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S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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                                                                     Exhibit 4.2

         THIS WARRANT HAS BEEN  ACQUIRED FOR  INVESTMENT  AND NOT WITH A VIEW TO
THE DISTRIBUTION HEREOF OR OF THE COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON
EXERCISE  HEREOF WITHIN THE MEANING OF THE  SECURITIES ACT OF 1933 AND THE RULES
AND REGULATIONS  THEREUNDER.  NEITHER THIS WARRANT NOR THE COMMON STOCK OR OTHER
SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE  REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933 OR UPON RECEIPT BY THE COMPANY OF AN OPINION SATISFACTORY AS TO FORM, SCOPE
AND SUBSTANCE OF COUNSEL ACCEPTABLE TO THE COMPANY AS TO AN EXEMPTION THEREFROM.


                          Common Stock Purchase Warrant


75,000  Shares                                              January 19, 1996


         KEY ENERGY GROUP,  INC., a Maryland  corporation (the  "Company"),  for
value received,  hereby  certifies that The CIT  Group/Credit  Finance,  Inc.,or
registered  assigns,  is entitled to purchase,  except to the extent hereinafter
referred to, from the Company 75,000 duly authorized, validly issued, fully paid
and nonassessable  shares (the "Warrant Shares") of Common Stock, par value $.10
per share (the "Common  Stock"),  of the Company at the purchase price per share
of $5.00 (the "Exercise Price"),  at any time or from time to time prior to 5:00

P.M., Boston,  Massachusetts  time, on January 18, 2001 (the "Expiration Date"),
all subject to the terms and conditions set forth below in this Warrant.

         This Warrant  (this  "Warrant"  and,  together  with any such  warrants
issued  in  substitution   therefor  or  issued  pursuant  to  the  transactions
contemplated  by the Second  Amended and Restated  Loan and  Security  Agreement
dated as of January  19,  1996  between  the  Company  and The CIT  Group/Credit
Finance, Inc., the "Warrants").

         SECTION 1.  Registration.  The Company  shall number and register  this
Warrant (and any other warrants issued in substitution herefor) in a register as
they are issued.  The Company may deem and treat the  registered  holders of the
Warrants  as the  absolute  owners  thereof  (notwithstanding  any  notation  of
ownership  or other  writing  thereon made by anyone) for all purposes and shall
not be affected by any notice to the contrary.  Notwithstanding the foregoing, a
Warrant,  if properly  assigned,  may be exercised by a new holder without a new
Warrant first having been issued.

         SECTION 2.  Registration  of Transfer and Exchanges.  The Company shall
from time to time register the transfer of the Warrants in a Warrant register to
be maintained by the Company upon surrender thereof accompanied by a written

                                                      


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instrument or instruments  of transfer in form  reasonably  satisfactory  to the
Company,  duly executed by the  registered  holder or holders  thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney and
upon receipt of any applicable  transfer taxes or evidence  satisfactory  to the
Company that no such tax is due. Upon any such  registration of transfer,  a new
Warrant shall be issued to the transferee(s)  and the surrendered  Warrant shall
be canceled and disposed of by the Company.

         If such a transfer is not made  pursuant to an  effective  Registration
Statement under the Securities Act of 1933, as amended (the  "Securities  Act"),
the Warrant holder will, if requested by the Company,  deliver to the Company an
opinion of counsel,  which  counsel and opinion shall be  satisfactory  in form,
scope and  substance  to the Company,  that the  Warrants  may be sold  publicly
without registration under the Securities Act, as well as:

                  (a) an investment covenant  satisfactory to the Company signed
         by the proposed transferee;

                  (b) an agreement by such  transferee to the  impression of the
         restrictive  investment  legend  set  forth  at the  beginning  of this
         Warrant; and

                  (c)  an  agreement  by  such  transferee  to be  bound  by the
         provisions of this Warrant.

         This Warrant may be exchanged  at the option of the  holder(s)  hereof,
when  surrendered to the Company at its office  designated for such purpose (the
address  of which is set  forth  in  Section  8) for  another  Warrant  or other
Warrants  of like  tenor and  representing  in the  aggregate  a like  number of
Warrants,  including,  without  limitation,  upon an adjustment in the number of
Warrant Shares purchasable upon exercise of this Warrant.  Warrants  surrendered
for exchange shall be canceled and disposed of by the Company.

