Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED

BY [***], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY

CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

EXECUTION VERSION

RESTRUCTURING SUPPORT AGREEMENT

This Restructuring Support Agreement (including all annexes, exhibits and
schedules attached hereto, including the Term Sheet (defined below), in each
case, as may be amended, modified or supplemented from time to time, this “RSA”
or this “Agreement”), dated as of January 24, 2020, is entered into by and among
Key Energy Services, Inc., a Delaware corporation (the “Company”), Key Energy
Services, LLC, a Texas limited liability company (“Key Energy LLC”, and together
with the Company, collectively, “Borrowers” or “Borrower”), and, severally and
not jointly, each lender that is a holder of Term Loans (as defined below)
listed on Schedule 1 and party hereto (each, a “Supporting Term Lender”) and
Cortland Products Corp., as agent under the Term Loan Agreement (defined below)
(in such capacity, the “Agent”).

The Borrowers and each Supporting Term Lender are referred to herein
individually as a “Party”, and collectively as the “Parties”. Capitalized terms
used but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Term Loan Agreement.

RECITALS

WHEREAS, the Borrowers and the Supporting Term Lenders are parties to that
certain Term Loan and Security Agreement, dated as of December 15, 2016 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Term Loan Agreement”), by and among the Borrower, the lenders party thereto and
the Agent;

WHEREAS, the Borrowers are obligors under the Term Loan Agreement in the
aggregate outstanding principal amount of $243,125,000 as of the date hereof,
plus accrued and unpaid interest thereon and any fees or other amounts owing
thereunder, and the Supporting Term Lenders, in the aggregate, hold
approximately $241,909,374.87 (99.5%) of the aggregate outstanding principal
amount of the term loans under the Term Loan Agreement (the “Term Loans”);

WHEREAS, the Parties have negotiated in good faith and at arms’ length an out-
of-court transaction that will effectuate a financial restructuring (the
“Restructuring”) of the Company’s capital structure and financial obligations,
on the terms and conditions set forth in the Summary of Terms and Conditions of
Restructuring Transaction (the “Term Sheet”) attached hereto as Exhibit A; and

WHEREAS, the Parties desire to express to each other their mutual support and
commitment in respect of the Restructuring, including with respect to the good
faith cooperation in consummating a series of transactions (the “Restructuring
Transaction”) on the terms and conditions consistent with the Term Sheet.

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NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each Party, intending to be legally bound hereby,
agrees as follows:

1.    Effectiveness; Entire Agreement. This Agreement shall become effective and
binding upon each of the Parties upon the execution and delivery of counterpart
signature pages to this Agreement by the Company and the Supporting Term Lenders
(such date, the “RSA Effective Date”).

(b) This RSA, including all exhibits and schedules attached hereto (inclusive of
exhibits thereto), and together with the non-disclosure and confidentiality
agreements among the Parties, the Forbearance Agreement, dated as of October 29,
2019, among the Borrowers, the Agent and the Supporting Term Lenders (as
amended, modified or supplemented, the “Forbearance Agreement”), and Letter re:
Fees and Expenses of Counsel to the Ad Hoc Group among Davis Polk & Wardwell LLP
and the Company (the “DPW Reimbursement Letter”), constitutes the entire
agreement of the Parties as of the date of this Agreement with respect to the
subject matter hereof and supersedes all prior negotiations and documents
reflecting such prior negotiations between and among the Parties (and their
respective advisors), with respect to the Restructuring. In the event the terms
and conditions set forth in the Term Sheet and this Agreement (exclusive of the
Term Sheet) are inconsistent, the terms and conditions set forth in the Term
Sheet shall govern.

2.    Material Covenants of All Parties. For so long as this Agreement has not
been validly terminated, each Party severally and not jointly agrees to:

(a)    support and cooperate with each other Party in good faith and coordinate
its activity in connection with, and otherwise use its commercially reasonable
best efforts to consummate, the Restructuring as soon as reasonably practicable,
but in all cases, consistent with the Term Sheet;

(b)    use its commercially reasonable best efforts and work in good faith to
(i) negotiate definitive documents implementing, achieving and relating to the
Restructuring, as soon as reasonably practicable, but in all cases, consistent
with the Term Sheet, including (A) the New Term Loan Agreement, New Warrants,
Shareholders’ Agreement, MIP (each as defined in the Term Sheet), an exchange
agreement pursuant to which each Supporting Term Lender will exchange all of the
Term Loans held by such Supporting Term Lender for equity interests in the
Company and $20 million of New Term Loan (as defined in the Term Sheet) (the
“Exchange”), amendments to, or a replacement of, the ABL Credit Agreement, and
other corporate governance agreements and (B) such other related documents and
ancillary agreements required to implement the Restructuring (collectively
(A) and (B), such documents, in each case, which shall contain terms and
conditions consistent, in all material respects, with the Term Sheet, and, if
not expressly specified therein, in form and substance satisfactory to the
Borrowers and Supporting Term Lenders holding at least 66.6% of the Term Loans
held by the Supporting Term Lenders (the “Required Supporting Term Lenders”),
and as may be amended, modified or supplemented only in accordance with the
terms of this Agreement, the “Definitive Restructuring Documents”), and (ii)
duly execute and deliver (to the extent it is a party thereto) the Definitive
Restructuring Documents and otherwise support and seek to effect the actions and
transactions contemplated thereby, as soon as reasonably practicable;

(c)    support and use its commercially reasonable best efforts to
(i) consummate the Restructuring and all transactions contemplated by the Term
Sheet or the Definitive Restructuring Documents, to which it is a party, as soon
as reasonably practicable, (ii) take any and all reasonably necessary actions in
furtherance of the Restructuring and the transactions

 

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contemplated by the Term Sheet or the Definitive Restructuring Documents, and
(iii) if applicable, obtain (solely as it relates to such Party) any and all
required regulatory and/or third party approvals necessary to consummate the
Restructuring, including any approvals required under antitrust laws;

(d)    not take any action that is inconsistent with, or is intended to
frustrate, delay or impede in any respect the timely consummation of the
transactions contemplated by the Term Sheet or Definitive Restructuring
Documents; and

(e)    not challenge the validity or enforceability of this Agreement in any
way, including by commencing, directly or indirectly, any legal proceeding.

3.    Additional Covenants of the Supporting Term Lenders. For so long as this
Agreement has not been validly terminated as to such Supporting Term Lender,
each Supporting Term Lender agrees, severally but not jointly, so long as it
remains the legal owner or beneficial owner of any interest in, or claim to, the
Term Loans, to:

(a)    not, directly or indirectly, (i) object to, delay, impede, or take any
other action to interfere with the implementation or consummation of the
Restructuring, (ii) seek, solicit, support, encourage, or consent to any
restructuring or reorganization for the Company that is inconsistent with the
Term Sheet or the Definitive Restructuring Documents in any respect, or
(iii) otherwise support any other transaction that is inconsistent with the Term
Sheet or the Definitive Restructuring Documents;

(b)    support the implementation and consummation of the Exchange subject to
and in accordance with the terms hereof and the Shareholder Approval (as defined
below); and

(c)    not (A) sell, pledge, assign, transfer, permit the participation in, or
otherwise dispose of any ownership (including any beneficial ownership) in the
Term Loans, as the case may be, set forth on Schedule 1 hereto, in whole or in
part or (B) grant any proxies or deposit any of such Supporting Term Lender’s
interests in the Term Loans, as the case may be, set forth on Schedule 1 hereto
into a voting trust, or enter into a voting agreement with respect to any such
interest (collectively, the actions described in clauses (A) and (B), a
“Transfer”).

