Exhibit 10.2

LIMITED CONSENT AND SECOND AMENDMENT TO LOAN AGREEMENT AND AMENDMENT No. 3 TO
LIMITED CONSENT TO LOAN AGREEMENT AND FORBEARANCE AGREEMENT

This Limited Consent and Second Amendment to Loan Agreement Consent and
Amendment No. 3 to Limited Consent to Loan Agreement and Forbearance Agreement
(this “Agreement”), dated as of August 24, 2016, is among KEY ENERGY SERVICES,
INC., a Maryland corporation (the “Company”), KEY ENERGY SERVICES, LLC, a Texas
limited liability company (“Key Energy LLC”, and together with the Company,
collectively, “Borrowers”), certain subsidiaries of the Borrowers as Guarantors,
Lenders and Co-Collateral Agents party to this Agreement and BANK OF AMERICA,
N.A., a national banking association, as administrative agent for the Lenders
(in such capacity, “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, Borrowers, certain subsidiaries of Borrowers as Guarantors from time to
time party thereto, the Lenders from time to time party thereto, the
Administrative Agent, and Bank of America, N.A. and Wells Fargo Bank, National
Association, as Co-Collateral Agents, are parties to that certain Loan and
Security Agreement dated as of June 1, 2015 (as amended, supplemented, restated
or otherwise modified from time to time, the “Loan Agreement”; capitalized terms
not otherwise defined herein having the definitions provided therefor in the
Loan Agreement) and to certain other documents executed in connection with the
Loan Agreement;

WHEREAS, Borrowers, certain subsidiaries of Borrowers as Guarantors, the Lenders
party thereto, and the Administrative Agent are parties to that certain Limited
Consent to Loan Agreement and Forbearance Agreement, dated as of May 11, 2016
(the “Limited Consent and Forbearance Agreement”);

WHEREAS, substantially concurrently herewith, Borrowers are entering into a Plan
Support Agreement, an executed copy of which is attached as Exhibit A (the “Plan
Support Agreement”);

WHEREAS, the Borrowers have requested that the Lenders consent to the prepayment
of the Term Loans in an amount of up to $10,000,000 (of which $9,859,637.11 will
be applied to pay the principal amount thereof and $140,362.89 will be applied
in payment of accrued but unpaid interest thereon) (such payment, the “Specified
Term Loan Repayment”);

WHEREAS, the Lenders are willing to provide such consent on terms and subject to
conditions set forth herein;

WHEREAS, the Borrowers have further requested that the Lenders and the
Administrative Agent amend the Limited Consent and Forbearance Agreement as set
forth herein; and

WHEREAS, the Lenders and the Administrative Agent are willing to so amend the
Limited Consent and Forbearance Agreement on terms and subject to conditions set
forth herein.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:

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NOW, THEREFORE, the parties hereto agree as follows:

1. Limited Consent. Notwithstanding anything to the contrary contained in the
Loan Agreement, Administrative Agent and the Lenders signatory hereto
constituting Required Lenders hereby consent to the Specified Term Loan
Repayment, provided that (i) the Specified Term Loan Repayment is made on or
before August 25, 2016 and (ii) no proceeds of Revolver Loans are used to fund
the Specified Term Loan Repayment.

The consent contained in this Section 1 is limited and (i) shall only be relied
upon and used for the specific purpose set forth herein, (ii) shall not
constitute nor be deemed to constitute a waiver of (a) any Default or Event of
Default or (b) any term or condition of the Loan Agreement and the other Loan
Documents, (iii) shall not constitute nor be deemed to constitute a consent by
the Administrative Agent or any Lender to anything other than the specific
purpose set forth herein and (iv) shall not constitute a custom or course of
dealing among the parties hereto.

2. Amendments to the Loan Agreement. The Loan Agreement is hereby amended as
follows:

2.1 Section 1.1 of the Loan Agreement is amended by

(a) deleting the percentage “103%” in the definition of “Cash Collateralize” and
inserting the percentage “105%” in lieu thereof; and

(b) inserting the following new defined term in its appropriate alphabetical
order:

“Plan Support Agreement: as defined in that certain Limited Consent and Second
Amendment to Loan Agreement and Amendment No. 3 to Limited Consent to Loan
Agreement and Forbearance Agreement, dated as of August 24, 2016, 2016, among
Borrowers, Guarantors, the Administrative Agent and Lenders party thereto (the
“Limited Consent and Second Amendment and Amendment No. 3 to Forbearance
Agreement”).”

2.2 Section 2.2 of the Loan Agreement is amended and restated to read in its
entirety as follows:

“2.2. Termination of Obligations to Extend Credit.