         SECTION 3. Warrants: Exercise of Warrants. Subject to the terms of this
Warrant,  the  holder  of this  Warrants  shall  have the  right,  which  may be
exercised at any time prior to the Expiration  Date, to receive from the Company
the number of fully paid and  nonassessable  Warrant Shares which the holder may
at the time be entitled to receive on such  exercise and payment of the Exercise
Price then in effect for such Warrant  Shares.  No  adjustments  as to dividends
will be made upon exercise of the Warrants.

         This Warrant may be exercised upon  surrender  hereof to the Company at
its office  designated  for such  purpose  (the address of which is set forth in
Section 8) with the form of election to purchase  attached hereto duly filled in
and signed, upon payment to the Company of the Exercise Price per Warrant Share,
for the  number of  Warrant  Shares in  respect  of which  this  Warrant is then
exercised.  Payment of the aggregate Exercise Price shall be made (a) in cash or
by certified or bank cashier's check payable to the order of the Company, or (b)
by delivery to the  Company of that  number of shares of Common  Stock  having a
Fair Market Value (as hereinafter defined) equal to the then applicable Exercise
Price  multiplied by the number of Warrant Shares then being  purchased.  In the
alternative,  this Warrant may be exercised on a net basis,  such that,  without


                                       -2-


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the exchange of any funds,  the holder of this Warrant  receives  that number of
Warrant  Shares  subscribed to less that number of shares of Common Stock having
an aggregate  Fair Market Value at the time of exercise  equal to the  aggregate
Exercise Price that would otherwise have been paid by such holder for the number
of Warrant Shares subscribed to. As used herein the term "Fair Market Value", on
a per share  basis,  means the Closing  Price of the Common Stock on the Date of
Exercise.  As used  herein,  the term  "Date of  Exercise"  with  respect to any
Warrant  means the date on which such Warrant is  exercised as provided  herein.
For purposes of this  Warrant,  the "Closing  Price" for any date shall mean the
last sale price reported in the Wall Street  Journal or other trade  publication
regular  way or, in case no such  reported  sale takes  place on such date,  the
average of the last reported bid and asked prices regular way, in either case on
the principal national  securities  exchange on which the Common Stock is listed
or admitted to trading if that is the principal market for the Common Stock, or,
if not listed or admitted to trading,  on any national securities exchange or if
such national  securities  exchange is not the  principal  market for the Common
Stock, the last sale price as reported by the National Association of Securities
Dealers,  Inc. Automated National Market System ("NASDAQ") or its successor,  if
any, or, if the Common Stock is not so reported, the average of the reported bid
and asked prices in the  over-the-counter  market,  as furnished by the National
Quotation  Bureau,  Inc., or if such firm is not then engaged in the business of
reporting  such  prices,  as  furnished by any similar firm then engaged in such
business and selected by the Company or, if there is no such firm,  as furnished
by any NASD member selected by the Company or, if the Common Stock is not quoted
in the over-the-counter  market, the fair value thereof determined in good faith
by the  Company's  Board of Directors as of a date which is within  fifteen (15)
days of the date as of which the determination is to be made.

         Subject to the  provisions  of Section 4, upon such  surrender  of this
Warrant and payment of the Exercise Price,  the Company shall issue and cause to
be delivered  with all  reasonable  dispatch  (and in any event within three (3)
business  days) to or upon the written  order of the holder,  and in the name of
this Warrant holder or its nominee, a certificate or certificates for the number
of full Warrant  Shares  issuable  upon such  exercise  together with such other
property  (including  cash) and securities as may be then  deliverable upon such
exercise.  Such certificate or certificates  shall be deemed to have been issued
and the  person so named  therein  shall be  deemed  to have  become a holder of
record of such  Warrant  Shares as of the date of the  surrender of this Warrant
and payment of the Exercise Price.

