Exhibit 10.1


 


FOURTH AMENDMENT TO CREDIT
AGREEMENT


 


DATED AS OF NOVEMBER 12, 2007


 


This FOURTH AMENDMENT TO CREDIT AGREEMENT (together
with all Exhibits, Schedules and Annexes hereto, this “Amendment”)
is among KEY ENERGY SERVICES, INC.,  a
Delaware corporation (the “Borrower”), the Guarantors signatory
hereto, the LENDERS (as defined in
the Credit Agreement), and LEHMAN COMMERCIAL
PAPER INC., as administrative agent for the Lenders (in such
capacity, the “Administrative Agent”) and as Collateral Agent for the
Lenders and other Secured Parties (in such capacity, the “Collateral Agent”).


PRELIMINARY
STATEMENTS


A.            The Borrower, the Lenders, the
Administrative Agent, Wells Fargo Foothill, Inc., as Revolving Administrative
Agent, Lehman Brothers Inc., as sole lead arranger and sole bookrunner, and the
other agents party thereto, entered into a Credit Agreement dated as of July
29, 2005 (together with all Annexes, Exhibits and Schedules thereto, and as
heretofore amended, the “Credit Agreement”). 
Capitalized terms used and not otherwise defined in this Amendment shall
have the meanings given them in the Credit Agreement.


B.            The Borrower intends to issue
$400,000,000 of senior unsecured notes (the “Notes Issuance”), on
substantially the terms set forth in the Preliminary Offering Memorandum dated
November 5, 2007 (the “Preliminary Offering Memorandum”), copies of
which have been provided to the Agents. 
The proceeds of the Notes Issuance will be used, in part, to repay in
full the Term Loans.  In connection with
the Notes Issuance, the Borrower has proposed, and the other parties to this
Amendment have agreed, that the Credit Agreement be amended (i) to terminate
the Funded Letter of Credit Commitments, (ii) to permit the entire Revolving
Credit Commitments to be used for Revolving Credit Letters of Credit and (iii)
to permit the Notes Issuance.


NOW,
THEREFORE, in
consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


1.             Amendments
to Credit Agreement.  Subject to the
satisfaction of the conditions set forth in Section 4 hereof, the Credit
Agreement is amended as follows:


(a)           The definition of Revolving L/C
Commitment set forth in Section 1 of the Credit Agreement is hereby amended by
replacing the number “$25,000,000” with the number “$65,000,000”.


(b)           Section 7.2(f)(ii) of the Credit
Agreement is hereby amended and restated in its entirety as follows:


“consisting of Unsecured Indebtedness
of the Borrower, in an aggregate principal amount not to exceed $500,000,000,
the proceeds of which are used to repay the Term Loans and the Guarantee
Obligations of any Guarantor in respect of such Indebtedness, with any proceeds
in excess of the amount required to repay such Indebtedness being used for
general


 

















 


corporate purposes, and the unsecured
guarantee by any Guarantor hereunder of the Borrower’s obligations thereunder;
provided that no part of the principal part of such Indebtedness shall have a
maturity date earlier than six months after the Revolving Credit Termination
Date;”


2.             Existing
Letter of Credit.


(a)           Each of the Funded Letters of Credit
issued and outstanding on the Amendment Effective Date, as defined herein (the “Existing
Letters of Credit”), shall, on and after the Amendment Effective Date, be
deemed issued as Revolving Credit Letters of Credit for all purposes.  To the extent that, at the time the Existing
Letters of Credit are deemed issued under the Revolving Credit Facility, the
Revolving Credit L/C Obligations would exceed the Revolving Credit L/C
Commitment (such excess amount, the “L/C Excess Amount”), the Borrower
shall provide cash collateral (the “Excess L/C Cash Collateral”) to the
Revolving Administrative Agent on or before the Amendment Effective Date in an
amount equal to 103% of the L/C Excess Amount and upon terms satisfactory to
the Borrower and the Revolving Administrative Agent.  The Borrower hereby grants the Revolving
Administrative Agent a Lien, for the benefit of the Issuing Lenders that have
issued an Existing Letter of Credit only, on the Excess L/C Cash Collateral,
and the Borrower and the Lenders agree that the Revolving Administrative Agent
shall hold a senior lien and security interest in the Excess L/C Cash Collateral,
free and clear of all other Liens.


(b)           To the extent any of the Existing
Letters of Credit are satisfied or discharged, in whole or in part, the L/C
Excess Amount shall be deemed to be the first exposure satisfied and reduced.


(c)           In
the event an Existing Letter of Credit is satisfied or cancelled, the Revolving
Administrative Agent shall, upon the Revolving Administrative Agent’s receipt
of such original, Existing Letter of Credit (and a release duly executed by the
beneficiary thereof, as applicable), promptly release the portion of Excess L/C
Cash Collateral applicable to such Existing Letter of Credit to the Borrower,
minus any Reimbursement Obligations and any fees, costs and expenses of the
Issuing Lenders or the Revolving Administrative Agent paid in respect of such
Existing Letter of Credit. 
When the L/C Excess Amount equals $0.00, all Excess L/C Cash Collateral
on deposit with the Revolving Administrative Agent shall be promptly released
and returned to Borrower for its own account.


