Exhibit
10.1


 


THIRD
MODIFICATION OF WAIVER AND


FOURTH
AMENDMENT TO CREDIT AGREEMENT


(TO
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT)


 


 


THIS THIRD MODIFICATION OF WAIVER AND FOURTH
AMENDMENT TO CREDIT AGREEMENT (the “Amendment”) is dated as of March 30, 2005
and is made by and among KEY ENERGY SERVICES, INC., a Maryland corporation (the
“Borrower”), each of the GUARANTORS (as defined in the Credit Agreement), the
LENDERS (as defined in the Credit Agreement), PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent (the “Administrative Agent”), PNC CAPITAL MARKETS,
INC., and WELLS FARGO BANK, NATIONAL ASSOCIATION (successor-by-merger to Wells Fargo Bank Texas, National Association), as the Co-Lead Arrangers, and CALYON NEW
YORK BRANCH (successor by merger to CREDIT LYONNAIS NEW YORK BRANCH), as the
Syndication Agent (the “Syndication Agent”), JPMORGAN CHASE BANK, N.A. and
COMERICA BANK, as the Co-Documentation Agents (the “Co-Documentation Agents”).


 


GENERAL
RECITALS


 


WHEREAS,
the Borrower, the Guarantors, the Lenders, the Administrative Agent and the
other parties hereto are parties to that certain Fourth Amended and Restated
Credit Agreement, dated as of June 7, 1997, as amended and restated
through November 10, 2003, and as amended by that certain Waiver And First Amendment To Credit
Agreement (the “Waiver and First Amendment”) dated as of April 5,
2004, that Modification of Waiver and
Second Amendment to Credit Agreement (the “Modification of Waiver”) dated August 31, 2004 and that Second
Modification of Waiver and Third Amendment to Credit Agreement (the “Second
Modification of Waiver”) dated December
17, 2004 (and as hereafter amended, restated, supplemented or modified, the “Credit
Agreement”);


 


WHEREAS,
the Lenders and Borrower desire to modify certain provisions of the Waiver and
First Amendment as previously modified by the Modification of Waiver and the
Second Modification of Waiver; and


 


WHEREAS,
except as otherwise provided in this Amendment, capitalized terms used herein
shall have the meanings given to them in the Credit Agreement, as amended by
this Amendment, and all references to Sections in this Amendment which do not
refer to a specific document shall be deemed to refer to the Credit Agreement.


 


AGREEMENT


 


NOW,
THEREFORE, the parties hereto, in consideration of their mutual covenants and
agreements hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:


 





















 


1.             Modification of Waiver And First
Amendment.


 


(a)           Modification of Recitals (Section 1(a) of Waiver and
First Amendment).


 


1.             Paragraph
3 of Section 1(a) (Recitals) of the Waiver and First Amendment is hereby
amended and restated to read as follows:


 


“3.           As
a result of the Restatements, the Loan Parties: (1) could not finalize and
deliver their Annual Financial Statements for their fiscal year ending December
31, 2003 (the “2003 Annual Statements”), and expect that they will not be able
to finalize their Annual Financial Statements for their fiscal year ending
December 31, 2004 (the “2004 Annual Statements”), by the due dates therefor
under Section 7.3.2 of the Credit Agreement and (2) could not finalize and
deliver their Quarterly Financial Statements for their fiscal quarters ending
March 31, 2004 (the “March 31, 2004 Quarterly Statements”), June 30, 2004 (the “June
30, 2004 Quarterly Statements”) or September 30, 2004 (the “September 30, 2004
Quarterly Statements”), and expect that they will not be able to finalize and
deliver their Quarterly Financial Statements for their fiscal quarters ending
March 31, 2005 (the “March 31, 2005 Quarterly Statements”), and June 30, 2005
(the “June 30, 2005 Quarterly Statements”) by the due dates therefor under
Section 7.3.1 of the Credit Agreement.”


 


2.             Paragraphs
5 and 6 of Section 1(a) (Recitals) of the Waiver and First Amendment are hereby
amended and restated to read as follows:


 


“5.           As
a result of the Restatements, the Borrower was not able to file its Annual Reports
on Form 10-K for 2003 (the “2003 Form 10-K”) or its Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, 2004 (the “March 2004 10-Q”), June
30, 2004 (the “June 2004 10-Q”) and September 30, 2004 (the “September 2004
10-Q”), and is unlikely to file its Annual Report on Form 10-K (the “2004 Form
10-K”), or its Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2005 (the “March 2005 10-Q”) and June 30, 2005 (the “June 2005
10-Q”), in a timely manner.  That failure might be deemed a violation of
Law as contemplated by Sections 5.1.19 and 7.1.9 of the Credit Agreement.