2.2.1 Termination of Obligations to Extend Credit. Notwithstanding anything in
this Section 2, in this Agreement or in any other Loan Document to the contrary,
effective 11:59 p.m. (Central Time) on August 24, 2016 (the “Credit Extension
Termination Time”), all obligations of the Administrative Agent, Issuing Banks
and Lenders to fund any Loans, issue or arrange for issuance of any Letters of
Credit, increase, renew, extend or otherwise amend any existing Letter of
Credit, or otherwise extend any credit or financial accommodations under this
Agreement or any other Loan Documents, shall each automatically terminate
without any further action or notice from any party; provided, that, with
respect to any Letter of Credit outstanding as of the Credit Extension
Termination Time that has a stated termination date in 2016 (each such Letter of
Credit, a “Specified Letter of Credit”), the Issuing Banks agree, following a
receipt of an LC Application, to either (A) send to the applicable beneficiary
an amendment to the applicable Specified Letter of Credit that amends its expiry
date to March 31, 2017 or (B) as long as the existing Specified Letter of Credit
has been validly cancelled prior thereto, issue a new Letter of Credit in
replacement of the cancelled Specified Letter of

 

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Credit which has the same terms as the cancelled Specified Letter of Credit but
for the expiry date which will be March 31, 2017 (the first such extension of an
expiry date as to each such Specified Letter of Credit, the “Contemplated
Extension”). Notwithstanding any of the foregoing to the contrary, each of the
Lenders and the Borrowers hereby irrevocably authorizes the Issuing Banks to, in
their discretion after the Credit Extension Termination Time, either deliver to
the beneficiary of any “evergreen” Letter of Credit a notice of a non-renewal of
such Letter of Credit, which notice such Issuing Bank may deliver at such time
as such Issuing Bank elects, or refrain from delivering such notice and
therefore effectively renew such “evergreen” Letter of Credit; provided that,
except with respect to any Contemplated Extension, at least 15 Business Days
prior to the date a non-renewal notice must be delivered pursuant to the terms
of the applicable “evergreen” Letter of Credit (or such shorter period of time
agreed to by each Co-Collateral Agent), the applicable Issuing Bank shall
deliver a written notice to the Co-Collateral Agents that it intends to refrain
from delivering a non-renewal notice, and if the Co-Collateral Agents do not
approve in writing (which may be by email) such renewal (or if either of them
confirms that it does not approve such renewal (which confirmation may be by
email)) within five Business Day of receiving the applicable Issuing Bank’s
notice, such Issuing Bank shall deliver a non-renewal notice to the beneficiary
of such “evergreen” Letter of Credit prior to the requisite date such
non-renewal notice must be delivered. No Issuing Bank Indemnitee shall be liable
or otherwise responsible to any Lender, Borrower or other Person for such
Issuing Bank’s delivery of a non-renewal notice or for refraining from
delivering a non-renewal notice with respect to any “evergreen” Letters of
Credit issued by it in accordance with the foregoing, and the Lenders
acknowledge and agree that each such “evergreen” Letter of Credit extended (or
not extended, as the case may be) pursuant to the foregoing shall be deemed to
be and constitute a Letter of Credit that is permitted to be issued and extended
(or not extended, as the case may be) under this Agreement and that each Lender
has irrevocably and unconditionally purchased such Lenders’ Pro Rata
participations in all LC Obligations with respect thereto each “evergreen”
Letter of Credit that is as so extended (or not extended, as the case may be).

2.2.2 Continuing Rights and Obligations. Notwithstanding anything in this
Section 2, in this Agreement or in any other Loan Document to the contrary, all
provisions of the Loan Documents that by their terms survive any termination in
whole or in part of the obligation to extend credit hereunder, including all
affirmative covenants in Section 10.1, all negative covenants in Section 10.2,
Section 10.3, Sections 2.3, 3.2.2, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 13, 15.2,
Section 4.6, and each indemnity or waiver given by any Obligor or Lender under
any Loan Document, shall survive the termination of the obligations of
Administrative Agent, Issuing Banks and Lenders pursuant to this Section.

2.2.3 Lenders’ Participation in the Existing Letters of Credit. It is understood
and agreed that Lenders’ obligations to make payments to the Administrative
Agent for the account of Issuing Banks on account of Lenders’ Pro Rata
participations in all LC Obligations with respect to the Letters of Credit
outstanding as of the Credit Extension Termination Time (including those Letters
of Credit listed on Schedule 2.2 hereto), whether pursuant to Sections 2.3.2(b)
and (c) or otherwise, shall continue and be of full force and effect at all
times as long as such Letters of Credit remain outstanding, including following
the Credit Extension Termination Time, the commencement of the Chapter 11 Cases
referenced in the Plan Support Agreement or any other Event of Default described
in Section 12.1(h).”

 

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2.3 Section 2.3.2(a) of the Loan Agreement is amended and restated to read in
its entirety as follows:

“(a) If Issuing Bank honors any request for payment under a Letter of Credit,
Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement Date”), the
amount paid by Issuing Bank under such Letter of Credit, together with interest
at the interest rate for Base Rate Revolver Loans plus an additional two percent
(2%) (for the avoidance of doubt, such interest rate shall be the Base Rate plus
5.5%) from the Reimbursement Date until payment by Borrowers. The obligation of
Borrowers to reimburse Issuing Bank for any payment made under a Letter of
Credit shall be absolute, unconditional, irrevocable, and joint and several, and
shall be paid under any and all circumstances whatsoever, including: (i) any
lack of validity, enforceability, or legal effect of any Letter of Credit or
this Agreement or any term or provision therein or herein; (ii) payment against
presentation of any draft, demand or claim for payment under any Drawing
Document which proves to be fraudulent, forged, or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, or which is signed,
issued or presented by a Person or a transferee of such Person purporting to be
a successor or transferee of the beneficiary of such Letter of Credit; (iii)
Issuing Bank or any of its branches or affiliates being the beneficiary of any
Letter of Credit; (iv) Issuing Bank or any correspondent honoring a drawing
against a Drawing Document up to the amount available under any Letter of Credit
even if such Drawing Document claims an amount in excess of the amount available
under the Letter of Credit; (v) the existence of any claim, set-off, defense or
other right that any Borrower or any of its Subsidiaries may have at any time
against any beneficiary, any assignee of proceeds, Issuing Bank or any other
Person; (vi)any other event, circumstance or conduct whatsoever, whether or not
similar to any of the foregoing that might, but for this Section 2.3.2(a),
constitute a legal or equitable defense to or discharge of, or provide a right
of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and
other payment obligations and liabilities, arising under, or in connection with,
any Letter of Credit, whether against Issuing Bank, the beneficiary or any other
Person; or (vii) the fact that any Default or Event of Default shall have
occurred and be continuing. Whether or not Borrower Agent submits a Notice of
Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate
Revolver Loans (with interest at the interest rate for Base Rate Revolver Loans
plus an additional two percent (2%) (for the avoidance of doubt, such interest
rate shall be the Base Rate plus 5.5%)) in an amount necessary to pay all
amounts due Issuing Bank on any Reimbursement Date and each Lender shall fund
its Pro Rata share of such Borrowing whether or not the Commitments have
terminated, an Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied.”

2.4 Section 3.1.1(a) of the Loan Agreement is amended and restated to read in
its entirety as follows:

“(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR
Loan, at

 

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LIBOR for the applicable Interest Period, plus the Applicable Margin; and (iii)
if any other Obligation not paid when due (including, to the extent permitted by
law, interest not paid when due), at the Base Rate in effect from time to time,
plus the Applicable Margin for Base Rate Revolver Loans; provided that,
notwithstanding the foregoing, Obligations of Borrowers to reimburse Issuing
Bank for any payment made under a Letter of Credit shall bear interest as set
forth in Section 2.3.2(a) hereof”.

2.5 Section 3.2.1 of the Loan Agreement is amended and restated to read in its
entirety as follows:

“3.2.1 Unused Line Fee. Borrowers shall pay to Administrative Agent, for the Pro
Rata benefit of Lenders, a fee equal to the Unused Line Fee Rate times the
amount by which the Revolver Commitments exceed the average daily Revolver Usage
during any quarter; provided, that in lieu of the foregoing, from and after the
Credit Extension Termination Time until the date of any bankruptcy filing by or
with respect to any Borrower, Borrowers shall pay to Administrative Agent, for
the Pro Rata benefit of Lenders, a per diem fee equal to $2,134.49. Such fee
shall be due and payable in arrears, on the first day of each calendar quarter,
on date of the Credit Extension Termination Time, and on the date of any
bankruptcy filing by or with respect to any Borrower.”

2.6 Section 4.6 of the Loan Agreement is amended to restate the first sentence
thereof to read in its entirety as follows:

On the effective date of the termination of all Commitments (other than in
accordance with Section 2.2 hereof), the Obligations shall be immediately due
and payable, and each Secured Bank Product Provider may terminate its Bank
Products to the extent permitted by the agreements covering such Bank Products

2.7 Section 12.1(a) of the Loan Agreement is amended and restated to read in its
entirety as follows:

“(a) (i) Any Borrower fails to pay principal on any Loan when due (whether at
stated maturity, on demand, upon acceleration or otherwise), (ii) any Borrower
fails to pay the applicable Issuing Bank on the same day (or by 11:00 am Central
time on the next Business Day with respect to draws as to which Borrowers
receive notice of such draws after 3:00 pm Central time) such Issuing Bank
honors any request for payment under a Letter of Credit the amount paid by such
Issuing Bank under such Letter of Credit, or (iii) any Borrower fails to pay any
interest, fee or any other Obligation, and such failure continues unremedied for
a period of three (3) Business Days (it being understood and agreed that
following an entry of a cash collateral order by the Bankruptcy Court (as
defined in Plan Support Agreement) as