(d)           Notwithstanding
any provision of this Amendment or the Credit Agreement to the contrary, (i)
the Revolving Credit Lenders shall have no obligation to participate in, or
otherwise in any manner be obligated with respect to, Revolving Credit L/C
Obligations that exceed the Revolving Credit L/C Commitments, (ii) the
Revolving Credit Lenders shall have no right to the fees and other charges paid
under the Credit Agreement in respect of Revolving Credit L/C Obligations that
exceed the Revolving Credit L/C Commitments, (iii) Revolving Credit L/C
Obligations that exceed the Revolving Credit L/C Commitments shall be
Obligations, (iv) the Lenders shall have no rights with respect to any of the
Excess L/C Cash Collateral provided by the Borrower with respect to the L/C
Excess Amount, (v) the Excess L/C Cash Collateral shall not be deemed
Collateral, and (vi) the Borrower will pay all accrued and unpaid Funded Letter
of Credit Fees on the Amendment Effective Date to the Revolving Administrative
Agent for the ratable benefit of the Funded L/C Participants.


 


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(e)           The Borrower hereby acknowledges and
confirms that (i) as of November 8, 2007, the aggregate amount of issued and
outstanding Funded Letters of Credit is $68,031,547.00 and there are no
outstanding reimbursement obligations under the Existing Letters of Credit,
(ii) as of the Amendment Effective Date, the Revolving Credit Commitments are
fully drawn and (iii) as of November 8, 2007, the amount of the L/C Excess
Amount is $3,031,547.00.


3.             Waiver
and Consents.  Effective immediately
after the consummation of the transactions contemplated hereby (including the
Notes Issuance, the application of the proceeds to prepay the Term Loans and
the termination of the Funded Letter of Credit Commitments), the parties hereto
(other than the Borrower) expressly hereby re-affirm their agreements herein
contained and waive and consent to any breach of the Credit Agreement, and any
Default or Event of Default that might have been occasioned by any such breach,
that might have occurred had the Credit Agreement not been amended as set forth
in Section 1 above and absent the terms of this Section 3.


4.             Conditions
to Effectiveness.  The effectiveness
of all the amendments contained in Section 1 of this Amendment and all waivers
and consents contained in Section 3 of this Amendment are conditioned upon
satisfaction of the following conditions precedent (the date on which all such
conditions precedent have been satisfied being referred to herein as the “Amendment
Effective Date”):


(a)           the Administrative Agent shall have
received signed, written authorization from the Required Lenders to execute
this Amendment, and shall have received counterparts of this Amendment signed
by each of the Borrower, the Guarantors and the Administrative Agent;


(b)           each of the representations and
warranties contained in Section 3 below shall be true and correct in all
material respects on and as of the Amendment Effective Date;


(c)           the Notes Issuance shall have
occurred and the Borrower shall have delivered to the Administrative Agent an
amount sufficient to prepay in full the Term Loans, together with all accrued
and unpaid interest thereon; and


(d)           the Borrower shall have provided
irrevocable notice of the termination of the Funded Letter of Credit
Commitments.


5.             Representations
and Warranties.  The Borrower
represents and warrants to the Administrative Agent and the Lenders as follows:


(a)           Authority.  The Borrower has the corporate power and
authority, and the legal right, to make, deliver and perform this Amendment and
to perform its obligations hereunder and under the Loan Documents (as amended
hereby).  Each of the Guarantors has the
corporate or other organizational power and authority, and the legal right, to
make, deliver and perform this Amendment. 
The execution, delivery and performance by the Borrower and Guarantors
of this Amendment and the Loan Documents (as amended hereby) and the
transactions contemplated hereby and thereby have been authorized by all necessary
corporate or other organizational action of such Person.  No material consent or authorization of,
filing with, notice to or other act by or in respect of, any


 


3

















 


Governmental
Authority or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Amendment.


(b)           Enforceability.  This Amendment has been duly executed and
delivered on behalf of each Loan Party that is party thereto.  Each of this Amendment and each Loan Document
as amended hereby (i) constitutes a legal, valid and binding obligation of each
Loan Party hereto, enforceable against each such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law) and (ii) is
in full force and effect.  Neither the
execution, delivery or performance of this Amendment or the performance of the
Loan Documents (as amended hereby), nor the performance of the transactions
contemplated hereby or thereby, will adversely affect the validity, perfection
or priority of the Collateral Agent’s Lien on any of the Collateral or its
ability to realize thereon.  This
Amendment is effective to amend the Credit Agreement as provided herein.


