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Exhibit 10.17  

 
 

DON D. WEINHEIMER EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT (as from time to time amended in accordance with the provisions hereof, this
"Agreement"), is entered into as of the 2nd day of October, 2006, by and between DON D. WEINHEIMER, whose address
is                        ,            ,
Texas 77441 (the "Executive"), and KEY ENERGY SERVICES, INC., a Maryland corporation with executive offices at 1301 McKinney Street, Suite 1800,
Houston, Texas 77010 (the "Company"). 

        WHEREAS,
the Chief Executive Officer of the Company (the "Chief Executive Officer") and the Executive Committee ("Committee") of the Board
of Directors of the Company (the "Board") are each of the view that employing Executive to serve as Senior Vice President, Business Development,
Technology and Strategic Planning is essential to the continued growth and success of the Company and is in the best interests of the Company and its shareholders; 

        WHEREAS,
the Company desires to enter into this written Employment Agreement with the Executive, effective as of October 2, 2006 (the "Commencement
Date"); and 

        WHEREAS,
the Executive is willing to serve as the Company's Senior Vice President, Business Development, Technology and Strategic Planning pursuant to the terms and conditions set forth
herein, effective as of the Commencement Date. 

        NOW
THEREFORE, in consideration of the covenants and agreements herein contained, the Company and the Executive hereby agree as follows: 

1.    Employment; Term.    

        (a)   Effective
as of the Commencement Date, the Company hereby agrees to employ the Executive, and the Executive hereby accepts employment by the Company, as the Company's
Senior Vice President, Business Development, Technology and Strategic Planning, and the Executive shall hold such position and continue employment with the Company hereunder until the close of
business on October 2, 2009, unless sooner terminated in accordance with Section 5 hereof (the "Initial Employment Period"). The above
notwithstanding, at the close of business on each anniversary of the conclusion of the Initial Employment Period (an "Anniversary Date"), commencing
with October 2, 2009, the term of the Executive's employment hereunder shall be automatically extended for twelve (12) months (unless sooner terminated in accordance with
Section 5 hereof) unless either the Executive or the Company shall have given written notice (in each case, a "Non-Renewal Notice")
to the other that such automatic extension shall not occur, which Non-Renewal Notice shall have been given no later than ninety (90) days next preceding the relevant Anniversary
Date (the Initial Employment Period, together with any extensions, until termination in accordance herewith, is referred to hereby as the "Employment
Period"). 

        (b)   The
Executive shall have the responsibilities, duties and authority commensurate with his position as the Senior Vice President, Business Development, Technology and
Strategic Planning of the Company, including without limitation the general supervision and management of the Company's objectives, policies and programs for worldwide sales, marketing, business
development, strategic planning and operations support, and such other responsibilities, duties, functions and authority as the Chief Executive Officer or, in certain circumstances, the Board shall
from time to time designate that do not effect a material decrease in the responsibilities, importance, scope or dignity of the Executive's position with the Company compared with those of such
position as of the Commencement Date, subject, however, to the supervision of the Chief Executive Officer. The Executive will report to the Chief Executive Officer. 

        (c)   The
Executive will devote his full time and his best efforts to the business and affairs of the Company and its Subsidiaries; provided, however, that nothing contained
in this Section 1 shall be deemed to prevent or limit the Executive's right to: (i) make investments in the securities of any publicly-owned corporation; or (ii) make any other
investments with respect to which he is not 

 

obligated
or required to, and to which he does not in fact, devote managerial efforts that interfere with his fulfillment of his duties hereunder; or (iii) to serve on boards of directors and
to serve in such other positions with non-profit and for-profit organizations as to which the Board may from time to time consent, which consent shall not be unreasonably
withheld or delayed. Reference is made to Section 6 hereof, which contains limitations on some of the above activities. 

        (d)   The
principal location at which the Executive will substantially perform his duties will be the Company's Houston, Texas offices, or as otherwise designated by the Chief
Executive Officer. The
Executive acknowledges that the Chief Executive Officer may decide that the Executive should render his services hereunder at a location other than at such offices. The Executive agrees to accept any
such change in location, and the Company will pay to the Executive, and reimburse the Executive for, the following expenses and costs incurred in connection with any required relocations and will pay
to the Executive the bonus specified in clause (vii) below: (i) the excess, if any, of (A) the Executive's aggregate tax basis in his primary residence at the time of its sale
over (B) the proceeds realized by the Executive from such sale net of ordinary and reasonable fees and expenses incurred in connection with such sale (other than such fees and expenses
described in clause (ii) of this sentence), (ii) ordinary and reasonable realtor fees and closing costs incurred in connection with the sale of the Executive's primary residence,
(iii) ordinary and reasonable closing costs incurred in connection with the purchase of the Executive's new primary residence in the vicinity of the new location at which the Executive is to
render his services hereunder, (iv) ordinary and reasonable costs incurred to pack, transport, unpack, and insure the Executive's household furnishings and effects to his new primary residence,
(v) ordinary and reasonable fees for connecting utilities in his new primary residence, (vi) ordinary and reasonable costs for trips to look for a new residence as well as up to thirty
(30) days of temporary housing, and (vii) a cash bonus calculated to pay all of the federal, state and local income and payroll taxes which the Executive will incur, if any, as a result
of (A) the Company's reimbursement of the preceding expenses and (B) the amount of such bonus (that is, a "gross-up" bonus). 

2.    Salary; Bonuses; Expenses.    

        (a)   During
the Employment Period, the Company will pay base compensation to the Executive at the annual rate of Two Hundred Fifty Thousand Dollars ($250,000) per year (the
"Base Salary"), payable in substantially equal installments in accordance with the Company's existing payroll practices, but no less frequently than
monthly. The Company will review the Base Salary on a yearly basis promptly following the end of each fiscal year of the Company to determine if an increase is advisable, and the Base Salary may be
increased (but not decreased) at the discretion of the Chief Executive Officer and the Compensation Committee (the "Compensation Committee") of the
Board, taking into account, among other factors, the Executive's performance and the performance of the Company. 

        (b)   The
Executive shall be eligible to participate in all of the Company's cash performance compensation plans (collectively, the "Performance Cash
Compensation Plans") for the Company's executives providing for the payment of cash bonuses or other cash incentives payable upon the achievement of goals set forth in the
Company's strategic plan as developed by the Compensation Committee after consultation with the Chief Executive Officer and the Executive, payable in accordance with the provisions thereof. The
performance goals for the Performance Cash Compensation Plans will be based on objective criteria specified in good faith in advance by the Compensation Committee after consultation with the Chief
Executive Officer and the Executive. The Executive shall also receive such bonuses other than pursuant to the Performance Cash Compensation Plans in such amounts and at such times as the Compensation
Committee, after consultation with the Chief Executive Officer, in its discretion determines are appropriate to recognize extraordinary performance by the Executive. The Executive's target bonus for
each fiscal year will be one hundred percent (100%) of Base Salary, prorated for the portion of the 2006 

2

 

fiscal
year following the Commencement Date. In addition, if Executive's prior employer refuses to pay the prorated bonus earned by Executive for its 2006 bonus period, Executive shall receive a
one-time supplemental bonus payment equal to the prorated bonus expected. 

        (c)   The
Executive shall be reimbursed by the Company for reasonable travel, lodging, meal, entertainment and other expenses incurred by him in connection with performing his
services hereunder in accordance with the Company's reimbursement policies from time to time in effect. 

        (d)   The
Executive shall be reimbursed for his medical and/or dental premiums for a period of ninety days if he elects COBRA continuation coverage from his prior employer. 

3.    Equity-Based Incentives.    

        (a)   Effective
as of the Commencement Date, the Compensation Committee has granted the Executive, pursuant to the Key Energy Group, Inc. 1997 Incentive Plan (the
"1997 Plan"), 25,000 restricted shares of Company's common stock, vesting over three years, assuming continued employment. Such grant shall otherwise be
on the terms and conditions generally applicable to grants of restricted stock as reasonably determined by the Compensation Committee. 

        (b)   The
Executive shall be eligible to participate in awards of stock options, restricted stock, deferred stock and other equity-based incentives (collectively,
"Equity-Based Incentives"), at the discretion of the Board or the Compensation Committee. The performance goals for the grant of such Equity-Based
Incentives will be based on objective criteria mutually negotiated and agreed upon in good faith in advance by the Board or the Compensation Committee after consultation with the Executive and the
Chief Executive Officer. 

4.    Benefit Plans; Vacations.    

        In
connection with the Executive's employment hereunder, he shall be entitled during the Employment Period (and thereafter to the extent provided in Section 5(f) hereof) to the
following additional benefits: 

        (a)   At
the Company's expense, such fringe benefits as the Company may provide from time to time for its senior management, but in any case, at least the benefits described
on EXHIBIT A hereto. 

        (b)   The
Executive shall be entitled to no less than the number of vacation days in each fiscal year determined in accordance with the Company's vacation policy as in effect
from time to time, but not less than 20 business days in any fiscal year (prorated in any fiscal year during which he is employed hereunder for less than the entire year in accordance with the number
of days in such fiscal year in which he is so employed) and subject to the Company's policies on carryovers and cashouts. The Executive shall also be entitled to all paid holidays and personal days
given by the Company to its senior management. 

        (c)   Nothing
herein contained shall preclude the Executive, to the extent he is otherwise eligible, from participation in all group insurance programs or other fringe benefit
plans which the Company may from time to time in its sole and absolute discretion make available generally to its personnel, or for personnel similarly situated, but the Company shall not be required
to establish or maintain any such program or plan except as may be otherwise expressly provided herein. 

5.    Termination, Change in Control and Reassignment of Duties.    

        (a)    Termination by the Company.    The Company shall have the right to terminate the Executive's employment under
this Agreement and the Employment Period for Cause (as defined below) at any time without obligation to make any further payments to the Executive hereunder except the compensation described in
Section 5(g) hereof. Except as otherwise provided in Section 5(b) hereof, which Section shall apply in the event the Executive becomes unable to 

3

 

perform
his obligations hereunder by reason of Disability (as defined below), the Company shall have the right to terminate the Executive's employment hereunder and the Employment Period for any
reason other than for Cause (including, without limitation, by giving the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof) only upon at least ninety (90) days
prior written notice to him (provided that, in the event the Company gives the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof, only the 90-day notice
period therein provided shall be required). In the event the Company terminates the Executive's employment hereunder for any reason other than for Disability or Cause (including, without limitation,
by giving the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof), then for the purpose of effecting a transition during the ninety (90) day notice period of the
Executive's management functions from the Executive to another person or persons, during such period the Company may reassign the Executive's duties hereunder to another person or other persons. Such
reassignment shall not reduce the Company's obligations hereunder to make salary, bonus and other payments to the Executive and to provide other benefits to him during the remainder of his employment
and, if applicable, following the termination of employment. Notwithstanding a notice of termination that does not, when made, specify Cause, the Company may, during the 90 day notice period
(the "Cause Review Period"), convert the termination to a Cause termination, subject to the procedural safeguards specified in the next paragraph. 

        As
used in this Agreement, the term "Cause" shall mean (i) the failure by the
Executive to substantially perform the major functions of his position in a satisfactory manner (other than (A) any such failure resulting from his incapacity due to physical or mental illness
or physical injury or (B) any such actual or anticipated failure after the issuance of a notice of termination by the Executive for Good Reason (as defined below)), after a written demand for
substantial performance is delivered by the Company to the Executive that specifically identifies the manner in which the Company believes the Executive has not substantially performed his duties; or
(ii) the engaging by the Executive in misconduct that is, or is reasonably likely to be, materially injurious to the Company, monetarily or otherwise; or (iii) the Executive's conviction
or plea of guilty or no contest to a felony (or to a felony charge reduced to misdemeanor), or, with respect to his employment, to any misdemeanor (other than a traffic violation) or, with respect to
his employment, knowing violation of any federal or state securities or tax laws; or (iv) willful violation of the Key Energy Services, Inc. Amended and Restated Policy Regarding
Acquisition, Ownership and Disposition of Company Securities or the Code of Business Conduct, as same may be amended from time to time. Notwithstanding the foregoing, the Executive's employment shall
not be deemed to have been terminated for Cause unless (A) reasonable notice shall have been given to him setting forth in detail the reasons for the Company's intention to terminate for Cause,
and if such termination is pursuant to clause (i) or (ii) above and any damage to the Company is curable, only if Executive has been provided a period of ten (10) business days
from receipt of such notice to cease the actions or inactions and otherwise cure such damage, and he has not done so (provided that only one such period needs to be provided in any period of three
(3) consecutive months); (B) an opportunity shall have been provided for the Executive to be heard before the Board; and (C) if such termination is pursuant to clause (i)
or (ii) above, delivery shall have been made to the Executive of a
notice of termination from the Board finding that in the good faith opinion of a majority of the Board (excluding the Executive, if applicable) he was guilty of conduct set forth in clause (i)
or (ii) above. 

        (b)    Termination upon Disability and Temporary Reassignment of Duties Due to Disability; Termination upon Death    

          (i)  If
the Executive becomes totally and permanently disabled during the Employment Period so that he is unable to perform his obligations hereunder by reasons involving
physical or mental illness or physical injury for an aggregate of ninety (90) days (whether or not 

4

 

consecutive)
during any period of twelve (12) consecutive months during the Employment Period ("Disability"), then the Executive's employment
hereunder and the Employment Period may be terminated by the Company within sixty (60) days after the expiration of such ninety (90) day period (whether or not consisting of consecutive
days), such termination to be effective ten (10) days after written notice to the Executive. In the event the Company shall give a notice of termination under this Section 5(b) (i), then
the Company may reassign the Executive's duties hereunder to another person or other persons. Such reassignment shall not reduce the Company's obligations hereunder to make salary, bonus and other
payments to the Executive and to provide other benefits to him, during the remainder of his employment and, if applicable, following the termination of employment. 

         (ii)  During
any period that the Executive is totally disabled such that he is unable to perform his obligations hereunder by reason involving physical or mental illness or
physical injury, as determined by a physician chosen by the Company and reasonably acceptable to the Executive (or his legal representative), the Company may reassign the Executive's duties hereunder
to another person or other persons, provided if the Executive shall again be able to perform his obligations hereunder prior to the Company's termination of the Executive's employment hereunder and
the Employment Period in accordance with the terms of this Agreement, all such duties shall again be the Executive's duties. The cost of any examination by such physician shall be borne by the
Company. Notwithstanding the foregoing, if the Executive has been unable to perform his obligations hereunder by reasons involving physical or mental illness or physical injury for an aggregate of
ninety (90) days (whether or not consecutive) during any period of twelve (12) consecutive months during the Employment Period, then a determination by a physician of disability will not
be required prior to any such reassignment. Any such reassignment shall not be a termination of employment and in no event shall such reassignment reduce the Company's obligation to make salary, bonus
and other payments to the Executive and to provide other benefits to him under this Agreement during his employment or, if applicable, following a termination of employment. 

        (iii)  The
Executive's employment hereunder and the Employment Period shall automatically terminate immediately upon the death of the Executive. 

