CROSS-COLLATERALIZATION AND CROSS-GUARANTY AGREEMENT
This CROSS-COLLATERALIZATION AND CROSS-GUARANTY AGREEMENT (this "Agreement"), dated as of January 19, 1996, is among The CIT Group/Credit Finance, Inc. ("Lender"), Yale E. Key, Inc. ("Yale"), Key Energy Drilling, Inc. d/b/a Clint Hurt Drilling ("Hurt"), Key Energy Group, Inc. ("Key"), WellTech, Inc. ("WellTech"), and Bronson Production, Inc. ("BPI") (Yale, Hurt, Key, WellTech and BPI are referred to each individually as a "Borrower" and collectively as the "Borrowers").
A. Yale, Hurt and Key entered into that certain Second Amended and Restated Loan and Security Agreement with Lender dated as of January 18, 1996 (the "Yale Loan Agreement").
B. WellTech and BPI entered into that certain Loan and Security Agreement with Lender dated as of January 18, 1996 (the "WellTech Loan Agreement"; the Original Loan Agreement, as defined in the Yale Loan Agreement and the WellTech Loan Agreement, together with the Yale Loan Agreement and the WellTech Loan Agreement as they may hereafter be modified or amended are referred to collectively as the "Loan Agreements").
C. In accordance with the terms of the Loan Agreements, Lender has agreed to make loans and other financial accommodations for the benefit of Borrowers.
D. Key and Lender entered into that certain Stock Pledge Agreement dated as of January 18, 1996 (the "Key Stock Pledge Agreement"), under which Key pledged certain stock (the "Key Stock") described therein as security for the obligations of the Borrowers under the Loan Agreements.
E. WellTech and Lender entered into that certain Stock Pledge Agreement dated as of January 18, 1996 (the "WellTech Stock Pledge Agreement"), under which WellTech pledged certain stock (the "WellTech Stock") described therein as security for the obligations of the Borrowers under the Loan Agreement.
F. Yale, Hurt and WellTech have each agreed to execute certain deeds of trust or mortgages (the "Mortgages") pledging as additional collateral certain parcels of real estate located in various states (the "Real Estate").
G. Lender has conditioned its obligations under the Loan Agreements and the other documents and instruments executed in connection therewith on the execution of this Agreement by each of the Borrowers.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, each Borrower and Lender hereby agree as follows:
Due to the close business and financial relationships between each and all Borrowers, in consideration of the benefits which will accrue to each Borrower, and as an inducement for and in consideration of Lender at any time providing or extending loans, advances and other financial accommodations to all Borrowers pursuant to the Loan Agreements, each Borrower hereby, irrevocably and unconditionally, (a) guarantees and agrees to be liable for the prompt indefeasible and full payment and performance of all revolving loans, term loans, letters of credit, bankers' acceptances, merchandise purchase guaranties or other guaranties or indemnities for each other Borrower's account and all other obligations, liabilities and indebtedness of every kind, nature or description owing by all other Borrowers to Lender and/or its affiliates, including principal, interest, charges, fees and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the Loan Agreements, whether now existing or hereafter arising, whether arising during or after the initial or any renewal term of the Loan Agreements or after the commencement of any case with respect to any Borrower under the United States Bankruptcy Code or any similar statute, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, original, renewed or extended, and whether arising directly or howsoever acquired by Lender including from any other entity outright, conditionally or as collateral security, by assignment, merger with any other entity, participations or interests of Lender in the obligations of any Borrower to others, by assumption, operation of law, subrogation or otherwise, and (b) agrees to pay to Lender on demand the amount of all expenses (including, without limitation, attorneys' fees and legal expenses) incurred by Lender in connection with the preparation, execution, delivery, recording, administration, collection, liquidation, enforcement and defense of each Borrower's obligations, liabilities and indebtedness as aforesaid to Lender, Lender's rights in any collateral or under this Agreement and all other Loan Agreements, or in any way involving claims by or against Lender directly or indirectly arising out of or related to the relationship between any Borrower and Lender, whether such expenses are incurred before, during or after the initial or any renewal term of the Loan Agreements or after the commencement of any case with respect to any Borrower under the United States Bankruptcy Code or any similar statute (all of which being collectively referred to herein as the "Guaranteed Obligations").
Notice of acceptance of this Agreement, the making of loans, advances and extensions of credit or other financial accommodations to, and the incurring of any expenses by or in respect of, each Borrower, and presentment, demand, protest, notice of protest, notice of nonpayment or default, notice of intent to accelerate and notice of acceleration, and all other notices to which each Borrower is or may be entitled are hereby waived. Each Borrower also waives notice of, and hereby consents to, (i) any amendment, modification, supplement, renewal, restatement or extensions of time of payment of or increase or decrease in the amount of any of the Guaranteed Obligations or to the Loan Agreements and any collateral, and the guarantee made herein shall apply to the