Any Transfer made in violation of this provision shall be void ab initio.
Notwithstanding the foregoing, (a) any Supporting Term Lender may Transfer to
(i) any other Supporting Term Lender or (ii) any transferee that executes and
delivers to the Company a Transfer Agreement substantially in the form of
Exhibit B to this Agreement concurrently with such transfer. This RSA and the
obligations of each Supporting Term Lenders hereunder with respect to the Term
Loans held by such Supporting Term Lender shall apply to any Term Loans acquired
by such Supporting Term Lender after the date hereof.

4.    Additional Covenants of the Company.

For so long as this Agreement has not been validly terminated, the Company
shall:

(a)    (i) promptly notify counsel to the Supporting Term Lenders of any
inquiries, proposals or offers to purchase any substantial assets or properties
of the Company or to make any material investment in the Company or to provide
the Company with debt or equity financing and (ii) thereafter, keep counsel to
the Supporting Term Lenders promptly and reasonably informed of the progress of
any related discussions or negotiations;

 

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(b)    use its commercially reasonable efforts to provide a Supporting Term
Lender with any information that is reasonably requested by such Supporting Term
Lender or is reasonably necessary to consummate the Restructuring Transaction;

(c)    use its commercially reasonable best efforts to preserve intact its
material present business organization and maintain in effect all of its
material foreign, federal, state and local licenses, permits, consents,
franchises, approvals and authorizations;

(d)    pay reasonable and documented fees and expenses incurred by the
Supporting Term Lenders in connection with the transactions contemplated by the
Restructuring and consistent with the Term Sheet, which, in the case of legal
fees, shall be limited to (i) the reasonable and documented fees and expenses of
Davis Polk & Wardwell LLP, as counsel to the Supporting Term Lenders, in
accordance with the DPW Reimbursement Letter and (ii) the reasonable and
documented fees and expenses of Milbank LLP (“Milbank”), as advisor to
Tennenbaum Capital Partners, LLC., provided that Milbank’s fees or expenses
shall be capped at $100,000 in the aggregate and the Company shall not be
responsible for any fees or expenses of Milbank incurred after January 14, 2020,
and, in the case of other advisors, shall be limited to the fees and expenses of
Perella Weinberg Partners LP payable pursuant to the letter agreement, dated as
of October 21, 2019, between Perella Weinberg Partners LP, the Company and
certain of the Supporting Term Lenders; and

(e)    prepare such proxy statements, information statements or other disclosure
documents with respect to solicitations of the Company’s existing stockholders
necessary or advisable to implement the Exchange and other matters contemplated
by the Term Sheet in each case in accordance with the terms of the Term Sheet
(the “Shareholder Approval”), including providing any and all information
reasonably required in connection therewith.

Without limiting the generality of the foregoing, except as expressly
contemplated by this Agreement or otherwise in the ordinary course of business
consistent with past practice, the Company shall not, without the prior written
consent of the Required Supporting Term Lenders:

(i)    amend its articles of incorporation, bylaws or other similar
organizational documents (whether by merger, consolidation or otherwise);

(ii)    split, combine or reclassify any shares of capital stock of the Company
or declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of the capital
stock of the Company, or redeem, repurchase or otherwise acquire or offer to
redeem, repurchase, or otherwise acquire any Company equity securities;

(iii)    issue, deliver or sell, or authorize the issuance, delivery or sale of,
any shares of any Company equity securities or amend any term of any Company
equity security (in each case, whether by merger, consolidation or otherwise);

 

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(iv)    enter into any agreement or arrangement that limits or otherwise
restricts in any material respect the Company or any successor thereto or that
could, after the Restructuring Transaction is consummated, limit or restrict in
any material respect the Company or any of its subsidiaries, from engaging or
competing in any line of business, in any location or with any person or waive,
release or assign any material rights, claims or benefits of the Company;

(v)    make or change any tax election, change any annual tax accounting period,
adopt or change any method of tax accounting, materially amend any tax returns
or file claims for material tax refunds, enter any material closing agreement,
settle any material tax claim, audit or assessment, or surrender any right to
claim a material tax refund, offset or other reduction in tax liability; or

(vi)    enter into agreement to do any of the foregoing;

5.    Mutual Representations and Warranties of All Parties. Each Party,
severally but not jointly, represents and warrants to each of the other Parties
that, as of the date hereof:

(a)    it has all requisite power and authority to enter into this RSA and to
carry out the transactions contemplated hereby, and perform its obligations
hereunder;

(b)    the execution and delivery of this RSA and the performance of its
obligations hereunder have been duly authorized by all necessary action on its
part; and

(c)    this RSA constitutes the legally valid and binding obligation of such
Party, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or limiting creditors’ rights
generally or by equitable principles relating to enforceability.

6.    Additional Representations and Warranties by the Supporting Term Lenders.
Each Supporting Term Lender (solely on its own behalf and not on behalf of any
other Supporting Term Lender), severally but not jointly, represents and
warrants, as of the date hereof that:

(a)    Holdings by the Supporting Term Lenders. With respect to the holding of
the Term Loans listed on Schedule 1 hereto opposite its name, such Supporting
Term Lender (i) either (A) is the sole beneficial owner of the full amount of
such Term Loans as set forth herein or (B) has sole investment or voting
discretion with respect to the full amount of such Term Loan Loans as set forth
herein and has the power and authority to bind the beneficial owners of such
Term Loans to the terms of this RSA and (ii) has all requisite power and
authority to act on, and consent to matters concerning, such Term Loans and to
dispose of, exchange, assign, and transfer such Term Loans, including the power
and authority to execute and deliver this RSA and to perform its obligations
hereunder, in each case, subject to any ordinary course financing arrangements a
Supporting Term Lender may have with respect to such Term Loans;

(b)    No Transfers. With respect to the Term Loans, held by each Supporting
Term Lender as set forth on Schedule 1 hereto, such Supporting Term Lender has
made no Transfer;

 

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(c)    Sufficiency of Information Received. Such Supporting Term Lender has
reviewed, or has had the opportunity to review, with the assistance of
professional and legal advisors of its choosing, all information it deems
necessary and appropriate for such Supporting Term Lender to evaluate the
financial risks inherent in the Restructuring and accept the terms and
conditions of the Term Sheet;

(d)    Knowledge and Experience. Such Supporting Term Lender (i) has such
knowledge and experience in financial and business matters of this type that it
is capable of evaluating the merits and risks of entering into this Agreement
and of making an informed investment decision, and has conducted an independent
review and analysis of the business and affairs of the Company that it considers
sufficient and reasonable for purposes of entering into this Agreement and
(ii) is not relying on any advice from any other Supporting Term Lender or their
respective affiliates and that no other Supporting Term Lender or its respective
affiliates is acting as a financial advisor, agent, underwriter or broker to
such Supporting Term Lender or any of its affiliates or otherwise on behalf of
such Supporting Term Lender or any of its affiliates in connection with the
transactions contemplated by this Agreement or the agreements entered into in
connection herewith;