 

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contemplated by the Plan Support Agreement, failure by any Borrower to pay the
Issuing Banks the amount paid by the Issuing Banks under the Letters of Credit
and failure by any Borrower to pay any interests or fees shall be governed by
the terms and provisions of such cash collateral order);”

2.8 Section 15.2 of the Loan Agreement is amended and restated to read in its
entirety as follows:

“15.2 Indemnity.

EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY
CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING
CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON AND, IN ALL CASES, WHETHER OR NOT
CAUSED OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE OR SOLE
NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have
any obligation thereunder to indemnify or hold harmless an Indemnitee with
respect to a Claim (a) that is determined in a final, non-appealable judgment by
a court of competent jurisdiction to result directly from the bad faith, gross
negligence or willful misconduct of such Indemnitee or (b) arises out of or is
in connection with any claim, litigation, loss or proceeding not involving an
act or omission of any Borrower or any of its Affiliates and that is brought by
an Indemnitee against another Indemnitee (other than against any Agent in its
capacity as such); and Claims consisting of attorneys’ fees and expenses
incurred by the Indemnitees will be limited to (a) the reasonable and documented
fees, disbursements and other charges of no more than one firm of counsel to the
Indemnitees taken as a whole (including Wells Fargo Bank, National Association,
in its capacity as a Co-Collateral Agent, as an Issuing Bank, and as a Lender)
and one firm of local counsel to the Indemnitees taken as a whole in each
appropriate jurisdiction and, in the case of an actual or potential conflict of
interest as determined by the affected Indemnitee Party, one additional counsel
to such affected Indemnitee and (b) the reasonable and documented fees,
disbursements and other charges of one firm of special counsel to Wells Fargo
Bank, National Association, in its capacity as a Co-Collateral Agent and as an
Issuing Bank.”

2.9 Schedule 2.2 to this Agreement is inserted in the Loan Agreement as
Schedule 2.2 to the Loan Agreement.

3. Amendment to Limited Consent and Forbearance Agreement. The Limited Consent
and Forbearance Agreement is hereby amended by:

3.1 amending and restating Section 2.1 thereof to read in its entirety as
follows:

“2.1 Effective as of the date hereof, Administrative Agent and the Lenders
signatory hereto, constituting Required Lenders, hereby agree that until the
expiration or termination of the Forbearance Period, they will temporarily
forbear from exercising default-related rights and remedies against the
Borrowers or any

 

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other Obligor solely with respect to (i) the Alleged Asset Coverage Ratio
Default and any failure to satisfy Section 10.3.2 of the Loan Agreement from and
after September 30, 2016; (ii) the accuracy of any Compliance Certificate
insofar as it concerns the Asset Coverage Ratio as of March 31, 2016; (iii) from
and after the date of any payment pursuant to the FCPA Resolution (as defined
below), failure to satisfy the financial covenants contained in Section 10.3.3
of the Loan Agreement and any default arising pursuant to Section 12.1(j) of the
Loan Agreement, (iv) from and after the Credit Extension Termination Time, any
failure to comply with Section 10.3.1 of the Loan Agreement; (v) any
cross-default to the Term Loan Agreement or Senior Notes Indenture arising from
matters that are subject to the forbearance pursuant to Section 12 of the Plan
Support Agreement for so long as such forbearance shall remain in effect
(collectively, the “Subject Defaults”); provided, however, that nothing herein
shall restrict, impair or otherwise affect any Lender’s or the Administrative
Agent’s rights and remedies under any agreements (including, without limitation,
the Intercreditor Agreement) containing subordination provisions in favor of any
or all of the Lenders or the Administrative Agent (including, without
limitation, any rights or remedies available to the Lenders or the
Administrative Agent as a result of the occurrence or continuation of the
Alleged Asset Coverage Ratio Default) or amend or modify any provision
thereof. As used herein, “FCPA Resolution” means the valid and binding cease and
desist order entered by the SEC on August 11, 2016 and effective as of August
11, 2016.”

3.2 amending and restating Section 2.2 thereof to read in its entirety as
follows:

“2.2 As used herein, the term “Forbearance Period” shall mean the period
beginning on the date hereof and ending on the earlier to occur of (the
occurrence of clause (i) or (ii), a “Termination Event”): (i) any Forbearance
Default (as hereinafter defined) or (ii) November 1, 2016 at 11:59 p.m. New York
time. As used herein, the term “Forbearance Default” shall mean (A) the
occurrence of any Default or an Event of Default other than the Subject
Defaults, (B) the failure of any Borrower or any other Obligor to comply timely
with any term, condition, or covenant set forth in this Agreement, (C) the
failure of any representation or warranty made by any Borrower or any other
Obligor under or in connection with this Agreement to be true and complete in
all material respects as of the date hereof, (D) the repudiation and/or
assertion of any defense by any Obligor with respect to this Agreement or any
Loan Document or the pursuit of any claim by any Obligor against the
Administrative Agent, any Issuing Bank, any Lender, or any other Indemnitee of
any of the foregoing, and/or (E) the termination or expiration of any other
forbearance granted by another creditor of any of the Obligors (including of the
forbearance pursuant to Section 12(a) or Section 12(b) of the Plan Support
Agreement) or taking of an enforcement action or other exercise of any or all
rights and remedies (including delivery of any notice of default or event of
default or similar notice) by any such creditor (including by the Term Loan
Agent, any “Lender” under (and as defined in) the Term Loan Credit Agreement or
any other holder of obligations under the Term Loan Credit Agreement or by any
holder of obligations under the Senior Notes Indenture) or acceleration by such
creditor of indebtedness owing to such creditor, including, without limitation,
by the Term Loan Agent, any “Lender” under (and as defined in) the Term Loan
Credit

 

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Agreement or any other holder of obligations under the Term Loan Credit
Agreement or by an holder of obligations under the Senior Notes Indenture.”

4. No Other Amendments or Waivers.

This Agreement, and the terms and provisions hereof, constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes any and all prior or contemporaneous amendments relating to the
subject matter hereof. Except for the limited consent to the Loan Agreement
expressly set forth in Section 1 hereof, the amendments to the Loan Agreement
expressly set forth in Section 2 hereof and the amendments to the Limited
Consent and Forbearance Agreement expressly set forth in Section 3 hereof, the
Loan Agreement and the Limited Consent and Forbearance Agreement shall remain
unchanged and in full force and effect. Except as expressly set forth in Section
1, Section 2 and Section 3 hereof, the execution, delivery, and performance of
this Agreement shall not operate as a waiver of or as an amendment of, any
right, power, or remedy of Administrative Agent or the Lenders under the Limited
Consent and Forbearance Agreement, the Loan Agreement or any of the other Loan
Documents as in effect prior to the date hereof, nor constitute a waiver of any
provision of the Limited Consent and Forbearance Agreement, the Loan Agreement
or any of the other Loan Documents. The agreements set forth herein are limited
to the specifics hereof, shall not apply with respect to any facts or
occurrences other than those on which the same are based, shall not excuse
future non-compliance under the Limited Consent and Forbearance Agreement, the
Loan Agreement or other Loan Documents, and shall not operate as a consent to
any further or other matter, under the Loan Documents.

5. Use of Cash Collateral.

By their signatures below, Administrative Agent and the Lenders signatory hereto
constituting Required Lenders hereby (a) consent to the use of cash collateral
on the terms set forth in Exhibit 2 to the Plan Term Sheet (as defined in the
Plan Support Agreement) as in effect on the date hereof (the “Cash Collateral
Order Term Sheet”) in connection with a chapter 11 bankruptcy filing by the
Borrowers as contemplated by the Plan Support Agreement and (b) acknowledge and
agree that the consent of the Term Loan Agent (as defined in the Plan Support
Agreement) and the Supporting Term Lenders (as defined in the Plan Support
Agreement) to use of cash collateral is contingent on the provisions set forth
in the Cash Collateral Order Term Sheet as in effect on the date hereof being
reflected in the cash collateral orders entered by the Bankruptcy Court (as
defined in the Plan Support Agreement) in a manner reasonably satisfactory to
the Term Loan Agent and the Required Consenting Term Lenders (as defined in the
Plan Support Agreement), and agree, for so long as this Agreement is in effect,
to use commercially reasonable efforts to cause the provisions on the Cash
Collateral Order Term Sheet as in effect on the date hereof to be reflected in
the cash collateral orders entered by the Bankruptcy Court in a manner
reasonably satisfactory to the Term Loan Agent and the Required Consenting Term
Lenders and not to consent to the entry of any cash collateral orders that fail
to include the provisions set forth on the Cash Collateral Order Term Sheet as
in effect on the date hereof in a manner reasonably satisfactory to the Term
Loan Agent the Required Consenting Term Lenders (this paragraph being the “Cash
Collateral Provision”).

 

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The Term Loan Agent and the Supporting Creditors (as defined in the Plan Support
Agreement) are express third party beneficiaries of the Cash Collateral
Provision and this Section, and the terms and provisions of this Section
expressly inure to the benefit of the Term Loan Agent and the Supporting
Creditors, who shall be entitled to rely on and enforce the provisions of this
Section.

The Administrative Agent and the Lenders agree that money damages would be an
insufficient remedy for any breach of this Section and the Term Loan Agent and
the Supporting Creditors, as applicable, shall be entitled to specific
performance and injunctive or other equitable relief, including attorneys’ fees
and costs, as a remedy of any such breach, including an order of the Bankruptcy
Court or other court of competent jurisdiction requiring the applicable party to
comply promptly with any of its obligations hereunder, and each of the
Administrative Agent and the Lenders, and by acceptance of the benefits of this
Section, the Term Loan Agent and the Supporting Creditors, as applicable, agree
to waive any requirement for the securing or posting of a bond in connection
with such remedy, as the sole remedy to which such non-breaching party will be
entitled, at law or in equity. Each of the Administrative Agent and the Lenders,
and by acceptance of the benefits of this Section, the Term Loan Agent and the
Supporting Creditors, agree that such relief will be their only remedy against
the applicable other party with respect to any such breach, and that in no event
will the Administrative Agent and the Lenders or the Term Loan Agent and the
Supporting Creditors be liable for monetary damages (including consequential,
special, indirect or punitive damages or damages for lost profits) other than
attorneys’ fees and costs.

Notwithstanding anything to the contrary contained in this Agreement, this
Section may not be amended, supplement, waived or otherwise modified without the
prior written consent of the Term Loan Agent and the Supporting Creditors.

6. Conditions Precedent. The effectiveness of this Agreement is subject to the
satisfaction of the following conditions precedent on the date hereof:

6.1 Execution of Agreement. Each Obligor, Administrative Agent, Issuing Banks
and the Required Lenders shall have duly executed and delivered this Agreement.

6.2 Accuracy of Representations and Warranties. All representations and
warranties contained in Section 5 hereof shall be true and correct in all
respects.

6.3 Plan Support Agreement. Receipt by the Administrative Agent of evidence
reasonably satisfactory to Administrative Agent that the Plan Support Agreement
has been entered into by all requisite parties thereto.

6.4 Amendment Fee. Receipt by the Administrative Agent, for the benefit of each
Lender that executes and delivers a counterpart of this Agreement by 5:00 p.m.
(Central Time) on August 25, 2016 (each such Lender, a “Consenting Lender”), in
an amount equal to the product of each such Consenting Lender’s Revolver
Commitment (as in effect immediately prior to the effectiveness of this
Agreement) multiplied by 0.0025.

7. Representations and Warranties. Each Obligor hereby jointly and severally
represents and warrants to Administrative Agent and Lenders, that

 

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7.1 the execution, delivery and performance by the Obligors of this Agreement:

(a) are within each Obligor’s corporate, limited liability company or
partnership powers, as applicable, and have been duly authorized by all
necessary corporate, limited liability company or partnership, as applicable,
and, if required, equity holder action (including, without limitation, any
action required to be taken by any class of directors or other governing body of
any Obligor or any other Person, whether interested or disinterested, in order
to ensure the due authorization of the execution, delivery and performance by
the Obligors of this Agreement);

(b) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority or any other third Person
(including shareholders or other equity holders or any class of directors or
other governing body, whether interested or disinterested, of any Obligor or any
other Person), nor is any such consent, approval, registration, filing or other
action necessary for the validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby, except such as have been
obtained or made and are in full force and effect other than those third party
approvals or consents which, if not made or obtained, would not cause a Default
hereunder, or could not reasonably be expected to have a Material Adverse
Effect,

(c) will not violate any Sanctions and Applicable Law or any Organic Documents
of any Obligor or any Restricted Subsidiary, or any order of any Governmental
Authority,

(d) will not violate or result in a default under any Material Contract, or give
rise to a right thereunder to require any payment to be made by any Obligor or
any Restricted Subsidiary and

(e) will not result in the creation or imposition of any Lien on any Property of
any Obligor or any Restricted Subsidiary (other than the Liens created by the
Loan Documents);

7.2 this Agreement has been duly executed and delivered by such Obligor and
constitutes a legal, valid and binding obligation of such Obligor, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law; and

7.3 no Default or Event of Default has occurred and is continuing.

8. Reaffirmation. Each of the Obligors hereby confirms its respective
guarantees, pledges, grants of security interests and other obligations, as
applicable, under and subject to the terms of each of the Loan Documents to
which it is party, and agrees that such guarantees, pledges, grants of security
interests and other obligations, and the terms of each of the Loan Documents to
which it is a party, are not impaired or affected in any manner whatsoever and
shall continue to be in full force and effect. Each Obligor acknowledges and
agrees that any of the Loan Documents to which it is a party or otherwise bound
shall continue in full force and effect, effect and that all of its obligations
thereunder (other than as expressly amended hereby) shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Agreement.