(c)           Guaranty Obligations.  Each of the signatories hereto who have executed
this Amendment under the caption “Guarantors” is a Guarantor of the Obligations
of the Borrower under the Credit Agreement and hereby (i) acknowledges
that notwithstanding the execution and delivery of this Amendment, the
obligations of each of the undersigned Guarantors are not impaired or affected
and all guaranties given to the holders of Obligations and all Liens granted as
security for the Obligations continue in full force and effect, and
(ii) confirms and ratifies its obligations under the Guarantee and
Collateral Agreement and each other Loan Document executed by it.


(d)           Representations and Warranties.  After giving effect to this Amendment, the
representations and warranties contained in the Credit Agreement and the other
Loan Documents (other than any such representations and warranties that, by
their terms, are specifically made as of an earlier date) are true and correct
in all material respects on and as of the date hereof as though made on and as
of the date hereof.


(e)           No Conflicts.  Neither the execution, delivery and
performance of this Amendment, nor the performance of and compliance with the
terms and provisions hereof or of the Loan Documents (as amended hereby) by any
Loan Party will, at the time of such performance, (i) violate any Requirement
of Law or any material Contractual Obligation of any Loan Party or (ii) result
in, or require, the creation or imposition of any Lien (other than Liens
created by the Loan Documents) on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation.


(f)            No Default.  After giving effect to this Amendment, no
event has occurred and is continuing that constitutes a Default or Event of
Default.


6.             Reference
to and Effect on Credit Agreement.


(a)           Upon
and after the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like
import referring to


 


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the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby.  This Amendment is a Loan
Document.


(b)           Except as specifically amended above,
the Credit Agreement and the other Loan Documents are and shall continue to be
in full force and effect and are hereby in all respects ratified and
confirmed.  Without limiting the
generality of the foregoing, the Security Documents and all of the Collateral
described therein do and shall continue to secure the payment of all
Obligations under and as defined therein.


(c)           The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Secured Party under
any of the Loan Documents, nor, except as expressly provided herein, constitute
a waiver or amendment of any provision of any of the Loan Documents.


7.             Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Amendment by facsimile or electronic transmission (in
pdf format) shall be effective as delivery of a manually executed counterpart
of this Amendment.


8.             Severability.  Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


9.             Governing
Law.  This Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.


[Signature
pages follow]


 


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IN
WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized, as of the date first written above.


ADMINISTRATIVE
AGENT AND COLLATERAL AGENT:


 


LEHMAN
COMMERCIAL PAPER INC.


 


 


	
  By: 

  	
  /s/ Maria Maslennikova Lund

  
	
  Name: 

  	
  Maria Maslennikova Lund

  
	
  Title: 

  	
  Vice President

  
				



 


 


 


 


 


 


 


[Signature
Page to Fourth Amendment]


 

















 


Wells
Fargo Foothill, Inc.


 (as Lender)


 


 


	
  By: 

  	
  /s/ Kristy S. Loucks

  
	
  Name: 

  	
  Kristy S. Loucks

  
	
  Title: 

  	
  Vice President

  
				



 


 


 


Wells
Fargo Foothill, Inc.


 (as Issuing Lender)


 


 


	
  By: 

  	
  /s/ Kristy S. Loucks

  
	
  Name: 

  	
  Kristy S. Loucks

  
	
  Title: 

  	
  Vice President

  
				



 

















 


Capital
One, N.A.


 (as Lender)


 


 


	
  By: 

  	
  /s/ David L. Denbina, P.E.

  
	
  Name: 

  	
  David L. Denbina, P.E.

  
	
  Title: 

  	
  Senior Vice President          

  
				



 


 


 


 


 


	
   

  
	
  (as Issuing Lender)

  



 


 


	
  By: 

  	
   

  
	
  Name: 

  	
   

  
	
  Title: 

  	
   

  
				



 

















 


BORROWER:


 


KEY
ENERGY SERVICES, INC.


 


 


	
  By: 

  	
  /s/ William M. Austin

  
	
  Name: 

  	
  William M. Austin

  
	
  Title: 

  	
  Senior Vice President and Chief Financial Officer

  
				



 

















 


EXECUTION
VERSION


 


GUARANTORS:


 


KEY ENERGY DRILLING, INC.


ODESSA EXPLORATION INCORPORATED


UNITRACK SERVICES HOLDING, INC.


 


 


	
  By: 

  	
  /s/ Newton W. Wilson III

  
	
   

  	
  Name:

  	
  Newton W. Wilson III

  
	
   

  	
  Title:

  	
  President and Secretary

  
					



 


 


 


KEY ENERGY SERVICES, LLC


KEY ENERGY PRESSURE PUMPING
SERVICES, LLC


KEY ENERGY FISHING &
RENTAL SERVICES, LLC


KEY ENERGY SHARED SERVICES,
LLC


MISR KEY ENERGY INVESTMENTS,
LLC*


MISR KEY ENERGY SERVICES,
LLC*


KEY ELECTRIC WIRELINE
SERVICES, LLC


 


 


	
  By: 

  	
  /s/ Newton W. Wilson III

  
	
   

  	
  Name:

  	
  Newton W. Wilson III

  
	
   

  	
  Title:

  	
  Vice President and Secretary

  
					



 


*Executing
in the capacity of President