 


6.             Unless
waived, failure to complete the 2003 Form 10-K, the 2004 Form 10-K, the March
2004 10-Q, the June 2004 10-Q, the September 2004 10-Q, the March 2005 10-Q and
the June 2005 10-Q, and to deliver copies of the same to the trustees under the
6 3/8% Notes Indenture and the 8 3/8% Notes Indenture and the holders of the
notes issued thereunder in a timely manner has constituted, or will constitute,
an event which, with the giving of notice and the passage of 60 days after the
giving of such notice as provided in such Indentures, will constitute an Event
of Default under such Indentures which will then permit the acceleration of the
indebtedness outstanding thereunder. 
Section 8.1.5 of the Credit Agreement provides that the occurrence of a
default or event of default under the terms of any other agreement involving
borrowed money or the extension of credit or any other Indebtedness under


 


2





















 


which any Loan
Party or Subsidiary of any Loan Party may be obligated as a borrower or
guarantor in excess of $20,000,000 in the aggregate, will constitute an Event
of Default under the Credit Agreement if such breach, default or event of
default consists of the failure to pay (beyond any period of grace permitted
with respect thereto, whether waived or not) any Indebtedness when due (whether
at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of
Indebtedness.”


 


(b)           Modification of Waivers (Section 1(b) of Waiver and
First Amendment).


 


Section 1(b) (Waivers and Agreement) of the Waiver and
First Amendment is hereby amended and restated to read as follows:


 


“(b) Waivers and
Agreement.


 


Subject to the agreements
and conditions set forth in Section 1(c) [Agreements] and Section 2
[Amendments] of this Amendment, and the other terms of this Amendment, the
Lenders hereby waive (i) the requirement that the Loan Parties deliver, on the
due dates therefor under Section 7 of the Credit Agreement, the 2003 Annual
Statements, the March 31, 2004 Quarterly Statements, the June 30, 2004
Quarterly Statements, the September 30, 2004 Quarterly Statements, the 2004
Annual Statements, the March 31, 2005 Quarterly Statements, and the June 30,
2005 Quarterly Statements, and the Compliance Certificates which are due
concurrently with the delivery of such statements, (ii) the provisions of
Sections 5.1.19 and 7.1.9 of the Credit Agreement to the extent the failure to
file the 2003 Form 10-K, the 2004 Form 10-K, the March 2004 10-Q, the June 2004
10-Q, the September 2004 10-Q, the March 2005 10-Q and the June 2005 10-Q in a
timely manner constitutes a violation of the representations, warranties and
covenants contained in Sections 5.1.19 and 7.1.9 of the Credit Agreement, and
(iii) the provisions of Section 5.1.9 and Section 7.1.7 of the Credit Agreement
to the extent the Restatements cause the financial statements of the Borrower
and its consolidated Subsidiaries not to meet the requirements of Section 5.1.9
of the Credit Agreement or reflect that the Borrower failed to maintain
adequate books and records as required by Section 7.1.7 of the Credit Agreement
and hereby waive any Potential Default or Event of Default which might
otherwise be occasioned by any of the foregoing; provided however, that the
Lenders do not waive any Potential Default or Event of Default resulting from
the breach of any financial covenants contained in Sections 7.2.16, 7.2.17 or
7.2.18 of the Credit Agreement occasioned by any of the foregoing. In addition,
the Lenders hereby acknowledge and agree that the events described in Section
1(a)6 of this Amendment will not constitute a Potential Default or an Event of
Default under the Credit Agreement unless and until the related notice as
required by the Indenture has been given by the trustee under the related
Indentures or the holders of the notes issued under the applicable Indentures
and the related cure period in the Indentures has expired. To the extent any
waiver contained herein relates to any representation or warranty contained in
the Credit Agreement, any renewal of the representations and warranties
required by the Credit Agreement shall mean that such representations and
warranties are true and correct


 


3





















 


except to the
extent such representations and warranties have been waived or modified hereby.”


 


(c)           Modification of Agreements (Section 1(c) of Waiver and
First Amendment).


 


Section 1(c) (Agreements) of the Waiver and First
Amendment is hereby amended and restated to read as follows:


 


“(c) Agreements.


