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 contained in such statements;
(ii)
June 30, 2005 . By June 30, 2005, their March 31, 2004
Quarterly Statements, June 30, 2004 Quarterly Statements, September
30, 2004 Quarterly Statements, and 2004 Annual Statements, all of
which shall be finalized and comply in all respects (other than the
requirement for timely delivery) with the requirements of Sections
7.3.2 and 7.3.1, as applicable, of the Credit Agreement (including,
in the case of the 2004 Annual Statements, 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 each such
statements, a Compliance Certificate based on the results contained
in such statements;
(iii)
August 31, 2005 . By August 31, 2005, their March 31,
2005 Quarterly Statements and June 30, 2005 Quarterly Statements,
all of which shall be finalized and comply in all respects (other
than the requirement for timely delivery) with the requirements of
Section 7.3.1 of the Credit Agreement and concurrently with the
delivery of such each such statements, a Compliance Certificate
based on the results contained in such statements;
(5)
Pricing .
This Section is subject to Section 1(c)(7) of
this Amendment, and the additional incr
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