(e)    No Conflicts (Contracts). The execution, delivery and performance by such
Supporting Term Lender of this Agreement and the transactions contemplated by
the Term Sheet or Definitive Restructuring Documents does not and shall not
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any contractual obligation to which such
Supporting Term Lender is a party, except to the extent any such breach or
default would not be expected to have a material adverse effect on such
Supporting Term Lender’s business or materially delay consummation of the
Restructuring;

(f)    Governmental Approvals. The execution, delivery and performance by such
Supporting Term Lender of this Agreement does not and shall not require any
registration or filing with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or governmental authority or
regulatory body, except as may be required for approval of the transactions
contemplated by the Term Sheet and the Definitive Restructuring Documents
pursuant to applicable antitrust laws, and except as would not otherwise have a
material adverse effect on the Restructuring; and

(g)    No Conflicts (Laws and Organizational Documents). The execution,
delivery, and performance of this Agreement does not (i) violate any provision
of law, rule, or regulations applicable to such Supporting Term Lender or
(ii) violate such Supporting Term Lender’s certificate of incorporation, limited
liability company agreement, by-laws, or other organizational documents.

7.    Additional Representations and Warranties by the Borrower. Each Borrower
represents and warrants, as of the date hereof that:

(a)    No Conflicts (Contracts). The execution, delivery and performance by such
Borrower of this Agreement and the transactions contemplated by the Term Sheet
or Definitive Restructuring Documents does not and shall not conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any contractual obligation to which such Borrower is a party,
except (i) the defaults under the ABL Credit Agreement and the Term Loan

 

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Credit Agreement that such Borrower has obtained a waiver or forbearance of,
which such waiver or forbearance remains in effect, and/or (ii) to the extent
any such breach or default would not be expected to have a material adverse
effect on such Borrower’s business or materially delay consummation of the
Restructuring;

(b)    Governmental Approvals. Subject to the accuracy of Section 6(f), the
execution, delivery and performance by such Borrower of this Agreement does not
and shall not require any registration or filing with, consent or approval of,
or notice to, or other action to, with or by, any federal, state or governmental
authority or regulatory body, except as may be necessary or required (i) for
filings in connection with the Shareholder Approval and any other filings
pursuant to the Securities Exchange Act of 1934, as amended, (ii) filings in
connection with perfecting security interests in respect of the New Term Loan
Agreement and the ABL Credit Agreement, (iii) for filings pursuant to applicable
state securities or “blue sky” laws, and (iv) for approval of the transactions
contemplated by this Agreement, the Term Sheet and the Definitive Restructuring
Documents pursuant to applicable antitrust laws, and except as would not
otherwise have a material adverse effect on the consummation of the
Restructuring;

(c)    No Conflicts (Laws and Organizational Documents). The execution,
delivery, and performance of this Agreement does not (i) violate any provision
of law, rule, or regulations applicable to such Borrower, including any
applicable state securities or “blue sky” laws or (ii) violate such Borrower’s
certificate of incorporation or by-laws; and

(d)    No Defaults. As of the date hereof, no Default or Event of Default has
occurred and is continuing under the Term Loan Credit Agreement other than the
Specified Defaults.

8.    Termination of Obligations. This Agreement shall terminate immediately and
automatically and all of the obligations of the Parties shall be of no further
force or effect upon the occurrence of any of the following events: (i) the
consummation of the Restructuring Transaction and the execution and delivery of
the Definitive Restructuring Documents, (ii) the issuance by any governmental
authority, any court or any regulatory authority, in each case having competent
jurisdiction, of an order or decree enjoining the Restructuring or declaring
this Agreement to be unenforceable, as the case may be, (iii) the Borrowers and
the Required Supporting Term Lenders mutually agree to such termination in
writing, or (iv) this Agreement is terminated pursuant to paragraph (b) or (c)
of this Section 8.

(b)    The Borrowers may, in their discretion, terminate this Agreement by
written notice to the other Parties, upon the occurrence of any of the following
events:

(i)    the Restructuring Transaction has not been consummated within 75 days
after the RSA Effective Date;

(ii)    within three (3) Business Days after the giving of written notice by the
Borrowers to the Supporting Term Lenders of a determination by the board of
directors of the Company (the “Board”), in good faith, based on the advice of
its outside counsel, that proceeding with the Restructuring and pursuit of the
Restructuring Transaction would be inconsistent with the Board’s fiduciary
obligations under applicable law;

 

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(iii)    a breach by one or more Supporting Term Lenders of its or their
material obligations, representations or warranties hereunder, which breach is
not cured within five (5) Business Days after the giving of written notice by
the Borrowers of such breach to such Supporting Term Lender or Supporting Term
Lenders and counsel to the Supporting Term Lenders; or

provided that, upon a termination of this Agreement by the Borrowers pursuant to
Section 8(b), (x) all obligations of the Supporting Term Lenders hereunder shall
immediately terminate without further action or notice by such Supporting Term
Lenders, and (y) the Borrowers (and its directors, officers, employees,
advisors, subsidiaries, and representatives) shall not have or incur any
liability under this Agreement or otherwise solely on account of such
termination.

(c)    This Agreement may be terminated by the Required Supporting Term Lenders
by written notice to the other Parties upon the occurrence of any of the
following events:

(i)    the Restructuring Transaction has not been consummated within 75 days
after the RSA Effective Date;

(ii)    upon the occurrence of a Forbearance Termination Event (as defined in
the Forbearance Agreement);

(iii)    upon receipt by the Supporting Term Lenders of a notice delivered by
the Borrowers pursuant to Section 8(b)(ii) hereof;

(iv)    Company files or publicly announces that it will file, join in or
support any plan of reorganization, including any in-court bankruptcy
proceeding, other than as contemplated by the Term Sheet without the prior
written consent of the Required Supporting Term Lenders; or

(v)    a breach by any Borrower of its material obligations, representations or
warranties hereunder, which breach is not cured within five (5) Business Days
after the giving of written notice by counsel for the Supporting Term Lenders to
the Borrowers.

(d)    This Agreement shall terminate solely as to any Supporting Term Lender on
the date on which such Supporting Term Lender has transferred all (but not less
than all) of its Term Loans in accordance with Section 3 of this Agreement.

(e)    No Party may seek to terminate or terminate this Agreement based upon any
default, failure of a condition, or right of termination in this Agreement
arising (directly or indirectly) out of its own actions or omissions.

