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SEC Filings

KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
Entire Document

         The payment of interest on these notes is restricted by the terms of an
intercreditor  agreement  between  these note  holders and Shawmut  (see below).
Interest on $2.0  million of these notes is not  payable  currently  if WellTech
does not achieve certain levels of cash flows. These minimum levels of cash flow
were  not  achieved  and the  related  interest  was not  paid on July 6,  1995.
Interest on the remaining  $2.9 million of these notes is not payable  currently
if  WellTech  is in default  of certain  covenants  of the Loan  Agreement  with
Shawmut.  WellTech was in default on July 6, 1995 and the payment of interest on
these notes has been deferred.

         In November 1991, WellTech entered into a lease agreement to obtain the
necessary financing for a computer system. The lease agreement has been recorded
as a capital lease with the corresponding  property and equipment being included
in the accompanying consolidated balance sheet.

         During 1994,  WellTech used seller  financing to provide the capital to
fund several expansion  opportunities.  These notes payable which are secured by
the  purchased  assets bear  interest at rates  ranging from 5.3% to prime + 2%.
Negotiated  repayment  terms,  which are fixed or based  upon cash flow or asset
utilization, range from 3 to 5 years.

         On  January  6,  1995,  WellTech  entered  into a Loan  Agreement  with
Barclays  Business  Credit,  Inc.  (subsequently  acquired by Shawmut),  whereby
Shawmut  agreed  to  provide  WellTech  with a term loan of $2.5  million  and a
revolving  credit facility of up to $6.5 million.  The Shawmut Term Loan,  which
bears  interest at Shawmut  prime plus 1.75% is generally  secured by WellTech's
rigs and equipment and is payable in 84 equal monthly  installments of principal
plus  interest.  The  availability  under the  revolving  credit  facility  is a
function of available  accounts  receivable  collateral,  as defined in the Loan
Agreement.  The interest rate on the revolver is Shawmut  prime plus 1.75%.  The
original term of the Loan  Agreement is for a three (3) year period and includes
certain  restrictive  covenants relative to the maintenance of certain levels of
tangible net worth,  working  capital,  aged accounts payable and cash flows and
contains  restrictions  on the purchase  and sale of certain  assets and capital
expenditures.  See Note 12 for further  discussion of WellTech's credit facility
and financing arrangements.

         Aggregate  loan  maturities  for the  next  five  fiscal  years  are as
follows: 1995-$798,000; 1996- $353,000; 1997-$273,000;  1998-$5,073,000 and 1999
and thereafter $921,000.

         Letters  of  Credit -  WellTech  had a letter  of  credit  of  $421,000
outstanding  at  December  31,  1994.  In  March  1995,  Shawmut  issued,  under
WellTech's  revolving  credit  facility,  an additional  letter of credit in the
amount of $1,080,000. These letters of credit provide collateral for the payment
of the self-insured  retention under certain of WellTech's  liability  insurance
policies.  The letter of credit in the amount of  $421,000  is  guaranteed  by a
former stockholder of WellTech.

         In addition to the above letters of credit,  WellTech was  contingently
obligated  through  January 6, 1995, to an officer and shareholder in the amount
of $292,000, for securities placed by him as collateral on behalf of WellTech to
further support the self-insured  retention under WellTech's liability insurance
policies.  In connection with the Shawmut  financing,  WellTech paid this amount
into its self-insurance cash collateral account and the officer's collateral was
returned to him.