 

10

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9. General Release; Indemnity.

9.1 In consideration of, among other things, the Administrative Agent’s, Issuing
Banks’ and the Lenders’ execution and delivery of this Agreement, each of
Borrowers and the other Obligors, on behalf of itself and its agents,
representatives, officers, directors, advisors, employees, subsidiaries,
affiliates, successors and assigns (collectively, “Releasors”), hereby forever
agrees and covenants not to sue or prosecute against any Releasee (as
hereinafter defined) and hereby forever waives, releases and discharges, to the
fullest extent permitted by law, each Releasee from any and all claims
(including, without limitation, crossclaims, counterclaims, rights of set-off
and recoupment), actions, causes of action, suits, debts, accounts, interests,
liens, promises, warranties, damages and consequential damages, demands,
agreements, bonds, bills, specialties, covenants, controversies, variances,
trespasses, judgments, executions, costs, expenses or claims whatsoever, that
such Releasor now has or hereafter may have, of whatsoever nature and kind,
whether known or unknown, whether now existing or hereafter arising, whether
arising at law or in equity (collectively, the “Claims”), against any or all of
the Administrative Agent, Co-Collateral Agents, Issuing Banks, Lenders and other
Secured Parties (sometimes referred to herein individually as a “Lender Party,”
and collectively as the “Lender Parties”) in any capacity and their respective
affiliates, subsidiaries, shareholders and “controlling persons” (within the
meaning of the federal securities laws), and their respective successors and
assigns and each and all of the officers, directors, employees, agents,
attorneys, advisors and other representatives of each of the foregoing
(collectively, the “Releasees”), based in whole or in part on facts, whether or
not now known, existing on or before the date of this Agreement, that relate to,
arise out of or otherwise are in connection with: (i) any or all of the
Obligations, Loan Documents or transactions contemplated thereby or any actions
or omissions in connection therewith or (ii) any aspect of the dealings or
relationships between or among the Borrowers and the other Obligors, on the one
hand, and any or all of the Lender Parties, on the other hand, relating to any
or all of the obligations, documents, transactions, actions or omissions
referenced in clause (i) hereof, but only to the extent such dealings or
relationships relate to any or all of the obligations, documents, transactions,
actions or omissions referenced in clause (i) hereof. In entering into this
Agreement, each Borrower and each other Credit Party consulted with, and has
been represented by, legal counsel and expressly disclaims any reliance on any
representations, acts or omissions by any of the Releasees and hereby agrees and
acknowledges that the validity and effectiveness of the releases set forth above
do not depend in any way on any such representations, acts and/or omissions or
the accuracy, completeness or validity thereof. The provisions of this Section
shall survive the termination of this Agreement, the Loan Agreement, the other
Loan Documents and the Full Payment of the Obligations.

9.2 Borrowers and other Obligors each hereby agrees that it shall be, jointly
and severally, obligated to indemnify and hold the Releasees harmless with
respect to any and all liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever incurred by the Releasees, or any of them, whether direct, indirect
or consequential, as a result of or arising from or relating to any proceeding
by or on behalf of any Person, including, without limitation, the respective
officers, directors, agents, trustees, creditors, partners or shareholders of
any Borrower, any other Obligor, or any of their respective Subsidiaries,
whether asserted or unasserted, in respect of any claim for legal or equitable
remedy under any statue, regulation or common law principle arising from or in
connection with the negotiation, preparation, execution, delivery, performance,
administration and enforcement of or relating to the Obligations, the Loan
Agreement, the other Loan Documents, this Agreement or any other document
executed and/or delivered in connection herewith or therewith; provided, that
neither any Borrower nor any other Obligor shall have any obligation to
indemnify or hold harmless any Releasee hereunder with respect to liabilities to
the extent they result from the gross negligence or willful misconduct of any
Releasee as finally determined by a court of competent jurisdiction. If and to
the extent that the foregoing undertaking may be unenforceable for any reason,
Borrowers and other Obligors each agrees to make the maximum contribution to the
payment and satisfaction thereof that is permissible under applicable law. The
foregoing indemnity shall survive the termination of this Agreement, the Loan
Agreement, the other Loan Documents and the Full Payment of the Obligations.

 

11

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9.3 Each of Borrowers and other Obligors, on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of each
Releasee that it will not sue (at law, in equity, in any regulatory proceeding
or otherwise) any Releasee on the basis of any Claim released, remised and
discharged by any Borrower or any other Obligor pursuant to Section 7.1
hereof. If any Borrower, any other Obligor or any of its successors, assigns or
other legal representatives violates the foregoing covenant, Borrowers and other
Obligors, each for itself and its successors, assigns and legal representatives,
agrees to pay, in addition to such other damages as any Releasee may sustain as
a result of such violation, all attorneys’ fees and costs incurred by any
Releasee as a result of such violation.