(f)    If this Agreement is terminated as to any Party pursuant to this
Section 8, this Agreement shall forthwith become void and of no further force or
effect, each such Party shall be released from its commitments, undertakings and
agreements under or related to this Agreement, and there shall be no liability
or obligation on the part of any such Party, provided that (i) each such Party
shall have all rights and remedies available to it under applicable law (for all
matters unrelated to this Agreement); (ii) any and all consents tendered by the
terminating Supporting Term Lenders prior to such termination shall be deemed,
for all purposes,

 

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automatically to be null and void ab initio; (iii) in no event shall any such
termination relieve any Party from liability for its breach or non-performance
of its obligations hereunder prior to the date of such termination (including
any reimbursement obligations incurred prior to the date of such termination);
and (iv) in no event shall any such termination relieve any Party from its
obligations under this Agreement which expressly survive any such termination
pursuant to Section 20 hereof.

9.    Forbearance. The Parties agree, and the Agent acknowledges, that the
Forbearance Agreement shall continue to remain in full force and effect for as
long as this Agreement has not been validly terminated, subject to Section 9(b)
below.

(b)    Effective as of the RSA Effective Date, the Forbearance Agreement is
hereby amended as follows:

(i)    Section 3(a) of the Forbearance Agreement is hereby amended by replacing
the reference to “January 31, 2020” with “the date on which the Restructuring
Support Agreement, dated as of January 24, 2020, among the Borrowers, the Agent
and the Lender Parties party thereto, is validly terminated in accordance with
Section 8 thereof” (such date, the “Termination Date”).

(ii)    The definition of “Specified Default” is expanded to include, in
addition to any Specified Defaults in existence immediately prior to the RSA
Effective Date:

 

  a.

any Default or Event of Default arising from the Borrowers’ failure to pay any
scheduled payment of principal, interest or fees with respect to the Term Loans,
required to be made pursuant to the Term Loan Agreement prior to the Termination
Date (it being understood that any such amounts shall be deferred and shall
become due and payable in the event this Agreement is validly terminated without
the Restructuring Transaction having been consummated and the Definitive
Restructuring Documents having been executed), including any cross-default
arising as a result of any Default or Event of Default under the ABL Credit
Agreement caused by any of the foregoing; and

 

  b.

any Default or Event of Default arising solely from (x) the negotiation,
execution, implementation or consummation of this RSA or the Definitive
Restructuring Documents or any of the actions or transactions contemplated
thereby; or (y) any cross-default arising as a result of any Default or Event of
Default under the ABL Credit Agreement caused by the negotiation, execution,
implementation or consummation of the RSA or the Definitive Restructuring
Documents, or any of the actions or transactions contemplated thereby.

(c)    Effective as of the RSA Effective Date, any requirement in any
confidentiality agreement between the Company and any Supporting Term Lender
that requires “cleansing” disclosures or similar provisions are hereby waived
until the Termination Date.

(d)    The execution, delivery and effectiveness of this Agreement, including
this Section 9, shall not operate as a waiver of any right, power or remedy of
any Supporting Term

 

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Lender under any of the Loan Documents nor constitute a waiver of any provision
of any of the Loan Documents, other than as expressly set forth in the
Forbearance Agreement (as amended hereby) and this Section 9. On and after the
RSA Effective Date, this Agreement shall for all purposes constitute a Loan
Document.

(e)    Execution of this Agreement by the Required Lenders constitutes a
direction by the Required Lenders that the Agent, in accordance with this
Agreement, act or refrain from acting. Each Supporting Term Lender agrees that
the Agent shall not be required to act against the Company or any of its
subsidiaries that are Obligors under the Term Loan Credit Agreement if such
action is contrary to the terms of this Agreement. In no event shall any
discretionary obligations or duties be construed against the Agent hereunder.

10.    Counterparts. This Agreement and any amendments, waivers, consents, or
supplements hereto or in connection herewith may be executed in multiple
counterparts and delivered by electronic mail (in “.pdf” or “.tif” format),
facsimile or otherwise, each of which shall be deemed to be an original for the
purposes of this Agreement and all of which taken together shall constitute one
and the same Agreement.

11.    No Solicitation and Acknowledgements. Notwithstanding anything to the
contrary in this Agreement, each Party acknowledges that no securities of the
Company are being offered or sold hereby and this Agreement neither constitutes
an offer to sell nor a solicitation of an offer to buy any securities of the
Company.

12.    Time is of the Essence. The Parties acknowledge and agree that time is of
the essence, and that they must each use commercially reasonable best efforts to
effectuate and consummate the Restructuring as soon as reasonably practicable.

13.    Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISION WHICH WOULD REQUIRE THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

(b)    By its execution and delivery of this Agreement, each Party hereby
irrevocably and unconditionally agrees for itself that any legal action, suit or
proceeding against it with respect to any matter under or arising out of or in
connection with this Agreement or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding, may be brought solely in either
a state or federal court of competent jurisdiction in the County of New York in
the State of New York. By execution and delivery of this Agreement, each of the
parties hereto hereby irrevocably accepts and submits itself to the nonexclusive
jurisdiction of each such court, generally and unconditionally, with respect to
any such action, suit or proceeding.

14.    Relationship Among Parties; No “Group”. It is understood and agreed that
no Supporting Term Lender has any duty of trust or confidence of any kind or
form with respect to any other Supporting Term Lender and, except as expressly
provided in this Agreement, there are no commitments between or among them. No
prior history, pattern or practice of sharing confidences between or among the
Supporting Term Lenders or the Borrowers shall in any way

 

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affect or negate this Agreement. No Supporting Term Lender shall, as a result of
its entering into and performing its obligations under this Agreement, be deemed
to be part of a “group” (as that term is used in Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) with any of the other
Supporting Term Lenders..

15.    Notices. Any notice, request, instruction or other document to be given
hereunder by any Party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, by email or
overnight courier.

(a)    If to the Supporting Term Lenders, or counsel to the Supporting Term
Lenders, to counsel at:

Derek Dostal

Damian Schaible

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Derek.Dostal@davispolk.com

Damian.Schaible@davispolk.com

(b) If to the Borrowers, to:

Katherine Hargis

Vice President, Chief Legal Officer and Secretary

Key Energy Services, Inc.

1301 McKinney Street, Suite 1800

Houston, Texas 77010

khargis@keyenergy.com

With a courtesy copy (that does not constitute notice) to:

Alison Ressler

Ari Blaut

Pat Brown

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

resslera@sullcrom.com

blauta@sullcrom.com

brownp@sullcrom.com

16.    Severability.

Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. In the event that any part of this
Agreement is

 

11

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

declared by any court or other judicial or administrative body to be null, void
or unenforceable, said provision survives to the extent it is not so declared,
and all of the other provisions of this Agreement remain in full force and
effect only if, after excluding the portion deemed to be unenforceable, the
remaining terms provide for the consummation of the transactions contemplated
hereby in substantially the same manner as originally set forth at the later of
the date this Agreement was executed or last amended.

17.    Mutual Drafting. This Agreement is the result of the Parties’ joint
efforts, and each of them and their respective counsel have reviewed this
Agreement and each provision hereof has been subject to the mutual consultation,
negotiation, and agreement of the Parties, and the language used in this
Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and therefore there shall be no construction against any
Party based on any presumption of that Party’s involvement in the drafting
thereof.

18.    Headings. The headings used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize, or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no headings had been used in this Agreement.

19.    Waivers and Amendments. Notwithstanding anything to the contrary
contained herein, this Agreement, including any exhibits and schedules hereto
(including any provision in the Term Sheet and any exhibits and schedules
thereto) may not be changed, modified, amended, or supplemented, nor shall any
provision or requirement hereof be waived, without the prior written agreement
(which may include electronic mail by counsel to the applicable parties) of the
Borrowers and the Required Supporting Term Lenders; provided, that (a) the
definition of Required Supporting Term Lenders; (b) the provisions of this
Section 19; and (c) the following sections of the Term Sheet: (i) Treatment of
Existing Debt, (ii) Governance, and (iii) the Credit Facilities, Maturity,
Interest Rate, and Initial Payment sections identified in the New Term Facility
Term Sheet Summary, shall not be amended or modified without the consent of all
Supporting Term Lenders; provided, further that, any changes, modifications,
amendments, supplements or waivers and any proposed change, modification,
amendment or supplement to, or waiver of, any provision of this Agreement and
any terms in the Term Sheet that would or would reasonably be expected to
materially and adversely affect any Supporting Term Lender in a manner that is
disproportionate to any other Supporting Term Lender or the Supporting Term
Lenders as a whole, may not be made without the prior written consent of the
Borrowers and each Supporting Term Lender that would be so affected.

20.    Specific Performance.

It is understood and agreed by the Parties that money damages may be an
insufficient remedy for any breach of this Agreement by any Party, that such
breach may represent irreparable harm, and that each non-breaching Party shall
be entitled to seek specific performance and injunctive or other equitable
relief (without the posting of any bond and without proof of actual damages) as
a remedy of any such breach, including an order of a court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder. Notwithstanding anything to the contrary in this Agreement, in no
event shall any Party or their representatives be liable to any other Party
hereunder for any punitive, incidental, consequential, special or indirect
damages, including the loss of future revenue or income or opportunity, relating
to the breach or alleged breach of this Agreement.

 

12

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

21.    Indemnification.

The Company hereby agrees to indemnify each Supporting Term Lender for
reasonable and documented out-of-pocket fees and disbursements of one firm of
counsel and one local counsel for all such Supporting Term Lenders, taken as a
whole (and, solely in the case of an actual conflict of interest between
Supporting Term Lenders, one (1) additional counsel to the affected Supporting
Term Lenders) incurred by the Supporting Term Lenders in connection with the
defense of any claims, causes of action, lawsuits or other legal or threatened
legal actions, whether based on any federal, state or foreign laws, statutes,
rules or regulations (including securities and commercial laws, statutes, rules
or regulations) on common law or equitable cause or on contract or otherwise,
asserted against such Supporting Term Lender, in any manner arising from or
related in any way to the transactions or events giving rise to, or any claim
that is treated as rising under, the Exchange or the negotiation, formulation,
or preparation of this Agreement, the Definitive Restructuring Documents or the
related documents, guarantees, security documents, agreements, instruments, or
other documents.

22.    Disclosure.

The Borrowers shall submit drafts to the advisors to the Supporting Term Lenders
of any press releases and public documents that constitute the disclosure of the
existence or terms of this Agreement at least one calendar day or as soon as
reasonably practicable prior to making any such disclosure, and the Borrowers
shall consult with such advisors in good faith regarding the form and substance
of such disclosure(s). No Party or its advisors shall disclose to any person or
entity the amount or percentage of any claims or other interests held by, or the
identity of, any Supporting Term Lender without such Supporting Term Lender’s
prior written consent, provided that the Borrowers may disclose such information
to the extent necessary pursuant to law, regulation, legal process, securities
law disclosure requirements, or at the request of any regulatory authority,
self-regulatory authority or other applicable judicial or governmental order or
other legally compulsory act.

23.    Survival.

Notwithstanding the termination of this Agreement in accordance with its terms,
the agreements and obligations of the Parties in this Section 23 and Sections
1(b), 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, and 22 shall survive such
termination and shall continue in full force and effect for the benefit of the
Parties in accordance with the terms hereof.

[Signature Pages Follow]

 

13

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

IN WITNESS WHEREOF, this RSA has been duly executed as of the date first above
written.

 

KEY ENERGY SERVICES, INC. By:   /s/ J. Marshall Dodson Name:   J. Marshall
Dodson Title:  

Interim Chief Executive Officer,

Senior Vice President and Chief Financial Officer

 

KEY ENERGY SERVICES, LLC. By:   /s/ J. Marshall Dodson Name:   J. Marshall
Dodson Title:  

Interim Chief Executive Officer,

Senior Vice President and Chief Financial Officer

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

CORTLAND PRODUCTS CORP., as Agent solely as it relates to the terms of Section 9
By   /s/ Matthew Trybula   Name:   Matthew Trybula   Title:   Associate Counsel

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

SPECIAL SITUATIONS INVESTING GROUP, INC.,

as a Lender

By   /s/ Lee D. Becker   Name:   Lee D. Becker   Title:   Authorized Signatory

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

BLUEMOUNTAIN FOINAVEN MASTER FUND L.P.,

as a Lender

By   /s/ David O’Mara   Name:   David O’Mara   Title:   Deputy General Counsel

BLUE MOUNTAIN CREDIT ALTERNATIVES MASTER FUND L.P.,

as a Lender

By   /s/ David O’Mara  

Name:

  David O’Mara  

Title:

  Deputy General Counsel

BLUEMOUNTAIN GUADALUPE PEAK FUND L.P.,

as a Lender

By   /s/ David O’Mara  

Name:

  David O’Mara  

Title:

  Deputy General Counsel

BLUEMOUNTAIN LOGAN OPPORTUNITIES FUND L.P.,

as a Lender

By   /s/ David O’Mara  

Name:

  David O’Mara  

Title:

  Deputy General Counsel

BLUEMOUNTAIN MONTENVERS MASTER FUND SCA SICAV-SIF,

as a Lender

By   /s/ David O’Mara  

Name:

  David O’Mara  

Title:

  Deputy General Counsel

BLUEMOUNTAIN SUMMIT TRADING L.P.,

as a Lender

By   /s/ David O’Mara  

Name:

  David O’Mara  

Title:

  Deputy General Counsel

BLUEMOUNTAIN TIMBERLINE LTD.,

as a Lender

By   /s/ David O’Mara  

Name:

  David O’Mara  

Title:

  Deputy General Counsel

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

BLUEMOUNTAIN KICKING HORSE FUND L.P.,

as a Lender

By  

/s/ David O’Mara

  Name:  

David O’Mara

  Title:   Deputy General Counsel

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

TENNENBAUM ENERGY OPPORTUNITIES CO, LLC

TCP WATERMAN CLO, LLC

TENNENBAUM SENIOR LOAN OPERATING III, LLC

TENNENBAUM SENIOR LOAN FUNDING III, LLC

TENNENBAUM SENIOR LOAN FUND V, LLC

as Lenders On behalf of each of the above entities:

By:   TENNENBAUM CAPTIAL PARTNERS, LLC Its:   Investment Manager

By   /s/ Michael Leitner   Name:   Michael Leitner   Title:   Managing Director
TCP ENHANCED YIELD FUNDING I, LLC As Lender By:   Tennenbaum Enhanced Yield
Operating I, LLC Its:   Sole Member By:   Tennenbaum Capital Partners, LLC Its:
  Investment Manager

By

  /s/ Michael Leitner

Name:  

Michael Leitner

Title:  

Managing Director

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

SOTER CAPITAL, LLC,

as a Lender

By   /s/ Mary Ann Sigler Name:  

Mary Ann Sigler

Title:  

President and Treasurer

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

WHITEBOX ASYMMETRIC PARTNERS, L.P.,

as a Lender

By: Whitebox Advisors LLC its investment manager

By   /s/ Luke Harris

Name:  

Luke Harris

Title:  

General Counsel – Corporate, Transactions & Litigation

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

WHITEBOX CAJA BLANCA FUND, LP,

as a Lender

By:WHITEBOX CAJA BLANCA GP LLC its general partner

By: WHITEBOX ADVISORS LLC its investment manager

By   /s/ Luke Harris

Name:  

Luke Harris

Title:  

General Counsel – Corporate, Transactions & Litigation

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

WHITEBOX RELATIVE VALUE PARTNERS, L.P.,

as a Lender

By: WHITEBOX ADVISORS LLC its investment manager

By   /s/ Luke Harris

Name:  

Luke Harris

Title:  

General Counsel – Corporate, Transactions & Litigation

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

WHITEBOX CREDIT PARTNERS, L.P.,

as a Lender

By: WHITEBOX ADVISORS LLC its investment manager

By   /s/ Luke Harris

Name:  

Luke Harris

Title:  

General Counsel – Corporate, Transactions & Litigation

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

WHITEBOX MULTI-STRATEGY PARTNERS, L.P.,

as a Lender

By: Whitebox Advisors LLC its investment manager

By   /s/ Luke Harris

Name:  

Luke Harris

Title:  

General Counsel – Corporate, Transactions & Litigation

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

SCHEDULE 1

HOLDINGS OF SUPPORTING TERM LENDERS

 

Supporting Term Lender

   Principal Amount
of Term Loan  

SPECIAL SITUATIONS INVESTING GROUP, INC.

   $ [***]  

BLUEMOUNTAIN FOINAVEN MASTER FUND L.P.

     [***]  

BLUEMOUNTAIN CREDITALTERNATIVES MASTER FUND L.P.

     [***]  

BLUEMOUNTAIN GUADALUPE PEAK FUND L.P.

     [***]  

BLUEMOUNTAIN LOGAN OPPORTUNITIES FUND L.P.

     [***]  

BLUEMOUNTAIN MONTENVERS MASTER FUND SCA SIC AV-SIF

     [***]  

BLUEMOUNTAIN SUMMIT TRADING L.P.

     [***]  

BLUEMOUNTAIN TIMBERLINE LTD.

     [***]  

BLUEMOUNTAIN KICKING HORSE FUND L.P.

     [***]  

TENNENBAUM ENERGY OPPORTUNITIES CO, LLC

TCP WATERMAN CLO, LLC

TENNENBAUM SENIOR LOAN OPERATING III, LLC

TENNENBAUM SENIOR LOAN FUNDING III, LLC

TENNENBAUM SENIOR LOAN FUND V, LLC

TCP ENHANCED YIELD FUNDING I, LLC

     [***]  

SOTER CAPITAL, LLC

     [***]  

WHITEBOX ASYMMETRIC PARTNERS, L.P.

     [***]  

WHITEBOX CAJA BLANCA FUND, LP

     [***]  

WHITEBOX RELATIVE VALUE PARTNERS, L.P.

     [***]  

WHITEBOX CREDIT PARTNERS, L.P.

     [***]  

WHITEBOX MULTI-STRATEGY PARTNERS, L.P.

     [***]     

 

 

 

Total

   $ 241,909,374.87     

 

 

 

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

Exhibit A

Term Sheet

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

KEY ENERGY SERVICES, INC.

SUMMARY OF TERMS AND CONDITIONS OF RESTRUCTURING TRANSACTION

 

Company:

Key Energy Services, Inc., a Delaware corporation (the “Company”).

 

Implementation of Restructuring and Required Approvals

The Restructuring shall be implemented as a private, out of court transaction
and structured in a tax and cost efficient manner for the Company.

 

 

Platinum Equity Advisors, LLC (together with its controlled affiliates,
“Platinum”) shall vote (or provide written consent in lieu of a shareholder
vote) to approve the Restructuring, with further amendments to corporate charter
and bylaws consistent with the provisions of the Governance annex attached
hereto.

 

 

Subject to fiduciary duties, no M&A transaction shall be effected during the
interim period between the agreement of this term sheet and the closing of the
transaction (the “Closing”) without the affirmative consent of the Required
Consenting Term Lenders.

 

Treatment of ABL Facility:

The Loan and Security Agreement, dated as of December 15, 2016 (as amended,
modified or supplemented from time to time, the “ABL Credit Agreement”), shall
be amended and restated or refinanced on terms to be mutually agreed.

 

 

Company to negotiate in good faith with existing ABL lenders to reduce the
Minimum Availability Covenant (as defined in the ABL Credit Agreement), increase
advance rates and allow for additional collateral to be introduced as eligible
collateral for purposes of the borrowing base (such collateral to be agreed).

 

Treatment of Existing Debt:

Supporting Term Lenders shall exchange all of their Term Loans into newly issued
common shares of the Company representing 97% of the Company’s equity interest
(subject to dilution by the New Warrants and MIP (each as defined below)) and
Supporting Term Lenders shall receive $20 million of term loans under the New
Term Facility (as defined below, and such exchanged term loans, the “Exchange
Term Loans”) on a pro rata basis;

 

1

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

 

provided, that each Supporting Term Lender may allocate the Exchange Term Loans
in its sole discretion among all accounts and funds managed by such Supporting
Term Lender or any affiliate of such Supporting Term Lender.

 

 

If the exchange closes with 100% participation, the shares issued to the
Supporting Term Lenders will not change.

 

Treatment of Unsecured Claims:

Trade and other unsecured obligations shall be unimpaired and paid or satisfied
in the ordinary course of business.

 

Treatment of Existing Equity Holders:

Existing equity holders continue to hold at least 3% of the outstanding shares
of the Company pro forma for the exchange of the Term Loan (subject to dilution
by the New Warrants and MIP).

 

 

Two series of warrants (the “New Warrants”) with a: i) four-year exercise period
for 10.0% of the common shares of the Company on an as-exercised basis (after
giving effect to the exercise of all New Warrants, but subject to dilution by
the MIP) with a strike price equal to an equity value of par plus accrued
interest (at the default contract rate) of the Term Loan and ii) four-year
exercise period for 7.5% of the common shares of the Company on an as-exercised
basis (after giving effect to the exercise of all New Warrants, but subject to
dilution by the MIP) with a strike price equal to an equity value of par plus
accrued interest (at the default contract rate) of the Term Loan multiplied by
1.50.

 

 

New Warrants will be subject to customary Black- Scholes protections, based on
pre-agreed parameters to be applied to the Black-Scholes formula, in case of a
change-of-control sale or similar transaction during the term of the warrants,
with any payments under such protections to be capped at $10 million and subject
to sun setting provisions after 18 months.