 


In consideration
of the waivers in Section 1(b) of this Amendment, the Loan Parties hereby agree
as follows:


 


(1)           Draft
Annual Statements for 2004.  The Loan
Parties shall deliver to the Administrative Agent and to the Lenders draft,
internal, unaudited financial statements for the fiscal year ended December 31,
2004 (the “Draft Annual Statements for 2004”) on or before the later of the
effective date hereof or April 30, 2005.  The Draft Annual Statements for
2004 shall consist of a consolidated and consolidating balance sheet as of the
end of such fiscal year, and related consolidated and consolidating statements
of income and cash flows and consolidated stockholders’ equity for the fiscal
year then ended, all in reasonable detail and setting forth in comparative form
the financial statements as of the end of and for the preceding fiscal year,
and certified by the Borrower to reflect the Borrower’s financial condition and
results of operations in all material respects as of and for the period ended
December 31, 2004, subject to any write downs, write offs, charges and
adjustments required as a result of the Restatements;


 


(2)           Draft
Quarterly Statements for First Two Quarters of 2005.  The Loan Parties shall deliver to the
Administrative Agent and to the Lenders draft, internal, unaudited financial
statements for the fiscal quarters ended March 31, 2005 (the “Draft March 31,
2005 Statements”) on or before May 20, 2005 and for the fiscal quarter ended
June 30, 2005 (the “Draft June 30, 2005 Statements”) on or before August 19,
2005.  The Draft March 31, 2005
Statements and Draft June 30, 2005 Statements shall consist of a consolidated
and consolidating balance sheet as of the end of such fiscal quarter and
related consolidated and consolidating statements of income, and cash flows for
the fiscal quarter then ended and the fiscal year through that date and setting
forth in comparative form the respective financial statements for the
corresponding date and period in the previous fiscal year, all in reasonable
detail and certified by the Borrower to reflect the Company’s financial
condition and results of operations for the related period, subject to any
write downs, write offs, charges and adjustments required as a result of the
Restatements and to any normal year-end audit adjustments;


 


(3)           Compliance
Certificates Based on Draft Statements. 
Concurrently with their delivery of each of their Draft Annual
Statements for 2004, Draft March 31, 2005 Statements and Draft June 30, 2005
Statements (collectively, the “Draft Statements”), the Loan Parties shall
deliver to the Administrative Agent and to the


 


4





















 


Lenders a
Compliance Certificate in the form required by Section 7.3.3 [Compliance
Certificate], but is based on the results contained in the applicable Draft
Statements and is subject to the qualifications in the last clause of each of
Sections 1(c)(1) and 1(c)(2) (each beginning “, subject to . . .”).  Compliance by the Loan Parties with their
covenants, including their financial covenants, under the Credit Agreement
shall be measured based on the Draft Statements and the Compliance Certificates
delivered with such Draft Statements (as if such Draft Statements and
Compliance Certificates were finalized versions), until the finalized financial
statements and related Compliance Certificates have been delivered pursuant to
Section 1(c)(4) of this Amendment, at which time such compliance shall be
measured by such finalized financial statements and Compliance Certificates;


 


(4)           Finalized
Financial Statements and Compliance Certificates.  The Loan Parties shall deliver to the
Administrative Agent and to the Lenders the following documents by the dates
set forth below:”


 


(i)            April
30, 2005.  By April 30, 2005, their
2003 Annual Statements, which shall be finalized and comply in all respects
(other than the requirement for timely delivery) with the requirements of
Section 7.3.2 of the Credit Agreement ( the delivery of the report of
independent certified public accountants for the Loan Parties as more fully
described in Section 7.3.2 of the Credit Agreement) and concurrently with the
delivery of such 2003 Annual Statements, a Compliance Certificate based on the
results contained in such statements;


 


(ii)           June
30, 2005.  By June 30, 2005, their
March 31, 2004 Quarterly Statements, June 30, 2004 Quarterly Statements,
September 30, 2004 Quarterly Statements, and 2004 Annual Statements, all of
which shall be finalized and comply in all respects (other than the requirement
for timely delivery) with the requirements of Sections 7.3.2 and 7.3.1, as
applicable, of the Credit Agreement (including, in the case of the 2004 Annual
Statements,  the delivery of the report of
independent certified public accountants for the Loan Parties as more fully
described in Section 7.3.2 of the Credit Agreement) and concurrently with the
delivery of such each such statements, a Compliance Certificate based on the
results contained in such statements;


 


(iii)          August
31, 2005.  By August 31, 2005, their
March 31, 2005 Quarterly Statements and June 30, 2005 Quarterly Statements, all
of which shall be finalized and comply in all respects (other than the
requirement for timely delivery) with the requirements of Section 7.3.1 of the Credit
Agreement and concurrently with the delivery of such each such statements, a
Compliance Certificate based on the results contained in such statements;


 


(5)           Pricing.