         This  Warrant  shall be  exercisable,  at the  election  of the  holder
hereof, either in full or from time to time in part, and, in the event that this
Warrant is exercised in respect of fewer than all of the Warrant Shares issuable
on such  exercise  at any  time  prior to the  Expiration  Date,  a new  Warrant
evidencing  the  remaining  Warrant or  Warrants  will be issued  and  delivered
pursuant to the provisions of this Section and of Section 4.

         The Company shall not be required to issue fractional Warrant Shares on
the  exercise of  Warrants.  If more than one  Warrant  shall be  presented  for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable  upon the exercise  thereof  shall be computed on
the basis of the aggregate  number of Warrant Shares  purchasable on exercise of
the Warrants so presented.  If any fraction of a Warrant Share would, except for


                                       -3-


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the provisions of this Section,  be issuable on the exercise of any Warrants (or
specified portion thereof), the Company shall pay an amount in cash equal to the
Exercise  Price  on the day  immediately  preceding  the  date  the  Warrant  is
presented for exercise, multiplied by such fraction.

         All Warrants  surrendered  upon exercise shall be canceled and disposed
of by the Company. The Company shall keep copies of this Warrant and any notices
received hereunder  available for inspection by the normal business hours at its
office.

         SECTION 4.  Payment of Taxes.  The Company  will pay all stamp taxes in
connection  with the issuance,  sale,  delivery or transfer of the Warrants,  as
well as all such taxes  attributable  to the initial  issuance of Warrant Shares
upon the exercise of this Warrant and payment of the Exercise Price.

         SECTION 5. Mutilated or Missing  Warrants.  In case any of the Warrants
shall be mutilated,  lost,  stolen or  destroyed,  upon delivery of an indemnity
agreement or security satisfactory to the Company in form, scope,  substance and
amount,  the Company  shall  issue,  in exchange and  substitution  for and upon
cancellation of the mutilated  Warrants or in lieu of and  substitution  for the
Warrant lost, stolen or destroyed,  a new Warrant of like tenor and representing
an equivalent number of Warrants .

         SECTION 6. Reservation of Warrant Shares. The Company will at all times
reserve and keep available,  free from preemptive or similar rights,  out of the
aggregate of its  authorized  but unissued  capital stock or its  authorized and
issued  capital  stock held in its  treasury,  for the purpose of enabling it to
satisfy any  obligation to issue Warrant  Shares upon exercise of Warrants,  the
maximum  number of shares of each class of capital stock  constituting a part of
the  Warrant  Shares  which may then be  deliverable  upon the  exercise  of all
outstanding  Warrants.  The Company shall cause all Warrant Shares of each class
of Common Stock or other  securities  reserved for issuance upon exercise of the
Warrants to be listed (or to be listed  subject to notice of  issuance)  on each
securities  exchange  on which  such  shares of Common  Stock or any such  other
securities are listed.

         The Company or, if  appointed,  the  transfer  agent for shares of each
class of Common Stock (the "Transfer Agent") and every subsequent transfer agent
for any shares of the Company's  capital stock issuable upon the exercise of the
Warrants  will be  irrevocably  authorized  and directed at all times to reserve
such number of  authorized  shares as shall be required  for such  purpose.  The
Company  will keep a copy of this  Warrant on file with the  Transfer  Agent and
with every subsequent transfer agent for any shares of the Company capital stock
issuable  upon  the  exercise  of the  rights  of  purchase  represented  by the
Warrants.  The Company will furnish such Transfer Agent a copy of all notices of
adjustments,  and  certificates  related  thereto,  transmitted  to each  holder
pursuant to Section 7.

         The Company  covenants that all Warrant Shares which may be issued upon
exercise of Warrants  will,  upon  payment of the  Exercise  Price  therefor and
issue,  be validly  issued,  fully paid,  nonassessable,  free of  preemptive or
similar rights and free from all taxes,  liens,  charges and security  interests
with respect to the issue thereof.

                                       -4-


<PAGE>



         SECTION 7.  Adjustments, Notices and Other Events.