 

 

All transactions trigger Black Scholes protections if cash consideration exceeds
10% of proceeds.

 

2

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

Treatment of Existing Warrant Holders:

Treatment to be mutually agreed, subject to compliance with agreements governing
the Warrants

 

New Term Loan:

$51,214,995.13 facility (the “New Term Facility”), which includes $1,214,995.13
of existing term loans.

 

 

Terms of the New Term Facility are outlined in the “New Term Facility Term Sheet
Summary.”

 

 

New Term Facility to be made available to all Supporting Term Lenders on a pro
rata basis. Backstop for funding as follows:

 

 

$7.5 million of the New Money Term Loan (as defined below) to be provided by
Platinum, remaining amount of New Money Term Loan to be provided by all
Supporting Term Lenders (including Platinum) on a pro rata basis.

 

New Employee Equity Plan:

The “Managing Incentive Plan” or “MIP”. Terms to be mutually agreed, but to
represent up to 9% of the newly issued common shares of the Company. Day-1
allocations and amounts reserved for future issuances to be mutually agreed.

 

 

Such MIP to be subject to key employees, the list of which to be mutually
agreed, entering into waivers to applicable severance agreements providing that
the out-of-court transaction will not constitute a “change in control” for
purposes of such agreements, which waivers will be in a form satisfactory to the
Supporting Term Lenders.

 

Board, Governance And Listing:

Governance terms outlined in the Governance section of this Term Sheet.

 

3

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

Releases:

The documentation for the Restructuring shall include customary mutual releases
in favor of the Company, the Supporting Term Lenders (in all capacities,
including as equity holders), the Term Loan Agent and each of their respective
current and former directors, officers, shareholders, employees, advisors,
partners, legal counsel and agents.

 

 

Documentation shall also include appropriate indemnification provisions by the
Company of any post-closing costs / liabilities of the Supporting Term Lenders
and the Term Loan Agent.

 

Governing Law:

The documentation for the Restructuring shall be governed by the laws of the
state of New York.

 

Fees and Expenses:

The reasonable fees and expenses incurred by the Supporting Term Lenders
(including the fees and expenses of Perella Weinberg Partners (“PWP”), Davis
Polk & Wardwell LLP (“Davis Polk”), the Term Loan Agent and Milbank LLP
(“Milbank”), counsel to Tennenbaum Capital Partners, LLC (“BlackRock”); provided
that Milbank’s fees shall be capped at $100,000 and the Company shall not be
responsible for any fees of Milbank incurred after January 14, 2020) in
connection with the transactions contemplated by this Term Sheet shall be paid
by the Company

 

Closing Conditions:

Company to deliver to lenders under the Term Loan Agreement the results of the
HilCo Appraisal (but the results of such appraisal shall not be a condition
precedent to the Restructuring).

 

 

Delivery of proxy statement or information statement pursuant to SEC rules.

 

 

Resignation of number of existing directors to give effect to board appointment
right described above.

 

 

Company employees to enter into new, amended employment agreements satisfactory
to the Supporting Term Lenders.

 

4

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

Governance:

 

Board of Directors:

Board Size: At Closing, the board of directors shall consist of 7 directors,
including the CEO, 5 directors that shall constitute independent directors under
SEC rules and NYSE listing rules (irrespective of whether the Company is listed
on any exchange) and one director who may or may not be independent.

 

 

Initial Appointment Right: Supporting Term Lenders to appoint new Board of
Directors according to the following thresholds based on pro forma equity
ownership at Closing: 2 seats if over 25% and 1 seat if between 10-25%, such
that each of Goldman Sachs and BlueMountain gets 2 seats and each of Platinum
and BlackRock gets 1 seat; provided that Platinum shall be entitled to initially
appoint at least 1 non-independent director, provided further that the directors
appointed by Supporting Term Lenders, other than Platinum, shall be independent
under SEC rules and NYSE listing rules (irrespective of whether the Company is
listed on any exchange) and shall not be consultant to or employee of such
equityholder.

 

 

Whitebox shall be entitled to one board observer as long as it maintains at
least 85% of its pro-forma equity ownership as of the Closing.

 

 

Ongoing Nomination Rights: Ongoing nomination rights for Supporting Term Lenders
subject to minimum equity threshold percentages (i.e., 2 seats if over 25% and 1
seat if between 10%-25%), subject to applicable law with respect to director
independence, it being understood that future nominees of Supporting Term
Lenders (other than Platinum) shall be independent under SEC rules and NYSE
listing rules (irrespective of whether the Company is listed on any exchange)
and shall not be consultant to or employee of such equityholder. To the extent
that Platinum maintains a nomination right as set forth above, one director
nominated by Platinum need not be independent under SEC or NYSE listing rules,
as applicable. The ongoing nomination rights set forth above shall be
transferable as follows: A holder (including a subsequent holder) with the right
to nominate one or

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

 

two directors may transfer that nomination right to a third party in connection
with a transfer of its equity of the Company to such third party if, as a result
of such transfer of equity, the third party holds at least 10% of the Company’s
equity (in the case of transferring the right to nominate a single director) or
at least 25% (in the case of transferring the right to nominate two directors),
it being understood that the transferring holder will no longer have such
nomination right upon completion of the transfer, regardless of the transferring
holder’s equity ownership at such time.

 

 

Ongoing Observer Rights: Other than with respect to Whitebox’s board observer
rights set forth above, Supporting Term Lenders that maintain pro forma equity
ownership in excess of 5% shall be entitled to one board observer.

 

 

All thresholds above to be based on TSO and pro forma equity holdings of
Supporting Term Lenders as of Closing.

 

Shareholders’ Agreement:

Registration Rights: At Closing, the Company and Supporting Term Lenders shall
enter into a shareholders agreement (the “Shareholders’ Agreement,” which shall
be the sole shareholders’ agreement amongst such Supporting Term Lenders)
containing customary terms for similar transactions, including providing
provisions for the benefit of the Supporting Term Lenders with respect to the
following:

 

 

Secondary Demand Registration Rights (up to 2 in any 365-day period)

 

 

Cutback on primary sales to the extent advised by underwriters that the offering
could not accommodate both primary and secondary offerings

 

 

Customary piggyback rights in connection with both primary and secondary
offerings, subject to customary cutbacks

 

 

Transactions with Affiliates.

 

 

Governance documents to require all transactions with affiliates (including any
transactions with a

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

 

party (or affiliate of a party) that has a board seat nomination right or is
holder of more than 15% of the common equity of the Company) in excess of
$40 million be at arms’ length terms, and approved by a majority of the
disinterested directors, subject to customary exceptions to be mutually agreed.

 

 

Tag Along Rights.

 

 

During a period when the Company (i) does not have a class of securities
registered under Section 12 of the Securities Exchange Act and (ii) is not
listed on any over-the-counter market or national securities exchange, in the
event of a transfer by one or more parties to the stockholder agreement (the
“Tag Parties”) to an unaffiliated person or “group” of unaffiliated persons that
constitutes more than 50% of the then-outstanding common shares, each other
holder party to the Shareholders’ Agreement shall have “tag-along” rights to
participate, on a pro rata basis (based on its respective ownership of the
common shares held by all such stockholders) in such sale on the same terms, and
subject to the same conditions as the initiating selling stockholder(s)
(provided, that no tagging stockholder shall be required to agree to any
restrictive covenants other than confidentiality not otherwise imposed on the
Tag Parties), with a corresponding reduction (except to the extent the buyer
agrees to purchase additional common shares) in the number of common shares
being sold by the Tag Parties to reflect the number of common shares that
tagging stockholders elect to sell in such sale.

