Exhibit 10.1


 


FIRST AMENDMENT TO CREDIT AGREEMENT

AND

FIRST AMENDMENT TO GUARANTY AND COLLATERAL
AGREEMENT

DATED AS OF NOVEMBER 1,
2005


 


This FIRST AMENDMENT
TO CREDIT AGREEMENT and FIRST
AMENDMENT TO GUARANTEE AND COLLATERAL AGREEMENT (together with all Exhibits,
Schedules and Annexes hereto, this “Amendment”) is among KEY ENERGY SERVICES, INC., a
Delaware corporation (the “Borrower”),
the GUARANTORS (as defined in the
GCA), 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


 


1.                                       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, the “Credit Agreement”).  Capitalized terms used and not otherwise
defined in this Amendment shall have the meanings given them in the Credit
Agreement.


 


2.                                       The Borrower, the Guarantors and the Collateral Agent,
entered into a Guarantee and Collateral Agreement dated as of July 29,
2005 (together with all Annexes, Exhibits and Schedules thereto, the “GCA”).  Capitalized terms used and not otherwise
defined in this Amendment or in the Credit Agreement, shall have the meanings
given them in the GCA.


 


3.                                       The Borrower has requested that the Lenders amend the Credit
Agreement to increase the limitations on permitted Capital Expenditures and to
amend the Credit Agreement and the GCA to clarify and adjust certain provisions
regarding Rigs and Vehicles and the requisite Lenders have agreed to such
proposed amendments, subject to the other terms and conditions contained in
this Amendment.


 


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 3
hereof, the Credit Agreement is amended as follows:


 


a)                                      the definition of “Permitted
Perfection Exception” contained in Section 1.1
of the Credit Agreement is hereby amended by amending and restating
clause (a) in its entirety as follows:


 


“(a) personal
property subject to a certificate of title act under which a security interest
may be perfected only by notation on the certificate of title (i) with
respect to Rigs (as defined in the Guarantee and Collateral Agreement), without
limitation as to amount until the date such perfection is required under Section 6.15,
(ii) with respect to any such personal property other than Rigs, without
limitation as to amount until such perfection is required under Section 5.11
of the Guarantee and Collateral Agreement, (iii) at all times with respect
to Rigs and all such other personal property required to be perfected under Section 5.11
of the Guarantee and Collateral Agreement with an aggregate book value at the
time of determination of not more than $5,000,000, and (iv) at


 





















 


all
times with respect to Rigs and all such other personal property not required to
be perfected under Section 5.11 of the Guarantee and Collateral Agreement,
without limitation as to amount,”


 


b)                                     Section 7.7 of the Credit Agreement is hereby
amended and restated in its entirety as follows:


 


Make
or commit to make any Capital Expenditure, except (a) Capital Expenditures
of the Borrower and its Subsidiaries in the ordinary course of business not
exceeding $175,000,000 per annum for fiscal year 2005, $200,000,000 per annum
for fiscal year 2006 and $150,000,000 per annum for each fiscal year
thereafter; provided, that (i) up to $25,000,000 of such amount referred
to above, if not so expended in the fiscal year for which it is permitted, may
be carried over for expenditure in the next succeeding fiscal year and (ii) Capital
Expenditures made pursuant to this clause (a) during any fiscal year shall
be deemed made, first, in respect of amounts permitted for such fiscal year as
provided above and second, in respect of amounts carried over from the prior
fiscal year pursuant to subclause (i) above, (b) Capital Expenditures
made with the proceeds of any Reinvestment Deferred Amount and (c) with
respect to any fiscal year following a fiscal year as to which the ECF
Percentage is 0.0%, Capital Expenditures in an amount equal to the Excess Cash
Flow for the prior fiscal year to the extent not used to make Restricted
Payments pursuant to Section 7.6(d) and (e) or Investments
pursuant to Section 7.8(g), (h) or (m).


 


2.                                       Amendment
to GCA.  Subject to
the satisfaction of the conditions set forth in Section 3 hereof, the GCA is amended as follows:


 


a)                                      Section 4.10 of the GCA is
hereby deleted in its entirety and replaced with the following:


 


“4.10.                  Rigs and
Vehicles.  The aggregate book value
at any time of (a) all Rigs as to which at such time Grantors have not
complied in all material respects with the actions required to be taken by
paragraph 1 of Schedule 6.15 of the Credit Agreement and (b) all
Vehicles as to which at such time Grantors have not complied in all material
respects with the actions required to be taken by Section 5.11 of this
Agreement, is less than $5,000,000.”