        (c)    Termination by Executive.    The Executive's employment hereunder and the Employment Period may be terminated
by the Executive by giving written notice to the Company as follows: (i) at any time for any reason other than Good Reason (including, without limitation, by giving the Company a
Non-Renewal Notice pursuant to Section 1(a) hereof) by notice of at least ninety (90) days (provided that, in the event the Executive gives the Company a
Non-Renewal Notice pursuant to Section 1(a) hereof, only the 90-day notice period therein provided shall be required); or (ii) at any time for Good Reason,
effective upon the 16th business day after Executive's giving written notice in reasonable detail of such (unless the Company corrects the condition Executive asserts gives him Good Reason within
fifteen (15) business days after such notice); provided that the Executive can only give a notice of resignation for Good Reason in connection with a "Change in
Control" (as defined in Exhibit B) beginning on the ninetieth (90th) day after the closing of the Change in Control. In the event of a termination by the Executive of
his employment, the Company may reassign the Executive's duties hereunder to another person or other persons. 

        As
used herein, "Good Reason" shall mean any of the following: 

        (1)   Failure
of the Board to elect the Executive as Senior Vice President of the Company, or removal from the office of Senior Vice President of the Company provided that
such failure or removal is not in connection with a termination of the Executive's employment hereunder by the Company for Cause (in accordance with Section 5(a) hereof), for Disability (in
accordance with Section 5(b) hereof) or other than for Cause or Disability (in accordance 

5

 

with
Section 5(a) hereof and including, without limitation, by giving the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof), and provided further that any
notice of termination hereunder shall be given by the Executive within ninety (90) days of such failure or removal; or 

        (2)   Material
change by the Company in the Executive's title, authority, functions, duties or responsibilities as Senior Vice President of the Company (including without
limitation material changes in the control or structure of the Company) which would cause his position with the Company to become of materially less responsibility, importance, scope or dignity than
his position as of the Commencement Date, provided that such material change is not in connection with a termination of Executive's employment hereunder by the Company for Cause (in accordance with
Section 5(a) hereof), for Disability (in accordance with Section 5(b) hereof) or other than for Cause or Disability (in accordance with Section 5(a) hereof) (including, without
limitation, by giving the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof); and provided, further, that any notice of termination hereunder shall be given by the
Executive within ninety (90) days of when he becomes aware of such change; or 

        (3)   Failure
by the Company to comply with any provision of Section 1(d), 2 or 4 of this Agreement, which has not been cured within fifteen (15) days after
notice of such noncompliance has been given by
the Executive to the Company, provided any notice of termination hereunder shall be given by the Executive within ninety (90) days after the end of such fifteen (15) day period; or 

        (4)   Failure
by the Company to obtain an assumption of this Agreement (by operation of law or in writing) by a successor in accordance with Section 17 hereof unless
payment or provision for payment and provision for continuation of benefits under this Agreement have been made as required by Section 17 hereof; or 

        (5)   Any
purported termination by the Company of the Executive's employment which is not effected in accordance with the terms of this Agreement, including without
limitation, pursuant to a notice of termination not satisfying the requirements set forth herein (and for purposes of this Agreement no such purported termination by the Company shall be effective),
which has not been cured within ten (10) days after notice of such non-conformance has been given by the Executive to the Company, provided any notice of termination hereunder shall
be given by the Executive within thirty (30) days of receipt of notice of such purported termination. 

        (d)    Severance Compensation.    

        (i)    Termination for Good Reason or Other than for Cause.    In the event the Executive's employment hereunder is
terminated (A) by the Executive for Good Reason or (B) by the Company other than for Cause or Disability, the Executive shall be entitled, in addition to the other compensation and
benefits herein provided for, to severance compensation in an aggregate amount equal to two (2) times his Base Salary at the rate in effect on the termination date, payable in
twenty-four (24) substantially equal monthly installments commencing at the end of the calendar month in which the termination date occurs. The preceding amounts shall be reduced to
one (1) times his Base Salary if the termination is a result of or after a Non-Renewal Notice by the Company. 

        (ii)    Termination following Disability.    In the event the Executive's employment should be terminated by the
Company as a result of Disability in accordance with Section 5(b) hereof, then the Executive shall be entitled, in addition to the other compensation and benefits herein provided for, to
severance compensation in an aggregate amount equal to one (1) times his Base Salary at the rate in effect on the termination date, payable in twelve (12) substantially 

6

 

equal
monthly installments commencing at the end of the calendar month in which the termination date occurs, reduced by the amount of any employer-provided disability insurance proceeds actually paid
to the Executive or for his benefit during such time period. 

        (iii)    Change in Control.    If the Executive's employment is terminated in anticipation of, or within one
(1) year following, a Change in Control and the Executive is entitled to severance compensation pursuant to Section 5(d)(i) or 5(d)(ii) hereof as a result of such
termination, the severance compensation otherwise payable to the Executive (A) shall be increased to an amount equal to three (3) times the Base Salary then in effect plus an amount
equal to three (3) times the Executive's annual target cash bonus as provided in Section 2 (b) above and (B) shall be payable in one lump sum on the effective date of such
termination. In the event there is a Change in Control after the Executive's employment is terminated while the Executive is entitled to severance compensation pursuant to
Section 5(d)(i) or 5(d)(ii) hereof, any severance compensation which remains unpaid as of the Change in Control shall be paid in one lump sum as of the Change in Control. In the
event severance compensation becomes payable in a lump sum pursuant to this Section 5(d)(iii), and if the Executive's employment is or has been terminated for Disability, such lump sum shall be
reduced by a good faith estimate of the aggregate amount of any disability insurance proceeds which will be actually paid to the Executive or for his benefit (but only those proceeds from disability
insurance provided by the Company to the Executive pursuant to Section 4(a) hereof) during the remaining period over which such severance would otherwise have been paid. 

        (iv)    Termination for Death.    In the event of the Executive's death during the Employment Period, the Executive's
estate shall not be entitled to any severance compensation. 

        (v)    Termination by Executive other than for Good Reason or by Company for Cause.    In the event of the Executive's
termination by resignation under Section 5(c)(i) (i.e., other than for Good Reason) or by the Company for Cause, the Executive shall not be entitled to any severance under
Section 5(d) or otherwise, any continued benefits under Section 5(f) (other than as required by statute), or any accrued compensation under Section 5(g)(ii) (for unpaid
vacation, except as otherwise required by law), or Section 5(g)(iii) (for prior year bonuses, to the extent specified in that clause). Under the foregoing situations, the treatment of
equity incentives shall be as specified in Section 5(e)(ii), and the Executive shall receive the accrued compensation described in Section 5(g)(i), (iv) and (v). 

        (vi)    Release.    Executive agrees that all payments under Subsections (d), (e), (f), and (g)(ii) of this
Section 5 are conditioned on the Executive's prior execution and non-revocation of a full release of the Company and its officers, employees, affiliates and agreements for all
claims relating to his employment, compensation, and termination and such other matters as the Company reasonably requests on termination; provided,  however, that any Release previously executed under this Section 5(d)(vi) will be null and void if the Company reaches a determination of
Cause within the Cause Review Period. 

        (e)    Effect of Termination or Change in Control upon Equity-Based Incentives.    

          (i)  In
the event the Executive's employment hereunder is terminated by the Company for any reason other than for Cause or Disability (including, without limitation, by
giving the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof), or in the event the Executive should terminate his employment for Good Reason, then any Equity-Based
Incentives held by the Executive which have not vested prior to the effective date of such termination shall immediately vest and shall remain exercisable until the earlier to occur of (x) the
first anniversary of the effective date of such termination and (y) the final stated 

7

 

expiration
date of the Equity-Based Incentive. In addition, in the event of such a termination, any Equity-Based Incentives held by the Executive which have vested prior to the effective date of such
termination shall remain exercisable until the earlier to occur of (x) the first anniversary of the effective date of such termination and (y) the final stated expiration date of the
Equity-Based Incentive. 

         (ii)  In
the event the Executive's employment hereunder is terminated by the Company for Cause or is terminated by the Executive other than for Good Reason (including,
without limitation, by giving the Company a Non-Renewal Notice pursuant to Section 1(a) hereof), then effective upon the date such termination is effective, any Equity-Based
Incentives which have not vested prior to the effective date of such termination shall be forfeited. Any Equity-Based Incentives held by the Executive entitling the Executive to retain or purchase
securities of the Company which have vested prior to the effective date of such termination shall remain subject to the terms and provisions of the plan and/or the agreement under which they were
awarded. 

        (iii)  In
the event of the Executive's death while employed by the Company or in the event that the Executive's employment should terminate as a result of Disability, then,
unless the provisions of Section 5(e)(iv) hereof regarding Change in Control shall apply, any Equity-Based Incentives held by the Executive which have not vested prior to the effective
date of such termination shall immediately vest and shall also remain exercisable until the earlier to occur of (x) the first anniversary of the death of the Executive or the effective date of
such termination and (y) the final stated expiration date of the Equity-Based Incentives. In addition, in the event of such death or such a termination, any Equity-Based Incentives held by the
Executive which have vested prior to the effective date of such death or termination shall remain exercisable until the earlier to occur of (x) the first anniversary of the effective date of
such death or termination and (y) the final stated expiration date of the Equity-Based Incentives. 

        (iv)  In
the event of a conflict between the preceding terms and provisions of this Section 5(e) and any other terms and provisions governing any Equity-Based
Incentives held (now or in the future) by the Executive (including without limitation the terms and provisions contained in the agreements and/or plans pursuant to which such Equity-Based Incentives
were (or will in the future be) granted), the preceding terms and provisions of this Section 5(e) shall control; provided,  however, that, if an
Equity-Based Incentive does not by its terms require any exercise, no requirement of exercise shall be implied from the preceding
terms and provisions of this Section 5(e). 

        (f)    Continuation of Benefits.    

          (i)  Subject
to Section 5(f)(ii) hereof, in the event that Executive's employment hereunder is terminated by the Executive for Good Reason or by the Company
for Disability or other than for Cause (including, without limitation, by giving the Executive a Non-Renewal Notice pursuant to Section 1(a) hereof) and not as a result of the death
of the Executive, the Executive shall continue to be entitled, at the Company's expense, to the post-employment benefits under Section 4(a), if any, that such benefits provide under
their terms for a period of time following the termination date ending on the first to occur of (I) the second anniversary of the termination date, (II) the last date of eligibility
under the applicable benefits or (III) the date on which the Executive commences full-time employment with another employer. The Company will pay the premiums for COBRA health
coverage for Executive and his covered family members for the period COBRA provides. At such time as the Company is no longer required to provide the Executive with life and/or disability insurance,
as the case may be, the Executive shall be entitled, at the Executive's expense, to 

8

 

convert
such life and disability insurance, as the case may be, into individually owned policies, except if and to the extent such conversion is not available from the provider of such insurance. 

         (ii)  In
the event the Executive's employment hereunder is terminated by the Company within one (1) year of a Change in Control (other than a termination because of
the Executive's death) or is terminated by the Company other than for Cause in anticipation of a Change in Control, the Company shall pay to the Executive, in lieu of providing the benefits
contemplated by Section 5(f)(i) above, an amount in cash equal to the aggregate reasonable expenses that the Company would incur if it were to provide such benefits for a period of time
following the termination date ending on the second anniversary of the termination date, which amount shall be paid in one lump sum on the date of such termination. 

        (iii)  In
the event the Executive's employment hereunder is terminated by reason of death, the Executive's spouse and her dependents shall be entitled at the Company's
expense to continued health coverage under COBRA under the Company's group medical and dental plans applicable to executives (with the Company's payment of premiums lasting for a period of
twenty-four months or such shorter period as COBRA provides because of replacement coverage). 

        (g)    Accrued Compensation.    In the event of any termination of the Executive's employment for any reason, the
Executive (or his estate) shall be paid (i) any unpaid portion of his Base Salary through the effective termination date, (ii) for any accrued but unused vacation (payable in an amount
equal to the Base Salary divided by 255 and multiplied by the number of accrued but unused vacation days), (iii) any prior fiscal year bonus earned, but not paid (other than on a resignation by
Executive without Good Reason or termination for Cause), (iv) any amounts for expense reimbursement and similar items which have been properly incurred in accordance with the provisions hereof
prior to termination and have not yet been paid, including without limitation any sums due under Sections 2(c), 2(d), and 4(c) hereof,
and (v) any Gross-Up Payment which may become due under the terms of Section 5(i) hereof. Such amounts shall be paid within ten (10) days of the termination
date. 

        (h)    Director/Officer Resignations.    If the Executive's employment hereunder shall be terminated by him or by the
Company in accordance with the terms set forth herein, then effective upon the date such termination is effective, he will be deemed to have resigned from all positions as an officer and director of
the Company and of any of its Subsidiaries, except as the parties may otherwise agree. 

        (i)    Certain Tax Consequences.    

    (i) (A)  Whether
or not the Executive becomes entitled to the payments and benefits described in this Section 5, if any of the payments or benefits received or
to be received by the Executive in connection with a change in ownership or control of the Company, as defined in section 280G of the Code (a "Statutory Change in
Control"), or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a Statutory Change in Control or any person affiliated with the Company or such person) (collectively, the "Severance
Benefits") will be subject to any excise tax (the "Excise Tax") imposed under section 4999 of the Code after giving
effect to Section 5(i)(i)(B), the Company shall pay to the Executive an additional amount equal to the Excise Tax, plus any amount necessary to "gross up" the Executive for additional taxes
resulting from the payments to the Executive by the Company under this Section 5(i)(i) (the "Excise Tax Payment"). Each Excise Tax Payment
shall be made not less than five (5) business days prior to the due date for payment of the Excise Tax. 

9

  

        (B)  Notwithstanding
the foregoing, if it shall be determined that the Executive would be entitled to an Excise Tax Payment, but that if the Severance Benefits could be
reduced by an amount necessary such that the receipt of the Company Payments would not give rise to any Excise Tax (the "Reduced Benefits")  and the
Reduced Benefits would not be less than ninety percent (90%) of the Severance Benefits before such reduction, then no Excise Tax Payment shall
be made to the Executive and the Severance Benefits, in the aggregate, shall be reduced to the Reduced Benefits. To determine the Reduced Benefits, payments shall be reduced in the following order
(1) acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value, (2) any cash severance based on a multiple of Base Salary or Bonus,
(3) any other cash amounts payable to the Executive, (4) any benefits valued as parachute payments; and (5) acceleration of vesting of any equity not covered by (1) above,
unless the Executive elects another method of reduction by written notice to the Company prior to the change of ownership or effective control. 

