REGISTRATION RIGHTS AGREEMENT
among
KEY ENERGY GROUP, INC.
MCMAHAN SECURITIES CO. L.P.
and
RAUSHER PIERCE REFSNES, INC.
DATED AS OF JULY 3, 1996
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is
entered into as of July 3, 1996, among KEY ENERGY GROUP,
INC., a Maryland corporation (the "Company"), McMAHAN
SECURITIES CO. L.P., a Delaware limited partnership
("McMahan"), and RAUSCHER PIERCE REFSNES, INC., a Delaware
corporation ("RPRI"; RPRI and McMahan being hereinafter referred
to as the "Initial Purchasers"), who have agreed to purchase the
Company's 7% Convertible Debentures due 2003 (the
"Debentures") pursuant to the Purchase Agreement dated as of
June 27, 1996 among the Company and the Initial Purchasers
(the "Purchase Agreement"). This Agreement is being executed
pursuant to Section 3(i) of the Purchase Agreement. The
Debentures are convertible into shares of the Company's common
stock, par value $.10 per share (the "Common Stock"), under
the terms and conditions set forth in an indenture dated as of
July 3, 1996, between the Company and American Stock Transfer &
Trust Company, as Trustee (the "Indenture").
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the
following capitalized terms shall have the following meanings:
Broker-Dealer. Any broker or dealer registered under
the Exchange Act.
Business Day. A day other than a Saturday or Sunday
or any federal holiday.
Closing Date. The date of this Agreement.
Commission. The Securities and Exchange Commission.
Damages Payment Date. Each Interest Payment Date. For
purposes of this Agreement, if no Debentures are outstanding,
"Damages Payment Date" shall mean each July 1 and January 1.
Debentures. As defined in the preamble hereto.
Effectiveness Target Date. As defined in Section 3
hereof.
Exchange Act. The Securities Exchange Act of 1934, as
amended.
Holder. A Person who owns, beneficially or
otherwise, Transfer Restricted Securities.
Indemnified Holder. As defined in Section 6(a) hereof.
Indenture. As defined in the preamble hereto.
Initial Purchasers. As defined in the preamble hereto.
Interest Payment Date. As defined in the Indenture.
Liquidated Damages. As defined in Section 3 hereof.
NASD. National Association of Securities Dealers, Inc.
Person. An individual, partnership, corporation,
unincorporated organization, limited liability company, trust,
joint venture or a government or agency or political subdivision
thereof.
Prospectus. The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder. With respect to any Damages Payment
Date, each Person who is a Holder on the record date with
respect to the Interest Payment Date on which such Damages
Payment Date shall occur. In the case of a Holder of shares of
Common Stock issued upon conversion of the Debentures, "Record
Holder" shall mean each Person who is a Holder of shares of
Common Stock which constitute Transfer Restricted
Securities on the June 15 or December 15 immediately
preceding the Damages Payment Date.
Registration Default. As defined in Section 3(a)
hereof.
Registration Statement. The registration for
resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, which is filed pursuant to the
provisions of this Agreement, in each case, including the
Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Securities Act. The Securities Act of 1933, as amended.
Shelf Filing Deadline. As defined in Section 2 hereof.
Shelf Registration Statement. As defined in Section 2
hereof.
TIA. The Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities. Each share of Common
Stock issued upon conversion of Debentures until the earlier
of (a) the date on which such share of Common Stock issued upon
conversion has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf
Registration Statement, (b) the date on which such share of
Common Stock issued upon conversion is distributed to the
public pursuant to Rule 144 under the Securities Act or
(c) the date on which such share of Common Stock issued upon
conversion may be sold or transferred pursuant to Rule
144(k) (or any other similar provision then in force).
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Underwritten Registration or Underwritten Offering. A
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. Shelf Registration.
(a) The Company shall: (i) as soon as practicable,
but not later than nine months after the date hereof (the
"Shelf Filing Deadline"), cause to be filed a shelf
registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement"), which
Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities held by Holders that have
provided the information required pursuant to Section 2(b)
hereof; (ii) use its best efforts to cause such Shelf
Registration Statement to be declared effective by the
Commission on or before one year after the date hereof; and
(iii) use its best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as
required by the provisions of Section 4(b) hereof to the extent
necessary to ensure that it is available for resales by the
Holders of Transfer Restricted Securities entitled to the
benefit of this Agreement, and to ensure that it conforms with
the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced
from time to time, for a period of at least three years
following the Closing Date or such shorter period that will
terminate when all Transfer Restricted Securities covered by
the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement.