                  (a) Adjustment of Exercise Price. Subject to the provisions of
         this Section 7, the Exercise Price in effect from time to time shall be
         subject to adjustment, as follows:

                           (i) In case the Company  shall (x) declare a dividend
                  or make a distribution on the outstanding shares of its Common
                  Stock  in  shares  of  its  Common  Stock,  (y)  subdivide  or
                  reclassify the  outstanding  shares of its Common Stock into a
                  greater  number of shares,  or (z) combine or  reclassify  the
                  outstanding  shares of its Common Stock into a smaller  number
                  of shares,  the Exercise Price in effect immediately after the
                  record date for such dividend or distribution or the effective
                  date  of such  subdivision,  combination  or  reclassification
                  shall be adjusted so that it shall equal the price  determined
                  by multiplying the Exercise Price in effect  immediately prior
                  thereto by a fraction, of which (A) the numerator shall be the
                  number  of  shares of  Common  Stock  outstanding  immediately
                  before such dividend, distribution,  subdivision,  combination
                  or reclassification, and of which (B) the denominator shall be
                  the number of shares of Common Stock  outstanding  immediately
                  after such dividend, distribution, subdivision, combination or
                  reclassification.  Any shares of Common  Stock of the  Company
                  issuable in payment of a dividend shall be deemed to have been
                  issued  immediately prior to the record date for such dividend
                  for purposes of calculating  the number of outstanding  shares
                  of Common  Stock of the Company  under  Section  7(a)(ii)  and
                  7(a)(iii)  hereof.  Such adjustment shall be made successively
                  whether any event specified above shall occur.

                           (ii) In case the Company  shall fix a record date for
                  the issuance of rights,  options,  warrants or  convertible or
                  exchangeable  securities  to all  holders of its Common  Stock
                  entitling them (for a period expiring  within  forty-five (45)
                  days after such  record  date) to  subscribe  for or  purchase
                  shares of its Common  Stock at a price per share less than the
                  Current  Market  Price (as such  term is  defined  in  Section
                  7(a)(iv)  hereof) of a share of Common Stock of the Company on
                  such  record  date,  the  Exercise  Price  shall  be  adjusted
                  immediately  thereafter  so  that it  shall  equal  the  price
                  determined  by  multiplying   the  Exercise  Price  in  effect
                  immediately  prior  thereto  by a  fraction,  of which (A) the
                  numerator  shall be the  number  of  shares  of  Common  Stock
                  outstanding  on such  record date plus the number of shares of
                  Common Stock which the aggregate  offering  price of the total
                  number of shares of Common Stock so offered would  purchase at
                  the  Current  Market  Price  per  share,  and of which (B) the
                  denominator  shall be the  number of  shares  of Common  Stock
                  outstanding  on such record date plus the number of additional
                  shares of Common Stock offered for  subscription  or purchase.
                  Such  adjustment  shall be made  successively  whenever such a
                  record  date is fixed.  To the  extent  that any such  rights,
                  options,  warrants or convertible or  exchangeable  securities
                  are not so issued or expire  unexercised,  the Exercise  Price
                  then in effect shall be readjusted to the Exercise Price which
                  would  then be in  effect  if  such  unissued  or  unexercised
                  rights,  options,  warrants  or  convertible  or  exchangeable
                  securities had not been issuable.

                                       -5-


<PAGE>



                           (iii) In case the Company shall fix a record date for
                  the making of a  distribution  to all holders of shares of its
                  Common  Stock (A) of shares of any class other than its Common
                  Stock or (B) of evidences of its indebtedness or (C) of assets
                  (excluding  cash  dividends  or   distributions   (other  than
                  extraordinary cash dividends or distributions),  and dividends
                  or distributions  referred to in Subsection 7(a)(i) hereof) or
                  (D)  of  rights,   options,   warrants   or   convertible   or
                  exchangeable  securities  (excluding  those  rights,  options,
                  warrants or convertible or exchangeable securities referred to
                  in  Section  7(a)(ii)  hereof),  then in each  such  case  the
                  Exercise  Price  in  effect  immediately  thereafter  shall be
                  determined  by  multiplying   the  Exercise  Price  in  effect
                  immediately  prior  thereto  by a  fraction,  of which (x) the
                  numerator  shall be the total number of shares of Common Stock
                  outstanding  on such  record  date  multiplied  by the Current
                  Market  Price (as such term is  defined  in  Section  7(a)(iv)
                  hereof) per share on such record date, less the aggregate fair
                  market  value as  determined  in good  faith  by the  Board of
                  Directors  of the  Company  of said  shares  or  evidences  of
                  indebtedness  or  assets  or  rights,  options,   warrants  or
                  convertible or exchangeable securities so distributed,  and of
                  which (y) the denominator  shall be the total number of shares
                  of Common Stock  outstanding on such record date multiplied by
                  such Current Market Price per share.  Such adjustment shall be
                  made successively whenever such a record date is fixed. In the
                  event  that such  distribution  is not so made,  the  Exercise
                  Price then in effect shall be readjusted to the Exercise Price
                  which would then be in effect if such record date had not been
                  fixed.