         (ii)  For
purposes of determining whether any of the Severance Benefits will be subject to the Excise Tax and the amount of such Excise Tax: 

        (A)  all
of the Severance Benefits shall be treated as "parachute payments" within the meaning of Code section 280G(b)(2) if the aggregate present value (determined as
provided in Code Section 280G(d)(4)) of such Severance Benefits equals or exceeds three times the Executive's "Base Amount" (within the meaning
of Code Section 280G(b)(3)), and all "excess parachute payments" within the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise Tax, unless the Executive
receives a written opinion from a nationally recognized law or accounting firm ("280G Advisers") selected by the Compensation Committee or the Board,
and reasonably acceptable to the Executive, that such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Code section 280G(b)(4)(A),
or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code section 280G(b)(4)(B), in excess of the
"Base Amount" as defined in Code section 280G(b)(3) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax;
and 

        (B)  the
value of any non-cash benefits or any deferred payment or benefit shall be determined by a certified public accountant or appraisal company of recognized
national standing forming part of or selected by 280G Adviser and reasonably acceptable to the Executive, in accordance with the principles of Code section 280G(d)(3) and (4). 

        (iii)  In
the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined (the "Reduced Excise Tax"), an amount (the
"Gross-Up Repayment") equal to the sum of (A) the difference of the Excise Tax Payment and the Reduced Excise Tax  plus (B) an amount
representing the difference between (1) the amount paid by the Company to the Executive to "gross up" the Executive for
taxes on payments made by the Company to the Executive in respect of the Excise Tax and (2) the amount which should have been paid to the Executive by the Company to "gross up" the Executive
for taxes on payments made by the Company to the Executive in respect of the Reduced Excise Tax; provided,  however, that in no event shall the Gross-Up
Repayment exceed the actual aggregate cash refunds of, or cash reductions in, taxes paid by the
Executive by virtue of paying the Gross-Up Repayment; and provided, further, that if such refunds or reductions are realized from time to time, the Executive shall make a repayment to the
Company at the time of each such realization equal to the excess of the Gross-Up Repayment due after giving effect to such realization over the Gross-Up Repayment due 

10

 

immediately
prior to giving effect to such realization. The Executive shall (1) take such actions with respect to taxes and tax returns as the Company may from time to time request in order to
obtain such refunds and reductions, including, without limitation, by taking positions on tax returns and filing amended tax returns, (2) provide the Company with copies of all tax returns
filed by the Executive which reflect such refunds or reductions or are otherwise requested by the Company in order to determine the Executive's compliance with the immediately preceding
clause (1), (3) permit the Company to participate in any proceedings relating to such refunds and reductions and (4) take all such other actions as may be reasonably requested by
the Company from time to time in connection with the realization of such refunds or reductions, including, without limitation, borrowing money from the Company (on terms and conditions reasonably
satisfactory to the Executive and the Company, including, without limitation, having the Company make the Executive whole, on an after-tax basis, for any interest costs) so that the
payments made from time to time by the Executive to the Company hereunder maximize (to the extent reasonably possible) such refunds and reductions, the aggregate amount of such payments by the
Executive not to exceed the Gross-Up Repayment (computed without regard to the provisos to the first sentence of this Section 5(i)(iii));  provided, however, that the Company shall bear and directly pay, or shall promptly reimburse the
Executive for, all costs and expenses (including any additional penalties and interest) incurred by the Executive in connection with any actions taken or omitted by the Executive in accordance with
instructions from the Company pursuant to this sentence, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including any
additional penalties and interest) imposed as a result of the Company's payment of such costs and expenses. In the event that the Excise Tax is subsequently determined to exceed the amount taken into
account hereunder (including by reason of any payment the existence or amount of which could not be determined at the time of the Excise Tax Payment), the Company shall make an additional Excise Tax
Payment in respect of such excess (together with any interest or penalties payable by the Executive with respect to such excess) at the time that the amount of such excess if finally determined, plus
any additional taxes resulting from the payment to the Executive by the Company for such excess and the interest and penalties thereon. The Executive and the Company shall each reasonably cooperate
with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Benefits. 

        (iv)  The
Executive shall give the Company written notice of any determination by the Executive, or any claim by any taxing authority, that he owes Excise Tax on any
Severance Benefit. Such notice shall be given as soon as practicable but no later than ten (10) business days after the Executive makes such determination or is informed of such claim, and
shall, to the extent Executive has or may reasonably obtain such information, apprise the Company of the amount of such Excise Tax and the date on which it is required to be paid. If the Company gives
the Executive written notice at least thirty (30) days prior to the due date for payment of such Excise Tax, or within ten (10) business days of having received the foregoing notice from
the Executive (whichever is later), that it disagrees with or wishes to contest the amount of the Excise Tax, the Company and the Executive shall consult with each other and their respective tax
advisors regarding the amount and payment of any Excise Tax. In the event there is a contest with any taxing authority regarding the amount of the Excise Tax, the Company shall bear and pay directly
all costs and expenses (including additional interest, penalties and legal fees) incurred in connection with any such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, to the extent not otherwise paid hereunder, on (x) the Excise Tax Payment (including any interest and penalties with respect thereto) and (y) the Company's
payment of the Executive's costs and expenses hereunder. 

11

 

6.    Limitation on Competition.    

        The
Executive acknowledges that he will have immediate and continuing access to the trade secrets, confidential and proprietary information and "know-how" of the Company
("Confidential Information"). As an agreement ancillary to the receipt of such information and the other undertakings in this Agreement, the Executive
covenants as follows: 

        During
the Employment Period, and for such period thereafter (A) as the Executive is entitled to receive severance compensation under this Agreement, or (B) in the event
payment of the Executive's severance compensation is accelerated due to a Change in Control, for a period of three (3) years following the end of the Employment Period, or (C) in the
event the Executive's employment is terminated by the Company for Cause or the Executive terminates his employment for any reason other than Good Reason (including, without limitation, by giving the
Company a Non-Renewal Notice pursuant to Section 1(a) hereof), for a period of twelve months following the Employment Period: 

        (a)   the
Executive shall not, directly or indirectly, without the Company's prior written consent, participate or engage in, whether as a director, officer, employee,
advisor, consultant, investor, lender, stockholder, partner, joint venturer, owner or in any other capacity, any Competitive Business (as defined below) conducted in any Competitive Market Area (as
defined below); provided, however, that the Executive shall not be deemed to be participating or engaging in any such business solely by virtue of his ownership of not more than five percent of any
class of stock or other securities which is publicly traded on a national securities exchange or in a recognized over-the-counter market; 

        (b)   the
Executive shall not, without the Company's prior written consent, (i) solicit (other than by way of generalized employment advertising undertaken in the
ordinary course of business) the service of or employ any employee of the Company for the Executive's own benefit or for the benefit of any person or entity other than the Company, (ii) induce
any such employee to leave employment with the Company, or (iii) employ or cause any other person or entity other than the Company to employ any former employee of the Company whose termination
of employment with the Company occurred less than six (6) months prior to such employment by the Executive or such other person or entity; and 

        (c)   the
Executive shall not, without the Company's prior written consent, (i) induce or attempt to induce any customer, supplier or contractor of the Company to
terminate or breach any agreement or arrangement with the Company or otherwise to cease doing business with the Company, or (ii) induce or attempt to induce any customer, supplier or contractor
of the Company (including any prospective customer, supplier or contractor which the Company is actively pursuing prior to the Executive's termination of employment), not to enter into any agreement
or arrangement with the Company or not to do business with the Company. 

        As
used herein, the term "Competitive Business" shall mean any business: (1) that is competitive with any business (A) which
was conducted by the Company or any of its affiliated companies during the Employment Period or on the date of termination of Executive's employment hereunder or (B) which, on the date of such
termination or during the twelve months immediately preceding such termination, the Company or any of its affiliated companies was actively investigating with a view to conducting or was actively
pursuing a plan to conduct; and (2) from which the Company and such affiliated companies derive (or reasonably expect to derive) annual revenues of not less than $1,000,000. As used herein, the
term "Competitive Market Area" shall mean any geographic market area (1) if the Company or any of its affiliated companies conducted business in
such geographic market area during the Employment Period or on the date of termination of Executive's employment hereunder, or (2) if, on the date of such termination or during the twelve
months immediately preceding such termination, the Company or any of its affiliated companies was actively investigating 

12

 

with
a view to conducting business in such geographic market area or was actively pursuing a plan to conduct business in such geographic market area. 

        The
Executive agrees and acknowledges that a portion of the consideration to be paid by the Company to the Executive pursuant to this Agreement is in consideration of the covenants under
this Section 6 and that such consideration is fair and adequate, even though the Executive will not receive any severance compensation in the event he terminates his employment with the Company
other than for Good Reason or the Company terminates his employment for Cause. The Executive acknowledges and agrees that any breach or anticipatory breach by him of any of the provisions of this
Section 6 would cause the Company irreparable injury not compensable by monetary damages alone and that, accordingly, in any such event, the Company shall be entitled to injunctions, both
preliminary and permanent, enjoining or restraining such breach or anticipatory breach without the necessity of showing
irreparable injury (and the Executive hereby consents to the issuance thereof without bond by a court of competent jurisdiction). 

7.    Confidential Information.    

        The
Executive acknowledges that during the course of his employment with the Company he will have access to the Company's Confidential Information. Except in the ordinary course of
properly performing his duties for the Company, the Executive shall not at any time, without the Company's prior written consent while employed or after termination of his employment, disclose,
communicate or divulge, or use for the benefit of himself or of any third party, any of the Confidential Information of the Company. In the event the Executive learns during his employment with the
Company any trade secrets, confidential or proprietary information or know-how of any customer, supplier or contractor of the Company, the Executive shall maintain the confidence of such
information. 

8.    Return of Materials.    

        Upon
termination of the Executive's employment for any reason, the Executive shall promptly deliver to the Company or, with the Company's consent, destroy all documents and other
materials in the Executive's possession or custody (whether prepared by the Executive or others) that the Executive obtained from the Company or a customer, supplier or contractor of the Company
during the Employment Period and which relate to the past, present or anticipated business and affairs of the Company, including without limitation, any Confidential Information. 

9.    Enforceability.    

        If
any provision of this Agreement shall be deemed invalid or unenforceable as written, this Agreement shall be construed, to the greatest extent possible, or modified, to the extent
allowable by law, in a manner which shall render it valid and enforceable and any limitation on the scope or duration of any such provision necessary to make it valid and enforceable shall be deemed
to be a part thereof. No invalidity or unenforceability of any provision contained herein shall affect any other portion of this Agreement unless the provision deemed to be so invalid or unenforceable
is a material element of this Agreement, taken as a whole. 

10.    Legal Expenses.    

        The
Company shall pay the Executive's reasonable fees for legal and other related expenses associated with any disputes arising hereunder or under any other agreements, arrangements or
understandings regarding Executive's employment with the Company (including, without limitation, all agreements, arrangements and understandings regarding bonuses, Equity-Based Incentives, employee
benefits or other compensation issues) if either a court of competent jurisdiction or an arbitrator shall render a final judgement or an arbitrator's final decision in favor of the Executive on the
issues in such dispute, from which there is no further right of appeal. If it shall be determined in such judicial adjudication or arbitration that the Executive is successful on some of the issues in
such dispute, but 

13

 

not
all, then the Executive shall be entitled to receive a portion of such legal fees and other expenses as shall be appropriately prorated. 

11.    Notices.    

        All
notices which the Company is required or permitted to give to the Executive shall be given by registered or certified mail or overnight courier, with a receipt obtained, addressed to
the Executive at his primary residence, or at such other place as the Executive may from time to time designate in writing, or by personal delivery to the Executive, or by facsimile to the Executive
with oral confirmation of his receipt and with a copy immediately sent to the Executive by first class U.S. Mail, and to counsel for the Executive as may be requested in writing by the
Executive from time to time. All notices which the Executive is required or permitted to give to the Company shall be given by registered or certified mail or overnight courier, with a receipt
obtained, addressed to the Company at the address set forth above, or at such other address as the Company may from time to time designate in writing, or by personal delivery to the Chief Executive
Officer of the Company, or by facsimile to the Chief Executive Officer with oral confirmation of his receipt and with a copy immediately sent to the Chief Executive Officer by first class U.S.
Mail, and to counsel for the Company as may be requested in writing by the Company. A notice will be deemed given upon personal delivery, the mailing thereof or delivery to an overnight courier for
delivery the next business day, or the oral confirmation of receipt by facsimile, except for a notice of change of address, which will not be effective until receipt, and except as otherwise provided
in Section 5(a) hereof. 

12.    Waivers.    

        No
waiver by either party of any breach or nonperformance of any provision or obligation of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the
same or any other provision of this Agreement. Any waiver of any provision of this Agreement must be in writing and signed by the party granting the waiver. 

13.    Headings; Other Language.    

        The
headings contained in this Agreement are for reference purposes only and shall in no way affect the meaning or interpretation of this Agreement. In this Agreement, as the context may
require, the singular includes the plural and the singular, the masculine gender includes both male and female reference, the word "or" is used in the
inclusive sense and the words "including," "includes," and
"included" shall not be limiting. As used herein, the term "Subsidiary" shall mean any corporation or
other entity the voting equity of which the Company or another Subsidiary holds at least fifty percent. 

14.    Withholding and Timing of Payments.    

        The
Executive acknowledges and agrees that any or all payments under this Agreement may be subject to reduction for tax and other required withholdings. Notwithstanding any provision of
this Agreement, if the payment of any severance compensation or severance benefits under this Agreement would be subject to additional taxes and interest under Section 409A of the Internal
Revenue Code because the timing of such payment is not delayed as provided in Section 409A(a) (2) (B) of the Internal Revenue Code, then any such payments that Executive would otherwise
be entitled to during the first six months following the date of Executive's termination of employment shall be accumulated and paid on the date that is six months after the date of Executive's
termination of employment (or if such payment date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be
paid under Section 409A of the Internal Revenue Code without being subject to such additional taxes and interest. 

15.    Counterparts.    

        This
Agreement may be executed in duplicate counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one agreement. 

14

 

16.    Agreement Complete; Amendments.    

        Effective
as of the Commencement Date, this Agreement, together with the Exhibits hereto, the agreements referred to herein, and the instruments, agreements, plans, resolutions and other
documents pursuant to which any Equity-Based Incentives are held (now or in the future) by the Executive, constitutes the entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto. This Agreement may not be amended, supplemented, canceled or discharged except by a written instrument executed by both of the
parties hereto, provided, however, that the immediately foregoing provision shall not prohibit the
termination of rights and obligations under this Agreement which termination is made in accordance with the terms of this Agreement. 

17.    Benefit of the Successors and Permitted Assigns of the Respective Parties Hereto.    

        This
Agreement and the rights and obligations hereunder are personal to the Company and the Executive and are not assignable or transferable to any other person, firm or corporation
without the consent of the other party, except as contemplated hereby; provided, however, in the event of the sale, merger or consolidation of the Company, whether or not the Company is the surviving
or resulting corporation, the transfer of all or substantially all of the assets of the Company, or the voluntary or involuntary dissolution of the Company, then the surviving or resulting corporation
or the transferee or transferees of the Company's assets shall be bound by this Agreement and the Company shall take all actions necessary to insure that such corporation, transferee or transferees
are bound by the provisions of this Agreement; and provided, further, this Agreement shall inure to the benefit of the Executive's estate, heirs, executors, administrators, personal and legal
representatives, distributees, devisees, and legatees. Notwithstanding the foregoing provisions of this Section 17, the Company shall not be required to take all actions necessary to insure
that a buyer, survivor, transferee or transferees of the Company's assets ("Transferee") are bound by the provisions of this Agreement and such
Transferee shall not be bound by the obligations of the Company under this Agreement if the Company shall have (a) paid to the Executive or made provision satisfactory to the Executive for
payment to him of all amounts which are or may become payable to him hereunder in accordance with the terms hereof and (b) made provision satisfactory to the Executive for the continuance of
all benefits required to be provided to him in accordance with the terms hereof, in each case as if the Executive had been terminated without Cause in anticipation of a Change in Control. 

18.    Governing Law.    

        This
Agreement will be governed and construed in accordance with the laws of Texas applicable to agreements made and to be performed entirely within such state, without giving effect to
any choice or conflicts of laws principles which would cause the application of the domestic substantive laws of any other jurisdiction. 

19.    Survival.    

        The
covenants, agreements, representations, warranties and provisions contained in this Agreement that are intended to survive the termination of the Executive's employment hereunder and
the termination of the Employment Period shall so survive such termination. 

20.    Interpretation.    

        The
Company and the Executive each acknowledge and agree that this Agreement has been reviewed and negotiated by such party and its or his counsel, who have contributed to its revision,
and the normal rule of construction, to the effect that any ambiguities are resolved against the drafting party, shall not be employed in the interpretation of it. 

15

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. 

	 	 	KEY ENERGY SERVICES, INC.
	

 	
 	

By:	
 	

/s/  RICHARD J. ALARIO      
 Richard J. Alario
 Chairman, President, and Chief Executive Officer
	

/s/  DON D. WEINHEIMER      
 Don D. Weinheimer	
 	

 	
 	

 

16

   EXHIBIT A  

 Company Paid Coverages  

        1.    Medical and Dental Plan.    Comprehensive medical and dental plans available to the Company's senior management,
pursuant to which all medical and dental expenses incurred by the Executive, his spouse and his children will be reimbursed by the Company, through insurance or, in the absence of insurance, directly
by the Company, so that the Executive has no out-of-pocket cost with respect to such expenses. 

        2.     Director
and Officer Liability Insurance. 

        3.     Voluntary
annual physicals at the Executive's option while employed, with a report by the examining physician, if requested, to the Board regarding the Executive's
ability to perform job related functions. 

17

   EXHIBIT B  

 Definition of "Change in Control"  

        The occurrence of any of the following shall constitute a "Change in Control" of the Company: 

        (a)   If
any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as from time to time in effect (the "Exchange
Act"), or any successor provision), other than the Company, becomes the beneficial owner directly or indirectly of more than fifty percent (50%) of the outstanding Common Stock
of the Company, determined in accordance with Rule 13d-3 under the Exchange Act (or any successor provision), or otherwise becomes entitled to vote more than fifty percent (50%) of
the voting power entitled to be cast at elections for directors ("Voting Power") of the Company; 

        (b)   If
the Company is subject to the reporting requirements of Section 13 or 15(d) (or any successor provision) of the Exchange Act, and any person (as defined in
Section 3(a)(9) of the Exchange Act, or any successor provision), other than the Company, purchases shares pursuant to a tender offer or exchange offer to acquire Common Stock of the Company
(or securities convertible into or exchangeable for or exercisable for Common Stock) for cash, securities or any other consideration, if after consummation of the offer, the person in question is the
beneficial owner, directly or indirectly, of more than fifty percent (50%) of the outstanding Common Stock of the Company, determined in accordance with Rule 13d-3 under the
Exchange Act (or any successor provision); 

        (c)   If
the stockholders or the Board approve any consolidation or merger of the Company (i) in which the Company is not the continuing or surviving corporation unless
such merger is with a Subsidiary at least fifty percent (50%) of the Voting Power of which is held by the Company or (ii) pursuant to which the holders of the Company's shares of Common Stock
immediately prior to such merger or consolidation would not be the holders immediately after such merger or consolidation of at least a majority of the Voting Power of the Company; 

        (d)   The
stockholders or the Board shall have approved any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all or substantially
all of the assets of the Company; 

        (e)   Upon
the election of one or more new directors of the Company, a majority of the directors holding office, including the newly elected directors, were not nominated as
candidates by a majority of the directors in office immediately before such election 

        As
used in this definition of "Change in Control," "Common Stock" means the Common Stock,
or if changed, the capital stock of the Company as it shall be constituted from time to time entitling the holders thereof to share generally in the distribution of all assets available for
distribution to the Company's stockholders after the distribution to any holders of capital stock with preferential rights. 

18

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Exhibit 10.18  

 

AGREEMENT FOR SUPPLY AND OPERATION OF WORKOVER RIGS,  

 PULLING UNITS, VEHICLES, OTHER EQUIPMENT AND RELATED  

 SERVICES  

 by and between  

 APACHE CORPORATION  

 and  

 KEY ENERGY SERVICES, INC.  

 Dated as of March 28, 2002  

 

  

   TABLE OF CONTENTS  

	ARTICLE 1—INTERPRETATION	 	1
	 	Section 1.1	 	Definitions	 	1
	 	Section 1.2	 	Currency	 	1
	 	Section 1.3	 	Conflicts	 	1
	 	Section 1.4	 	Headings	 	1
	 	Section 1.5	 	Further Assurances	 	1
	 	Section 1.6	 	Contractor's Status	 	1
	 	Section 1.7	 	Governing Law	 	2
	 	Section 1.8	 	Affiliates	 	2
	ARTICLE II—TERM	 	2
	 	Section 2.1	 	Term	 	2
	 	Section 2.2	 	Option to Extend	 	2
	ARTICLE III—CONTRACTOR'S PERSONNEL	 	2
	 	Section 3.1	 	Number, Selection, Hours of Labor and Remuneration	 	2
	 	Section 3.2	 	Provision of Contractor's Personnel	 	2
	 	Section 3.3	 	Contractor's Representative	 	2
	 	Section 3.4	 	Increase/Decrease in Contractor's Personnel	 	2
	 	Section 3.5	 	Replacement of Contractor's Personnel	 	2
	 	Section 3.6	 	Personnel Shortages	 	3
	 	Section 3.7	 	Health, Safety and Environmental Measures	 	3
	ARTICLE IV—WORKOVER EQUIPMENT	 	3
	 	Section 4.1	 	Obligation to Supply	 	3
	 	Section 4.2	 	Maintain Stocks	 	3
	 	Section 4.3	 	Maintain and Repair Equipment	 	3
	 	Section 4.4	 	Additional Items	 	3
	ARTICLE V—CONTRACTOR'S GENERAL OBLIGATIONS	 	4
	 	Section 5.1	 	Contractor's Standard of Performance	 	4
	 	Section 5.2	 	Operation of Units	 	4
	 	Section 5.3	 	Compliance with Company's Instructions	 	4
	 	Section 5.4	 	Adverse Weather	 	4
	 	Section 5.5	 	Drilling Fluids and Casing Program	 	4
	 	Section 5.6	 	Difficulties during Workovers	 	4
	 	Section 5.7	 	Well Control Equipment	 	4
	 	Section 5.8	 	Cutting/Coring Program	 	5
	 	Section 5.9	 	Records to be Kept by Contractor	 	5
	 	Section 5.10	 	Visas	 	5
	 	Section 5.11	 	No Liens	 	5
	 	Section 5.12	 	Waste Disposal and Environmental Safeguards	 	5
	 	Section 5.13	 	Contractor Assistance to Company	 	5
	 	Section 5.14	 	Warranties Disclaimed	 	6
	ARTICLE VI—COMPANY'S RIGHTS AND OBLIGATIONS	 	6
	 	Section 6.1	 	Company's Employees	 	6
	 	Section 6.2	 	Workover Programs Sites and Access	 	6
	 	Section 6.3	 	Mobilization and Demobilization of Workover Equipment, Custom or Excise Duties and Fees	 	6
	 	Section 6.4	 	Take Over of Work	 	7
	 	Section 6.5	 	Storage	 	7
	 	Section 6.6	 	First Aid	 	7
	 	 	 	 	 

i

 

	 	Section 6.7	 	Medivac	 	7
	 	Section 6.8	 	Meals, Accommodations and Laundry	 	8
	ARTICLE VII—RATES OF PAYMENT	 	8
	 	Section 7.1	 	Payment	 	8
	 	Section 7.2	 	Operating Rate	 	8
	 	Section 7.3	 	Standby Rate With Crew	 	8
	 	Section 7.4	 	Equipment Breakdown Rates	 	8
	 	Section 7.5	 	Force Majeure Rate	 	9
	 	Section 7.6	 	Moving Rates	 	9
	 	Section 7.7	 	Standby Rate Without Crew	 	9
	 	Section 7.8	 	Overtime Rate	 	9
	 	Section 7.9	 	Consumables	 	9
	 	Section 7.10	 	Variation of Rates	 	9
	ARTICLE VIII—PAYMENTS	 	10
	 	Section 8.1	 	Monthly Invoices	 	10
	 	Section 8.2	 	Payment	 	10
	 	Section 8.3	 	Manner of Payment	 	10
	 	Section 8.4	 	Currency	 	10
	 	Section 8.5	 	Taxes	 	10
	 	Section 8.6	 	Customs Duties, Other Taxes	 	10
	ARTICLE IX—LIABILITY	 	11
	 	Section 9.1	 	Equipment or Property	 	11
	 	Section 9.2	 	The Hole	 	11
	 	Section 9.3	 	Contractor's Personnel	 	12
	 	Section 9.4	 	Company's Personnel	 	12
	 	Section 9.5	 	Pollution and Contamination	 	12
	 	Section 9.6	 	Cost of Control	 	12
	 	Section 9.7	 	Underground Damage	 	12
	 	Section 9.8	 	Consequential Damages	 	12
	 	Section 9.9	 	Third Parties	 	13
	 	Section 9.10	 	Indemnity Obligation	 	13
	 	Section 9.11	 	Indemnity Procedures	 	13
	ARTICLE X—INSURANCE	 	13
	 	Section 10.1	 	Insurance	 	13
	 	Section 10.2	 	Certificates	 	14
	 	Section 10.3	 	Subrogation	 	14
	 	Section 10.4	 	Additional Insured	 	14
	ARTICLE XI—SUBLETTING AND ASSIGNMENT	 	14
	 	Section 11.1	 	Subcontracts	 	14
	 	Section 11.2	 	Assignment	 	14
	ARTICLE XII—ARBITRATION	 	14
	 	Section 12.1	 	Agreement to Arbitrate	 	14
	 	Section 12.2	 	Conduct, Authority, and Choice of Law	 	14
	 	Section 12.3	 	Forum for the Arbitration and Selection of Arbitrators	 	15
	 	Section 12.4	 	Decision of the Arbitrators	 	15
	 	Section 12.5	 	Confidentiality	 	15
	ARTICLE XIII—DEFAULT AND TERMINATION	 	15
	 	Section 13.1	 	Termination by Company	 	15
	 	Section 13.2	 	Termination by Contractor	 	16
	 	Section 13.3	 	Effect of Termination	 	17
	ARTICLE XIV—REPRESENTATIONS AND WARRANTIES	 	17
	 	 	 	 	 

ii

 

	 	Section 14.1	 	Representations by Contractor	 	17
	 	Section 14.2	 	Representations by Company	 	17
	 	Section 14.3	 	Survival	 	18
	ARTICLE XV—GENERAL	 	18
	 	Section 15.1	 	Confidential Information	 	18
	 	Section 15.2	 	Attorney's Fees	 	18
	 	Section 15.3	 	Force Majeure	 	18
	 	Section 15.4	 	Right to Audit	 	18
	 	Section 15.5	 	Compliance with Laws	 	18
	 	Section 15.6	 	Waivers	 	19
	 	Section 15.7	 	Inurement	 	19
	 	Section 15.8	 	Notices	 	19
	 	Section 15.9	 	Additional Documents and Actions	 	20
	 	Section 15.10	 	Expropriation, Confiscation, Nationalization and War Risks	 	20
	 	Section 15.11	 	Foreign Corrupt Practices Act	 	20
	 	Section 15.12	 	Entire Agreement	 	20

List of Attachments/Appendices  

	Attachment 1	 	Definitions
	

Appendix A	
 	

Description of Equipment
	Appendix B	 	Contractor's Personnel
	Appendix C	 	Rates
	Appendix D	 	Insurance
	Appendix E	 	Equipment Performance

iii

  

 
 

AGREEMENT FOR SUPPLY AND OPERATION OF WORKOVER RIGS, PULLING
  UNITS, VEHICLES, OTHER EQUIPMENT AND RELATED SERVICES    
    

        This AGREEMENT dated as of March 28, 2002, is by and between APACHE CORPORATION ("Company"), and KEY ENERGY SERVICES, INC. ("Contractor"). Company
and Contractor are sometimes referred to herein individually as "Party" and collectively as "Parties". 

BACKGROUND  

        Company desires to have onshore wells worked over in the Western Desert of the Arab Republic of Egypt ("Egypt"), as specified by Company, and to have performed or
carried out all auxiliary operations and services as detailed in the Appendices hereto or as Company may require in accordance with this Agreement (hereinafter referred to as "Workover Services"); and 

        Contractor
is willing to provide or cause to be provided the workover rigs, pulling units, and vehicles, together with other equipment listed in Appendix A and such other
equipment as Company may reasonably require pursuant to Section 4.4 (hereinafter called the "Workover Equipment"), insurance and personnel, all as detailed in the Appendices hereto for the
purpose of performing the Workover Services for Company. 

AGREEMENT  

        NOW THEREFORE, in consideration of the premises and the covenants and agreements herein, the Parties agree as follows: 

ARTICLE 1

INTERPRETATION  

        Section 1.1
Definitions. Each capitalized term used herein shall have the meaning given such term in Attachment 1. 

        Section 1.2
Currency. In this Agreement, all amounts expressed in dollars are United States dollar amounts. 

        Section 1.3
Conflicts. Appendices A, B, C, D, and E attached hereto are incorporated herein by this reference. If any provision of
the Appendices conflicts with a provision in the body of this Agreement, the applicable provision of the body of this Agreement shall prevail. 

        Section 1.4
Headings. The paragraph headings shall not be considered in interpreting the text of this Agreement. 

        Section 1.5
Further Assurances. Each Party shall perform the acts and execute and deliver the documents and give the assurances
necessary to give effect to the provisions of this Agreement. 

        Section 1.6  Contractor's Status. Contractor in performing its obligations hereunder shall be an independent contractor. Company may
instruct and direct Contractor as to the results to be obtained from Contractor's employees. None of Contractor's employees are, nor shall be deemed to be, employees or agents of Company. Contractor
is not authorized to, and shall not, create any lien or encumbrance on any well where the Workover Services are performed. 

        Section 1.7
Governing Law. This Agreement shall be construed and relations between the Parties determined in accordance with the
laws of the State of Texas, United States of America, not including, however, any of its conflicts of law rules, which would direct or refer to the laws of another jurisdiction. In the event any
provision of this Agreement is inconsistent with or contrary to any applicable law, rule or regulation, the provision shall be deemed to be modified to the extent required to comply with the law, rule
or regulation, and as so modified the provision and this Agreement shall continue in full force 

1

 

and
effect. If this Agreement is translated into another language, the English version of this Agreement shall be controlling for all purposes. 

        Section 1.8  Affiliates. Either Party may fulfill its obligations under this Agreement through one or more of its Affiliates;
provided that each Party shall remain responsible for the performance of its obligations hereunder. 

ARTICLE II

TERM  

        Section 2.1 Term. This Agreement will be effective upon execution by both Company and Contractor and,
unless earlier terminated in accordance with this Agreement shall remain in effect until the second anniversary of the last Commencement Date occurring hereunder (the "Initial Term"). 

        Section 2.2  Option to Extend. This Agreement may be renewed by Company beyond the Initial Term for two additional
one-year terms by delivery of written notice on or before the 120thday prior to the end of the relevant term, provided that Company and Contractor shall mutually agree on or
before the 60thday prior to the end of the relevant term upon the appropriate rates, terms and conditions for each extension period. 

ARTICLE III

CONTRACTOR'S PERSONNEL  

        Section 3.1 Number, Selection, Hours of Labor and Remuneration. Except where herein otherwise provided, the
number, selection, replacement, hours of labor and remuneration of Contractor's Personnel shall be determined solely by Contractor. Such employees or subcontractors shall be the employees or
subcontractors solely of Contractor. Notwithstanding the foregoing, minimum manning shall be as specified in Appendix B, and Contractor undertakes to provide qualified personnel with the
technical background and experience Contractor deems are required to perform the Workover Services. 

        Section 3.2
Provision of Contractor's Personnel. Contractor shall provide Contractor's Personnel at a mutually agreed place ready
to conduct Workover Services. 

        Section 3.3  Contractor's Representative. Contractor shall designate in writing to Company one of Contractor's Personnel as
Contractor's representative who shall be in charge of the remainder of Contractor's Personnel and who shall have full authority to resolve all day-to-day matters which arise
between Company and Contractor in the ordinary course of business. Contractor shall inform Company in a written form if such representative is replaced. 

        Section 3.4
Increase/Decrease in Contractor's Personnel. Company may, subject to mutual agreement of the Parties, require
Contractor to increase the number of Contractor's Personnel, subject to additional payment by Company as mutually agreed between the Parties. Company also may require Contractor to decrease the number
of Contractor's Personnel, provided that Contractor shall not be required to reduce such number below the minimum manning specified in Appendix B. Such reduction in the number of Contractor's
Personnel shall not result, however, in any decrease in the applicable rates of payment set forth in Article VII. 

        Section 3.5
Replacement of Contractor's Personnel. Contractor will remove and replace at any time any of Contractor's Personnel if
Company so reasonably requests in writing. Company shall give to Contractor the reasons for any such request. So as not to interfere with Contractor's ability to provide Workover Services, Contractor
shall have a reasonable period of time within which to effect such removal and replacement of personnel. 

2

 

        Section 3.6
Personnel Shortages. 

        (a)   If
at any time during the term of this Agreement less than a full crew of expatriate personnel as listed in Appendix B is utilized for any reason that is beyond
Contractor's reasonable control, Company shall nevertheless pay Contractor for such missing personnel, but the applicable day rate payable to Contractor hereunder shall be reduced by an amount equal
to one-half of the day rate for the missing expatriate personnel. For example, if a drilling unit toolpusher is absent, then the rate payable by Company shall be $425.00 rather than
$850.00. There will be no reduction for missing Egyptian personnel. 

        (b)   If
at any time, in Company's opinion, Contractor's failure to provide a full crew of personnel at the minimum manning levels established in this Agreement is materially
interfering with or delaying the conduct of Contractor's operations, and such material interference or delay continues for a period of thirty (30) days after written notice from Company to
Contractor, then in addition to (i) a reduction in the applicable day rate as provided herein and (ii) any other remedies Company may have under this Agreement, Company may, subject to
Section 13.3, terminate this Agreement. 

        Section 3.7
Health, Safety and Environmental Measures. Contractor shall, at its sole expense, take all measures necessary or proper
to provide safe working conditions, proper safety clothing and supplies to its personnel in accordance with international health, safety and environmental practices and standards and with all health,
safety and environmental requirements of Egypt and general health, safety and environmental measures applied by Contractor in its other similar businesses. Contractor shall give notice to all of its
personnel at each workover site of all health, safety and environmental regulations that apply to such personnel and shall take reasonable actions to ensure that such personnel comply with such
regulations. 

ARTICLE IV

WORKOVER EQUIPMENT  

        Section 4.1 Obligation to Supply. 

        (a)   Contractor
shall provide the Workover Equipment in accordance with Appendix A. Each of the items comprising the Workover Equipment shall be subject to inspection
and approval of Company for its account prior to such items being placed into service. 

        (b)   No
inspection by Company or its representatives shall constitute an approval, endorsement or confirmation of any Workover Equipment or an acknowledgment by Company or
such other person that any Workover Equipment satisfies the requirements of this Agreement; nor shall any such inspection relieve Contractor of any of its obligations to furnish the Workover
Equipment. 

        Section 4.2  Maintain Stocks. Contractor shall be responsible, at Company's expense, for maintaining reasonably adequate stock
levels of consumable goods for pumps, choke manifolds, BOP equipment, stripper rubbers, swab cups, adapter spools, and related items including, without limitation, rig and equipment fuel
(collectively, "Consumables") necessary to perform and carry out the Workover Services and replenishing them as necessary. 

        Section 4.3
Maintain and Repair Equipment. Contractor shall, subject to Section 4.2 and Section 9.1, be responsible
for the maintenance and repair of the Workover Equipment and shall provide all spare parts and materials required therefor. 

        Section 4.4  Additional Items. Contractor agrees and undertakes to provide additional equipment upon the requirement of Company.
Such additional equipment shall be provided by Contractor at a cost to Company to be mutually agreed upon. 

3

 

ARTICLE V

CONTRACTOR'S GENERAL OBLIGATIONS  

        Section 5.1 Contractor's Standard of Performance. Except as provided in Appendix C, Contractor shall
provide Workover Services on a daywork basis. For purposes hereof, the term "daywork basis" means Contractor shall furnish Workover Equipment, Contractor's Personnel and perform Workover Services as
herein provided, for a specified sum per day under the general direction and supervision of Company. 

        Section 5.2
Operation of Units. Contractor shall be responsible for the operation of the Workover Equipment, including supervising
moving operations and positioning on workover locations as required by Company. Operations under this Agreement performed with Workover Rigs (including moving operations) will be performed on a
twenty-four (24) hour per day, seven (7) days a week basis. Operations under this Agreement performed with Pulling Units, Hot Oiler Trucks, Vacuum Trucks, Pump Trucks,
Auger/Anchor Trucks, and Fork Lifts will be performed on a twelve (12) hour per day, seven (7) days a week basis; provided, however, Company may request that Contractor operate Pulling
Units, Hot Oiler Trucks, Vacuum Trucks, Anchor/Auger Trucks and Fork Lifts more than twelve (12) hours per day in which case Company shall make payment to Contractor for such work made on an
overtime basis in accordance with Section 7.8. Operations under this Agreement performed with Winch Trucks and Low-Boy Trailers will be performed on an hourly basis at the rates
specified in Appendix C. Contractor represents that the Workover Rigs and Pulling Units (without modification, upgrade or enhancement) will be capable of performing as described in
Appendix E under normal operating conditions. 

        Section 5.3
Compliance with Company's Instructions. Company shall provide Contractor with a written work plan for each job to be
performed by Contractor hereunder. Contractor shall comply with such work plans and all other instructions of Company consistent with the provisions of this Agreement, including, without limitation,
drilling, well control and safety instructions. Such other instructions shall, if time permits, be confirmed in writing by the authorized representative of Company. However, Company shall not issue
(and Contractor shall not be required to comply with) any work plans or other instructions which would be inconsistent with Contractor's rules, policies or procedures pertaining to the safety of
Contractor's Personnel or the safe operation of the Workover Equipment. 

        Section 5.4
Adverse Weather. Contractor, in consultation with Company, shall decide when, in the face of impending adverse weather
conditions, to institute precautionary measures in order to safeguard Contractor's Personnel, the well, and the Workover Equipment to the fullest possible extent. Contractor and Company shall each
ensure that each respective senior representative will not act unreasonably in the exercise of their discretion under this Section 5.4 but in the event Contractor's and Company's
representatives cannot agree upon the steps to be taken, the Parties agree that the decision of Contractor's representative shall be controlling. 

        Section 5.5
Drilling Fluids and Casing Program. Contractor shall follow any of Company's instructions with respect to the drilling
fluid and tubular program as may be specified by Company. Company shall
provide Contractor written drilling fluid and tubular programs reasonably in advance of the start date of each well to be worked over under this Agreement. 

        Section 5.6  Difficulties during Workovers. In the event of any difficulty arising which precludes providing Workover Services under
reasonably normal procedures, Contractor may suspend the work in progress and as soon as practicable shall notify the representative of Company of the difficulty, and during such period of suspension
exert its commercially reasonable efforts to overcome the difficulty. 

        Section 5.7
Well Control Equipment. Subject to Article IX, Contractor shall maintain its well control equipment in good
condition, ordinary wear and tear excepted, at all times and shall use commercially reasonable efforts to prevent and control fires and blowouts and to protect the hole. 

4

 

        Section 5.8
Cutting/Coring Program. Contractor shall save and identify cuttings and cores according to Company's written
instructions and place them in containers furnished by Company. 

        Section 5.9  Records to be Kept by Contractor. Contractor shall keep and furnish to Company an accurate record of the work performed
in a form to be agreed prior to the first Commencement Date. Contractor shall furnish to Company a legible copy of the form signed by Contractor's representative. Contractor shall also keep and
furnish to Company a report of operations for each month containing details of (i) spare parts consumption, (ii) fuel usage, (iii) safety and accident data for the Workover
Equipment and Contractor's Personnel, and (iv) such other information as Company shall have reasonably requested Contractor to provide. All such records and reports shall be in the English
language. 

        Section 5.10  Visas, etc. Contractor shall be responsible for obtaining visas, work permits, residence permits and certifications
required for Contractor's Personnel; provided, however, that Company shall provide all reasonable assistance and cooperation requested by Contractor, and reimburse Contractor for all reasonable fees
and expenses incurred, in connection therewith, it being understood that in obtaining such visas, work permits, residence permits and certifications, Contractor will be relying on Company's experience
in conducting business in Egypt and in dealing with the relevant Egyptian authorities. 

        Section 5.11
No Liens. 

        (a)   Contractor
shall not directly or indirectly create, incur, assume or suffer to be created by it or any subcontractor, employee, laborer, materialman or other supplier of
goods or services any right of retention, claim, lien, charge or encumbrance on any material portion of Company's equipment, wells, or any part thereof (each a "Contractor Lien"), and Contractor shall
promptly pay or discharge, and discharge of record, any such Contractor Lien or other charges which, if unpaid, might be or become a Contractor Lien, other than any such Contractor Liens or other
charges that Contractor is contesting in good faith. Contractor as soon as practicable after becoming aware of the assertion of a Contractor Lien shall notify Company. Contractor shall be responsible
for and hold harmless, defend and indemnify Company from and against Contractor Liens. 

        (b)   Upon
the failure of Contractor to promptly pay, contest, discharge or provide security acceptable to Company for any Contractor Lien within thirty (30) days of
notice of the existence thereof from any source (other than any such Contractor's Lien that Contractor is contesting in good faith), Company may, but shall not be obligated to, pay or discharge such
Contractor Lien and, upon the payment or discharge thereof, shall be entitled to recover from Contractor the amount thereof together with expenses incurred by it in connection with such payment or
discharge or to set off equal to the product of a fraction the numerator of which is 1 and the denominator of which is the total number of months remaining in the then effective term of this
Agreement and all such amounts against the amount of the monthly invoice for the month that corresponds to the month in which Company seeks to recover or set off against Contractor. 

        Section 5.12
Waste Disposal and Environmental Safeguards. In the performance of the Workover Services, Contractor shall at all
times (i) observe and comply, in all material respects, with all Egyptian laws and regulations concerning the production, carrying, keeping, treating and/or disposal of waste; and
(ii) act to minimize the quantity of wastes; provided, however, that Company shall accept delivery and dispose of all of Contractor's refuse including, but not limited to, refuse Contractor
collects in cleaning up surface pollution for which it has responsibility pursuant to Section 9.5(a). 

        Section 5.13
Contractor Assistance to Company. Contractor shall deliver the Workover Equipment to Company's custody in Houston,
Texas, and/or a port in the Republic of Argentina chosen by Contractor, and shall cooperate with and assist Company in connection with Company's complying with 

5

 

the
obligations imposed pursuant to Section 6.3(a). Contractor shall prepare and execute any papers that cannot be prepared or executed by Company and are necessary to import any Workover
Equipment into Egypt. Company shall reimburse Contractor for the costs and expenses it reasonably incurs complying with the obligations contained in this Section 5.13. 

        Section 5.14
Warranties Disclaimed. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, CONTRACTOR NEGATES AND DISCLAIMS ALL
REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO MERCHANTIBILITY, FITNESS FOR ANY PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES. 

ARTICLE VI

COMPANY'S RIGHTS AND OBLIGATIONS  

        Section 6.1 Company's Employees. Company shall designate in writing to Contractor a senior representative
to resolve day-to-day matters requiring decision by Company and Company's representative shall communicate such decisions to Contractor. Company shall inform Contractor in
writing in case such representative is replaced. Company's representative shall at all times have access to each Workover Rig and Pulling Unit and may, among other things, observe tests, check and
give instructions it deems necessary or advisable to control the implementation of the mud program, examine cuttings and cores, inspect the Workover Equipment or examine the records kept on the
applicable Workover Rig or Pulling Unit by Contractor. 

        Section 6.2
Workover Programs, Sites and Access. Company shall be responsible for providing: (i) within a reasonable time
prior to the commencement of specific Workover Services a written workover program for each well it requires to be worked over together with a written program for any other specific Workover Services
it may require; and (ii) access to the workover locations, as well as selecting, surveying, marking and clearing the workover locations as may be reasonably required by Contractor for location
approval. Company shall notify Contractor in writing of any impediments or hazards to operations at each workover location or at any access routes to the workover locations of which it has actual
knowledge. Notwithstanding any other provision of this Agreement, should there be obstructions at or within the area of the workover site (or any access route to any workover site) and these
obstructions result in damage to the Workover Rig or Pulling Unit, Company shall be responsible for and hold harmless, defend and indemnify Contractor for all resulting damage, including the payment
of the applicable Standby Rate during repairs, but Company shall receive credit for any physical damage insurance proceeds actually received by Contractor with respect to such damage. 

        Section 6.3  Mobilization and Demobilization of Workover Equipment, Customs or Excise Duties and Fees. 

        (a)   Company
at its cost and expense shall cause the Workover Equipment to be packed, expedited, loaded and shipped from the applicable Port of Origin to the Port of
Alexandria, Egypt, and from the Port of Alexandria to the Operating Area where Company at its cost and expense shall cause the Workover Equipment to be unloaded, unpacked and stored until ready for
use by Contractor. Company will be further responsible for importation of any subsequent items of Workover Equipment into the Operating Area as required, including but not limited to spare parts,
consumables, additional equipment and chemicals as needed for the operation of the Workover Rigs, Pulling Units and Vehicles. Upon termination of this Agreement for any reason, Company at its cost and
expense shall cause the Workover Equipment to be packed, expedited, loaded and shipped from the Operating Area to the Port of Houston, Texas, USA and/or such other location as Contractor may designate
in writing provided that any incremental cost of shipping to such alternate location shall be borne by Contractor. Company shall be responsible for and hold harmless, defend and indemnify Contractor
from and against any loss or damage to the 

6

 

Workover
Equipment during the mobilization or demobilization thereof, which such indemnity obligation shall apply (i) in the case of mobilization, from the time packing of the Workover
Equipment commences in preparation for shipment from the Port of Origin until the time the Workover Equipment is unpacked and ready for use at the Operating Area, and (ii) in the case of
demobilization, from the time the Workover Equipment is packed in preparation for the shipment from the Operating Area until the Workover Equipment arrives at the Port of Houston, Texas, USA and/or
other location designated by Contractor pursuant to this Section 6.3(a). 

        (b)   Company
shall perform all importation and customs clearance activities for all Workover Equipment into Egypt, and pay the costs associated with customs clearance
activities. 

        (c)   In
the event the Workover Equipment is not allowed into Egypt because of import or customs restrictions or for any other reason, the Parties agree that (i) this
Agreement will remain in effect for the full term hereof, (ii) Contractor will upon notice from Company that such Workover Equipment will not be allowed into Egypt cease any refurbishment
thereof, (iii) if such disallowed Workover Equipment is of a type that Company does not or cannot utilize in its operations in the United States as then conducted or proposed to be conducted,
Company will purchase such equipment from Contractor on an "as is" basis and for a price equal to its fair market value, and (iv) if such disallowed Workover Equipment is of a type that Company
does or can utilize in its operations in the United States as then conducted or proposed to be conducted, Contractor shall provide such disallowed Workover Equipment to Company in the United States of
America. In the circumstances described in sub-clause (iv), Company and Contractor shall negotiate in good faith and in an expeditious manner toward the execution of a mutually
satisfactory amendment to this Agreement covering operations in the United States of America under this Agreement. In particular, the rates to be charged pursuant to Article VII, which reflect
rig rates for international operations, will be adjusted to a level consistent with Contractor's regional pricing structure in place in the United States of America for substantially similar
equipment, services and categories of personnel. In addition, Company agrees that the work performed for it by Contractor in the United States of America under this Agreement shall be in addition to
(and not in replacement of) the work being performed for Company by Contractor in the United States of America prior to the addition of the disallowed Workover Equipment. 

        Section 6.4
Take Over of Work. In the event any well worked over under this Agreement should blow out, catch fire or in any manner
get out of control, Company may assume at its sole cost and expense complete control and supervision of the Workover Equipment and take such actions as it deems necessary to bring the well under
control, extinguish the fire and take such other measures as Company deems appropriate. 

        Section 6.5  Storage. Company shall at its cost provide appropriate storage, warehouse and yard facilities for the Workover
Equipment (including spare parts and special tools) at or in the vicinity of the Operating Area. Workover Equipment that is stored shall be segregated from other goods, as appropriate, clearly
identified as the property of Contractor, its Affiliates, Khalda Petroleum Company, or Qarun Petroleum Company, and Company shall be responsible for the security and protection of the Workover
Equipment while stored or warehoused in Company facilities. 

        Section 6.6
First Aid. Company, at Contractor's expense, shall provide first aid medical care on location as may be required for
Contractor's Personnel. Such medical care is provided at the recipients' own risk, and Company shall not be responsible for any medical care it may provide, or fail to provide, to Contractor's
Personnel hereunder. 

        Section 6.7
Medivac. Company will arrange Medivac services for Contractor's Personnel when required by Contractor according to the
guidelines of Company's insurance program applicable to Company's personnel. Contractor will be responsible for any additional cost borne by Company as a result. Contractor and Company shall consult
together as and when necessary and to act in concert in 

7

 

the
event of a need to evacuate foreign personnel for non-medical reasons. To comply with Company's medivac policy, Contractor shall provide Company with a list of Contractor's Personnel
and shall update such list from time to time to reflect any changes in Contractor's Personnel. 

        Section 6.8
Meals, Accommodations and Laundry. Company shall supply reasonably satisfactory meals, potable water, and
accommodations including laundry services for Contractor's Personnel while they are performing Workover Services. Although Contractor shall be responsible for arranging transportation for Contractor's
Personnel to and from Company's base and work locations in the field, Company shall reimburse Contractor for its costs and expenses reasonably incurred in connection therewith. 

ARTICLE VII

RATES OF PAYMENT  

        Section 7.1 Payment. Company shall pay to Contractor during the term of this Agreement the amounts due on a
monthly basis as calculated to the nearest hour according to the rates of payment herein set forth in accordance with Article VIII, and reimburse Contractor for any reimbursable costs or
expenses incurred by Contractor during such month. 

        Section 7.2  Operating Rate. The Operating Rate specified for each item of Workover Equipment in Appendix C will first become
payable on the Commencement Date. The Operating Rate shall continue to be payable during the term of this Agreement, except when some other rate herein provided applies. Company acknowledges that the
performance of the Workover Services will require the sharing of certain items of Workover Equipment between rigs and agrees that the unavailability of any item of Workover Equipment for use at any
rig that results from its use at any other rig shall not negatively impact Contractor's compensation hereunder. 

        Section 7.3  Standby Rate With Crew. The Standby Rate With Crew specified for each item of Workover Equipment in Appendix C
will be payable as follows: 

        (a)   during
any period of delay when Contractor is unable to perform its obligations under this Agreement solely because of adverse weather conditions or as a result of an
act, instructions or omission of Company including, without limitation, the failure of Company to issue instructions; 

        (b)   during
any period when operations are being conducted hereunder to redrill or repair any well worked over hereunder which is lost or damaged solely as a result of
Contractor's sole negligence; 

        (c)   during
any period when operations are suspended solely due to difficulties encountered as provided for in Section 5.6 or while Contractor is waiting for Company
or third parties in order to initiate or continue operations; and 

        (d)   during
any period when operations are suspended to allow Company to conduct inspections. 

        Section 7.4  Equipment Breakdown Rates. The Equipment Breakdown Rates specified for each item of Workover Equipment in
Appendix C will be payable during (i) the first twelve (12) hours per calendar month during which operations are suspended solely to permit necessary replacement, inspection,
repair or maintenance by Contractor of the Workover Equipment, and (ii) the subsequent hours in excess of the first twelve (12) hours per calendar month during which operations
are suspended solely to permit necessary replacement, inspection, repair or maintenance by Contractor of the Workover
Equipment. Routine maintenance, including without limitation, lubrication, packing of swivels, changing of pump parts, slipping lines, drill string and certification inspections, shall not be
considered as maintenance for purposes of this Section 7.4. Contractor will effect such repairs, replacements or maintenance in a good and workmanlike manner and will use commercially
reasonable efforts to familiarize itself with the location of rentable replacements for the items comprising the Workover Equipment. 

8

   
        Section 7.5 Force Majeure Rate. The Force Majeure Rate specified for each item of Workover Equipment in Appendix C will be
payable during any period in which operations are not being carried on solely because of Force Majeure as defined in Section 15.3, including periods required to repair damage caused by an event
of Force Majeure. In the event of Force Majeure lasting for a period of greater than 90 days, Company shall have the option, at its sole expense, to remove any affected Workover Equipment from
Egypt to the United States of America for use in its operations there. In such event, Company and Contractor shall negotiate in good faith and in an expeditious manner toward the execution of a
mutually satisfactory amendment to this Agreement covering operations in the United States of America under this Agreement. In particular, the rates to be charged pursuant to this Article VII,
which reflect rig rates for international operations, will be adjusted to a level consistent with Contractor's regional pricing structure in place in the United States of America for substantially
similar equipment, services and categories of personnel. In addition, Company agrees that the work performed for it by Contractor in the United States of America under this Agreement shall be in
addition to (and not in replacement of) the work being performed for Company by Contractor in the United States of America prior to the addition of the disallowed Workover Equipment. 

        Section 7.6  Moving Rates. The Rig Move Rates specified for each item of Workover Equipment in Appendix C will be payable for
each move of the Workover Rigs and Pulling Units from one well to another, provided that the well site is prepared and ready. 

        Section 7.7
Standby Rate Without Crew. The Standby Rate Without Crew specified for each item of Workover Equipment in
Appendix C will be payable during any period when: 

        (a)   operations
are suspended solely to repair the appropriate item of Workover Equipment due to blow out, fire, cratering, shifting or punch through at a workover location,
obstacles or obstructions or the consequences thereof, but only from the date the crew has been demobilized; 

        (b)   during
any period after the Commencement Date that the item of Workover Equipment is undergoing periodic inspections required for the maintenance of any certification or
classification certificates, but only from the date the crew has been demobilized; and 

        (c)   for
any period during which Company orders suspension of operations, but only from the date the crew has been demobilized. 

        Section 7.8  Overtime Rate. The Overtime Rate shall be the rate for work conducted outside of the fixed schedule described in
Appendix C when requested by Company. 

        Section 7.9
Consumables. Contractor undertakes to use commercially reasonable efforts to obtain the best price possible for all
materials and equipment supplied, including Consumables. 

        Section 7.10
Variation of Rates. The rates set forth herein shall be increased (but not decreased) by the actual amount of any
documented change in Contractor's costs resulting from (a) any change in laws, rules, regulations, or legislation, including the enforcement or interpretation thereof, or (b) any
increase in Contractor's costs for Egyptian personnel (but not expatriate personnel), spares, materials, or services that is beyond Contractor's reasonable control. The following limitations shall
apply to Contractor's ability to increase its rates pursuant to this Section 7.10: (i) Contractor shall not be entitled to increase its rates more than once per calendar quarter, and
(ii) Contractor shall not be entitled to increase its rates unless its costs have increased by 1% or more since the later of the date of this Agreement or the date of the last rate increase
pursuant to this Section 7.10. For the avoidance of doubt, once Contractor's costs have increased by 1% or more, Contractor shall be entitled to a rate increase for the entire amount of its
increased costs. 

9

 

ARTICLE VIII

PAYMENTS  

        Section 8.1 Monthly Invoices. Contractor shall bill Company at the end of each month, for all daily charges
and other charges earned by Contractor during such month, and for the costs of Consumables purchased during such month. Billings for daily charges will reflect details of the time spent (calculated to
the nearest hour) and the rate charged for that time. Billings for Consumables and other charges will be accompanied by invoices and other documentation supporting costs incurred for Company or other
substantiation as reasonably required by Company. 

        Section 8.2
Payment. Company shall pay all invoices within thirty (30) days after the receipt thereof; provided that if
Company, in good faith, disputes an item invoiced then Company shall, within twenty (20) days after receipt of the invoice notify Contractor in writing of the amount disputed, specifying the
reason therefor, and payment of the disputed amount may be withheld until settlement of the dispute. Any sums (including amounts ultimately paid with respect to a disputed invoice) shall bear interest
from the due date until paid at a rate equal to the lesser of (a) a varying rate per annum equal to the sum of (i) the 12-month London Interbank Offered Rate (LIBOR) as
published in The Wall Street Journal, plus (ii) 2% per annum, and (b) the maximum rate permitted by law. 

        Section 8.3
Manner of Payment. All payments due by Company to Contractor hereunder shall be made by wire transfer or as otherwise
agreed to one or more of Contractor's bank accounts which shall be specified in writing. Notwithstanding anything to the contrary in this Agreement, including this Section 8.3, Contractor may
by written instruction direct payments to be made by Company pursuant to this Agreement to third parties, including, without limitation, Contractor's subcontractors. 

        Section 8.4
Currency. All payments related to daily charges and other similar personnel charges will be made as follows, unless
otherwise directed or requested by Governmental Authority or mutually agreed by the Parties: 85% in United States Dollars, and 15% in L.E. Egyptian Pounds. The L.E. Egyptian Pound percentage will be
calculated at the most favorable rate of exchange to Contractor quoted by the Central Bank of Egypt on the date of Contractor's invoice or the date of Company's payment. All payments required to be
made by Company under this Agreement for Consumables shall be paid in United States Dollars or the currency in which payment for such Consumable was incurred by Contractor. 

        Section 8.5
Taxes. Company shall be responsible for and hold harmless, defend and indemnify Contractor from and against all taxes,
levies, duties, and assessments imposed on Contractor, the Workover Equipment, or Contractor's Personnel arising out of or in connection with Contractor's performance hereunder (including sales taxes,
value-added taxes, ad valorem and any other taxes imposed by any Governmental Authority, but excluding (a) any such taxes, levies, duties and assessments that are imposed by any U.S.
Governmental Authority, (b) any such taxes, levies, duties and assessments that are imposed on or measured by Contractor's income, and (c) payroll, employment, and similar taxes imposed
with respect to Contractor's Personnel). The taxes, levies, duties and assessments for which Company is responsible pursuant to the preceding sentence are hereinafter referred to as the "Covered
Taxes". Company shall pay all Covered Taxes directly to the proper governmental authority, including gross-up if applicable, and shall furnish Contractor with appropriate tax receipts.
Company further agrees to be responsible for and hold harmless, defend and indemnify Contractor from and against all liability or loss resulting from the non-payment of Covered Taxes,
including interest and penalties thereon. Contractor agrees to pay the taxes, levies, duties and assessments described in subsections (a), (b) and (c) above ("Contractor Taxes"),
and further agrees to be responsible for and hold harmless, defend and indemnify Company from and against all liability or loss resulting from the non-payment of Contractor Taxes,
including interest and penalties thereon. 

        Section 8.6
Customs Duties, Other Taxes. Without prejudice to the generality of Section 8.5, Company shall be responsible
for and shall pay all customs duties, fees, levies, assessments, or other 

10

 

charges
imposed by any Governmental Authority in connection with or incidental to the export of Workover Equipment, spare parts and consumables from its or their Port of Origin and its importation
into and export from Egypt. 

ARTICLE IX

LIABILITY  

        Section 9.1 Equipment or Property. Except as specifically provided herein to the contrary, each Party shall
at all times be responsible for and hold harmless, defend and indemnify the other Party from and against damage to or loss of its own equipment or property, regardless of the cause of loss, including
the negligence of such Party, and despite the fact that a Party's items may be under the control of the other Party, except that, 

        (a)   Company
shall be responsible at all times for and shall hold harmless and indemnify Contractor for loss or destruction of or damage to Contractor's drill pipe, drill
collars, subs, reamers, bumper subs, stabilizers and other in-hole equipment when such equipment is being used in the hole below the rotary table, normal wear excepted. Abnormal wear
and/or damage for which Company shall be responsible hereunder shall include, but not be limited to, wear and/or damage resulting from the presence of hydrogen sulfide or other corrosive elements in
the hole including those introduced into the drilling fluid, excessive wear caused by sandcutting, damage resulting from excessive or uncontrolled pressure such as those encountered during testing,
blow-out, or in a well out of control, excessive deviation of the hole from vertical, dog-leg severity, fishing, cementing or testing operations, and from any unusual Workover
Services undertaken at Company's request. Company's responsibility for such abnormal wear and/or damage as referred to herein shall include abnormal wear and/or damage to Contractor's choke hoses and
manifolds, blow-out prevention and other appurtenant equipment. Company shall pay the cost of repairing damaged equipment if repairable. In the case of equipment lost, destroyed or damaged
beyond repair, Company shall reimburse Contractor an amount equal to the then current replacement cost of such equipment delivered to the Workover Rig or Pullover Unit, less depreciation. In
calculating Company's liability under this Section 9.1(a), Company shall receive credit for any physical damage insurance proceeds actually received by Contractor with respect to any damage or
destruction to Contractor's equipment that is subject to indemnification by Company under this Section 9.1(a). 

        (b)   The
depreciation rate for Contractor's equipment lost, destroyed or damaged beyond repair shall be twenty (20%) per annum straight line from Contractor's documented date
of purchase or refurbishment; provided however, in no event shall depreciation deducted from replacement cost exceed fifty percent (50%) of the original purchase or refurbishment price of such
equipment. 

        (c)   Notwithstanding
anything to the contrary in this Agreement, each Party shall be responsible for and hold harmless and indemnify the other Party from and against any loss
or loss of use or damage to such other Party's tangible property (such as flow lines and rigs) when such loss or damage occurs outside of the hole and solely caused by the negligent acts, errors or
omissions, gross negligence or willful and wanton acts of such Party; provided that a Party's liability under this Section 9.1(c) shall not exceed $20,000 per indemnifiable event. 

        Section 9.2
The Hole. In the event a hole is lost or damaged, Company shall be solely responsible for and hold harmless and
indemnify Contractor from such damage to or loss of the hole, including all downhole property therein, regardless of whether such loss or damage was caused by the negligence, gross negligence or
willful misconduct of Contractor, Contractor's personnel or its subcontractors or agents. 

11

 

        Section 9.3
Contractor's Personnel. Contractor shall be responsible for and hold harmless, defend and indemnify Company, its
officers, directors and employees from and against all claims, demands and causes of action of every kind and character, without limit and without regard to the causes thereof, arising in connection
herewith in favor of Contractor's employees, or Contractor's subcontractors or their employees, or Contractor's invitees on account of bodily injury, death or damage to property. 

        Section 9.4
Company's Personnel. Company shall be responsible for and hold harmless, defend and indemnify Contractor, its officers,
directors and employees from and against all claims, demands, and causes of action of every kind and character arising in connection herewith in favor of Company's employees, or Company's other
contractors (excluding Contractor hereunder) or their employees, or Company's invitees, on account of bodily injury, death or damage to property. 

        Section 9.5  Pollution and Contamination. Notwithstanding anything to the contrary contained herein, the Parties understand and
agree that the responsibility for pollution or contamination shall be as follows: 

        (a)   Subject
to Company's compliance with its obligations under Section 5.12, Contractor shall be responsible for and hold harmless, defend and indemnify Company
against, all claims, demands, and causes of action of every kind and character (including control and cleanup of the pollutant involved) arising directly or indirectly from all pollution or
contamination that originates above the surface of the ground or water and solely from improper care or disposition of items wholly in Contractor's possession and control and directly associated with
the Workover Equipment, including, without limitation, spills of fuels, lubricants, motor oils, water base drilling fluid and attendant cuttings, pipe dope, paints, solvents, ballast, bilge and
garbage. 

        (b)   Company
be responsible for and hold harmless, defend and indemnify Contractor against all claims, demands, and causes of action of every kind and character (including
control and removal of the pollutant involved) arising directly, or indirectly, from all pollution or contamination, other than that for which Contractor is responsible pursuant to
Section 9.5(a), including, but not limited to, that which may result from fire, blow-out, cratering, seepage or any other uncontrolled flow of oil, gas, water or other substance, as
well as the use or disposition of lost circulation and fish recovery materials and fluids, oil emulsion, oil base or chemically treated drilling fluids, contaminated cuttings or carvings. 

        (c)   In
the event a third party commits an act or omission which results in pollution or contamination for which either Contractor or Company for whom such third party is
performing work is held to be legally liable, the responsibility therefor shall be considered, as between Contractor and Company, to be the same as if the Party for whom the work was performed had
performed the same and all of the obligations and limitations set forth in Sections 9.5(a) and (b) shall be specifically applied. 

        Section 9.6
Cost of Control. Company shall be responsible for and hold harmless, defend and indemnify Contractor for the cost of
regaining control of any wild well. 

        Section 9.7
Underground Damage. Company shall be responsible for and hold harmless, defend and indemnify Contractor for any and all
claims arising against Contractor resulting from operations under this Agreement on account of injury to, destruction of, or loss or impairment of any property right in or to oil, gas, or other
mineral substance or water. 

        Section 9.8  Consequential Damages. Except as provided in this Agreement, neither Party shall be liable to the other for, and each
Party shall hold harmless and indemnify the other against, special, indirect or consequential damages resulting from or arising out of this Agreement, including, without limitation, loss of profits,
loss of use or business interruptions, however same may be caused. 

12

 

        Section 9.9  Third Parties. Except as otherwise provided in this Article IX, each Party shall be responsible for and hold
harmless, defend and indemnify the other Party against any property damage of, or personal injury (including illness or death) to third parties arising out of or relating to the performance of the
Workover Services (with respect to Contractor) or operations in the Operating Area (with respect to Company) to the extent caused solely by such Party's negligence, gross negligence, willful
misconduct, or other fault. 

        Section 9.10
Indemnity Obligation. 

        (a)   The
Parties intend and agree that the phrase "be responsible for and hold harmless, defend and indemnify" in this Agreement (or words of similar effect) means that the
indemnifying Party shall indemnify, hold harmless and defend (including payment of reasonable attorney's fees and costs of litigation) the indemnified Party from and against any and all claims,
demands, causes of action, damages, judgments and awards of any kind or character, WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF, INCLUDING PRE-EXISTING CONDITIONS,
WHETHER SUCH CONDITIONS BE PATENT OR LATENT, BREACH OF WARRANTY (EXPRESS OR IMPLIED), STRICT LIABILITY, OR THE NEGLIGENCE OF ANY
PERSON OR PERSONS, INCLUDING THAT OF THE INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE. 

        (b)   The
indemnifying Party's obligations contained in this Agreement shall also extend to the indemnified Party and its Affiliates and the officers, directors, employees,
agents, owners and shareholders of each. 

        (c)   Each
Party shall procure and maintain insurance in support of its indemnity obligations under this Agreement. 

        Section 9.11
Indemnity Procedures. If a claim arises as to which either Party is or may be entitled to indemnification from the
other Party hereunder, such Party (the "Indemnified Party") shall advise the other Party (the "Indemnifying Party") of the claim promptly after such Indemnified Party becomes aware of any fact,
condition or event which may give rise to such claim. In the case of a claim for indemnification involving the assertion of a claim by a third party against such Indemnified Party, provided that the
Indemnifying Party admits in writing to the Indemnified Party that such claim is covered by the indemnity provisions of this Agreement, the Indemnifying Party shall have the right to contest and
defend by all appropriate legal proceedings such claim and to control all settlements (unless the Indemnified Party agrees to assume the cost of settlement and to forego such indemnity) and to select
lead counsel to defend any and all such claims at the sole cost and expense of the Indemnifying Party ("Assume the Defense"); provided, however, that the Indemnifying Party may not effect any
settlement that could result in any cost, expense or liability to, or have any obligation upon, any Indemnified Party unless such Indemnified Party consents in writing to such settlement and the
Indemnifying Party agrees to indemnify such Indemnified Party therefor. Once an Indemnifying Party Assumes the Defense with respect to a claim, an Indemnified Party may select counsel to participate
in any defense of that claim, in which event such Indemnified Party's counsel shall be at the sole cost and expense of such Indemnified Party (unless there is a conflict of interest, in which case the
Indemnified Party's counsel shall be at the cost and expense of the Indemnifying Party). In connection with any such third party claim, the Parties shall cooperate with each other and provide each
other with access to relevant books and records in their possession. 

ARTICLE X

INSURANCE  

        Section 10.1 Insurance. Each Party shall carry and maintain insurance coverage of the type and in the
amounts set forth in Appendix D at such Party's sole cost. All references in this Agreement to the 

13

 

"insurance"
of a Party shall mean such insurance as set forth in Appendix D. Furthermore, each Party will be responsible for maintaining the statutory insurance coverage required in Egypt and
for the insurance premiums for its personnel. 

        Section 10.2  Certificates. Each Party will furnish the other prior to the first Commencement Date with certificates indicating that
the required insurances are in full force and effect and that the same shall not be cancelled or materially and adversely changed without ten (10) days prior written notice to the other Party. 

        Section 10.3
Subrogation. Each Party, for liabilities assumed hereunder by it, shall cause its insurance to be endorsed to provide
that its underwriters waive their right of subrogation against the other Party. 

        Section 10.4  Additional Insured. Each Party shall name the other Party as an additional insured, where permitted, under its
policies of liability insurance, but only with respect to liabilities assumed by such Party under this Agreement. 

ARTICLE XI

SUBLETTING AND ASSIGNMENT  

        Section 11.1 Subcontracts. Contractor may employ other contractors to perform any of the operations or
services to be provided or performed by it with the prior written consent of Company, such consent not to be unreasonably withheld. Use of subcontractors by Contractor shall not relieve Contractor
from any liability or obligation under this Agreement. 

        Section 11.2
Assignment. Neither this Agreement nor any rights or interests hereunder (including the right to receive monies due
hereunder) may be assigned or transferred in whole or in part by either Party hereto, nor may any Party hereto delegate any of its obligations, duties or liabilities hereunder, without the prior
written consent of the other Party hereto. Notwithstanding the foregoing sentence, but subject to the other provisions of this Agreement, either Party may assign this Agreement and its rights and
obligations hereunder to a Permitted Assignee. Such assignment shall be effective when the Permitted Assignee executes an Amendment to this Agreement thereby becoming a Party and assuming all of the
assigning Party's rights and obligations under this Agreement; provided, however, such assignment shall not relieve the assigning Party of any obligation under this Agreement. Any attempted
assignment, delegation, or transfer in violation of this Section 11.2 shall be void. 

ARTICLE XII

ARBITRATION  

        Section 12.1 Agreement to Arbitrate. Any and all claims, counterclaims, demands, cause of action, disputes,
controversies, and other matters in question arising out of or relating to this Agreement, any provision hereof, the alleged breach thereof, or in any way relating to the subject matter of this
Agreement or the relationship between the Parties created by this Agreement, involving the Parties
and/or their respective representatives (all of which are referred to herein as "Claims"), even though some or all of such Claims allegedly are extra-contractual in nature, whether such Claims sound
in contract, tort, or otherwise, at law or in equity, under State or federal law, whether provided by statute or the common law, for damages or any other relief, shall be resolved by binding
arbitration. 

        Section 12.2
Conduct, Authority, and Choice of Law. It is the intention of the Parties that the arbitration shall be conducted
pursuant to the Federal Arbitration Act and administered by the American Arbitration Association in accordance with its then current Commercial Arbitration Rules, as such Act and Rules are
modified by this arbitration agreement. The validity, construction, and interpretation of this Agreement to arbitrate, and all procedural aspects of the arbitration conducted pursuant to this
Agreement to arbitrate, including but not limited to, the determination of the issues 

14

 

that
are subject to arbitration (i.e., arbitrability), the scope of the arbitrable issues, allegations of "fraud in the inducement" to enter into this agreement or this arbitration provision,
allegations of waiver, laches, delay or other defenses to arbitrability, and the rules governing the conduct of the arbitration (including the time for filing an answer, the time for the filing of
counterclaims, the times for amending the pleadings, the specificity of the pleadings, the extent and scope of discovery, the issuance of subpoenas, the times for the designation of experts, whether
the arbitration is to be stayed pending resolution of related litigation involving third parties not bound by this arbitration agreement, the receipt of evidence, and the like), shall be decided by
the arbitrators appointed in accordance with this Agreement (the "Arbitrators"). In deciding the substance of the Parties' Claims, the Arbitrators shall refer to the substantive laws of the State of
Texas for guidance (excluding Texas choice-of-law principles that might call for the application of some other State's law). Provided, however, it is expressly agreed that
notwithstanding any other provision in this arbitration agreement to the contrary, the Arbitrators shall have absolutely no authority to award treble, exemplary or punitive damages of any type under
any circumstance regardless of whether such damages may be available under Texas law, the law of any other State, or federal law, or under the Federal Arbitration Act, or under the Commercial
Arbitration Rules of the American Arbitration Association, the Parties hereby waiving their right, if any, to recover treble, exemplary or punitive damages in connection with such Claims. 

        Section 12.3
Forum for the Arbitration and Selection of Arbitrators. The arbitration proceeding shall be conducted in Houston,
Texas. Within thirty (30) days of the notice of initiation of the arbitration procedure, each Party shall appoint an arbitrator. The two arbitrators appointed as herein provided shall select a
third arbitrator, failing agreement on which within ninety days of the original notice, the Parties (or either of them) shall apply to any United States District Judge for the Southern District
of Texas, Houston Division, who shall appoint the third arbitrator. While the third arbitrator shall be neutral, the two Party-appointed Arbitrators are not required to be neutral and it shall not be
grounds for removal of either of the two Party-appointed Arbitrators or for vacating the arbitrators' award that either of such arbitrators has past or present minimal relationships with the Party
that appointed such arbitrator. Evident partiality on the part of an Arbitrator exists only where the circumstances are such that a reasonable person would have to conclude there in fact existed
actual bias and a mere appearance or impression of bias will not constitute evident partiality or otherwise disqualify an Arbitrator. Minimal or trivial past or present relationships between the
neutral Arbitrator and the Party selecting such Arbitrator or any of the other Arbitrators, or the failure to disclose such minimal or
trivial past or present relationships, will not by themselves constitute evident partiality or otherwise disqualify any Arbitrator. 

        Section 12.4
Decision of the Arbitrators. The Arbitrators shall render their final decision within twenty days of the completion of
the final hearing completely resolving all of the Claims that are the subject of the arbitration proceeding. The Arbitrators' ultimate decision after final hearing shall be in writing. The Arbitrators
shall certify in their decision that no part of their award includes any amount for exemplary or punitive damages. The Arbitrators' decision shall be final and non-appealable to the
maximum extent permitted by law. Any and all of the Arbitrators' orders and decisions may be enforceable in, and judgment upon any award rendered in the arbitration proceeding may be confirmed and
entered by, any federal or state court having jurisdiction. 