(b) No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and
until such Holder furnishes to the Company in writing, within 10
Business Days after receipt of a request therefor, such
information as the Company may reasonably request for use
in connection with such Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein and in any
application to be filed with or under state securities
laws. No Holder of Transfer Restricted Securities shall be
entitled to Liquidated Damages pursuant to Section 3 hereof
unless and until such Holder shall have provided all such
reasonably requested information. Each Holder as to which any
Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required
to be disclosed in order to make the information
previously furnished to the Company by such Holder not
materially misleading.
3. Liquidated Damages.
(a) If the Shelf Registration Statement required by
this Agreement (i) is not filed with the Commission on or before
the date specified for such filing in Section 2(a)(i) hereof,
(ii) has not been declared effective by the Commission
on or before the date specified for such effectiveness in
Section 2(a)(ii) hereof (the "Effectiveness Target Date"),
or (iii) subject to the provisions of Section 4(b)(i) below, is
filed and declared effective but, during the period specified in
Section 2(a)(ii) hereof, shall thereafter cease to be
effective or fail to be usable for its intended purpose without
being succeeded within 15 Business Days by a post-effective
amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective
(each such event referred to in foregoing clauses (i) through
(iii), a
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"Registration Default"), the Company hereby agrees to pay
liquidated damages ("Liquidated Damages") to (A) each holder
of Debentures with respect to any period during which a
Registration Default shall have occurred and be
continuing, in an amount equal to one and one-half percent
(150 basis points) per annum per $1,000 principal amount of
Debentures held by such Holder; and (B) each Holder of shares of
Common Stock issued upon conversion of Debentures with respect
to any period in which a Registration Default shall have
occurred and be continuing, in an amount equal to $.07 per
annum per share of Common Stock, subject to adjustment in the
event of stock splits, stock recombinations, stock dividends
and the like.
(b) All accrued Liquidated Damages shall be paid
to holders of Debentures or Record Holders by the Company on
each Damages Payment Date by wire transfer of immediately
available funds or by federal funds check. Following the cure of
all Registration Defaults relating to any particular Debenture
or share of Common Stock, the accrual of Liquidated
Damages with respect to such Debenture or share of Common
Stock will cease.
4. Registration Procedures.
(a) In connection with the Shelf Registration
Statement, the Company shall comply with all the provisions
of Section 4(b) below and shall use its best efforts to effect
such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and,
pursuant thereto, the Company will as expeditiously as
possible prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any
appropriate form under the Securities Act.
(b) In connection with the Shelf Registration
Statement and any Prospectus required by this Agreement to
permit the sale or resale of Transfer Restricted Securities, the
Company shall:
(i) Use its best efforts to keep such
Registration Statement continuously effective during the
period required by this Agreement; upon the occurrence of any
event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not be effective and usable for
resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement, in the
case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use
its reasonable best efforts to cause such amendment to be
declared effective and such Registration Statement and the
related Prospectus to become usable for their intended
purposes as soon as practicable thereafter. Notwithstanding
the foregoing, if the Board of Directors of the Company
determines in good faith that it is in the best interests of
the Company not to disclose the existence of or facts
surrounding any proposed or pending material corporate
transaction involving the Company, the Company may allow the
Shelf Registration Statement to fail to be effective and
usable as a result of such nondisclosure for (1) a period not
to exceed 30 days in any three month period or (2) two periods
not to exceed an aggregate of 60 days in any twelve month
period.
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(ii) Prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration
Statement effective for the period set forth in Section
2(a)(ii) hereof or such shorter period as will terminate
when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable
provisions of Rules 424 and 430A under the Securities Act in a
timely manner; and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered
by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution
by the sellers thereof set forth in such Registration Statement
or supplement to the Prospectus.
(iii) Advise the underwriter(s), if any, and selling
holders promptly (but in any event within two Business Days)
and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments
to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
under the Securities Act or of the suspension by any state
securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, (D) of the existence of any fact
or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission
or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification
of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
(iv) Furnish to each of the selling holders
and each of the underwriter(s), if any, before filing
with the Commission, copies of any Registration Statement
or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus
(including, upon request in writing, all documents
incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to
the review of such holders and underwriter(s), if any, for
a period of at least three Business Days, and the Company
will not file any such Registration Statement or Prospectus
or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents
incorporated by reference) to which a selling holder of
Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall, upon advice of
its counsel, reasonably object within three Business Days after
the receipt thereof.
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A selling holder or underwriter, if any, shall be deemed to
have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement
or omission.
(v) Promptly before the filing of any document
that is to be incorporated by reference into a
Registration Statement or Prospectus, (A) provide copies
of such document to the selling Holders and to the
underwriter(s), if any, (B) make the Company's
representatives available for discussion of such document and
other customary due diligence matters, and (C) include such
information in such document before the filing thereof as
such selling Holders or underwriter(s), if any, reasonably may
request.
(vi) Make available at reasonable times for
inspection by the selling Holders, any underwriter
participating in any distribution pursuant to such
Registration Statement, and any attorney or accountant retained
by such selling Holders or any of the underwriter(s), all
financial and other records, pertinent corporate documents and
properties of the Company and cause the Company's officers,
directors, managers and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement
after the filing thereof and before its effectiveness.
(vii) If requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any
Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment if necessary, such information as
such selling Holders and underwriter(s), if any, may reasonably
request to have included therein, including, without
limitation, information relating to the "Plan of Distribution"
of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase
price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment.
(viii) Furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of
the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits
(including exhibits incorporated therein by reference).
(ix) Deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably
may request; the Company hereby consents to the use of the
Prospectus and any amendment or supplement thereto by each of
the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment
or supplement thereto.
(x) Whether or not an underwriting agreement is
entered into and whether or not the registration is an
Underwritten Registration, the Company shall: (A) upon
request, furnish to each selling Holder and each underwriter, if
any, in such substance and scope as they may reasonably request
and as are
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customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of effectiveness of
the Shelf Registration Statement: (1) a certificate, dated
the date of effectiveness of the Shelf Registration
Statement, signed by (y) the President and (z) the Chief
Financial Officer of the Company confirming, as of the date
thereof, the matters set forth in Section 5(b) of the Purchase
Agreement and such other matters as such parties may
reasonably request; (2) an opinion, dated the date of
effectiveness of the Shelf Registration Statement, of counsel
for the Company covering the matters set forth in Section
5(a)(1) of the Purchase Agreement; and (3) customary comfort
letters, dated as of the date of effectiveness of the
Shelf Registration Statement from the Company's independent
accountants, in the customary form and covering matters of
the type customarily covered in comfort letters by
underwriters in connection with primary underwritten offerings;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification
provisions and procedures of Section 6 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance
with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement
entered into by the pursuant to this clause (xi).
(xi) Before any public offering of Transfer
Restricted Securities, cooperate with the selling Holders,
the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue
Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may reasonably request and do any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement;
provided, however, that the Company shall not be required to
register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject
it to the service of process, in any jurisdiction where they are
not now so subject.
(xii) Cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in
such names as the Holders or the underwriter(s), if any,
may request at least two Business Days before any sale of
Transfer Restricted Securities made by such underwriter(s).
(xiii) Use its reasonable best efforts to cause the
Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other
U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities.
(xiv) Subject to Section 4(b)(i) above, if any
fact or event contemplated by Section 4(b)(iii)(D) above shall
exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue
7
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(xv) Cooperate and assist in any filings required to
be made with the NASD and in the performance of any due
diligence investigation by any underwriter that is required
to be retained in accordance with the rules and regulations
of the NASD.
(xvi) Otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the
Commission, and make generally available to its security
holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not
be audited) for the twelve-month period (A) commencing at the
end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to
underwriters in such an offering, beginning with the first
month of the Company's first fiscal quarter commencing after
the effective date of the Registration Statement.
(xvii) If required, cause the Indenture to be
qualified under the TIA not later than the effective date of
the first Registration Statement required by this Agreement,
and, in connection therewith, cooperate, with the trustee and
the holders of Debentures to effect such changes to the
Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute
and use its reasonable best efforts to cause the trustee
thereunder to execute all documents that may be required to
effect such changes and all other forms and documents required
to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner.
(xviii) Cause all Transfer Restricted Securities
covered by the Registration Statement to be listed on each
securities exchange on which securities of the same class
issued by the Company are then listed.
(xix) Provide promptly to each Holder upon
written request each document filed with the Commission
pursuant to the requirements of Section 13 and Section 15 of
the Exchange Act after the Effective Date of the Registration
Statement.
(c) Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the
Company of the existence of any fact of the kind described in
Section 4(b)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities
pursuant to the applicable Registration Statement until such
Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(b)(xv) hereof, or until it
is advised in writing (the "Advice") by the Company that the
use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by
the Company, each Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current
at the time of receipt of such notice.
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5. Registration Expenses.
(a) All expenses incident to the Company's performance
of or compliance with this Agreement will be borne by the
Company regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings
made by any Initial Purchasers or Holders with the NASD (and, if
applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel that may be required
by the rules and regulations of the NASD)); (ii) all
reasonable fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees
and disbursements of counsel for the Company and, subject to
Section 5(b) below, the Holders of Transfer Restricted
Securities; (v) all application and filing fees in
connection with listing of the Common Stock issued upon
conversion of the Debentures on a national securities
exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company
(including the expenses of any special audit and comfort
letters required by or incident to such performance), but
specifically excluding (a) fees and expenses of counsel to the
underwriter(s), if any (other than fees and expenses set
forth in clauses (i) and (ii) above), (b) underwriting
discounts and commissions and (c) transfer fees and taxes if
any, relating to the sale and disposition of Transfer
Restricted Securities by a selling Holder. The Company will, in
any event, bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the
expenses of any annual audit and the fees and expenses of any
Person, including special experts, retained by the Company.
(b) In connection with any Registration Statement
required by this Agreement, the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted
Securities being registered pursuant to the Shelf
Registration Statement, as applicable, for the reasonable fees
and disbursements of not more than one counsel chosen by the
Holders of a majority in principal amount of Debentures and
in number of shares of Common Stock issued upon conversion
thereof for whose benefit such Registration Statement is
being prepared.
6. Indemnification and Contribution.
(a) The Company and the Subsidiaries (as defined
in the Purchase Agreement), jointly and severally, agree to
indemnify and hold harmless: (i) each Holder; (ii) each
person, if any, who controls (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act)
any Holder (any of the persons referred to in this clause
(ii) being referred to as a "controlling person"); and (iii)
the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling
person (any person referred to in clause (i), (ii), or
(iii) may hereinafter be referred to as an "Indemnified
Holders"), against any losses, claims, damages or liabilities,
joint or several, to which such Indemnified Holder may
become subject under the Securities Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon: (i) any untrue statement or alleged untrue
statement of any material fact contained in (A) in any
Registration Statement or Prospectus or in any amendment or
supplement thereto or (B) any application or
9
other document, or any amendment or supplement thereto,
executed by the Company or any Subsidiary or based upon written
information furnished by or on behalf of the Company or any
Subsidiary filed in any jurisdiction in order to qualify the
Common Stock issued upon conversion of the Debentures under
the securities or "Blue Sky" laws thereof or filed with
the Commission or any securities association or securities
exchange (each an "Application"); or (ii) the omission or
alleged omission to state, in such Registration Statement or
Prospectus or any amendment or supplement thereto, or in any
Application, a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and
will reimburse, as incurred, each Indemnified Holder for
any legal or other expenses reasonably incurred by such
Indemnified Holder or controlling person in connection with
investigating, defending against or appearing as a third-party
witness in connection with any such loss, claim, damage,
liability or action; provided, however, neither the Company
nor any of the Subsidiaries will be liable in any such case to
the extent that any such loss, claim, damage, or liability
is finally judicially determined to arise out of or be based
upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration
Statement or Prospectus or amendment or supplement thereto or
Application in reliance upon and in conformity with
written information furnished to the Company through the
Holders by or on behalf of any Holder (or its related
Indemnified Holder) specifically for use therein. This
indemnity agreement will be in addition to any liability that
the Company and the Subsidiaries may otherwise have to the
Indemnified Holders. The Company and the Subsidiaries shall
not be liable under this Section 6 for any settlement of any
claim or action effected without their consent, which
shall not be unreasonably withheld.
(b) Each Holder, severally and not jointly, will
indemnify and hold harmless each of the Company and each
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the
Exchange Act against any losses, claims, damages or
liabilities to which the Company or any such controlling
person may become subject under the Securities Act, the Exchange
Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement or the Prospectus or any amendment or supplement
thereto or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the
Company through the Holders by or on behalf of any Holder or its
related Indemnified Holder specifically for use therein;
and, subject to the limitation set forth immediately
preceding this clause, will reimburse, as incurred, any
legal or other expenses incurred by the Company or any
controlling person in connection with investigating or
defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in
addition to any liability that any Holder may otherwise
have to the indemnified parties. No Holder shall be liable
under this Section 6 for any settlement of any claim or action
effected without its consent, which shall not
10
be unreasonably withheld. In no event shall the liability of
any selling Holder hereunder be greater in amount than the
dollar amount of the proceeds received by such Holder upon the
sale of Transfer Restricted Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action
for which such indemnified party is entitled to
indemnification under this Section 6, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying
party of the commencement thereof; but the omission so to
notify the indemnifying party (i) will not relieve it from any
liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any
obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and
(b) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that
if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with
a conflict of interest, (ii) the defendants in any such
action include both the indemnified party and the
indemnifying party and the indemnified party shall have
been advised by counsel that there may be one or more legal
defenses available to it and other indemnified parties that
are different from or additional to those available to the
indemnifying party or (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action,
then, in each such case, the indemnifying party shall not have
the right to direct the defense of such action on behalf of
such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel
to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 6
for any legal or other expenses, other than reasonable costs
of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i)
the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection
with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising
out of the same general allegations or circumstances, designated
by the Holders in the case of paragraph (a) of this Section 6
or the Company in the case of paragraph (b) of this Section
6, representing the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are
parties to such action or actions) or (ii) the indemnifying
party has authorized in writing the employment of counsel for
the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable
for the costs and expenses of any settlement of such
action effected by such indemnified party without the consent
of the indemnifying party, unless such
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indemnified party waived in writing its rights under this
Section 6, in which case the indemnified party may effect such a
settlement without such consent.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 6 is
unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect (i) the relative benefits received
by the Company and the Subsidiaries on the one hand and any
Holder on the other from such Holder's sale of Transfer
Restricted Securities or (ii) if the allocation provided by
the foregoing clause (i) is not permitted by applicable law,
not only such relative benefits but also the relative fault of
the Company and the Subsidiaries on the one hand and such
Holder on the other in connection with the statements or
omissions or alleged statements or omissions that resulted
in such losses, claims, damages or liabilities (or actions in
respect thereof). The relative fault of the parties shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact
relates to information supplied by the Company or the
Subsidiaries on the one hand or such Holder on the other, the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission, and any other equitable considerations appropriate
in the circumstances. The Company, the Subsidiaries and each
Holder of Transfer Restricted Securities agree that it would
not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other
method of allocation that does not take into account the
equitable considerations referred to in the first sentence of
this paragraph (d). Notwithstanding the provisions of this
Section 6(d), none of the Holders (or any of their related
Indemnified Holders) shall be required to contribute any
amount in excess of the amount by which the total discount
received by such Holder with respect to the Common Stock issued
upon conversion thereof exceeds the amount of any damages
which such Holder has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each
person, if any, who controls any Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as
such Holder, and each person, if any, who controls the Company
or any Subsidiary within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as the Company.
7. Rule 144A. The Company hereby agrees with each
Holder, for so long as any Transfer Restricted Securities
remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser
of such Transfer Restricted Securities from such Holder or
beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule
144A.
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8. Participation in Underwritten Registrations.
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's
Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lockup
letters and other documents required under the terms of such
underwriting arrangements.
9. Selection of Underwriters. The Holders of
Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such
Transfer Restricted Securities in an Underwritten Offering.
In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a
majority in number of shares of Common Stock included in
such offering; provided, that such investment bankers and
managers must be reasonably satisfactory to the Company.
10. Miscellaneous.
(a) Remedies. The Company agrees that monetary damages
(including the Liquidated Damages contemplated hereby) would
not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this
Agreement other than with respect to Registration Defaults and
hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not,
on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company
has not previously entered into any agreement granting any
registration rights with respect to their securities to any
Person which rights conflict with the provisions hereof. The
rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights
granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. This Agreement may not be
amended, modified or supplemented, and waivers or consents to
or departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders
of a majority in number of shares of Common Stock as
issuable upon conversion of the Debentures, as the case may be.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified,
return receipt requested), telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture or the transfer
agent of the Common Stock, as the case may be; and
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(ii) if to the Company:
Key Energy Group, Inc.
255 Livingston Avenue
New Brunswick, New Jersey 08901
With a copy to:
Sullivan & Worcester, LLP
One Post Office Square
Boston, Massachusetts 02109
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if
personally delivered, five Business Days after being
deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next Business Day, if timely delivered to
an air courier guaranteeing overnight delivery.
(a) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors
and assigns of each of the parties, including without
limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities;
provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(b) Counterparts. This Agreement may be executed
in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
(c) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES
THEREOF.
(e) Severability. If any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such
provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired
thereby.
(f) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein with respect to the
registration rights granted by the Company with respect to
14
the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
KEY ENERGY GROUP, INC.
By:
MCMAHAN SECURITIES CO.
L.P.
By:
RAUSCHER PIERCE REFSNES,
INC.
By:
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