                           (iv) For the purpose of any computation under Section
                  7(a)(ii) or 7(a)(iii)  hereof,  the "Current Market Price" per
                  share at any date (the "Computation  Date") shall be deemed to
                  be the average of the daily Closing Prices of the Common Stock
                  for twenty (20)  consecutive  Trading  Days ending the Trading
                  Day  immediately  preceding the  Computation  Date;  provided,
                  however,  that if  there  shall  have  occurred  prior  to the
                  Computation  Date any event  described in Subsection  7(a)(i),
                  7(a)(ii) or 7(a)(iii)  which shall have become  effective with
                  respect to market transactions at any time (the "Market-Effect
                  Date") on or within such 20-day period,  the Closing Price for
                  each Trading Day  preceding  the  Market-Effect  Date shall be
                  adjusted,   for  purposes  of  calculating  such  average,  by
                  multiplying such Closing Price by a fraction, of which (A) the
                  numerator shall be the Exercise Price as in effect immediately
                  prior to the Computation Date and of which (B) the denominator
                  shall be the Exercise Price as in effect  immediately prior to
                  the  Market-Effect  Date, it being understood that the purpose
                  of this  proviso is to ensure that the effect of such event on
                  the  market  price of the  Common  Stock  shall,  as nearly as
                  possible,  be eliminated  in order that the  distortion in the
                  calculation of the Current Market Price may be minimized.

                  (b) No  Adjustments  to Exercise  Price.  No adjustment in the
         Exercise Price in accordance  with the  provisions of Section  7(a)(i),
         7(a)(ii) or 7(a)(iii)  hereof need be made unless such adjustment would
         amount to a change  of at least 1% in such  Exercise  Price;  provided,
         however,  that the amount by which any adjustment is not made by reason
         of the  provisions  of this Section  7(b) shall be carried  forward and
         taken into  account  at the time of any  subsequent  adjustment  in the
         Exercise Price.

                                       -6-


<PAGE>


                  (c)  Adjustment of Number of Shares.  Upon each  adjustment of
         the Exercise Price pursuant to Section  7(a)(i),  7(a)(ii) or 7(a)(iii)
         hereof,  each Warrant  shall  thereupon  evidence the right to purchase
         that number of Warrant Shares (calculated to the nearest hundredth of a
         share) obtained by multiplying the number of Warrant Shares purchasable
         immediately  prior to such  adjustment  and  dividing  the  product  so
         obtained  by the  Exercise  Price  in  effect  immediately  after  such
         adjustment.