        Section 12.5
Confidentiality. To the fullest extent permitted by law, any arbitration proceeding and the Arbitrators award shall be
maintained in confidence by the Parties. 

ARTICLE XIII

DEFAULT AND TERMINATION  

        Section 13.1 Termination by Company. Company may terminate this Agreement: 

        (a)   upon
the Bankruptcy, insolvency, or dissolution of Contractor; 

15

 

        (b)   upon
30 days' written notice to Contractor if there is a material breach by Contractor of any representation or warranty made by Contractor herein, unless
Contractor has cured such breach during the notice period or has initiated and is diligently pursuing the cure of such breach and thereafter continues to diligently pursue such cure; provided, that
such cure is effected within 90 days from the receipt of such notice by Contractor or within an appropriate time frame if such cure by Governmental Requirement or otherwise requires or
stipulates or allows a longer time period than 90 days; 

        (c)   upon
30 days' written notice to Contractor if there is a material failure by Contractor to perform its obligations hereunder, unless Contractor has cured such
breach during the notice period or has initiated and is diligently pursuing the cure of such breach and thereafter continues to diligently pursue such cure; provided, that such cure is effected within
90 days from the receipt of such notice by Contractor or within an appropriate time frame if such cure by Governmental Requirement or otherwise requires or stipulates or allows a longer time
period than 90 days (or, notwithstanding the
foregoing, such shorter period of time as may be necessary to avoid the payment of penalties or the loss of any permit, authorization, license, or concession); 

        (d)   in
accordance with Section 3.6(b) after exhausting its remedies under Sections 3.6(b)(i) and (ii); or 

        (e)   upon
the actual or constructive total loss of all of the Workover Equipment. 

        Section 13.2
Termination by Contractor. Contractor may terminate this Agreement: 

        (a)   upon
the Bankruptcy, insolvency, or dissolution of Company; 

        (b)   upon
the failure by Company to pay within 60 days of when due all amounts owed to Contractor and such failure is not cured by or on behalf of Company within
ten days of written notice from Contractor to Company demanding such cure; 

        (c)   upon
30 days' written notice to Company if there is a material breach by Company of any representation or warranty made by Company herein, unless Company has
cured such breach during the notice period or has initiated and is diligently pursuing the cure of such breach and thereafter continues to diligently pursue such cure; provided that such cure is
effected within 90 days from the receipt of such notice by Company or within an appropriate time frame if such cure by Government Requirement or otherwise requires or stipulates or allows a
longer time period than 90 days; 

        (d)   upon
30 days' written notice to Company if there is a material failure by Company to perform its non-payment obligations hereunder, unless Company has
cured such breach during the notice period or has initiated and is diligently pursuing the cure of such breach and thereafter continues to diligently pursue such cure; provided that such cure is
effected within 90 days from the receipt of such notice by Company, during which cure period Contractor shall be required to continue performing the services under this Agreement or within an
appropriate time frame if such cure by Governmental Requirement or otherwise requires or stipulates or allows a longer time period than 90 days; or 

        (e)   upon
the actual or constructive total loss of all of the Workover Equipment. 

16

   
        Section 13.3 Effect of Termination. If this Agreement is terminated by Company pursuant to Section 13.1, Contractor shall
have no liability to Company as a result of such termination. If this Agreement is terminated by Contractor pursuant to Sections 13.2(a), (b), (c) or (d), Company shall continue to pay
to Contractor the Operating Rate for each item of Workover Equipment for the remaining term of this Agreement. Company agrees that the foregoing payments are reasonable in light of the anticipated
harm and the difficulty of estimation or calculation of actual damages and waives the right to contest such payments as an unreasonable penalty. For the avoidance of doubt, the provisions of
Section 6.3(a) shall apply to any termination of this Agreement under this Article XIII. 

ARTICLE XIV

REPRESENTATIONS AND WARRANTIES  

        Section 14.1 Representations by Contractor. Contractor represents and warrants to Company as follows: 

        (a)   Contractor
is a corporation duly formed, validly existing, and in good standing under the laws of the state of Maryland, United States of America and has full power and
authority to own its property and to carry on its business as now conducted. 

        (b)   Contractor
has full corporate power and authority to execute this Agreement and to carry out all its obligations under this Agreement. Its execution and performance of
this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all requisite corporate action on its part. This Agreement constitutes a valid and
legally binding obligation of Contractor, enforceable against it in accordance with its terms, except as may be limited by applicable Bankruptcy, insolvency, reorganization, moratorium, and other
similar applicable laws now or hereafter in effect relating to creditors' rights generally. Contractor's representative executing this Agreement has sufficient authority to sign this Agreement in the
name and on behalf of Contractor, and that authority has not been limited or revoked. 

        (c)   Contractor's
execution and performance of this Agreement and the transactions contemplated hereby do not constitute a breach of any term or provision of, or a default
under, (i) any contract or agreement to which it or any of its Affiliates is a party or by which it or any of its Affiliates or its or their property is bound, (ii) its organizational
documents, or (iii) any applicable laws having applicability to it, in each case which breach would have a material adverse effect on its ability to perform its obligations hereunder. 

        (d)   There
is no legal proceeding pending or, to its knowledge, threatened against it that could materially adversely affect the validity of this Agreement or the ability of
Contractor to perform its obligations hereunder. 

        Section 14.2
Representations by Company. Company represents and warrants to Contractor as follows: 

        (a)   Company
is a corporation duly formed, validly existing, and in good standing under the laws of the state of Delaware, United States of America and has full power and
authority to own its property and to carry on its business as now conducted. 

        (b)   Company
has full corporate power and authority to execute this Agreement and to carry out its obligations under this Agreement. Its execution and performance of this
Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all requisite action on its part. This Agreement constitutes a valid and legally binding
obligation of Company, enforceable against it in accordance with its terms, except as may be limited by applicable Bankruptcy, insolvency, reorganization, moratorium, and other similar applicable laws
now or hereafter in effect relating to creditors' rights generally. Its representative executing this 

17

 

Agreement
has sufficient authority to sign this Agreement in the name and on the behalf of Company, and that authority has not been limited or revoked. 

        (c)   Company's
execution and performance of this Agreement and the transactions contemplated hereby do not constitute a breach of any term or provision of, or a default
under, (i) any contract or agreement to which it or any of its Affiliates is a party or by which it or any of its Affiliates or its or their property is bound, (ii) its organizational
documents, or (iii) any applicable laws having applicability to it, in each case which breach would have a material adverse affect on its ability to perform its obligations hereunder. 

        (d)   There
is no legal proceeding pending or, to Company's actual knowledge, threatened against it that could materially adversely affect the validity of this Agreement or
its ability to perform its obligations hereunder. 

        Section 14.3
Survival. The representations made in Sections 14.1 and 14.2 shall survive the execution and delivery of this
Agreement. 

ARTICLE XV

GENERAL  

        Section 15.1 Confidential Information. Upon written request of Company, all information relating to the
workover wells obtained by Contractor in the conduct of operations hereunder shall be held confidential by Contractor who will use the same degree of care it uses in safeguarding its own confidential
information. 

        Section 15.2
Attorney's Fees. If this Agreement is placed in the hands of attorney for collection of any sums due hereunder, or
suit is brought on same, or sums due hereunder are collected through Bankruptcy or arbitration proceedings, then the winning Party shall be entitled to recover reasonable attorney's fees and costs. 

        Section 15.3
Force Majeure. Except as otherwise provided in this Section 15.3, each Party to this Agreement shall be excused
from complying with the terms of this Agreement, except for the payment of monies when due and the honoring of indemnities, if and for so long as such compliance is hindered or prevented by riots,
strikes, wars (declared or undeclared), insurrection, rebellions, terrorist acts, civil disturbances, dispositions or order or injunctions of any Governmental Authority, whether such authority be
actual or assumed, acts of God or adverse weather conditions, inability to obtain equipment, supplies or fuel, or by any act or cause (other than financial distress or inability to pay debts when due)
which is reasonably beyond the control of such Party, such cause being herein sometimes called "Force Majeure." In the event that either Party is rendered unable, wholly or in part, by any of these
causes to carry out its obligations under this Agreement, such Party shall give notice and details of Force Majeure in writing to the other Party as promptly as possible after occurrence. In such
cases, the obligations of the Party giving notice shall be suspended during the continuance of any inability so caused except that Company shall be obliged to pay to Contractor the Force Majeure Rate
provided for in Section 7.6. 

        Section 15.4  Right to Audit. For a period of two years from termination of the Agreement, Contractor shall keep proper
books, records and accounts of operation hereunder and shall permit Company at all reasonable times to inspect the portions thereof related to any variation of the rates hereunder and charges for
reimbursable items. 

        Section 15.5
Compliance with Laws. In the event any provision of this Agreement is inconsistent with or contrary to any applicable
treaty, law, rule, regulation or ordinance, said provision shall be modified to the extent required to comply with said treaty law, rule, regulation or ordinance upon mutual signing of the Parties,
and as so modified the provision and this Agreement shall continue is full force and effect. If any act or omission by Contractor in response to Company's explicit instruction 

18

 

violates
such law, Company shall indemnify Contractor for any consequences thereof. In no event however, will either Contractor or Company be requested or required to violate any treaty, law, rule,
regulation or ordinance of their respective countries of incorporation or organization. 

        Section 15.6
Waivers. It is fully understood and agreed that none of the requirements of this Agreement shall be considered as
waived by either Party unless the same is done by writing, and then only by the persons executing this Agreement, or other duly authorized agent or representative of the Party. 

        Section 15.7
Inurement. This Agreement shall inure to the benefit of and be binding upon the permitted successors and assignees of
the Parties. 

        Section 15.8
Notices. 

        (a)   All
notices required or provided for in this Agreement shall be in writing and shall be delivered by hand; or sent by a recognized overnight mail or courier service with
delivery receipt requested; or sent by facsimile transfer and acknowledged by recipient, as follows: 

If to Company:

Apache
Corporation

c/o Apache Egypt Companies

11, Street 281

New Maadi, Cairo, Egypt

Facsimile: (20) (2) 519-3900 

Attention:
General Manager 

With
copy to: 

Apache
Corporation

2000 Post Oak Boulevard

Suite 100

Houston, TX 77056-4400

Facsimile: (713) 296-6450 

	Attention:
	Assistant
International Counsel 

If to Contractor:

6
Desta Dr., Suite 4400

Midland, TX 79705

Facsimile: (915) 620-0307 

	Attention:
	Mr. Thomas
B. Murphy

Vice President—International 

With
copies to: 

	Key Energy Services, Inc.

400 South River Road

New Hope, PA 18938

Facsimile: (215) 862-7902	 	Vinson & Elkins LLP

2300 First City Tower

1001 Fannin St.

Houston, TX 77002

Facsimile: (713) 615-5295
	

Attention: General Counsel	
 	

 
	 	 	Attention: William H. Weiland, Esq.

        (b)   Notices
shall be effective when received by the Party to whom addressed. 

19

 

        (c)   All
notices, communications and instructions under this Agreement shall be in the English language. 

        Section 15.9  Additional Documents and Actions. Each Party agrees to execute and deliver to the other such additional documents, and
take such additional actions, all at its own expense, as may be reasonably required by the other to effect the interest of this Agreement. 

        Section 15.10
Expropriation, Confiscation, Nationalization and War Risks. 

        (a)   In
the event any of the Workover Equipment, spare parts and/or supplies directly associated therewith (i) cannot lawfully be exported from the country in which it
was operating following termination of Workover Services, Company cannot obtain an export license or permit or because of other governmental restrictions; or (ii) are lost to Contractor through
confiscation, expropriation, nationalization or governmental seizure; or (iii) are lost, seized, damaged or destroyed as a result of political unrest, insurrection, terrorist acts, riot or war
(declared or undeclared) or other similar occurrences (including forced abandonment as a result of the foregoing) during the term of this Agreement, Company will within sixty (60) days
following the occurrence of any such event pay to Contractor the value (as set forth in the packing lists pursuant to which the Workover Equipment is
imported into Egypt) of such property so restricted, confiscated, expropriated, nationalized, seized, damaged or destroyed, from which value shall be subtracted the total of the following: 

        (1)   any
amount actually received by Contractor by such governmental unit or body within such period; and 

        (2)   any
amount actually received by Contractor from insurance within such period. 

        (b)   Upon
payment by Company to Contractor of the amounts specified in Section 15.10(a) above, Contractor shall transfer to Company its right, title, and interest in
and to all such property so restricted, confiscated, expropriated, nationalized, seized, damaged or destroyed. 

        (c)   All
costs and other charges provided for in this Section 15.10 are subject to adjustment after audit. 

        (d)   If
requested by Company in writing, Contractor agrees to obtain at Company's sole expense to the extent then and thereafter available, insurance covering all or such
portion of the risks specified in this Section 15.10 as Company may direct. Company shall be named as an additional insured in any such policy or policies of insurance, which shall provide for
the payment of losses thereunder in United States dollars. The provisions of such insurance and cost thereof shall be subject to Company's approval prior to the issuance thereof. 

        (e)   Contractor
shall pay to Company any monies with respect to such expropriation, etc., which Contractor receives and for which Company has not already received credit
after payment has been made by Company to Contractor under this Section 15.10. 

        Section 15.11
Foreign Corrupt Practices Act. Neither Party shall act in violation of the U.S. Foreign Corrupt Practices Act or, in
connection therewith, make any payments, loans, or gifts, directly or indirectly, to or for the use or benefit of any official, employee, agency or instrumentality of any government, political party,
or public international organization, candidate for political office, or any other person, the payment of which would violate the laws of the United States of America or of Egypt. Each Party shall be
responsible for and hold harmless and indemnify the other Party from and against any fines, penalties, related costs and expenses (including reasonable attorneys' fees and expenses) attributable to
any failure of such Party (or any subcontractor) to comply with this Section 15.11 in connection with this Agreement or the performance of the Workover Services. 

        Section 15.12
Entire Agreement. This Agreement supersedes and replaces any oral or written communications heretofore made between
the Parties relating to the subject matter hereof. 

[Signature Page Follows]

20

 

        IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. 

	

 	
 	

CONTRACTOR: KEY ENERGY SERVICES, INC.
	

 	
 	

 	
 	

By:	
 	

/s/  JACK D. LOFTIS, JR.      
	 	 	 	 	Name:	 	Jack D. Loftis, Jr.
	 	 	 	 	Title:	 	Senior Vice President and General Counsel
	

 	
 	

COMPANY: APACHE CORPORATION
	

 	
 	

 	
 	

By:	
 	

/s/  G. STEVEN FARRIS      
	 	 	 	 	Name:	 	G. Steven Farris
	 	 	 	 	Title:	 	President and Chief Operating Officer

21

QuickLinks

AGREEMENT FOR SUPPLY AND OPERATION OF WORKOVER RIGS, PULLING UNITS, VEHICLES, OTHER EQUIPMENT AND RELATED SERVICES

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