 


This Section is
subject to Section 1(c)(7) of this Amendment, and the additional increases in
pricing that may result pursuant thereto. 
The provisions of this


 


5





















 


clause (5) shall
apply until the later of the following dates (such later date shall be referred
to as the “Pricing Trigger Date”): (1) the Compliance Date (as defined below)
or (2) the date on which the senior secured debt of the Borrower is rated BB-
or higher by Standard & Poor’s or Ba3 or higher by Moody’s.  Notwithstanding the provisions contained in
Schedule 1.1(A) (Pricing Grid) of the Credit Agreement (which permits the
Applicable Margin and Applicable Commitment Fee Rate to increase or decrease at
such times and based on the criteria set forth in such Schedule 1.1(A)), the
Applicable Margin and Applicable Commitment Fee Rate shall be Level V (so that
the Applicable Commitment Fee Rate shall be .375%, the Applicable Margin under
the Base Rate Option shall be .75% and the Applicable Margin under the
Euro-Rate Option shall be 2.25% during such period).  Following the Pricing Trigger Date, the
Applicable Margin and Applicable Commitment Fee Rate shall again be determined
solely by the provisions contained in Schedule 1.1(A) (Pricing Grid) of the
Credit Agreement.


 


(6)           Limitation
on Certain Transactions.  Prior to
the Compliance Date, the Loan Parties shall not be permitted to do or engage in
any of the following:


 


(i)            Permitted
Acquisitions.  Except those set out
on Exhibit A attached hereto, engage in any Permitted Acquisitions provided in
Section 7.2.7 [Liquidations, Mergers, Consolidations, Acquisitions] of the
Credit Agreement.


 


(ii)           Dividends.  Make or pay any dividends described in, or
pursuant to, clause (iii) of Section 7.2.5 [Dividends, Distributions and Stock
Repurchases].


 


(iii)          Stock
Purchases.   Engage in any [Stock
Purchases] described in, or pursuant to, clause (iv) of Section 7.2.5.


 


(iv)          Repayments
of Other Indebtedness.  Make any
optional payment or optional prepayment on, or optional redemption or purchase
of, any of its Permitted Subordinated Indebtedness or its 8 3/8% Notes, 6 3/8%
Notes or Permitted Unsecured Indebtedness.


 


(7)           Violation
of Agreements in this Section 1(c)—Events of Default and Pricing Increases.


 


(A)          Events
of Default.


 


Any breach of any
agreement in clauses (1), (2) or (3) of this Section 1(c) shall constitute an
Event of Default if not cured within 10 days following the occurrence
thereof.  Any breach of any agreement in
clauses (4), (6) or (9) of this Section 1(c) shall be deemed a violation of a
negative covenant subject to Section 8.1.3 [Breach of Negative Covenants or
Visitation Rights] of the Credit Agreement (and as such shall result in an
Event of Default upon the occurrence thereof).


 


6





















 


(B)           Pricing
Increase.


 


Immediately upon
any breach of any agreement under Section 1(c) of this Agreement, the
Applicable Margin under the Base Rate Option and the Euro-Rate Option each
shall be increased by .25%.  Each such
increase in the Applicable Margins resulting from breaches of any clause shall
be permanent (and shall not be reduced if the Loan Parties shall again be in
full compliance with such Section 1(c)). Any increase in the Applicable Margin
under the Euro-Rate Option under this clause (7) shall also increase the Letter
of Credit Fee (which is equal to the Applicable Margin under the Euro-Rate
Option) by a corresponding amount.  Any
increase in the interest rates provided for under this clause (7) shall be in
addition to any increase in the interest rates or fees pursuant to Section 3.3
of the Credit Agreement [Default Rate] arising as a result of the existence of
an Event of Default.


 


(8)           Compliance
Date.  Upon the date that the Loan
Parties shall have complied with the provisions of clauses (1) through (4) of
this Section 1(c) and shall have made all of the deliveries referred to
therein, the matters set forth in Section 1(b) of this Amendment shall be
permanently waived and the amendments contemplated by Section 2 of this
Amendment shall terminate and be of no further force and effect.  The date upon which the Loan Parties have
complied with such provisions and made such deliveries is referred to as the “Compliance
Date.”


 


(9)           New
Covenants.  The Loan Parties shall
comply with the following covenants between the date hereof and the Compliance Date:


 


(i)            Cash
Deposits.  The Loan Parties shall at
all times maintain in one or more accounts (whether demand, time or other
account) with the Lenders, or their respective Affiliates, all cash of the Loan
Parties other than (1) cash held in the ordinary course of business outside of
the United States by Misr Key Energy Services, LLC in an amount not to exceed
$3,000,000 at any time, and (2) other cash in an aggregate amount not to exceed
$200,000 at any time.