 


b)                                     Section 5.11 of the GCA is
hereby deleted in its entirety and replaced with the following:


 


“5.11                     Rigs and Vehicles.  With respect to any Rig or any Vehicle which
is a truck now or hereafter owned by a Grantor and with respect to which a
certificate of title has been issued, at the reasonable request of the
Collateral Agent, such Grantor agrees to take such action (or cause its Subsidiaries
to take such action), including endorsing certificates of title or executing
applications for transfer of title, as is reasonably required by Collateral
Agent to enable it to properly perfect and protect its lien on such Rig or such
Vehicles, or to transfer the same, if at any time the aggregate value of such
owned Rigs or such Vehicles exceeds $5,000,000.”


 


3.                                       Conditions
to Effectiveness.  The
effectiveness of all the amendments contained in Section 1 and Section 2 of this Amendment are conditioned upon
satisfaction of the following


 


2





















 


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 in Section 4 below shall be
true and correct in all material respects on and as of the Amendment Effective
Date; and


 


c)                                      the Administrative Agent shall have
received such other documents, instruments, certificates, opinions and
approvals as it may reasonably request.


 


4.                                       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 action of such Person.  No
material consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or
enforceability of this Amendment.


 


b)                                     Enforceability. 
Each of this Amendment, and, after giving effect to this Amendment, the
Credit Agreement and the other Loan Documents 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 and the GCA as
provided herein.


 


c)                                      Guaranty Obligations. 
Each of the undersigned, other than the Borrower and the Administrative
Agent, is a Guarantor of the Obligations of the Borrower under the Credit
Agreement and hereby (i) acknowledges that notwithstanding the execution
and delivery of the foregoing 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 GCA and each other Loan Document executed by
it.


 


3





















 


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. 
Both before and after giving effect to this Amendment, no event has
occurred and is continuing that constitutes a Default or Event of Default.


 


5.                                       Reference
to and Effect on Credit Agreement and GCA. 



 


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 the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.  Upon and after the effectiveness of this
Amendment, each reference in the GCA to “this Agreement”, “hereunder”, “hereof”
or words of like import referring to the GCA, shall mean and be a reference to
the GCA 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.


 


6.                                       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 shall be effective as
delivery of a manually executed counterpart of this Amendment.


 


7.                                       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.


 


4





















 


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


 


[Signature pages follow]


 


5





















 


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/ Frank P.
  Turner

  	
   

  
	
   

  	
  Name:

  	
  Frank P. Turner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  KEY
  ENERGY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J.
  Alario

  	
   

  
	
   

  	
  Name:

  	
  Richard J.
  Alario

  
	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  
							



 


Signature Page to First
Amendment


 





















 


	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  BROOKS WELL SERVICING, INC.

  DAWSON PRODUCTION MANAGEMENT, 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.

  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/ Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Sole Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DAWSON PRODUCTION TAYLOR, INC.

  
	
   

  	
  DAWSON PRODUCTION ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ William M.
  Austin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William M.
  Austin

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MISR. KEY ENERGY SERVICES, LLC

  
	
   

  	
  MISR. KEY ENERGY INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard J.
  Alario

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  President

  	
   

  
																



 





















 


	
   

  	
  BROOKS WELL SERVICING BENEFICIAL, L.P.

             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, L.P.

             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, L.P.

             by
  the sole general partner,

             WellTech
  Mid-Continent, Inc.

  YALE E. KEY BENEFICIAL, L.P.

             by
  the sole general partner,

             Yale
  E. Key, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Sole Director

  	
   

  
									



 





















 


	
   

  	
  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/ Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard J.
  Alario

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Manager

  	
   

  
								



 





















 


	
   

  	
  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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J.
  Alario

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Richard J.
  Alario

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KEY ENERGY SHARED SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J.
  Alario

  
	
   

  	
   

  	
  Name:

  	
      Richard
  J. Alario

  
	
   

  	
   

  	
  Title:

  	
        Vice
  President