10. Miscellaneous.

10.1 Captions. Section captions used in this Agreement are for convenience only,
and shall not affect the construction of this Agreement.

10.2 Governing Law. UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS
AGREEMENT AND ALL CLAIMS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES EXCEPT FEDERAL LAWS
RELATING TO NATIONAL BANKS.

10.3 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be valid under Applicable Law. If any provision
is found to be invalid under Applicable Law, it shall be ineffective only to the
extent of such invalidity and the remaining provisions of this Agreement shall
remain in full force and effect.

10.4 Successors and Assigns. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns, and shall inure to the sole
benefit of the parties and their respective successors and assigns.

10.5 References. Any reference to the Limited Consent and Forbearance Agreement
and the Loan Agreement contained in any notice, request, certificate, or other
document executed concurrently with or after the execution and delivery of this
Agreement shall be deemed to include this Agreement unless the context shall
otherwise require.

10.6 Loan Document. This Agreement shall be deemed to be and shall constitute a
Loan Document.

10.7 Continued Effectiveness. Notwithstanding anything contained herein, the
terms of this Agreement are not intended to and do not serve to effect a
novation as to the Loan Agreement. The Limited Consent and Forbearance
Agreement, the Loan Agreement and each of the Loan Documents remain in full
force and effect.

 

12

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10.8 Entire Agreement. This Agreement constitutes the entire agreement, and
supersede all prior understandings and agreements, among the parties relating to
the subject matter thereof.

10.9 Counterparts; Execution. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall become effective when
Administrative Agent has received counterparts bearing the signatures of all
parties hereto. Delivery of a signature page of this Agreement by telecopy or
other electronic means shall be effective as delivery of a manually executed
counterpart of such agreement. Any signature, contract formation or
record-keeping through electronic means shall have the same legal validity and
enforceability as manual or paper-based methods, to the fullest extent permitted
by Applicable Law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any similar state law based on the Uniform Electronic Transactions Act.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

BORROWERS: KEY ENERGY SERVICES, INC. By  

/s/ J. Marshall Dodson

Name:   J. Marshall Dodson Title:   SVP, CFO and Treasurer KEY ENERGY SERVICES,
LLC. By  

/s/ J. Marshall Dodson

Name:   J. Marshall Dodson Title:   SVP, CFO and Treasurer GUARANTOR: KEY ENERGY
MEXICO, LLC By  

/s/ J. Marshall Dodson

Name:   J. Marshall Dodson Title:   SVP, CFO and Treasurer

 

[Signature Page to Limited Consent and Second Amendment to

Loan Agreement Consent and

Amendment No. 3 to Limited Consent to Loan Agreement and Forbearance Agreement]

--------------------------------------------------------------------------------

ADMINISTRATIVE AGENT AND LENDERS: BANK OF AMERICA, N.A., as Administrative
Agent, Issuing Bank and a Lender By  

/s/ Brandon Watkins

Name:   Brandon Watkins Title:   Senior Vice President

 

[Signature Page to Limited Consent and Second Amendment to

Loan Agreement Consent and

Amendment No. 3 to Limited Consent to Loan Agreement and Forbearance Agreement]

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender and Issuing Bank By  

/s/ Nathan McIntosh

Name:   Nathan McIntosh Title:   Duly Authorized Signer

 

[Signature Page to Limited Consent and Second Amendment to

Loan Agreement Consent and

Amendment No. 3 to Limited Consent to Loan Agreement and Forbearance Agreement]

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Exhibit A

Plan Support Agreement

(to be attached)

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SCHEDULE 2.2

to

Loan and Security Agreement

OUTSTANDING LETTERS OF CREDIT

 

Applicant

  

Beneficiary

  

Issuer

  

LC#

  

Expiry Date

   Amount   Key Energy Services, Inc.    Highlands Insurance    Wells Fargo
Bank, National Association    NTS610035    December 1, 2016    $ 150,000.00   
Key Energy Services, Inc.    Liberty Mutual Insurance    Wells Fargo Bank,
National Association    NTS610034    November 30, 2016    $ 9,643,788.00   
Key Energy Services, Inc.    ACE Insurance    Wells Fargo Bank, National
Association    NTS651695    November 30, 2016    $ 28,488,900.00    Key Energy
Services, LLC.    Bond Safeguard Insurance Company and/or Lexon Insurance
Company and/or Boston Indemnity Group and/or Ironshore Specialty Insurance
Company and/or Ironshore Indemnity, Inc.    Bank of America, N.A.    68123768   
February 10, 2017    $ 244,000.00