                  (d)  Reorganizations.  In case of any capital  reorganization,
         other than in the cases  referred  to in Section  7(a)  hereof,  or the
         consolidation or merger of the Company with or into another corporation
         (other  than a merger  or  consolidation  in which the  Company  is the
         continuing   corporation   and   which   does   not   result   in   any
         reclassification  of the  outstanding  shares  of  Common  Stock or the
         conversion  of such  outstanding  shares of Common Stock into shares of
         other stock or other securities or property), or the sale or conveyance
         of the  property of the Company as an entirety or  substantially  as an
         entirety  (collectively  such actions being hereinafter  referred to as
         "Reorganizations"), there shall thereafter be deliverable upon exercise
         of any  Warrant  (in lieu of the number of Warrant  Shares  theretofore
         deliverable)  the  number  of shares  of stock or other  securities  or
         property to which a holder of the number of Warrant  Shares which would
         otherwise have been deliverable upon the exercise of such Warrant would
         have been  entitled upon such  Reorganization  if such Warrant had been
         exercised in full immediately prior to such Reorganization.  In case of
         any Reorganization, appropriate adjustment, as determined in good faith
         by the  Board  of  Directors  of the  Company,  shall  be  made  in the
         application  of the  provisions  herein set forth  with  respect to the
         rights  and  interests  of the  holder  of this  Warrant  so  that  the
         provisions set forth herein shall  thereafter be applicable,  as nearly
         as  possible,  in relation to any shares or other  property  thereafter
         deliverable upon exercise of the Warrants.  Any such adjustments  shall
         be made by and set forth in a  supplemental  agreement  prepared by the
         Company or any successor thereto, between the Company, or any successor
         thereto, and shall for all purposes hereof conclusively be deemed to be
         an  appropriate  adjustment.  The  Company  shall not  effect  any such
         Reorganization,  unless upon or prior to the  consummation  thereof the
         successor  corporation,  or if  the  Company  shall  be  the  surviving
         corporation  in any such  Reorganization  and is not the  issuer of the
         shares of stock or other  securities  or  property to be  delivered  to
         holders of shares of the Common Stock outstanding at the effective time
         thereof,  then such  issuer,  shall  assume by written  instrument  the
         obligation  to  deliver to the holder of any  Warrants  such  shares of
         stock,  securities,  cash or other  property  as such  holder  shall be
         entitled to purchase in accordance with the foregoing provisions.

                  (e)  Verification of  Computation.  The Company shall select a
         firm of independent accountants, which selection (i) may be its regular
         firm of  independent  accountants  and (ii) may be changed from time to
         time, to verify each computation  and/or  adjustment made in accordance
         with this Section 7. The certificate, report or other written statement
         of any such firm shall be conclusive evidence of the correctness of any
         computation  made under this  Section 7.  Promptly  upon its receipt of
         such  certificate,  report or statement  from such firm of  independent
         accountants,  the Company shall deliver a copy thereof to the holder of
         this Warrant.

                                       -7-


<PAGE>



        

                  (f) Notice of Certain Actions. In the event the Company shall:

                           (i)  declare  any  dividend  payable  in stock to the
                  holders of its Common Stock or make any other  distribution in
                  property  other than cash to the holders of its Common  Stock;
                  or

                           (ii) offer to the holders of its Common  Stock rights
                  to subscribe  for or purchase any shares of any class of stock
                  or any other rights or options; or

                           (iii) effect any reclassification of its Common Stock
                  (other   than  a   reclassification   involving   merely   the
                  subdivision or  combination  of  outstanding  shares of Common
                  Stock) or any capital  reorganization  or any consolidation or
                  merger  (other  than a  merger  in which  no  distribution  of
                  securities  or other  property  is made to  holders  of Common
                  Stock),  or any sale,  transfer  or other  disposition  of its
                  property, assets and business substantially as an entirety, or
                  the liquidation, dissolution or winding up of the Company;

         then in each such case, the Company shall cause notice of such proposed
         action to be mailed to the holder of this  Warrant as  hereinafter  set
         forth in this Section 7(f). Such notice shall specify the date on which
         the  books of the  Company  shall  close,  or a record  be  taken,  for
         determining  the holders of Common Stock entitled to receive such stock
         dividend or other  distribution or such rights or options,  or the date
         on which such reclassification,  reorganization, consolidation, merger,
         sale, transfer, other disposition, liquidation, dissolution, winding up
         or exchange  shall take place or commence,  as the case may be, and the
         date as of which it is expected  that holders of record of Common Stock
         shall be entitled to receive  securities or other property  deliverable
         upon such action, if any such date has been fixed. Such notice shall be
         mailed in the case of any action  covered by  paragraph  (i) or (ii) of
         this Section  7(f), at least ten (10) days prior to the record date for
         determining  holders of the Common Stock for purposes of receiving such
         payment or offer,  and, in the case of any action  covered by paragraph
         (iii),  at least ten (10) days  prior to the  earlier  of the date upon
         which  such  action is to take place or any  record  date to  determine
         holders of Common Stock  entitled to receive such  securities  or other
         property.