 

 

Drag Along Obligations.

 

 

During a period when the Company (i) does not have a class of securities
registered under Section 12 of the Securities Exchange Act and (ii) is not
listed on any over-the-counter market or national securities exchange, in the
event one or more parties to the stockholder agreement receives and accepts an
offer from an unaffiliated person or “group” of unaffiliated persons to transfer
an amount that constitutes more than 50% of the then-outstanding common shares,
each other holder party to the Shareholders’ Agreement shall be subject to
customary “drag along” obligations, which shall include an obligation to sell
its equity in such transaction on identical terms.

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

 

Preemptive Rights:

 

 

During a period when the Company (i) does not have a class of securities
registered under Section 12 of the Securities Exchange Act and (ii) is not
listed on any over-the-counter market or national securities exchange, each
shareholder party to the Shareholders’ Agreement to have the right to
participate in its pro rata portion (at the same price being offered to other
parties) of any new shares of common stock or material debt issued by the
Company (subject to customary exceptions).

 

 

Information Rights: Customary information, including quarterly and annual
financial statements, management discussion & analysis and quarterly conference
calls (such rights will be deemed to be satisfied as long as Company remains
subject to SEC reporting requirements).

 

Other:

The Company shall remain a Delaware C- Corporation.

 

 

Other private company governance mechanics to be mutually agreed.

 

Amendments:

Charter / Bylaws: Amendments to Charter and Bylaws to implement the foregoing
and to contemplate shareholder written consents so long as Supporting Term
Lenders collectively hold more than 50% of total voting power. Further
amendments in respect of the foregoing governance matters to require consent of
all holders of 10% or more of the common stock (subject to mutually agreed
exceptions) and of each holder adversely and disproportionately affected by such
amendment.

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

New Term Facility Term Sheet Summary

 

Borrower:

Key Energy Services, Inc. (the “Company”)

 

Guarantors:

Each of the direct and indirect subsidiaries of the Company, subject to
exceptions in the existing Term Loan Agreement (the “guarantors”)

 

Agent:

Cortland Products Corp.

 

Lenders:

Supporting Term Lenders

 

Credit Facilities:

$51,214,995.13 (the “Total Facility Amount”) comprised of $30 million of new
term loans funded by the Supporting Term Lenders on the Initial Funding Date
(the “New Money Term Loans”), $20 million in Exchange Term Loans and
$1,214,995.13 of existing term loans (the “Specified Existing Term Loans”);
provided that the Specified Existing Term Loans shall not be subject to
provisions described under “Maturity”, “Prepayment Premium” and “Prepayments”
set forth below.

 

Use of Proceeds:

Proceeds of the New Money Term Loans shall be applied for capital expenditures,
working capital and other general corporate purposes

 

Initial Funding Date:

The date of the consummation of the Restructuring Transaction

 

New Money Term Loan Funding:

$7.5 million to be provided by Platinum, with the remainder to be provided by
all Supporting Term Lenders (including Platinum) on a pro rata basis

 

Maturity

The date that is 5.50 years after the initial funding date

 

Interest Rate

A fixed rate of L+10.25% payable semi-annually, or, until the second anniversary
of the Closing Date, a L+12.25% PIK option (exercisable by the Company in its
sole discretion) for the New Money Term Loan and Exchange Term Loan

 

 

All rates shall be calculated on a 360-day basis

 

Admin Fee:

To be mutually agreed

 

Prepayment Premium:

Prepayment premium, payable on the full Total Facility Amount, subject to waiver
by two-thirds of holders of the New Term Facility, which shall be owed and
payable upon a change of control, merger, sale of all or substantially all
assets, acceleration, default, bankruptcy, insolvency, redemption or

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

 

prepayment (whether mandatory or at the reorganized company’s option)

 

 

Prepayment premium is equal to (i) 3%, from the Closing to (but excluding) the
first anniversary of Closing, (ii) 2%, on and after the first anniversary of the
Closing to (but excluding) the second anniversary of the Closing, (iii) 1%, on
and after the second anniversary of the Closing to (but excluding) the third
anniversary of the Closing Date and (iv) 0%, on and after the third anniversary
of the Closing

 

Amortization:

None

 

Prepayments:

Mandatory prepayments (subject to customary exceptions and baskets to be agreed
by the parties) from debt issuances (in violation of the credit agreement),
excess cash flow, asset sales, tax refunds and other extraordinary receipts and
insurance/condemnation proceeds

 

Collateral:

Perfected first lien security interest on all assets and equity interests of the
Company, except ABL collateral on which the New Term Facility will have a
perfected second lien security interest, subject to customary permitted liens
and exceptions

 

Financial Covenants:

To be determined

 

Affirmative Covenants:

Customary and appropriate for transactions of this type to be mutually agreed

 

Negative Covenants:

Customary and appropriate for transactions of this type to be mutually agreed

 

Representations Warranties:

Customary and appropriate for transactions of this type to be mutually agreed

 

Initial Payment:

1% of the New Money Term Loans, payable to the Supporting Term Lenders on a
ratable basis in accordance with their commitments in respect of the New Money
Term Loans, shall be fully earned and payable on the Initial Funding Date

 

Other Conditions

Conditioned upon the closing of the exchange transaction

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100% amendment/waiver threshold for customary and agreed “sacred” rights
(including, without limitation, subordination of liens or claims)

 

 

Other conditions to be determined

 

Choice of Law:

New York

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Exhibit B

Transfer Agreement

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EXHIBIT B

TRANSFER AGREEMENT

The undersigned (“Transferee”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of [•], 2020 (the
“Agreement”), by and among Key Energy Services, Inc., a Delaware corporation,
Key Energy Services, LLC, a Texas limited liability company, [TRANSFEROR’S NAME]
(“Transferor”), Cortland Products Corp., and certain other Supporting Term
Lenders party thereto, and (i) agrees to be bound by the terms and conditions of
the Agreement to the extent Transferor was thereby bound, (ii) hereby makes all
representations and warranties made therein by all other Supporting Term Lenders
(as defined in the Agreement), and (iii) shall be deemed a Supporting Term
Lender under the terms of the Agreement, in each case, solely with respect to
the Transferred Claims. The Transferee is acquiring the principal amount of the
Term Loans from Transferor in the amounts set forth on Schedule 1 hereof (the
“Transferred Amount”). All notices and other communications given or made
pursuant to the Agreement shall be sent to the Transferee at the address set
forth below in the Transferee’s signature below.

Date Executed:                                                  

 

 

[TRANSFEREE]

 

By:

 

 

 

Name:

   

Title:

   

Address:

 

 

 

 

 

 

 

Attn:

 

 

 

Fax:

 

 

 

Email: