Registration Rights Agreement
among
Key Energy Group, Inc.
Lehman Brothers Inc.
and
McMahan Securities Co. L.P.
Dated as of September 25, 1997
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as of
September 25, 1997, among Key Energy Group, Inc. (the "Company"), Lehman
Brothers Inc. ("Lehman"), and McMahan Securities Co. L.P. ("McMahan"; Lehman and
McMahan being hereinafter referred to as the "Initial Purchasers"), who have
agreed to purchase the Company's 5% Convertible Subordinated Notes due 2004 (the
"Notes") pursuant to the Purchase Agreement dated as of September 18, 1997 among
the Company and the Initial Purchasers (the "Purchase Agreement"). This
Agreement is being executed pursuant to Section 7(e) of the Purchase Agreement.
The Notes 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 September 25, 1997, between the Company and American
Stock Transfer & Trust Company, as Trustee (the "Indenture").
The parties hereby agree as follows:
I. 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 Notes are outstanding, "Damages Payment Date" shall mean each
March 15 and September 15.
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.
Notes. As defined in the preamble hereto.
Person. An individual, partnership, corporation, unincorporated organization,
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 Notes, "Record Holder" shall mean
each Person who is a Holder of shares of Common Stock which constitute Transfer
Restricted Securities on the March 1 or September 1 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 Note and each share of Common Stock issued
upon conversion of Notes until the earlier of (a) the date on which such Note or
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 Note or 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 Note or 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).
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 180 days
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 270 days 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 two 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 "Registration
Default"), the Company hereby agrees to pay liquidated damages ("Liquidated
Damages") to (A) each holder of Notes with respect to any period during which a
Registration Default shall have occurred and be continuing, in an amount equal
to three quarters of one percent (75 basis points) per annum per $1,000
principal amount of Notes held by such Holder; and (B) each Holder of shares of
Common Stock issued upon conversion of Notes with respect to any period in which
a Registration Default shall have occurred and be continuing, in an amount equal
to $.29 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 Notes 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 Note or share of Common Stock,
the accrual of Liquidated Damages with respect to such Note 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; 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) to 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.
(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 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 reasonably object within three
Business Days after the receipt thereof. 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 after the initial filing
of such Registration Statement, (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, if requested in
writing, all documents incorporated by reference therein and, if requested in
writing, 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 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 1 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 7(c) 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 selling Holders pursuant to this clause
(x).
(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 it is 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 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 statement of a
material fact or omit to state any material fact necessary to make the
statements therein 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) 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
Notes 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 similar securities
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)(xiv) 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.
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 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 Notes 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 agrees 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) hereinafter being referred to as an
"Indemnified Holder"), 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) any Registration Statement or Prospectus or any
amendment or supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Notes and the Common Stock issued upon conversion of the
Notes under the state securities or "Blue Sky" laws 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, the Company will not 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 may otherwise
have to the Indemnified Holders. The Company shall not be liable under this
Section 6 for any settlement of any claim or action effected without its
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
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
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 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 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 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 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 proceeds received by such
Holder from an offering of Transfer Restricted Securities 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 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.
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 issued 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
(ii) if to the Company:
Key Energy Group, Inc.
255 Livingston Avenue
New Brunswick, New Jersey 08901
Attention: Jack D. Loftis, Jr.
With a copy to:
Porter & Hedges, L.L.P.
700 Louisiana
Houston, Texas 77002
Attention: Samuel N. Allen
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.
(e) 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.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(h) 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.
(i) 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.
(j) 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
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
KEY ENERGY GROUP, INC.
By:
LEHMAN BROTHERS INC.
By:
MCMAHAN SECURITIES CO. L.P.
By: