
5.1.9 of the Credit Agreement or reflect that the Borrower failed
to maintain adequate books and records as required by Section 7.1.7
of the Credit Agreement and hereby waive any Potential Default or
Event of Default which might otherwise be occasioned by any of the
foregoing; provided however, that the Lenders do not waive any
Potential Default or Event of Default resulting from the breach of
any financial covenants contained in Sections 7.2.16, 7.2.17 or
7.2.18 of the Credit Agreement occasioned by any of the foregoing.
In addition, the Lenders hereby acknowledge and agree that the
events described in Section 1(a)6 of this Amendment will not
constitute a Potential Default or an Event of Default under the
Credit Agreement unless and until the related notice as required by
the Indenture has been given by the trustee under the related
Indentures or the holders of the notes issued under the applicable
Indentures and the related cure period in the Indentures has
expired. To the extent any waiver contained herein relates to any
representation or warranty contained in the Credit Agreement, any
renewal of the representations and warranties required by the
Credit Agreement shall mean that such representations and
warranties are true and correct
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except to the extent such
representations and warranties have been waived or modified
hereby.”
(c)
Modification of Agreements (Section
1(c) of Waiver and First Amendment).
Section 1(c) (Agreements) of the
Waiver and First Amendment is hereby amended and restated to read
as follows:
“(c) Agreements
.
In consideration of the waivers in
Section 1(b) of this Amendment, the Loan Parties hereby agree as
follows:
(1)
Draft Annual Statements for
2004 . The Loan
Parties shall deliver to the Administrative Agent and to the
Lenders draft, internal, unaudited financial statements for the
fiscal year ended December 31, 2004 (the “Draft Annual
Statements for 2004”) on or before the later of the effective
date hereof or April 30, 2005. The Draft Annual
Statements for 2004 shall consist of a consolidated and
consolidating balance sheet as of the end of such fiscal year, and
related consolidated and consolidating statements of income and
cash flows and consolidated stockholders’ equity for the
fiscal year then ended, all in reasonable detail and setting forth
in comparative form the financial statements as of the end of and
for the preceding fiscal year, and certified by the Borrower to
reflect the Borrower’s financial condition and results of
operations in all material respects as of and for the period ended
December 31, 2004, subject to any write downs, write offs, charges
and adjustments required as a result of the
Restatements;
(2)
Draft Quarterly Statements for
First Two Quarters of 2005 . The Loan Parties shall deliver to the
Administrative Agent and to the Lenders draft, internal, unaudited
financial statements for the fiscal quarters ended March 31, 2005
(the “Draft March 31, 2005 Statements”) on or before
May 20, 2005 and for the fiscal quarter ended June 30, 2005 (the
“Draft June 30, 2005 Statements”) on or before August
19, 2005. The Draft March 31, 2005 Statements and Draft June
30, 2005 Statements shall consist of a consolidated and
consolidating balance sheet as of the end of such fiscal quarter
and related consolidated and consolidating statements of income,
and cash flows for the fiscal quarter then ended and the fiscal
year through that date and setting forth in comparative form the
respective financial statements for the corresponding date and
period in the previous fiscal year, all in reasonable detail and
certified by the Borrower to reflect the Company’s financial
condition and results of operations for the related period, subject
to any write downs, write offs, charges and adjustments required as
a result of the Restatements and to any normal year-end audit
adjustments;
(3)
Compliance Certificates Based on
Draft Statements .
Concurrently with their delivery of each of their Draft Annual
Statements for 2004, Draft March 31, 2005 Statements and Draft June
30, 2005 Statements (collectively, the “Draft
Statements”), the Loan Parties shall deliver to the
Administrative Agent and to the
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Lenders a Compliance Certificate in
the form required by Section 7.3.3 [Compliance Certificate], but is
based on the results contained in the applicable Draft Statements
and is subject to the qualifications in the last clause of each of
Sections 1(c)(1) and 1(c)(2) (each beginning “, subject to .
. .”). Compliance by the Loan Parties with their
covenants, including their financial covenants, under the Credit
Agreement shall be measured based on the Draft Statements and the
Compliance Certificates delivered with such Draft Statements (as if
such Draft Statements and Compliance Certificates were finalized
versions), until the finalized financial statements and related
Compliance Certificates have been delivered pursuant to Section
1(c)(4) of this Amendment, at which time such compliance shall be
measured by such finalized financial statements and Compliance
Certificates;
(4)
Finalized Financial Statements
and Compliance Certificates . The Loan Parties shall deliver to the
Administrative Agent and to the Lenders the following documents by
the dates set forth below:”
(i)
April 30, 2005
. By April 30, 2005, their
2003 Annual Statements, which shall be finalized and comply in all
respects (other than the requirement for timely delivery) with the
requirements of Section 7.3.2 of the Credit Agreement ( the
delivery of the report of independent certified public accountants
for the Loan Parties as more fully described in Section 7.3.2 of
the Credit Agreement) and concurrently with the delivery of such
2003 Annual Statements, a Compliance Certificate based on the
results co