                  (g) Certificate of Adjustments.  Whenever any adjustment is to
         be made  pursuant  to this  Section  7, the  Company  shall  prepare  a
         Certificate  executed by the Chief  Financial  Officer of the  Company,
         setting  forth  such  adjustment  to be  mailed  to the  holder of this
         Warrant  at least  fifteen  (15) days  prior  thereto,  such  notice to
         include  in  reasonable   detail  (i)  the  events   precipitating  the
         adjustment,  (ii) the  computation  of any  adjustments,  and (iii) the
         Exercise  Price and the  number of  shares or the  securities  or other
         

                                       -8-


<PAGE>


         property  purchasable upon exercise of each Warrant after giving effect
         to such  adjustment.  Such  Certificate  shall  be  accompanied  by the
         accountant's verification required by Section 7(e) hereof.

         SECTION 8. Notices.  Any notice or demand authorized by the Warrants to
be given or made by the  registered  holder of any  Warrant to or on the Company
shall be  sufficiently  given or made when received at the office of the Company
expressly  designated  by the Company at its office for purposes of the Warrants
(until Warrant holders are otherwise notified in accordance with this Section by
the Company), as follows:

                      Key Energy Group, Inc.
                      257 Livingston Avenue
                      New Brunswick, NJ  08901
                      Attention: Francis D. John, President

         Any notice  pursuant to the  Warrants to be given by the Company to the
registered holder(s) of any Warrant shall be sufficiently given when received by
such holder at the  address  appearing  on the  Warrant  register of the Company
(until the Company is otherwise notified in accordance with this Section by such
holder).

         SECTION 9. Cash  Distributions  and  Dividends.  If the Company  pays a
dividend  or makes a  distribution  to the  holders of its  Common  Stock of any
securities (other than Common Stock) or property  (including cash and securities
of other  companies)  of the  Company,  or any  rights,  options or  warrants to
purchase securities (other than Common Stock) or property (including  securities
of other  companies) of the Company,  then,  simultaneously  with the payment of
such dividend or the making of such distribution,  and as a condition  precedent
to its right to do so, the Company will pay or  distribute to the holders of the
Warrants  an amount of  property  (including  without  limitation  cash)  and/or
securities  (including without limitation  securities of other companies) of the
Company as would have been received by such holders had they exercised  (whether
or not the Warrants were then exercisable) all of the Warrants immediately prior
to the record date (or other applicable date) used for determining  stockholders
of the Company entitled to receive such dividend or distribution.

         SECTION  10. No  Rights or  Liabilities  as  Stockholder;  Information.
Nothing  contained in this Warrant  shall be  construed as  conferring  upon the
holder hereof the right to vote or to consent as  stockholders in respect of the
meetings of stockholders or the election of members of the Board of Directors of
the Company or any other matter, or any rights whatsoever as stockholders of the
Company or as imposing any  obligation on such holder to purchase any securities
or as imposing any  liabilities  on such holder as a stockholder sf the Company,
whether  such  obligation  or  liabilities  are  asserted  by the  Company or by
creditors  of the  Company.  Notwithstanding  the  foregoing,  the Company  will
furnish to each holder of any Warrants,  promptly upon their becoming available,
copies of all financial statements,  reports,  notices and proxy statements sent
or made  available  generally  by the Company to its  stockholders  or otherwise
filed  pursuant  to the  provisions  of  the  Securities  Act or the  Securities
Exchange Act of 1934, as amended.  The Company shall give to each Warrant holder
written notice of any  determination  to register any of its Common Stock at the
same  time that it gives  notice to any  holder  of  securities  of the  Company
entitled to rights to register securities under the Securities Act.

                                       -9-


<PAGE>


         SECTION 11. Amendment and Modification; Waiver. This Warrant may not be
amended or modified except by a written instrument signed by the Company and the
registered  holder of this Warrant at the time such amendment or modification is
sought.  Any waiver of any term or condition of this Warrant in any one instance
shall not operate as or be deemed to be or construed as a further or  continuing
waiver of such term or condition,  nor shall any failure at any time or times to
enforce or require performance of any provision hereof operate as a waiver of or
affect in any  manner  any  party's  right at a later time to enforce or require
performance of such provision or any other provision hereof.

         SECTION 12.  Severability.  If any  provision of this Warrant  shall be
held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable
as applied to any particular case in any  jurisdiction or  jurisdictions,  or in
all jurisdictions or in all cases, because of the conflict of any provision with
any  constitution or statute or rule of public policy,  or for any other reason,
such  circumstance  shall not have the  effect of  rendering  the  provision  or
provisions  in  question  invalid,  inoperative  or  unenforceable  in any other
jurisdiction  or in any other case or  circumstance  or if  rendering  any other
provision or provisions herein contained  invalid,  inoperative or unenforceable
to the extent that such other provisions are not themselves actually in conflict
with such constitution, statute or rule of public policy, but this Warrant shall
be reformed and construed in any such  jurisdiction  or case as if such invalid,
inoperative or unenforceable  provision had never been contained herein and such
provision  were formed so that it would be valid,  operative and  enforceable to
the maximum extent permitted in such jurisdiction or in such case.

         SECTION  13.  Successors.  All the  covenants  and  provisions  of this
Warrant by or for the benefit of the Company or the  Warrant  holder  shall bind
and inure to the benefit of their respective successors and assigns.

         SECTION  14.  Governing  Law.  This  Warrant  shall be  governed by and
construed in accordance  with the laws of the State of New York,  without giving
effect to principles or conflicts of laws.

         SECTION  15.  Headings.  The  headings  contained  in this  Warrant are
inserted for convenience only and shall not constitute a part hereof.

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
by the signature of its duly authorized  officer and the corporate seal hereunto
affixed.

                                     KEY ENERGY GROUP, INC.


                                     By:_____________________
[Seal]                                    Francis D. John, President

                                      -10-


<PAGE>



                          FORM OF ELECTION TO PURCHASE

                    (To Be Executed Upon Exercise of Warrant)


         The  undersigned  holder  hereby  represents  that he, she or it is the
registered holder of this Warrant, and hereby irrevocably elects to exercise the
right, represented by this Warrant, to receive
         shares of Common Stock, $.10 par value, of KEY ENERGY GROUP,  INC., and
herewith  tenders  payment for such  shares,  to the order of KEY ENERGY  GROUP,
INC., the amount of $
         in accordance with the terms hereof.  The  undersigned  requests that a
certificate  for such shares be  registered  in the name of the  undersigned  or
nominee hereinafter set forth, and further that such certificate be delivered to
the undersigned at the address  hereinafter set forth or to such other person or
entity as is hereinafter set forth. If said number of shares is less than all of
the shares of Common Stock purchasable hereunder,  the undersigned requests that
a new Warrant representing the remaining balance of such shares be registered in
the name of the undersigned or nominee  hereinafter set forth,  and further that
such certificate be delivered to the undersigned at the address  hereinafter set
forth or to such other person or entity as is hereinafter set forth.

                    Certificate to be registered as follows:







                     Certificate to be delivered as follows:











Date:                 
     
                                        (Signature  must conform in
                                        all respects to the name of
                                        the holder as  specified on
                                        the  face  of the  Warrant,
                                        unless  Form of  Assignment
                                        has been executed)


                                      -11-


<PAGE>


                               FORM OF ASSIGNMENT
                    [To be executed upon Transfer of Warrant]


         For value  received,  the undersigned  registered  holder of the within
Warrant hereby sells,  assigns and transfers unto  __________________  the right
represented by such Warrant to purchase  ________  shares of Common Stock of KEY
ENERGY GROUP,  INC. (the "Company") to which such Warrant relates,  and appoints
______________  its  Attorney to make such  transfer on the books of the Company
maintained for such purpose, with full power of substitution in the premises.



                              ------------------------------------------
                              (Signature must conform in all respects to
                              name of holder as specified on the face of
                              Warrant)


                              ------------------------------------------
                              (Street Address)



                              ------------------------------------------
                              (City), (State)   (Zip Code)






                                      -12-