 


(ii)           Reporting
of Cash Balance.  The Loan Parties
shall, on or before each Tuesday following the completion of every two calendar
weeks, beginning with the two calendar weeks ending on Friday, April 1, 2005
and continuing through the Compliance Date deliver to the Administrative Agent
a report certified by an Authorized Officer of the Loan Parties, setting forth
the amount of cash of the Loan Parties maintained in accounts with the Lenders
as of the end of such two-week period. (Such two-week periods beginning April
1, 2005 and continuing through August, 2005 shall end on the following dates
(each in 2005): April 1, April 15, April 29, May 13, May 27, June 10, June 24,
July 8, July 22, August 5 and August 19.)


 


7





















 


2.             Amendments to Credit Agreement.


 


(a)           Section
1.1—Definitions.


 


(i)            Restated Definitions.


 


The following defined terms in Section 1.1 of the
Credit Agreement are hereby amended and restated to read as set forth below:


 


“Commitment
shall mean, as to any Lender at any time, (a) the amount initially set forth
opposite its name on Schedule 1.1(B) in the column labeled “Amount of
Commitment for Loans,” (b) following the execution and delivery of any
Assignment and Assumption Agreement, the amount set forth on Schedule I to the
most recent Assignment and Assumption Agreement, and (c) following any increase
in the Commitments pursuant to Section 2.10.1, the amount set forth on Schedule
I to the most recent Commitment Increase Agreement or the Lender Joinder
Agreement delivered pursuant to Section 2.10.1.


 


(ii)           New Definitions.


 


The following new defined term is added to Section 1.1
of the Credit Agreement in alphabetical order therein and to read as set forth
below:


 


“Third Modification
Effective Date shall mean the effective date of the Third Modification of
Waiver and Fourth Amendment to Credit Agreement modifying this Agreement and
prior modifications thereto.”


 


(b)           Section
2.10—Increase in Commitments.


 


The Loan Parties may not request any increase in the
Commitments (whether from existing or new Lenders) pursuant to Section 2.10
until after the Compliance Date has occurred.


 


(c)           Schedule
of Commitments.


 


Part I of Schedule 1.1(B) is hereby amended and
restated to read as set forth on Schedule 1.1(B) attached to this
Amendment.


 


3.             Representations.


 


The Borrower represents and warrants to the
Administrative Agent and the Lenders that, by its execution and delivery hereof
to the Administrative Agent, as of the Effective Date (defined below), after
giving effect to this Amendment, no Potential Default or Event of Default has
occurred and is continuing, and the representations and warranties made by the
Borrower and the other Loan Parties in or pursuant to the Credit Agreement or
any Loan Documents, including without limitation the representation that the transactions
contemplated herein will not violate any Requirement of Law or Contractual
Obligation of any Loan Party, are true and correct in all material respects on
and as of the Effective Date as if made on such date (except to the extent that
any such representations and warranties expressly relate to an earlier date in
which case such representations and warranties were true and correct in all
material respects on and as of such earlier date).


 


8





















 


4.             Conditions to Effectiveness of
this Amendment.


 


This
Amendment shall become effective on the date on which all of the following
conditions have occurred:


 


(a)           Execution
and Delivery.  The Administrative
Agent (or its counsel) shall have received a copy of this Amendment duly
executed and delivered by duly authorized officers of the Borrower and each of
the Guarantors, the Required Lenders and the Administrative Agent;


 


(b)           Representations
and Warranties.  The representations
and warranties in Section 2 of this Amendment shall be true and correct and,
after giving effect to this Amendment, 
no Potential Default or Event of Default shall exist and be continuing.


 


(c)           Fee.  The Borrower shall have paid to the
Administrative Agent for the account of each Lender which delivers to the
Administrative Agent (or the Administrative Agent’s counsel as instructed by
the Administrative Agent) such Lender’s signed signature page to this Amendment
on or before the close of business on March 29, 2005 a fee in the amount of
..25% times such Lender’s Commitment.


 


5.             Miscellaneous.


 


(a)           Continuing
Effect of the Credit Agreement.  This
Amendment shall not constitute an amendment or waiver of or consent to any
provision of the Credit Agreement, the Waiver and First Amendment, the Modification
of Waiver or the Second
Modification of Waiver not expressly referred to herein and shall not be
construed as an amendment, waiver or consent to any action on the part of the
Borrower that would require an amendment, waiver or consent of the Agents or
the Lenders except as expressly stated herein. 
Except as expressly consented to hereby, the provisions of the Credit
Agreement, the Waiver and First Amendment, the Modification of Waiver or the Second Modification of Waiver and
the other Loan Documents are and shall remain in full force and effect.


 


(b)           Fees
and Expenses.  The Borrower agrees to
pay or reimburse the Administrative Agent on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the preparation
and execution of this Amendment, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent.


 


(c)           Counterparts.  This Amendment may be executed in any number
of counterparts (including by facsimile) by the parties hereto, each of which
counterparts (whether by facsimile or otherwise) when so executed shall be an
original, but all counterparts taken together shall constitute one and the same
instrument.


 


(d)           GOVERNING
LAW.  THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE COMMONWEALTH OF PENNSYLVANIA.


 


[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]


 


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[SIGNATURE
PAGE 1 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


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


 


	
   

  	
  KEY
  ENERGY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  M. Austin

  
	
   

  	
  Name:

  	
  William M. Austin

  
	
   

  	
  Title:

  	
  Senior Vice President
  and

   Chief Financial Officer

  
					



 





















 


[SIGNATURE
PAGE 2 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION,

  individually and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Munsick

  
	
   

  	
  Name:

  	
  Richard J. Munsic

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 





















 


[SIGNATURE
PAGE 3 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION,
  successor-by-merger to Wells

  Fargo Bank Texas, National Association, ,

  individually and as Co-Lead Arranger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Eric R.
  Hollingsworth

  
	
   

  	
  Name:

  	
  Eric R. Hollingsworth

  
	
   

  	
  Title:

  	
  Vice President

  
					



 





















 


[SIGNATURE
PAGE 4 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  CALYON
  NEW YORK BRANCH, individually

  and as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Olivier
  Audemard

  
	
   

  	
  Name:

  	
  Olivier Audemard

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Phillippe Soustra

  
	
   

  	
  Name:

  	
  Phillippe Soustra

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  
					



 


 





















 


[SIGNATURE
PAGE 5 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually

  and as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jeanie
  C. Gonzalez

  
	
   

  	
  Name:

  	
  Jeanie C. Gonzalez

  
	
   

  	
  Title:

  	
  Director

  
					



 





















 


[SIGNATURE
PAGE 6 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  COMERICA
  BANK, individually and as

  Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Mona M.
  Foch

  
	
   

  	
  Name:

  	
  Mona M. Foch

  
	
   

  	
  Title:

  	
  Senior Vice President –
  Texas Division

  
					



 


 





















 


[SIGNATURE
PAGE 7 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  BNP
  PARIBAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Brian
  M. Malone

  
	
   

  	
  Name:

  	
  Brian M. Malone

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Greg
  Smothers

  
	
   

  	
  Name:

  	
  Greg Smothers

  
	
   

  	
  Title:

  	
  Vice President

  
					



 





















 


[SIGNATURE
PAGE 8 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Robert
  Kadlick

  
	
   

  	
  Name:

  	
  Robert Kalkick

  
	
   

  	
  Title:

  	
  Duly Authorized
  Signatory

  
					



 





















 


[SIGNATURE
PAGE 9 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  HIBERNIA
  NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Stephen
  H. Birnbaum

  
	
   

  	
  Name:

  	
  Stephen H. Birnbaum

  
	
   

  	
  Title:

  	
  Vice President

  
					



 





















 


[SIGNATURE
PAGE 10 OF 15  TO THIRD MODIFICATION OF


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AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  NATEXIS
  BANQUES POPULAIRES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Timothy
  L. Polvado

  
	
   

  	
  Name:

  	
  Timothy L. Polvado

  
	
   

  	
  Title:

  	
  Vice President and
  Group Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Donovan
  C. Broussard

  
	
   

  	
  Name:

  	
  Donovan C. Broussard

  
	
   

  	
  Title:

  	
  Vice President and
  Manager

  
					



 





















 


[SIGNATURE
PAGE 11 OF 15  TO THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  AMEGY
  BANK N.A. f/k/a SOUTHWEST

  BANK OF TEXAS, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Scott
  Collins

  
	
   

  	
  Name:

  	
  Scott Collins

  
	
   

  	
  Title:

  	
  Banking Officer

  
					



 





















 


[SIGNATURE
PAGE 12 OF 15  TO  THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  BROOKS WELL SERVICING, INC.

  
	
   

  	
  DAWSON PRODUCTION ACQUISITION
  CORP.*

  
	
   

  	
  DAWSON PRODUCTION MANAGEMENT, INC.

  
	
   

  	
  DAWSON PRODUCTION TAYLOR, INC.*

  
	
   

  	
  KALKASKA OILFIELD SERVICES, INC.

  
	
   

  	
  KEY ENERGY DRILLING, INC.

  
	
   

  	
  KEY ENERGY SERVICES-CALIFORNIA,
  INC.

  
	
   

  	
  KEY ENERGY SERVICES-SOUTH TEXAS,
  INC.

  
	
   

  	
  KEY FOUR CORNERS, INC.

  
	
   

  	
  KEY ROCKY MOUNTAIN, INC.

  
	
   

  	
  MISR KEY ENERGY SERVICES, LLC

  
	
   

  	
  Q SERVICES, INC.

  
	
   

  	
  Q.V. SERVICES, INC.

  
	
   

  	
  UNITRAK SERVICES HOLDING, INC.

  
	
   

  	
  WATSON OILFIELD SERVICE &
  SUPPLY, INC.

  
	
   

  	
  WELL-CO OIL SERVICE, INC.

  
	
   

  	
  WELLTECH EASTERN, INC.

  
	
   

  	
  WELLTECH MID-CONTINENT, INC.

  
	
   

  	
  YALE E. KEY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  M. Austin

  
	
   

  	
  Name:

  	
  William M. Austin

  	
   

  
	
   

  	
  Title:

  	
  Vice President of each corporate general

  partner listed above

  
	
   

  	
   

  	
   

  
					



 





















 


[SIGNATURE
PAGE 13 OF 15  TO  THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  BROOKS WELL SERVICING BENEFICIAL, LP

  
	
   

  	
  by the sole general
  partner, Brooks Well

  Servicing, Inc.

  
	
   

  	
  DAWSON PRODUCTION PARTNERS, L.P.

  
	
   

  	
  by the sole general
  partner, Dawson

  Production Management, Inc.

  
	
   

  	
  KEY ENERGY DRILLING BENEFICIAL, LP

  
	
   

  	
  by the sole general
  partner, Key Energy

  Drilling, Inc.

  
	
   

  	
  Q.V. SERVICES BENEFICIAL, L.P.

  
	
   

  	
  by the sole general
  partner,

  Q.V. Services, Inc.

  
	
   

  	
  UNITRAK SERVICES, L.P.

  
	
   

  	
  by the sole general
  partner, Unitrak Services

  Holding, Inc.

  
	
   

  	
  WELLTECH MID-CONTINENT

  BENEFICIAL, LP

  
	
   

  	
  by the sole general
  partner, WellTech Mid-

  Continent, Inc.

  
	
   

  	
  YALE E. KEY BENEFICIAL, LP

  
	
   

  	
  by the sole general
  partner, Yale E. Key, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  M. Austin

  
	
   

  	
  Name:

  	
  William M. Austin

  	
   

  
	
   

  	
  Title:

  	
  Vice President of each corporate general

  partner listed above

  
	
   

  	
   

  	
   

  
					



 





















 


[SIGNATURE
PAGE 14 OF 15  TO  THIRD MODIFICATION OF


WAIVER
AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  KEY ENERGY PRESSURE PUMPING

  SERVICES, L.P.

  
	
   

  	
  by the sole general
  partner, Q Oil & Gas

  Services, LLC

  
	
   

  	
  Q PRODUCTION SERVICES, L.P.

  
	
   

  	
  by the sole general
  partner, Q Oil & Gas

  Services, LLC

  
	
   

  	
  QUALITY OIL FIELD SERVICES, L.P.

  
	
   

  	
  by the sole general
  partner, Q Oil & Gas

  Services, LLC

  
	
   

  	
  KEY ENERGY FISHING & RENTAL

  SERVICES, L.P.

  
	
   

  	
  by the sole general
  partner, Q Oil & Gas

  Services, LLC

  
	
   

  	
  Q.V. SERVICES OF TEXAS, L.P.

  
	
   

  	
  by the sole general
  partner, Q Oil & Gas

  Services, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  M. Austin

  	
  (SEAL)

  
	
   

  	
  Name:

  	
  William M. Austin

  	
   

  
	
   

  	
  Title:

  	
  Vice President of Q Services, Inc., the sole

  member of each sole general partner listed above

  
	
   

  	
   

  	
   

  
						



 





















 


[SIGNATURE
PAGE 15 OF 15  TO  THIRD MODIFICATION OF


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AND FOURTH AMENDMENT TO CREDIT AGREEMENT]


 


 


	
   

  	
  BROOKS WELL SERVICING, LLC

  
	
   

  	
  KEY ENERGY DRILLING, LLC

  
	
   

  	
  Q ENERGY SERVICES, L.L.C.

  
	
   

  	
  Q OIL & GAS SERVICES, LLC

  
	
   

  	
  Q.V. SERVICES, LLC

  
	
   

  	
  UNITRAK SERVICES, LLC

  
	
   

  	
  YALE E. KEY, LLC

  
	
   

  	
  WELLTECH MID-CONTINENT, LLC

  
	
   

  	
  KEY ENERGY SHARED SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Kimberly R. Frye

  
	
   

  	
  Name:

  	
  Kimberly R. Frye

  	
   

  
	
   

  	
  Title:

  	
  Manager of each limited

  liability company listed above

  
					



 





















 


SCHEDULE 1.1(B)


 


COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES


 


Part 1 -
Commitments of Lenders and Addresses for Notices to Lenders


 


	
  Lender

  	
   

  	
  Amount of Commitment

  for Loans

  	
   

  	
  Ratable Share

  	
   

  
	
  PNC Bank, National
  Association

  One PNC Plaza

  249 Fifth Avenue

  Pittsburgh, Pennsylvania 15222-2707

  Attention: Richard
  Munsick

  	
   

  	
  $

  	
  23,999,999.98

  	
   

  	
  15.999999987

  	
  %

  
	
  Telephone:

  	
  (412) 762-4299

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (412)
  762-2760

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo Bank Texas,

  National Association

  MAC T5002-031

  1000 Louisiana Street - 3rd Floor

  Houston, Texas 77002

  Attention: Eric Hollingsworth

  	
   

  	
  $

  	
  21,428,571.44

  	
   

  	
  14.285714293

  	
  %

  
	
  Telephone:

  	
  (713) 319-1354

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (713) 739-1087

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Lyonnais New
  York Branch

  1301 Travis Street - Suite 2100

  Houston, Texas 77002

  Attention: Ting Wei Lee

  	
   

  	
  $

  	
  17,142,857.14

  	
   

  	
  11.428571427

  	
  %

  
	
  Telephone:

  	
  (713) 890-8638

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (713) 890-8668

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank One, NA

  1 Bank One Plaza

  Mail Code: IL1-0365

  Chicago, IL 60670

  Attention: Ken Fatur

  	
   

  	
  $

  	
  17,142,857.14

  	
   

  	
  11.428571427

  	
  %

  
	
  Telephone:

  	
  (312) 325-3012

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (312) 325-3030

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comerica Bank

  910 Louisiana - Suite 410

  Houston, Texas 77002

  Attention: Kenyatta Gibbs

  	
   

  	
  $

  	
  17,142,857.14

  	
   

  	
  11.428571427

  	
  %

  
	
  Telephone:

  	
  (713) 220-5668

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (713) 220-5650

  	
   

  	
   

  	
   

  	
   

  	
   

  



 





















 


	
  Lender

  	
   

  	
  Amount of Commitment

  for Loans

  	
   

  	
  Ratable Share

  	
   

  
	
  Hibernia National Bank

  313 Carondelet Street

  New Orleans, Louisiana 70130

  Attention: Stephen Birnbaum

  	
   

  	
  $

  	
  12,000,000

  	
   

  	
  8.000000000

  	
  %

  
	
  Telephone:

  	
  (504) 533-2109

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (504) 533-5434

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BNP Paribas

  1200 Smith Street, Suite 3100

  Houston, Texas 77002

  Attention: Greg Smothers

  	
   

  	
  $

  	
  10,285,714.29

  	
   

  	
  6.857142860

  	
  %

  
	
  Telephone:

  	
  (713) 982-1151

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (713) 659-1162

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GE Capital Corporation

  Bank Loan Group

  6 High Ridge Park - Building 6C

  Stamford, Connecticut 06927

  Attention: Anand Rao

  	
   

  	
  $

  	
  10,285,714.29

  	
   

  	
  6.857142860

  	
  %

  
	
  Telephone:

  	
  (203) 961-5723

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (203) 316-7978

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Natexis Banques
  Populaires

  333 Clay Street - Suite 4340

  Houston, Texas 77002

  Attention: Tim Polvado

  	
   

  	
  $

  	
  10,285,714.29

  	
   

  	
  6.857142860

  	
  %

  
	
  Telephone:

  	
  (713) 571-8739

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (713) 571-6165

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amegy Bank N.A.

  5 Post Oak Park

  4400 Post Oak Parkway

  Houston, Texas 77027

  Attention: Scott Collins

  	
   

  	
  $

  	
  10,285,714.29

  	
   

  	
  6.857142860

  	
  %

  
	
  Telephone:

  	
  (713) 232-2022

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (713) 693-7475

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  100.000000

  	
  %